Governor Carney’s Statement on Delaware Economic and Financial Advisory Council (DEFAC) Estimates

WILMINGTON, Del. Governor John Carney on Monday released the following statement on the latest estimates from the Delaware Economic and Financial Advisory Council (DEFAC):

“We continue to show strong revenue growth, which is a positive sign for Delaware’s economy and our state budget. But, as we’ve said all along, much of this revenue is coming from one-time sources and volatile revenue streams like the corporate income tax. Delawareans expect us to responsibly manage their money in good and bad times. We should not use one-time revenue to fund ongoing expenses. That’s why we will continue to talk to legislators about dedicating one-time revenue to one-time expenses like infrastructure projects and open space preservation – while putting money away to prevent spending cuts the next time our revenue picture trends downward.”

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Learn more about Governor Carney’s Fiscal Year 2020 budget proposal.


Delaware Sets Health Care Spending Benchmark

Benchmark initiative will limit spending growth, improve quality of care

NEW CASTLE, Del. – The Delaware Economic and Financial Advisory Council (DEFAC) on Wednesday issued a recommended Benchmark Index that set the state’s health care spending growth target at 3.8 percent for 2019 – the initial year of Delaware’s newly created Health Care Spending Benchmark. This move furthers the state’s goals of managing the growth of future health care spending, increasing transparency into how health care is delivered and paid for, and improving the quality and cost of health care for the citizens of Delaware.

DEFAC set the target based on Executive Order 25 signed by Governor John Carney in November. The order called for the initial benchmark to be equivalent to the advisory Benchmark Index for overall State budget growth established under Executive Order 21 signed by the Governor in June 2018.

“We know that the rising cost of health care crowds out other important state investments, keeps companies from hiring, and makes it harder for families to manage their household budgets,” said Governor Carney. “This benchmark initiative is about providing Delawareans with more transparency around their own health care spending, and making sure that Delawareans are getting the quality of health care that they’re paying for. At the state level, Delaware taxpayers rightly expect us manage their money wisely. This initiative will help us do just that.”

“Establishing the health care spending benchmark is an important step forward in learning more about how health care dollars are spent in our state,” said Dr. Kara Walker, Secretary of the Delaware Department of Health and Social Services. “In order to meet the current and future health care needs of Delawareans, our system of providing and paying for care has to change in order to be sustainable. We look forward to working with health care providers, insurers, businesses and consumers as we move forward in improving the patient and provider experience, while improving the overall health of Delawareans and doing it at a lower cost.”

“Establishing the Health Care Spending Benchmark is a vital step in establishing realistic economic measures that provide meaningful insight toward producing optimal outcomes with the limited health care dollars available to the state, our citizens and the private sector,” said Rick Geisenberger, Secretary of the Delaware Department of Finance.

In subsequent years, Executive Order 25 requires the health care spending benchmark to be calculated based on long-term projections for growth in Potential Gross State Product (PGSP). Currently, long-term PGSP is forecast at 3 percent. The target approved today provides a transitional market adjustment with the benchmark starting at 3.8% and then gradually expected to decline to 3% over the next three years.

A Health Care Spending Benchmark Subcommittee of DEFAC will monitor PGSP forecasts and health care spending trends and make annual recommendations for the Benchmark in future years.

The path to creating the health care spending benchmark began in the summer of 2017, when the General Assembly passed House Joint Resolution (HJR) 7 authorizing the Department of Health and Social Services (DHSS) to develop a spending benchmark. The Governor signed HJR 7 in September 2017, just months after an analysis by the Centers for Medicare and Medicaid Services (CMS) indicated that Delaware had the third-highest per-capita health care spending rate in the country, and a rate that was 27 percent above the U.S. average.

That fall, DHSS and Secretary Dr. Kara Odom Walker, a board-certified family physician, began a series of summits to explore how a spending benchmark could work for Delaware. In February 2018, Governor Carney signed Executive Order 19 creating an Advisory Group to provide feedback to Secretary Walker on the health care spending and quality benchmarks. While the overall health of Delawareans has been improving – Delaware is now ranked 30th among the states, according to America’s Health Rankings ¬– the pace of that improvement is trailing the growth of health care spending in the state.

Delaware has historically ranked among the top 10 states in per-capita health care spending, including in 2014, when the state ranked behind only Alaska and Massachusetts. The 50-state analysis by the Centers for Medicare and Medicaid Services (CMS) released in 2017 found that Delaware’s per-capita rate was $10,254. Without changes, the analysis estimated that Delaware’s total health care spending would more than double from $9.5 billion in 2014 to $21.5 billion in 2025.

Click here to learn more about the health care spending benchmark.

