Medicaid Expansion

Ceci ConnollyWhile fierce debate continues to envelop much of the Affordable Care Act, financial data for many of the nation’s health systems reveal one clear fact: the optional Medicaid expansion has resulted in hospital haves and have nots.

An analysis by PwC’s Health Research Institute (HRI) of newly released earnings and patient volume data shows a clear financial split between healthcare providers operating in states that expanded Medicaid and those that have not. The law as written would have provided Medicaid coverage to every American earning less than 138% of the federal poverty level ($16,105 for an individual). But a June 2012 Supreme Court ruling made the expansion optional for states, creating a patchwork of coverage.

Health systems and physician groups delivering care in the 26 states and the District of Columbia that have embraced the federally-funded expansion have reported a significant rise in patient volumes and paying consumers and a measureable reduction in uncompensated care levels.

This year alone LifePoint Hospitals has seen a 30.3% reduction in its uninsured and charity care patients, according to filings with the Securities and Exchange Commission. Tenet Healthcare, which operates in five Medicaid expansion states, saw uninsured and charity care admissions decline by 46% in the expansion states, coupled with a 20.5% increase in Medicaid inpatient admissions in those same states, according to an HRI analysis which will be released next week.

In all, HRI analyzed financial data from the nation’s five largest for-profit health systems—HCA Holdings, LifePoint, Tenet, Community Health Systems and Universal Health Services, representing 538 hospitals in 35 states. Our team also reviewed data from several mid-sized hospitals, government reportsand industry surveys.

Continue reading “Medicaid 2.0″

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flying cadeuciiIn September 2012, I said that Republican governors should be expanding their Medicaid programs under Obamacare.

I argued that Republicans have long called for state block grants and the flexibility to run their own Medicaid programs in what are the state “laboratories of democracy.”

I made the point that, given the then recent Supreme Court decision enabling states to opt out of the expansion, the Obama administration would be hard pressed to deny any reasonable proposal from Republican governors.

If Republicans really believed in state responsibility and flexibility for how they run their Medicaid programs, this was the opportunity to prove it. (See here.)

Since then, a few Republican governors have taken that tack and the Obama administration has been very cooperative and flexible.

This is a good place to recognize outgoing HHS Secretary Sebelius for her leadership by being willing to work with state Republicans in order to get millions of people covered who wouldn’t be getting coverage otherwise.

Good faith Republican Medicaid proposals have led to good faith responses from Sebelius’ Department of Health and Human Services (HHS) and a few done deals and other deals still in the works.

Many Republicans have said that Medicaid is not sustainable and that the feds could well cut the new Obamacare funding in future years. Sebelius responded by giving these governors an out if funding were to be cut.

Of course Medicaid is unsustainable, that’s why the states should be given the autonomy to run their own plans and deal with these challenges in any number of different ways the country can learn from.

Continue reading “Virginia Should Take Obamacare’s Money”

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With the ACA exchange enrollment deadline almost behind us, this is a good time to take a look at the big picture.

Three years after the first baby steps of implementation, what has the ACA accomplished?

When we consider the ACA, we can think of two broad goals. The “easy” goal was expanding coverage to the uninsured. We say “easy” because regulators should be able to succeed by simply throwing money at the problem, and that is a task our elected officials seem particularly adept at accomplishing.

The “hard” goal was bringing down the rate of growth in health care spending.

This has proven to be a difficult task for policy makers, who have been trying (and failing) for decades and have often done more harm than good.

We first consider the goal of expanding coverage to the uninsured. From its onset, the ACA chalked up a small victory by requiring plans to continue coverage for dependents under age 26.

This provided coverage to as many as three million uninsured, albeit the healthiest members of the population. The lion’s share of the reduction in the numbers of uninsured was supposed to come from Medicaid expansions and private exchanges.

And here is where the problems emerge.

Medicaid ranks have swelled in the 27 states (including DC) that have chosen to expand the program. Republican leadership in other states continue to assert they will not expand Medicaid, but given the exceptionally generous federal funding for this expansion, we find it hard to believe that most of these states won’t soon join the expansion.

After all, even Louisiana eventually raised its drinking age to 21 to get its share of federal highway funding. Similarly, we can’t imagine that the red states will turn down billions of dollars in federal funds.

Continue reading “Taking Stock of the ACA”

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The Republicans have an alternative to Obamacare and they may have given the Democrats a big political gift.

The proposal was unveiled last Monday by Republican Senators Richard Burr, (NC), Tom Coburn (OK), and Orrin Hatch (UT).

The Republican plan targets many of the most unpopular parts of the Affordable Care Act such as expensive mandated benefits and the resulting lack of choice, the individual mandate, the employer mandate, and age-rating disruptions.

My sense is that most independent voters––the ones that matter in an election-year––don’t want Obamacare repealed; they want it fixed.

The problem for Republicans is that they have such a visceral response to the term “Obamacare” that they just can’t bring themselves to fix it. The notion that Obamacare might be fixed and allowed to continue as part of an Obama legacy and as a Democratic accomplishment is something they can’t get past.

