Addressing and Reducing Health Care Costs in States: Global Budgeting Initiatives in Maryland, Massachusetts, and Vermont

In the five years since the passage of the Affordable Care Act (ACA), 17 states and the District of Columbia have created health insurance exchanges and 30 states and the District have expanded their Medicaid programs to cover low-income populations.  More than 16 million people are newly insured under the law.

In addition to expanding health coverage, a number of states are also undertaking broad health care system transformation initiatives, which seek to achieve the Triple Aim: improve health and quality while lowering costs. The Centers for Medicare and Medicaid (CMS) Innovation Center has awarded nearly $4.8 billion to these efforts and states are undertaking scores of new demonstrations to reform payment and delivery systems. Although health care spending has been growing at a slower rate in recent years, it is now projected to increase.

An important focus for states is the third “leg” of the Triple Aim— lowering costs. This paper highlights how Maryland, Massachusetts, and Vermont have adopted policies and are working to implement all payer models that set targets or global budgets for health care cost growth based on the total cost of care. These states have undertaken initiatives to try to slow the growth of health care spending in their states and the results of these experiments will be important to watch.

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