Delaware Health Policy Stakeholders Come Together to Advance a Statewide Healthcare Spending Benchmark

June 6, 2019
Faced with high costs and relatively poor health outcomes, stakeholder groups have come together to work on a statewide healthcare cost benchmark in Delaware, the state’s secretary for health and social services reports

Faced with high costs and relatively poor population health outcomes—the state is third in the nation in overall costs, and thirty-first in health outcomes—stakeholder leaders in Delaware have come together to work collectively on their state’s cost-quality problem, according to an article published on June 6 in the Health Affairs Blog. In an article entitled, “Can A Small State Improve Both Health Care Costs And Health Outcomes? Lessons from Delaware,” Kara Odom Walker reports on a statewide initiative that has emerged to take on the cost-quality conundrum in that state.

“After I was appointed to serve as Cabinet secretary for health and social services in February 2017,” Odom Walker explains, “the [Delaware] State Assembly passed and the governor signed House Joint Resolution 7, which directed me to develop a strategy to reduce health care cost growth and improve health outcomes. We are the first state to both set a health care spending growth target and implement a suite of associated quality and population health measures.”

Then, Odom Walker reports, “From September through December 2017, the Department of Health and Social Services convened stakeholders, held public summits, and asked experts and the public for proposals to address both cost and quality. In February 2018, the governor issued executive order 19 to convene stakeholders to discuss a health care spending benchmark—a transparency measure that is a target for annual per capita health care spending growth. In the executive order, the governor also appointed payers, providers, hospitals, and state officials to discuss the methods involved in calculating, and setting a target for containing, health care expenditures. The same group, along with additional experts in quality, identified measures linked to better health outcomes and the prevention of avoidable health care use and expenditures. As required by executive order 19, I then sent recommendations to Governor [John] Carney in August 2018. In November 2018, the governor issued executive order 25, which established Delaware’s health care cost and quality benchmarks.”

Meanwhile, Odom Walker notes, “For 2019, the per capita total health care cost growth target was set at greater than or equal to 3.8 percent, trending down, by 2024, to greater than or equal to 3.0 percent. The benchmark is based on the per capita potential gross state product, defined as the sum of the expected growth in national labor force productivity; plus the expected growth in Delaware’s civilian labor force; plus the expected national inflation; minus Delaware’s expected population growth; plus a market adjustment to provide a gradual transition through the years 2020 to 2022 as a way to estimate economic growth and remove effects of inflation. The annual target will be reviewed by the Delaware Economic and Financial Advisory Committee, which will confirm that the methods and targets remain appropriate.”

Among the public policy questions yet to be resolved, Odom Walker writes, are this one: “[I]t remains to be seen whether transparency alone, with a good dose of optimistic and persistent messaging, will help Delaware focus on lower cost growth and seek strategies to better manage care for high-risk patients and improve primary prevention. The hope is that this will work, just as setting targets in Massachusetts has worked to lower the Commonwealth’s cost growth. Massachusetts’ experience has been promising, with the Commonwealth meeting or exceeding its cost growth benchmark in the past several years and, to date, not needing penalties or additional levers to push entities to perform. In February 2019, Rhode Island announced a 3.2 percent target for health care spending growth through 2022. Unlike Massachusetts and Rhode Island, however, Delaware has added quality benchmarks to monitor population health targets, particularly in areas that link to health expenditures.”

What’s more, she concedes, “Delaware may continue to be an expensive place for health care due to its market size and limited competition, and additional tools to reduce unnecessary costs and focus on waste may be critical.”