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Tag: Medicaid

HELP! This is Unbelievable

Key members of the Senate Health, Education, Labor, and Pensions Committee announced on Thursday what they claimed were dramatically improved cost and coverage estimates for the latest version of their health care reform bill.

Headed by Democratic Senator Christopher Dodd, HELP members (in a Muzak-marred conference call with reporters) stated that the revised bill would cost only $611 billion over ten years, a figure apparently computed by the CBO, and that with a further expansion of Medicaid would provide coverage for 97 percent of Americans.

Key features of the bill provided during the conference call included a public plan option, subsidies for lower-income individuals buying insurance through an exchange mechanism, and a play-or-pay employer mandate.

Sounds good? We’ll have to wait for details, but two big problems are already apparent.

The first BIG problem is that the ten-year cost estimate of $611 billion excludes the cost of Medicaid expansion. With Senator Dodd’s admission that the HELP Committee expects this to provide coverage for 7 percent of Americans (the difference between the 97 percent coverage with Medicaid expansion and 90 percent without it), the total cost balloons to far more than a trillion dollars. A rough calculation of Medicaid costs for 20 million Americans at present funding levels gives a total of $80 billion a year – or $800 billion just for Medicaid expansion, presumably to be shared with state governments already on the verge of bankruptcy.

Even assuming that Senator Dodd misspoke, and the at he intended his percentages to apply only to under-65 Americans, the ten-year estimate for Medicaid expansion is still over $700 billion—with no provision for medical inflation. And, given the financial condition of most states, most of this cost would have to be borne by the federal government.

The second BIG problem is the absurdly modest levy—$750 for businesses with more than 25 workers and $375 for businesses with fewer than 25—to be imposed on employers not providing employee coverage. It’s hard to believe, in the middle of a deepening recession, that many employers will not choose to pay the $375 or $750 levy rather than buy insurance at $3,000 or more (just for the employee, with no family coverage), with additional government subsidies needed to bridge the funding gap.

The CBO has apparently assumed in its estimates that there will not be a big change in the extent of employer-sponsored coverage over the ten-year period, but this seems unrealistic. While we have not seen a “rush to the exits” in Massachusetts so far, the longer-term experience of Hawaii may be more meaningful. Immediately after Hawaii passed its mandated coverage law, the uninsured rate was below 5 percent, but as a series of recessions hit Hawaii’s economy, the rate increased to 8 percent in 1998, and close to 10 percent today. Only the truly naïve can believe that numerous US employers won’t either choose the far cheaper levy option or—as in Hawaii—find other ways of ducking the employer mandate.

Roger Collier was formerly CEO of a national health care consulting firm. His experience includes the design and implementation of innovative health care programs for HMOs, health insurers, and state and federal agencies.  He is editor of Health Care REFORM UPDATE [reformupdate.blogspot.com].

POLICY: HSAs for Medicaid–cost-shifting to the poor by Theora Jones

Policy analyst Theora Jones has been a little quiet at THCB lately, but the news that South Carolina is going to be giving all its Medicaid recipients HSAs got her a little riled up.

THCB recently pointed out that if the government could risk-adjust perfectly, we’d have no need for insurance companies, (Well I didn’t quite say that but close enough, MH) which is why this recent story from SC is so confusing–call me crazy, but I don’t think they’re out to replace the insurance industry.

So golly gee, what’s behind this? Does SC they think the private sector can control costs better? There’s no evidence of that. Do they think that people on Medicaid will get better care? Well, they’re not proposing any case management or disease management or quality measures, so…no. Wait, I think I’ve found the nut graph:

"South Carolina would cap how much it will spend on a recipient, and if health care costs more than the account will pay for, then the low-income people would have to make up the difference themselves or go without."

Ah, rationing. That’s neither new nor radical.

Please note that in order to qualify for Medicaid (2003 numbers), a mom in a family of three has to earn less than $7,510 a year. Disabled and blind folks have to earn less than $12,120 ($9k if they’re single). The old folks can pull down a cool $16,362, and kids can be covered even if their family of 3 is rolling in cash–up to $22,890! With disposable income like this, I’m SURE they’ll be able to make up the difference on that triple heart bypass. Or the asthma medication.

Legislation like this confirms my greatest fears–that HSAs are going to have a worse impact on the health care system than managed care ever did. Their effect on the health care system will be more pernicious and long-lasting–they will exacerbate the fragmentation and the injustices in the current system, and they will stymie the effects of reformers who are trying to achieve clinically focused quality improvements, greater access, and efficient financing.

POLICY: While we’re on the subject of Medicaid

Modern Physician reports that HHS is getting serious about cutting off those "accounting games" that enable states like New York (but by no means only New York) to get so much extra cash out of Medicaid. While this might be a great idea in theory, you can expect that Congressional delegations from several states, not to mention the Governors, will go ballistic when they figure out what that might mean for their budgets. It’s tantamount to going to the block grant proposal that we’ve heard before, and that was discussed on THCB on Inauguration day, which now seems quite a while back.

POLICY: Medicaid as the route to universal insurance?

During the Dolphin Group webinar I was presenting on today, I was asked if Medicaid would become a communal buying pool that would solve the unisurance problem. I rather fliply dismissed the idea, and Scott Tiazkun, healthcare analyst, IDC Research mentioned that something like that was going on in Massachusetts. Now there have been local changes in how many people Medicaid covers — for instance Tennessee put almost all its uninsured into Medicaid in the mid 1990s and more recently threw most out, and Utah changed the way it paid for Medicaid and enrolled more people — but we’re nowhere near the Clinton plan of putting all of Medicaid, all the uninsured and most small business employees in big buying pools. So I felt fairly safe saying what I said, but I also wasn’t exactly working from the latest data in my head. (Remember this was a webinar about health plan web strategies!)

