Why is it important?
The current health care system in the U.S. and Oregon is not delivering value. Health care costs have been increasing at an unsustainable rate in Oregon. Higher health care costs directly cause increases in health insurance premiums. To make matters worse, health care providers shift significant costs to the business community and consumers as a result of under-reimbursement from Medicare and Medicaid—essentially a hidden tax.
As a result of the high cost of health benefits, it makes it more expensive for Oregon businesses to compete in a global market, reduces funds for business investment, dampens economic recovery and job growth, and contributes to poor employee and dependent health, which in turn hurts productivity. In addition, the high cost of publicly financed health care crowds out needed public investment in education and other critical services.
With health care reform enacted at the federal and state level, we are in the midst of the largest restructure of health care in over 30 years. It is unclear what the full impact of these new regulations will be. For example, on one hand more people will be covered, reducing the burden of uncompensated care on the system, however, other changes will drive costs up. The increased access to eligibility for Medicare and Medicaid is expected to increase the cost shift to business and will impact state budgets. The changes in health insurance regulations and requirements on employers will also drive employer health care costs upwards, at least for a period of time. At the same time, there are many other implications that we still do not know but must understand.
The business community must continue to be engaged in the health care dialogue both to understand the impact of these changes and to ensure that sufficient emphasis is given to controlling health care costs and creating a sustainable economic health care system. While many aspects of reform focus on expanding access, without addressing the fundamental cost drivers of health care, this will result in a failed economic recovery with significant impact on state programs.
The Oregon Business Plan Vision for Healthcare
We support actions to give all Oregonians access to quality, affordable healthcare. This can be best accomplished by creating the proper economic incentives where everybody is motivated to improve health, ensure quality, and control costs. In such a system, individuals, employers, health plans, and providers have incentives to encourage good health, and consumers make informed choices about health practices and treatment options based on understandable health information and transparent prices and quality.
Where we stand today
There are three closely related factors driving health care cost increases in Oregon.
- First, underlying costs for medical care are increasing. These are being driven by the aging of the population; the increased use of health services of people with chronic conditions; new advancements in technology, many of which may provide new alternative to extend life or improve health but may not be as effective as existing or alternative treatments; and, unhealthy lifestyles and lack of personal responsibility for health.
- Second, there is a lack of transparent information and proper economic incentives for cost, quality and health. Consumers are shielded from the real costs of health care and lack strong economic incentives or knowledge to select the most appropriate treatment. Most providers, especially physicians are paid on a fee-for-service basis that drives demand for more medical care services rather than paid for outcomes or better care coordination. In addition, physicians often lack information and decision support tools to allow them to follow evidence-based clinical guidelines.
- Third, lower reimbursement rates for Medicare and Medicaid patients increases the costs paid by employers and individuals.
Combined, these three factors drive higher costs for employers who in turn, drop or reduce coverage or pass these costs on to their employees. This cost shift can result in individuals dropping insurance and can trap everyone in a vicious cycle that leads to increased costs. As a result, nearly one-sixth of the population is without health care.
The reform actions provide for an opportunity to break this vicious cycle if we create a healthcare system with the proper economic incentives and transparency to engage consumers and providers in higher quality, more cost-effective care and create the personal accountability and responsibility for health.
The Oregon Business Plan Strategy
The Oregon Business Plan Strategy outlines actions that:
1) Employers, both private and public can take to address health care cost including support and implementation of the initiatives emerging from the Oregon Health Leadership Council, a statewide group of health care experts formed at the request of the business community to implement actions to bring health care costs and premiums closer to the CPI;
2) Advance the use of health information technology; and
3) Support payment reforms that improved cost effectiveness and quality outcomes; and 4) support sound health care reform actions that create a sustainable financial model for health care that supports the economic growth of Oregon.
Private and Public Employers:
- Encourage a culture of wellness and personal responsibility in the workplace; offer and include incentives for participation in health and wellness programs.
- Offer health benefit options that require cost sharing at the time of service while avoiding financial barriers for preventive services and management of chronic diseases. Ensure there is protection from catastrophic costs. Consider the new value-based, evidence-based benefit designs being developed by several health plans through the Oregon Health Leadership Council.
- Increase the transparency on the real cost and quality of medical care and alternative treatments. Provide employees with tools to help them access and use this information when selecting plans, providers or treatment options. Health Plans and the Oregon Health Care Quality Corporation can help provide this data.
- Look at total cost of health care within your work force, including cost of medical claims and also employee productivity and presenteeism.
With health plans, physicians, hospital and health systems, the State and other groups, stimulate the use of health information technology:
- Electronic Health Records should be adopted by all health care providers
- Support the development of the sharing of patient health information through a secure data exchange so that providers will have the necessary information to deliver the appropriate care.
- Develop the capacity to have meaningful information on costs and quality readily available to consumers, purchasers and providers.
Support provider payment reforms:
- Health care payers, health plans and self-insured employers should implement new payment mechanisms that support improved quality and lower costs such as the High Value Medical Home project being implemented by the Oregon Health Care Leadership Council.
Support sound health care reform strategies that lead to a sustainable economic model:
- Understand the implications of federal and state reform on business and the overall state economy.
- Encourage integration of state reform within federal reform.
- Emphasize the need to control overall health care costs in order to support expansion.
- Minimize the cost shift of funding government programs on business and consumers.
- Support creation of a viable “insurance exchange”, the requirement that all individuals have coverage and insurance reforms to accomplish this.
Health care costs, left unattended, will have a significant impact on all Oregonians, including Oregon business and the State. To ensure we have a viable business community, a state budget that is not consumed by health care spending and one that allows for other investments critical to Oregon’s future, the business community must take a stronger role in the health care issue. Through the Oregon Business Health Care Roundtable, we will encourage ongoing dialogue with health care community, state agencies and business to provide direction, while at the same time encouraging employers to take a more active role to address health and health care within their own organizations.
Key Documents and Links
Oregon Health Leadership Council: The Oregon Health Leadership Council (formerly the Health Leadership Task Force) is a collaborative organization working to develop practical solutions that reduce the rate of increase in health care costs and premiums so health care and insurance is more affordable to people and employers in the state. Formed in 2008 at the request of the Oregon business community, the council brings together health plans, hospitals and physicians to identify and act on cost-saving solutions that maximize efficiencies while delivering high quality patient care. Since 2008, over 200 individuals have been working on initiatives in four areas that the council determined to have the greatest potential for impact. Go to website.
Help Shape Our Health Care Initiative
Are we on the right track? Do you have ideas to reduce costs and improve quality of healthcare? Give us your feedback.