Containment: Delivering Cost-Effective Healthcare on a Budget

Few issues are as politically-charged as the ever-rising cost of American healthcare. The average cost of healthcare in the United States is high relative to its developed-nation peers: The World Health Organization reports that total American health spending approached 17 percent of GDP in 2009, the year before the passage of the landmark Patient Protection and Affordable Care Act. Despite assurances from the law's supporters that it would reduce healthcare costs over the long term, many of its provisions won't be implemented for years. Meanwhile, according to another WHO report, the American healthcare as a whole consistently produces mediocre patient outcomes. Many providers and health systems now recognize the urgency of this situation and are fighting to control their costs while improving these outcomes.

The Importance of Affordable Insurance

According to the Department of Health and Human Services, some 45 million Americans lack health insurance. Most of the individuals and families that forgo insurance are either self-employed or work for smaller firms that choose not to provide health insurance for their employees.
While families with very low incomes enjoy access to Medicaid, a government-run insurance program that provides a valuable safety net for vulnerable members of society, higher earners are prohibited from joining its rolls. As the cost of purchasing individual health coverage on the open market is prohibitive for all but the most affluent slice of the American populace, thousands of middle-income families and individuals without access to employer-sponsored coverage must raid their life savings each year to pay "out-of-pocket" for major medical procedures.

Health Insurance Exchanges

Part of the Affordable Care Act, state-level health insurance exchanges aim to decrease the cost of health insurance for individuals by increasing the transparency of a notoriously opaque industry. Exchanges allow healthcare consumers to compare the plans available in their state, weighing their costs against their coverages. They also look to streamline the process of applying for tax credits or enrolling in state-run health programs.

Coverage for Pre-Existing Conditions

In recent years, folks with "pre-existing" health conditions like diabetes or heart disease have found it increasingly difficult to find affordable insurance coverage. Since these people must regularly consume healthcare services in order to remain healthy, they represent a major piece of the cost-containment puzzle: If the cost of their care can be managed down, increasing the financial strength of their insurance providers, premiums for those without pre-existing conditions should drop as well. The ACA's Pre-Existing Condition Insurance Plan, or PCIP, aims to achieve this goal by factoring pre-existing conditions out of its premium calculations.

Accountable Care Organizations

The primary function of Accountable Care Organizations is to maintain detailed records of care quality and patient outcomes across participating providers. This information is available to public and private insurers, which use it to determine payouts and conduct cost-benefit analyses of various providers. ACOs reinforce success: Providers with better patient outcomes and more favorable quality-of-care ratings are reimbursed at higher rates and ultimately receive more referrals.
It's been obvious for some time that American healthcare costs are growing at an unsustainable rate. Healthcare delivery is complex, and there's no one-size-fits-all approach to cutting costs and broadening access. Ultimately, it will take a mixture of public and private initiatives like ACOs, the PCIP, and health insurance exchanges to improve patient outcomes without increasing an already undue burden.
Nathan West is a full-time writer for higher ed blogs and journals nationwide. Several schools offer degrees in the health field, including healthadministrationdegree.usc.edu and www.berkeley.edu.