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Mind Your Ps and Qs
Amy Downs and Nina RoumellDecember 4, 2014
Levers to Reduce the Price and Quantity of Health Care
• After a lull, health care cost growth is increasing again.
• Health care markets don’t operate like typical markets.
• A number of opportunities exist that may reduce costs.
2
A Long Way to Go Average Total Single Premium (In Dollars), Private-Sector Establishments, United States And Colorado, 2000-2012
4
What Drives Costs? Where To Start?
Breaking Down Health Care Cost:
A Simple Formula
Alfred E. Neuman’sCosmic Health Care Law
The Technology Conundrum
8
SOURCE: Health Care Costs: Key Information on Health Care Costs and their Impact, Kaiser Family Foundation, 2009
Traditional Insurance: Buffet-Style Demand
9
Health Behaviors DriveAnnual Health Care Costs
Tobacco $289 Billion
Obesity $190 Billion
Alcohol $224 Billion
10
Fee for Service: It’s About the Money
11
Colorado Business Group on Health; PROMETHEUS
13
Levers that Keep Costs in Check
1. Consumers bear costs of purchases.
2. Buyers make choices based on transparent information.
3. Competition exists among suppliers to add value to services and products.
In Traditional Markets . . .
Consumers Bearing the Cost
More Skin in the Game
17
Show Me the Money: High Deductible Plans
46%
10%
5%
2%
1%
21%
28%
24%
20%
14%
26%
39%
54%
58%
57%
7%
24%
17%
12%
9%
8%
20%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
1993
1999
2003
2008
2013
Conventional HMO Preferrred Provider Network Point of Service High deductible
Enrollment by Insurance Plan Type, United States, 1993-2013
18
Benefit Design: Tipping the Scale
19
Reference Pricing
Cholesterol lowering
medications
Source: National Institute for Health Care Reform
22
Reference Pricing: From Theory to Practice
Robinson J C , and Brown T T Health Aff 2013;32:1392-1397
©2013 by Project HOPE - The People-to-People Health Foundation, Inc.
Shifting Risk—and Reward—to Employees
Encouraging employees to take responsibility for their health and health care
High-deductible plans
Wellness incentives
Transparency
Transparent Information for Informed Choices: Cost and Quality
• Health Insurance Marketplaces • All Payer Claims Databases
27
Engaging Consumers in Medical Decisions
28
Increasing Competition
30
Buying in bulk: Walmart and Lowes
• Crossing state lines to use providers (Centers of Excellence)
• Bundled payment
Increasing Competition Among Providers
31
Providers Bearing More Risk
32
Bundled Payments: One-Stop Shopping
Defensive Medicine and Tort Reform
SB 14-187: Colorado Commission on Affordable Health Care
• 12-member group will conduct in-depth analysis of Colorado’s health care cost drivers.
• Goal: Recommend ways to contain costs while improving access and quality.
Containing Health Care Costs
36
• After a lull, health care cost growth is increasing again.
• Health care markets don’t operate like typical markets.
• A number of opportunities exist that may reduce costs.
37
Amy Downs Nina Roumell [email protected] [email protected]