Cut Healthcare Spending by $1 Trillion: 4 Reforms That Could Get Us There

Money DeclineReforms in four areas could save the U.S. healthcare system $300 billion in the next decade, and almost $1 trillion in the next two decades, according to a report from the Engelberg Center for Health Care Reform at The Brookings Institution.


The report, titled "Bending the Curve: Person-Centered Health Care Reform," claims more personalized care can reduce spending through reforms in four domains.

1. Medicare reforms. Authors of the report favor capitated payments through Medicare Advantage and Medicare Comprehensive Care to providers for comprehensive care, with incentives to keep quality high and introducing competition among providers on quality metrics. Using the savings from value-based payment plans, the authors call for "predictable payments" in traditional Medicare.

2. Medicaid reforms. CMS should merge its "Financial Alignment Demonstration" program for Medicare and Medicaid beneficiaries into a reformed "Medicare-Medicaid Aligned Care" program. Additionally, state Medicaid waivers should shift to person-focused policies and care that promotes care efficiency through continuity.

3. Private health insurance reforms. By capping tax exclusions for employer-sponsored health benefits to a rate in line with the federal insurance subsidy structure, the authors predict coverage and cost-sharing levels would even out between the group, small-business and individual insurance markets, putting pressure on payors to stabilize rates and restricting them from shifting rate increases onto any one market. State regulations and improved competition between insurers will also help achieve this aim. Additionally, employer engagement in healthcare cost reduction is necessary through wellness programs and innovative cost-reducing policies and agreements.

4. Regulatory reforms. Policies that promote higher-value care, more transparency, antitrust enforcement and updated licensing programs, as well as emphasize systemwide reforms, will also add to improved effectiveness and efficiency in the healthcare spending programs, according to the report.

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