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CCH® BENEFITS — 06/22/09

Commonwealth Fund Report Examines Estimated Potential Savings Of Various Health Care Reform Policy Options

from Spencer’s Benefits Reports: In a report released on June 5, The Commonwealth Fund reviewed policy options that could achieve the primary goals of health care reform to slow health care spending growth, improve health outcomes, and provide additional revenues to finance comprehensive reform. The report, Finding Resources for Health Reform and Bending the Health Care Cost Curve, also spotlights the widely differing budget impact estimates of various policy options depending on the underlying assumptions used.

The report compared the estimated potential savings yield for the following 11 policy options as computed by the Lewin Group using figures from The Commonwealth Fund (Path estimate), the Office of Management and Budget (OMB), the Congressional Budget Office (CBO), and the American Recovery and Reinvestment Act (ARRA, also referred to as the economic stimulus package).

Comparing The Budget Impact Of Select Policy Options

Changes to Medicare Advantage:

• OMB: $175 billion in federal savings
• CBO: $157 billion in federal savings for setting benchmark at local fee-for-service rates; $158 billion in federal savings for competitive bidding
• Path: $135 billion in federal savings

Achieving Lower Drug Costs in Public Programs:

• OMB: $29 billion in federal savings
• CBO: $110 billion in federal savings
• Path: $93 billion in federal savings, $62 billion in total health system savings

Bundled Payments for Hospitals to Include Post–Acute Care:

• OMB: $26 billion in federal savings
• CBO: $19 billion in federal savings
• Path: $123 billion in federal savings, $182 billion in total health system savings

Changes to Home Health Reimbursement:

• OMB: $37 billion in federal savings
• CBO: $50 billion in federal savings
• Path: not available

Hospital Pay-for-Performance:

• OMB: $12 billion in federal savings
• CBO: $3 billion in federal savings
• Path: $43 billion in federal savings, $55 billion in total health system savings

Patient-Centered Medical Homes:

• OMB: not available
• CBO: ($6 billion federal budget)
• Path: $83 billion in federal savings, $144 billion in total health system savings

Primary Care Payment and Physician Payment Reform:

• OMB: not available
• CBO: $5 billion in federal savings
• Path: $23 billion in federal savings, $56 billion in total health system savings

Health Information Technology (IT):

• ARRA: $13 billion in federal savings
• CBO: $4 billion in federal savings through incentives, $61 billion if health IT use were required as a condition of participation in Medicare
• Path: $70 billion in federal savings, $180 billion in total health system savings

Comparative Effectiveness Research:

• ARRA: not available
• CBO: ($1 billion federal budget), $8 billion in total health system savings
• Path: $174 billion in federal savings, $480 billion in total health system savings

High-Cost Area Update:

• OMB: not available
• ARRA: not available
• CBO: $51 billion in federal savings
• Path: $100 billion in federal savings, $177 billion in total health system savings

Select Population Health Options:

• ARRA: not available
• CBO: $205 billion federal revenues (2009–2018 period)
• Path: $247 billion in federal savings, $583 billion in total health system savings

“As the health care reform debate unfolds, it will be important to keep in mind that there are various options for financing the necessary federal investment and stimulating change throughout the care system,” The Commonwealth Fund report noted. “The challenge will be building consensus to move forward and implement policies that have the potential to simultaneously address health care access, quality, and costs.”

For more information, visit http://www.commonwealthfund.org/.

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