Medicare and Medicaid
Colorado’s Coverage Coup
Published April 24, 2009 @ 11:25AM PT
With this week’s passage of the Colorado Healthcare Affordability Act, the Centennial State has increased coverage to 100,000 people during difficult economic times. More importantly, it’s another real-time test of the theory that increased investment in prevention and primary care quite literally can pay for itself over time.
As summed up by Colorado Gov. Bill Ritter during the bill’s signing, “At no increased cost to taxpayers, the Colorado Healthcare Affordability Act will allow us to provide critical health services to people who need those services the most. This historic legislation will significantly address the crisis of the uninsured while also reducing uncompensated care and cost-shifting in our healthcare system.” I know what you’re thinking – 100,000 new people on Medicaid and SCHIP with better reimbursement rates to hospitals with no cost to taxpayers? What's the catch? Granted, on paper, the funding looks a bit like a shell game: raise $600 million per year by charging an additional fee to health care providers at hospitals; match that with federal dollars via Medicaid funding to create a $1.2 billion per year pot; use that money to not only expand coverage but increase rates of reimbursement to hospitals providing care to Medicaid patients and Colorado Indigent Care Program. But it's no accounting trick - it finds a way to maximize the federal Medicaid dollars the state is eligible for without raising state taxes or cutting something somewhere else in the budget. Points for creativity!
Now normally, this is the part in our health care debate where doctors and hospitals would jump off the bandwagon. Why would they be OK with paying new fees and shouldering the burden alone? But actually, the Colorado Hospital Association has been the major booster of the bill. Sure, there’s pain in coming up with the $600 million in fees, but the money goes back to them at the end of the day anyway -- and then some. Those 100,000 people would have been uninsured, going to the emergency room when they were in their worst shape and resulting in uncompensated care (not to mention elongating waiting times in the ER for those with coverage). Now, they’re on Medicaid, where their care is paid for, and where they'll have access to a doctor for primary and preventative care rather than crowding the emergency room. Without the bill, the hospital gets nothing for expensive care and has to pass that on to taxpayers and insurance companies, driving everyone’s taxes and premiums up. With the bill, the hospital not just gets Medicaid compensation, but better Medicaid rates than they’re getting now, and doesn't have to pass anything on to anybody. Since the hospital is the only place to go for care for many of Colorado’s rural communities, they’re not likely to lose many patients to private practice doctors. With the federal matching funds for Medicaid, the proposition for them is put in $1, get $2 back – who wouldn’t take that deal?
There are two potential downfalls. The first is, as Colorado Republican opponents to the bill claimed, that hospitals will seek to double their money by finding a way to reimburse themselves for the fees by charging more to patients or insurance companies. The law expressly forbids this, but crafty, fraudulent businessmen – modern-day Richard Scotts, if you will – might be able to find a loophole over time. The other concern is that this measure can’t control costs on its own. You’re adding new people into the Medicaid mix, and the costs to treat them could well be exorbitant if they have multiple or seriously advanced chronic conditions – a sadly all-too-common state for those who have been without insurance for a long time. Although we should see savings from giving people regular primary care as opposed to getting treated in the ER – “The most expensive place to treat someone” according to Colorado Hospital Association CEO Steve Summer – those savings may take years to materialize. In short, there’s a real danger that escalating health care costs nationally will screw up this state-level innovation. We’ll see. Finally, 100,000 people is a good start, but it still leaves 700,000 Coloradans without insurance.
At an economically awful time when so many states are seeking to cut their budget by lowering their Medicaid eligibility and/or increasing taxes, the fact that Colorado is experimenting with increasing coverage, lowering costs and improving the experience of emergency care is inspiring. But it also acutely shows the limitations of what one state can do.
(Photo credit: Scott Ingram Photography on Flickr.)
Messing Up Medicaid in Ole Miss
Published April 06, 2009 @ 04:34PM PT
Medicare is fairly easy to understand, if challenging to reform. If you're over 65 or have some specific disability, bam, you'd got it, and you've got the same basic coverage no matter where you live. Medicaid is infinitely harder to understand. Most people think of it as "health care for the poor," but even that is not necessarily the case. Every state makes us its own eligibility requirements and procedures - and a quick glance at how Medicaid works in Mississippi shows just how screwy those decisions can be.
