Lowering the Cost of Care

Access to coverage means early detection and longer lives

As a result of the Affordable Care Act (ACA), the uninsured population in California has steadily decreased.

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Americans are paying more out-of-pocket for health care now than they did in the past decade.¹

In the U.S., funding for healthcare comes from a combination of private and public health insurance, employers, and individuals.² Most health insurance plans require members to contribute to the cost of care using some form of out-of-pocket costs. Out-of-pocket costs include up-front costs (premiums), costs at the point of service (copayments), and costs for services rendered (coinsurance, deductibles). Plans typically offer a tradeoff between paying more up-front and less for services, or less up front and more for services. Understanding the details of health insurance cost-sharing can be difficult. People who do not understand their insurance plan’s cost-sharing model are more likely to delay or avoid healthcare.³

This indicator tracks the average annual out-of-pocket health care cost per family and individual in U.S. dollars. Total Out-of-Pocket Cost (Families) includes monthly insurance premiums because health insurance eligibility and coverage are typically tied to families.⁴ Total Out-of-Pocket Cost (Individuals) does not include premiums. This data represents one important piece of out-of-pocket health care cost; in the future we hope to track out-of-pocket cost relative to household income.

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National health spending growth is expected to accelerate 5.7 percent for 2017¹

The overall cost of health care includes more than just out-of-pocket costs and insurance premiums. Tracking California’s compound annual growth rate (CAGR) of health care spending is one way to monitor the overall cost of care. This indicator is valuable as it includes past trends in rate of spending on health care, and also helps predict what the rate of spending is going to look like in the near future.

The Let’s Get Healthy California goal is to bring California’s growth rate of health care expenditures in line with the rate of growth in Gross State Product (GSP) by 2022.

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Many Californians receive care in a fragmented system.¹

Many Californians receive care in a fragmented system that does not emphasize coordination of care or take into account the higher costs of care received outside of the primary care setting. One form of an integrated health care system is managed care which refers to health care coverage that organizes doctors, hospitals and other providers into groups in order to enhance the quality and cost effectiveness of medical treatment.

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The way we pay for health care does not reward providers for improving performance (CHCF Health Care payment in transition: A California Perspective)

How we pay for coverage and care in the US does not provide incentives that reward value (improved quality and services at a lower cost). Instead, our system provides incentives for higher volume, often leading to over-use of services and high costs.
There is an urgent need for payment reform in order to better align costs with health outcomes. (CHCF Health Care payment in transition: A California Perspective)
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