Integrated care, payment reform could save $300 billion in a decade: Brookings report

    By Jonathan Block

    Posted: April 29, 2013 – 7:15 pm ET
    The federal government could save more than $300 billion in healthcare costs over the next 10 years with more integrated care and a move to a risk-based payment system, according to a bipartisan report from the Brookings Institution.

    One target policymakers should be aiming for, the report suggests, is holding healthcare spending growth in line with the growth in per-capita gross domestic product. For years, spending growth in healthcare has far exceeded the rise in GDP. Healthcare spending growth has slowed in recent years, at least in part and perhaps primarily because of the economic downturn.

    Former Senate Majority Leader Tom Daschle (D-S.D.), another author of the report who spoke at the event, said that reform and cost-cutting must come not only in Medicare and Medicaid, but also in private insurance and from systemwide changes.

    The report recommends transforming Medicare into a “Medicare comprehensive-care” system in which providers receive a capitated payment influenced by care quality and patient outcome, and with per-capita spending growth limited to per-capita GDP. The authors estimate the federal government would save $120 billion from 2019-23 alone.

    HHS’ Office of the Assistant Secretary for Planning and Evaluation estimated that Medicare’s per-beneficiary spending growth in 2012 was 0.4%, compared with 3.4% growth in per-capita GDP.

    On the Medicaid side, the authors propose “person-focused” Medicaid reform that would focus on more coordinated care and deliver lower cost growth while maintaining or improving care, saving $100 billion over a decade.

    The U.S. could spend $120 billion in private health plans over 10 years, the report says, with a cap on the employer-sponsored insurance tax exclusion.

    Another $20 billion in savings could be achieved by expanding the CMS capitated financial-alignment demonstration project for those eligible for both Medicaid and Medicare to a permanent initiative with a pathway for faster implementation. Last month, California became the fifth and largest state to win approval to participate in the program, which has drawn concerns from patient advocates about its pace and scope. Read more: