by Jay J. Cohen, MD, Senior Vice President, Optum and Glenn D. Steele, Jr. MD, President and CEO Geisinger Health System

Lost in much of the debate over the federal health care law are the surprising powers that reside in states to reduce health care costs and improve quality. With 46 state legislatures set to convene in January and 36 campaigns for governor heating up, the opportunities are profound. The year 2014 might very well be the year state leaders successfully take the lead to advance the unfinished agenda of health care reform.

States wield tremendous purchasing power. In the coming years close to one-third of all Americans will receive their health care coverage either directly from state government or indirectly through a state entity. These nearly 90 million enrollees will be covered by Medicaid, state children’s health (SCHIP), state and local government employee health insurance or through state health insurance exchanges. Imagine the potential savings if fee-for-value were leveraged on this scale.

2. Engage the care community and help equip it for change. A Harris Interactive survey of doctors found that only 28 percent of those surveyed thought practices in their communities were prepared to assume greater responsibility for managing their patients’ care. Success in changing how care is delivered and paid for will require building acceptance of the need for change among physicians and other care providers and support and incentives for them to introduce the technology, connectivity and collaboration required to help modernize local health systems.

Governors and legislative leaders need to make the introduction and expansion of modern health care technology a priority in every state. For example, Geisinger Health System treats approximately 25,000 diabetic patients using physician-directed, patient-centered, team-delivered care connected through advanced information technology to significantly reduce the complications of diabetes. For every l000 diabetics treated by Geisinger over 1000 days, 12 heart attacks, six strokes and six cases of diabetic eye disease were prevented. Using a comparable approach for cardiac surgery, mortality rates for patients were reduced by two-thirds, length of stay was reduced by a half day and readmissions by over 20 percent.

Electronic data can also tell physicians how they compare to similar care providers. UnitedHealth Group’s assessment program shows that cardiologists and orthopedists providing high-quality care have about half as many complications and “re-dos” for key procedures as doctors who do not meet quality goals; and doctors delivering high-quality care are also more efficient, with total episode costs about 14 percent lower than other doctors. Publicly available report cards with performance and price information is useful for patients in choosing care, helps providers improve their performance and is a basis for aligning payment incentives.

3. Rethink and retool the layers of outdated health care regulations, laws and mandated benefits that currently hamstring efforts to adopt payment structures that reward value over volume. Current state regulatory barriers too often impede the use of non-physician caregivers, bonus payments, shared savings, and shared risk/accountability – all imperative for successful payment reforms.

Research shows that 30-40 percent of the cost of health care provided is wasted spending borne of an inefficient system. Every other industry sector that improves efficiency typically lowers prices for consumers. It’s time for health care to do the same.

In addition to legislative change and executive orders, governors as CEOs of their states are uniquely positioned to convene the key thought leaders and leading local professionals n health care to review price and performance data and pinpoint where costs can be reduced and care can be improved. Such working group meetings can lead to voluntary agreements among those who provide, pay for and receive health care to address the problems of escalating costs.

The economic imperative for states to seize these powers has never been greater. Health care isn’t just too expensive, it is bankrupting our nation’s future. The rising costs of health care gobbles up an increasing share of state budgets, leaving little left to invest in education, highways and infrastructure, and research and development – all of which are critical to economic growth.

Even more importantly, the citizens of every state in the U.S. need and deserve more affordable, higher quality health care. Let 2014 be the year state leadership does its part to deliver broader access to better care at prices more people can afford to pay and at the same time restores the nation’s economic health.