HCP Professors Michael Chernew, PhD, and Joseph P. Newhouse, PhD, together with PhD candidate Lindsay Sabik and Harvard Kennedy School’s Amitabh Chandra, PhD, collaborated on the article, “Ensuring the Fiscal Sustainability of Health Care Reform,” published online on December 9, 2009, in the New England Journal of Medicine. The authors argue that much of the current health care reform debate is overly focused on achieving budget balance in the next 10 years and suggest that, ultimately, long-term sustainability is more important.

Much of the debate has focused on lessons from geographical areas that spend relatively little per Medicare beneficiary. The authors point out that little correlation exists between the amount an area spends at one point in time and the growth of spending over time. Moreover, areas that have low spending growth over one period may not have low spending growth over a subsequent period. The authors argue that the United States must create effective strategies to curb spending growth and that doing so requires addressing the role of government in health care.

The authors discuss three strategies to lower spending growth: delivery-system reform, payment reform, and pro-market strategies. They caution that delivery-system reform alone will not change steady-state growth rates sufficiently and identify challenges associated with each of the other approaches. "One's perception of the appropriate role of government and markets will depend on one’s faith in the political system and general philosophy, as much as on economics," says Chernew.