Delaware Public Media

DHSS Secretary Walker issues health care spending benchmark plan

Aug 29, 2018

Health and Social Services Secretary Dr. Kara Odom Walker has sent recommendations to Gov. John Carney laying out a plan for the state to implement a health care spending benchmark.

One-third of Delaware’s budget is spent on health care and the cost is rising faster than the state’s economy is growing.

Earlier this year, Gov. Carney issued an executive order allowing Secretary Walker and an advisory group to come up with a benchmark goal to reign in that cost.

Walker released her report Monday calling for Delaware to align its health care spending growth with the growth of per capita gross state product (GSP)—an economic measurement relating to the rate of inflation. This is meant to keep health care spending from outpacing the economy.

But Walker says the benchmark is just the first step in the process.

“Setting a benchmark is just setting a goal. It’s setting a transparent way that will look forward to lowering costs, but it doesn’t necessarily tell us how we’re going to get there and that’s the work that still needs to be done,” said Walker.

Harvard University Professor of Economics David Cutler was on the Delaware advisory board and played a role in planning the Massachusetts health care spending benchmark.

He says a benchmark works to lower costs when insurers and providers reference the target growth rate as they write health care contracts.

“So in Massachusetts where we have such a target, the target is about 3.5%, the insurers and the providers say, you know, we should really only do a price increase of 1.5% because we know that utilization increase will be about 2% or so. So that ensures that they come in under the target,” said Cutler.

Unlike Massachusetts, Walker’s report also calls for quality measurement goals. Her plan recommends three metrics for improvement: opioid overdose deaths and benzodiazepine use, ambulatory visits to the emergency department and cardiovascular disease prevention.

The benchmark would not penalize payers, insurers or providers for not reaching the goals.

Walker’s report recommends Gov. Carney put the benchmark plan in place starting next year.