Task Force Issues Plan for Saving $305 Billion in California

Just before the bell rings for the next round of budget battles, California legislators and policymakers were presented last week with a plan to reduce health spending by more than $300 billion over the next 10 years.

The California Task Force on Affordable Care delivered a 56-page report outlining specific tactics for saving health care dollars as the state implements elements of national health reform. Assembled in the wake of California’s failed attempt at statewide health care reform a couple years ago, the task force over the past several months zeroed in on how California could make the most of national reform.

The report, titled “Creating a High Value Healthcare System for California,” calls for 10 specific actions and estimates the savings each action would produce.

The plan may fall on particularly receptive ears this week and next, as lawmakers hear and respond to Gov. Arnold Schwarzenegger’s (R) proposals to deal with a deficit estimated to be about $20 billion. State officials predicted revenue gains in April might trim the budget deficit from $20 billion, where it was at the beginning of the year, to about $18.6 billion, but those gains did not materialize, according to State Controller John Chiang.

The governor’s new budget plan, expected to be announced this week, probably will call for cuts deeper than those he proposed in January, particularly for areas such as health and human services.

While the cost savings identified in the task force report may not help the state make ends meet this fiscal year, the changes are necessary to make health reform work in the long run, according to Micah Weinberg, senior researcher with New America Foundation’s California Program and co-author of the report.

“There’s increasing understanding that healthy habits are not some subsidiary issue to be dealt with by public health people and ignored by everybody else. We’ve got to learn to talk about prevention not as a separate issue but as an integral part of the health care system,” Weinberg said.

‘Health Policy Glitterati’

The task force, assembled by New American Foundation and Blue Shield of California Foundation, was characterized by California HHS Secretary Kim Belshé as “health care policy and provider glitterati of the state of California.”

“This is a very distinguished group,” Belshé said at the Sacramento event to release the report last week. “This Task Force is well-positioned and well-suited to bring an important voice to many of the important implementation matters that will come before our state elected leaders and our policy administrators. There really couldn’t be a better time for the task force’s recommendations to be coming forth,” Belshé said.

The task force includes almost three dozen leaders from many corners of the health care world — consumers, academics, insurers, physicians, hospital administrators, clinic operators, employers and advocates for the uninsured and underserved.

10 Steps in Four Categories

The task force determined that the best way to achieve better value is to change California’s reactive health system to a more proactive one. In order “to change the focus of health care systems from treating illnesses to promoting health,” the task force said California must act in concert with federal efforts to:

  • Financially reward providers for improving health outcomes;
  • Significantly reduce administrative expenses that do not improve health;
  • Create meaningful choices for health consumers; and
  • Improve the environments in which Californians work, play and socialize.

The task force identified 10 steps toward those goals, offering suggestions in each of the four categories, followed by estimated savings over the next decade. The total savings estimate was $305 billion.

In the first category, aligning incentives to promote better outcomes, the task force recommends:

  • Implementing bundled payments while preserving California’s models of accountable care;
  • Holding hospitals accountable for progress in reducing utilization in targeted areas such as imaging;
  • Reducing medical costs and promoting patient safety by reducing hospital readmissions and preventing hospital-acquired infections; and
  • Reducing defensive medicine and protecting providers from liability by developing best practice guidelines that protect providers who use appropriate medical judgments in targeted high-cost areas.

In the second category, reducing costs not associated with health care, the task force recommends:

  • Adopting common, statewide standards for claims processing, eligibility and benefit determination, and general contracting; and
  • Combining the health insurance wing of the Department of Insurance and the Department of Managed Health Care into one state agency with consistent standards for all health insurance coverage.

In the third category, creating meaningful choices for consumers, the task force recommended:

  • Creating a sole-source insurance exchange for individuals and small business to promote maximum participation and enhance affordability; and
  • Increasing support for shared decision-making practices, which frequently result in more conservative, less-costly courses of treatment.

In the fourth category, improving Californians’ chances for making healthy life choices, the task force recommended:

  • Taxing sweetened beverages and improving the affordability and accessibility of nutritious foods; and
  • Make walking, biking and the use of public transit viable, affordable, safe and attractive.

Legislator Supports Recommendations

Assembly member Isadore Hall (D-Compton) – assistant speaker pro tempore and a member of the Assembly Health Committee – endorsed the task force findings.

“The New America Foundation’s report highlights a number of important policy considerations to improve patient care and reduce the crippling cost of health care in California. Preventing and reducing incidents of chronic diseases such as obesity, diabetes and heart disease should be a priority for all Californians,” Hall said.

Hall, who underlined the importance of increasing access to healthy foods in poorer communities, also is a proponent of physical activity in schools. He introduced a bill that would require students in California physical education classes to be moving at least 50% of the time.

“Among the (task force) suggestions, I am particularly encouraged by the report’s recommendation to encourage healthier lifestyles, especially among our youth,” Hall said.

“Through enhanced access to healthier foods and increased levels of physical activity, as called for in my bill, AB 2705, we can take important steps toward reversing chronic diseases and encouraging healthier, more active lifestyles. These proactive steps will reduce short and long term health care costs while reaffirming our shared commitment to a healthier California,” Hall said.

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