stuart h. altman ph.d
TRANSCRIPT
Massachusetts as a Regional Laboratory to Control Health
Spending
Stuart H. Altman Ph.D.Chaikin Professor of Health Policy
Heller School for Social Policy and Management
Brandeis University
In 1971 U.S. Healthcare Spending Was $75 Billion and
Accounted for 7.5% of GDP
Today Healthcare Spending Exceeds $3.2 Billion and Consumes Over 18%
of GDP
Internationally We Far Outpace Other Countries In
Per Capita Spending
Relative to the size of its wealth, the U.S. spends a disproportionate amount on health care
But Interestingly Much Of The International Gap is Related
to Only Two Periods
Since 1980, the gap has widened between U.S. health spending and that of other countries
As Healthcare Consumes an Ever Larger Percentage of National Income It Reduces The
Capacity of Government, Individuals and Business To Spend on Other Goods and Services
Is There a Limit???
What Is The Major Factor Driving Increases In Health Spending?
• Is It We Use Too Many Expensive Services? Or
• Are Prices To High for The Services We Use?
Many Argue That The U.S. Provides Too Many Healthcare Services That Are Wasteful or
Harmful
In 1971 Dr. Bob Brook From The Rand Corporation Estimated That 40% of
Healthcare is Either Useless or Harmful!
We Still Here The Same Story Today and Surprisingly The Same
Percentage of Waste!
Sure Limiting Waste and Harmful Care Is Important BUT---
In Recent Years Most Research Suggests It is Higher Prices Not More
Utilization That Is Driving Medical Spending
Major Factors Generating Growth in
Healthcare Spending 1996-2013
-20%
0%
20%
40%
60%
80%
100%
30%
12%
-2.40%-2.50%
63%Price and Intensity
Service Utilization
Disease Prevelence
Aging
Population
Factors Associated With Increases in US Health Care Spending 1996-2013, Dielman et al, JAMA October 2017
Price Increases Driving Spending Growth (2014)
-20.00%
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
-2.7%-0.9% -1.3%
-15.6%
3.1%4.6% 5.6%
3.1%
28.1%
3.3%Utilization
Prices
Source: Health Care Cost Institute, “2014 Health Care Cost and Utilization Report”
Is It Possible To Constrain Prices Without Direct Regulation of Prices
Lets Turn To Massachusetts
State Develops Regional Programs to Promote More Efficient and Less
Expensive Health Care System
Note: Income data reported in 2014 dollars.
Sources: American Community Survey (income data); Center for Medicare and Medicaid Services (per capita health spending)
State Healthcare Spending in Massachusetts Among The Highest Even
Accounting for High Income
Healthcare spending per capita and median household income, by state, 2014
In 2006 Massachusetts Passed a Universal Health Insurance Law
Primarily Expanded Health Insurance Coverage to Low-Income Uninsured---Left to
Later Legislation Need to Focus on High Medical Costs
In 2012 Massachusetts Legislated a Health Care Spending Law
• Established a State-Wide Limit on Total Healthcare Spending (Benchmark)– Equal To Long-term Growth in State Income
• Created New Quasi State Agencies (Each With Separate Staffs and Budgets)
– CHIA---Center for Health information and Analysis• Collect and Publish Detailed Cost and Quality Information by
Provider and Payer
– HPC ---Health Policy Commission• Run by 11 Independent Commissioners (only Two From State
Administration
What Separates Massachusetts From Other States (Except Maryland)---State is Concerned About TOTAL Healthcare Spending Not Just Medicaid Spending
This Is Becoming More Important as Gap Between Private Spending and
Government Grows!
Hospital Paid Significantly Higher Amounts By Private Insurance
106%
125%
160%175%
100%90% 90% 85%
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
200%
1996 1998 2000 2002 2004 2006 2008 2010 2012
Pvt Ins. Paytas Percent ofMedicarePayments
MedicarePayt. GrowthRate
Seiden et al, Health Affairs December 2015
Payments in $2012 and adjusted for patient mix and geography
HPC Required to Issue a Cost and Market Report on Any Merger or Acquisition That Has the Potential to Substantially Increase Total Spending, or Lower
Access or Quality
Make Recommendation to State (Certificate-of-Need) or Attorney General (Ant-Trust) for Activities That Could Add Significant Cost
Growth
Health Policy Commission (HPC) Also Monitors Total Healthcare Spending
HPC Required to Hold Annual Cost Trends Hearing and Issue Report on
Major Cost Drivers
HPC Also Engages in Several Activities Designed To Improve Delivery System• Invested $150 Million in Lower Cost Community
Hospitals to Improve Care and increase Efficiency• Promoted Higher Use of Lower Cost Community
Health Systems• Established an ACO and Patient Centered
Certification Program (Used by State Medicaid Program)
• Promoted Alternative Payment Systems • Issued Several Reports on Reasons for Higher
Spending in State
Healthcare Spending in Massachusetts: Compared to
Benchmark and U.S.
