The Peter G. Peterson Foundation has provided the Center for American Progress (CAP) with a grant to explore a series of payment and delivery system reforms in both public and private health care systems that will reduce reliance on fee-for-service medicine and reduce overall costs. The growth of health care costs is the single largest driver of federal budget deficits and a major threat to the nation’s economy. Major changes to the health care delivery system are necessary in order to control health spending. Most medical services in the United States are paid for on a “fee for service” basis: a patient receives a treatment, and the provider is paid for that service. As a result, doctors and hospitals are incentivized to increase the volume of services they provide with little regard to how treatments will affect health outcomes.
With the Foundation’s grant, CAP will pull together a team of health care economists and researchers to develop a set of payment and delivery system reform options. Once these options are developed, CAP will work towards their implementation by the various health care sectors —that is, Medicare and Medicaid, private insurance companies, and health care service providers. Within the federal government, CAP will push for rapid implementation of these reforms through the use of Medicare’s new authority (provided in the recently-passed health reform legislation, the Affordable Care Act, or ACA) to use pilot projects for delivery system reform.