Study: Investing in health IT, incentive plans could save $456B

Commonwealth Fund issues report. Source: Commonwealth Fund

Investment in a universal healthcare program, combined with incentive plans and investments in health IT adoption could result in $456 billion in reduced spending over 10 years, according to a new Commonwealth Fund report, Bending the Curve: Options for Achieving Savings and Improving Value in Health Spending. Along with additional healthcare policy initiatives, the report estimates that the U.S. could save more than $1.5 trillion.

Commonwealth Fund Senior Vice President Cathy Schoen and colleagues analyzed 15 federal health policy options for their potential to lower spending over the next 10 years, and yield higher value for the nation's investment in healthcare. Specifically, investigators reviewed policies related to health IT and improving knowledge for clinical decision making; public health measures such as reducing smoking and positive incentives for health; financial incentives aligned with quality and efficiency, such as hospital pay-for-performance and strengthening primary care; and policies that use the healthcare market to increase efficiency, add value and reduce costs.

One example of generating healthcare savings is with the establishment of a Center for Medical Effectiveness and Healthcare Decision-Making. Such a center could save payors an estimated $368 billion over the next 10 years. The center would focus on improving healthcare decision-making and incorporating information about relative clinical and cost effectiveness into insurance benefit design. It would also set up an incentive plan for providers, payors and consumers to use the information, according to the report.

Additionally, with an initial increase in health IT investments, the report estimates that $88 billion could be saved by accelerating healthcare providers' adoption of health IT that would allow them to share all patient health information with the other healthcare providers involved in the patient's care.

Combining universal coverage with policies aimed at achieving healthcare savings could have a significant impact because improvements in delivery and financing would apply to a larger number of people, could lower insurance administrative costs and lead to a more integrated healthcare system. However, authors caution that in order to see real savings and higher value, policies must address overall healthcare system costs and not shift cost from one part of the healthcare system to another.

"If we continue down this path of escalating costs and eroding health insurance coverage we will pay an enormous human and economic price," said commission member Glenn Hackbarth. "Building consensus to move in a healthier direction will require leadership, private and public collaboration, and a shared aim at improved access, quality and cost performance." While the commission said it is not endorsing any specific options, it will be reviewing several in greater detail and plan to issue recommendations in 2009.

Currently, health spending in the U.S. is predicted to increase from $2 trillion to more than $4 trillion over the next 10 years, and to consume one out of every five dollars of national income as increases outpace income growth by a wide margin.