Addressing Health Care Cost Growth — Why and How States Should Lead

With health care affordability high on U.S. voters' minds, the upcoming election and subsequent legislative sessions offer an opportunity to make the case for restraining cost growth while addressing the increasing financialization of the U.S. health system, which poses a serious threat to the public good and undermines physicians' ability to live up to their professional values. 1 Turning concrete proposals into an election issue can render subsequent legislative success more likely. 2And, because the prospects for needed federal reforms are poor and states are better positioned than the federal government to precisely and comprehensively address the drivers of low-value spending, we believe that action at the state level is essential.Rising health care costs are like a balloon: as policymakers constrain spending in one area, affected organizations simply seek additional revenues elsewhere.Since spending is the product of volume and price and since new services and products add to rather than supplant existing ones, policymakers need to see the full picture, establish systemwide constraints, and address the drivers of low-value spending and monopoly pricing (see table ).Without comprehensive oversight of money flows, sources and magnitude of waste, and opportunities for change, improvement will not be possible.Economists have long called for firm limits on spending growth.A key step forward has been the establishment of agencies charged with both these tasks: nine states have launched programs to track and analyze statewide health care spending and establish reasonable spending-growth targets.Targets canThe views expressed are those of the authors and do not necessarily represent the views of the Green Mountain Care Board.