Opinion: Who is to blame for rising health costs?

Opinion: Who is to blame for rising health costs?

By Robert Smith

Princeton economics professor Uwe Reinharts strident New York Times editorial about the ultimate party responsible for out-of-control health care costs properly emphasizes the employers crucial role in the health care system. U.S companies, nonprofits and government entities pay for the majority of our health care costs. They have been the sloppiest purchasers of health care in the world, he writes, because they have passively paid for just about every health care bill put in front of them.

Employer passivity has supported an opaque and chaotic pricing system, inappropriate incentives, rampant medical inflation, waste and lagging quality. Employers pay the largest portion of the ever-increasing premiums, and forgo profits. Consumers fund much of the waste through increased prices, and employees pay the rest through lost pay raises as dollars are diverted in inefficient delivery systems.

The Colorado Business Group on Health (CBGH), an innovative, employer-led nonprofit, focuses on what really matters in health care: value. Through education, pilot projects and practical purchasing tools, we help forward-thinking Colorado employers get more value for their health care dollars. Our goal is to reduce the upward cost spiral and improve employee health.

National experts agree that controlling rising health care costs boils down to two things: stemming excessive demand and reshaping inefficient supply. To lower demand, we must change employee behavior to prevent or catch illness early. To reshape health care supply, we need transparent information about what were paying for and what we are getting in return. Armed with such information, employers can join pilot projects to change how they pay for medicine.

CBGH has a long history of working with employers on the forefront of health system change. To stem demand, for instance, we host the annual Colorado Culture of Health conference, in which many of Colorados sharpest benefits and human resources directors share best practices to promote employee wellness.

To reshape supply and promote transparency, CBGH publishes the annual Colorado Health Matters Quality Report. It tells readers if patients are satisfied with their insurance plans, as well as how frequently health plan members receive recommended tests and preventive measures. Ultimately, the reports are designed to help employers choose health plans that deliver high quality service and care.

We also publish quality reports about hospitals and physicians to arm employers and employees with the information they need to make better buying choices. For example, we know that when medical providers participate in nationally-recognized programs, such as Bridges to Excellence and the Patient Centered Medical Home, they are far more likely to follow recommended practices, reduce costs, and improve quality and efficiency.

Our most innovative payment reform project, using PROMETHEUS Payment employs a bundled payment model developed by the Healthcare Incentives Improvement Institute Inc., to establish clinically-based expenditure targets for patients with chronic diseases. If the physician and the physicians team can improve care, they will be able to reduce avoidable costs such as emergency department visits and admissions to hospitals. Savings will be shared with those successful health professionals. Bundled payments also encourage integrated care and collaboration thus maximizing everyones profit while minimizing avoidable harm and the need for costly services by the patient.

If we use 50 years of history as a guide, hospitals, doctors and health plans wont reform themselves. Employers, as Uwe Reinhart suggests, must do the heavy lifting by purchasing health care with the same deliberate processes they use for other major purchases. By turning dollars into carrots and sticks, employers have the ultimate power to transform our health system. The Colorado Business Group on Health plans to support employers at every step along the way.

Bob Smith is project manager for the Colorado Business Group on Health where he is responsible for a major pilot project on payment reform in Colorado. Reach him at robert.smith@cbghealth.org.

Opinions communicated in Solutions represent the view of individual authors, and may not reflect the position of the University of Colorado Denver or the University of Colorado system.