Welcome to Porter Novelli Policy Perspectives, an ongoing series where PN policy experts will provide insights in key policy areas like healthcare and food & nutrition.
Despite its increasing frenzy, the fight in Washington over health care spending doesn’t look much different than it did a decade ago. Aside from recent Congressional hearings on drug pricing, there’s little concrete action being taken to address health care costs that continue to rise faster than inflation.
Looking inside the Beltway, one could easily assume the status quo will continue. Congress remains too gridlocked to agree on nearly anything beyond the idea that prices—drug prices in particular—are too high. And while the White House’s American Patients First drug pricing blueprint could tweak the way we pay for medicines, few experts believe it will significantly lower prices for most patients.
Outside Washington, however, the health care policy landscape is shifting. States are exploring innovative solutions to address key issues like drug pricing, expansion of health coverage, and the shift to value-based care. To tackle rising prices, for example, as many as 41 states have proposed dramatic changes to their health care payment structures, ranging from issuing hefty fines for “unconscionable” price increases to Medicaid buy-in plans.
Some of these state-level proposals plans could provide a road map for other states or federal agencies. Below are a few notable examples of state action in health care that could have broader implications for the U.S. health system:
- California: Often the first mover when it comes to sweeping regulatory change, California is looking to consolidate drug purchasing for Medi-Cal, the state’s Medicaid program. About 13 million people are enrolled in Medi-Cal— nearly 1 in 3 people in the state. That would make California the single largest purchaser of prescription drugs in the country, which Governor Gavin Newsom says will empower the state to negotiate lower drug prices with pharma companies. Over time, CA wants to bring other payers on board, including insurance plans for state workers and private-sector employees.
- North Carolina: Beyond drug pricing, North Carolina has proposed or implemented several policies designed to promote value-based payment models for provider services and other areas of health care spending. Driven by efforts from Blue Cross Blue Shield (BCBS) NC, other private insurers and the state’s Medicaid program, North Carolina is poised to make an estimated 70 percent of health care payments through alternative payment models over the next five years.
- New Mexico: While Medicare-for-All plans are garnering attention thanks to the Democratic presidential primary, some states are looking at other ways to expand access to affordable health coverage. New Mexico has proposed bills that would allow certain residents to buy into Medicaid—which, unlike Medicare, is managed at the state level—by paying a monthly premium for Medicaid benefits. As Medicaid reimbursement rates tend to be lower than those paid by Medicare or private insurers, these proposals could help keep premiums and overall healthcare costs from rising too quickly—and provide coverage to many who need it. Similar proposals have also appeared in Colorado, Oregon, Washington and Minnesota.
These state-level proposals face hurdles, including the potential need for federal approval, all-but-guaranteed lawsuits, or national requirements that could blunt their effectiveness. For example, even if California is successful in consolidating its Medicaid reimbursement system, it’s not clear how powerful a negotiator the state could be, given that federal law requires Medicaid to cover nearly all drugs approved by the FDA. Without the ability to deny reimbursement to pharma companies, the state would have few cards to play in its bid to lower prices.
It’s impossible to know what the landscape will look like even a year from now, but one thing is clear: the genie is out of the bottle. States have decided to take health policy matters into their own hands. As a result, they’re crafting and implementing policies that could disrupt long-held health care power structures and business models, with potentially permanent results.
Ben Shannon is an account manager in the Porter Novelli Washington D.C. office.