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Governor Carney Signs Executive Order Establishing Health Care Spending and Quality Benchmarks

Order will create subcommittee focused on bettering health care spending, quality across the state

WILMINGTON, Del. – Governor Carney on Tuesday signed Executive Order #25 establishing health care spending and quality benchmarks. This Executive Order will form a subcommittee of the Delaware Economic and Financial Advisory Council to focus on reducing the cost of health care for Delaware families, taxpayers, and businesses. The subcommittee will advise DEFAC and other relevant state agencies on spending, and will work closely with the Delaware Health Care Commission (DHCC) on improving the quality of health care in Delaware.

“Delaware has consistently ranked among the highest-spending states for health care, but we have not traditionally been a leader in health care outcomes. That needs to change,” said Governor John Carney. “This Executive Order reaffirms our commitment to lowering costs for Delaware families and improving the quality of care that Delawareans receive. We’ll do that, first and foremost, by improving transparency around the cost of health care services.”

In addition to setting the State’s health care spending benchmark for 2019 and beyond, the new subcommittee will consistently review its methodology and provide the public and interested stakeholders an opportunity to provide input and consider their recommendations.

This Executive Order also lays out quality benchmarks for the State for calendar years 2019 through 2021 for the Delaware Health Care Commission to follow in the categories of:

  • Emergency Department Utilization Rate,
  • Opioid-Related Overdose Deaths,
  • Overlapping Opioid and Benzodiazepine Prescriptions,
  • Adult Obesity,
  • Adult Tobacco Use,
  • High School Students Who Were Physically Active,
  • Statin Therapy for Patients with Cardiovascular Disease, and
  • Persistence of Beta-Blocker Treatment After a Heart Attack.

These quality benchmarks will be reviewed every three years, starting after 2022, to reflect improved health care performance in the state.

“I am grateful to all of the health care stakeholders for the work they have done to change how care is delivered and paid for in our state,” said Department of Health and Social Services (DHSS) Secretary Dr. Kara Odom Walker, a board-certified family physician. “As a state, we must address the cost of health care and the outcomes we are getting for that spending. The Executive Order that Governor Carney signed adds transparency and attention to our health care system, both from a spending and a quality standpoint. Today is an important milestone in moving toward a health care system that is financial sustainable for families, employers, providers and insurers, and one that rewards providers for keeping Delawareans healthy.”

This Executive Order was based on recommendations from Secretary Walker in August of this year, after a year of outreach and feedback from health stakeholders. Secretary Walker will publish a manual that contains the methodology for the health care spending and quality benchmarks no later than January 31, 2019.

“For more than four decades, the Delaware Economic and Financial Advisory Council has played a vital, non-partisan role in tracking national and state economic trends and preparing credible and trusted state revenue and expenditure estimates,” said Rick Geisenberger, Secretary of Finance. “This Executive Order creates a DEFAC Health Care Spending Benchmark Subcommittee that will solicit public and stakeholder input toward recommending a credible and trusted annual target for per capita growth of total health care costs in Delaware.”

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Governor Carney, JFC Co-Chairs Release Statements on DEFAC Estimates

WILMINGTON, Del.Governor John Carney and the co-chairs of the General Assembly’s Joint Finance Committee, Senator Harris McDowell and Representative Melanie George Smith, released the following statements Monday on the latest revenue estimates from the Delaware Economic and Financial Advisory Council:

“We’ve been focused since I took office on limiting spending growth, on directing one-time revenue into one-time investments, and on making sure we don’t spend beyond our means. These new estimates don’t change our priorities,” said Governor Carney. “The fact remains that our spending needs over the next several years will outgrow our ability to pay for them. If we fail to show restraint, we are setting ourselves up for difficult budget challenges next year or the year after that could require us to cut the very programs we’re funding this year. Over the next two weeks, we will work with chairs of the Joint Finance Committee on a sustainable budget plan that makes important investments but conserves resources, and sets us up for the long term.”

“During the Joint Finance Committee hearings this spring we heard from a number of Delawareans advocating for support for issues such as education, substance abuse treatment, corrections and investing in our workforce,” said Senator McDowell. “Over the next two weeks we will debate these issues with the goal of producing a prudent, sustainable spending plan that limits base budget growth while addressing the needs of Delawareans for Fiscal Year 2019 and beyond.”

“We are fortunate that the DEFAC estimates have been trending upward this spring,” said Representative Smith. “As a result, we will be able to address areas of highest priority for funding. However, this does not necessarily mean that we should irresponsibly increase ongoing spending, but look to limit ongoing costs and direct surplus revenue into one-time investments or savings.”

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