TODAY’S
TOPIC
Impact of Health Care
Costs in Washington State
Dennis Braddock, Secretary
Washington State Department of
Social and Health Services
FEBRUARY 1, 2001
February 1, 2001
PART 1
A Bellwether State
◗
1988
DRG-based The
rates and Basic
contracts Health
Inpatient Hospital Plan
1989
1990
1992
1994
Children
covered
to age 8
Children
1 to 5
Children
to age 19
(Medicaid)
(Medicaid)
Children Child
to age 19 Dental
200 FPL
Increase
Categorically
100 FPL
1980s
1987
Children
covered
to age 2
Optional
Categorically
Needy
Progressive – At the forefront of health care reform
133 FPL
100 FPL
Needy
1995
1999
From 45 to 65
percent paid
1990s
1988
1989
Children Infants and
covered pregnant
to age 3 women 185 FPL
Optional
Categorically
Catastrophic
Needy
Coverage
100 FPL
250 FPL
2000
1991
Children
covered
to age 18
Children's
Health
Insurance
Program
1993
AIDS “Healthy
State Pays Options”
Medical
Premiums for families
for Certain
Eligibles
Mandatory Managed
Care, King and
Selected Other
Counties
1997
“WorkFirst”
Medical Insurance
Upon Workforce
(Re)Entry
February 1, 2001
PART 1
A Bellwether State
◗
◗
Washington
250%
Federal Poverty
200%
Progressive – At the forefront of health care reform
Comprehensive – At the top end of the benefit scale
❚
❚
❚
Providing medical for 2 in 5 children
Reaching 250 percent of the poverty level for children
One of 15 states with full dental benefits for adults
100%
Full Adult Dental
Partial
None
February 1, 2001
PART 2
30 years
The Pressure Builds
Tighter Budgets – Like other states
◗
❚
of state spending
Faced with spending limits and tax initiatives
18.1%
18.1%
17.5%
17.5%
13.7%
13.7%
13.4%
13.4%
11.7%
11.7%
10.8%
10.8%
8.3%
8.3%
7.7%
7.7%
7.6%
7.6%
Slowing
6.7%
6.7%
Since Spending Limits
PROPOSED
4.4%
4.4%
4.4% 4.3%
4.4% 4.1%
4.3% 4.0%
4.1%
4.0%
2.1%
2.1%
71-73
71-73
73-75
73-75
75-77
75-77
77-79
77-79
79-81
79-81
81-83
81-83
83-85
83-85
85-87
85-87
87-89
87-89
89-91
89-91
91-93
91-93
93-95
93-95
95-97
95-97
97-99
97-99
99-01
99-01
01-03
01-03
February 1, 2001
PART 2
The Pressure Builds
◗
Tighter Budgets – Like other states
❚
❚
$2.6 Billion
$1.0 Billion
Fee for
Service
Fee for
Service
Fee for
Service
Fee for
Service
Fee for
Service
62%
62%
77%
94%
Managed
Care
95%
95%
20%
34%
1989-91
1991-93
1993-95
1995-97
31%
31%
34%
1997-99
Managed
Care
Managed
Care
Managed
Care
State Medicare
1987-89
PROPOSED
65%
$3.5 Billion
$3.1 Billion
Fee for
Service
65%
Fee for
Service
Despite Shifts to Managed Care
$2.1 Billion
Fee for
Service
$4.3 Billion
Medical Expenditures
Continue to Rise
$1.5 Billion
$5.1 Billion
Faced with spending limits and tax initiatives
Looking for ways to manage costs, scale back
4%
State Medicare
1999-01
4%
State Medicare
4%
2001-03
February 1, 2001
PART 2
The Pressure Builds
◗
Tighter Budgets – Like other states
❚
❚
❚
Faced with spending limits and tax initiatives
Looking for ways to manage costs, scale back
Trying to explain why medical costs account for half
of the state’s budget increase
Driving Our State
Budget
Population
Pressures
Health Care
for Low Income
50%
$588 million
Representing 50 Percent of the
State’s Proposed Budget Increase
• K-12
• Social Services
• Prisons
38%
$440 million
Other
Increases
12%
$144 million
February 1, 2001
PART 2
The Pressure Builds
◗
Tighter Budgets – Like other states
❚
❚
❚
❚
Faced with spending limits and tax initiatives
Looking for ways to manage costs, scale back
Trying to explain why medical costs account for half
of the state’s budget increase
Feeling medical pressures and making tough decisions
Medical Assistance
Proposed 2001-03
$14.1 Billion
Consuming More and More
of Our Agency’s Budget
DSHS Budget
1987-89
Agency
Medical
$4.5 Billion
23%
Agency
Medical
All Other
42%
58%
All Other
77%
February 1, 2001
PART 2
All States
Feel the
Pressure
Statewide, affecting
all agencies with
health care costs
Nationwide,
affecting businesses
and consumers
Employers learned earlier
this year that their health
care premiums would be
increasing
. . . [S]tate lawmakers are
gearing between 10 and
30 percent
up for legislative sessions that likely
will be in 2001.
