September 12, 2013

Maine tackles the rising cost of health care

The state, ranked fifth in per-capita health spending, is devising strategies for efficiencies when Obamacare arrives.

By Joe Lawlor jlawlor@pressherald.com
Staff Writer

(Continued from page 1)

click image to enlarge

In this December 2012 file photo, Peggy Akers, a nurse practioner who volunteers at the India Street Public Health Clinic in Portland, examines Charles Lafland during a physical exam at the clinic. States have begun tackling an issue that has vexed employers, individuals and governments at all levels for years: trying to control the rapidly rising cost of health care. Maine has an especially difficult task because it ranks fifth among the states for per-capita health care costs, according to 2009 federal statistics.

Gregory Rec / Staff Photographer

Health spending per capita

     Avg. annual growth   1991-2009

 Percent growth

United States

$6,815

6.50%

Alabama

$6,272

5.90%

Alaska

$9,128

8.40%

Arizona

$5,434

7.80%

Arkansas

$6,167

6.60%

California

$6,238

5.90%

Colorado

$5,994

7.30%

Connecticut

$8,654

5.80%

Delaware

$8,480

7.70%

District of Columbia

$10,349

4.50%

Florida

$7,156

6.90%

Georgia

$5,467

6.60%

Hawaii

$6,856

6.20%

Idaho

$5,658

7.90%

Illinois

$6,756

5.80%

Indiana

$6,666

6.30%

Iowa

$6,921

6.10%

Kansas

$6,782

6.20%

Kentucky

$6,596

6.70%

Louisiana

$6,795

5.70%

Maine

$8,521

7.40%

Maryland

$7,492

6.60%

Massachusetts

$9,278

6.40%

Michigan

$6,618

5.60%

Minnesota

$7,409

7.00%

Mississippi

$6,571

7.00%

Missouri

$6,967

6.70%

Montana

$6,640

7.00%

Nebraska

$7,048

6.90%

Nevada

$5,735

9.20%

New Hampshire

$7,839

7.60%

New Jersey

$7,583

6.00%

New Mexico

$6,651

7.70%

New York

$8,341

5.90%

North Carolina

$6,444

7.90%

North Dakota

$7,749

6.20%

Ohio

$7,076

5.80%

Oklahoma

$6,532

6.70%

Oregon

$6,580

7.50%

Pennsylvania

$7,730

5.70%

Rhode Island

$8,309

6.30%

South Carolina

$6,323

7.30%

South Dakota

$7,056

6.90%

Tennessee

$6,411

6.60%

Texas

$5,924

7.30%

Utah

$5,031

7.90%

Vermont

$7,635

7.30%

Virginia

$6,286

6.90%

Washington

$6,782

7.30%

West Virginia

$7,667

6.30%

Wisconsin

$7,233

6.70%

Wyoming

$7,040

7.60%

U.S. health care spending reached $2.7 trillion in 2011, an average of $8,700 per person, according to the Centers for Medicare and Medicaid Services. The agency says those numbers are climbing and predicts that spending will reach $14,000 per person by 2021.

The higher costs mean higher insurance premiums for businesses, which are passing on more of those expenses to their employees, and for individuals, who are paying more in out-of-pocket costs.

The recession provided what is expected to be a temporary reprieve, with health care costs growing at 3.9 percent annually from 2009 to 2011, the slowest rate since the government began keeping track in 1960, according to data from the Centers for Medicare and Medicaid Services. Over the preceding 18 years, per-capita health care costs grew an average of 6.5 percent a year.

Despite the recent slowdown, health care costs continue growing faster than both wages and the economy as a whole, accounting for an ever-larger share of spending for employers and workers. It now accounts for nearly 18 percent of U.S. economic activity, up from 5 percent in 1960.

Annual premiums for employer-sponsored family coverage jumped nearly 4 percent this year, and single coverage rose almost 5 percent, according to a report released last week by the nonprofit Kaiser Family Foundation. The foundation expects prices will begin rising faster as the economy improves.

Economists say soaring health care costs are driven primarily by industry consolidation and expensive new medical technologies and prescription drugs.

The Affordable Care Act's cost-containment section reduces Medicare reimbursements to providers and requires commercial insurance companies to issue refunds if more than 20 percent of their revenue goes to profits, salaries and overhead. Hospitals will face penalties when patients develop conditions while in their care.

The federal law also promotes "accountable care organizations" within Medicare, which are responsible for improving coordination to reduce wasteful spending.

But much of the experimentation on reducing costs is driven by state governments and businesses.

Oregon has tried to tackle rising costs by focusing on Medicaid, which serves 550,000 people in the state and is expected to grow by 200,000 under the Affordable Care Act.

Gov. John Kitzhaber last year led a new model of delivering services under Medicaid. His initiative led to a state law that created "coordinated care organizations," which attempt to integrate mental, physical and dental care as they improve the way chronic conditions are managed. These organizations are required to manage their costs within a fixed rate of growth.

In New Jersey, hospitals have reported success with a Medicare program that paid doctors who saved money for hospitals. Officials said it contributed to lower costs and shorter hospital stays without increasing mortality or readmission rates because doctors began considering the costs of their orders.

The experiment, known as "gainsharing," is expanding this year to more hospitals, including some outside New Jersey.

In Massachusetts, the first state to enact comprehensive health care reforms, lawmakers last year supported a goal of restraining the rise in health care costs to a level no greater than the state's overall growth rate. To accomplish that, legislators passed a multi-tiered state law that expands the role of physician assistants and nurse practitioners to act as primary care providers, making it easier for patients to access care outside the emergency room.

The law also requires providers to disclose more information to consumers about costs and quality, and allows the state to review proposed consolidations to assess the effect on those factors.

There are substantial challenges to copying such experiments nationally. Adopting a technology system to keep medical records electronically, for example, entails substantial upfront costs, as does hiring staff to coordinate patient care. At the same time, providers have to be careful to avoid skimping on needed care to save money.

Most of the experiments are too new to produce reliable data about their success, but health policy experts warn that the rapid rise in costs is unsustainable.

"It has to end eventually," said Larry Levitt, senior vice president of the Kaiser Family Foundation, "because we can't have an economy driven entirely by health care."

 

Joe Lawlor can be contacted at 791-6376 or at:

jlawlor@pressherald.com

Twitter: @joelawlorph

 

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