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U.S. Senators Explore Options to Reduce Health Care Costs

June 28, 2018

The U.S. Senate Health, Education, Labor and Pensions (HELP) Committee recently convened an expert panel to

  • Explore dynamics that contribute to the cost of health care in America
  • Identify policy avenues to address health care spending

Expert testimony reflected on key trends:

  • According to National Health Expenditure estimates, the United States spent $3.3 trillion on health care during 2016
  • Health care spending accounts for 18 percent of our gross domestic product (GDP), or approximately one in five dollars spent in our economy
  • The cost of health care to American families has significantly outpaced wage growth 
  • Data shows a small share of the population accounts for a disproportionate share of total health care spending
  • Per capita cost growth in the Medicare program has been low over the past decade—average annual growth between 2010 and 2016 was 1.4 percent
  • Inpatient utilization has declined from 2012 to 2016, but spending has increased
  • Utilization of prescription drugs has remained relatively constant, but spending on prescription drugs has increased significantly 

During the hearing—“How to Reduce Health Care Costs: Understanding the Cost of Health Care in America”—Senators and the expert witnesses spoke to a vast array of issues that affect the cost of health care including:

  • Use of technology
  • Competition within the health care sector
  • Transparency in the context of both price and quality
  • Administrative burdens that create inefficiencies
  • Incentives for value-based care   

The witness panel proposed topics that policymakers might explore as they consider ways to reduce health care spending, including:

  • Addressing the affordability and utilization of drugs, in recognition that specialty drugs are projected as a major cost driver in the future
  • Evaluating payment rates for various kinds of health care services
  • Advancing value-based payment methods and models
  • Reducing administrative complexity
  • Addressing high health care prices, in part through transparency that reflects quality as well as cost
  • Enforcing anti-trust laws, and promoting greater competition within health care markets
  • Maximizing the effectiveness of the health care workforce by considering paraprofessional strategies and telehealth

Senator Casey Addresses Key Pennsylvania Issues

U.S. Senator Bob Casey (D-PA) raised two specific concerns during the hearing:

  • The impact of high deductible health insurance plans and health savings accounts (HSA) on individuals with limited resources
  • The importance of access to technology for rural communities

High deductible health plans can reduce health care spending, but may adversely affect health outcomes. Senator Casey cited the caution expressed by Dr. Melinda Buntin, the Mike Curb Professor of Health Policy in the Department of Health Policy at the Vanderbilt University School of Medicine, who:

  • Spoke to research indicating consumers cut back on investments in preventative care in the face of high deductibles
  • Urged review and consideration of the results of state level experiments, such as Indiana’s use of HSAs for Medicaid beneficiaries, before adopting the policies nationwide

Senator Casey also highlighted a recent Pittsburgh Post-Gazette article, “Lifeline offline: Unreliable internet, cell service are hurting rural Pennsylvania’s health.” The article outlines rural communities’ challenges in accessing high-speed internet and the resulting limitations for innovation in rural health care. The Federal Communications Commission (FCC) recently increased funding intended to increase rural broadband connectivity to health care providers. 

Both the affordability of care and the burden of health care spending continue to motivate intense concern and interest for federal lawmakers. Particular attention is being placed on drug costs. 

HAP is actively engaged in supporting Pennsylvania hospitals in executing the Triple Aim. Hospitals are working to improve overall health and the safety and quality of health care while reducing per capita U.S. health care spending. 

For questions regarding federal policy initiatives aimed at health care spending, please contact Laura Stevens Kent, HAPs vice president of federal advocacy. Contact Kate Slatt, HAP's senior director, innovative payment and care delivery, for questions regarding health care innovations.

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