Legislation on Cost Containment - Essay Example

Memorandum on Health Care Cost Containment August 12, M E M O R A N D U M TO The Maryland Conference of Legislatures Board on CostContainment FROM : SUBJECT :LEGISLATION ON COST CONTAINMENT 1.0 Problem Statement In what ways can the prescription drug benefits idea be used as a cost containment strategy to address the rising health care and health insurance costs in Maryland and thus to meet the present socio-economic needs of citizens? 2.0 Background The need to promote quality, efficient and effective healthcare to the populace is a goal, the attainment of which can never be compromised in any way. This is because of the important role that quality healthcare among citizens plays in all aspects of national development. It is known that in the absence of quality healthcare leading to improved health of citizens, rate of productivity in all sectors of the economy will be affected (Bodenheimer, 2005). In contemporary times, therefore, there are several innovative techniques that are used in the provision of healthcare to all people so as to ensure that the general health of the citizenry is improved. While recognizing the need for improving healthcare, sight must not be lost of the need to consider the readiness of the healthcare recipients to afford the cost of healthcare given to them. This point is made against the backdrop that, as much as the need to promote quality healthcare is appreciated, there is also a growing phenomenon – only a few people can afford the healthcare provided because of rising health care and health insurance costs (Guo, 2008). Invariably, people are either receiving quality healthcare or receiving nothing at all. This is not a very good situation, as quality healthcare has to become accessible and affordable to all people. To salvage the situation, a number of health care cost containment ideas have been put forward for consideration by most levels of the legislature in the country. With Maryland State in mind, it will be said that some of these ideas on cost containment would be more suitable than others. 3.0 Landscape To cut down on the cost of healthcare and still maintain the quality, it must be remembered that there are a number of key stakeholders whose roles cannot be ignored in any way. First is Maryland State as a community. Maryland is considered as the beneficiary community which should have the right of a stakeholder and thus have the right to decide on the kind of cost containment that best meets the community’s socio-economic status. The role of the community as a stakeholder is, therefore, to give the final approval of whether or not the selected cost containment is suitable for them. Other stakeholders include the state government, which will be a major financier of the cost containment strategy. For any major health reform policies such as cost containment, the local government ought to be given enough stakes in deciding on the merits and demerit of the strategy to the long-time strategic plan and budget of the local assembly (Simonet, 2005b). It is for this reason that the input of the local government as a stakeholder cannot be ignored. Furthermore, healthcare facilities and healthcare providers remain important stakeholders in the current cost containment strategy that is to be legislated. Health facility operators including doctors, nurses, ward assistants, pharmacists, surgeons, hospital administrators and others who will be working directly on health insurance must be considered before any strategy is approved. A typical scenario of a problem that can arise if these people are ignored as stakeholders is that there may be the approval of a cost containment strategy that will make healthcare so accessible that demand for health facilities will exceed the amount of services that can be provided, and so the quality will eventually have to be compromised (Hodgkin, 2004). 4.0 Options 4.1 Review of available options The desperate need for a solution to the rising cost of health care and health insurance has actually led to the propagation of as many cost containment options as possible. Presently, several options could possibly be developed for further legislative approval and subsequent implementation: “Direct Cost Containment Ideas, Prescription Drug Ideas, Cost Shifting Ideas, Workforce Expansion/Scope of Practice Ideas, Health Insurance Reform Ideas, Subsidy Program Ideas, Medical Errors and Medical Malpractice Ideas, Preventive and Public Health Ideas and Medicaid Ideas” (National Conference of State Legislatures, 2003). These options seek to address the cost of health care through two major channels or avenues. 4.2 Government Centered Cost Containment The first has to do with the state subsidies on the general cost of health care. Examples of such options are direct cost containment ideas and cost shifting ideas. Though these do not mention directly that government should take part of the cost, it endorses the need for cost borne by patients to be cut down. Ultimately, the state takes up the extra cost (Simonet, 2005a). The pros of this group of options is that citizens of Maryland will enjoy a socialist approach to healthcare whereby they will barely have to spend anything beyond their economic gains because government will take care of the excesses. The option also puts government in a position to be proactive and forthcoming, with identification of alternatives to health funding that is focused not only on the financial input of the customer. The demerit, however, is that government will once again become overburdened financially and might adapt preferential care, which means that some patients will be preferred over others, depending on the intensity of their illness. 