Sherry Glied July 2018 - Altarum · 2. Pursue Targeted Regulation •Markets with limited...
Transcript of Sherry Glied July 2018 - Altarum · 2. Pursue Targeted Regulation •Markets with limited...
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Identifying promising solutions to real problemsSherry GliedJuly 2018
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Outline
• Can we go on like this?• Should we go on like this?• Why is it happening?• What can be done?
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Been there
• “In the next decade, the problem of costs may be the decisive consideration in the health field.”
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1961
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Been there, done that
1984
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Been there, done that, again
2009
“The cost of our health care has weighed down our economy and the conscience of our nation long enough. “
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Sustainability is not the question –we can go on --we have….
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But should we?
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Are we getting value? What is value anyway?
But I know it when I see it.
I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description ["hard-core pornography"], and perhaps I could never succeed in intelligibly doing so.
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MALE LIFE EXPECTANCY AT 40
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MALE LIFE EXPECTANCY AT 40
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MALE LIFE EXPECTANCY AT AGE 40
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This is a value crisis…
•We used to look pretty much like everyone else
•But now we do worse•And we spend way, way more
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It’s not:
Obesity Smoking Violence Trafficaccidents
End-of-lifecare
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It’s not patient overuse – putting more cost-sharing burden on patients is not going to enhance value
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It’s not bad management – we’ve squeezed out obvious inefficiencies
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It’s not growing profits – or easily eliminated waste
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It’s the prices…
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And their consequences... Prices guide investments and decision-making throughout the
system – not just how we pay but how much…
Technology Attract more patients
Support staff Increase intensity and throughput
Administrators Improve coding and collections
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Biggest increase in spending 1997-2012 was for tech and other purchases
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Another big chunk was additions to support staff
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Share of Total Employment in Health Care Sector
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That’s not happening – to the same extent -elsewhere
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What can be done?
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Private sector prices today – both relative and absolute -- bear little relationship to efficient, competitive market prices
•Demand side:• Informational asymmetries• Health insurance and moral hazard
•Supply side:• Barriers to entry• Small markets and natural monopolies
Recognize that the emperor has no clothes
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Consumers can’t solve this problem through price transparency or higher cost sharing
• Most high cost services are unshoppable• Very little use of price transparency tools
• Wrong time for shopping• Experiencing illness • Consulting experts
• Time, attention, expertise• Exacerbates disparities
Don’t be distracted by fluff
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Government Price-Setting faces serious risks of regulatory failure
• Fundamental challenges• Difficulties of price setting in general
• Nimbleness in face of technological change
• Technological change and revaluing services
• Capture• “Every dollar of health care expenditures is someone’s
health care income” -- Uwe Reinhardt
We’re from the government….???
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No magic bullet
Don’t be distracted by fluff
We’re from the government….???
Pursue multiple options
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1. Enhance Competition•Antitrust enforcement•Encourage narrow network plans – so insurers can negotiate more effectively
•Reference pricing
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2. Pursue Targeted Regulation
•Markets with limited competition•Essential facilities regulation – caps on
negotiated prices•Limit prices for unanticipated out-of-network use
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3. New Mechanism Designs
•Two-part pricing• Capitation + lower fee-for-service price
•Competitive bidding for services•Competitive bidding for markets
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It’s only sustainable…If we choose to sustain it
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THANK YOU