Reducing The Growth In Healthcare Spending: Can Massachusetts Be A Model for The Nation. Stuart H. Altman Ph.D. Chaikin Professor of Health Policy Heller School for Social Policy and Management Brandeis University. Even Without Reform Healthcare Spending By Government Will Be A Major Force.
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Stuart H. Altman Ph.D.
Chaikin Professor of Health Policy
Heller School for Social Policy and Management
Demographics and The Growing Number of Low Income Are Key Reasons
Hospital Payment-to-Cost Ratios
Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2005, for community hospitals.
(1) Includes Medicaid Disproportionate Share payments.
Employers Are Requiring Workers To Absorb More of The Increases In Premiums---AND
The U.S. Health System Seems To Be Approaching a “Brown Out”---Less Money Available for Healthcare Services
Need to Foster a “Value-Based” Delivery System
But Still Unclear Whether Supply or Demand Side Approaches Will Prevail
Give Providers a Limited Budget and Let Them Decide How It Should Be Spent
Fastest Growing Private Insurance Are High Deductible and Preferred Provider (PPO) Plans That Use Fee-for-Service Payments
NOTE: Information was not obtained for POS plans in 1988. A portion of the change in plan type enrollment for 2005 is likely attributable to incorporating more recent Census Bureau estimates of the number of state and local government workers and removing federal workers from the weights. See the Survey Design and Methods section from the 2005 Kaiser/HRET Survey of Employer-Sponsored Health Benefits for additional information.
SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2012; KPMG Survey of Employer-Sponsored Health Benefits, 1993, 1996; The Health Insurance Association of America (HIAA), 1988.
Penalize Providers That Voluntarily Cut Use of Expensive Services
Although Many Use PPO Insurance and Fee-for-Service Payment--- Offer Bonuses For Providers That Spend Less Than Target
The Massachusetts Story
Quality of Care and Access Also Better In Massachusetts But Systems Need To Become More Efficient
Personal health care expenditures* relative to size of economy
Percent of respective economy†
MA (CMS NHE)
*Personal health care expenditures (PHC) are a subset of national health expenditures. PHC excludes administration and the net cost of private insurance, public health activity, and investment in research, structures and equipment.
† Measured as gross domestic product (GDP) for the US and gross state product (GSP) for Massachusetts
‡ CMS state-level personal health care expenditure data have only been published through 2009. 2010-2012 MA figures were estimated based on 2009-2012 growth rates provided by CMS for Medicare, ANF budget information statements for MassHealth, CHIA, and pre-filed testimony from commercial payers.
Source: Centers for Medicare and Medicaid Services; ANF; CHIA; pre-filed testimony from commercial payers for 2013 annual cost trends hearing; HPC analysis
Stops Short of Regulating Payments
Chapter 224: Cost Control & Payment Reform Legislation
Health Workforce Support
Alternative Payment Models
New State Oversight
Review Provider Price Variation
Health IT Requirements
Medicaid Payment Reform
Transparency & Reporting Requirements
Annual Spending Targets
ACO Certification & Oversight
Community Hospital Improvement Fund
Executive Director and Staff
Payment Reform Fund
Center for Healthcare Information and Analysis
Health Policy Commission*
* In EOHS but not subject to EOHS control. Exempt from state civil service requirements and pay scales.
Ultimate Responsibility Still Within Private Sector!
Source: Author’s calculation based on historical state spending estimates and projected national health spending growth from the CMS Office of the Actuary and targets set forth in Chapter 224.
We Keep Reminding The System to Eat It’s Vegetables
What Could Be Next!!!