Health-care delivery must be reformed for sustainable state budget

IN the face of daunting economic challenges, we must set our state on a new path for financial stability. Washington state must transform the way it delivers health care or we will be overcome by it.

Over the past 20 years, the underlying cost of health care has increased at about 6 percent annually, or twice the rate of general consumer prices. The amount state government pays for health care has doubled over the past decade, to more than $5 billion. Health care now accounts for nearly one-third of the state's annual budget. The largest components are Medicaid, which covers 1.3 million low-income children and adults, and insurance for teachers and state employees.

As costs increase, there is less money available for elementary, secondary and higher education, not to mention infrastructure. That hurts the state's ability to compete in the world marketplace.

A health-care transformation will require a number of significant changes. We need:

• To pay doctors for how well they do — not how much they do;

• Transparency on quality and prices so we can address wasteful variation in care;

• A commitment to improving outcomes by strengthening primary care, the first and most cost-effective line of defense against illness.

The goal should be to improve outcomes and cut cost increases in half so that the rate approximates the growth in all consumer prices.

Yes, cutting cost increases in half is a difficult and challenging goal, but we can do this.

First, we know it's possible. A number of credible studies tell us that more than a third of all health-care expenditures don't add to health or increase life span. In our state that translates to at least $10 billion a year that could be saved for families, employers and government, without hurting anyone's health. In fact, health could be improved by focusing limited resources on public health and better delivering dental, primary and chronic care.

Second, this state has a track record of government, private employers, doctors, hospitals, drug companies and insurance plans working together to enhance quality and efficiency. We need to step up this effort.

There is no magic bullet, but many small actions could add up to significant savings and enable the continuation of critical programs like prenatal care for high-risk, low-income women and the Basic Health Plan.

Here's an illustration: The Puget Sound Health Alliance publishes a report on the quality of primary-care delivery. Let's look at just one example of the measures they track — generic drug usage. There is a consensus among highly regarded physicians and pharmacists that 95 percent of the prescriptions for antacid medication should be generic. Our regional average is 80 percent, which is up from 55 percent in 2005. That's good news.

But the bad news is that, across major medical groups, there is a range of 28 to 90 percent. That variation can and should be reduced. A stronger "generics first" law alone could save tens of millions of dollars that could restore critical access programs.

Some will argue that these decisions should be up to the doctor and the patient. When these decisions are not based on evidence, however, they add to costs and limit access to good care.

When I was born, health-care costs represented 4 percent of the economy. When my daughters were born, these costs had risen to 8 percent. Today, as my grandchildren arrive, health care is almost one-fifth of the economy. This trend is not sustainable. The future will not be bright for our grandchildren or their children if we cannot contain and reverse this persistent increase in health-care costs, and the associated declines in quality and access.

Getting control of health-care costs is the most significant economic transformation opportunity currently before our state and our nation.