4.3 Client Centered Cost Containment The second avenue has to do with proportional funding by patients whereby a patient receives healthcare according to how much he or she can afford. This, however, comes with contingency strategies such as health saving protocols and insurances that entail health savings, so that at the point of illness one would not have to spend as much as original cost would have been. Examples of these are health insurance reform ideas and preventive and public health ideas. This group comprises a highly individualized health care cost sharing but could be critiqued for the fact that it provides no financial interventions that can better the lot of the poor (Hillman, 2000). Again, the option propagates the unacceptable situation of discrimination in health care provision, because, even though the quantitative spending of individuals could be cut down, there will still be room for some customers to receive better care than others – and all of them are equal before the law. 5.0 Recommendation Prescription drug benefit could be narrowed down among the options as one option that carries qualities of the two major forms of avenues described earlier. For instance, it considers cost cutting from both the government perspective and the citizen’s perspective (Baker et al., 2003). In such a situation, the consequent result is that no side will be overly burdened or loosely relieved. This is, therefore, a 2-tier strategy that builds on the collaborative effort of both government and citizens to cut down on the cost of healthcare. On the part of government, for instance, there are specific roles to play in cutting down cost. One of these is the need to make purchases of drugs for prescription and bulk and in partnership with other states. The idea here is that the higher the quantum of drugs, the lower the price to be paid for them. Government is also expected to engage the services and expertise of pharmacists and other professionals who will educate customers on how to reduce cases of health reports and the general cost of healthcare. There will also be social interventions such as the provision of safety nets and immunization programs to deal with healthcare at the preventive stages, so that they do not degenerate to a point where much funds would have to be spent. On the part of clients, the first and foremost responsibility is to abide to preventive measures, because, as it is often said, prevention is better than cure (Albright, Winston & Zappe, 2006). Efforts of the government, such as providing safety nets, will be useless if clients do not cooperate. Clients are also expected to register with recognized health insurance schemes to ensure that the need to make much money available at an unexpected time of sickness will be reduced. Clients will also benefit from the costs cut down in the sense that specific activities such as the auditing of health care providers will be ensured. Once funds are used in the most appropriate and cost effective manner, less amounts will have to be spent. It can be concluded that there could be opposition to the prescription drug benefit – for example, among those who argue that the strategy is not universal, because, besides provision of drugs, it does not take into consideration other aspects of health care services. However, it is important to reiterate the need to stick to this option as it is the only 2-tier beneficiary strategy that will not shift the cost containment responsibility to only one stakeholder. Again, it must be noted that drug prescription is a larger part of health services as compared to other services that are not considered by the drug prescription benefit (Hemenway et al., 2009). References Albright, S. C., Winston, W. L., & Zappe, C. (2006). Data analysis & decision making with Microsoft excel (3rd ed.). Mason, Ohio: Thompson South-Western. Baker, L., Birnbaum, H., Geppert, J., Mishol, D., & Moyneur, E. (2003). The relationship between technology availability and health care spending. USA: Department of Health Research and Policy, Stanford University School of Medicine. Bodenheimer, T. (2005). High and rising health care costs. part 1: Seeking an explanation. Ann Intern Med, 142(10), 847-854. Guo, K. L. (2008). Quality of health care in the US managed care system: Comparing and highlighting successful states. International Journal of Health Care Quality Assurance, 21(3), 236-248. Hemenway, D., Killen, A., Cashman, S. B., Parks, C. L., & Bicknell, W. J. (1990). Physicians responses to financial incentives. evidence from a for-profit ambulatory care center. New England Journal of Medicine, 322(15), 1059-1063. Hillman, B. J., Joseph, C. A., Mabry, M. R., Sunshine, J. H., Kennedy, S. D., & Noether, M. (2000). Frequency and costs of diagnostic imaging in office practice - A comparison of self-referring and radiologist-referring physicians. New England Journal of Medicine, 323(23), 1604-1608. Hodgkin, D. (2004). Payment levels and hospital response to prospective payment. Journal of Health Economics, 13(1), 1-29. National Conference of State Legislatures (2003). State health care cost containment ideas. Retrieved August 11, 2012 from http://www.ncsl.org/issues-research/health/archive-state-health-care-cost-containment-ideas.aspx Simonet, D. (2005a). Medical practice under managed care: Cost-control mechanisms and impact on quality of service. Public Organization Review, 5(2), 157. Simonet, D. (2005b). Patient satisfaction under managed care. International Journal of Health Care Quality Assurance, 18(6), 424. Read More