Tuesday, April 9, 2013

Fwd: qotd: Other nations' lessons on cost containment

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-------- Original Message --------
Subject: qotd: Other nations' lessons on cost containment
Date: Tue, 9 Apr 2013 11:14:28 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>

Health Affairs
April 2013
Health Care Cost Containment Strategies Used In Four Other High-Income
Countries Hold Lessons For The United States
By Mark Stabile, Sarah Thomson, Sara Allin, Seán Boyle, Reinhard Busse,
Karine Chevreul, Greg Marchildon and Elias Mossialos

The past decade has been one of relative affluence for the countries we
reviewed (Canada, England, France, and Germany), particularly when
compared to the budget scenarios they face over the next few years. It
may not be surprising, therefore, that health care costs grew relatively
quickly during 2000–10 and that there is limited evidence of the success
of recent cost containment strategies.

That said, the four countries discussed here continue to make use of
public budgeting and price-setting mechanisms to contain costs in the
health care sector, as they have in previous decades. The greater use of
public budgeting and price-setting mechanisms, along with the much
higher public shares of health care financing in these countries, remain
the greatest contrasts between them and the United States.

Our review also revealed that in 2000–10 the four European countries
moved away from strategies that simply shifted costs to households
through across-the-board budget cuts, rationing of services, and
increases in user charges. We found a growing focus on the cost-benefit
ratio through the greater use of health technology assessment,
activity-based funding with centrally set prices, and value-based
approaches to paying for drugs. Although these policies may not drive
down costs, they are likely to produce more efficient use of health care
resources in the future.

Our review suggests that the four countries have had some success in
using a variety of public policy tools and that the United States may
wish to emulate their policies to reduce the growth rate in drug
spending. The policies include relatively simple levers such as
large-scale negotiations with pharmaceutical manufacturers and sellers
as well as budget caps. Our review also suggests that the United States
may wish to use more challenging tools, such as cost-effectiveness
analysis that sets prices for new technologies based on the
technologies' relative value and value-based user charges.

It seems unlikely, however, that the US system will move toward the
types of volume and price controls used in the countries examined here.
Thus, although the United States is also moving toward policies aimed at
changing the cost-benefit ratio and promoting economic efficiency, it is
likely that the large gap in health care spending between the four
countries in our study and the United States will remain.


Comment: Cost containment strategies in the four nations studied -
Canada, England, France, and Germany - depend largely on the government,
especially through public budgeting and price setting. The authors point
out that it is unlikely that the United States will move toward such
policies, thus the large gap between our health care spending and that
of these four countries will remain.

Also of note is the fact that other more recent cost containment
innovations in these four countries have shown only limited evidence of
success. It is still the government engagement that perpetuates their

Of great significance for the United States is the fact that these
nations have moved away from strategies that simply shifted costs to
households. Our emphasis on consumer-directed approaches that increase
cost sharing through high deductibles, coinsurance, more restrictive
provider networks, and our government efforts to reduce "entitlement"
spending, are all moving in the wrong direction. Costs can be controlled
without impairing access by erecting financial barriers.

The lesson is simple. We need beneficial public policies, designed to
serve patients, to displace private sector policies (enabled by
government complicity) that currently prioritize the interests of
business stakeholders over those of patients.

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