Take the underlying assumption that Medicaid is "health care for the poor." Not so in Mississippi, where you don't qualify for Medicaid if you're making 100% of the poverty line or below which in 2008 was $21,200 for a family of four. You only qualify if you're a child whose family is under 100% of the poverty line, if you're over 65, disabled or blind - the minimum set of requirements under the legislation creating Medicaid back in the 1960s. If your family is making $20,000 a year, the children qualify for coverage, but the parents explicitly qualify for nothing. It's not like there isn't a need for the program, since Mississippi is ranked 50th among states in mean income by the 2000 Census (and 51st if you're counting D.C.). And yet Mississippi since 2005 has actually made it harder to stay on Medicaid. Under the guise of fighting fraud, the state legislature instituted the requirement that you could only re-apply for Medicaid and SCHIP coverage face-to-face, during normal business hours - because if there's one thing the working poor are known for, it's having flexible work schedules and reliable automobile transportation. Mind you, this isn't preventing auto-enrollment - this is just ruling out applications by mail for re-enrollment. As a direct result, Medicaid in Mississippi now has 53,000 fewer enrollees overall, and the number of uninsured children left out of Medicaid and SCHIP has jumped by 146,000.
Mississippi Gov. Haley Barbour has sworn to resist attempts to overturn this law with a measure of righteousness, proclaiming, "We have enacted reforms because we know it is wrong for a family to work hard at two or three jobs, to raise their kids and pay for their health care, and then have to turn around and pay extra taxes so others who are able to work and take care of themselves choose not to but instead get free health care at taxpayers' expense." That may be true, but it seems equally wrong to deny children health care because their parents, who have already demonstrated a need for the program, haven't jumped through the correct yearly hoops, to say nothing about the backwards thinking that it's ok for parents under 100% of the poverty line to be denied care, so long as they're not blind or disabled.
Medicaid was always intended to be a federal-state partnership. But it's time to reconsider how that partnership operates. In the case of Mississippi, where a full 20% of the population including children is on Medicaid already, the reality is there's only so much the state can afford to do to expand and improve coverage (although not making it a hardship to be in the program in the first place would be a welcome start), especially when you consider rich states with a progressive tradition like New York, California and Massachusetts are also trying to figure out how they can spend less, often by covering fewer people and services. Sen. Max Baucus in his white paper offers to make the Federal government the sugar daddy for an expansion to 100% of the Federal poverty line for all states, picking up some of the state tabs for their idiosyncratic "means testing" administrative costs (a leading factor in Medicaid's administrative costs being twice that of the national Medicare), and creating a trigger mechanism to automatically increase the Federal government's share of Medicaid when an economic downturn hits - like an automatic stimulus package.
That's a great start, but not sufficient. Assumption of more of the costs for Medicaid by the federal government isn't enough to reform the system in a way that will lead to better quality or cost savings down the road. Let's attach some strings to that money. You want extra cash for "means testing," not a problem - but let's trim the heavy amounts of administrative waste and confusion for families who have recently moved by making the paperwork and the process simpler and uniform from sea to shining sea. Want to fight fraud, we can help you - but let's make it a requirement that you first give the benefit of the doubt to high risk but cheap to cover populations like children.
The Federal government shouldn't just be the pocketbook - it should be the agent of change to build a stronger Medicaid, particularly in these troubled times.
(Photo credit: Jim Frazier on Flickr.)
Still Think Health Care Costs Make Sense?
Published February 27, 2009 @ 06:17PM PT
We know that health care costs are too high, and we know the rate at which they're increasing is actually accelerating. But some people might be under the assumption that this process is uniform, or perhaps operating in some market-driven, logical manner. A new toy from Robert Wood Johnson foundation - an interactive map of the U.S. showing variances in health care spending by hospital region, with information supplied by the Darmouth study - not only demonstrates the huge variances in spending throughout the U.S. but that the factors driving up cost are anything but logical.
All the information from the map is based on Medicare reimbursement per enrollee. Now it's easy to imagine some factors coming into play that would influence costs even in a system like Medicare, where coverage for individuals is intended to be more or less uniform. One is the natural geographic variances in cost of living that we all come to expect. Major cities like New York, San Francisco, Boston, L.A. and San Diego are very expensive to live in. Miami is about in the middle. Corpus Christi, Houston and Lubbock, TX are among the cheapest cities to live in. The second thought would be that states with the highest concentration of Medicare might influence the costs - either higher or lower. So we'd expect Florida, California and New York - the three states with the highest numbers of Medicare beneficiaries - to look different from other states.
