Rise slower in isle health care costs

Health care costs in Hawaii have grown 6.2 percent annually for nearly the past two decades but are still rising at a slower rate than the national average.

Statewide costs rose to an average of $6,856 per person from 1991 to 2009, according to a study due out today by the Centers for Medicaid and Medicare Services. That compares to the national average of 6.5 percent and health spending per person of $6,815.

Like other states, Hawaii is focused on controlling skyrocketing medical costs through better care coordination and specifically targeting the poor as well as people with high-cost diseases.

To that end, the state is developing special teams to meet the needs of "medically and socioeconomically complex patients," many of whom have multiple chronic diseases and are homeless. State officials hope that intervening in their care will reduce avoidable and costly emergency room visits and hospital admissions.

"We want to focus more resources and attention on underserved communities — areas where more people are living in poverty and also ones that are disproportionately unhealthy," said Beth Giesting, the state’s health care transformation coordinator. "Making communities healthier requires a lot more than just a good, competent health care system. To improve the health of communities, you’ve really got to improve those communities’ economy and education. We want to make sure we are focusing on the people who need the help the most."

As states work on implementing the complex federal health care reform law, some have begun tackling the rapidly rising costs of medical care. The success of models that are beginning to emerge across the country ultimately will determine whether President Barack Obama’s Affordable Care Act can make good on its name.

States, insurers and medical groups are experimenting with a variety of programs to contain costs without undermining care. These test runs come as millions of new patients will gain eligibility for health insurance under the federal law, putting additional pressure on the system.

The Affordable Care Act is expected to extend coverage to many of the roughly 50 million Americans who lack insurance by expanding Medicaid, the state-federal health care program for low-income people, and requiring most others to buy insurance or pay a fine.

Often overlooked are the law’s efforts to stabilize constantly rising costs.

U.S. health care spending reached $2.7 trillion in 2011, or $8,700 per person, according to the Centers for Medicare and Medicaid Services. The agency says those numbers are climbing and predicts spending will reach $14,000 per person by 2021.

"The trend that we’re on is just completely unsustainable. Clearly we’ve got to do something," Giesting said. "With an epidemic of chronic disease you’ve got to do a better job of managing chronic disease and that means reducing fragmentation and duplication."

The higher costs mean higher premiums for businesses, which are passing on more of those expenses to employees, and for individuals, who are seeing a rise in out-of-pocket costs.

Health care costs continue growing faster than both wages and the economy as a whole, accounting for an ever-larger share of spending for employers and workers alike. It now accounts for nearly 18 percent of U.S. economic activity, up from 5 percent in 1960.

The Affordable Care Act’s cost-containment section reduces Medicare reimbursements to providers and requires commercial insurance companies to issue refunds if more than 20 percent of their revenue goes to profits, salaries and overhead.

Hospitals will face penalties when patients develop conditions while in their care.

The federal law also promotes "accountable care organizations" within Medicare, which are charged with improving coordination to reduce wasteful spending.

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The Associated Press and Star-Advertiser reporter Kristen Consillio contributed to this story.