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2 Ways to Lower America's High Health Care Costs

West Health summit experts agreed: The crisis is too large to ignore

By Holly Lawrence

The United States ranks No.1 for highest health care costs per person. Annual family health insurance premiums rose 5% last year, averaging $19,616, according to the Kaiser Family Foundation. A healthy couple retiring at 65 this year can expect to spend $285,000 on health care in retirement, says Fidelity Investments. So, what could lower crushing health care costs in America?

Health Care Costs
Credit: Adobe

Value-based health care and health care cost transparency, said experts at West Health's Healthcare Costs Innovation Summit in Washington, D.C. April 2. But, the speakers at the "High Costs, Broken Promises: Healthcare in America" event conceded, neither will be easy to pull off.

West Health Summit on Health Care Costs

"It's imperative for all of us to be involved and informed on the issues and hold our leadership accountable," said Tim Lash, president of the West Health Policy Center and chief strategy officer of West Health. It's a family of nonprofit and nonpartisan organizations focused on lowering health care costs and making health care better for older Americans. (West Health just launched its Health Care Cost Crisis website, tracking prescription drug and insurance costs, along with consumer resources.)

Here's why West Health says we're in a crisis: Its new national survey with Gallup of 3,537 adults found that during the past 12 months, Americans have borrowed an estimated $88 billion to pay for health care. The public has also sacrificed $126 billion from savings and nest egg goals to cover unexpected health care issues. What's more, in the last year, one in four Americans had a health problem and didn't seek care because they couldn't afford it. Meantime, 48 million Americans were unable to pay for a prescribed medication.

At the conference, Dr. Elisabeth Rosenthal, editor-in-chief of Kaiser Health News, revealed example after example of staggering health care costs and what patients have told her media outlet about them.

One who Rosenthal described was a Texas nurse in her 50s, newly diagnosed with pancreatic cancer. "She told us she can live with the chemo. She can live with the side effects, the weakness, the scans, the worries about death. But it's the bills that are killing her." Rosenthal added: "What she worries about is a depleted savings account, leaving her husband bankrupt, not being able to pay for her kids' college tuition."

Survey of Americans and Health Care Costs

In fact, nearly half of Americans West Health and Gallup surveyed said they're concerned a major health event in their lives will lead to bankruptcy. Gallup's Mike Ellrich noted that that this fear is "not just unique to individuals struggling financially." People making upwards of $200,000 a year had these concerns just as frequently as those with lower incomes, he said.

healthcare costs impact on healthcare utilization
Credit: The U.S. Healthcare Cost Crisis | Gallup

How To Fix America’s Health Care Cost Crisis

Americans have little faith that government leaders will find a solution to high health care costs, the survey found. More than two-thirds of Republicans and Democrats West Health and Gallup polled said they're not confident that elected Republicans and Democrats will be able to achieve bipartisan legislation to do it.

But the conference speakers had a few ideas that wouldn't require action just from Congress or the president. They focused on what American patients and voters, health care providers, drug companies and insurers could do, sometimes with the politicians.

Gary West, founder and chairman of West Health, offered what he called "three common sense, easy-to-understand reforms that could be implemented within the next two years." They are:

  1. End the health care system’s dominant fee-for-service payment practices (which reward providers for their quantity of services, not the quality or efficiency) and move to a patient-focused, cost-effective, value-based care (where providers are compensated based on effectiveness)
  2. Require Medicare to directly negotiate drug prices with pharmaceutical companies
  3. Broadly implement easy-to-understand health care pricing transparency

Value-Based Health Care

Many of the conference speakers echoed the call for a value-based health care system.

Said former Republican Ohio Governor John Kasich: "More Medicare for all and more government, more price controls isn't going to work. Let's let the market work so that we have a system that rewards excellence and high quality, not duplicative, and quantity over quality."

John Bardis, former assistant secretary of administration for the U.S. Department of Health and Human Services under President Donald Trump and founder of MedAssets (a health care performance improvement company) said: "Today I'm calling on the purchasing community, businesses, American labor, to step up and step out on this mission and push the Congress and the administration to act aggressively. We can no longer afford giving a blank check to our private health care delivery system and shame on us if we do."

