What Works in the Deficit Reform Proposals

Mark B. McClellan
Mark B. McClellan Former Brookings Expert, Director, Margolis Center for Health Policy - Duke University

November 28, 2010

The Washington Post asked experts to highlight the most exciting ideas in the deficit reform plans circulating in Washington. Engelberg Center Director Mark McClellan comments that fiscal commission reports underscore the centrality of addressing rising health care costs in finding a solution to the nation’s fiscal challenges, but lack a defined plan for achieving systematic improvement.

The fiscal commission reports have underscored the centrality of addressing rising health-care costs in finding a solution to the nation’s severe long-term fiscal challenges. But to a considerable extent, the reports assume a solution: They propose using an expert board to achieve a slowdown in annual growth of per-person health-care spending that is about two percentage points below what has been ever been achieved over the past 50 years.

And the commissions have failed to define a plan for what is desperately lacking in the patchwork of health-care reform: alignment between payment systems, providers and patients around getting the best care at the lowest cost. Without such alignment, we are unlikely to achieve the systematic improvement in care needed to bring down growth rates in health-care spending in a way that the public will support—that is, in a way that doesn’t reduce access to valuable innovative treatments but, rather, concentrates spending on the treatments that really make a difference.

We don’t confidently know how to achieve such an unprecedented slowdown. Policy changes may help but would be unlikely to add up to anywhere near the needed overall redirection of health care toward value and avoiding unnecessary and inefficient services.

Areas to start include payment reforms for health-care providers, in the private sector and in Medicare and Medicaid, so that health professionals get paid more when they deliver better care at a lower cost, not simply more and more intensive services; insurance benefit reforms for patients; and insurance choice reforms to help implement these steps.
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