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The Milbank Memorial Fund is an endowed operating foundation that publishes The Milbank Quarterly, commissions projects, and convenes state health policy decision makers on issues they identify as important to population health.
November 27, 2018
Sustainable Health Care Costs State Health Policy Leadership
Christopher F. Koller, President Read Bio
Back to President’s Blog: The View from Here
Dear Newly Elected Governor:
Congratulations on your victory on November 6th and for assembling successful campaign messages that resonated with so many in your state. Now about those statements on health care affordability.
You are one of 19 new governors this year and I hope you and your colleagues did not overcommit yourselves on health care when you were out on the campaign trail. In spite of the President’s famous remark last year during the “Repeal and Replace” debate, we who work in state health policy do in fact know that it is “so complicated” and, on behalf of them, I want to share a couple of thoughts on health care affordability as you settle in with your transition team and get started.
You probably heard a lot from voters about the affordability of health care while you were out campaigning. Your briefing book may have latched on to good villains like pharmaceutical companies or health insurers. Alas, the issue is more complicated than that and we need to look in the mirror for blame. To quote the comic strip sage Pogo, “We have met the enemy and he is us.”
Its complexity notwithstanding, I encourage you to take on the issue. You will have to broaden the scope of the conversation and lower the expectations for success, and your efforts probably won’t get you reelected, but the issue is crucial and no one else can lead on it but you.
When you broaden the scope, you’ll help people understand that our collective health care challenge is the underlying cost of health care. Explain that when you spend 18% of your GDP on health care and when a family insurance policy in 2018 clocks in just shy of $20,000, these costs crowd out state spending on higher education and infrastructure and rob employees of wage hikes.
You’ll have to explain to people that the typical response to rising costs has been to make health care more affordable for some by making it more expensive for others. Employers manage their costs by shifting premiums to their employees as well as deductibles, co-insurance, and co-payments. Public policies with rating rules that charge less to healthy and younger people make older and sicker people pay more. State governments try to get the Feds to pick up the tab for public subsidies.
Once the public is focused on the underlying costs of care, then you can help them understand that in the US we have a price problem more than a utilization problem. All those provider consolidations are making it worse, as is our tendency to encourage providers to choose specialty practice over primary care practice. And while you are at it, some quick lessons on the social determinants of health would be in order. All that expensive health care does not buy us the improvements in overall community health and lifespan that investments in education, housing, and food security would.
Having identified the challenge, it will be important to keep expectations on affordability modest. Don’t oversell. State government can take a lead on improving the overall affordability of health care, but it will take time and the use of all of the state’s considerable policy levers.
Use your bully pulpit to educate people about what is driving up underlying health care costs, as they do in Minnesota and to promote healthy behaviors, as they do in Colorado and Utah. Align Medicaid and public employees’ health benefits administration and use your purchasing power to move the health care market, as they do in Washington and Oregon. Coordinate payment reform activities across Medicaid and commercial insurance, as they do in Arkansas and Oklahoma. Get aggressive about insurer rate review to promote delivery system reform, as Rhode Island has been doing for a decade. Tackle high provider prices directly, as the state employees plan did in Montana. Finally and most importantly, you cannot improve what you cannot measure. Your state measures economic development, jobs growth, and public health—it should track health care spending against targets for growth, as they do in Massachusetts and Delaware.
None of this work will make health care more affordable tomorrow. And if you bemoan the price of health care but then champion health care as an economic driver in your state or stay quiet as providers merge to gain negotiating leverage, you will lose that most precious element of political capital—your credibility.
A word about your team and its important role in this work. Pick good people. You have one chance, so get the best folks you can for your cabinet. Of course this holds true beyond health care, but that Medicaid director you want to recruit for only $100k will be asked to run an agency with a Fortune 100-sized annual budget and trailing-edge information technology. Mental health services and care for kids who have experienced family trauma are expensive for states. A slip up in either agency will bring tragedy and social media outrage. You will have a public health emergency on your watch and you will need a health director who can communicate calm competence when that happens. And all this should be overseen by a health and human services secretary who is not too busy responding to your nervous staff and demanding legislators—and can actually support these cabinet officials.
Competence matters. These are not posts to fill with loyal friends (or their associates) who can then learn on the job. Once the cabinet is hired, support these officials in their efforts to develop a high-quality civil servant workforce.
So why should you and your new team wade into these economic thickets, to be scarred by disappointed providers whose revenue is your expense, and by patients who think their needs trump all others?
First, consider the economic benefits of the next dollar to be spent on health care. Take a look at your state budget and ask your commissioner of education or director of transportation what they could do with 5% of your Medicaid and public employees’ health benefits budget. Ask your chambers of commerce what a couple fewer points of commercial insurance trends—compounded over time—would mean for employee cost sharing or wages.
It should be quite clear that the federal government will not fix this problem, so it is up to states to address it. You ran for office because you care about your state, and you are not afraid of challenges. Yes, making health care affordable is tough, but excessive health care spending is robbing your state of resources that could be better invested elsewhere. Clearly charge someone in your cabinet to gather people together—not just the providers and the insurers—to get the facts, understand the issues, the options, and the tradeoffs. Communicate with the legislature. Support the people looking at the issue with state resources, leadership, accountability, and persistence.
After all, “common problems create community,” as a Hawaiian legislator told me recently. That sense of common purpose is needed to improve health care affordability and would be quite a legacy for you.
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