ECONOMIC REPORT OF THE PRESIDENT

Figure 4-24
Mortality Rate vs. Medicare Spending per Beneficiary,
by Hospital Referral Region, 2009
Annual Deaths per 100 Medicare Beneficiaries
7
6
5
4
3
2
6,000 8,000 10,000 12,000 14,000 16,000 18,000
Medicare Spending per Beneficiary
Note: Spending and mortality adusted for age, sex, and race.
Source: Dartmouth Atlas of Health Care.
Reforms to the Health Care Delivery System Under the Obama
Administration
In light of the compelling evidence that the health care delivery system
has historically fallen short of its potential, this Administration has implemented
a comprehensive set of reforms, largely using tools provided by the
ACA, to make the health care delivery system more efficient and improve the
quality of care. These reforms fall in three main categories: better aligning
payments to medical providers and insurers in public programs with actual
costs; improving the structure of Medicare’s provider payment systems
to ensure that those systems reward providers who deliver efficient, highquality
care, rather than simply a high quantity of care; and engaging private
insurers in a similar process of payment reform. Each of these reforms, as
well as its underlying economic logic, is discussed in detail below.
Aligning Public Program Payment Rates with Actual Costs
One way of reducing spending on health care is to ensure that the
amounts Medicare and other public programs pay for health care services
match the actual cost of delivering those services. Setting Medicare payment
rates at an appropriate level has at least two major benefits. Most
directly, reductions in Medicare payment rates reduce costs for the Federal
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