State healthcare policymakers should work to lower healthcare costs while improving the quality of care, with a focus on gathering and sharing data and setting statewide goals, according to a recently published report.
The State Health Care Cost Containment Commission, launched just over a year ago released a series of recommendations, beginning with a call for an alliance of stakeholders – including all interested parties, from state government officials to industry leaders to consumer representatives – committed to transforming the healthcare system.
The urgency of this task is highlighted by the fact that U.S. healthcare costs are nearly twice as high as costs in other developed countries, while health outcomes are worse than in many other countries.
“As the nation’s ‘laboratories for democracy,’ states can serve as a proving ground for new approaches that raise the efficiency and value of healthcare,” according to the report, quoting a phrase by former U.S. Supreme Court Justice Louis Brandeis.
The Plainsboro-based Robert Wood Johnson Foundation funded the commission’s report, along with Kaiser Permanente, a California-based nonprofit managed care consortium.
Foundation senior program officer Andrew Hyman said he was encouraged that the report includes recommendations tailored toward the needs of state policymakers, rather than repeating recommendations geared toward the federal government.
“What’s actually unique about this is, it’s not only making the case for state leadership around involvement in taking responsibility for controlling health spending, which is actually an important point in and of itself, but it does so in a pretty balanced way,” Hyman said, noting that no one segment of healthcare stakeholders would have to carry the burden for making changes to the system.
While the commission’s recommendations provide a template for policy changes, they generally shy away from highly specific proposals. This is by design, Hyman said, because different states have different healthcare landscapes and a variety of systems of government.
Commission co-chairmen Bill Ritter Jr., a Democratic former Colorado governor, and Michael O. Leavitt, a Republican who is the former Utah governor and served as U.S. Health and Human Services secretary, knew that governors in each state face different obstacles, “therefore, states are going to approach this challenge differently,” Hyman said.
The seven broad policy recommendations are to: 1) create an alliance of stakeholders to transform the healthcare system; 2) define and collect data to create a profile of healthcare in the state; 3) establish statewide baselines and goals for healthcare spending, quality and other measures as appropriate; 4) leverage payment reforms to accelerate the trend toward coordinated risk-based care; 5) encourage consumer selection of high-value care based on cost and quality data, and promote market competition; 6) reform healthcare regulations to promote system efficiency; and 7) promote better population health and personal responsibility in healthcare.
David Knowlton, president and CEO of the New Jersey Health Care Quality Institute, said the recommendations are a good starting point, but it will be a challenge to translate them into policy.
“Who’s going to disagree with this stuff?” Knowlton said.
A board member of the Leapfrog Group, a nonprofit dedicated to promoting healthcare quality information, Knowlton said it can be a challenge to gather information in a format that’s useful to consumers. Giving an example, he noted that finding out what a provider charges for a procedure is a complicated process that depends on a patient’s health plan, their ability to pay and other factors.
“All of these things are noble goals, but they’re at the level of goals – they have to be operationalized,” Knowlton said.
Commission Executive Director Raymond C. Scheppach said the report would be valuable to states that choose to follow the template set down in its recommendations. He noted that the report calls for some central reforms, including a focus on shifting from paying providers a fee for each service to paying them for the number of patients they service and whether they meet quality standards.
The portion of U.S. gross domestic product that goes toward healthcare has risen from 5.2 percent in 1960 to 17.9 percent in 2011.
The report gives several reasons why U.S. healthcare costs are so high, including the fact that doctors’ services, hospital costs and prescription drugs are more expensive than in other countries; that Americans use more expensive services despite visiting doctors and hospitals less often than people in other countries; and that care is fragmented, with limited information given to patients and infrequent consultation among providers treating the same patients. In addition, many people with insurance don’t pay healthcare costs directly.
“In fact, numerous studies have shown that consumers generally equate high-cost treatment with high-quality care and will choose the most expensive treatment among options that are equal in quality but vary substantially in cost,” according to the report.
The report lists many ways that states can affect costs, such as through the design of public-employee benefit plans and Medicaid plans, as well as by using their antitrust power to discourage provider groups from gaining too much bargaining power.
The commission also advocates for malpractice reform, a goal supported by doctor groups, and for expanding the scope of practice for other healthcare professions, an approach resisted by many doctors.
It also suggests that states take various steps to encourage healthy living, such as providing loans and grants for grocery stores to locate in underserved communities.
Scheppach noted that the states have “phenomenal purchasing power” through public employee benefits and Medicaid. He added that states that have designed their own health insurance exchanges – New Jersey did not – can drive changes through exchange requirements, regardless of the politicization of healthcare at the federal level and the eventual fate of the Affordable Care Act.
Whether the ACA is “amended, goes forward or is repealed, I think you still have this problem” of growing health costs, he said.
He acknowledged the challenge of turning the report’s recommendations into concrete policies.
“One of the key points we make is this is not something where you’re going to pass a couple of pieces of legislation,” Scheppach said. “This is probably a 10-year effort.”
He added that the growing share of healthcare costs paid by consumers directly out-of-pocket will increase the pressure for publicly available information about healthcare costs and quality.
“Consumers, I think, are going to be making better decisions,” he said. “It is a long-term process” of getting them the information they need in an understandable format.
Hyman said it might be time for New Jersey healthcare leaders to re-engage on systemic reform.
The report “really helps any governor or state leader that wants to take this on, it shows here is a path you can follow no matter state you are here’s how you can have a very real and vigorous process aimed at addressing the problem of high health spending,” Hyman said.