How To Curb Cost Of Health Care? Lots Of Ideas, No Quick Fix

Lawmakers, industry executives, health care professionals, union officials and advocates suggested a number of ideas at a conference last week. 

The relentless rise of health care costs, which account for nearly one-fifith of the economy, is a bane to the country, but experts disagree about how to stem them to bring the United States in line with other industrialized countries, which spend far less on health care. 

Cap the profits of health care insurance companies and hospital systems, and cap executive pay, Melissa Unger, executive director of Portland-based SEIU 503, which represents thousands of workers at nursing homes, local governments and universities, said at a conference last week.

Impose a 10% payroll tax on Oregon private-sector employers and use the money to create a government-funded health insurance system and take that responsibility away from employers, suggested Oregon Rep. Marty Wilde, D-Eugene.

Fund hospitals and other providers with fixed amounts of money, prod them to become more efficient, and reward them for improving wellness, not just treating illness, suggested former Oregon Gov. John Kitzhaber.

Get Congress to let the federal government negotiate with pharmaceutical companies to regulate drug prices for bulk purchases by Medicaid, Medicare and other government health care programs, said Rep. Earl Blumenauer, D-Portland.

These officials were among the lawmakers, policy experts, union officials, industry executives and advocates who spoke at the 2020 Oregon State of Reform Health Policy Conference, an annual event that took place online this year. 

Some states, including Oregon, are trying to figure out how to stop health care costs from rising so rapidly. But that’s not easy.

The Oregon Legislature has two task forces at work – one to come up with ways to cap rapidly escalating health care costs, the other to devise a way to ensure affordable health care for all. The task force members see the two groups as having an entwined mission: to substantially rework health care delivery.

Per-capita health care costs in Oregon are rising at about 6.5% a year, and the cost-control task force wants that pared back to 3.4% a year without hurting the quality of care at hospitals and other providers. The state and the federal government already have systems in place to try to limit annual spending increases on Medicaid, Medicare and two health care systems for public employees: the Oregon Educators Benefit Board and the Public Employees Benefit Board. Much of the spiraling cost increases come in the commercial insurance plans that cover the remainder of Oregonians, about 1.6 million people who get their plans through their employer or buy an individual plan. Those price jumps are negotiated between employers, insurers and health care providers.

But that revenue from commercial plans is crucial to hospitals and other providers, and throttling it back could prove very difficult. Hospitals freely admit that they charge commercial plans about double what they charge Medicare or Medicaid for the same service or procedure. That’s because, hospitals say, Medicare and Medicaid don’t pay high enough rates to cover the cost of care. They say they need money from commercially covered patients in order to stay afloat.

Jack Friedman, a retired health insurance executive and chairman of the state health care cost control tasks force, said there is inefficiency and waste to be squeezed out of the system.

“The key to this thing is to get better management on the commercial side,” he said. There are “high administrative costs” and “clinical waste,” he said. Examples of so-called clinical waste include high emergency room usage for non-emergency services, high rates of elective imaging, and “low-value care. There is plenty of that,” he said.

“On the insurance side there is waste,” he added, citing time-consuming prior-authorization procedures that insurers impose.

The solution, said Kraig Anderson, senior vice president at Portland health care insurer Moda Health, and a member of the cost-control task force, is to set providers on “fixed income streams,” in effect forcing them to find cost efficiencies while the state carries out monitoring to ensure they don’t drop their quality of care. The task force is working on the specifics of how such a monitoring system would work.

Wilde, the state representative, said he expects lawmakers to consider a plan that would impose a payroll tax on private-sector employers, and in return for the imposition of the tax, employers would no longer have to bear the cost of providing health care plans to their workers. He said he expects lawmakers to put the idea onto the ballot in 2022. But would Oregon residents be willing to trade their existing employer-provided plans for the uncertainty of a government-run system?

Unger, the union executive director, favored direct state action limiting profits and executive pay. 

How such a system would be created in Oregon and how it would work is unclear. Almost all hospitals in the state are part of nonprofit hospital systems, a number of which are not even headquartered in the state. Many companies or nonprofits that offer health insurance plans in the state are headquartered in other states.

Kitzhaber and Blumenauer said it is crucial to get Congress to compel health care providers and other elements of the health care system to cut the rate of cost growth. If the federal government created a unified system for buying healthcare for Medicaid, Medicare, the Veterans Administration and states, “you have a purchasing pool that (no provider) can walk away from,” Kitzaber said. But Congress and the White House have been moving in the opposite direction, seeking to dismantle or scale back the Affordable Care Act portion of Medicaid.

Creating a nationwide, government-run health care system is not a priority in the Senate, said U.S. Sen. Jeff Merkley, a Democrat and Oregon’s junior senator. “I don’t have a sense that there’s a high momentum (in Congress) to try to institutionalize that model across the country. Perhaps to incentivize it some, but I don’t think there’s a sense that it needs to be prescribed.”

Issues such as creating a government health care insurance program that Americans who are not on Medicaid or Medicare could join – a so-called public option – and cutting drug prices, are “highly contested ideas,” Merkley said.

Even if Democrats gain a majority in the Senate in the election next month, they will still face powerful lobbying from drug and insurance companies, he said.

Measures such as drug price controls and a public health insurance option have “common sense” in their corner, Merkley said, but, “there’s a reason they haven’t been done in the past.”

You can reach Christian Wihtol at [email protected].

 

 

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Comments

A publicly financed system would get more birds with one stone. The plan covers everything for everybody and maintains the patients rights to choose their own provider.  By pooling all the money to pay for care also gives the state the ability to bargain costs of Rx and Medical Equipment. Those are costly items.  This can be done for less money plus in stops the inflation rate. The best thing it does it allow providers to care for their patients.

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