If you play along on the interactive map, you'll see that's not the case at all. Start with the percentage annual increase in per capita spending, and you'll see Lubbock and Corpus Christi are dark brown, well over 4% annual growth on top of inflation, and Houston's not far behind at 3.81%. Miami, too, has a very high annual growth at almost 5%. But every expensive cost of living city has low growth - at the average 3% or below. In San Diego's case, well, well, below. So at the same time that everything else about living in San Francisco was on the rise compared to the rest of the nation, their health care costs weren't rising as quickly. Switch to the green colors for the total reimbursements per enrollee, and it's a similar story. Now Los Angeles, New York and Boston show up as high spending areas, but Lubbock and Corpus Christi have caught up to them, as has most of Louisiana. In fact, go to the state view on that same map. Florida and New York are dark green, as we'd expect if we're looking for concentrations of retirees, but Texas and Louisiana are nearly as much in terms of costs per capita. California is average. Keep in mind that the health care outcomes for Medicare recipients by state bear absolutely no relation to how much money that state is spending per person.
Let's put this another way - Monroe, LA has one of the highest per enrollee costs in Medicare in the nation at well over $10,000. Does that make any sense?
Couple this with a similar report in the New England Journal of Medicine trying to figure out what causes these regional disparities. Their first conclusion: how much these regions are spending has nothing to do with health, or even access to new technology (unless you want to explain to me how much of Louisiana has better access to the latest technology than Chicago). Instead, they ran some studies involving hypothetical scenarios. They found that doctors in high-paying areas were just as likely to suggest treatment where there was strong evidence that it was needed as the low-paying areas, but much more likely to use "discretionary services" - to respond to a grey area with treatment, even if the evidence wasn't conclusive. The article gives the example of a patient who's 85 years old with end-stage congestive heart failure, when the muscles of the heart have stopped responding to treatment. There's not much that can be done short of a heart transplant - which would be significantly dangerous at that age. Doctors in high-paying areas were three times more likely to admit the patient into an intensive care unit, an expensive move despite the unlikelihood that this would make the patient any better, and 30% less likely to discuss palliative care with the family.
Why is this the case? To be blunt, there's just not enough comparative effectiveness research to help guide decision-making when it comes to grey areas. The 85 year old with heart failure example is extreme, but physicians must make these choices every day for ailments on a spectrum ranging from mild discomfort to mortal danger for their patients. It's not just to treat or not to treat - it's choosing from a whole range of treatment options. Without better clinical data not just on whether a program is effective or not, but whether it's just as effective or much less effective as a cheaper alternative is information that can help us come to terms with what the real cost drivers are.
Ignorance is not bliss in this case. It's just a recipe for more skyrocketing costs that don't make us any healthier.
What Else Does the Budget Contain for Health Care?
Published February 26, 2009 @ 04:50PM PT
The $634 billion health care reserve fund and the combination of new taxes and Medicare reforms to finance it has understandably monopolized the discussion of the budget released today by the Obama Administration. There's no underestimating that commitment to health care reform - it's huge. But there are plenty more goodies in the section for the Department of Health and Human Service, and their inclusion gives both the promise of serious reform and the taste of fights still to come.
None of this guarantees the funding - we'll get a crocodile roll deathmatch with Congress before this translates into real programs - but it's a vivid portrait of the Administration's values. Here's what jumped out at me. You can download your own copy of the FY2010 Budget and follow along.
"Expands research comparing the effectiveness of medical treatments to give patients and physicians better information on what works best." At this sentence, hordes of pharmaceutical and medical device lobbyists began sharpening their pencils. Somewhere, far off in the night, Betsy McCaughey dreams of a reinvigorated political career or at least a book deal. But it cannot be stressed enough how essential this is in improving quality and lowering costs. As Atul Gawande points out, "In 1996, Americans underwent some 60 million surgeries. In 2008, that number rose to 100 million. Does that mean that Americans are healthier? No one knows because we never measure how well our healthcare system is performing." This will be a fight, for certain but a fight worth having -- and winning.
"Invests over $6 billion for cancer research at the National Institutes of Health." Combine this with the $10 billion in the stimulus (which, credit it where it's due, Sen. Arlen Specter went to the mattresses for) and you have an unprecedented boost to cancer research.
Millions more for HIV/AIDS prevention and support for individuals, families and communities dealing with Autism. Given the almost criminally poor funding, these are two long-overdue budget priorities.