dominated by politically painful debates,
which haven’t been seen since the early
1990s recession.
February 1, 2001
Nearly
PART 2
Thousand
Medical Assistance
Enrollees
Biennial
State Drug
Costs
400
Thousand
87-89 89-91 91-93 93-95 95-97 97-99 99-01 01-03
FORECAST
$121
Million
PROPOSED
We All
See Costs
Rising
&
Find More
People at
Our Door
State
$1 Billion
850
FY89 FY91 FY93 FY95 FY97 FY99 FY01 FY03
February 1, 2001
PART 2
We’re
Turning to
Other
Sources
of Funds
A Changing Fiscal
Environment
Medical Assistance
Payments 1987-89
$1.1 Billion
State
General
Fund
53%
Federal
Funds
47%
DSHS Proposed Medical
Budget 2001-03
$5.9 Billion
State General
Fund
31%
Federal
Funds
51%
Other
Sources
18%
February 1, 2001
PART 2
We’re
Asking
Providers
to Share
the Burden
And
And We’re
We’re Hearing
Hearing About
About It
It
◗◗
Historical
Historical practice – Reimburse on the margin
margin
◗◗
Now
Now we’re
we’re the
the largest
largest purchaser
purchaser of
of health
health care
care in
in our
our
state
state – And a major player in setting market
market rates
rates
◗◗
We’re
We’re getting
getting calls
calls from other purchasers – They’re
They’re
concerned
concerned we’re
we’re shifting
shifting costs
costs their
their way
way
.. .. .. [S]ome
[S]ome doctors
doctors in
in Washington
Washington state
state
are
are taking
taking out
out loans
loans to
to pay
pay employees,
employees, turning
turning
away
Medicare
and
Medicaid
patients,
away Medicare and Medicaid patients, and
and
in
some
cases
shutting
their
doors.
in some cases shutting their doors.
The
The average
average medical
medical practice
practice
in
in Washington
Washington suffered
suffered an
an average
average
net
net loss
loss of
of $95,000
$95,000 last
last year.
year. .. ..
February 1, 2001
PART 3
We Watch
& Wait
Hoping to
Avoid a
Train
Wreck
February 1, 2001
PART 3
The
State’s
Short Term
Agenda
Drop
Drop Optional
Optional Services
Services
◗◗ Pharmacy
Pharmacy
◗◗ Therapies
Therapies
◗◗ Durable
Durable Medical
Medical Equipment
Equipment
◗◗ Adult
Adult Dental
Dental
◗◗ Optical
Optical
✗
✗
Eliminate
Eliminate State
State Only
Only Programs
Programs
Uncompensated
Uncompensated
care subsidy
subsidy
✗ care
◗◗
And
And Next?
Next?
◗◗ Optional
Optional services
services
◗◗ Vendor
Vendor rates
rates
◗◗ Eligibility
Eligibility
February 1, 2001
PART 3
The
State’s
Long Term
Agenda
What
What We
We Need
Need
◗◗
Recognition
Recognition that
that Medicaid
Medicaid can’t
can’t solve
solve the
the health
health
care
care access
access problem
problem
◗◗
Support
Support for
for cost
cost control
control efforts
efforts on
on the
the front
front line
line
◗◗
❚❚
Co-pay
Co-pay and
and premium-share
premium-share options
options at
at higher
higher income
income
levels
levels
❚❚
Flexibility
Flexibility in
in program
program implementation
implementation
❚❚
Hiatus
Hiatus from
from changing
changing or
or adding
adding new
new data
data reporting
reporting
requirements
requirements
Sustain
Sustain federal
federal commitment
commitment
February 1, 2001
February 1, 2001