High-Value Health Care — A Sustainable Proposition

Gregory D. Curfman, M.D., Stephen Morrissey, Ph.D., and Jeffrey M. Drazen, M.D.

September 17, 2013DOI: 10.1056/NEJMe1310884

Health care in the United States is at a crossroads. With health care costs representing an unsustainable 17.6% of our gross domestic product, creation of a new, higher-value health care system has never been a greater priority. Although the rate of increase in health care spending has moderated during the economic recession, some experts predict that it will rebound as the economy recovers.

Thus, the need for higher value in health care is urgent. The goal of high-value health care is to produce the best health outcomes at the lowest cost, and this goal has recently created a new alliance. Health care professionals are increasingly given incentives to deliver high-value care by virtue of such payment-reform measures as pay-for-performance policies, bundled-payment strategies, global budgets, and financial risk sharing within accountable care organizations. Likewise, business leaders are strongly encouraged to maintain healthy work forces while trying to rein in rising health care premiums, which reduce opportunities for reinvestment in their businesses and offset wage increases for their employees.

The health care community and the business community today share a fundamental interest in finding ways to achieve higher value in health care. The ultimate objective for both communities is to keep people healthy, prevent the chronic illnesses that consume a large fraction of our health care dollars, use medical interventions appropriately and only when needed, and create an economically sustainable approach to the delivery of health care. While we want to foster innovation and novel therapies against disease, we also recognize that, whenever possible, prevention of disease before it is established is the better solution.

It is in this context that we announce the launch of a novel collaborative publishing initiative between the New England Journal of Medicine and the Harvard Business Review. The focus of our pilot project is on how to achieve a high-value health care system, and we will publish articles on that topic from numerous experts across the health care and business communities. Beginning this week, on Tuesday, September 17, we will be posting new articles at the Insight Center for Leading Health Care Innovation, which will reside on the Harvard Business Review website (www.hbr.org), where during the pilot phase all articles will be freely available to all readers. New articles will be posted daily through November 15. All the articles will be archived at the Harvard Business Reviewwebsite, and the articles solicited by the editors of the Journal will also be archived at NEJM.org.

The articles will cover three broad areas of this complex, multifaceted topic. One group of articles will address foundational principles in the formulation of a high-value health care system, a second will address the management of innovation in the organization and delivery of health care, and a third will focus on the solutions developed by physician leaders and practitioners on the front lines. Authors in all three areas will illuminate a range of relevant topics, such as organizational leadership, health information technology, leadership in accountable care organizations, redefining primary care, economic projections of health care spending, employer-sponsored health insurance, employee wellness programs, physician payment reform, the pricing of health care interventions, the use of checklists in health care, same-day appointments, and how best to design a bundled payment.

These topics reflect critical — and rapidly changing — points of intersection between the health care and business communities. Take employer-sponsored health insurance, for example: according to a recent Kaiser Family Foundation survey, 93% of businesses with more than 50 workers now offer coverage. But since 1999, premiums have risen 196%, while wages have risen only 50%. Both employers and employees are being squeezed, and they will soon have to face the Affordable Care Act mandate that such businesses offer a minimum level of coverage, as well as the new “Cadillac tax” on high-cost plans. Articles posted at the Insight Center will explore the impact of these provisions on the future of employer-based insurance.

On Tuesday, September 24, we will host an interactive webcast with Michael Porter and Thomas Lee, focused on high-value health care, at the Harvard Business Review site. The webcast will also be archived there.

The collaborative publishing project between the Journal and the Harvard Business Review comes at a turning point in American health care. Never before have the interests of the health care community and the business community been better aligned. As Journal editors, we have already benefited from the collaboration through new colleagues, innovative ideas, and fresh perspectives. As the 2-month pilot project unfolds, we hope you will reap the same benefits. We look forward to receiving your comments about the project, and we hope to continue the collaboration in the future as key stakeholders in health care seek a high-performing health care system that can meet the country's current and future needs.

http://www.nejm.org/doi/full/10.1056/NEJMe1310884?af=R&rss=currentIssue.

Competition in Medicare programs: Boon or boondoggle? | TheUnion.com

Competition in Medicare programs: Boon or boondoggle? | TheUnion.com

Does competition to provide insurance for Medicare recipients reduce costs? Or does competition simply increase the tab picked up by taxpayers?

Dr. Ida Hellander, policy director for Physicians for a National Health Program, a nonprofit research and advocacy group, thought taxpayers should know the answers to these questions.

In her research study published in the International Journal of Health Services, Hellander found that competing insurance programs, called Medicare Advantage plans, did not save money. In fact, since their introduction, the private (mostly for-profit) insurance programs have cost taxpayers an extra $282.6 billion.

Hellander adds, “In 2012 alone, private insurers are being overpaid $34.1 billion.” This money, Hellander believes, should have been used to reduce the federal deficit, shore up Medicare’s trust fund or improve patient care — not to enrich private insurance companies.

In 1985, Medicare contracted with private (mostly for-profit) insurance plans such as UnitedHealth and Humana for coverage of Medicare enrollees in a plan called Medicare Advantage. The idea was that Medicare Advantage plans would compete with the traditional fee-for-service Medicare insurance.

(B)ecause of the added benefits, the lower premiums and the need to make a profit, the Advantage programs cost Medicare about 25 percent more than the traditional Medicare program.

Ironically, part of the argument for introducing the Advantage plans was that the competition would lower Medicare costs. Indeed, since their inception, the Advantage plans have become increasingly popular because they offer enrollees additional benefits at reduced premiums. But because of the added benefits, the lower premiums and the need to make a profit, the Advantage programs cost Medicare about 25 percent more than the traditional Medicare program.

Medicare currently pays these privately run plans a set premium per enrollee (about $10,123). This amount is $2,526 more than the premium paid for enrollees covered under the standard Medicare plan.

About 27 percent of Medicare beneficiaries are currently covered under Medicare Advantage plans. Given how profitable the Advantage plans are for private insurers and how attractive the expanded benefits and lower premiums are for enrollees, this number is expected to grow at a fast clip.

Just how profitable are these programs for the private insurers?

UnitedHealth Group could afford to bump the annual compensation of its chief executive officer, Stephen J. Hemsley, to $13.9 million from $13.4 million in the prior year. The increase was based in part on his leadership in solidifying the company’s position as “the biggest provider of the privately run, subsidized versions of the government’s Medicare program for the elderly and disabled people.”

Guess who’s subsidizing Mr. Hemsley’s salary? Look around. It’s you, me and other taxpayers.

Dr. Steffie Woolhandler, coauthor of the study, concludes, “It’s clear that having Medicare Advantage programs compete with Medicare doesn’t save us money. In fact, the opposite is the case. The private plans only add waste, and the aggregate waste is staggering — enough to be a significant drag on the economy.”

Can taxpayers afford the extra cost to help private insurers make a profit from Medicare? Given the intent of Medicare to provide basic healthcare coverage to all enrollees, should all enrollees receive the same benefits? Or are some recipients entitled to expanded benefits at reduced premiums? If so, should taxpayers cover the cost of paying for these extra benefits and lowered premiums?

Or does a single-payer, not-for-profit model with universal benefits and premiums make more financial sense?

What do you think?

Carole Carson lives in Nevada City.