Can Public Policy Choices at the State Level Affect Health Care Affordability?

Health care affordability is gaining steam as a topic not just on the presidential debate stage but also among state and federal policy makers. Researchers at Altarum, a nonprofit health care consulting group, decided to dig into the relationship between the relative affordability of health care in each state and the public policies states had adopted that have been shown to affect affordability. The results of this analysis have been published in a new “Healthcare Affordability State Policy Scorecard.”

“Affordable”… for Whom?

What does it mean for health care to be affordable? The researchers looked at consumers’ self-reported answers to survey questions asking whether, in the past 12 months, they:

• Needed but couldn’t afford medical care;
• Delayed seeking medical care because of concerns about cost;
• Made changes to a treatment plan, including prescribed medications, because of cost; or
• Had trouble paying medical bills.

In the states served by The Alliance, nearly 41% of Illinois residents, 39% of Iowa residents, and 37% of Wisconsin residents reported at least one of these concerns.

What Policy Choices May Make A Difference At The State Level?

The researchers then considered policies that, if adopted at the state level, are expected to lead to more affordable health care coverage options. Those policy buckets were:

• Extend coverage to all residents. The uninsured are more likely than those insured to delay or forego needed medical care. Cost is the #1 reason consumers don’t have health insurance. States can promote coverage by implementing programs that fill the gap between Medicaid eligibility and the cost of private health insurance for low-wage workers.
• Make out-of-pocket costs affordable. The researchers looked for evidence that states were promoting strategies to control consumers’ out-of-pocket expenses, including protecting consumers from surprise medical bills and waiving or reducing cost-sharing for high-value services. Illinois, for example, recently passed a law capping out-of-pocket expenses for insulin at $100 and a similar bill has been introduced in Wisconsin.
• Reduce low-value care. The report notes it is difficult to gather data on the amount of low-value health care provided in any state given limited publicly available data. The need to compare care provided against nationally accepted benchmarks is one of the reasons The Alliance is a strong supporter of the Wisconsin Health Information Organization, and the Wisconsin Collaborative for Healthcare Quality, along with other efforts to collect and share information about variation in health care services, costs, and outcomes.
• Curb excess prices. “Excess,” like “affordable,” is a relative term subject to a great deal of interpretation and variation in its definition. Even “price” is a broad term that sweeps in premiums, co-pays, and deductibles, and of course, unit prices for individual medical services or prescriptions. In an effort to validate the data on pricing, Altarum looked at a study conducted by RAND on the degree to which prices paid by private sector plan sponsors and insurers varied from the amounts paid for the same services by Medicare. The Alliance participated in this RAND study, along with other employer coalitions from around the country. Altarum cites transparency strategies, including all-payer claims databases, as an important tool in curbing unnecessary health care costs.

Additionally, the report also ranks states based on their outcomes in each area. This “outcomes” analysis looks at the uninsured rate, the percent of resident-reporting affordability concerns, the rate of low-value care, and the extent to which average prices paid by private-sector insurers and other payers are above the national median.

How Did Wisconsin, Illinois and Iowa Fare Overall?

Wisconsin ranks 18th overall out of the 42 states (plus Washington DC,) evaluated in this report. While the researchers looked at all 50 states, only states with data available in all four of the report’s focus areas were evaluated.

Wisconsin scored best on its polices to extend coverage to all residents and reduce low-value care, however, needs to adopt policies that will make out-of-pocket costs more affordable and curb excess health care prices.

On outcomes, Wisconsin ranks high compared to other states on overall measures of health care coverage and low-value care.  The state is ranked the worst – 41 out of 42 – on having private payer prices above the national median. 

Illinois ranks 19th and gets higher marks than Wisconsin for efforts to make out-of-pocket costs affordable, but needs to adopt policies that will reduce low-value health care, and has also not made progress in adopting public policies to curb excess prices. Looking at outcomes, the state is about average on out-of-pocket costs and low-value care.

Iowa, ranked 21st., gets good marks for its efforts to reduce low-value care but also has a long way to go on excess prices. They are ranked 13th in the nation on keeping private payer prices below the national median.

What’s Next?

Adding to healthcare affordability’s national attention, this report will be presented at a National Press Club event in Washington DC on February 12.

Closer to home, the team at Michael Best Strategies will work with The Alliance’s Health Policy Committee to review the report’s focus areas and assess where we are today in the WI, IL and IA policy landscape. From there, we will consider possibly advocacy priorities that will advance our goal of making high quality health care more affordable for The Alliance members and their employees.