So, the only way Republicans can propose an alternative to Obamacare is to first wipe the health insurance reform slate clean and start over.

Continue reading “The Republican Alternative to Obamacare: Their Aversion to Fixing it May Prove to Be a Political Mistake”

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No-one can say any longer that Senate Republicans are entirely deaf to calls to describe how they would replace the much maligned Affordable Care Act.

This week, three senior GOP senators (Orrin Hatch, Tom Coburn, and Richard Burr) announced their proposed Patient Choice, Affordability, Responsibility, and Empowerment (or Patient CARE) Act. Given that each of this group is a heavyweight mainstream Republican and that Senator Coburn is one of the few physicians in the Congress, the draft Act deserves a serious look.

Although the first part of the draft would repeal the ACA, other parts would continue a number of the ACA’s reforms while introducing some changes in attempts to control costs and reduce the numbers of uninsured, creating a kind of Obamacare Lite.

The draft proposes to continue the ACA’s ban on lifetime insurance caps, its coverage of dependents up to the age of 26, and the ACA’s savings in Medicare costs. It also continues, although in a weaker form, the ACA’s subsidies for low-income individuals and the ban on medical underwriting, and allows states to continue to operate insurance exchanges (although without any federal funding).

On the other hand, the three parts of the ACA that have taken the most heat from Republicans – the individual mandate, the Medicare IPAB, and the expansion of Medicaid eligibility – would all be eliminated.

Continue reading “After Months of Thought Senate Republicans Propose Obamacare Lite”

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Hospitals need to overhaul their processes so they can help the un- and under-insured stay healthy.

Many people running health care institutions tell me that they have been fighting the fight, learning to be nimble, transforming their cultures, making big changes as the landscape rearranges itself like a really bad day along the San Andreas Fault.

But in comparison with the actual scale of the problems, most of the business models and strategies in health care have been sleeping like overfed dogs. It’s wake-up time in America.

Nowhere is the problem defined more clearly than in this question: How can we deal with the tens of millions of new Medicaid recipients, the tens of millions of still-uninsured poor, and the increasing numbers of the underinsured?

Today’s hospital executives formed their careers around the “volume” question: “How do we get more and better-paying customers into and through our system?”

This is a different era. Most markets do not have enough medical care to go around, between an aging population, expanded Medicaid in 25 states, and expanded numbers of insured in all states.

When there is not enough of what you are selling to go around, operating inefficiently leads to choking on volume. In order to survive under any business model we must get the volume down and the value up.

First: What can we expect in the coming years?

The Future of Medicaid, the Uninsured and the Underinsured
Medicaid numbers are astonishing if you are not used to them. Even before the projected expansion, at some time during an average year about 72 million people, close to a quarter of all Americans, are on Medicaid. At any given moment, it’s over 50 million. Medicaid is an open-ended program:

When more people are eligible, or sick, or have more complex diseases, the states and the federal government pay more.

Continue reading “What About the Poor?”

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“Extraordinary claims require extraordinary evidence,” said Carl Sagan.

The claim that health insurance improves health outcomes is hardly ground breaking. Studying whether insurance affects health status is like wondering whether three meals a day lead to a higher muscle mass than total starvation.

Well that’s what I thought. Until I read the study on Oregon’s Medicaid program by Baicker and colleagues in the NEJM earlier this year and, more recently, Avik Roy’s short treatise “How Medicaid Fails the Poor”.

Baicker et al found that Medicaid enrollees fared no better in terms of health outcomes than those without insurance. That is, no insurance no difference.

The study is an exemplar of policy research laced with regression equations, control of known confounders and clear separation of variables. There is only so much rigor social science can achieve compared to the physical sciences. Yet this is about as good a study as is possible.

The one thing the study did not lack was sample size. It’s useful to bear in mind sample size. Large effects do not need a large sample size to show statistical significance. Conversely, if study with a large sample size does not show even a modest effect, it means that the effect probably does not exist.

There are several interpretations of the Medicaid study, interpretations inevitably shaped by one’s political inclination. The ever consistent Paul Krugman, consistent in his Samsonian defense of government programs against philistines and pagans, extolled critics of Medicaid as “nuts” and asked, presumably rhetorically, “Medicaid is cheaper than private insurance. So where is the downside?”

Unlike Krugman I am not a Nobel laureate and am about as likely to win a Nobel Prize as I am of playing the next James Bond, so it’s possible that I am missing something blatantly obvious.  Could the downside of a government program paying physicians, on average 52 cents, and as low as 29 cents, for every dollar paid by private insurance in a multiple payer system be access?

Indeed, it’s darn impossible for patients on Medicaid to see a new physician.  As Avik Roy explains “…massive fallacy at the heart of Medicaid….It’s the idea that health insurance equals healthcare”.

But wait. It gets better.

