Bending the health care cost curve, Affordable Care Act or not


Recently, there has been  lot of uproar and confusion about the Supreme Court ruling on the constitutionality of the Affordable Care Act.  Many were surprised by the ruling, and others, while happy it was upheld,  are concerned about the constitutional questions that arose due to the way the ruling was written.  All of that said, and no matter which side of this debate you are on, the reality is that the discussion takes us in a positive direction, mostly toward bending the cost curve.

The United States spends over 17 percent of GDP on healthcare annually, which makes us the leader in health care spending on both the OECD and WHO lists.  Sadly, we are 30th in life expectancy in the world.  So, this tells us very simply, we are spending more in terms of percentage of GDP than others and getting much worse results.  We continue to discuss whether to repeal the law, implement the act as designed, procrastinate and await the election, or, we can begin serious discussions about bending the cost curve with the ACA or with its replacement.  Because, no matter what route we as a nation choose, we have to change the cost dynamic.

Currently, we spend roughly 50 percent of our health care spending on about five percent of the population.  Additionally, we are currently fee for service which means that volume drives income, not preventive care, which would be dramatically cheaper.  So we are spending enormous amounts of money on health care, and even with amazing doctors and facilities, we are getting a lower life expectancy and concentrating costs in a small minority.

When other nations are spending dramatically less and getting much better results we need to rethink our approach.  While other countries are taking care of their population, and controlling the costs, our businesses and governments are absorbing those costs and making us less competitive.  This is an employment and competitiveness issue.  It is also a mobility issue for thousands with preexisting conditions.  Many who have health insurance, and yet have a preexisting condition, dream of starting their own business or moving on in some way, but cannot because they have no guarantee of health care if they leave.

So, how do we bend this curve?  How do we address the high percentage of GDP we spend on health care annually?  We have to begin looking at new and innovative ways to address the issue.  Analyzing successful practices versus ineffective ones is paramount in bending the cost curve.  What protocols are most effective at stemming the tide of a disease and at what point in the progression of the disease are they most successful?  These questions can be answered much more easily now with the application of technology.

We need to move toward value-based payment models and associated incentive structures. Good examples include accountable care organizations, which tie provider reimbursements to quality and cost reductions and patient-centered medical homes, where a physician-led team that provides comprehensive and continuous medical care to maximize health outcomes. Analytics can help  health plans and providers to implement bundled payment and accountable care organization  shared savings models. This approach to analyzing health care data streamlines the planning and execution of a wide variety of value-driven payment contracts to help health plans and providers control costs, while improving quality and health outcomes.

Looking at all Medicaid data, incorporating state health plan data and other sources of public health data allows for  a more comprehensive picture of where patterns of successful treatment and lower costs may emerge, as well as showing where higher cost, lower success rates may be.  This will allow for better cost controls.  In addition, tracking and modeling cost avoidance due to preventive care can provide a method of replacing the fee for service system we now work under.  Doctors are simply not incented to treat patients while they are healthy in terms of preventive care, as it doesn’t pay as well as cutting, snipping, tucking, or removing.

We have to change the dynamic in health care discussion from whether we should be socializing medicine or letting everyone fend for themselves.  In the end, we all pay for the costs of the uninsured via unpaid emergency room visits, etc.  Insuring all, looking at the data, incenting healthy behaviors and reimbursing physicians for preventive care can change the dynamic of our health care costs.








About Author

Chuck Ellstrom

Sr Manager, Industry Consulting

Chuck Ellstrom manages a team of subject matter experts focusing on multiple policy areas in state and local government, particularly health and human services, justice and public safety and finance. Over the past 16 years, Chuck has worked on comprehensive grants intelligence solutions, disaster planning, disaster recovery operations, and interpretation and execution of client requirements. He has extensive expertise with the challenges of managing large infusions of Federal grant dollars and projects into states. In his seven years at SAS, Chuck has helped develop several SAS technologies, including a major disaster management intelligence solution. Before joining SAS, Chuck was Deputy Chief of Operations for North Carolina’s Division of Emergency Management where he was responsible for the management of 13 Presidential Disaster Declarations and statewide disaster response operations. A former field artillery captain in the U.S. Army, Chuck holds a bachelor’s degrees in history and political science, as well as a master’s in public administration (policy analysis), from East Carolina University. Chuck takes advantage of living in a hotbed for college basketball but officiating in multiple conferences throughout the southeast U.S. He is also a proud father of a rising 9th grade “soccer star."


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