Expect to keep hearing more talk about health care cost cutting, despite charts like this. It’s an idee fixe of the Wall Street/Washington corridor, and will only be implemented more vigorously over time. So perhaps we should take stock of a few cost cutting initiatives. Medicare Part D, it seems, is coming way under its projected budget. But maybe that’s because of ”a sharp fall in the number of breakthrough drugs,” a sign that innovation in pharma is stalling. Cost cutting triumph, or logical outgrowth of a system that fails to reward actual contributions to health?
There’s also been a lot of pressure on skilled nursing facilities to hold the line on costs. What are we getting in return? Here’s a summary from OIG:
Skilled nursing facilities (SNF) are required to develop a care plan for each beneficiary and provide services in accordance with the care plan, as well as to plan for each beneficiary’s discharge. . . For 37 percent of stays, SNFs did not develop care plans that met requirements or did not provide services in accordance with care plans. For 31 percent of stays, SNFs did not meet discharge planning requirements. . . . [R]eviewers found examples of poor quality care related to wound care, medication management, and therapy. These findings raise concerns about what Medicare is paying for. They also demonstrate that SNF oversight needs to be strengthened to ensure that SNFs perform appropriate care planning and discharge planning.
I’m sure the health care cost cutters will use this evidence to demand the SNFs be paid even less–rather than, say, investing real funding in proper training and pay in this vital service sector. At some point, though, costs get cut so much that Medicaid will become little more than a meaningless plastic card, and “SNF” will stand for “Scarce Nursing Forever.”
This post first appeared on HealthLawProf Blog.
Filed under: Health Law, Health Reform, Medicaid
Professor Jacobi writes:
GOVERNOR CHRISTIE’S decision to expand Medicaid coverage to more residents will improve the health of many low-income New Jerseyans, and save the lives of some. In addition, the expansion dovetails with other reform efforts in the state, furthering implementation of innovative programs for the poor and vulnerable.
The governor’s announcement is great news for low-income individuals. The Rutgers Center for State Health Policy estimates that the expansion will lead to an enrollment increase of about 234,000 in NJ FamilyCare, which combines New Jersey’s Medicaid and Children’s Health Insurance Program.
The expansion addresses gaps in the current Medicaid system, under which many poor people were ineligible even if they had absolutely no income or assets.
The expansion will plug those gaps, allowing people to enroll so long as they are lawful residents with an income of no more than about $15,414 per year, which is about the gross income of a full-time minimum wage worker.
Health insurance coverage is important to personal health, and it is simply not true that all Americans have meaningful access to health care. As the Institute of Medicine of the National Academy of Sciences has found, people who have health insurance — including Medicaid — have better access to a regular source of health care. Those with no coverage, in contrast, are more likely to do without medically necessary care, particularly for chronic conditions, and to not fill prescriptions due to cost.
As a consequence, the uninsured are more likely to be in “fair” or “poor” health — and to die before their time. Medicaid expansion will keep people healthy and even save lives.
Read the full feature, “How Medicaid expansion will help New Jerseyans”
As I mentioned here last month, government leaders are turning their attention to mental health issues — focusing on diagnosis and access to treatment, in particular — in the wake of the horrific shootings at Sandy Hook Elementary School in Newtown, Connecticut in December. Even though it remains unclear whether or not the shooter suffered from any form of mental disorder, many leaders have argued that expanding treatment access for those suffering from mental disorders will prevent future tragedies.
As President Obama pledges to define the new mental health essential benefits under the Affordable Care Act (“ACA”), state leadership is also beginning to react. Perhaps somewhat surprisingly, South Carolina Governor Nikki Haley (R) — the leader of the state that had cut mental health funding by nearly 40 percent from 2009 to 2012 (mentioned here) — is now leading the call to increase funding and services for those diagnosed with mental illness.
In addition to her proposal to increase funding for mental health services by $16 million in the summer of 2012, Haley has now called for an additional $11.3 million in funding for the South Carolina Department of Mental Health (“SCDMH”); in fact, her total proposed budget for the SCDMH in the 2013 budget is $17 million. Haley has been particularly outspoken on the issue, noting that “[t]here is nothing wrong with someone who has a mental health issue…. There is something very wrong when that person doesn’t get treatment…. These are good productive citizens that deserve to live good, healthy life [sic]. And if given treatment they can be incredibly successful. If not given treatment, we as a state have failed.”
She has argued that increasing funding for mental health treatment can prevent another tragedy like the one seen at Newtown. Treating an increase in mental health funding as an alternative to implementing additional gun control or gun safety measures, Haley mentioned that “[n]o amount of gun control can stop someone from getting a gun when they want to get it. What we can do is control mental health in a way that we treat people.”
