What Makes Better Care? The Series. Part 6: Shared Savings

Principle 6: Shared Savings

As the House and Senate get close to releasing their versions of comprehensive payment and delivery reform legislation, the Campaign For Better Care, with the help of students from the Harvard School of Public Health, will be doing a series of blog posts this week highlighting our 10 Principles for Better Care.

6. Shared Savings: As cost growth is contained, premium payers must share in the savings. The legislation should provide explicit methods to assure that savings created by payment reform get passed on to consumers and other payers.

Providers and insurers are preparing for, and in some cases have implemented global payment systems and ACOs designed to increase efficiency and improve quality. We are optimistic that shifts of incentives for providers will result in real health care savings, but it is unclear if consumers will share in them. If the savings that are achieved accrue only to insurers and providers, than the payment reform law will not have met its goals, and will not have broad support.

Key Policy:

  • Payment reform must include a mechanism to share savings from reduced medical costs with premium payers, including consumers. Strong public oversight of insurer and provider rates and charges can ensure that costs are reasonable and that savings get passed on to payers. This can include extending the state’s tough Minimum Loss Ratio standards, which are expiring this year. These standards require insurers to spend at least 89% of their premium revenue for medical benefits, and limit what the insurers can retain for administrative costs, profit, and surplus. 

Consumers lose big when premiums and deductibles spiral out of control. Not only does it hurt our wallets, but it also becomes more difficult to access quality care. Strong public oversight of insurer and provider rates may be necessary to protect consumers in a health care market with such little transparency.

Better care means lowering the cost of health care for everyone.
-Akash A. Desai

About HCFA

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One Response to What Makes Better Care? The Series. Part 6: Shared Savings

  1. kyrani99 says:

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