Posted on December 18, 2007

Health Insurance, Federal Policy Options Could Reduce Spending by $1.5 Trillion Over Ten Years, Study Finds

Guaranteed health insurance for all combined with several federal policy options to achieve healthcare system savings could result in $1.5 trillion in reduced spending over ten years, a new report from the New York City-based Commonwealth Fund finds.

Prepared for the fund's Commission on a High Performance Health System, the report, Bending the Curve: Options for Achieving Savings and Improving Value in Health Spending (113 pages, PDF), analyzes the potential of fifteen federal health policy options to lower spending over the next ten years and yield higher value on investments in health care. Among other things, the report looked at policies related to health information technology; public health measures such as reducing smoking; financial incentives aligned with healthcare quality; and policies that use the healthcare market to increase efficiency, add value, and reduce costs.

Spending on health care in the United States is predicted to increase from $2 trillion to more than $4 trillion over the next ten years and consume one out of every five dollars of national income. The report argues, however, that it is possible to curb spending on health care while enhancing the overall performance of the healthcare system, and the sooner policy changes are enacted, the greater the cumulative savings for families, businesses, and public health insurance programs. In order to see real savings and higher value, however, policy reforms must address overall system costs rather than shift costs from one part of the system to another.

According to Commonwealth Fund president Karen Davis, the report is unique because it focuses on total national health spending, not just one aspect of spending. "The report illustrates there are policy solutions out there that will save money and ensure that Americans get improved value for their healthcare dollars," said Davis. "But we need to start now."