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Moving Towards Higher-Value Health Care

Moving Towards Higher-Value Health Care. Katherine Baicker Professor of Health Economics Harvard School of Public Health and NBER. Lower Costs vs. Higher Value. Rising costs have made reform a priority Risk of uninsurance Strain on private budgets Pressure on public budgets

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Moving Towards Higher-Value Health Care

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  1. Moving Towards Higher-Value Health Care Katherine Baicker Professor of Health Economics Harvard School of Public Health and NBER

  2. Lower Costs vs. Higher Value • Rising costs have made reform a priority • Risk of uninsurance • Strain on private budgets • Pressure on public budgets • Appeal of cost-saving quality improvements • Self-financing plans to cover the uninsured • Health-improving reductions in spending • But is this the right metric?

  3. Ample Evidence of Inefficient Spending • International evidence: • Spend much more than OECD trading partners without commensurately better outcomes • Domestic evidence: • Areas where we spend more are not areas with best outcomes

  4. Quality Variation Even within Medicare Source: Dartmouth Atlas of Health Care

  5. Variation in Medicare Spending Source: Dartmouth Atlas of Health Care

  6. But Higher Spending not Associated with Higher Quality Source: Baicker and Chandra (Health Affairs 2004)

  7. Some Causes of Inefficiency • Public side: • Medicare reimbursement primarily based on quantity, not quality • Resources for the uninsured spent on inefficient modes of care • Private side: • Biases in tax subsidy of employment-based insurance • Barriers to well-functioning insurance markets • Information on prices and quality often not available

  8. Focus on Changes with System-wide Effects • Few individual interventions likely to produce better health at lower cost • Doesn’t mean there aren’t many worthwhile interventions • Wrong metric: probably willing to pay more if getting a lot more for it • Interventions that affect the care received by some groups likely to have “spillover” effects • Insurance coverage – extent and type • Use of high-intensity interventions • Information • Use of “best practices”

  9. Case of Hospital Quality Source: Baicker, Chandra, and Jha

  10. Conclusions • Bending the Curve highlights many areas in vital need of improvement and proposes many potentially high-payoff reforms • Need not pursue only self-financing reforms: goal should be higher value, not just cost-saving quality improvements • May get biggest bang for the buck from reforms that improve the quality of care system-wide

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