Reaching the Goal of Affordability

s I said in my last blog post, health care in America costs more than it should. The Affordable Care Act, while a real step forward on many fronts, falls short in effectively dealing with unsustainable spending on health care. And although there is movement toward affordable health care among ACHP member plans and other committed stakeholders, we have a very long and difficult road ahead. We simply cannot maintain quality care and access to that care without seriously addressing the issue of affordable care.

While appropriate levels of health care spending contribute to maintaining and improving health, excessive health care spending is a burden on the private and public sectors, crowds out other important investment, and diminishes the capacity of our nation to remain competitive and our communities to remain economically viable.  ACHP is committed to a continuing leadership role in forging solutions to this challenge, especially at the community level, where some of the most effective levers for reducing costs can be found and where we have extensive experience.

A comprehensive strategy to achieve affordability must address the total cost of care. Developing solutions for just one sector, public or private, does nothing more than allow a shift of costs to another payer. Three areas must be the focus of attention:

  • A transformation in the delivery of care. Payment reform is the starting point for the critical step of transforming our delivery system. Fee-for-service payments reward volume and promote fragmentation; to discourage wasteful practices, payment must reward value. A value-based payment system will promote the alignment of incentives for better care across both providers and health plans.
  • Market forces and market consolidation. Economic factors and the Affordable Care Act are both increasing consolidation among health care providers and in the insurance market.  The question is how consolidation affects the price and total cost of care for all payers.  If provider and payer incentives are not aligned — that is, if both providers and payers aren’t invested in lowering cost trend and total cost of care across the entire system, consolidation is likely to drive up prices without producing substantial value for the consumer.  Both private and public payers, as well as providers, must step up to the challenge of aligning incentives between the financing and delivery of care.
  • A culture of health. We should remind ourselves that better health is the ultimate goal. While it has long been recognized that social and economic factors have by far the greatest impact on health, our health system tilts strongly to medical solutions. These interventions may serve the provider system well, but they are inadequate to the challenge of achieving a healthier population.  That requires commitment to reducing disease and creating a culture of health. Over time, by incorporating communities, families, employers and other stakeholders into promoting health, we can place less demand on the health care system across the population.

While ACHP firmly believes in these three key principles for affordability and sustainability, such goals require action at federal, state, and local levels. Our community-based member plans will continue to collaborate, innovate, and develop transformative models of care, while we at ACHP will continue to provide leadership in working towards these goals of better care and better health at a better cost.

– Patricia Smith
President and CEO, ACH