Getting at the drivers of health care cost increases…
There was a really telling exchange this morning about Medicaid expansion between Sen. Steven Thayn, R-Emmett, who opposes expansion; Deborah Bachrach, a consultant to states and New York’s former Medicaid director; and Sen. Marv Hagedorn, R-Meridian, the co-chair of the Idaho Legislature’s interim committee on the topic. Thayn said he believes the real problem with rising medical costs is the third-party payer system, and he said Medicaid expansion wouldn’t address that. He also decried the “creep of federal rules and federal involvement,” noted the federal deficit, and said he doesn’t believe “that federal rules with food stamps or Medicaid encourages people to become productive.”
“If we’re really, truly looking at an Idaho solution, we need to look at what we can do with Idaho money, Idaho rules, and what we can do to change the cost of medical care,” he said.
Bachrach had a detailed response. She said Thayn’s right that Medicaid is a third-party payer, like others in the current system. “The one point I would make is with Medicaid expansion, we dramatically increase the state’s leverage to reform the health system,” she said. She noted that states already have control over medical care for state employees, through the insurance programs they offer. And they have control over the private insurance market through regulations set by the state Department of Insurance. If Medicaid expands to cover up to a quarter of the state’s population, she said, “The leverage the state has to influence where the system is going does go up.”
She noted that the Affordable Care Act was scored as paying for itself in terms of the federal deficit, and the Congressional Budget Office has scored repeal of the ACA as having a negative effect on the deficit. “About federal entitlement programs tending to increase dependence: I would resist that with respect to Medicaid,” she said. “Medicaid is health insurance. It started in the ‘60s as a welfare program I t was linked to welfare.” But it was decoupled from welfare in 1996, she said, and now is “purely health insurance.”
“We know that individuals who work in some small employers, who don’t work full-time, they’re not dependent – they just don’t have access to health insurance. The whole premise of Medicaid is have people covered, have them covered full-time, continuity of coverage, so that we can influence health and allow people to be better able to enter the workforce. So I have a different philosophy, if you will, on the dependency point.”
Hagedorn said, “In a perfect world, we would have control over all the things we do in the state, but we don’t live in that world. We live in a world where people are using emergency rooms because they don’t have insurance … and hospitals are mandated to provide that medical care. And they’re passing those costs on to you and I and the insurance companies that you and I pay for. And that’s the world in which we live, and we’ve got to figure out how do we start to reduce those costs. … Because as you’ve said, Sen. Thayn, we’ve got to start to bend the cost curve of delivery, that’s the key. And I think the No. 1 step is try to figure out how to reduce those uncompensated costs. That’s the biggest driver of cost right now to our medical providers, is the uncompensated cost. … That’s, I think, got to be one of our primary focuses.”
Over the lunch break, I asked Sen. Dan Schmidt, D-Moscow, a physician and sponsor of past Medicaid expansion bills who isn’t serving on the committee, about the factors that are driving health care costs up in our nation. He said both Thayn and Hagedorn are right, as they include the payment methodology and uncompensated care, or “cost shifting,” where “somebody else pays for it.” That’s what the ACA tried to get at, he said, by trying to get everyone insured. But there are other factors as well, Schmidt said, including technical and technological innovations that are consumer-driven, hospital and pharmaceutical costs, and more. All, he said, need to be addressed. “You can’t just do one of ‘em and expect it to be solved.”
Kaiser Health News has a report here on seven factors that drive up health care costs; the United States spends more on health care services than any other country. This Bipartisan Policy Center paper identifies 13 drivers of U.S. health care costs, from fee-for-service reimbursement to an aging population to insurance benefit design.
