Overview

This summary is based on "Comprehensive State Reforms Address Health Care Quality and Efficiency" in the March/April 2007 issue of the newsletter States in Action. Governor Schwarzenegger's reform proposal incorporates measures that would cover virtually all Californians—through an individual mandate, premium assistance, State Children's Health Insurance Program (SCHIP) expansion, and a new purchasing mechanism—and places a strong emphasis on prevention, health promotion, and wellness.

The Issue: State legislatures and governors are increasingly proposing or implementing comprehensive health care reform plans that extend beyond coverage expansion to address the quality of care, health promotion, and cost containment. These multifaceted plans aim to improve the overall performance of the health system—recognizing the imperative to increase the value of care obtained for the dollars spent. Maine, Massachusetts, and Vermont have passed and are implementing such comprehensive reforms, and governors and legislators in many other states, including California, Maryland, Pennsylvania, and Wisconsin, are introducing variations of these reforms as well as new strategies. Since others have written about the coverage aspects of reform plans, this profile focuses on their efforts to address health care quality and efficiency. Most of the quality and efficiency strategies are related to chronic care management, wellness and prevention, patient safety, and transparency through data collection and health information technology. Proponents of these strategies emphasize that these measures to improve the quality of care and health status are integrally tied to cost containment. They argue that practices that help people achieve healthier lives, help providers reduce errors, and help purchasers make better, more informed decisions also generate savings in the long run. The reform plans include both incentives and mandates, both "carrots" and "sticks." A primary focus of many of these comprehensive reform plans is chronic care management, particularly for asthma, diabetes, and heart and lung disease. Policymakers cite data illustrating that the majority of health care costs are attributed to a minority of patients with chronic disease, and that these patients are not receiving the right amount or best kind of care. For example, Pennsylvania's Governor Rendell points out that, "Even though 75 percent of health care costs can be traced to the 25 percent of patients with chronic disease, these Pennsylvanians received only 56 percent of the care they need." The reform proposals seek to increase use of nationally proven models or "best practices" for treating chronic disease through pay-for-performance and other incentives to providers. The reform plans also promote prevention and wellness, with a particular focus on tobacco use and obesity. They feature nutrition counseling, smoking cessation, and exercise programs, provided through such mechanisms as telephone help lines, schools, and community partnerships. Some reform proposals would establish insurance plans that reduce premiums or copayments if enrollees engage in healthy activities. Comprehensive reform plans also include provisions to support health information technology that promotes patient safety (e.g., electronic medical records, e-prescribing), data collection, and public reporting. Proponents expect that making comparative performance information available to purchasers of health care, including state agencies, employers, and consumers, will enable them to make better choices. Such data could also encourage providers to improve the quality and efficiency of the care they provide. Target Population: All California residents The Intervention: In addition to incorporating measures that would cover virtually all Californians—through an individual mandate, premium assistance, State Children's Health Insurance Program (SCHIP) expansion, and a new purchasing mechanism—Governor Schwarzenegger's recent reform proposal places a strong emphasis on prevention, health promotion, and wellness. It includes:

• "Healthy Action Incentives/Rewards" programs in the public and private sectors to offer enhanced benefits and/or reduced insurance premiums to participants who engage in healthy activities;
• promotion of patient safety through: requirement on health facilities to reduce medical errors and hospital-acquired infections by 10 percent over four years, technical assistance to implement evidence-based safety measures, and creation of a "reengineering" curriculum to improve safety and streamline costs;
• statewide diabetes initiative to implement proven interventions for screening, primary prevention, and self-management; this would reduce health costs by reducing the incidence of diabetes and improving the health of people with diabetes;
• obesity prevention activities including media campaigns, community-based activities to promote healthy food and physical activity, employee wellness programs, and school-based strategies; and
• tobacco use reduction, by increasing access to the California Smokers' Helpline smoking cessation services and maximizing use of cessation benefits.

These efforts to promote a healthier lifestyle are expected to reduce health spending growth. But the governor's approach also contains other cost containment measures, such as:

• eliminating the "hidden tax" that results from shifting costs from uninsured and Medicaid patients to privately insured individuals, estimated to drive prices 10 percent higher;
• enhancing efficiency by requiring health plans, insurers, and hospitals to spend at least 85 percent of each premium/health spending dollar on patient care;
• removing barriers to lower-cost models of care delivery such as the use of nurse practitioners and physician assistants;
• developing a technology assessment process to promote evidence-based care;
• advancing the adoption of health information technology (expected to enhance long-term affordability) to achieve 100 percent electronic health data exchange in the next 10 years, universal e-prescribing by 2010, accessible and portable personal health records, and use of telemedicine and telehealth, particularly in underserved areas; and
• investing resources to measure, collect, integrate, and publicly report data on provider quality, outcomes, cost, prices, and utilization to help inform providers, purchasers, and consumers and drive their decision-making.

For Further Information: Read more about the California Governor's Health Care Proposal.