Advancing state-based efforts for healthcare affordability
The Challenge
The rising cost of healthcare and higher levels of spending weaken our healthcare system and crowd out other public investments.
Healthcare in the United States costs far too much for the poor outcomes that result. America has the lowest life expectancy among large, wealthy countries, while greatly outspending its peers on healthcare.
Rising health care costs are straining state and federal budgets, burdening businesses, and forcing families to choose between going to the doctor and putting food on the table.
As a consequence, individuals may struggle to pay for required care, irrespective of their insurance coverage, causing people to postpone or forgo essential medical services.
Not only does the system result in worse health outcomes, but its inefficiency also creates enormous challenges for the U.S. economy. Healthcare spending currently represents about 18% of the U.S. gross domestic product, and is projected to outpace growth in the overall economy and account for nearly one-fifth of the U.S. economy by 2031.
As healthcare costs and spending continue to grow, governments are left with fewer resources to devote to other critical public resources—like emergency preparedness, education, energy, housing, and infrastructure.
Our Solution
Addressing drivers of healthcare spending can make care more affordable.
The Peterson Center on Healthcare supports efforts to make healthcare more affordable by working directly with states on a number of targeted initiatives.
We help states collect and analyze healthcare spending data to better understand what is driving rising costs in their communities. Our goal is to equip states with tailored strategies to thoughtfully manage unaffordable healthcare costs.
Our Projects
Supporting State Affordability
Peterson-Milbank Program for Sustainable Health Care Costs
A growing number of states have adopted policies to measure statewide healthcare spending and set a target for healthcare cost growth. These programs aim to constrain healthcare cost growth to no faster than the local economy, state revenues, or wages. The Peterson-Milbank Program for Sustainable Health Care Costs advances these efforts by providing technical assistance, strategic communications, and analytics support to participating states, while hosting interstate learning opportunities for state partners to facilitate peer learning on how to address underlying drivers of cost growth. By examining spending patterns across all types of payers and identifying cost drivers, these states are leading the way toward ultimately making healthcare more affordable for everyone.
Massachusetts’ Experience with Cost Containment
Massachusetts was the first state in the nation to try to contain healthcare costs by establishing an annual benchmark for its cost growth rate, including mechanisms to hold payers and providers accountable to keeping health spending growth below the benchmark. The Peterson Center on Healthcare and Gates Ventures partnered with Mathematica to determine the effectiveness and lessons from Massachusetts’ approach.
Supporting State Affordability
Influenced by the Peterson-Milbank Program for Sustainable Healthcare Costs, AHEAD is a payment and care delivery model that strives to curb healthcare costs, improve population health, and reduce disparities in health outcomes. Through targeted technical assistance, the Center aims to strengthen states’ applications in this leading-edge model in health care payment and delivery innovation.
Ending Health Care’s Affordability Crisis Begins With Actions to Fix State Markets
Caroline Pearson emphasizes the benefits of states being able to more easily engage with local employers, healthcare providers, and payers.
States Setting Health Care Spending Growth Targets Experienced Accelerated Growth in 2021
This article examines health care spending growth trends and the key factors driving those trends in 5 states in 2021.
Minnesota Takes Steps to Open the “Black Box” of Health Care Spending Amid Industry Opposition
Minnesota has established a center for healthcare affordability as part of a landmark healthcare bill.