Reducing the Soaring Cost of Medical Care


If history is any guide, reducing the rate of growth in health care costs requires a collaborative, inclusive, and bipartisan approach. While there is no simple formula for lowering the growth in health care costs, stakeholders have long recognized that there are many areas where common ground can be found. 

Medical Liability Reform 
The current medical liability system is at odds with efforts to transform the health care system to one that recognizes and rewards quality. With an estimated 20 to 30 percent of all health spending going to care that is wasteful, inefficient, or redundant, our medical liability system generates billions of dollars in unwarranted costs each and every year. There is a better way to resolve claims of medical negligence and to compensate patients who suffer injuries as a result of malicious or incompetent medical practice. Providers who follow best practices and evidence-based medicine guidelines should receive protection from the threat of frivolous lawsuits. By promoting an evidence-based medicine approach to medical liability, both providers and patients would be protected.

Consumers and payers often do not have the information they need to know about the value and cost of medical services. Improving cost transparency would allow consumers, employers, and public programs to make more informed purchasing decisions.

Payment and Delivery System Reform
Experts agree that our system must move away from the antiquated, disjointed fee-for-service payment system to one that better rewards value and quality. To that end, health insurance plans have implemented innovative payment models to reward quality and promote evidence-based health care. Health insurance plans are committed to engaging physicians, hospitals, and other health care professionals in the design and implementation of payment reforms.

Reducing Preventable Hospital Admissions, Readmissions and Emergency Room Visits
Reducing preventable hospital admissions, overall readmissions and emergency room visits has become an important national priority for both quality improvement and cost control. Health plans are advancing this goal through a variety of initiatives that transform patient care. Research findings demonstrate that these innovative strategies are working to help keep patients out of the hospital and avoid potentially harmful complications. In doing so, health plans are promoting improved quality and safety and lower costs.

Fighting Health Care Fraud and Abuse
Efforts to fight health care fraud and abuse in private and public health insurance programs play an important role in protecting patients and payers. Fraud and abuse in the health care system has an enormous adverse impact on health care quality and safety, while also imposing higher costs on consumers, employers and taxpayers. The financial losses to health care fraud nationwide are estimated to range from $75 billion to $250 billion a year (National Health Care Anti-Fraud Association). Fraud and abuse also can result in serious harm to people who are subjected to unnecessary or inappropriate medical services – or to services by providers who are not licensed or qualified to provide them. Health plans are leaders in fighting health care fraud and abuse, and their effectiveness is demonstrated by the increasing degree that government health programs are adopting private health plan practices.

Latest Resources

Specialty Drugs—Issues and Challenges (ePub)

AHIP Specialty Drugs E-Pub:  Summarization of the Specialty Drugs issue brief that explores recent trends in the specialty drug market, highlights some of the innovative strategies health plans are adopting to control costs, and recommends additional policy solutions to further promote high-value, high-quality care.

Fact Sheets/Issue Briefs/Talking Points | Policy and Regulatory Affairs | 07/08/2015

New AHIP Report in AJMC Highlights Rising Prices for Hospital Services, 2008-2010

A new study published in the March issue of the American Journal of Managed Care (AJMC) provides new data on trends in hospital prices across the country.

Press Releases | Strategic Communications | 03/18/2013

New Report Examines Physician Out-of-Network Charges

A new report from America’s Health Insurance Plans (AHIP) highlighting data collected by Dyckman & Associates shows that some physicians who choose not to participate in health insurance networks are charging patients fees that are 10 times – and in some cases, nearly 100 times – Medicare reimbursement for the same service in the same geographic area.

Press Releases | Strategic Communications | 02/01/2013

Survey of Charges Billed by Out-of-Network Providers: A Hidden Threat to Affordability

To make health care coverage more affordable, the nation must address the soaring cost of medical care that continues to rise at an unsustainable rate. Research shows that higher health care spending is a result of higher health care prices.

Research | Center for Policy and Research | 01/01/2013

New Analysis in Health Affairs Outlines Framework for Effective Public-Private Sector Collaboration in Payment and Delivery System Reform

As payment and delivery system reform expands across the country, it is critical that public sector initiatives complement and build upon the successful efforts currently underway in the private sector, according to an article in the latest edition of Health Affairs.

Press Releases | Strategic Communications | 09/04/2012