Advice to the
President
Health Care Cost Containment
David Seltz, Special Advisor to Governor Patrick
Health Care Cost Problem - US
Distribution Of National Health Expenditures (NHE) By Type Of Sponsor, 2007 And 2010
Martin A B et al. Health Aff 2012;31:208-219
Health Care Cost Problem - US
National Health Expenditures Per Capita, 1990-2019
Projected
Historical
$16,000
$13,387
(2019)
$14,000
$8,047
(2009)
$12,000
$10,000
$8,000
$6,000
$2,814
(1990)
$4,000
Per Capita
$2,000
Projected Per Capita
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
$0
Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at
http://www.cms.hhs.gov/NationalHealthExpendData/ (Historical data from NHE summary including share of GDP, CY 1960-2008, file
nhegdp08.zip; Projected data from NHE Projections 2009-2019, Forecast summary and selected tables, file proj2009.pdf).
Health Care Cost Problem - US
Health Care Cost Problem - US
Growth in Total Health Expenditure Per Capita, U.S. and Selected Countries, 1970-2008
Health Care Cost Problem - US
Health Care Cost Problem - US
Projected Revenues and Spending by Category
Source: Congressional Budget Office
Health Care Cost Problem - MA
ACTUAL AND PROJECTED MASSACHUSETTS TOTAL PERSONAL HEALTH
CARE EXPENDITURES, 1991-2020
ACTUAL
PROJECTED
$123
$116
$109
$103
$97
$92
$86
$77
$68
$20 $21
Year
1991
1992
$25
$23 $24
1993
1994
1995
$27 $28
1996
1997
$30 $31
1998
1999
$33
2000
$36
2001
$39
2002
$42
2003
$45
2004
$48
2005
$52
2006
$56
2007
$58
2008
$81
$72
$61
2009
2010
2011
2012
2013
2014
2015
Centers for Medicare & Medicaid Services, Health Expenditures by State of Residence, CMS, 2011; Massachusetts Division of Health Care Finance and Policy, “Massachusetts Health Care
Cost Trends, Historical (1991-2004) and Projected (2004-2020),” November 2009.
SOURCES:
2016
2017
2018
2019
2020
Health Care Cost Problem - MA
PER CAPITA PERSONAL HEALTH CARE EXPENDITURES, 2009
$10,000
$9,000
$8,000
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
UT AZ GA ID NV TX CO AR CA AL VA SC TN NC OK MS OR KY MI MT NM IN
NOTE: District of Columbia is not included.
SOURCE: Centers for Medicare & Medicaid Services,
Health Expenditures by State of Residence, CMS, 2011.
IL
KS WA LA HI IA MO WY NE SD OH FL WI MN MD NJ VT WV PA ND NH RI NY DE ME CT AK MA
Health Care Cost Problem - MA
NOTE: District of Columbia is not included.
SOURCE: Centers for Medicare & Medicaid Services,
Health Expenditures by State of Residence, CMS, 2011.
Health Care Cost Problem - MA
MASSACHUSETTS STATE BUDGET, FY2001 VS. FY2011
$16
FY2001
$14
$12
FY2011
+$5.1 B
(+59%)
-$4.0 B
(-20%)
$10
-15%
$8
$6
-13%
$4
-11%
-23%
-38%
$2
$0
SOURCE:
Health Care Coverage
(State Employees/GIC;
Medicaid/Health Reform)
Massachusetts Budget and Policy Center Budget Browser.
