The Thread Needler

The Proactive Approach: Health Care Inflation and the Deficit

Republicans are obsessed with the projected long-run deficit, but they rarely mention what’s causing it: health care costs that are rising faster than the rate of inflation.

And why do Republicans ignore the root cause of what they call the most precipitous problem the nation faces (which in reality is a benign non-issue)? Because the correct fix is more government – a solution that is ideologically unacceptable to today’s Republican party.

In this informative piece, Sarah Kliff explains how government, guided by the Affordable Care Act (which Republicans want to repeal), will reduce health care costs with proactive measures like bundling payments – and by doing so, reduce the necessity for draconian budget cuts like those Paul Ryan has proposed.

Here’s an example of the kind of program the Affordable Care Act will put in place to reduce health care inflation.

The program launched in June 2009 with a checklist of quality metrics. To earn a bonus, surgeons would, among other things, need to ensure that antibiotics were administered an hour before surgery and halted 24 hours after, reducing the chances of costly complications.

Only three doctors hit the metrics that first month, but their bonuses caught the attention of others. “There was a lot of, ‘Why are those doctors getting more, and I’m not?” Zucker says. Eight doctors got bonus payments in July; two dozen got them in August. Compliance with certain quality metrics steadily climbed from 89 percent to 98 percent in three months.

Two-and-a-half years later, Baptists’ surgeons have earned more than $950,000 in bonuses. Medicare, meanwhile, has netted savings: Its bundled rate is about 5 percent lower than all the fees it used to pay out for the same services. “It wasn’t a home-run,” says Zucker, noting the start-up costs in administering the program — not to mention a handful of lost employees. “But I’d call it a solid triple.”

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>