Overall Total Healthcare Spending in State Slightly Under the Benchmark
for the Period 2012-2016
And Massachusetts Is Doing Better Than The U.S.
Annual growth in per-capita healthcare spending, Massachusetts and the U.S, 2000 – 2017
Notes: US figures for 2017 are partially projected.Sources: Centers for Medicare and Medicaid Services, National Healthcare Expenditure Accounts Personal Health Care Expenditures Data (U.S. 2015-2017) and State Healthcare Expenditure Accounts (U.S. 2000-2014 and MA 2000-2014); Center for Health Informationand Analysis Annual Report THCE Databook (MA 2015-2017)
In Particular, Private Insurance Spending Which Has Been Fueling Health Spending is Growing Less Rapidly in Massachusetts vs U.S.
Commercial spending growth,Massachusetts and the US, 2007-2017
Notes: US data includes Massachusetts. US and MA figures for 2017 are partially projected.Sources: Centers for Medicare and Medicaid Services, National Healthcare Expenditure Accounts Personal Health Care Expenditures Data (U.S. 2015-2017) and State Healthcare Expenditure Accounts (U.S. 2000-2014 and MA 2000-2014); Center for Health Information and Analysis Annual Report TME Databook (MA 2015-2017)
As a Result
Growth in Total Healthcare Spending in The State Among the Lowest in
Nation
Massachusetts healthcare spending grew at the 4th lowest rate in the US
from 2009-2014
Average annual healthcare spending growth rate, per capita, 2009-2014
Source: Centers for Medicare and Medicaid Services, State Health Expenditure Accounts, 2009 and 2014
But Massachusetts Still a High Spending State
Our Major Problem is that We Use Expensive Major Teaching Hospitals More Than All Other
States and More Than Necessary
Source: Centers for Medicare and Medicaid Services, State Health Expenditure Accounts, 2009 and 2014
Massachusetts no longer spends the most on health care
Personal health care spending, per capita, by state, 2009 and 2014
Massachusetts share of community appropriate discharges by hospital type, 2012-2017
Notes: Discharges that could be appropriately treated in community hospitals were determined based on expert clinician assessment of the acuity of care provided, as reflected by the cases’ diagnosis-related groups (DRGs). The Center for Health Information and Analysis defines community hospitals as general acute care hospitals that do not support large teaching and research programs.Sources: HPC analysis of Center for Health Information and Analysis Hospitals Inpatient Discharge Database, 2012-2017
Inpatient admission rate, MA and the US, 2001-2017
Notes: US data include Massachusetts. Sources: Kaiser Family Foundation analysis of American Hospital Association data (2001-2016), HPC analysis of Center for Health Information and Analysis Hospital Inpatient Database (MA 2017)
Thirty-day readmission rates, Massachusetts and the U.S., 2011-2016
Sources: Centers for Medicare and Medicaid Services (US and MA Medicare), 2011-2016; Center for Health Information and Analysis (MA All-payer), 2011-2016
State Is Focusing on Improving The Efficiency
of Delivery System
Contribution to Excess Spending in Massachusetts, 2009 and 2014
Personal health care expenditures (PHC) are a subset of national health expenditures. PHC excludes administration and the net cost of private insurance, public health activity, and investment in research, structures and equipment. Includes nursing home care, home health care, and other health, residential, and professional care. Includes physician and clinical services, dental services, and other professional services. Source: Centers for Medicare & Medicaid Services; HPC analysis
The rate of emergency department visits has improved, but remains 9%
higher than the U.S.
Emergency department visits, per 1,000 residents, MA and the U.S., 2005, 2010, and 2015
Source: Kaiser Family Foundation analysis of American Hospital Association data, 2005, 2010 and 2015
Can The Massachusetts System Work In Other
States?
Several States Have Contacted Us and Looking Into How To Set Up a
Similar System