A Promising Proposal for Reducing Health Care Costs

Bruce Bullen, interim CEO at Harvard Pilgrim Health Care, recently made this proposal for the financing of health care reform on his "Let's Talk Health Care" blog:

Financing for the bill should come from system-wide medical cost savings, not from health care taxes and Medicare reimbursement reductions, which will only make matters worse in the commercial market. A collaborative effort with sector-specific annual targets monitored and enforced by government should be undertaken by all health care system stakeholders – health plans, hospitals, doctors, pharmaceutical manufacturers, equipment manufacturers, etc – to lower projected medical trend increases by 1.5 – 2% to fund the bill. This effort could begin immediately without raising insurance costs.

In 1997, Don Berwick, Howard Hiatt, Penny Janeway and Richard Smith, calling themselves the "Tavistock Group" (they met at the British Medical Association office at Tavistock Square), proposed a set of ethical principles for everybody in health care (see here). They recognized that the health system is like a water filled balloon - squeeze it in one spot and it pops out elsewhere. Their idea, and the principles they developed, were excellent. But like so many other good ideas about health care it went nowhere.

Ideas don't change health care. Facts on the ground are required.

That's what I like about Bruce Bullen's proposal. Over the years we've carved our health system into silos. No silo can improve quality or efficiency on its own. Collaboration is required. But our national ideological commitment to competition and disparagement of cooperation has blocked serious efforts to collaborate.

I believe Bullen is also correct in suggesting that health reform should be financed by savings from within the health system, not new taxes or across the board reductions in Medicare reimbursement. A combination of collaboration and courage could yield both savings and improved quality.

I don't know it there's any likelihood for this idea to be built into federal health reform, but it's a natural to implement at the state level. In Massachusetts we already have annual hearings about health system performance. It wouldn't be too much of a stretch to move from hearings, which are a bit like being called to the principal's office to explain our behavior, to a working group, chaired by government, with targets for each sector and the entire system, as Bullen envisions.