How do you get to Carnegie Hall?

An old joke: A tourist in New York approaches a woman carrying a violin case and asks, “How do you get to Carnegie Hall?” and the woman answers, “Practice, Practice, Practice!”

The new version of that joke goes how to we find the best way to get cost effective high quality health care. The punch turns out to be Experiment, Experiment, and Experiment. You could argue that United States has been conducting a variety of health care funding, financing, and delivery experiments for the last 100 years. We created a private health insurance market designed to mitigate risk selection while assuring the sustainability of hospitals. We developed public programs that both increased access for individuals shut out of the private market and increased financing for research. As costs increased we have experimented with a variety of forms of insurance that were intended to provide incentives for consumers and/or providers to seek and delivery cost effective care.

As a result of this experimentation we have reached an almost unanimous conclusion: we need more experimentation. Well, to be fair the conclusions are a bit more precise. Those conclusions are:

1. Effective care treats the whole person
2. Provider incentives must reflect #1
3. Consumers must be engaged in their own health
4. The most effective care is preventative

There does seem to be any firm consensus on the best way to apply those conclusions in our health system. As a result we are currently engaging or beginning to engage in further experiments to help determine the best ways to apply those conclusions.

Many employment-based health plans have adopted consumerism as a philosophy to engage their employees and dependents in their own health care. Often consumerism is simply a code word for offering less insurance, giving consumers more financial incentives to make better health and health care decisions. It’s not clear that those incentives alone change consumer behavior a great deal (the savings from moving to generic drugs notwithstanding). However, effective consumerism models also provide consumers with educational information, free or low cost access to preventative care, and tools that both increase price transparency and negotiation tools that increase their ability to participate in health care service decisions.

Others have argued that consumers can never attain the level of information necessary to effectively identify appropriate health care services and coordinate care. Public programs are trying a variety of incentives and organizational forms that promote integrated care in the forms of bundled payment mechanisms, patient centered medical homes, and accountable care organizations. These experiments seem focus on provider incentives, but they put providers at risk for consumer behavior. The providers thus have an incentive to find ways to engage consumers in managing their health. The Affordable Care Act formalizes these experiments in a number of large pilot programs and demonstrations.

These experiments are really the end game for cost-containment. If the right set of consumer incentives, provider payment mechanisms, and care organizational forms can be identified and applied heath care cost inflation could be reduced to manageable levels. Lack of success would inevitably lead to a global regulatory approach to cost management and health care delivery.

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