Undoubtedly, the increase in funding is an abrupt policy change from South Carolina’s recent history. From 2008 to 2012, the state was cutting funding to the South Carolina Department of Mental Health by an average of $70 million per year.
Ironically, however, Governor Haley is speaking during the exact same time that all states are deciding whether or not to expand their Medicaid programs under the ACA — which would affect many individuals’ access to mental health services. Just earlier this week, Ohio Governor John Kasich (R) agreed to expand his state’s Medicaid program, while Pennsylvania Governor Tom Corbett (R) has decided to opt-out of the expansion. Corbett’s refusal made Pennsylvania the eleventh state to decline to expand its Medicaid program. And who else is staunchly opposed to expanding her state’s Medicaid program?
South Carolina Governor Nikki Haley.
This past summer, Governor Haley announced “via Facebook that South Carolina ‘will NOT expand Medicaid, or participate in any health exchanges’” (emphasis in original). According to the Health Affairs Blog, South Carolina’s refusal to expand its Medicaid program would prevent more than 500,000 South Carolinians from being granted healthcare coverage. In other words, if Haley had decided to expand her state’s Medicaid enrollment pursuant to the ACA, South Carolina’s Medicaid enrollment would increase from about 951,000 currently (which is nearly one in every five South Carolinians) to nearly 1.5 million in FY 2014.
Governor Haley’s recent positions create a situation in which the state is increasing funding for mental health service offerings in the state, but is refusing to expand coverage (paid for in whole by the federal government for three years) to many individuals who currently lack access to the services. Needless to say, positions taken on health policy issues cannot be examined in isolation.
Indeed, according to the Congressional Budget Office, if all states agreed to opt-in to the Medicaid expansion under the ACA, 13 million more Americans would have their mental health treatments covered by Medicaid. However, given the policy positions like those of Governor Haley, this — unfortunately — remains highly unlikely. Treatment offerings can increase, but if individuals do not have insurance coverage to pay for those services, access and receipt of those services is likely to remain largely elusive.
Legal blogs have covered the Medicaid expansion in great detail. Now the law review scholarship is starting to emerge. Here’s one piece sure to make an impact: Nicole Huberfeld, Elizabeth Weeks Leonard, and Kevin Outterson on “Medicaid and Coercion in the Healthcare Cases.” From the abstract:
For the first time in its history, the Court held federal legislation based upon the spending power to be unconstitutionally coercive. Chief Justice Roberts’ plurality (joined for future voting purposes by the joint dissent) decided that the Medicaid expansion created by the ACA was a “new” program to which Congress could not attach the penalty of losing all Medicaid funding for refusing to participate. NFIB signals the Roberts Court’s interest in continuing the Federalism Revolution.
The Court relied on, seemingly modified, and strengthened at least two existing elements of the test for conditional spending articulated in South Dakota v. Dole. Clear notice and germaneness now appear to be folded into the newly fashioned yet undefined coercion doctrine, which relied on quantitative as well as qualitative analysis to determine that the Medicaid expansion was unconstitutionally coercive. The Court is now actively enforcing the Tenth Amendment to protect states from federal spending legislation. NFIB raises many questions regarding implementation of the Medicaid expansion as well as the ACA. The dockets will experience the reverberations of these open questions, as well as the Court’s invitation to explore the coercion doctrine.
For the near future, at least, the authors believe we are “plunged into Justice Cardozo’s ‘endless difficulties.’” For the long term, policymakers may want to take the advice of political science professor Andrea Louise Campbell:
[States are] ill suited to redistributive policy because they [have] an incentive to provide the lowest possible means-tested benefits in order to repel poor people and retain affluent taxpayers. The Great Recession also laid bare the devastating costs of the inability of nearly all states to run budget deficits and to engage in countercyclical spending during economic downturns. For many years, governors have urged the federal government to take on the portion of Medicaid that pays for nursing home stays for the disabled elderly.
Maybe now the time has come to federalize Medicaid altogether. Doing so would remove an enormous burden from state budgets and put an end to variations in state policy toward the poor that can have near-barbaric results. For example, in Texas, one of the states whose government plans to opt out, the working parents of Medicaid-eligible children can only get coverage for themselves if their income is below 26 percent of the federal poverty level. For a family of three, that’s $4,900 in annual income. Constitutionality is no barrier to federalization of Medicaid. The only question is whether it is politically feasible.
Huberfeld comes to a similar conclusion in another paper, arguing that “medicine generally and Medicaid specifically are already on the path to nationalization” and “Medicaid should be nationalized because federalism ideals are generally not served by the current structure.”
