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Rx for better, cheaper healthcare

A report suggests ways to save $1.5 trillion in costs and widen care.

December 18, 2007|Ricardo Alonso-Zaldivar | Times Staff Writer

WASHINGTON — Americans could save $1.5 trillion in healthcare costs over the next decade while covering the uninsured and improving overall quality, according to a report to be released today. But it would take widespread reforms to root out inefficiency, not to mention higher tobacco taxes and other levies.

"We are not getting good value for our dollar," said Karen Davis, president of the Commonwealth Fund, a New York-based research group that prepared the report. "Will we continue to head down a path of less access to care [and] higher costs . . . or will we start now to make the changes needed to transform our healthcare system?"

Intended to provide a menu of options for the next president, the report blends ideas put forward by leading political candidates with other proposals. Many of the ideas are likely to stir controversy.

For example, the report calls for boosting the federal tobacco tax by $2 from the current 39 cents a pack. It also proposes a penny tax on 12-ounce, sugar-sweetened soft drinks to fund a campaign against obesity. And it proposes a 1% levy on insurance premiums to finance rapid computerization of records kept by doctors and hospitals.

Radically reducing the paperwork that clogs the healthcare system could save $88 billion over 10 years, the report says. Other efficiencies -- such as paying doctors and hospitals based on quality of care and results, rather than on volume of tests and procedures -- are predicted to save even more.

So could rigorous evaluation of the costs and benefits of treatment strategies.

Such a combination of different approaches -- there are a total of 15 major proposals in the report -- could work together to produce hundreds of billions in savings, the authors say.

Preventive steps such as raising the price of cigarettes would deter teenagers from smoking and reduce their chances of later developing cancer, which is expensive to treat. Meanwhile, a streamlined healthcare delivery system could produce better care for the sick while keeping costs in check.

The savings claimed in the report were estimated by the Lewin Group, a healthcare consulting firm that advises businesses and government.

The United States will spend about $2.3 trillion on healthcare this year, twice as much on a per-capita basis as any other country. But the health of Americans is not appreciably better than that of people in other industrialized countries, most of which offer government-run care systems.

And U.S. healthcare costs, which are growing faster than wages and faster than the economy, are projected to double in the next 10 years. Economic experts who advise both government and the business community say the current rate of growth is unsustainable. Demanding greater efficiency has become a popular refrain among Democrats and Republicans.

"Everybody believes there are a lot of inefficiencies in the system and there are all sorts of opportunities to save money," said health economist Jack Rodgers of the PricewaterhouseCoopers consulting firm. But the kinds of savings envisioned in the report are difficult to achieve, he added, because the policy changes can create huge winners and losers.

For example, the uninsured would win by securing coverage. But some hospitals and medical providers could see their revenue squeezed in a leaner system.

To cover the uninsured, the report proposes a mix of Democratic and Republican policy ideas. It calls for making health insurance a requirement, as have Democratic presidential candidates Sen. Hillary Rodham Clinton of New York and former North Carolina Sen. John Edwards.

But it also says small businesses and individuals should be able to purchase coverage through a national insurance market, instead of being restricted to the state level. Variations on that idea have been proposed by GOP candidates.

"Constructive approaches will also require political compromises and a willingness to forsake ideological purity," the report says. "As a nation, we will need to move beyond the point where everyone's second choice is the status quo."

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ricardo.alonso-zaldivar@latimes.com

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