Health Affairs
Web Exclusive
February 13, 2002
“A reform proposal that addresses some underlying causes of Medicare funding woes: geographic variation and lack of incentive for efficient medical practices.”
by John E. Wennberg, Elliott S. Fisher, and Jonathan S. Skinner
ABSTRACT:
Medicare spending varies more than twofold among regions, and the variations persist even after differences in health are corrected for. Higher levels of Medicare spending are due largely to increased use of “supply-sensitive” services – physician visits, specialist consultations, and hospitalizations, particularly for those with chronic illnesses or in their last six months of life. Also, higher spending does not result in more effective care, elevated rates of elective surgery, or better health outcomes. To improve the quality and efficiency of care, we propose a new approach to Medicare reform based on the principles of shared decision making and the promotion of centers of medical excellence. We suggest that our proposal be tested in a major demonstration project.
Comment: John Wennberg and his colleagues have previously provided more than ample data to confirm that for even those who have access to care and can afford it, Americans are receiving poor value for their health care dollar. Many services are of no benefit and may be detrimental, and other beneficial services are not being delivered. Mediocrity in care is not limited to low-income, uninsured and under-insured individuals, but it is a characteristic of our entire health care system, with some exceptions.
In this report, Professor Wennberg and colleagues demonstrate that doubling spending in Medicare does not result in more effective care nor better health outcomes. They do demonstrate that this increase in spending merely results in increased use of hospitals, intensive care units, and, especially, medical specialist services, but with no improvement in the index of effective care. Clearly, efforts must be made to reform not just Medicare, but our entire health care system.
Professor Wennberg’s group proposes a fresh approach to Medicare reform including promotion of effective care and patient safety, reducing unwarranted variation in preference-sensitive care, reducing overuse of supply-sensitive care, refining monitoring systems, and rewarding more efficient resource use. They mention how this can be studied and implemented quite readily within the Medicare program. In fact, after reading their proposal and giving it some thought, it is clear that a single payer system would form the ideal infrastructure for implementation of these measures that would improve quality and efficiency.
They briefly mention the inequities that might result from implementation of a budget cap, but even those inequities would be more readily addressed through a single payer model than they would through a fragmented system of multiple payers. They also suggest that the Breaux-Thomas model might have a place in competitive strategies, although cooperative strategies should also be considered. However, integrated health systems are the entities that would be competing based on best-practice models, and the business-model health plans characteristic of the B-T proposal would add administrative waste and change the focus from best practices to dollar-flow management. Thus there is no reason to blindly follow the path of incrementalism merely because the authors state that it is more likely in the near future.
This article must be read by everyone who wishes to help improve our health care system. Professor Wennberg, et al, have indicated the direction for reform. It is our task to demonstrate that the single payer model provides the ideal infrastructure for implementing their proposals.
