One of the biggest problems facing the nation in the years ahead is the high and growing costs of healthcare. It's making our businesses uncompetitive, and it's the primary culprit behind the growing problem of the uninsured. No plan for expanding access to health insurance will be sustainable if costs aren't brought under control.

Imagine what it would mean for attracting both businesses and residents if Pennsylvania became the first state in the nation to reduce health care spending while improving quality. Impossible? No. A big part of the solution lies in changing the way we pay for healthcare. Under current payment systems, physicians, hospitals, and other healthcare providers receive strong financial incentives to deliver more services to more people, but they are often financially penalized for providing better services and improving health.  

To fix this, people need to start choosing healthcare services based on both cost and quality, so that healthcare providers have an incentive to eliminate the estimated 40 percent waste and inefficiency in the healthcare system.  

Read the October 5 Pittsburgh Post-Gazette for an example. The newspaper ran a story profiling a man who found that his medication cost $46 at one pharmacy and $557 at another, but his insurance plan would pay 80 percent of the cost regardless of where he went, and the high-priced pharmacy said that because of that, they compete on convenience, not on price.  

Or look at the 2007 report from the Pennsylvania Health Care Cost Containment Council (PHC4) showing that heart surgery costs more than twice as much at some hospitals as it does at others in the same region, with no difference in quality. Yet most health insurance plans give people no incentive to choose the lower-cost care.

What do we need to do?

1. Reauthorize PHC4 and issue public reports on healthcare providers' costs and quality.Pennsylvania was actually a pioneer in providing information on hospital quality and costs when it established the Pennsylvania Health Care Cost Containment Council over twenty years ago. But more recently it has fallen behind other states and regions by failing to expand quality reporting to physicians and outpatient services. And now even hospital reporting is at risk because of the governor's and General Assembly's failure to reauthorize PHC4.

2. Use health insurance plans that pay based on value. Businesses and state government in Pennsylvania should follow Minnesota's lead and create incentives for employees to use higher-value healthcare providers. Rather than charging employees more for all of their healthcare, charge them less for using higher-value providers and more for using lower-value care.

3. Choose healthcare providers based on quality and price. National studies have shown that higher-cost healthcare doesn't mean better quality healthcare. Just like any other product or service, the only way to lower spending is for all of us to ask about both price and quality, and use the healthcare providers that deliver the best value.