post by Bill Gardner
Health care spending is highly concentrated in a small portion of the population (see the graph of the cumulative distribution of US health care spending, from the National Institute for Health Care Management). This concentration has consequences for policies to reduce national health care spending.
Notice that half the population -- the group on the left in the graph -- accounts for < 3% of the total spending. Aaron Carroll argues that
When we talk about incentivizing people to forego care, we’re talking mostly about healthy people. When we talk about consumer directed health care, we’re talking mostly about healthy people... The problem is that healthy people consume so little care to begin with. If we could incentivize the healthier half of people to forego all their personal health care spending, we’d spend $36 billion less out of a total $1.259 trillion in personal health care spending. That would be a drop in the bucket.
OK, so we can't find significant health care savings in the healthy population. We do not want to deny care to the sick. So how are we going to bend the health care cost curve?
First, we need to shrink the percentage of the population that has expensive chronic illnesses. Almost all of us will eventually acquire one or more chronic illnesses, but delaying these illnesses even a few years would reduce the overall cost of care. My bet is that the breakthrough here will be finding ways to shift our diets away from simple carbohydrates. This would, over time, significantly reduce rates of diabetes and hypertension, which are key cost drivers among the chronically-ill population. But even if we can make this work, these are savings that we collect only in the medium to far future.
So we have to find near-term ways to make caring for the sick less expensive. One approach is deliver care through Accountable Care Organizations (ACO = "a provider-led organization whose mission is to manage the full continuum of care and be accountable for the overall costs and quality of care for a defined population;" Rittenhouse, Shortell, & Fisher). In brief: Set the incentives so that health care providers make money by devising less expensive ways to deliver better care. Although some health care regulation is necessary, this is fundamentally a market solution, in which ACOs compete for contracts and prosper through successful innovation.
However, the ACO idea only works if we can objectively measure the quality and outcomes of care. We need those measurements to enforce contracts with the ACOs to take good care of their populations. If we can't measure the quality of what the ACOs deliver, then the ACOs' incentives are just to reduce costs. We will be back to Managed Care and routine denial of care, which is much easier than delivering good, efficient care. We need objective, transparent, and public measures of the quality and outcomes of care regardless of whether you support payer-driven or individual-consumer-driven health market reforms (or both!).
Developing and validating technologies for measuring the quality and outcomes of care are among the principal goals of the Agency for Health Research and Quality (AHRQ) and the Patient-Centered Outcomes Research Institute (PCORI). And this is why the effort to eliminate AHRQ and PCORI is so stupid. Valid measurement technologies for the quality and outcomes of care are essential to market-based health care solutions. Measuring the quality and outcomes of care is like certifying the accuracy of gas pumps at service stations: It makes the market work for purchasers.