Miller Center

The State Health Care Cost Containment Commission

A Project of the University of Virginia’s Miller Center

REPORT RELEASED: “Cracking the Code on Health Care Costs”

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The State Health Care Cost Containment Commission, organized by the University of Virginia’s Miller Center, released a report on January 8, 2014, at the National Press Club in Washington D.C. The report examines how the nation’s governors and other state leaders can transform the current health-care system into one that is more integrated, coordinated, patient-centered and cost-effective.

The commission is co-chaired by Michael O. Leavitt, former secretary of health and human services and governor of Utah, and Bill Ritter, Jr., former governor of Colorado. Its members include health insurance, hospital, and physician group CEOs as well as representatives of the major purchasers of health care, including Medicare, Medicaid, the private sector, and consumers.

The report aims to jump start state-level action on health-care cost containment as states begin new legislative sessions.

Executive Summary: [Download Executive Summary | Download Full Report] The cost of health care in the United States has reached a tipping point as spending by individuals, governments, and businesses has grown steadily for over five decades. In 1960, health care costs per individual averaged $147; by 2011, this figure had reached $8,860. This is more than twice the average spent by all other developed countries in the Organization for Economic Cooperation and Development (OECD). Although there has been a recent lull in the growth of health care spending, it is likely temporary. If current practices in health care delivery and compensation remain the same, projected costs will reach $14,103 per person by 2021.

Despite our massive investment in health care, Americans are far less healthy than our peers elsewhere in the developed world. U.S. health quality is average or below other countries on several important measures, including life expectancy, infant mortality, obesity, diabetes, chronic lung illnesses, and heart disease. Moreover, although some of the most advanced medicine in the world is practiced in the United States, surgical errors, medical mistakes, and poorly coordinated care are not uncommon.

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Controlling the rise in health care spending offers substantial future benefits to individuals, families, businesses, and governments. Health care costs already consume 18 percent of the nation’s output, as measured by the gross domestic product. Even small reductions in the growth rate will improve wage growth; business competitiveness; and the opportunity for governments to invest in programs that spur prosperity, such as education, infrastructure, and research. But failing to act will have consequences. Without systemic reforms, health care expenses will continue to consume an ever-larger share of the nation’s wealth, eventually threatening its economic future. [Download Executive Summary | Download Full Report]

 

The Purpose: The report is being written for state health care leaders across the nation. Essentially it is for governors as they have the position and policy levers to lead the transformation of the health care systems in their states. It is also for their cabinet members, particularly Medicaid Directors, Insurance Commissioners, and Human Resource Directors, as well as all of their key staff. Furthermore, it is to inform state legislators and their staffs, as they will also need to provide critical leadership to change the system. Finally, in addition to the elected and appointed political leadership in the states, it is our hope that the report will be read by other health care stakeholders and particularly citizens in every state as they all need to be an integral part of the state consensus and partnership to change the health care cost trajectory in states while also enhancing quality. The report should be released in the fall of 2013.

 

The Problem: [Download PDF] The health care problem in the Unites States is one of high cost, mixed quality, and unsustainable growth. Health care spending has increased so rapidly over the last few decades that in 2011 per capita spending reached $8,860 and represented almost 18 percent of Gross Domestic Product. Per capita spending in the U.S. was over twice that of other OECD countries even though residents in the U.S. utilized the system less than individuals in these countries. In spite of the high level of spending, the U.S. ranked below 17 other OECD countries in terms of life expectancy the best measure of health outcomes. In the last several years, spending for health care by both federal and state governments has forced cuts in public investments such as education, infrastructure, and other programs, which will eventually lead to lower productivity, economic growth, and growth in real wages and real income. Read more →

 

The Critical Role of States in Transforming the System: [Download PDF] Due to the convening power of governors, the current authority of states, and the additional jurisdiction given to the states in the Affordable Care Act, states are the level of government best positioned to transform the United States health care system.  States should be able lead the transformation from a fee-for-service system to one that delivers higher quality care at lower costs. In terms of health care spending programs that can drive delivery system reform states administer Medicaid with 70 million enrollees, state employee health care with 3.4 million enrollees, and then the health insurance market places with 10 million enrollees. States also oversee all malpractice and scope of practice laws and insurance regulations and are an important force in influencing life style choices of citizens. Finally, they have a major role in requiring price and quality transparency in the system and thus can influence the level of competition in the health care marketplace. Read more →

The Meetings: The Commission has met twice, once on February 13, 2013 and the other on June 11, 2013. It also has had numerous conference calls to discuss various drafts of the report. There will be a meeting to approve the final report in the fall of 2013.

Project Staff: The project director is Dr. Raymond Scheppach, ray.scheppach@virginia.edu  who is the former Executive Director of the National Governors Association and currently an Economic Fellow at the Miller Center of Public Affairs and Professor of Practice at the Batten School of Leadership and Public Policy at the University of Virginia. John Thomasian, former Director of the Center of Best Practices at the National Governors Association, is a senior consultant and Dr. Arthur Garson, former Dean of the University of Virginia School of Medicine is also a senior advisor on the project. Tess Moore was the key coordinator of the project.

Funding: Kaiser Permanente and Robert Wood Johnson Foundation are funding the project.

The Commission: The Commission includes representatives of all the key sectors of the health care industry including insurance plans, hospitals and physician provider groups. It also has representatives from all the key groups that purchase health care including Medicaid, Medicare and the private sector as well a consumer advocate. All believe that the system can be transformed into one that can deliver higher quality care at lower costs. They all also believe that states are in a good position to lead the transformation. Click for full bios of the commission members. The Commission members are as follows:

  • The Honorable Mike Leavitt, Co-Chair
    Former Governor of Utah and Secretary, U.S. Department of Health and Human Services

  • The Honorable Bill Ritter, Jr., Co-Chair
    Former Governor of Colorado

  • Andrew Dreyfus, President and CEO
    Blue Cross Blue Shield of Massachusetts

  • Simon Stevens, Executive Vice President
    UnitedHealth Group and President, Global Health

  • Glenn D. Steele, Jr., MD, President and CEO
    Geisinger Health System

  • George C. Halvorson, Chairman and CEO
    Kaiser Permanente

  • Jay Cohen, MD, Senior Vice President, Optum

  • Joan Henneberry, Former Executive Director, Colorado Department of Health Care Policy and Finance and currently Principal Health Management Associates

  • Robert D. Reischauer, Medicare Trustee and Former Director, Congressional Budget Office

  • Lloyd Dean, CEO
    Dignity Health

  • Rob Restuccia, Executive Director
    Community Catalyst

  • Michael L. Davis, Senior Vice President, Global Human Resources, General Mills

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