Three Ways to Lower Healthcare Costs

< 1 min
February 23, 2021

The Health Savers Initiative is a project of West Health, the Committee for the Responsible Federal Budget (CRFB), and Arnold Ventures, which identifies bold and concrete policy options to make healthcare more affordable for the federal government, businesses, and households. The purpose of the Health Savers Initiative is to develop policy-ready options that will lower healthcare costs economy-wide, reduce the cost of healthcare and its impact on families, and save money for the federal government.

For each option, we produced an issue brief along with federal budget and national health expenditure impact scores. Below are three issue briefs and policy options that could help to mitigate the impacts of healthcare consolidation.

Equalizing Medicare Payments Regardless of Site-of-Care: This brief addresses the fact that Medicare payments for similar procedures vary widely based on site-of-service, incenting provider consolidation and driving up costs for the federal government and the private sector.

Reducing Medicare Advantage Overpayments: This brief addresses overpayments to private insurance plans in the Medicare Advantage program that reduce market incentives for innovation by allowing plans to profit from the overpayments rather than through improvements to the quality and efficiency of their product.

Capping Hospital Prices: This brief addresses the high hospital prices paid by commercial insurance plans. On average, commercial plans pay more than twice as much as Medicare, with some hospitals charging three or four times as much. Those commercial prices are fueled by several factors, including increasing market consolidation and “must-have” hospitals using their market power to negotiate higher prices.