The Health Care Cost Drivers
Skyrocketing health care costs are shutting people out of insurance, making care unaffordable even for those who have it, burdening the budgets of businesses, governments, and rural hospitals, reducing vital services like preventive and primary care, women’s health and pediatrics, causing ethical dilemmas and burnout for health care professionals, and gobbling up funds for much-needed health programs and services in order to maximize profits.
Health cost drivers are the systemic reasons why health care prices are spiraling.
Countries that guarantee coverage and spend far less than the United States with better health outcomes all have ways to control key cost drivers. So does the Health Security Plan, which would guarantee health coverage for most New Mexicans with freedom of choice of provider, overseen by a geographically representative citizens’ board. Three independent studies estimated it would save hundreds of millions of dollars within five years.
What are these cost drivers? They include ever-rising hospital and drug expenses, complex administrative requirements (30% related to billing and payment), corporate acquisitions and anti-competitive practices, and confusing IT systems that are not compatible.
Other countries have successfully controlled these costs with policies such as budgets for hospitals, standardized health professional reimbursement rates, setting drug prices, and other approaches.
In addition, New Mexico, must tighten controls over mergers and acquisitions by out-of-state corporations that remove critical resources from our state and reduce services to reward investors.
The Health Cost Drivers Project
Goal
The Health Cost Drivers Project focuses on analyzing sources of rising health care costs with the goal of developing solutions specific to New Mexico. Its simple premise is that New Mexico can have better, more affordable health care by contracting with experts knowledgeable in relevant policy innovations to identify approaches proven elsewhere and suggest ways they might play out in New Mexico.
Process
We are fortunate that New Mexico is addressing these issues through a state-funded public process. Since 2021, the Health Security Campaign and its supporters have successfully advocated for the legislature to fund this project. Both the Superintendent of Insurance and the interim Legislative Health and Human Services (LHHSC) have been able to hire consultants to report on selected cost driver topics – focusing on New Mexico solutions.
Results So Far
Reports so far have provided vital information that serves as a springboard to design New Mexico-appropriate policies to reign in health care costs. They suggest some clear next steps:
Developing a global budgets program that provides financial stability for hospitals and lowers costs.
Joining the existing Washington/Oregon drug purchasing consortium that already includes Nevada, Illinois and Connecticut.
Tightening oversight on corporate mergers and takeovers that impact the practice of medicine and increase costs.
Restricting prior authorization requirements that add administrative costs and interfere with care.
What’s Next
Legislative Committee Activity:
This year, at least $440,000 will be available for this project (with some possible additional funding). The Health Security Campaign will be working closely with our legislative champions to ensure that a work plan is developed for this upcoming year, that qualified consultants are hired, and that their scope of work is clearly delineated and solutions-focused.
Some policies, like global budgets, will take longer to develop – especially if New Mexico is able to receive federal dollars. Others, like joining the Washington/Oregon drug purchasing consortium, could occur more quickly.
One goal is to introduce selected cost-driver legislation in 2025
Another goal for 2025 is to ensure that the state budget includes funding for the Cost Drivers Project to continue pursuing more complex topics
To create effective policy, it is important for legislators to consider systemic health cost drivers as a group – with overlapping causes and solutions. This could (and should) take several more years.
Think of our health care system as a jigsaw puzzle with interconnected pieces. To solve the puzzle, we need to develop a strategy. Which pieces do we focus on first? The cost drivers are priority pieces – like the edges – that should hold the system together.
Health Security Campaign Activities
Zoom workshops. The Health Security Campaign will be offering Zoom workshops on specific topics – like global budgets – to ensure that you, our supporters, have the information you need to become involved taking control of this out-of-control system.
Individual and group outreach: We will continue to strengthen our coalition across the state, educating and gathering input. Please contact us if you would like us to come to your community or meet with your group by video.
Research: We will continue to engage in important research on cost driver topics and share this information across our platforms. Our work is relied upon by advocates and by policymakers alike.