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Health reform must focus on incentives to cut costs

The real beauty of the Affordability Model is that it offers minimalist steerage. It implements a (relatively) simple, straightforward incentive, and then allows the market to innovate to achieve the desired results.
Written by Dana Blankenhorn, Inactive on

Health care reform advocate Brian Klepper is getting depressed.

The  bill now moving through the Senate is all about who pays for health care, he writes, and not about what we should be buying.

Changing the financing model alone probably won't fix health care. What's needed - what is critical right now - are changes to the ways health care is supplied, tooled, delivered, managed and reimbursed, independent of any health plan's sponsorship and legal structure.

Who has the answer?

Klepper says it's Bob Laszewski (right, from his Healthpol Web site) a policy consultant and former insurance executive.

Laszewski's health care affordability model focuses on the delivery system, not finance. It uses tax incentives to change demand to what we need rather than what the present system wants to give us, Klepper writes.

It's pretty simple.

Insurers would first offer any plans they wanted, with employers and employees free to buy any plan. But over three years plans that did not meet national goals for lowering overall costs would lose their tax preferences.

Meanwhile, Medicare would track the successes of private insurers in holding down costs and follow those best practices, he writes.

Market incentives have to change, Klepper writes, in favor of doing what we know reduces costs as opposed to standard fee-for-service, where the incentives are to increase costs.

Writes Klepper:

The real beauty of the Affordability Model is that it offers minimalist steerage. It implements a (relatively) simple, straightforward incentive, and then allows the market to innovate to achieve the desired results.

Klepper expects everyone in the industry to oppose Laszewski's plan, because over time it shrinks industry revenues, but adds they ought to favor it because it provides a sustainable economic model with minimal government interference in the market.

How do you like it?

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