Policy Researchers: It’s Time for the States to Lead on Reform

At a time when progress on a variety of healthcare policy priorities is inevitably caught up in federal- and state-level politics, a group of healthcare policy leaders and experts has published an op-ed in The New England Journal of Medicine arguing that state legislatures should take the policy change lead.

Under the headline, “Addressing Health Care Cost Growth—Why and How States Should Lead,” Elliott S. Fisher, M.D., M.P.H., Carrie Colla, Ph.D., Christopher F. Koller, M.P.P.M., M.A.R., and Alena Berube, M.S., argue that now is a good moment for political leaders in state legislatures to take action to address a number of key healthcare policy issues. Writing on Oct. 5, the authors, who are affiliated the Dartmouth Institute for Health Policy and Clinical Practice, Geisel School of Medicine, Lebanon, N.H. (Fisher, Colla, Berube), the Milbank Memorial Fund, New York (Koller), the Department of Health Services, Policy, and Practice, Brown University School of Public Health, Providence, R.I. (Koller), and the Green Mountain Care Board, Montpelier, Vt. (Berube), argue that state governments can move more quickly and decisively than can the federal government, to impose structural controls to curb costs, and to implement certain quality standards.

“Without comprehensive oversight of money flows, sources and magnitude of waste, and opportunities for change, improvement will not be possible,” the article’s authors contend. “Economists have long called for firm limits on spending growth. A key step forward has been the establishment of agencies charged with both these tasks: nine states have launched programs to track and analyze statewide health care spending and establish reasonable spending-growth targets. Targets can and sometimes do include goals for increased spending on primary care. The targets are set by a public process and with the intention of achieving growth rates no greater than that of the economy as a whole. Reducing spending growth to just 1 percentage point below projected trends would lead to annual savings of more than $1 trillion by 2037. Because targets are aspirational, states also need to implement specific policies that can directly address the major drivers of spending growth,” they assert.

Further, the authors state, “Despite declining utilization, hospitals still represent the largest single component of U.S. health care spending. Hospitals provide the technologies that are essential for the effective and timely treatment of medical emergencies and the diagnosis and treatment of many diseases. Some subset of services must be geographically accessible to all. High fixed costs make duplication wasteful and providing access in rural regions challenging. Currently, hospitals can avoid the hard work of cost cutting by maximizing margins in other ways: expanding profitable services in wealthy neighborhoods, avoiding Medicaid, Medicare, and uninsured patients, or simply raising prices, as many do. If they are well designed and implemented, global hospital budgets can set firm limits on the total cost of hospital care (volume and price) while aligning incentives with community health goals by encouraging prevention and outpatient care. With input from regulators over time, budgets can be gradually adjusted to reduce duplication among facilities and improve efficiency within them.”

Per that, the article’s authors reference the success of the Maryland all-payer system, which, they state, “fosters hospitals’ engagement by giving them a share of the savings achieved. The result has been significant reductions in preventable admissions, readmissions, and the total cost of care, with no diminution of the quality of care, according to patients’ assessments.”

The authors concede that “Resistance to reforms that threaten the profits of large corporations and health systems will be fierce and well funded, and opponents of reform can legitimately point to the limited impact of each approach up to this point. Current state approaches to making prescription drugs more affordable do not address the underlying drivers of drug prices. Opponents will also cite ideological reasons to prefer market forces to government intervention or argue that any reduction in spending will harm patients. And slowing cost growth in a handful of states won’t solve health care’s threat to the federal budget. Nevertheless,” they insist, “state-level reform is both possible and, we believe, the most promising path forward.”

And, they add, collaboration with provider leaders and with physicians in practice, makes reform “within reach in many states. With stronger leadership by health professionals,” they conclude, “effective community organizing, and the right mix of policies, that vision could be attainable.”