Reform Update: Rhode Island sets sights on healthcare overhaul

Rhode Island policymakers and the state's healthcare industry began to draft plans last month on how best to overhaul payment to hospitals, doctors and other providers and simultaneously improve the health and well-being of its citizens.

If successful, the state will end the effort in October with proposals for new payment initiatives, targets for community health improvement, information technology investment, state laws to be introduced (or repealed), and, possibly, spending targets.

“We have set a number of goals,” said Elizabeth Roberts, Rhode Island's lieutenant governor. “Economically sustainable is absolutely one of them.”

Though it is too early to know how the coalition of public- and private-sector officials will decide to address health-spending growth, Roberts said the goal won't be only to reduce costs. Healthcare must also be high quality, she said. “We also need to make sure we get value for what we spend.”

Rhode Island was among states that scored funding from the Center for Medicare and Medicaid Innovation, created by the 2010 healthcare reform law, to examine its state-level reform options. In October, the state will return to CMMI with a plan and a request for $30 million to $50 million to test one of the proposals.

Roberts said the proposal may “get specific enough” to target health spending trends for the state. Should that be the case, Rhode Island could join Maryland and neighboring Massachusetts, which have moved to restrain health spending growth by introducing targets pegged to growth in their state economies.

This spring, Maryland proposed a cap in hospital spending growth to the growth rate of its economy, which would squeeze spending by $1.2 billion over three years. In Massachusetts, a new law would do the same through 2018 and then lower the target.

There is precedent for health spending targets at the federal level as well. Federal advisers will propose cuts in 2018 if Medicare spending grows faster than the gross domestic product plus 1 percentage point. That's not slow enough for health policy experts with the Brookings Institution, who this month called for lawmakers to shave 1 percentage point from that target.

The Society of Actuaries analyzed Medicare data and commercial insurance bills and reported, as others have, that demographics have done little in recent years to alter health-spending growth. “National health expenditure per capita costs have increased between 5 to 11% per year for the four 20-year periods since 1930, and the aging demographics have contributed less than 0.5% each year except 1930 to 1950. Researchers used commercial insurance data from the Health Care Cost Institute. The report also projected how premiums may rise or fall based on age under new insurance rules in the Patient Protection and Affordable Care Act. Twenty-somethings will pay more and their grandparents will pay less, the report said.

The Congressional Budget Office released its estimate of the president's budget. White House projections show Medicare spending per person will be higher than the CBO says. The difference totals $97 billion through 2023. Meanwhile, the CBO report says Medicaid spending per person will be higher than White House estimates by $201 billion during the same period.

Follow Melanie Evans on Twitter: @MHmevans