Colorado health care costs increase fourfold in 20 years, says report

Nov 16, 2015, 7:29pm MST Updated Nov 16, 2015, 7:31pm MST
http://www.bizjournals.com/denver/news/2015/11/16/colorado-health-care-costs-increase-fourfold-in-20.html

Coloradans spend slightly more on hospital care than they do on preventative care, lower-severity physician services and prescription drugs combined, despite recent efforts to contain hospital costs, according to a report Monday from a commission seeking ways to reduce health-care spending in the state.

The report ( download here) says that as of 2013, personal health care costs in Colorado stood at $36.3 billion, more than four times the level of two decades ago. Just since 2000, that spending is up 122.7 percent — 3.7 times the rate of inflation in the state.

The 327 percent increase in Colorado personal health care expenditures in 20 years compares to a 216 percent rise nationwide, the report says.

Members of the Colorado Commission on Affordable Health Care, approved in 2014 through a bipartisan bill, did not offer specific recommendations in the report that was sent to Gov. John Hickenlooper and legislative health care leaders on how to bring down spending.

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But they laid out a number of specific cost drivers and said they hope to produce recommendations that impact the total cost of care in a final report in June 2017 — if the Legislature agrees to fund their work one more year.

Bill Lindsay, president of the Lockton Benefit Group in Denver and chairman of the commission, said in an interview that many of the broad conclusions in this initial report will come with little surprise. But he said it is important to lay them out for legislators — and to show that observations and eventual recommendations will be based upon quantifiable data.

“It’s no surprise to anybody that hospitals are one of the biggest drivers of cost in the health care system,” Lindsay said. “Part of what we are focusing on is rules, laws, regulations. But part of it is the rules of the market too.”

Of all types of health care spending, hospital care accounts for $13.5 billion, or 37 percent of the total. Physician and clinical services, meanwhile, make up $9.6 billion (27 percent), while prescription drugs and other non-durable medical products account for $3.8 billion (10 percent).

Many of the recent efforts by government and private insurers to reduce health-care spending have been focused on hospital practices, including penalties for excessive re-admission of patients and a movement of patients from emergency care to outpatient care.

That has helped to slow the growth of health care spending to an annual rate of 3.6 percent between 2010 and 2013, the report stated.

But spending nationally remains at a level of 16.4 percent of gross domestic product — up from 4.6 percent in the year 1960. And spending per person has increased 175 percent since 1991, the report said.

Spending on Coloradans aged 65 and older is rising more quickly than for any other age group, according to the report. Consequently, spending on home health care, while just 2 percent of the overall spending in this state, is going up by a greater percentage than any other type of health-care spending in Colorado, it added.

Commission members now are completing the discovery and assessment phase of their work, which is to be followed by evaluations and then recommendations to the Legislature, Lindsay said.

He hopes Monday’s report convinces members of the Legislature, which is trying to close a $373 million budget shortfall for next year, that the group’s work is valuable enough to continue.

“Just as no single driver is responsible for our high and rising health care costs, no single policy solution will be adequate to meet this challenge,” the report states. “The commission must take time to carefully evaluate the data and evidence to understand the effects of any of its final policy recommendations.”

Ed Sealover covers government, health care, tourism, airlines, hospitality and restaurants for the Denver Business Journal and writes for the "Capitol Business" blog. Phone: 303-803-9229.