The Economy Is the Major Driver Health Care Spending

National health spending grew 3.9% each year from 2009 to 2011. That’s s the lowest rate of growth since the government began keeping track in 1960. A bad economy is credited with much of the decline in health spending, according to researchers at the Kaiser Family Foundation and the Altarum Institute’s Center for Sustainable Health Spending. Structural changes in the health system may play a modest role as well. In recent years, spending growth has fallen to levels similar to what was seen in the mid to late 1990s when managed care spread rapidly. Changes in health care delivery and rising cost sharing with insurance plans could be discouraging the use of health services.

Health spending is expected to increase the economy recovers, though growth rates are not likely to return to double-digit levels. Health spending increases will also depend on whether excess health costs remain at a relatively modest level or return to the historical norm. History suggests that previous efforts to control health care costs have only had a temporary effect, and there are initial signs that the recent slow down is beginning to wane.

Changes under the ACA could affect these trends significantly. Researchers expect a one-time spending bump by a couple of percentage points as the uninsured gain coverage and get better access to health services. Researchers also expect an economic recovery to lead to higher growth rates in health spending. They caution that the increase should not be attributed to the ACA simply because of the coincidental timing.

The bulk of the Medicare savings included in the ACA will lower the future growth in spending — primarily through smaller increases in payments to providers. Accountable care organizations (ACOs) and bundled provider payments may help keep costs down for public programs and private insurance. In addition, the ACA’s tax on high cost, Cadillac employer-sponsored health plans, which is scheduled to take effect in 2018, is expected to trim the cost of benefits and lead to lower health spending. For more information, visit www.kff.org.

Cigna Expands Collaborative Accountable Care Program

Cigna continues to expand its collaborative accountable care program through nine new initiatives with physician groups in Ariz., Calif., Colo., Conn., Nevada, Oregon and Tenn. In California,  Brown & Toland Physicians is an independent practice association based in San Francisco. http://www.brownandtoland.com. Cigna now has 42 collaborative accountable care programs in 18 states covering more than 390,000 customers, and is on track to reach its goal of 100 initiatives for one million customers by the end of 2014. Cigna launched its first collaborative accountable care program in 2008.

These programs focus on expanding patient access to health care, improving care coordination, and achieving improved health outcomes, affordability, and patient satisfaction. In places where it’s been introduced, collaborative accountable care is helping improve the health of Cigna customers while holding the line on medical costs. For example, in 2011, Medical Clinic of North Texas (MCNT) improved total medical cost trend by 4.4% while maintaining quality at 4% better than the North Texas market. During the same period, Eastern Maine Healthcare Systems maintained quality at 5% better than its market. Also in 2011, Holston Medical Group had an overall emergency room visit rate that was 12% lower than its Eastern Tennessee market while avoidable emergency room visits for Cigna Medical Group were 24% lower than the Phoenix market.

Coordinated Care ACO

NantHealth and Blue Shield of California will develop solutions to allow doctors, hospitals, and health plans to deliver evidence-based care in a more coordinated and personalized way. The companies will work with Saint John’s Health Center in Santa Monica and Access Medical Group to establish the first clinically based continuous learning center. It will be part of a new accountable care organization (ACO) Blue Shield intends to form with Access and Saint John’s. The learning center will be test innovations in reimbursement, business and clinical processes, new technologies and change management. For more information, visit www.nantworks.com.

Last Updated 09/22/2021

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