Key components of health care reform slow down the growth of health care costs, shows report

Nov 13 2009

A new report released today by Business Roundtable, an association of chief executive officers of leading U.S. companies, shows that key components of health care reform could slow the growth of health care costs and offer real savings for companies and their employees. At the same time, the report identifies those proposals that could accelerate costs.

The right reforms, the new Business Roundtable report said, could result in health care costs growing at the same rate as overall GDP – about 4 percent per year. For employers and employees, this represents a considerable improvement from the recent 10 percent per year growth rate for large employers and their employees’ health spending from 2001-2009.

“This report shows that effective reforms can slow health care costs by as much as $3,000 per employee in 2019,” said Antonio M. Perez, Chair of Business Roundtable’s Consumer Health and Retirement Initiative and Chairman and CEO of Eastman Kodak Company. “Health care reform done right could reduce the growth rate of health care costs – not just for government, but for the private sector as well. This must be a key measurement of success for Business Roundtable and the economy as a whole, and will be a key factor of businesses’ review of the final health care legislation. The report also shows that reform done wrong won’t work and could make a bad situation much worse, in which case Business Roundtable could not support the bill. Making the right choices as the final health care bill gets crafted is essential, and we are committed to working with Congress and the Administration toward a bill we can support."

The report, conducted with Hewitt Associates, Health Care Reform: Creating a Sustainable Marketplace, was released this morning and sent to members of Congress and the Administration.

“The crippling spike in health care costs makes it harder for America’s companies and workers to compete in the world economy. In this challenging economic environment, we need to make sure we improve, not erode, U.S. competitiveness,” said Ivan G. Seidenberg, Chairman of Business Roundtable and Chairman and CEO of Verizon Communications. “We can do that by implementing the broad-based delivery system reforms approved by the Senate Finance Committee and avoiding ill-advised proposals such as the public option.”

Employers provide 60 percent of all health care coverage in the United States, with Business Roundtable’s member companies providing health coverage to more than 35 million Americans.

According to the report, reforms to the U.S. health care system that would help curb costs include:

• Delivery system reforms, such as value-based purchasing;
• Innovation centers that identify alternative methods of provider reimbursement;
• Accountable care organizations that realign financial incentives to improve the quality and the value of the care delivered;
• Financial penalties for failing to avoid preventable hospital re-admissions;
• Increased individual accountability for health care spending decisions, including health reimbursement arrangements and health savings accounts;
• Cost and quality of care data that is easier for patients and providers to access and use;
• Elimination of sharp regional variations in practice patterns;
• Promote wellness and prevention programs and expand financial incentives to participate in specific programs to reduce lifestyle related illness; and
• Insurance market reforms that promote competition and choice.

But the report also notes that a number of potential changes threaten to increase health care spending, exacerbating the problem that true health reform should solve. Some of those include:

• Delayed or watered-down cost-saving efforts;
• Failure to implement a strong individual mandate to minimize cost increases in the health insurance exchange plans;
• Increases in the cost of health care to individuals from changes to consumer spending accounts or other actions that discourage consumer-engaged decision making; and
• Cost-shifting to the private sector from reductions in federal reimbursements to providers and from a public plan option, if included.

http://www.businessroundtable.org/