1 moving towards higher-value health care katherine baicker professor of health economics harvard...
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Moving Towards Higher-Value Health Care
Katherine BaickerProfessor of Health Economics
Harvard School of Public Health and NBER
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Lower Costs vs. Higher Value
• Rising costs have made reform a priority– Risk of uninsurance– Strain on private budgets– Pressure on public budgets
• Appeal of cost-saving quality improvements– Self-financing plans to cover the uninsured– Health-improving reductions in spending
• But is this the right metric?
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Ample Evidence of Inefficient Spending
• International evidence: – Spend much more than OECD trading partners without commensurately
better outcomes
• Domestic evidence:– Areas where we spend more are not areas with best outcomes
Internation Comparison Health Expenditures as a Share of GDP
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2
4
6
8
10
12
14
16
1960 1965 1970 1975 1980 1985 1990 1995 2000
Canada
Germany
Japan
United Kingdom
United States
Source: OECD
Percentage of GDP
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10
15
20
25
30
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1960 1965 1970 1975 1980 1985 1990 1995 2000
United States
Canada
France
Japan
Sweden
Switzerland
Median
UnitedStates
Source: OECD
Deaths per 1,000 Live Births
Infant Mortality Rates (per 1,000 Live Births) by OECD Country, 1960-2003
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Quality Variation Even within Medicare
Source: Dartmouth Atlas of Health Care
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Variation in Medicare Spending
Source: Dartmouth Atlas of Health Care
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But Higher Spending not Associated with Higher Quality
Source: Baicker and Chandra (Health Affairs 2004)
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Some Causes of Inefficiency
• Public side: – Medicare reimbursement primarily based on quantity, not
quality– Resources for the uninsured spent on inefficient modes
of care
• Private side: – Biases in tax subsidy of employment-based insurance– Barriers to well-functioning insurance markets– Information on prices and quality often not available
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Focus on Changes with System-wide Effects
• Few individual interventions likely to produce better health at lower cost
– Doesn’t mean there aren’t many worthwhile interventions– Wrong metric: probably willing to pay more if getting a lot more for it
• Interventions that affect the care received by some groups likely to have “spillover” effects
– Insurance coverage – extent and type– Use of high-intensity interventions– Information– Use of “best practices”
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Case of Hospital Quality
Source: Baicker, Chandra, and Jha
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Conclusions
• Bending the Curve highlights many areas in vital need of improvement and proposes many potentially high-payoff reforms
• Need not pursue only self-financing reforms: goal should be higher value, not just cost-saving quality improvements
• May get biggest bang for the buck from reforms that improve the quality of care system-wide