The cost of healthcare in the U.S. keeps going up, threatening people’s access to treatment and services while reducing their ability to afford other necessities. Yet some states are making progress in responding to this urgent problem. Over the last decade, state policymakers across the political spectrum have been passing legislation, setting up government offices, and adding regulations aimed at controlling healthcare cost growth. One critical element of states’ maturing approaches for addressing healthcare costs is high quality, timely, and accessible data.
On the latest episode of Mathematica’s On the Evidence podcast, guests Jim Lloyd, Rachel Block, and Julie Sonier discuss why rising healthcare costs present a complex and urgent issue, how states are responding, and the role of data in supporting solutions that address healthcare cost growth. All three guests have experience and expertise in state government, research, and data.
- Lloyd is the executive director of the Office of Health Care Affordability and Transparency in New Jersey's Department of Health and previously worked as a research specialist for the Center for Health Services Research at Rutgers University.
- Block is a program officer at the Milbank Memorial Fund, who previously worked in New York's Department of Health, in senior health policy staff roles in the New York state legislature, and as the founding executive director of the Vermont Health Care Authority.
- Sonier is a senior fellow at Mathematica who worked in Minnesota’s Department of Health and Office of Management and Budget before leading a Minnesota nonprofit focused on transparency of healthcare cost and quality.
The urgency of rising healthcare costs
Last year, almost 20 percent of U.S. gross domestic product was spent on healthcare, leaving less money for other aspects of daily living, such as housing, food, and transportation.
“We know that people cannot afford all of the things that they need in order to have a reasonable standard of living,” Block explains during the podcast. Because the economic impacts are so widespread and stem from a sprawling healthcare system that involves the public and private sectors, Block says, “These are not just government problems. They really are community problems, as well.”
During the conversation, Lloyd recalls seeing a line graph during a graduate school lecture about a decade ago that showed the share of U.S. GDP devoted to healthcare, as well as its projected growth over time. The graph showed that if growth were to continue at the same rate, it would be more than 100 percent of U.S. GDP by 2060. Even though Lloyd and his classmates understood the graph to be tongue-in-cheek (“obviously, you can't get to that point,” Lloyd says on the episode), the projection highlighted both the rapid growth in healthcare costs and the increasing importance of healthcare as a share of overall spending in the country. “We have this healthcare system with much higher costs than other countries around the world, but we also have less access,” Lloyd adds. “There’s an opportunity to be able to identify those costs that are contributing to quality, identify those costs that aren’t, and then increase access and increase quality, potentially without increasing costs.”
Emerging state solutions to lack of healthcare affordability
Although approaches vary by state, Block explains that the states that have prioritized healthcare affordability have governors who have called attention to the issue, an office in the executive branch that collects and analyzes data on healthcare costs and pricing, and legislative leaders who are using those data to inform new policies. Examples of those policies include market oversight, limiting the prices paid for hospital services for state employees, and entering into value-based payment arrangements for the Medicaid program that move away from the fee-for-service business model that rewards volume over quality of care.
In recent years, Lloyd says, New Jersey has focused on costs from the perspective of patients. “We certainly do engage with a lot of stakeholders in the healthcare sector—payers, providers, pharmaceutical developers—they are the healthcare sector, and it's impossible to ignore them.” But, he explains, patients anchor the state’s multifaceted strategy, “so, it’s not one large initiative as much as a variety of things where we’re all approaching it from that one [patient] perspective.”
New Jersey’s approach has resulted in the creation of an interagency working group focused on healthcare affordability, subsidies to help people enroll in state health insurance exchanges, new laws to make drug prices more transparent and affordable, and a data-centric benchmarking program that establishes targets aimed at slowing the rate of healthcare cost growth in the state.
Data’s central role in identifying and addressing cost drivers
All three guests note the increasing importance of data infrastructure and data analytics to support policies and programs to curb rising costs. “The data are really essential in identifying what costs are valuable, what costs contribute to health, [and] what costs really improve the lives of the patients,” Lloyd says.
A strong data infrastructure, Sonier says, “establishes a common set of facts, a common set of priorities, and gets people the information that they need to know how well they're doing.”
And to establish that common set of facts, Block adds, those data can’t be proprietary. “The information has to be available in the public domain,” she says.
The data provide insights that can guide policy and programmatic decisions, but Sonier notes that they are also key for building trust with the wider healthcare community. Stakeholders need to trust the data and methodologies, so they’ll be motivated to act when state data show they are contributing to poor outcomes and unnecessary costs. “It's hard to overemphasize the role that building that trust has in addressing these problems,” Sonier says.
Listen to the full episode below.
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Show notes
Learn more about Mathematica’s work with Connecticut to build interactive online dashboards that are available to the public and give state officials a better view into the factors driving growth in healthcare costs.
Learn more about Mathematica’s research into the effectiveness of the Massachusetts cost growth benchmark initiative.
Read the first Health Care Cost Growth Benchmark Report from Mathematica to the state of New Jersey’s Health Care Affordability, Responsibility, and Transparency Program.
Learn more about the Office of Health Care Affordability and Transparency in the New Jersey Department of Health.
