Health care is expensive, very expensive. So any news about how costs are being controlled is very good news.
Here are three examples:
1. Medicare is costing a lot less than predicted
As Kaiser Health reports, Medicare’s costs are now more than $1000 a person less than what was predicted.
Even better, new predictions are for $2400 less than earlier predicted. This would add up to a major cost saving in the federal budget.
What’s the cause?
In addition to scheduled reductions in Medicare’s more formulaic payment rates, providers may be tightening their belts and looking to deliver care more efficiently in response to financial incentives included in the ACA, and it is possible that these changes are having a bigger effect than expected.
For example, CMS recently reported that hospital readmission rates dropped by 130,000 between January 2012 and August 2013. It is also possible that hospitals and other providers are using data and other analytic tools more successfully to track utilization and spending and to reduce excess costs. [source]
As Kaiser, notes it’s not altogether known why costs have declined.
The Affordable Care Act is part of what’s going on, but the situation is complicated, with multiple causes.
2. Oregon lowered Medicaid costs and Emergency Room visits, while improving health
This west coast state is very active in health policy innovation.
And, after Oregon did a lottery to put some into Medicaid and found that ER use did not drop, but rather increased in Portland area hospitals, expansion opponents elsewhere said that showed expansion wasn’t a good idea.
However, as Modern Healthcare reports, that was before “the state’s 2012 Medicaid reform initiative, which has more than 90% of Medicaid enrollees belonging to a coordinated care organization in which competing providers and payers collaborate and receive payments from a per-member, per-month global budget.”
The state has been releasing quarterly reports that provide updates on how well the effort is proceeding. The most recent report, released this week, includes 12 months of data that show CCO members’ emergency department visits have decreased 17% compared to 2011, leading to a 19% decrease in costs.
Chronic-condition-related hospitalizations in 2013 also registered a decrease. In particular, hospitalizations for congestive heart failure fell by 27%, chronic-obstructive-pulmonary-disease-related hospitalizations dropped 32%, and adult asthma hospitalizations decreased 18%, according to the report.
Better health. Lower costs.
It’s just too bad this is getting so much less attention than the reports that suggested that Medicaid expansion wouldn’t decrease ER use. It can, especially when done the right way.
3. Colorado’s teen birth control program is very effective and saves money
Abstinence programs don’t work for reducing pregnancies. Birth control does.
In fact, Colorado saw a 40% decline in teen births after they adopted an IUD program in 68 family planning clinics.
IUDs are completely reversible, so women can get pregnant after they’re removed. But they are a very costly form of birth control.
So the state started a program of low or no cost IUDs for low-income women. More than 30,000 IUDs were used.
The decline in births among young women served by these agencies accounted for three-quarters of the overall decline in the Colorado teen birth rate.
While the family planning initiative has helped thousands of young women avoid unintended pregnancy, it also has helped reduce social and economic costs to Colorado. The teen abortion rate dropped 35 percent from 2009 to 2012 in those counties served by the initiative.
The infant caseload for Colorado WIC, a program that provides nutrition education and support to low-income women and their babies, fell 23 percent from 2008 to 2013.
And Colorado saved millions in health care expenditures associated with teen births, $42.5 million in public funds in 2010 alone based on the latest available data.
Pregnancies went down, abortions went down, and costs went down.
Moreover, as Gov. Hickenlooper said, “This initiative has saved Colorado millions of dollars. But more importantly, it has helped thousands of young Colorado women continue their education, pursue their professional goals and postpone pregnancy until they are ready to start a family.”
There is good news out there about health care. Government can spend less as it expands coverage, improves health, and enables people to further themselves.
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