Using Health Insurance Regulation to Achieve Health Care Cost Containment and Health System Reform: The Rhode Island Experience

Background:

Health care costs have inflated more rapidly than wages for more than 25 years, contributing to a decline in inflation-adjusted median family income and to diminished affordability of health insurance. Health care cost containment is an important consideration for any health delivery system reform effort. Unlike other states, health insurance regulation in Rhode Island requires commercial insurers to implement policies and invest in programs that enhance health care affordability. Measurable standards for cost containment are needed for regulators to hold insurers accountable for improving affordability.

Objectives:

(1) Identify cost containment strategies and facilitate prioritization by key stakeholders, and

(2) Evaluate stakeholder priorities for cost containment, systematically scoring each strategy using relevant feasibility and value criteria.

Methods:

Potential cost containment strategies were identified from peer-reviewed literature and informant interviews with insurers and state officials. Through consultation with insurers and experts in the field, stakeholders publicly debated and prioritized strategies for which standards of affordability would be developed by state regulators. Each strategy was independently analyzed through systematic scoring and ranking using six feasibility criteria and four value criteria. Feasibility criteria included level of health plan control, state resources required, legal authority, congruence with regulatory processes, political support, and alignment with current insurer activities. Value criteria included evidence of associated containment problems, availability of effective interventions, evidence of cost savings, and relative value compared to other strategies.

Results:

Twenty four cost containment strategies were considered in seven domains: primary care, health information technology, emergency care, hospitals, transparency, wellness, and comprehensive reform. Stakeholders prioritized four strategies for further development of affordability standards: primary care spending, medical home expansion, standardization of incentives for electronic medical records, and fundamental payment reform. Except for fundamental payment reform, each of these strategies also ranked highly (<80% of total points allotted) in the systematic application of feasibility and value criteria. Three additional strategies (wellness performance standards, primary care performance standards, and e-prescribing incentives) also received greater than 80% of total points allotted in the assessment of feasibility and value, however they were not indicated by relevant stakeholders as worthy of focus for setting statewide standards of affordability.

Discussion:

To ensure compliance with affordability regulation, each cost containment strategy must be translated into measurable standards. Other states considering the use of health insurance regulation to contain health care costs can learn from Rhode Island's experience of working with stakeholders to identify, prioritize, and operationalize cost containment strategies.