States have more at stake than feds

August 9, 2013

There's more political pressure on governors to contain costs and influence healthcare delivery. An industry think tank aims to tackle cost and quality for state leaders.

The State Health Care Cost Containment Commission-an industry think tank-plans to release its first toolkit in November, outlining six broad strategies with 35 to 40 potential actions that states can use to enhance quality and reduce costs.

Ray Scheppach, commission director and former executive director of the National Governors Assn., says the report is different from prevailing publications because it concentrates on changes at the state rather than federal level.

“It’s surprising,” Scheppach says. “States have almost all of the policy levers. It’s amazing nobody focused on state actions before.”

While declining to mention specific recommendations until the commission finalizes the report, Scheppach says the members-a bipartisan group of former governors, and health system and health plan CEOs-easily reached consensus on tactics that governors could employ. For example, he says, they tout the convening power of governors to enact change by getting stakeholders around a table to discuss issues, such as how to change the payment system in a state.

“Everybody agrees that fee-for-service is not very good, creates incentives for unproductive care and that we probably need to move toward a capitated system where provides share the risk,” he says.

He said they also suggest that states need to enact changes because healthcare needs to be tailored to the needs of individual states.

Scheppach notes that Medicare covers approximately 50 million members while states will cover around 100 million, comprised of 70 million in Medicaid, 10 million to 15 million in state healthcare exchanges and 4 million state employees. By sheer numbers, the impact states can have is larger than the federal government.

States also have oversight related to malpractice law and scope of practice that helps them influence the healthcare process. Scheppach says the commission also focuses on states because of “the sense that the federal government is locked up in the politics around healthcare and the idea of them doing anything is limited.”

He says that by the time the commission report is released, and the major provisions of the Patient Protection and Affordable Care Act (PPACA) take effect, healthcare may become an even larger election issue in 2014, when 36 governor seats are up for election.

“There is a huge unknown about how many people with serious medical conditions will come into the system and what will happen to cost, where the pendulum will shift,” he says about PPACA. “There will be a real shakeout over several years.”

But, he says the commission members are optimistic that their tools can make a difference.

“We feel we now know how to make the change and what’s going to help in terms of both quality and cost,” he says.

In the next three to five years, he expects smaller, innovative states-perhaps Oregon, Utah, Vermont or Connecticut-to serve as “prairie fires” and lead the way. As they achieve success, Scheppach says, controlled healthcare costs will become part of the economic development calculation for firms selecting a place to launch or relocate.

“You’re going to end up with more political pressure on governors to get into this area,” he says. “Are we going to transform the United States overnight? No. But, we’ve got enough experience in looking at how to do things at the state level. We believe we have the right answers, but a number of states have to go and show it.”

The commission’s goal is to create practical solutions for states to manage today’s crushing healthcare costs.

States are in a situation where they must cut other programs such as education and infrastructure to maintain healthcare services.

 

Commission Members

  • Mike Leavitt, Co-Chair
Former Governor of Utah and Secretary, U.S. Department of Health and Human Services

  • Bill Ritter, Jr., Co-Chair
Former Governor of Colorado

  • Andrew Dreyfus, President and CEO
Blue Cross Blue Shield of Massachusetts

  • Simon Stevens, Executive Vice President
UnitedHealth Group and President, Global Health

  • Glenn D. Steele, Jr., MD, President and CEO
Geisinger Health System

  • George C. Halvorson, Chairman and CEO
Kaiser Permanente

  • Jay Cohen, MD, Senior Vice President, Optum

  • Joan Henneberry, Former Executive Director, Colorado Department of Health Care Policy and Finance and currently Principal Health Management Associates

  • Robert D. Reischauer, Medicare Trustee and Former Director, Congressional Budget Office

  • Lloyd Dean, CEO 
Dignity Health

  • Rob Restuccia, Executive Director
Community Catalyst

  • Michael L. Davis, Senior Vice President, Global Human Resources, General Mills