JAMA Commentary Gives Crux of Cost Control Issue

By July 1, 2009Commentary

The June 17, 2009, issue of the Journal of the American Medical Association, page 2486, provides an excellent summary of what research tells us about the opportunities for health care cost control and the difficulties in implementing reforms that would affect cost without harming quality.  The commentaryrefers to two seminal research works; the Rand Health Insurance Experiment and the ongoing Dartmouth Atlas of Health Care studies.  The Rand research concluded that the more responsibility an individual had for paying the costs of their health care, the less health care spending they incurred and that if people had no cost-sharing, they used about one-third more care than those who did.  But these individuals with “free” care were no healthier on average than those patients who did have cost-sharing requirements.  The Dartmouth work has consistently shown that there is significant geographic variation in per capita health spending and that, again on average, higher spending areas did not necessarily have better health outcomes or status.

The simplistic takeaway from these studies is that under the right financial conditions patients will seek too much care that they may not need and providers will render more care than patients need.  The lack of correlation between spending and health outcomes has led many to conclude that enormous savings are possible without harming quality, just by reducing spending in high-cost areas.  But the author of the commentary points out that both the cost and quality conclusions reached in these studies are averages across large populations and health care is delivered person by person.  Putting financial incentives on patients to encourage them to think about the care they receive sounds good, but numerous studies have shown that patients are as likely to forego needed care as unneeded care.  We recently reported on a study of Medicare Part D enrollees which clearly indicated that patients who did not have drug coverage were not obtaining prescription drugs that they should have been taking.  Similarly, reducing payments to providers in high-cost regions seems logical, but might limit delivery of services not only to patients who shouldn’t be getting them, but to those who should.  The commentary cites studies indicating that provider decision-making about the appropriateness of services for specific patients is often inaccurate.

So while there are clear opportunities to reduce unnecessary care, doing so in a way that does not prevent the patients who do need the care from getting it is not as easy as it seems.  Both patients and providers need not only financial incentives to think about their decisions, but tools, and probably experts, to assist them in making those decisions.  It will cost something and take substantial time to put the incentives and the decision support and review in place.  One great irony is that this system of incentives and decision support and review is exactly what managed care companies were implementing in the 1990s before provider and patient outcry led regulators and legislators to restrict the practices which had in fact demonstrated great success.  Maybe this time will be different, maybe not.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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