A Successful Value-Based Program: Medicare Advantage

Bardis pointed to what he feels is the "most broadly successful value-based program" — Medicare Advantage. That's the alternative to Original Medicare sold by private insurers and used by about one-third of Medicare beneficiaries. "We can do better with Medicare Advantage, but it works," said Bardis.

But getting to a value-based health care system will be hard, the experts noted.

Panelist Carolyn Magill, CEO of the health care analytics platform Aetion, said "the biggest challenge we have with fee-for-service is that there's a lot of momentum behind the status quo."

Dr. Roy Beveridge, chief medical officer for the giant health insurer Humana, explained what a migration from fee-for-service to value-based health care means to him: "In my world, in fee‑for‑service, if I saw a patient with diabetes, I'd give them a prescription for insulin. And I'd say, 'Great. I've done my job.' And I would pat myself on the back. I should not have done that in retrospect. In the world of value, people now get paid based on whether the patient is educated, is engaged and is taking their medicines. Which is a huge change for physicians. And this is one part of why we are seeing that there is such difficulty in this transition."


Needed: A 'Fundamental Shift in Health Care Organizations'

Value-based care "requires a fundamental shift in health care organizations," said Dr. Mark McClellan, a former commissioner of the Food and Drug Administration and administrator of the Centers for Medicare and Medicaid Services under President George W. Bush. He is now director and professor at Duke-Margolis Center for Health Policy.

"If you look at what we have done in value-based care so far, we actually haven't moved that far away from a fee‑for‑service system," McClellan noted. "The Healthcare Payment Learning and Action Network recently released a survey showing we are close to 40% of payments in our health care system in alternative payment models that are linked in some way to value to people. But most of those payments are in so-called, shared-savings models, still not very far from fee‑for‑service."

With patient-focused, value-based care, McClellan said, patients should have more predictable costs and supports. They should also be able to choose teams of health providers delivering high quality care and related services that are best for their personalized need, he added. "Much of which is not supported and isn't available, let alone affordable, under fee‑for‑service payments," McClellan said.

Dr. Mark Gwynne, president and executive medical director of UNC Health Alliance, believes strongly in value-based care that engages patients where they are. Specifically, he said, through community- and home-based palliative care (focused on providing relief from symptoms, pain and stress for patients with serious illnesses).

"That is a type of care delivery that addresses patient and families' values. It addresses what their goals of care are," Gwynne said. "That is patient-centered and really is engaging not just patients, but their family and caregivers in their delivery."

transparency of costs in us healthcare
Credit: The U.S. Healthcare Cost Crisis | Gallup

Health Care Price Transparency

Better information about prices of medical procedures and services and prescription drugs would also help lower costs to patients and consumers, the speakers said. That would help them shop better and ask more questions.

But, McClellan noted, transparency goes beyond prices.

"I want to emphasize it to the audience, we are talking about a different kind of transparency," he said. "It's not transparency around a list of a couple hundred fee‑for‑service prices, but transparency around some bigger decisions or touchpoints that really matter to people: Where should I go to get my primary care? What can I expect about the total cost that I'll have to pay for that care and the quality that the people like me get? If I think I need a joint replacement or major procedure, what are the costs to me and what kind of outcomes can I expect?"

Doctors need better prescription drug pricing information to provide more transparency to patients, said Dr. Edward Fotsch, CEO and founder of Gemini Health, a health information tech and electronics records integration company. If you ask your physician whether there's a less expensive medication than the one he or she is prescribing, the doctor generally won't know, Fotsch noted.

Fotsch suggested giving doctors "cost-decision support" with information about other drugs that could provide similar outcomes, what they'll cost the patient and what the total savings cost would be.

Health Care Costs and Voters

A number of the speakers discussed the political side to driving down health care costs.

Said Rosenthal: "I hope in this next election we see We the patients, We the voters, taking it back. And I really hope that Americans rise up against this system that's immoral and expensive."

Shelley Lyford, president and CEO of the Gary and Mary West Foundation and West Health closed the summit with this thought: "Health care is about life and death. It cannot be about politics or greed. It is time for us to push politics aside and advance smart policy, not because it is Democratic or Republican but because it is the right thing to do."

Holly Lawrence is a freelance writer on well-being and issues affecting older adults. Connect on LinkedIn. Read More
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