Health Care Cost and Access Challenges Persist Across the Country

Rising Costs, Declining Coverage, Widening Access Inequalities Unchecked

News Release
Oct. 4, 2007

FURTHER INFORMATION, CONTACT:
Alwyn Cassil (202) 264-3484 or acassil@hschange.org

WASHINGTON, DC—Little has changed in local health care markets since 2005 to break the cycle of rising costs, declining insurance coverage and widening access inequities, according to initial findings from the Center for Studying Health System Change’s (HSC) 2007 site visits to 12 nationally representative metropolitan communities.

Two years ago, HSC researchers identified several troubling trends warning of growing cost and access problems, including a hospital building boom; intense competition among hospitals and physicians to expand profitable specialty services; growing stress on community safety nets; and few cost-control strategies on the part of employers and health plans.

For the most part, those trends continued into 2007, although employers and health plans have stepped up efforts to engage consumers and the hospital building boom appears to have abated somewhat, according to the study. Nonetheless, already-planned expansions of medical-surgical capacity, especially in profitable specialties and in affluent suburbs with well-insured populations, continue to come on line. Competition among hospitals and between hospitals and physicians for profitable service lines, such as cardiac and orthopedic care, remains intense in most markets, raising concerns about increased use of health care services and rising costs.

To help curb rising costs, employers and health plans are looking to consumers to take more responsibility for medical costs, lifestyle choices and treatment decisions, the study found. While consumer-directed health plans—high-deductible plans with a tax-preferred savings account—have not gained widespread adoption, other developments—including a heightened emphasis on prevention and wellness, along with nascent provider cost and quality information—are advancing health care consumerism.

"It’s an open question whether the heightened focus on consumer engagement can slow cost growth enough to keep care affordable or whether the growing problem of affordability will derail efforts to decrease the rising number of uninsured Americans and stymie meaningful health care reform," said Paul B. Ginsburg, Ph.D., president of HSC, a nonpartisan policy research organization funded primarily by The Robert Wood Johnson Foundation.

"The emphasis on prevention and wellness activities, along with growing availability of provider cost and quality information, arguably was the most striking development observed across the 12 communities in 2007," said Debra A. Draper, Ph.D., HSC director of site visits. "But whether the so-called health care consumerism movement can produce results—improved health and cost savings—remains to be seen."

The study’s findings are detailed in a new HSC Issue Brief—Health Care Cost and Access Challenges Persist: Initial Findings from HSC’s 2007 Site Visits—by Draper and Ginsburg. The Issue Brief is available here.

Every two years, HSC researchers visit 12 nationally representative metropolitan communities, conducting interviews with local health care leaders, including health plans, providers, policy makers, employers and consumer advocates. The 12 communities are Boston; Cleveland; Greenville, S.C.; Indianapolis; Lansing, Mich.; Little Rock, Ark.; Miami; northern New Jersey; Orange County, Calif.; Phoenix; Seattle; and Syracuse, N.Y. HSC has been tracking change in these markets since 1996.

Other key initial findings from the 2007 HSC site visits include:

• An Ounce of Prevention. Interest in prevention and wellness strategies by employers has increased sharply, and health plans are racing to build or acquire the capabilities to deliver these services. Employers want to intervene earlier to prevent disease, hoping to reduce health care costs, as well as lost productivity and absenteeism. Among the strategies being pursued, employers have shown particular interest in health risk assessments, where employees or dependents answer questions about their health and lifestyle. The health plan or vendor then responds with suggestions for treatment or other interventions such as participation in a weight-management program. Although most employers think of these activities as support for pursuing healthier lifestyles, some also see this in terms of personal accountability for employees to take steps to improve their own health.
• Hospitals Align with Select Physicians. Hospital-physician relations are increasingly strained as more physicians compete directly with hospitals for patients. Across markets, physicians—most notably specialists—are less willing to provide emergency on-call coverage, care for uninsured patients or carry out other voluntary activities, such as serving on medical staff committees that have typically accompanied their hospital admitting privileges. Hospitals are responding by seeking closer alignment with select physicians, including those in such specialties as cardiology, neurology and orthopedics. Hospital employment of physicians is becoming more prevalent, sometimes as a way of pursuing the service-line strategy and, in many cases, to respond to the growing reluctance of staff physicians to provide emergency on-call coverage and to treat uninsured patients.
• Increasing Focus on the Uninsured. States face mounting pressures to address health care for the estimated 47 million uninsured people nationally. With some exceptions, the fiscal picture of states improved dramatically from two years ago, creating a favorable climate for public program expansions and, in some states, restoration of previous cuts. For a few states, the fiscal climate did not improve over the past two years, and there are indications that it may now be worsening in others. Economic downturns threaten to increase demand for safety net services at the same time they impair states’ fiscal ability to support health care programs.
• Safety Net Faces Growing Demand. Safety net providers across local communities are seeing increased demand for services. Adding more pressure on the safety net is the waning capacity and willingness of some hospitals and physicians to provide charity care, particularly specialty care. A shortage of primary care physicians in some markets is further challenging the safety net’s ability to respond to the increasing demand for services.

The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded principally by the Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.