Health policy discussions often focus on controlling the cost of the sophisticated medical care that is provided to relatively few people. Outside of this blog, relatively few people pay attention to the impact of routine costs like the cost of an extra physician visit for each of 150 million people. This is one reason why so many people are surprised by the fact that consumer directed health plans with proper incentive structures can lower health care expenditures by as much as 20 percent without compromising health or externally rationing care. It also explains why so many Medicare commentators have difficulty understanding how the Ryan Medicare reform plan might work.
Below is a list of what officials at Colorado Medicaid consider the top 10 “cost drivers” for the state Medicaid program as shown in one of the Colorado’s budget documents. Six of the ten cost drivers revolve around labor and delivery and routine physician visits by children. Colorado Medicaid covers slightly more than 36 percent of Colorado births, almost 25 percent of its children, 20 percent of its disabled, and 60 percent of its nursing home residents.
How the bureaucracy chose these items as cost drivers is not made clear in the budget document. In the past, officials have focused on areas showing the largest year over year percentage increase. Only two items qualify as part of care for the aged and disabled even though the state’s Medicaid program still does spend more in total on the elderly and disabled than it does on healthy children. And if the cost driver listed as per capita cost for kids using Federally Qualified Health Centers is any guide, Federally Qualified Health Centers are really, really, expensive places to get care when compared to visits to regular physicians.
The number of cases and the total cost for FY2010-11 follow in parentheses:
Uncomplicated vaginal delivery (14,177, $38.7 million)
Health supervision of infant or child (105,734, $17.7 million)
Uncomplicated cesarean section (3,116, $16.4 million)
Cesarean with complicating diagnoses (2,175, $15.3 million)
Health supervision of infant or child at Federally Qualified Health Centers (58,789, $15 million)
Outpatient hospital visits involving abdomen and pelvis (18,331, $12.8 million)
Tracheostomy with mechanical ventilator with major operating room procedure (130, $12.3 million)
Oxygen concentrator (12,454, $12.2 million)
Special investigations and examinations at Federally Qualified Health Centers (39,480, $12.2 million)
Vaginal delivery with complicating diagnoses (3,061, $11.0 million)
The performance goals given by the state Medicaid bureaucracy grandly propose containing these costs. In response, state budget staff have asked, quite sensibly, whether the Department plans to “reduce vaginal deliveries without complicating diagnoses” by reducing the number of births?