The State (and Costs) of Our Health Care
Published February 24, 2009 @ 01:22PM PT
Day two of "The road to fiscal responsibility goes through health care" week is upon us, and we're beginning to see how a president can use the bully pulpit to drive his message. What a difference a year makes. Over one year ago, Sen. Barack Obama was an attendee at President Bush's State of the Union address where health care was scarcely mentioned outside of tax policy and health savings accounts, and the federal government had little plans to tackle the issue. Today, President Obama gives his own address in which health care is rumored to loom large. But that's not all - on the same day the Centers for Medicare and Medicaid and the Institute of Medicine released reports detailing the future cost of inaction in health care. In 2009, our government is telling us our path is unsustainable - and that's a huge difference.
(Programming note: I'll be liveblogging President Obama's address here at healthcare.change.org beginning at 9 pm ET. Please stop by and join the discussion!)
First, CMS released its report "Health Spending Projections Through 2018" on Health Affairs today. The first revelation is one that policy wonks and the Congressional Budget Office have warned about for a long time - that health care costs will be as much as 20% of our GDP by 2018 at the current trajectory. (Contrast that with countries which covers all their citizens where, paradoxically, you seldom see higher than 10% of GDP). Aside from the United States turning into GM writ large, the other revelation is that public financing - Medicare, Medicaid, the VA, etc. - are expected to be the largest source of funding in health care by 2016, and responsible for more than 50% of all costs in 2009. Keep in mind that this is without any government intervention, if we let the free market work its magic. Upon further reflection, the reasons are obvious. The effects of the recession are driving people out of coverage - and they're only leaving the private insurance market. If the effects are as severe as expected, more people will be on Medicaid. Prescription drug costs in Medicare part D have ballooned the cost of Medicare, in no small part because of provisions that do not allow the government to negotiate for the best prices, push for generics or allow drug reimportation. And finally, the baby boomers are entering Medicare.
Also keep in mind, the picture is worse for the federal budget than even this report shows (and it's pretty bad!) CMS anticipates a dip in public costs next year, with health care growth slowing to 0.5%. That would be amazing - the first time since the 1940s that growth has dropped like that. But that presumes that a 20% cut of physician payment rates goes into effect next year as it's scheduled to do. That ain't gonna happen. Merrill Goozer says, "As anyone who follows that issue closely knows, that never happens. Congress always steps in and restores the cuts." So everything we said for 2018? Presume it'll happen a lot earlier.
Oh, and health care costs in this country is going to shoot past $8,000 per person this year, according to HHS. (By contrast, Japan in 2006 was around $2,500 per person). So we've got that going for us, which is nice.
One thing that the administration's focus on the economic necessity of reforming health care misses is the human cost. Into that breach comes the Institute of Medicine, who unveiled their latest report today: America's Uninsured Crisis: Consequences for Health and Health Care. Their top line discoveries will surprise no one. The uninsured are less likely to fully recover from severe trauma than the insured, have a higher mortality rate in hospitals than the insured, are more likely to be diagnosed with cancer at a very advanced or irrecoverable stage than the insured, are more likely to suffer damage during strokes, be unable to control their sugar when diabetic, be aware of their high blood pressure, die of congestive heart failure or heart attack than the insured. This is no comfort when the economic recession is adding millions to the ranks of the uninsured every few months.
The state of our health care is bleak... but for once, it is the people in a position to do something about it that are telling us. There's hope in that, at least.
(Photo credit: a35mmlife on Flickr.)
"Health Care Reform Is Entitlement Reform."
Published February 23, 2009 @ 06:00PM PT
You can certainly be forgiven for thinking that today’s White House summit on Fiscal Responsibility would be… well… as interesting as summits on Fiscal Responsibility normally are. You might also have been very nervous about the Obama Administration’s willingness to discuss “entitlement reform”, with fresh memories of the Bush Administration’s invention of a looming crisis in Social Security connecting to painful reforms that, given how the stock market is doing these days, might have gutted the program. But you needn't have worried -- Obama means something very different when he says "entitlement reform." The title of this post, spoken by OMB Director Peter Orszag, was the message of the day – and it was spoken loudly, clearly and repeatedly.
For one thing, Orszag was the only speaker giving prepared remarks today who didn’t have a fancy-pants title like “Mr. Vice President” or “Mr. President.” As Ezra Klein noted, “This, in other words, is not just Orszag's message. It's the White House's message.” Secondly, Orszag spoke for only 450 words – and 260 of them were on the necessity of health care reform. Thirdly, he talked about health care reform not in moral terms or in good policy terms, but as a leading cost driver for so many of the fiscal problems plaguing the nation.
The single most important thing we can do to improve the long-term fiscal health of our nation is slow the growth rate in health care costs. Health care is the key to our fiscal future.
