Improving the Bottom Line: Lawmakers, Businesses and Health Care Providers Are Trying an Array of Approaches to Curb the Long-Term Costs of Health Care

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Next month: Six more strategies to manage the rising cost of health care.

Spiraling health costs grab headlines, create budget shortfalls and plunge families into bankruptcy. America spends $2.6 trillion annually on health care and costs seem to rise inexorably. Every year, state lawmakers face tough choices as health costs eat up 25 percent to 30 percent of total budgets. Costs hit households, too, with family health insurance coverage now averaging $15,073 a year.

At the same time, policymakers are teaming up with innovative local providers, business leaders and consumer advocates to find new and sustainable ways to hold down the cost of health care for the long term.

"Moving away from compensating the volume of care to providing better value is the way to cut costs without harming access or quality," says Massachusetts Senator Richard Moore (D), chair of the legislature's Joint Committee on Health Care Financing. "Promoting prevention and wellness, along with improving quality and safety, are fundamental to cutting health care costs."

In a nutshell, most medical experts agree medical care that does the right thing at the right time to the right people will help save money and improve Americans' health. These actions, coupled with promoting prevention and personal responsibility, should help curb health costs.

"Taming rising health costs is one area where state governments have been out front and where reaching across the aisle has saved real money," says Senate President Steve Morris (R) of Kansas, NCSL's current president. "I am pleased that NCSL and state legislators across the country are tackling this complicated issue."

No magic bullet exists. What works in one locale may not fit another. Yet, lawmakers continue to press for cost-effective strategies--in the individual home and at the state policy level.

Group Health Cooperative in Seattle, Rocky Mountain Health in Grand Junction, Colo., and Geisinger Health System in Pennsylvania have paved the way for documented cost savings.

Group Health houses its providers, clinics and hospitals under one roof. The group receives a monthly capped payment from insurers to manage each patient's care. Its methods include physician consultation by phone and secure email for patients. Washington analysts writing for the health policy journal Health Affairs have estimated that Group Health has saved more than $10 per client per month within this model of care.

In Grand Junction, the average per capita Medicare spending was 24 percent lower than the national average in 2007. Since it was founded in 1974, the Rocky Mountain Health communitywide system has expanded preventive care, including free prenatal care, and treated diabetes and asthma with a comprehensive case management approach. It also provides in-home follow up by nurses and other health professionals. Observers have suggested the cooperative spirit shown by providers, hospitals and health plans helps lower costs.

These promising methods include a payment system that involves equal reimbursement for care of Medicare, Medicaid and private insurance patients; limits on expensive resources, such as hospital beds and specialists; and comprehensive end-of-life care, which has led to 50 percent fewer deaths occurring in hospitals by emphasizing hospice and at-home services.

Pennsylvania's Geisinger Health System is widely celebrated for focusing on coordinating care among providers, peer-review and easy access for patients to routine care. Geisinger motivates providers to use only health care approaches that research has demonstrated are effective, such as team work and peer review. Patients' ability to schedule same-day appointments has increased from 50 percent to 95 percent since 2002. Using a medical home model, Geisinger has reduced overall medical costs by 4 percent--while costs have risen in most plans--and has seen a 29 percent reduction in hospital readmissions overall. …