Health Care Reform: The Real Story DAVID M. CUTLER FEBRUARY 2010What You Hear About Health Care Reform 2 y The public option y Death (panels) and taxes (on the rich, on your insurance plan, on …) y Should health care cover abortion?What You Don’t Hear About Health Care Reform 3 y One of the following is not true. Which one? y The Senate proposes to spend $10 billion trying out new chronic care models and disseminating successes throughout Medicare. y Congress is on the verge of ending its micro-management of Medicare. y The Yankees are inherently better than the Red Sox.What is the real story on health care reform? 4Fundamental Challenges 5 y The role of government in the economy { I’ll be damned if I want the government messing in my medical care { I’ll be damned if I want some private insurance company messing in my medical care y Money { Can we afford to cover everyone, make it balance in the short term, and save money in the longer term?Competing Views of US Health Care 6 © Michael Moore. All rights reserved. This content is excluded from our Creative Commons license. For more information, see http://ocw.mit.edu/fairuse.Fundamental Issues 1. Getting everyone covered 7 2. Improving the value of care 3. Addressing the US fiscal situationAffordability and accessibility are the keys to coverage 8 y People buy insurance when the price is low and there is a place to buy it { E.g., MA Connector y Subsidies are expensive { The modified 80-20 ruleImproving the value of care 9 y Premise: Medical care is inefficiently provided, and this both lowers quality and drives up cost. • Therefore, we should be able to improve quality and save money by modernizing the health system.Examples of inefficient care 10 1. Administrative expenses are too high { Wasted time, wasted peopleExamples of inefficient care 11 2. People use too much and too expensive acute care Image courtesy U.S. Department of Veterans Affairs.What Is Health System Modernization? 12 y The idea that The Hallmark of Productive health care Industries can be made a ‘normal’ industry in terms of productivity growth13 Productivity Growth by Industry, 1995-2005Four Steps to Health Care Modernization 14 1. Better Information { Wiring the medical industry and using the results at the patient and system level 2. Compensation arrangements { Pay-for-value instead of pay-for-volume { It starts with Medicare 3. Insurance reform { Competition over quality, not competition over risk avoidance 4. Worker empowerment { Scope of practice rules, medical training, specialty mixBetter Information 15 y Information technology { Digitize health care { Use the information well Ù Patient encounters Ù Cost-effectiveness analysis Ù Learning which providers are better and worse Photo of doctor using handheld tablet PC removed due to copyright restrictions.Compensation Changes 16 y Compensation changes { Bundle payment wherever possible Ù Hospital + Ù Patient as a whole { Stress prevention Ù Value-based insurance design Ù Medical homes, transitional care etc. { Pay-for-performanceWorker Empowerment 17 y Organizational changes { Flat organizations do better than hierarchical ones. { A truly paperless organization•Impact of doing better Improve health and cut growth of medical spending 1819 Productivity Growth in US IndustryCBO’s Favorite Chart 20 Public domain image from the U.S. Congressional Budget Office. For complete report, see U.S. Congress. Congressional Budget Office. The Long-Term Budget Outlook. December 2007.David Cutler’s Favorite Chart 21How Do The Bills Stack Up? 22 y Pretty well, actually { Commitment to payment change, with flexibility to adjust mid-course and lots of experimentation { Follows on heels of stimulus bill & IT investment y Somewhat weaker on non-payment issues { Workforce issues { Sin taxes (esp. directed towards obesity)Qualifications 23 y This is a path, not a leap { Implementation will be key y Provider support is essential { We can spend the next decade fighting, or changingMIT OpenCourseWarehttp://ocw.mit.edu HST.934J / STS.449J Introduction to Global Medicine: Bioscience, Technologies, Disparities, Strategies Spring 2010 For information about citing these materials or our Terms of Use, visit: