Leonard D. Schaffer professor of health care policy Michael Chernew, PhD, was a keynote speaker at the NIHCM Foundation Capitol Hill Briefing: Transforming Health Care to Drive Value.

Chernew’s talk, “The Future of Payment Reform”, addressed the current issues in health care spending, highlighting that health care spending growth has exceeded income spending growth in the last three decades.

Increase in private health care costs puts pressure on wages and salaries, which is not sustainable. Chernew offered two possible solutions to slow spending growth: payment reform and benefit design changes. Payment reform could come in the form of population based payment models and episode payment models. Both will lower spending, but episode based payment can be too narrow and population based spending cannot be supported in all areas.  Neither has generated substantial savings in Medicare, with some private programs performing better.

Benefit design changes can lower spending but are commonly blunt tools.  However, higher cost sharing has been shown to decrease use of high value and low value care among consumers.  Chernew discussed the potential of several more sophisticated cost sharing strategies including tiered networks, reference pricing and Value Based Insurance Design. 

Chernew encouraged Capitol Hill to be patient and focus on solutions that will not only be successful in 2019, but in 2025 and beyond. He noted the absence of magic bullets and therefore stressed importance of small wins and incremental improvements.

The full keynote speech can be viewed on the NIHCM Foundations’ YouTube channel.

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