Getting The Price Right: How Some Countries Control Spending In A Fee-For-Service System
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The health systems we studied focus on controlling prices in the context of fee-for-service medical practice and national expenditure constraints that do not result in withholding health care from the population. The use of fee-for-service physician payment does create problems, but marking fee-for-service as the major cause of high health care spending in the US is problematic, especially as countries with lower prices and expenditures use fee-for-service systems. France, Germany, and Japan limit the incomes of physicians by standardizing and adjusting the fees they are paid while using a variety of approaches to limit the volume of services provided.
The diversity of payment arrangements in the US acts as a constraint on unified approaches while also creating growing pressure to change and standardize fees. Although some Democratic leaders in Congress emphasize the buying power and leverage of a single-payer health care system to contain prices, extending Medicare to all legal residents would introduce challenges in negotiating prices with hospitals, pharmaceutical manufacturers, and physicians within the context of US institutions. Perhaps the most important implication of our study is that regardless of whether either fundamental changes such as Medicare for All or incremental expansion of the Affordable Care Act are proposed, both would oblige policy makers to think hard about how to set prices and oversee service volume.
Although France, Germany, and Japan vary in their approaches to regulating prices and service volume, all three rely on centralized fee negotiations. This general approach is evident in some Democratic health reform proposals, some of which have proposed empowering the secretary of health and human services to create a national fee schedule for payers and providers within a public option or Medicare for All design.
The experiences of these countries suggest that changes in physician reimbursement policy need not presuppose widespread changes to coverage and vice versa. Both become more interdependent when governments are committed to providing universal and affordable health insurance coverage. Health care pricing is an important pillar supporting and upholding universal coverage. Even without universal coverage, the US can and should regulate how much discretion providers of health care services have in setting their own prices. Standardization of prices can reduce treatment and administrative costs alike.
Comment by Don McCanne of PNHP: Health care spending is highest in the United States, and a major reason for this is our very high prices. The private insurance industry in the United States has not been particularly effective in controlling prices, and our government has largely limited its control of prices to public programs such as Medicare and Medicaid, though, even there, the government has refused to control Medicare drug prices. The authors use the examples of the universal programs in France, Germany and Japan to show how governments can get the price right.
The authors contend that we do not have to enact a Medicare for All system to control prices. But when you look at our fragmented health care financing system and the free rein that the private sector is allowed – especially the private insurers – it does not take too much imagination to see that trying to implement fee controls across the entire system would be much like herding cats. The fact that the crisis has been with us for many decades without any real progress being made in price controls, outside of Medicare and Medicaid, demonstrates that these cats are not very herdable.
Essentially all other nations have been effective in controlling spending through control of prices, and we could be too, but it sure would be a lot easier if we had a well designed, single payer, improved Medicare for All. That way we would be standardizing prices in a system based on solidarity.
Why solidarity? The current political turmoil should provide us with enough evidence that we sure could use an infusion of a whole lot more solidarity. Just our lack of solidarity in managing the COVID-19 pandemic is causing suffering, economic hardship, and loss of lives, simply because we have prioritized political squabbles over solidarity. Let’s give solidarity a try – for our health.
Jesus: Hey, Dad? God: Yes, Son? Jesus: Western civilization followed me home. Can I keep it? God: Certainly not! And put it down this minute--you don't know where it's been! Tom Robbins in Another Roadside Attraction
November 13, 2020 at 9:10 AM #377876Cold Mountain TrailParticipant
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“our government has largely limited its control of prices to public programs such as Medicare and Medicaid, though, even there, the government has refused to control Medicare drug prices.”
interesting, that bit
one of the first things rockefeller money was used for (similar to the covert tactics bill gates uses today) was to control medicine esp medications
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