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Home / Washington Business - March 2006 / Q&A with Steve Hill: Health Care Takes a Bigger Bite |
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Q&A with Steve Hill: Health Care Takes a Bigger Bite |
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Written On: March 2006 |
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Steve Hill was appointed Administrator of the Washington State Health Care Authority in April 2005. A cabinet-level agency, the HCA administers health care benefits to more than 400,000 Washington residents through the Basic Health program for low-income residents, and the Public Employees Benefits Board program for state government workers and retirees. Combined, the two programs administer more than $1.2 billion in benefits annually. The HCA also administers the Community Health Services program that provides state funding to community clinics; the Prescription Drug Program (known as Rx Washington), designed to reduce state spending on drugs; and the Uniform Medical Plan, a preferred provider plan utilized by more than a third of PEBB enrollees.
Q: What is the Health Care Authority and what is its role?
A: The Health Care Authority, or HCA, is a cabinet-level agency that is primarily a health care purchaser for Washington state government. We administer the Public Employees Benefits program which provides coverage to state and higher education employees, retired state employees, and retired teachers. That's about 300,000 people including dependents. We also administer Basic Health, which covers another 100,000 low-income people. HCA will purchase more than $1 billion of health care this year. There are several other programs we also administer including the state’s prescription drug program, and a program that helps fund community clinics around the state.
Q: How large is the health care problem as it relates to the state budget?
A: In 2000, the state spent $2.7 billion from the general fund; this year the health care spending will be $4.5 billion. This increase of nearly $2 billion means the share of the state budget going to health care has increased from 22 percent in 2000 to 28 percent today, diverting $750 million a year away from education, infrastructure and public safety. Gov. Christine Gregoire continues to point out that these trends are not sustainable. Revenue growth is 3 percent while health care spending is growing at a rate of 9 percent each year.
Q: How is the growth in health care costs impacting families and businesses around the state?
A: The story for families and business is the same as for state government. Rapidly rising health care costs are corrosive, they are creating a serious access problem, destroying jobs, reducing wages, and bankrupting families and businesses. The most troubling aspect of this is that with all this spending, we are not getting healthier. Americans spend more than anyone on health care, but we lag behind many other countries in the quality of care we receive. The system is fraught with errors and inefficiencies. Quality and efficiency problems are driving up costs, which in turn, price employers and families out of health care coverage.
Q: What are some ways to control the growth in health care expenses to the state?
A: The governor has put forward a five-point strategy for improving health care. First, we need to encourage that the right procedures are used to make people better. The buzz phrase is "evidence-based medicine," but the bottom line is using procedures that work and do not harm people. The Institute of Medicine estimates that 20 to 30 percent of health expenditures do not improve health or extend life. That means the state is spending $1 billion per year on things that don't work. We want to change that.
Second, we need to preach some personal responsibility and encourage people to make healthy choices in their own lives, focusing on exercise, eating right and prevention.
Next, we need to focus on that portion of our population that accounts for the biggest health care costs. Five percent of the people account for 50 percent of health care costs. We’re talking about chronic diseases like diabetes and heart disease. We need to make sure that those who have these diseases are getting the most effective treatment, and that those with the potential for these problems are identified and treated early to prevent them from becoming expensive patients.
The governor's initiatives also encourage the use of more information so consumers can make better choices, and the use of information technology to bring about more efficiency and better communication between health providers.
Q: How do you put those ideas into practice to save the state money?
A: We're going to incorporate those concepts into our contracts with companies that provide health care to our enrollees. When you add federal funding to the $4.5 billion coming out of the state budget, the government spends nearly $8 billion a year purchasing health care for 1.3 million Washington residents. We will provide incentives and other encouragement for our contractors to incorporate these principles into their delivery of health care. King County is pushing similar ideas, as are major employers like Starbucks, Boeing and Costco.
We can reduce the growth trends by only paying for medical procedures that work, by getting our people to make healthier choices, and by making sure they have the tools to be smart health care consumers.
The governor continues to make it clear that we need to bring health spending back in line with state revenue trends. But at the same time, she is clear: We will not try to solve this problem by kicking people off of coverage or engaging in a Wrace to the bottom. We want to improve the quality of health care we provide to our enrollees and increase access by making health care more affordable. There are already 600,000 people in this state without health insurance. We want to solve this problem by improving the quality and efficiency of health care delivery. We want all Washington citizens to have access to affordable coverage, starting with covering all children by 2010. We can make health care more affordable by spending smarter and using the savings to provide health care to more people who need it.
Q: How can the state deal with Medicaid growth?
A: The state's Medicaid program is a national leader in cost-containment, including an emphasis on evidence-based treatment—from reducing higher-risk and ineffective types of surgery to an expanded preferred drug list that steers prescribers and patients toward lower-cost drugs that are equally effective. Under the leadership of DSHS, they are moving toward increasing use of electronic records, improved fiscal integrity in billing and claims, and case management that improves chronic care at lower cost. These efforts save the state millions of dollars each year despite the continuing increase in overall health care spending.
Q: Are Health Savings Accounts working? If not, how can they be changed to work?
A: HSAs are working. But they are not a panacea. They will help bring more consumer involvement to health care. But they will not solve the coverage issues for low income people, nor effectively deal with the fact that 5 percent of us account for 50 percent of health care dollars spent each year. For expensive acute care and chronic care, which is most of the expenditure, HSAs will have limited impact on quality or efficiency. Further, for them to work, consumers will need information on quality and efficiency of providers and treatments.
Q: What role do you see for the state in assisting small businesses with health care? Are plans like those that AWB offers in the solution mix?
A: First, the state has to be a force for making health care affordable. The HCA was recently awarded a Robert Wood Johnson Foundation grant to investigate how we might offer alternative programs to small businesses. As part of that project, we have been holding focus groups with small employers. The governor is keenly aware of this problem and is asking us to propose some alternatives in the spring. Some want the state to provide a subsidy to help small employers provide coverage. I believe this is problematic given the state budget situation, which is largely driven by rising health expenditure. I think we would be better served to work on improving the health care delivery system and the affordability of health care coverage.
Q: Do mandates and tort costs impact health care costs and availability? If so, in what ways and what would the estimated impacts be?
A: Obviously both areas play roles in contributing to costs. I think the voters showed great wisdom in rejecting both malpractice initiatives last November. They recognized that this is a complex issue that needs to be addressed with a lot more insight and a lot less rhetoric.
In the case of mandates, they can be forces for both lowering and increasing costs. They are not the primary force behind rapidly rising health care costs and are not as big a factor as the 20 to 30 percent spent on health care that does not improve health. This administration is carefully watching proposals for new mandates, asking that all of these proposals go through the "sunrise" review process called for by the Legislature. After that review, we will only support proposed mandates that clearly improve quality and efficiency in health care delivery. I think we should be spending less time arguing about mandates and more time making sure we are spending health care dollars on care that works—where there is evidence that the treatment or procedure will improve health.
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