Health Reform That Passes the Buck Is Short-Sighted

Underlying causes of soaring Medicare-Medicaid bills must be treated first.


Introduce care coordination into traditional fee-for-service Medicare and for dual Medicare and Medicaid eligibles nationally over the next three years.

Of the $560 billion spent on Medicare, approximately $360 billion flows through the traditional Medicare program. Other than for homebound patients, traditional Medicare includes no efforts to coordinate care for chronically ill patients (virtually all the spending). In addition, dual eligibles—those enrolled in both Medicare and Medicaid—are the most expensive patients of all, accounting for over $300 billion in expenditures per year. More effective approaches for managing chronic conditions in these populations will improve health outcomes and reduce spending. The Affordable Care Act outlined the dimensions of effective care coordination in section 3502-community health teams. The teams, working in close collaboration with primary care provider practices, would provide several evidence-based functions including transitional care, medication management and reconciliation, coaching, and continuous 24/7 care. The provision was authorized but was not funded. These teams could be offered nationally to all beneficiaries enrolled in traditional Medicare for an investment of under $40 billion over the next decade.

Data from several randomized trials show the potential for the functions performed by the teams to reduce spending. Evidenced-based transitional care programs can cut preventable readmissions by 25 to 50 percent. Medication management and reconciliation programs have also been shown to reduce overall healthcare spending. Effective health coaching alone—those programs that change behavior and improve compliance with care plans—have been shown through randomized trials to reduce spending by a net of 3 percent. Even at the low end of what the literature has found, savings of 3 percent would be easy to achieve—Medicare could save $150 billion over the next decade with similar savings and better outcomes achieved for dual eligibles.

These two proposals would improve the quality of care delivered to Medicare and Medicaid patients and reduce total spending—federal, state, and local, and for beneficiaries. Over the next decade it would not be unreasonable to assume savings exceeding $300 billion in these healthcare programs.

We need to change the policy option debate in Washington from cost shifting to cost reductions. Focus on averting disease and potentially eliminating costs instead of shifting them, through effective lifestyle modification programs and finally introducing evidenced-based care coordination into Medicare and Medicaid would represent moves in the right direction.