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One Stage Down, Many More to Come

Health and Human Services Secretary Diana Dooley summed up the state of health care in California pretty succinctly at Tuesday’s health task force forum:

“With the economy down in California, there are more people needing services,” Dooley said, “and less money to provide it.”

That conundrum is at the heart of the creation of the Let’s Get Healthy California task force, which finished its first stage of discussions Tuesday.

“Historically, California has done very well in providing health care services,” task force co-chair Dooley said. “But that doesn’t mean we don’t have significant room for improvement.”

Dooley said the goal of the task force is to develop a 10-year blueprint for improving health care in California. The task force — and the state –  hope to save money along the way. The task force has a December deadline for completing the long-range plan.

The first four brainstorming sessions have focused on metrics. “First we have to know, 10 years from now, how do we know we got there,” Dooley said. “So setting the metrics and establishing the targets are the first steps. Then next we will be finding ways to reach these goals through concerted community action.”

Tuesday’s discussion centered on cost. “Our objective is to think about how to make a top priority the indicators related to health care affordability and cost,” said co-chair Don Berwick, former CMS administrator and past president and CEO of the Institute for Healthcare Improvement.

Richard Scheffler, professor of health economics and public policy at UC-Berkeley, recommended using a specific cost indicator — health spending in comparison to a percentage of the GSP (gross state product) in California. Using that metric, he said health care spending from 2000 to 2009 far outpaced economic growth in California — with roughly a 32% increase in GSP and a 73% rise in health spending.

“Health care spending on average increased two-and-a-half times faster than the economy in California,” Scheffler said.

He also proposed measuring affordability of care using a different metric: looking at employee and employer premium cost as a percentage of household income, or looking at the total cost of copays and deductibles as a percentage of household income.

“These proposed metrics can monitor the cost curve in California,” he said. “We are starting to see a spike in premiums in California, and we are now above the national average.

Health care affordability is not just about premium cost, he said.

“Affordability is more an issue of what people can do with their income,” Scheffler said. “And in California, affordability for families has gotten increasingly difficult over the past 10 years.”

Scheffler also presented a breakdown of the cost drivers in health care — such things as prices, administrative costs, and changes in third-party payments (insurance mandates, coverage expansion, benefit design).

Surprisingly, he said, the number-one cost driver is technology — the cost of new drugs, new treatments, new devices and a broader application of existing technology, such as scans.

“The big enchilada here is technology,” Scheffler said. “It is the major driver of health care spending yearly.”

The task force meets again Sept. 19 to start the next phase of discussion — ideas about how to change and improve the system.

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