So to my fellow budget hawks in this room and in the rest of the country, let me be very clear: health care reform is entitlement reform.
The path of fiscal responsibility must run directly through health care.
And he’s not wrong. Since the U.S. had a trillion dollar deficit before Obama took office and just added $789 billion out of necessity, it will be very difficult to even find enough programs to cut to make a difference. Although Obama has promised to let the Bush tax cuts expire, even that lost income isn’t enough to bring us down to earth. Obama has promised to end the Iraq War, which costs upwards of $450 billion each year. Combine that with the Bush tax cuts, and you’ve scarcely got us halfway.
But there’s a third element here – runaway health care costs (and not, say, concerns about Social Security’s solvency 40 years from now) are truly the drivers for both the crisis of funding in Medicare and Medicaid, but the economic strangulation effect for businesses’ bottom lines, not to mention the wages and budgets of families across the country. And these runaway costs have been accelerating since the 1990s. Health care reform needs to be tackled not just for today’s fiscal responsibility, but tomorrow’s, and five years from now, and ten years from now. The Center for Economic and Policy Research has a Deficit Calculator up that I encourage you to play with. It shows what our deficit will be like if health care costs are allowed to continue rising to a full 20% of our GDP in a few years, as they’re estimated to do. It also maps out what our deficit would look like if we controlled costs as efficiently as 31 other nations. The bottom line: it won’t even be possible to put our financial house in order unless we tackle health care reform… and soon.
Luckily, Budget Director Peter Orszag knows this all too well, as does the president. How convincing they can be with Congress and the American people remains to be seen.
Health Care for the Recently Unemployed: It’s Even Worse Than You Think
Published February 22, 2009 @ 01:28PM PT
Most Americans still get their benefits through their employer, though that number is slowly dropping as the cost of health care exceeds what more and more businesses are willing and able to afford. Many others get their care through public programs like Medicare, Medicaid, the Department of Defense, the VA, etc. But the 16% -- and growing –- of Americans without insurance are finding the terrible options available to them are getting even worse. And for the recently unemployed, you’re caught between unsustainable cost or being uninsured.
What’s the likelihood you can get an affordable individual plan? Well, we know that the cost of private insurance has been skyrocketing, with an annual average increase of 8-11% over the past 8 years (it actually dipped for the first time in 2008 to only be 5% on average). That’s bad enough, and has led more and more employers to either increase the share that their employees pay towards the premiums or drop coverage altogether. But for those without benefits through their employer, it’s even worse. USA Today collected information on individual plans, which is how 17 million Americans with coverage get their insurance, and found the increases this year are in double-digits, across the board, with some truly shocking specific examples:
• A 27.1% increase for Regence BlueCross BlueShield of Oregon
• An increase of 30% or higher for Anthem Blue Cross in California
• A proposed 56% increase for Michigan Blue Cross
• And the average deductible for any of these plans calls for $2,000-$2,500 to be paid out of pocket before coverage kicks in.
As offensive as these increases are, they’re coming at a time when more people than ever are buying individual plans because they’ve been left behind by their employers or have lost their jobs. Individuals purchasing their own insurance are at a huge disadvantage because they have to take the price as offered. Chances are, you don’t have 5,000 family members to negotiate more favorable rates.
I’m lucky enough to have benefits through my employer, but I hopped onto eHealthInsurance.com and entered my own information. If I want something with prescription drug coverage and primary care office visits with a deductible less than a couple thousand dollars, I can get a very limited selection HMO for $340.17 a month… but my primary care physician doesn’t accept that HMO. If I want to keep the doctor I have, it’s $436.13 a month. How you pay for that if you’ve recently lost your job is beyond me. In some areas of the country, that’s paying rent twice.
What relief is there for those who’ve lost their jobs or their benefits? The stimulus bill originally had a provision to give temporary Medicaid eligibility to those who had recently lost their jobs, if they were ineligible for COBRA. It was a novel idea – too novel for the moderates in the Senate, who stripped it out of the bill. There are subsidies for COBRA in the stimulus –- up to 65% of the cost -- but you need to have lost your job with benefits within a certain time frame. If you lost your job in spring of 2008, when we first realized our economy was in trouble, you’re not eligible. If your employer doesn’t offer COBRA, you’re not eligible.
Instead your options are pay an exorbitant price for insurance, pay a lesser price to be underinsured with deductibles so high you need to get hit by a truck to begin being covered, or join the 47 million and up who have no coverage at all. If those are your options, you’ve already lost.
(Photo credit: inoneear on Flickr.)
