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PSN on December 4, 2006 - 1:05pm
In states across the country, progressive leaders are stepping up to discuss how to achieve universal coverage for health care. At the same time, many on the Right are trying to define "health care coverage" to mean bare-bones care with often unaffordable cost-sharing for individuals and families.
It's a nice semantic trick, to pretend to support health care coverage while actually trying to dismantle decent standards of care. This Stateside Dispatch will examine the Right's push for more "consumer-driven care" in health coverage and the resulting downgrading of health care standards for what people need.
Short-Sighted Medicaid Redesign
Some states are teaming up with the federal government to cut Medicaid costs on the backs of current recipients. This "defining health care down" may become more prevalent as the Bush Administration puts financial pressure on states to cut Medicaid costs. The recent passage of the Deficit Reduction Act (DRA) in February 2006 means that states have more leeway to undermine Medicaid standards of care without seeking a waiver from the federal government.
And to force state action by starving them of funds, the Bush Administration is planning to cut $12.2 billion from Medicaid over the next five years, in part by restricting states' ability to tax health care providers to fund Medicaid programs. States trying to preserve Medicaid benefits will be hit hard. Maine, for instance, stands to lose $50 to $60 million dollars each year as a result of the changes.
A few examples of dangerous programs and proposals in the states:
- Oregon: As detailed in a 2005 Kaiser Commission Report, when Oregon increased premiums for poor adults to $6-$20, based on income, enrollment dropped by nearly half or roughly 50,000 people. Two-thirds of those losing Medicaid had no insurance because of the changes. The state saw a spike in costly emergency use by the uninsured.
- Utah: In July 2002, Utah implemented a Medicaid waiver that created a $50 enrollment fee for a new program for adults with incomes up to 150% of the poverty line -- which led to a 27% disenrollment rate by September 2003. The state responded by cutting the fee to $15 for those receiving general assistance welfare payments and to $25 for other poor adults in hopes of bringing lost enrollees back into the system.
- Idaho: As the Idaho Community Action Network detailed in a recent report, Governor Dirk Kempthorne -- before he was made US Secretary of the Interior this Spring -- had proposed a plan that would start charging premiums and co-pays to Medicaid recipients, while pitting segmented groups of low-income and disabled groups against each other for funds within the Medicaid system.
Examples from multiple states show that what seem like small copayments will undermine enrollment by low-income individuals and families who are too cash-strapped to afford them when immediate food and housing needs are often more pressing -- showing up at the emergency room instead when health crises hit.
Expanding "Coverage", Undermining Health Care Standards
Part of the justification for these new kinds of plans is a rather cynical rhetoric around "expanding" coverage for new people through Medicaid by reducing benefits and increasing payments for current recipients through Medicaid waivers and state plan amendments.
As the Stateside Dispatch discussed earlier this year, Arkansas announced a new waiver program of bare-bones benefits for employees of small businesses that covers a mere six doctor visits, seven inpatient days, two outpatient days or ER visits, and two prescriptions. Perhaps something is better than nothing, but that is a hard argument to make in this case when people may still avoid the doctor for fear of learning about a catastrophic illness or condition requiring long term management for which they would have no coverage.
West Virginia has a new pilot project designed to cut costs and encourage healthful behavior. It requires Medicaid patients to sign a pledge and to meet certain guidelines like making scheduled doctor's visits and only visiting the emergency room for real emergencies. Medicaid recipients who fail to meet the new guidelines will lose benefits like mental health care and diabetes management. A consequence of this approach is that people without access to transportation or children whose parents don't make appointments could lose needed care. Encouraging healthful behavior is good, but taking benefits away from people who need them will lead to worse outcomes and higher costs in the long run.
Thankfully, the strong progressive vote on November 7th ushered in new leadership in Congress who have promised to closely examine the Bush Administration's plans.
The Bad Medicine of Consumer-Driven Health Plans
At the center of the right's push for Consumer-Driven Health Plans (CDHPs), which are high deductible insurance paired with tax-free savings accounts, like Health Savings Accounts, is the idea that comprehensive insurance with little or no cost-sharing encourages consumers to use health care wastefully. Because they can get care without emptying their pockets, they don't differentiate between frivolous and necessary care. The flaw here is that we are dealing with people's health, not their clothing, groceries or latest electronic gadget. They don't know whether an ache or pain could be treated with ibuprofen or is a sign of leukemia.
As several recent studies show, CDHPs are proving to be unpopular and ineffective at reducing unnecessary utilization and will likely exacerbate the problems they are designed to address.
Avoiding necessary care: A Kaiser Family Foundation survey of individuals enrolled in Consumer-Driven Health Plans found that while greater cost-sharing made consumers more price-conscious, they couldn't differentiate between frivolous or necessary care, causing them to avoid both. Individuals in CDHPs were twice as likely to avoid care because of cost than were individuals in traditional plans. This finding mirrors results of an earlier study by the Rand Corporation, as reported in the Washington Post. While CDHPs do, in many cases, reduce utilization, they do so indiscriminately. Both effective and ineffective health care is being used less.
Fragmenting insurance and adverse selection: The Kaiser study also found that CDHPs were disproportionately used by wealthy and healthy individuals who have the means to set aside thousands of dollars for out-of-pocket costs. The growth of CDHPs will add to an already fragmented health insurance market, where higher-income and healthier individuals leave comprehensive plans and middle and lower-income and sicker Americans are left to shoulder the burden of an ever-shrinking insurance pool. This will lead to increased adverse selection in comprehensive plans, causing premiums to rise disproportionately.
Dissatisfied consumers:Finally there is a great deal of dissatisfaction with CDHPs. The Kaiser survey found that half would switch to other plans if they had the choice. In fact, employers have not been quick to pick up CDHP's, with only 7% of those that provide coverage offering them. Supporting Kaiser's findings, a study by the Center for Studying Health System Change found that workers are disproportionately choosing traditional and more comprehensive insurance over CDHPs. Jon Gabel, who is Vice President of the Center, said that a primary reason is that "most Americans are risk averse. They don't like making financial decisions." This is not a rejection of more responsibility, it's that CDHPs ask consumers to judge the seriousness of symptoms, decisions that should be made by doctors and not consumers.
The troubling individual mandate that is a cornerstone of the Massachusetts health reform could soon take on a whole new level of significance. The Connector Board, which must define "creditable coverage" for the purposes of the mandate, appears to be on the verge of endorsing CDHP-like insurance by allowing high deductibles and limited benefits plans to qualify as creditable coverage. This would be a double-whammy for consumers in Massachusetts who don't have access to employer or state coverage. Not only will they be mandated to have coverage, or face penalties far exceeding those incurred by businesses that don't provide coverage to employees, but the quality of the health coverage is in question.
We need honest cost-savings proposals and expansions of health care that don't buy into undermining benefits or finding money from the poorest health care recipients. Fundamentally, the systematic efforts profiled here to "define health care down " will not lead to sustainable reductions in the growth of health care costs or quality expansions of health care. These initiatives ignore the leading causes of rising costs, like expensive prescription drugs and drug marketing, inefficient provider and insurer systems, bad debt and charity care, and a fragmented insurer and provider "non"-system. In fact, as demonstrated here, even relatively small increases in cost-sharing lead consumers to avoid necessary care and to drop coverage, which will lead to worse health outcomes and higher costs over the long term.