The medical-industrial complex doctors, hospitals, insurance and drug companies is bankrupting the country. The cost of health care is rising twice as fast as inflation elsewhere in the economy. This explains why cost containment is the holy grail of health care reform. The most righteous criticism of the Affordable Care Act is that it seeks to provide universal coverage, which is fine, but it does woefully little to contain costs. It's hard to do one without the other.
Nevertheless, there is a little-known provision in the ACA that provides federal loans to launch insurance co-ops, nonprofit organizations that won't have to generate profits for investors and will focus on payment reforms to doctors that should help to keep costs down. Utah is fortunate that one such co-op Aarches Community Health Care is setting up business here.
Utah already has two well-known not-for-profit insurers Regence BlueCross BlueShield and SelectHealth. They are two of the reasons that health care costs are relatively affordable in the Beehive State. Intermountain HealthCare, which started SelectHealth before spinning it off, and the University of Utah Medical Center also have pioneered data-driven standards of care that also have helped to contain the soaring price of medicine.
Still, it is axiomatic in a capitalist system that competition is one way to keep downward pressure on prices. If Aarches becomes a healthy competitor to the other two big nonprofit insurers, that will be a good thing.
It may not be just what the doctor ordered, however. Because one way to promote efficiency is to quit paying doctors for each procedure they perform, which gives them financial incentive to order as many procedures as possible, and, instead, to pay them a flat fee to keep a patient healthy. That will be part of the Aarches model.
Each patient will have a "medical home," a doctor or group who will be the primary care provider. The incentive will be to keep the patient out of the hospital.
The co-op will mine Utah's All-Payer Database to find specialists who provide the best patient outcomes at the lowest cost.
The board of directors of the co-op will be customers. If the outfit ends the year with a surplus, it will plow that money into cost reduction.
None of these ideas is new, and some observers doubt that the company's $79 million capitalization is enough. But at least Utah is applying another available tool to try to bend the health care cost curve downward.