This type of model embodies the characteristics of the "accountable-care organizations," or ACOs, proposed in the House bill unveiled last week and the Senate Finance bill approved in committee in early October. Accountable-care organizations are networks of doctors and hospitals that together would receive a lump-sum payment for coordinating the care of their patients and for taking accountability for both the quality and the value of the care and service delivered.

Since not all medical providers are ready to accept this type of payment, new approaches to care delivery and financing already under way in some states and health systems are also included in legislation. This includes "medical homes" in which practices are paid to guide a patient's care. It also includes "bundled payment" for certain acute episodes of care and chronic conditions.

In this model, providers receive a fee for an entire episode of a patient's care – rather than for individual procedures – and then determine the best use of medical resources to deliver the best care for that patient. The Integrated Healthcare Association is developing a plan for bundled payment for total knee replacement and coronary artery bypass graft in partnership with several Southern California hospitals including Cedars-Sinai Medical Center and health plans including Blue Shield of California.

Administrative burdens must go

There is also a great deal of administrative inefficiency in the health care system. According to a study in the New England Journal of Medicine, almost one-fourth of hospital costs are related to administration and billing, and doctors spend more than eight hours a week on paperwork rather than on patient care. The administrative burden on those who run and participate in public programs is also very high.

To help streamline the process of applying for public programs, the California Healthcare Foundation and the California Endowment partnered with several California counties to develop a new online application tool, "One-E-App."

The investment in the creation of this tool has both reduced administrative overhead and improved the continuity of coverage for children who need public assistance, according to researchers at UCLA. This tool has also been adapted and is now in use in other states, including Indiana and Arizona.

This is just one example of how information technology can – if used wisely – reduce administrative inefficiencies and improve the continuity, and hence quality, of health care coverage. However, simply adding technology to an inefficient and costly medical system will only make the system more complicated and more expensive. Health information technology alone is not enough.

Address social disparities

Real health care reform must address the reasons we fall ill in the first place. In California, there are large disparities in health outcomes among different economic, geographic and cultural communities. The difference in life expectancies of people living in neighborhoods just a few miles apart is striking. The Bay Area Regional Health Inequities Initiative reports that "people who live in West Oakland … can expect to live on average 10 years less than those who live in the Berkeley Hills."

Redressing the "social determinants" of poor health is not only a moral obligation, it is also an economic imperative. The California Center for Public Health Advocacy estimates that a 5 percent reduction in the prevalence of obesity and physical inactivity will save the state nearly $2.4 billion a year. This is because obesity and physical inactivity are associated with the five chronic conditions that account for as much as 75 percent of our health care spending in the United States: diabetes, asthma, depression, congestive heart failure and congestive arterial disease.

The environments in which people live can have a positive impact on their health outcomes even in the face of persistent economic inequality. A local ordinance limits the development of fast food restaurants in south Los Angeles where the prevalence of obesity is higher. And ultimately it is the availability of affordable healthy foods that is the key to lowering rates of obesity. It is 10 times more expensive to get 200 calories from carrots than from donuts.

All components must collaborate

In the end, it will take a broad range of different strategies to control rising health care costs. And the solutions that are developed must be informed by what works in doctors' offices, hospitals and community clinics and for real patients and consumers.

It is for this reason that stakeholders from across the health care spectrum have come together this year to participate in an effort called the "California Task Force on Affordable Care." This series of daylong conversations, convened by the New America Foundation and held at health facilities around the state, will result in the development of a set of proposals to control health care costs based on California's innovative models of delivering high-quality health care and long history of multistakeholder collaboration.

It is possible to dramatically improve the value we get for our medical spending while improving the high quality of care we receive. California's experiences create a road map we can use to successfully implement federal reform and control rising medical costs.

Do you think health care reform can succeed without a public option? To comment on this issue, please use our forum.

Micah Weinberg is a senior research fellow in the California program of the New America Foundation and the staff director of the California Task Force on Affordable Care.