HCI3 Update from the Field: Trajectories Can be Changed

Submitted by francois.debrantes@hci3.org on Thursday, July 28, 2011 - 06:00

HCI3 Update from the Field – Newtown, CT

Trajectories can be changed, and will be changed if everyone truly steps up to take a swing – two studies released this week provide a bleak picture of our current and future well-being if the status quo remains. First, an issue brief from the Commonwealth Fund on a recent OECD report shows that the US continues to outpace every other nation in spending on health care. The price per unit is driving much of that difference, and use does the rest. A second paper released by the CMS Office of the Actuary predicts that healthcare spending will continue to grow at 5.8% for the foreseeable future, consuming close to 20% of GDP by the end of this decade. Fortunately for all of us, actuaries have pretty simple models. They take past performance and throw it into the future, adjusting for basic demographic factors. As such, what this second paper is reporting is what will happen if we don't change the current trajectory. Current payment does not put providers at risk for their performance in delivering high value health care. We are, quite literally, getting exactly what we pay for and exactly what we deserve. And as a result, employers can't grow their staff, companies are continuing to ship jobs overseas, and federal, state, county and municipal governments are laying off employees because they've run out of money and cannot absorb increases in payroll costs (in particular health care benefit costs). So we must move to provider payments that will place them at financial risk for delivering value. In a recent study, Suzanne Delbanco, an HCI3 Board member, and her colleagues, examine different risk arrangements and their potential. And as I wrote last week, CMS and the CMMI in particular seem to have gotten the message that it is, indeed, time to take a swing.

What this means to you – Some policymakers and some providers (albeit few) are still deluded that increasing health care spending to 20% of GDP is a good thing: it will create jobs! Yes, but each of those jobs is paid for by a implicit tax on ever single individual in this country that contributes ever more to health insurance premiums and/or contributes to the general tax receipts. Contrarily to companies that grow because they offer a high value service, as the first report above specifies, there's nothing high value about the current healthcare spend in this country. And if you're not convinced, consider this: GE is moving its Wisconsin-based health care business HQ to….China. So our insurance premiums and tax dollars go to pay providers partially for diagnostic imaging done on GE machines manufactured in China, and will help create jobs there, not the US. Employers and payers, including public sector employers and payers, can change this trajectory by changing the way providers are paid. It is as simple as that. While moving away from FFS will be tough, and wrenching for many, it will finally provide employers with the breathing room they need to plow money back into their businesses and employees, and grow the real GDP. So fair warning to those who are thinking of sitting on the sidelines doing nothing, or who are currently using the old "rope-a-dope" to maintain the status quo while pretending to do something: we're not going to let you get away with it.


Francois de Brantes
Executive Director
Health Care Incentives Improvement Institute, Inc.
w: www.hci3.org