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JAMA Forum Archive, 2012-2019: Health policy commentary from leaders in the field
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Building a Better Health Care System: the Work Ahead

Here are 4 health care proposals that have been made by politicians running for office. How many do you agree with?

1. “[Health care reform] should expand competition in the marketplace, it should empower consumers and patients to make healthcare decisions in consultation with their doctors and it should disempower the government from getting in between doctors and their patients.”

2. “[We need to transform] our health care system to reward value and quality.”

3. “[Congress must] require price transparency from all healthcare providers, especially doctors and healthcare organizations like clinics and hospitals. Individuals should be able to shop to find the best prices for procedures, exams or any other medical-related procedure.”

4. “We must ensure … that the money we put into health coverage goes to the delivery of health care, not to paper-pushing, astronomical profits and lining CEOs’ pockets.”

All of these statements sound reasonable to me. My guess is most people agree with them. The authors of the 4 statements are, in order, Ted Cruz, Hillary Clinton, Donald Trump, and Bernie Sanders. Does the fact that there are points of agreement across the political spectrum mean that some health reform is possible?

I would love to believe that this is so and that we could take a break from the health care wars and make positive changes.

Alas, I suspect it is not the case. Even when the goals are common, the complexity of health care makes any change difficult. And, sadly, much of the resistance to making progress on these issues is likely to come from physicians. Let me illustrate why.


There is near universal agreement that health care prices and quality need to be more transparent. Consumers’ out-of-pocket costs are significant; one-quarter of privately insured people are in plans with extremely high cost sharing. How can they spend their money wisely without good data on what services cost and how valuable they are?

But think a little more about what this means. Consider a scenario in which a 60-year-old patient with borderline high blood pressure presents in a primary care physician’s office with occasional dizziness that worsens with head movement. Results of a neurological examination are normal. Should the physician order magnetic resonance imaging (MRI) to rule out a cerebellar stroke or go with the high likelihood that the patient has benign positional vertigo? Health care transparency means that in addition to clinical judgment, the physician will now have to consider prices, and patients need to be told how much the MRI will cost.

Quality will also be measured and made public. Degree of adherence to clinical guidelines, health improvement after care receipt, and patient satisfaction will all be reported, right alongside cost. Furthermore, insurers will reach out to patients and proactively inform them about cost and quality options the insurer deems to be superior. Now the physician has to worry about how their recommendation will affect their quality score.

The intrusion of health care transparency into the sanctity of the examination room will lead to awkward interactions between patients and physicians. But many believe it is necessary. Transparency advocates believe that health care spending is so high in part because physicians are not good enough stewards of the financial and clinical decisions made by their patients. There is no way to rectify this without changing how those interactions occur.

Administrative Costs

Annual administrative costs in the United States are estimated to be twice the amount spent on heart disease and 3 times the amount spent on cancer. The average physician spends 45 minutes daily interacting with insurance companies. Medical costs could be reduced markedly just by taking out administrative waste.

What does this administrative simplification involve? To a great extent, it requires standardizing basic processes. Insurers need to agree on common eligibility rules, billing systems, and methods for measuring cost and quality. Providers of electronic health records (EHRs) will need to make their records interoperable—something physicians will like. But for administrative simplification to work, physicians will need to install software that automatically transfers information from EHRs to billing systems, as well as agree that they do not own the data they generate about their patients. Such information must be fully shareable with any provider to whom the patient has granted permission. Finally, physicians need to agree to a set of quality metrics by which they will be judged.

The closest parallel to what is required is the “meaningful use” criteria (EHR use intended to improve health and health care) set up as part of the Health Information Technology for Economic and Clinical Health Act. In that case, the federal government strongly encouraged provider groups to invest in electronic medical record systems and set standards for what such systems must do. Many physicians now complain that the requirements are onerous and the benefits hard to assess. The technological pain is real, but it is not unique to health care nor to activities involving the federal government. When retail industries moved from paper records to barcodes and computerized inventory management, many small retailers could not keep up. The same was true with small banks when information technology (IT) came to that industry. Like it or not, administrative simplification requires major IT investments. This will be difficult for many physicians, especially for practices that are not big enough to be on the cutting edge of technology.

Misguided Payment Rules

Medical care price setting has been accurately described as a Soviet approach to pricing. Prices are intended to be based on how much every service “costs” in terms of physician expertise and related expenses, not how well the service is done or what value patients attach to it. A physician who performs a beautiful surgery or diagnoses a rare condition is paid no more than a physician who experiences an avoidable complication or who fails to recommend the most basic test.

There is general agreement that prices should be more responsive to quality. Beyond this generalization, though, reforming the payment system is very difficult.

There are 2 ways to proceed. First, payments could explicitly incorporate a quality element. For example, physicians with better surgical outcomes could receive more than those with lower quality. Second, payments could be made for episodes of care, without reimbursing each particular service. For example, an oncologist could be paid for an entire course of therapy for a patient with cancer, not just a fee for each visit. Such bundled payment systems are increasingly common, and I and others have written in support of them.

But even supporters of these reforms need to acknowledge that change will be difficult. If physicians do not believe the quality assessments are accurate, they will not be comfortable tying reimbursement to them. And many physicians are not prepared for the work required under bundled payment systems: they do not know which patients are high risk (likely to require extensive care) or low risk, and they don’t know how to manage patients once they leave their office. Adaptation to reformed payment systems will be rough for some clinicians.

Transparency, administrative simplification, and payment reform are all necessary, and there are valuable steps that can be taken on each. But physicians and patients need to understand that even the most straightforward goals are going to involve a lot of work. We had better be prepared for that, or the health care wars will begin anew.

About the author: David M. Cutler, PhD, is the Otto Eckstein Professor of Applied Economics in the Department of Economics and Kennedy School of Government at Harvard University and a member of the Institute of Medicine. He served on the Council of Economic Advisers and the National Economic Council during the Clinton Administration and was senior health care advisor to Barack Obama’s presidential campaign. He is a commissioner on Massachusetts’ Health Policy Commission. He is the author of the The Quality Cure (2014) and Your Money or Your Life (2004). He tweets at @cutler_econ.
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