Global Budgets: An Effective Approach To Control U.S. Health Expenditures

Abstract

Global budgets, as utilized in Canada, Germany, and in most other European countries, could be a possible approach to control increasing U.S. health care expenditures. This paper starts with a discussion of why making modifications of how hospitals and physicians are reimbursed, but still maintaining fee-for-service incentives, is not the long-term solution to the U.S. healthcare cost dilemma. After in the most general terms outlining the key elements of a possible U.S. global budgetary reimbursement methodology, some potential targets for organizational and management-type cost reductions are outlined. Billions of dollars could be saved in the U.S. by implementing a smart card for processing health insurance claims; by shuttering underutilized hospitals and other health facilities; by eliminating almost half of the available high tech equipment; and, other proposed approaches. This paper concludes with a discussion of how global budgets might impact the delivery of health services as it relates to consumers, the providers, the insurers, and to the potential formation of a Federal Health Commission and of state health commissions organized as public utilities.