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Newest Policy Brief

State Healthcare Cost Growth Benchmarks
By Adrienne Anderson

June 27, 2024

As of 2020, New York State’s per capita healthcare expenditure was the highest in the nation at $14,007—179% higher than it was in 2000 and 37% higher than the national average as of 2020.  Healthcare costs represent part of the “crisis of affordability” in New York, which is becoming as dominant a political issue today as “inequality” was a decade ago. A comprehensive healthcare strategy for New York cannot avoid the issue of affordability, so affordability is one of the major focus areas of the Step Two Policy Project. 

Our January 2024 Commentary, The Affordability of Healthcare in New York, began our examination of the issue with the question, in part, of “affordable for whom?” – the answers to which must address the three distinct constituencies of individual consumers, employers, and taxpayers. Our January 2024 Issue Brief, Using Health Data and Information to Better Measure the Affordability of Healthcare, sought to help answer that question by identifying publicly available resources that offer valuable context about healthcare expenditures across service types and geographies. 

This third paper in the Affordability Series discusses a strategy that a growing number of states are pursuing to constrain growth in healthcare costs. These states establish an annual health expenditure growth target, typically referred to as a “healthcare cost growth benchmark.” Most states use the terms “cost” and “expenditure” interchangeably to refer to the total amount of spending in the healthcare ecosystem (including the non-medical expenses of insurance plans).  Some states, such as California, refer to a “spending target.” This Policy Brief will use “growth target” and “growth benchmark” interchangeably and “spending” and “expenditure” interchangeably. 

For a variety of reasons, a healthcare cost growth benchmark has never been proposed in New York, either by the Executive or, so far as we know, as a legislative bill. This Policy Brief examines how healthcare cost growth targets operate in other states and discusses the pros and cons of establishing such a benchmark in New York as part of a broader strategy to improve the affordability of healthcare. 

To read the rest of this Policy Brief, click here.

The Step Two Policy Project is a policy think tank that focuses on issues involving health, behavioral health, and human services in New York. We strive to accelerate the adoption of good ideas.
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