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How to cut health care costs without gutting Medicare or Medicaid

In case you missed it, national consumer group Community Catalyst’s Robert Restuccia and I wrote an op-ed in the Charlotte Observer this past weekend on this topic.   The take-home message?  We can improve health care and save substantial amounts of money with some common-sense changes both in Washington and Raleigh.  And no, it doesn’t involve making huge cuts in services and provider reimbursement to NC’s Medicaid program or raising the Medicare eligibility age to 67.  Basically:

Today, if a person is hospitalized with a broken arm and gets an infection in the hospital, the hospital gets paid twice: once for setting the arm and again for treating the infection. That’s what economists call “moral hazard” – the hospital benefits financially from the infection. This is not to say the hospital is malicious – just that the incentives are stacked against quality care. If, instead, we base payments in part on how well providers avoid such problems, we can align the incentives with what we actually want – quality health care.

2 Comments

  1. JeffS

    November 1, 2011 at 1:18 pm

    Until someone figures out how to benefit financially from healthy citizens, we will continue down the spiral.

    Even at the individual level, the more health services a group-insured person uses the more financial benefits they receive. The healthy person? They get to subsidize everyone else.

  2. Adam Searing

    November 1, 2011 at 3:52 pm

    Jeff – I’ve got news for you buddy! Everyone who is healthy will get sick at some point in their lives and need health care. We are all in this together, which is why the solutions Rob and I discuss above make sense.