Contents
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"When consumers easily compare the prices of goods and services, (providers) have strong incentives to keep those prices low."
-- Kathleen Sebelius, U.S. Health and Human Services Secretary April 2013 |
Overview
Health Costs & Spending
Health Care in the United States is a $2.8 trillion part of the economy and industry in 2012, encompassing significant portions of federal, state and local budgets, as well as a huge private sector market. The issues of growth, inflation, prices, sources of funding, as well as coverage and quality of services are central to much of today's health policy discussion. From consumer-directed health to universal coverage, the state and federal debate has intensified in recent years, including 2013. The following are a few overview statistics and projections, including some new, potentially conflicting projections by national experts:
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National Health Spending in 2011: Overall Growth Remains Low per 2013 Report. According to federal analysts (reported in Health Affairs, January 7, 2013) national health spending is estimated to have increased 3.9 percent in both 2010 and 2011; resulting in the health share of the GDP to "remain steady" at 17.9 percent. The new analysis from the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS), estimates that health care spending in the United States grew at a rate of 3.9 percent in 2011. That level of annual growth is identical to spending growth rates in 2009 and 2010, which means that growth in all three years has occurred at the slowest rates ever recorded in the 52-year history of the National Health Expenditure Accounts.
Study finds recent slowdown in health spending growth mostly tied to the economy
• 77% of the decline is linked to the economy
• 23% of the decline is linked to changes in the health system
Source: Assessing the Effects of the Economy on the Recent Slowdown in Health Spending, April 2013 Kaiser Family Foundation
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Health Spending Growth Projected To Average 5.7 Percent Annually Through 2021. Aggregate health care spending in the United States will grow at an average annual rate of 5.7 percent for 2011 through 2021, or 0.9 percentage points faster than the expected growth in the gross domestic product (GDP), according to new estimates from the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) The health care share of GDP by 2021 is projected to rise to 19.6 percent, from its 2010 level of 17.9 percent. By 2021, government spending at all levels for health care is projected to reach nearly 50 percent of total national health expenditures, with the federal government accounting for approximately two-thirds of that share. Published in a Health Affairs Web First. 6/12/2012
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Health Finance
There are a variety of ways that health care is paid for in the United States.
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In 2005, U.S. employers spent $596.5 billion on health benefits, up from $399.6 billion in 2000. Health benefits, which are taking an ever-increasing share of employers’ benefits spending, accounted for 44 percent of employer spending on benefits in 2005, up from 42 percent in 2000 and just 14 percent in 1960. (EBRI survey, 1/3/07)
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According to a recent survey conducted by the Commonwealth Fund, 34% of U.S. adults ages 19 to 64 face problems with medical bills or have medical debt, although 62% of those individuals have health insurance. (12/7/07)
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States spend an average of 28 to 35 percent of their annual budgets on health-related costs.
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The federal government pays a large portion of the costs of operating public programs.
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A new study US Health Care Spending: Who Pays?provides a year-by-year 1960 to 2010 comparison; by Josh Cothran of the Georgia Institute of Technology, published Sept. 2012.
NCSL's web site features a wide variety of reports that address these issues.
Health Cost Containment and Efficiencies
NCSL conducted a two-year project examining promising practices and realistic options for states to adopt cost containment strategies. Resources cover issues like global budgeting, multi-payer and pay-for-performance plans, multi-agency and pharmaceutical purchasing and a dozen other approaches.
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16 Cost Containment Reports by NCSL published and available online in 2011 and
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Two featured articles in the June and July/August 2012 State Legislatures are posted online.
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Health Costs: New Payment Reform Approaches |
Both publicly funded programs and private insurance markets are talking a lot about Accountable Care Organizations and "all payer databases" as tools to contain health costs and improve quality. Receive an update on these strategies, with examples from states and NCSL resources.
LEGISLATIVE SUMMIT SESSION IN LOUISVILLE: 7/27/2010
Taming Health Costs: States Making a Difference
States are struggling to rein in health costs and promote more efficiency, knowing that health spending accounts for more than 30 percent of many state budgets. Legislatures have suggested a variety of promising practices that could produce short-term savings, or "bend the cost curve" toward affordability while implementing long-term health reforms. Hear highlights on payment reform and other legislative perspectives from NCSL's health cost containment project.
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Facilitator: Representative James L. Riesberg, Colorado
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Introduction: Senator Richard T. Moore, Massachusetts - Chair, Healthcare Financing Committee; NCSL President
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Speakers: Christine Eibner, RAND Corporation, Virginia
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Representative Susan King, and Representative John Zerwas, MD, Texas - members, Public Health & Appropriations Committees
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Barbara Yondorf, CEO, Yondorf & Associates, Colorado - lead researcher, NCSL Cost Containment Project
Quality of Health Care
States can employ several strategies to improve the quality of care for their citizens, including the following:
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Disease management, which has been shown to improve results for individuals and provide significant cost savings to state Medicaid plans.
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Using “pay-for-performance” programs, i.e., physician- and hospital-level incentives to align payment with quality of services.
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Using other incentives to reward physicians for high performance, such as public reports and recognition or referrals of members to a plan or provider.
Along with disease management and pay-for-performance, states can focus on prevention and health information technology.
Pay for Performance: Pay for performance (P4P) ties reimbursement for services to the quality of care and outcomes. The Centers for Medicare and Medicaid Services defines pay for performance as "…the use of payment methods to encourage quality improvement and patient-focused high value care." States have begun to look at pay-for-performance strategies as a way to improve quality and cost effectiveness in their Medicaid and State Children's Health Insurance Programs (SCHIP). For example, Idaho is incorporating pay for performance into its primary-care case management Chronic Disease Management Program. An initial pilot program will focus on diabetes. The state plans to expand the pay-for-performance strategies to other chronic diseases. The pilot program will use six evidence-based quality indicators. Providers will receive a $50 incentive for each patient they enroll in a chronic disease management program, and $10 for each quality indicator that is met.
- May 2013
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