I am accustomed to US healthcare throwing more plot twisters than Hercule Poirot’s sleuth work. But one I least expected was that patients on Medicaid do worse than patients with no insurance (risk-adjusted, almost). I am not going to be that remorseless logician, which John Maynard Keynes warned us about, who starting with one mistake can end up in Bedlam, and argue that if you are for Medicaid that is morally equivalent to sanctioning mass murder. Rather, I ask how it is possible that possessing Medicaid makes you worse off than no insurance whatsoever.

To some extent this may artifactually appear so because poverty correlates with ill health, and studies that show Medicaid patients faring worse than uninsured, cannot totally control for social determinants of health.

Continue reading “How Can Patients on Medicaid Possibly Be Worse Off than Those Who Don’t Have Insurance?”

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As the Affordable Care Act’s (ACA) exchanges open and Medicaid expansion takes effect, millions of uninsured Americans will gain new coverage. This raises a key question: how are we possibly going to meet the demands of all of these new individuals entering the system? The physician workforce is growing slowly, at best, at a time when an aging population is increasing demand for care.

Predictions include long lines for everyone, rising prices and premiums as physicians are able to command greater market power, and reduced quality of care. Some have recommended additional government funding to help train more medical residents as a response.

But while studies predict ACA implementation will prompt an increase in demand for medical services, there is evidence that the increase in demand will not be as great as the raw number of newly insured Americans might suggest.

The latest CBO forecast projects the reduction in the number of uninsured Americans under the ACA will be 11 million people next year and 24 million by 2016. That’s an increase in the percentage of Americans with insurance of roughly 5% in 2014 and 12% in 2016. If the uninsured used zero health care today, but upon becoming insured used the same amount as a typical insured person, then the increase in demand for care would be the same as the increase in coverage.

In reality, the uninsured use substantial amounts of health care – but only about half the care that the insured use today. One reason is because they are uninsured – paying full prices for care rather than a small copay discourages use. Another reason also explains why many (but not all) are uninsured in the first place: they are healthy and don’t anticipate needing or wanting medical care.

When the uninsured gain coverage, demand does increase, but not dramatically, studies show. Evidence from the Oregon Health Insurance experiment, in which a funding cap forced the state to grant Medicaid coverage to some applicants but not others using a lottery-type system, found that those who did gain coverage increased their use of both hospital and physician care by about one-third relative to controls.

Continue reading “Will ACA Implementation Lead to a Spike in Demand for Care?”

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Robert Pear wrote in the Times that the refusal by “states to expand Medicaid will leave millions of poor people ineligible for government-subsidized health insurance…[1]” Indeed, the refusals will do that, as well as worsen what instead should be remedied. In the following I present a graph of two chronic diseases over the 50 states. Those states which have opted out of the Medicaid expansion are identified. Additionally each state’s poverty rate is indicated. The take-away is that populations in greater need are being further disadvantaged. A conjecture is presented as to why.

Please understand that refusal to expand Medicaid is not about state expenditures. Over the ten years, 2013-2022, every state would gain far more than it would spend for expansion [2]. Were all states to opt-in, the total ROI for the states combined would be almost 10,000% ($8 billion state expenditures in return for $800 billion federal).

Empirically health is associated with income, so if you’re poor you’ll likely have worse health. Also it’s well known that chronic conditions are often comorbid, that if you have a chronic disease, you probably have more than one. Additionally, chronic disease is a major contributor to total health care costs. Continue reading “Letting the Data Speak: On Refusing Medicaid Expansion”

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Arkansas is now the first state to use Medicaid expansion dollars to buy private coverage for many of its 250,000 newly eligible residents rather than enroll them in the existing Medicaid program. This week the Arkansas House of Representatives approved the plan, followed by the  Senate, to confirm that the state will be implementing this “market-based approach” to expanding Medicaid.

The idea of buying private insurance for Medicaid recipients is emerging as a “conservative compromise” for some of the 24 states (home to more than 25 million uninsured residents) leaning toward rejecting federal funding the Affordable Care Act provides for the expansion. In the original legislation, the ACA required states to expand Medicaid to adults earning up to 138 percent of the federal poverty level, $15,870 for an individual or $32,499 for a family of four. The federal government would fully cover the costs of this expansion for two years, with states gradually having to contribute 10% by 2020. Last summer, the Supreme Court struck down the Medicaid expansion requirement, allowing states to refuse federal funding and opt out of the expansion.

But most of these states, including Florida, Texas and Indiana, are leaving a lot of money on the table—from hundreds of millions to $1 billion or more in federal funding.  Under pressure from healthcare providers and other interested parties, some governors view premium assistance programs that move the poor, disabled and frail elderly to the state insurance exchanges to buy private insurance as a way to capture this windfall without appearing to embrace ObamaCare.

In Missouri, for example, Republican state legislator Jay Barnes calls the Obama administration’s plan for Medicaid expansion a “one-size-fits-all, far-left-wing ideological path.”

Continue reading “The Arkansas Experiment: Is the ‘Private Option’ a Realistic Plan For Medicaid?”

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