Supercommittee Faces Challenges in Slashing Health Care Expenditures

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The congressional supercommittee responsible for finding an additional $1.2 trillion worth of health care expenditures to eliminate from the federal deficit by Thanksgiving will experience significant challenges in getting the job done, reveals a perspective authored by researchers at the Center for Studying Health System Change (HSC) and published online in the New England Journal of Medicine.

In the article, HSC President Paul B. Ginsburg, Ph.D., and Senior Researcher Chapin White, Ph.D., observe that there remain, between the scheduled 30% cut in Medicare physician payment rates in 2012 and the roughly $500 billion reduction in Medicare spending growth over 10 years included in the Patient Protection and Affordable Care Act, only a minimal number of “attractive” short-term deficit-reduction targets left in federal health programs. However, the executives state that the supercommittee will nevertheless consider health care cuts and, conceivably, health-related revenue increases.

“Three principles should guide health-related deficit reduction,” the authors write. They deem lowering the long-term trend in overall growth of health care spending the highest priority, noting that reforms may prove worthwhile “even if they do little to reduce the 10-year deficit, so long as they put the overall health system on a better trajectory.”

Ginsburg and White also characterize cuts that merely shift the burden of financing to states, businesses, or individuals without affecting system-wide spending as “least attractive”. Cuts that have a disproportionate effect on low-income populations should be avoided, they assert.

Moreover, the authors outline in the article two critical strategies for reducing long-term health care spending growth. These two strategies include implementing provider payment reform that moves away from “volume-based, fee-for-service payment” and “greater engagement of individuals, employers, and states in decisions that affect the cost of care.”

Read the NEJM article.