Public
Health
-50%
-33%
Mental
Health
Education
Infrastructure/
Housing
Human
Services
Local
Aid
Public
Safety
Health Care Cost Problem - MA
MASSACHUSETTS PER CAPITA PERSONAL HEALTH EXPENDITURES
AND MEDIAN INCOME, 1999-2009
MA PER CAPITA PERSONAL HEALTH CARE EXPENDITURES
MA MEDIAN HOUSEHOLD INCOME
$10,000
$100,000
$9,431
$9,010
$9,000
$9,039
$90,000
$8,654
$7,771
$8,000
$8,067
$8,305
$80,000
$7,386
$6,884
$7,000
$6,366
$70,000
$6,519
$6,000
$60,000
$56,017
$5,000
$4,000
$52,253
$44,005
$49,855
$50,955
$58,463
$60,320
$59,375
$55,330
$50,000
$52,019
$46,753
$40,000
$3,000
$30,000
$2,000
$20,000
$1,000
$10,000
Year
$0
1999
2000
2001
2002
2003
2004
2005
NOTE: Health care expenditures are inflation-adjusted with 2005 as the base year; median household income is adjusted with 2010 as the base
SOURCES: Data for health care expenditures from CMS, Health Expenditures by State of Residence, 1991-2009. Data for median income from
2006
2007
year.
U.S. Census Bureau, State Median Income.
2008
2009
$0
The Massachusetts Model
History of Health Care Reform Efforts in Massachusetts
Insurance Reforms,
Community Rating,
Guaranteed Coverage
1990s
Ch. 305 passed,
Health care
Ch. 288 passed,
Ch. 58 passed,
transparency
Small business
Health Care Reform and e-Health
health care relief
2006
2008
2010
Chapter 224
signed into law
2012
The Massachusetts Model
Chapter 224 of the Acts of 2012, an Act Improving the Quality of Health Care and
Reducing Costs Through Increased Transparency, Efficiency and Innovation, was signed
into law on August 4, 2012 by Governor Patrick and is set to become effective on
November 5, 2012. It represents a historic step forward for Massachusetts.
The Massachusetts Model
Health Care Cost Growth Goal
CALENDAR
YEARS
COST GROWTH BENCHMARK
2013-2017
Equal to the Economic Growth Rate
2018-2022
Equal to the Economic Growth Rate minus 0.5% (may
be modified by the HPC)
2023 and beyond
Equal to the Economic Growth Rate (may be modified
by the HPC)
The Massachusetts Model
Key Provisions of the Law
Promotes payment and delivery system reform by both public and private
payers;
•
Promotes prevention and wellness, including the expanded adoption of
workplace wellness programs;
•
Implements sensible malpractice reforms ;
•
Increases scrutiny of health care market power and price variation;
•
Continues review of health insurance rates;
•
Supports expansion of the primary care workforce;
•
The Massachusetts Model
Key Provisions of the Law, continued
Supports the expansion of electronic health records and the state health
information exchange;
•
Provides key resources for workforce development and training
programs;
•
Provides consumers and employers with quality and cost data to inform
decision-making;
•
Promotes behavioral health care and integration;
•
Restructures government agencies and functions.
•
The Massachusetts Model
Key Levers to Contain
Costs
Comprehensive
payment reform
Increased
Transparency
System-wide redesign
/ Integrated care
Payment Reform
Health Information
Technology
Improved
Affordability,
Accessibility,
and Quality
of Health Care
Health Insurance
Plan Design
Innovation
Prevention of illness
and Promotion of
Good health
Malpractice Reform
Health Resource
Planning
The Massachusetts Model
PROJECTED MASSACHUSETTS TOTAL PERSONAL HEALTH
CARE EXPENDITURES, 2010-2026
$160,000
$140,000
$120,000
$100,000
$80,000
$60,000
$40,000
$20,000
$0
2010
2011
2012
2013
2014
2015
2016
2017
Projected Growth w/o Reform
2018
2019
2020
2021
2022
Projected Growth w/ Reform
2023
2024
2025
2026
The Massachusetts Model
PROJECTED MASSACHUSETTS TOTAL HEALTH
CARE EXPENDITURES AS A PERCENTAGE OF GSP, 2011-2026
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
2011
2012
2013
2014
2015
2016
2017
2018
Projected Share w/o Reform
2019
2020
2021
2022
2023
Projected Share w/ Reform
2024
2025
2026
The Massachusetts Model
Cumulative Savings over 15 Years (2012 to 2026)
~$200
Billion
Addt'l Take Home Pay over 15 Years ~$13 Billion
Reduction in Avg. Family Premiums over 15 Years ~$40 Billion
Public Sector Savings over 15 Years ~$38 Billion