State Health Care Cost Growth Targets: Moving from Aspiration to Evidence to Action

This spring, several states, including Connecticut, Oregon, and Rhode Island, are releasing new data tracking just how fast health care spending has been rising by comparing the growth to state-level spending growth targets. In a new Health Affairs Forefront article, Milbank Memorial Fund president Christopher Koller discusses the role of health care cost growth target programs in spurring policy change to lower cost growth.

Koller observes that, at first glance, these aspirational targets seem to have had little impact given that spending in states with cost growth target programs have generally surpassed the targets. He argues for a longer-term view, however, pointing out that the programs are providing policy-relevant data on cost drivers. In response, state legislators are starting to act. For example, seven of the twelve states with 2025 legislation to tie commercial hospital prices to Medicare rates have cost growth targets, as do six of the twelve states with enhanced health care market oversight.

“State cost growth target programs are generating the measurement and knowledge needed to improve [our health system], and in at least some instances, the policy activity needed to slow cost growth as well,” Koller says.