The changing market

The healthcare industry's broad group of interconnected yet distinctly separate entities operate with profoundly different-and often conflicting-business models. Not surprisingly, capturing conclusive information from healthcare's many players can be frustrating work.

The Commonwealth Fund, a private foundation based in New York, supports independent research on practical healthcare issues to drive improvement in practice and policy, while also openly sharing its research publicly for the common good. And its task in the past year leading up to the passage of the Patient Protection and Affordable Care Act (PPACA) was a formidable one.

"We were founded in 1918 with a philosophy that you need to merge a commitment to social progress with scientific rigor and analysis," says Karen Davis, president of the Commonwealth Fund. "We believe that not just an idea is promising or exciting, but that you must have the hard data on whether the idea is a better way of providing care, better quality, better access or lower cost."

"It was quite a specific health reform proposal, and in the end, a lot of what is in the Affordable Care Act had been in the Path report," Davis says. "So much so that we compared them.

"We called for a 1% productivity improvement, and [PPACA] has a 1% productivity improvement," she continues. "We called for a 5% hike in primary care payment, and [PPACA] has a 10% hike in primary care payment. It's not just the basic framework of individual mandates, shared employer responsibility, insurance exchanges or insurance market rules that are similar."

Its published policy reports, however, recommended that legislation should institute innovative payment methods immediately on a mandatory basis rather than through voluntary pilots, as in PPACA's final document. The Fund would have included a public plan to incorporate those new payment methods, and would have tied comparative effectiveness research and insurance benefit design. But Congress ultimately didn't craft a policy with those specific provisions, Davis says.

"Nonetheless, considering our reports-'Ambitious Agenda,' 'Bending the Curve,' 'Moving to a High Performance Health System'-it's hard not to think they made a lot of difference informing policymakers," she says. "It's fortuitous the president decided not to have a reform plan and left it up to Congress."

Davis and other staff members were called on dozens of times to testify in Washington about the various policy options as they were weighed by Congressional leadership. In fact, Davis says several Congress members placed yellow sticky notes on points of interest in the Fund's reports and followed up with her directly to dig deeper into the information.

She says the requests from policymakers as PPACA took shape reflect one of the Fund's core missions of analyzing hard data.

"I spent a lot of my time in Washington, and I did a lot of writing for whomever needed whatever, whenever they needed it," she says.

According to Davis, PPACA does control costs, in spite of common criticism that it simply doesn't do enough. The Fund estimates total health spending will slow under the new provisions from a 6.6% annual rate of increase to less than 6%. Average American families could save $2,500 in 2019.

In fact, she believes there are four major game changers in PPACA that will slow the growth in healthcare costs.

"Those plans that can succeed at really living up to the promise of managing care and providing quality care at an affordable price will thrive," she says.

"It's gotten very little attention but it has the potential to fundamentally transform our system into a high-performance health system," Davis says.

While not all provisions sit well with health plans, few can frown upon the promise of reduced cost growth and the potential for new target markets.