Justifying System-Wide Cost Containment

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Ralph Neas

May 3, 2010

Issue Areas: 


Question: Are Foster’s Findings a Big Deal?

No. What is surprising is the projection of health care spending over the next decade rising only about one percent (1%) while expanding coverage to 34 million individuals who otherwise would not have access to affordable health insurance. CMS Chief Actuary Richard Foster’s estimation that post health care reform, the nation will see a modest increase of almost one percent in health care spending in the first ten years is good news. However, slowing the trajectory of national health care expenditure growth in a dynamic environment will take both time and bipartisan political will to contain system-wide costs and to improve quality and value that has not been seen thus far.

A close reading of Foster’s estimate suggests that as enacted, over the long term, health reform provides many tools for bending the health care cost curve downward. Mandated coverage combined with extensive efforts to reduce waste and fraud in addition to potential actions of the Independent Payment Advisory Board should help to exert downward pressure on future health care cost growth rates. New federal programs to expand cost effective health care delivery mechanisms also have the potential to accelerate savings. However, implementation of serious system-wide cost containment and quality improvement efforts that address the massive inefficiencies of the American system will be deeply challenging especially considering the absence of comparable data and far greater health industry transparency regarding utilization, pricing, costs and profits.