The Changing Health Care Delivery System

The pace of change in the health care delivery system in Georgia and in the nation has been rapid and is likely to accelerate in the next decade. The places where we purchase health care, the people who provide the care, the types of health care available to consumers has all changed in the last 20 years. These changes resulted directly or indirectly from attempts to control the rate of health care inflation. Despite these changes in the structure and delivery of health care services health care cost inflation has averaged more than twice the rate of general price inflation in the last twenty years.

Rising health care costs have increased the number of Georgians without health insurance while the increase in the uninsured has made the burden of those health care costs more uneven. In the last decade the percentage of Georgians with private coverage has declined from 76 percent to 62 percent, while the percentage who are either uninsured or on public coverage has increased by a like amount. This change in coverage has contributed to a health system in which similar people face very different costs for the same care, and often achieve very different outcomes for the same conditions. 

At the same time Federal government is struggling with long-term deficits that most analysts attribute to the rising costs of entitlements.  There is a debate on the degree non-health related entitlements will actually contribute to long-term debt, and there are a set of relatively simple (this not to say politically easy) fixes for those entitlements. 

There is no debate on the contribution of health care costs to future Federal deficits: it is the major driver. Controlling health care costs on the other hand is a much more difficult problem.  Simple approaches to control entitlement spending for health benefits result in either reduced access to care or reduced quality of care. Moreover, reducing access to care or the quality of care for individuals in public plans affects the access and quality of care for the privately insured.

Increasing health care costs have purchased increased health.  A number of recent studies have documented positive and impressive returns on investment for cancer and heart disease for example. However, the costs paid by patients for the same procedure, or with the same diagnosis can vary by as much as 10 times depending on location or provider.  This is indicative of the inefficiencies inherent in the current health care delivery system.  Those inefficiencies result at least in part from a disaggregated delivery system whose component providers often have very different incentives.  Aligning those incentives toward the provision of cost-effective high quality care requires changing the health care financing system.

While the Patient Protection and Affordable Care Act’s (ACA) expansion of coverage and the creation of health insurance exchanges has received the greatest attention, perhaps the most fundamental parts of the law are the myriad experiments in the law that either directly reorganize the delivery of care (Accountable Care Organizations); change the unit of payment (payment by episode); or tie payments to performance measures.  Whatever the ultimate disposition of the ACA the changes reimbursement contained in the law are going to be pursued by both public and private payers over the next decade.

There a many possible futures for the health care system. All of them involve changing the way health care is purchased, provided and paid for.

One comment Add your comment

eye for image

September 16th, 2012
12:52 am

In my opinion you commit an error.

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