To be honest I knew that Medicaid had picked up its enrollment relative to private payers in recent years — particularly in the recent recession, and as I really hadn’t looked much at this recently, I spent a bit of time today digging. What I did know is that the restrictions on Medicaid eligibility were greatly slackened at the end of the first Bush Administration and (from memory) the numbers on Medicaid went from the mid-20 millions in 1989 to nearer 35 million in the mid 1990s (with most of the rise during to the 1990-2 recession). Then under the SCHIP (health insurance for children) program in the mid-to late 1990s, another several million kids were put into Medicaid. Now some 5 million of that 35 million were dual eligibles (poor seniors on Medicaid and Medicare) and were double counted, but nevertheless the number of Medicaid recipients has gone up quite a bit. USA today reported last week (chart lifted from their site) that the number went from 34 million in 1999 to 47 million this year.

Us_mcaid The reason they gave in a companion article was that because welfare had essentially been abolished back in 1996, states no longer gave Medicaid only to AFDC recipients, but now have the freedom to base eligibility on income. And although eligibility has toughened up and rolls have been cut somewhat in most places during the most recent recession, in general states are getting more relaxed about eligibility requirements and some states such as Minnesota and Massachusetts are actually trying to add to their rolls.

I went to look at my estimates for the IFTF/RWJ 1997 Ten Year Forecast and I then estimated mostly just on population growth that by 2006 some 35m would be on Medicaid (which equates to 40-42m if you count in the dual eligibles). So things have progressed faster than I thought. The Center for Health System Change reported that despite a rise in the number of Americans getting employment based-insurance in the boom times, that number fell from 67% of the under-65 population in 2001 to 63% in 2003, and that most of that decline was replaced by people moving into Medicaid, although the number of uninsured did rise slightly too. Clearly at the margin Medicaid is replacing employer-based insurance. But have the numbers within Medicaid really gone up quite so much?

Using some data from 1993 that CMS has available, it looks as though some 5 million children got into Medicaid (or separate but equal SCHIP programs) between 1998 and 2003, and this seems equivalent to the data that HSC used in its study. Kaiser Family Foundation (which is a wealth of information about Medicaid) in a January 2005 fact sheet said that in 2003 Medicaid covered 25 million children, 14 million adults (primarily low-income working parents), 5 million seniors and 8 million persons with disabilities. That gets us to a total of 53 million, or 48 million not counting the seniors (who are dual eligible). CMS said in 2004 using FY 2001 data that 46 million people received Medicaid services. But CMS says in another data sheet that in 2004 there are 42 million enrollees and 52 million beneficiaries. A beneficiary is someone who receives a (payment for a) service from Medicaid. Now we are getting somewhere near the nub of the issue, in that people go in and out of Medicaid often on a monthly basis.

My assumption is that the "snapshot" is the 42 million, which seems much lower than the 47 million that USA Today reports citing CMS data that I cannot find on their web site. So I suspect (but please if you know I’m wrong email me) that the USA Today number is the 42 million plus some 5 million dual eligibles (although KFF says that the number of dual eligibles is now 7 million in this recent factsheet). So overall counting Medicaid enrollement is very hard to do, as you are counting several moving targets, and it’s a question of definition.

But what Scott said this morning was that Massachusetts was looking at Medicaid as becoming a way to provide universal health insurance.1121593676_3333jpg And judging by this article in the Boston Globe, that’s what Mitt Romney, (who is the guy who made me wait 2 hours to get into the Ski Jumping at the 2002 Winter Olympics, and incidentally) the Governor of Massachusetts, is saying he’s aiming for. Enrollement went from under 700,000 in 1997 to nearly 1,000,000 in 2002, back down to nearer 900,000 in 2003 and is now moving back up near to 1,000,000.

However, this is all a long way from saying that Medicaid is going to be the cure for uninsurance. There are two main reasons why.

First, most of the people going into Medicaid are effectively leaving employer-based insurance rather than moving from being uninsured to having Medicaid. Of course there may be people moving from being uninsured into Medicaid as featured in the USA Today story, but overall their places in the ranks of the uninsured (which is itself an extremely fluid population) are being taken by an equivalent amount of people losing employer-based insurance. So the overall number of uninsured is not being changed by this increase in Medicaid enrollment, other than the uninsured number would be much higher than the current 45 million (snapshot), had it not happened.

The second reason is the relative makeup of Medicaid and the uninsured. KFF also has a great fact sheet on the unisured.  Only 20% or 9 million of the 45 million uninsured are children, leaving 36 million adults, of whom 80% are in some type of work, or have a family member working. Medicaid now only covers 14 million adults. That means that Medicaid would have to double enrollment overall and nearly quadruple it amongst low-income adults to get rid of the uninsured, and given that half of those uninsured adults are over 35 and thus somewhat expensive, that would cost plenty.

This is just not going to happen in the current fiscal and political environment. So even though getting some of the working poor onto Medicaid is a good thing, it’s disingenous to say that Medicaid is going to be the solution to the uninsurance problem.

What we should so with the Medicaid population is move it en masse into some type of universal insurance pool, with the uninsured, and a bunch of other people.  But no one in Congress with any clout is going to be touching that with a ten-foot pole, and while Bush has noticed that health care is an issue, we all know this his "solutions" aren’t.

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