Excess Medical Spending From the Minnesota Perspective

In last month’s issue of AJPH, Speer et al. aimed to bring a long-standing discussion in health services research to public health, in part to “help catalyze needed change.”^1(p1744) It is particularly timely, as the current pandemic has dramatized the chronic underfunding of public health and the resulting constraints on responding to rising chronic conditions, entrenched and systemic health disparities, and emerging infectious diseases.

Many US states are engaged with the intertwined problems of excess and wasteful medical spending, and they have abundant motivation to eliminate waste in medical care. It isn’t just good politics: it also helps protect residents from medical care that has no clear benefit and could create potential harm; it finances the delivery of high-quality, essential health care to an eligible population while limiting the fiscal burden; and it frees up resources that can be invested in a range of policy initiatives beyond medical care.

Indeed, over the past 20 years states have reset incentives, financed pilot studies, promoted structural change and transparency, conducted research, and made regulatory decisions, all to bring discipline to excess medical spending and wring out waste. For example, in the late 1990s, Minnesota paired coverage and structural reforms with a cost containment package to arrest spending growth. At the same time, the private sector and the state’s employee health insurance program began experimenting with early value-based purchasing programs.² Multiple public–private partnerships worked to reduce unnecessary cesarean deliveries, diagnostic imaging, and rehospitalizations. And with the 2008 health reforms, Minnesota invested in initiatives to find the “value signal” in cost and quality, including by establishing the Minnesota All Payer Claims Database in the state’s public health department.

A number of these projects and initiatives were thought to have been successful, at least for a time, although data to monitor progress were limited and formal evaluations were rare. In addition, several of these initiatives were narrowly focused rather than aimed at systemic change. There are a variety of reasons many of these have been repealed, “defanged,” deimplemented, or just discontinued, but lasting commitment to change in the face of oppositions is among them. Consequently, individually or collectively these initiatives have not fundamentally and sustainably altered the trend of excessive spending—inefficiencies and waste remain entrenched.³ Minnesota residents paid more than $9 million in annual out-of-pocket spending (of a total $54.9 million) for just 18 low-value services,⁴ a select set of high-volume inpatient treatments exhibited up to an eightfold difference in commercial prices across facilities,⁵ and administrative health plan spending continues to grow nearly in synch with rising excess medical spending.

For states to make more progress, we need sustained political will, resources, and data to inform improvement, including the following:

• 1  Timely and more complete data on the process of care delivery.⁶ A 2016 ruling found that the federal Employee Retirement Security Act preempts any state requirement to submit data to an all-payer claims database for self-insured employer health plans, which in Minnesota account for about 60% of individuals with private coverage.

• 2  A second-generation of low-value care metrics, including costly services that generate little clinical value.⁷ For example, Choosing Wisely is a well-publicized provider-led campaign aimed at identifying low-value services. Its strength—to be a provider-led initiative—has also been a limitation in identifying low-value measures that are significant revenue generators for the medical community.

• 3  A framework and data collection system that permits monitoring administrative spending for providers and health plans, as well as the potential for savings.⁸ Currently no studies have identified interventions that have succeeded in decreasing administrative spending, but systematically collecting data to assess where this spending is generated and why is an important first step.

• 4  A renewal of public health and population health economics so that reallocation of the resources that Speer et al. discuss can be informed by robust empirical evidence.

In its recommendations for transforming health and human services, the recently formed Minnesota Health and Human Services Blue Ribbon Commission included provisions focused on reducing low-value care and waste associated with prescription drug pricing.⁹ Activities more globally aimed at excess medical spending—establishing spending caps and exploring global budgeting—became victims of staff reassignments to pandemic response roles. Ironically, it may be the pandemic that keeps constraining excess medical spending on the front burner. For effective public health, we need data systems, creative analytics and data science, strong partnerships, and dedicated staff, something that we had to enhance in Minnesota’s COVID-19 response. Sustaining these partnerships, including to model disease hotspots and hospital capacity; maintaining the distributed data systems that generate near real-time data from electronic health records; and supporting clear and concise science communication may be the motivation to sustainably reduce excess medical spending through new thinking.