Coverage authority, payment authority, audit and appeals sit in separate bodies, because concentrating them would make a coverage mistake, a payment mistake and a governance mistake mutually reinforcing. The cost brake runs in two stages and both read access-adjusted spending, so a fall caused by undelivered care never registers as a saving. Prior authorization is abolished and replaced by retrospective, collective review. Durability is engineered: universality, mandatory appropriation, ring-fenced capital, insulated rate-setting.
Stage one is an operating-path warning. It fires when spending exceeds the legislated five-year path by 0.5% of GDP for four consecutive quarters, when access-adjusted need exceeds its path by 0.75%, or at a level of 17.4% of GDP.
Stage two is an outer solvency backstop at 19.61% of GDP, pinned to the worst modeled scenario so that no modeled case reaches it.
Both stages measure access-adjusted spending: cash outlay plus the estimated value of care demanded and not delivered.
A cash-only trigger can be satisfied by care simply not happening. Spending falls, the brake is content, and a delivery failure registers as a cost success. Under adverse assumptions cash spending falls to 17.95% of GDP while access-adjusted need stays at 19.61% — the gap is the failure the cash number hides.
The level also has to sit somewhere defensible. The retired 16.8% trigger fired in the program's own central-adverse case, which makes it a forecast rather than a governor. An 18% trigger fires under a CBO-style scenario, which would put the program in permanent breach on the day it was scored.
Stage one is diagnostic and targeted. Determine whether the variance comes from price, volume, coding, released suppressed demand, workforce loss or benefit expansion. Negotiate prices and rebates. Correct the affected payment method. Services already failing their access standard are protected from cuts.
Stage two suspends benefit-ratchet additions, reviews high-cost coverage indications and their prices, tightens drug, device and facility procurement, revises the affected schedule, and requires congressional review if the excess persists.
There is deliberately no automatic economy-wide fee clawback. A broad across-the-board cut deepens the very workforce shortage that drove costs up, and it punishes services that were never the problem.
The brake is cost-side only. No automatic tax adjustment is paired with it — unlike the Debt Sunset Governor, which couples payroll and top-rate adjustments to debt-retirement solvency. Healthcare cost growth is a delivery-system and price problem, and it is solved by correcting the mechanism rather than by extracting more from taxpayers.
Underneath both stages sits the continuous layer: the floating point value inside the fee-schedule sector, operating automatically, and a biennial schedule revision ratcheting rates where sector spending grew.
With no modeled scenario reaching stage two, the backstop is decorative.
That is the design. Stage one is the operating control and its triggers are path-relative, so routine drift is caught without any level being crossed. Stage two exists for a failure no scenario anticipated. It does mean stage one's calibration carries the real weight and should be reviewed as such.
Honesty about gaps. Distributed Healthcare has more unresolved specification than other Engines because operational complexity is higher; the items below are flagged for v10.2 specification or for outside expert review.
- Access-adjusted need has to be estimated to be measured, and the estimate is doing enormous work — it is also what blocks long-term-care expansion in every modeled scenario.