How states can help control healthcare spending

Despite a recent report from the Congressional Budget Office projecting that healthcare spending will be a major contributor to the federal budget deficit in the next few years, states can take the lead in reducing care costs, according to an opinion piece in the Wall Street Journal.

For example, Oregon, Gov. John Kitzhaber, responding to a $2 billion shortfall in the state's Medicaid budget, established 15 regional coordinated care organizations (CCOs) to dismantle barriers between various sectors of the healthcare industry for better-integrated care with an increased focus on preventive, primary-care services, William Galston writes in the piece. Each of the CCOs received an annual budget proportional to the patients it served and a modest increase in costs, with the budget weighed against cost, outcome and quality measures.

Although a January 2014 study found the state's expansion of Medicaid led to a 40 percent increase in overall emergency room (ER) visits, as of mid-2014, Galston writes, ER visits within CCOs are down 17 percent, and their ER costs fell 19 percent, following similarly encouraging 2013 results. The decline was even steeper for chronic condition-related hospitalizations, and the system is on track to meet the goals the state agreed to in exchange for upfront bridge funding from the federal government.

Despite the encouraging results, he writes that there remains a possibility that reducing public healthcare program payments may shift costs to private insurance beneficiaries rather than drive down overall costs. To alleviate these fears, Galston says the Center for American Progress, a progressive think tank, proposes expanding the model used in Oregon to cover public and private healthcare spending, giving states the choice to enter into accountable care agreements with the federal government and committing to maintaining care quality and controlling per capita growth in exchange for a share of federal healthcare savings.

 To learn more:
- here's the opinion piece

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