Realigning Incentives to Achieve Health Care Reform

Abstract

THE 2010 PATIENT PROTECTION AND AFFORDABLE Care Act addressed a number of important issues; most particularly, enhancing access to health care insurance. However, the act did not address fundamental issues related to the organization and integration of health care and did not create a long-term economic model of payment for health care. It is vital, therefore, that the legislation be modified before its longterm limitations force cost containment measures detrimental to health care quality and access. Although much of the debate about health care reform has been acrimonious and polarizing, there is near universal agreement on several facts, and this agreement can form the basis for realigning incentives to maximize quality and minimize cost: (1) Government-run, nonprofit single-payer systems have lower non–health care costs than do for-profit private insurance systems. (2) Singlepayer government-run systems lack competition and have the potential for political interference. (3) The current health care system does not derive the benefit of market forces because the recipient of the services (the patient) does not directly pay the physician or hospital. Instead, a third party (the insurer) pays, and a fourth party (the employer) often chooses the third party. (4) The fee-forservice payment system does not provide incentives for physicians to work together or in concert with hospitals to coordinate the care of patients with chronic complex disorders, which account for a disproportionate percentage of health care costs. Accountable care organizations encourage cooperation but will need to overcome the competing interests of physicians and hospitals and may not be economically viable. (5) Economic reward systems that are based on the performance of only 1 isolated component of the health care delivery system are unlikely to achieve the best and most cost-effective care. For example, hospital pharmacists may resist purchasing expensive new medications, even if they are expected to improve outcomes and reduce total health care costs. (6) Although it is vital that health care reform ensures access to needed medical care for all, it is important to prevent indiscriminant use of unneeded or futile care. (7) Primary care physicians play a vital role in delivering the most efficient and effective care when they establish long-term relationships with patients. Having patients change primary care physicians each time an employer-selected health plan changes is not only inefficient and medically dangerous but also creates disincentives for physicians to develop stable relationships with their patients and for health plans to invest in preventive services. (8) United States antitrust laws inadvertently discourage integrated medical care by requiring physicians to function as competitors rather than as colleagues.