State initiatives offer promise for health-care reform

Published January 29, 2014 by Robert Powell, III

Many businesspeople fear that the disastrous rollout of the federal health insurance website is just a preview of an upcoming train wreck that will leave health care in a mess while its costs continue to mount unchecked.

But help may be on the way from unexpected sources — state health-care initiatives, including one in the works in Virginia.

The shadow cast by the federal health-care law, the Affordable Care Act, was evident when the Virginia Society of Certified Public Accountants polled its membership in December.  “Health-care costs” were cited repeatedly as the biggest hurdle facing Virginia businesses.

One CPA commented anonymously that the Affordable Care Act “is going to cost us all a lot and may not lower the overall health-care costs. It will cost Virginia a lot more in the future.”

Concern about the law’s implementation appeared to shape many responses about the direction of the economy. Fifty-one percent of the CPAs said the U.S. now is in a sustained recovery. That note of optimism, however, was countered by response to the next question. More than a third of the CPAs, a plurality of 37 percent, said a full recovery is still more than four years away.

“It is not the health-care costs per-se that are creating stagnation, but the lack of clarity and changes in the tax code that are scaring businesses,” a CPA said on the survey.

Worries about the ACA have not been diminished by statistics showing that growth in health-care spending nationwide has slowed in recent years.
Spending rose only 3.7 percent in 2012, according to a study by the federal Centers for Medicare and Medicaid Services (CMS). Its measurement of health-care expenses — including money spent on hospital services, prescription drugs, insurance premiums, doctor visits and federal programs such as Medicare and Medicaid — fell below 5 percent in 2008 and now has remained below 4 percent for four years.

The report’s authors said the ACA, passed in 2010, has had minimal effect so far in slowing the growth of the health-care costs. The biggest factors in the spending decline were the lingering effects of the Great Recession of 2007-09. Some health policy experts, in fact, believe that the pace in spending will rise as the economy picks up steam, increasing to as much as 6 percent this year as more people get insurance coverage.

Maybe the answer to holding down health-care costs lies with the states rather than the federal government.  A report issued in early January by the University of Virginia’s Miller Center, “Cracking the Code on Health Care Costs,” suggests that states are in good position to rein in costs while improving the quality of health care because they can tailor solutions to fit their needs.

The study, conducted by a 12-member panel including business executives, health-care officials and two former governors, says states should use their clout to replace “fragmented, fee-for-service care” with coordinated plans that hold providers accountable for cost control and improvements in quality.
“Health-care markets and cultures vary from state to state,” Bill Ritter, a former Colorado governor who co-chaired the panel, told The Daily Progress in Charlottesville in explaining its state-focused approach.

Almost all of the panel’s recommendations— such as creating an alliance of health-care stakeholders, collecting data to establish baselines and goals, and pushing payment reform and more coordinated care — already are part of a state health innovation plan being prepared by the Virginia Center for Health Innovation, a nonprofit organization formed in 2012.

Beth Bortz, the center’s president and CEO, says the panel’s stance on state-based reforms is reassuring. “That’s exactly the direction we’re trying to go,” she said.

Facets of the Virginia plan include: giving patients more information about the costs and quality of health-care options, promoting “population health” programs that address chronic diseases in various regions, and integrating primary care and mental health care.

The center expects to apply for federal grants to fund much of the plan. If approved, the money likely would arrive around March 2015. Bortz, however, hopes to fund some parts of the plan through grants from private foundations, a process that is expected to move along more quickly.

Financed by a state grant and private donations and staffed by only two full-time employees, some of the center’s initiatives already are underway. Last year, it set up the Virginia Health Innovation Network, a social media-style website that lets various health-care stakeholders swap ideas. The center also has worked with several major health systems in Virginia on grant applications targeting population groups struggling with expensive medical conditions. In addition, the center has set up a “strategic scorecard” that shows how Virginia fares in comparison with other states on health-care access, utilization, quality and cost.

Former Gov. Gerald Baliles, the director and CEO of U.Va.’s Miller Center, noted in a letter releasing its report that states have been called “laboratories of democracy.”

“Much like states have led in clear air, welfare reform and education reform, they are the likely level of government to lead the transformation of the health-care system because they have most of the policy levers,” he said.