Governors and legislatures are keeping their options open as they mull over whether or not to expand their Medicaid programs. Medicaid expansion was slated to be responsible for half of the realization of the Affordable Care Act’s promise to enroll 32 million currently uninsured people. After NFIB v. Sebelius, that’s a harder lift, as the expansion can be regarded by the states as optional. Some governors have promised to reject Medicaid expansion on federalism grounds, sometimes expressing themselves somewhat intemperately. Others have raised pragmatic concerns, including the need to carefully assess the long-term budgetary effects, and questions about the value of Medicaid coverage. Two recent publications add to the discussion.
The Congressional Budget Office on Tuesday issued estimates of the federal cost of the ACA in light of states’ possible refusal of Medicaid expansion. The short takeaway is that the CBO projects that NFIB v. Sebelius will save the federal budget about $84 billion. Why? Because the CBO now projects that only one-third of the people newly eligible for Medicaid will reside in states that will fully accept the expansion, while one-half will live in states that strike a deal with the Secretary to only partially adopt the expansion (although the Secretary has not to this point indicated a path to that result), and one-sixth will live in states that reject the expansion in toto. As the CBO points out, the federal budget savings are large because most of those denied Medicaid coverage in refusing states will not be eligible for federal subsidies in the exchanges — a point I’ve make several times on this site (see here, here, and here).
In his excellent post on these issue on Balkinization, Joey Fishkin points out that the real story isn’t the effect of state refusal on the federal budget, but on state and local budgets. Fishkin argues that:
[T]there is a flip side to those federal savings. In states that don’t expand Medicaid, there will be more uncompensated care. Someone will have to pay for that: specifically, some combination of the state government, localities, and everyone in the state who pays insurance premiums. The new CBO estimate thus underscores the fact that choosing to opt out of the Medicaid expansion entirely is, in fiscal terms, an extremely bad move for states and their people.
What about the value of Medicaid the poor people who get coverage? Part of the push-back to Medicaid expansion has been the suggestion that the Medicaid system is dysfunctional and its extension is therefore unwarranted. A group of researchers at the Harvard School of Public Health published a timely analysis in the New England Journal of Medicine on Wednesday providing some evidence that Medicaid coverage is, in fact, valuable to recipients. The study examined the outcomes of Medicaid expansion to previously uncovered adult populations in three states, compared with the outcomes for similar populations in nearby states that did not expand Medicaid coverage. The authors concluded,
Our study documents that large expansions of Medicaid eligibility in three states were associated with a significant decrease in mortality during a 5-year follow-up period, as compared with neighboring states without Medicaid expansions. Mortality reductions were greatest among adults between the ages of 35 and 64 years, minorities, and residents of poor counties.
Correlation is not causation. But this study provides some information suggesting that, when it comes to expanding Medicaid, the game is worth the candle.
Decisions regarding programs as large as Medicaid are properly reached after careful consideration. Now, as governors and legislatures think through their Medicaid options, they have a bit more data to consider. Refusing Medicaid expansion presents financial strains for state and local governments’ uncompensated care and safety-net financing, and may increase private insurance rates due to cost-shifting. The decisions made by states and local governments under those circumstances may well cause dislocations for the safety net providers themselves, as they scramble for funds to make up for those they anticipated coming from increased Medicaid receipts. And, as the Harvard study suggests, refusing states’ poor populations may face increased mortality, rendering a difficult financial decision one that is truly life and death.
John Roberts’ jurisprudential wizardry in NFIB has been compared with the artistic genius of pro wrestlers and rappers. Poor Americans in states newly empowered to resist the ACA’s Medicaid expansion may need even more ingenuity to get themselves insured. Both Kevin Outterson and my colleague John Jacobi have observed the perplexing predicament imposed on the poor in states that keep Medicaid 1.0, and resist Medicaid 2.0. From Jacobi’s post:
The reform provides insurance subsidies through tax credits. The credits are calculated on a sliding scale, according to household level, for people with income up to 400% of FPL [the federal poverty line] — subsidizing more generously someone earning 200% of FPL, for example, than someone earning 350% of FPL. But, under 26 USC 36B(c)(1), credits will not be distributed to those with incomes below 100% of the FPL. Why? Because Congress assumed states would take up the Medicaid expansion, obviating the need for exchange-based subsidies for the very poor. . . .Bottom line: states rejecting Medicaid 2.0 will not only forego about 93% federal funding for the program between 2014 and 2022, but they could also be depriving the poorest of the uninsured from any shot at coverage — potentially affecting millions nation-wide.
Georgia hospitals are already worried about the “unexpected prospect of lower reimbursements without the expanded pool of patients” to be covered by the Medicaid expansion:
Last year, Georgia hospitals lost an estimated $1.5 billion caring for people without insurance. The promise of fewer uninsured is what led the national hospital industry to agree to the health law’s $155 billion in Medicare and Medicaid cuts over a 10 year period. The Medicaid curveball comes at a time when Georgia hospitals are already in the throes of a massive industry transformation to improve quality and efficiency driven by market forces as well as the new law. Hospitals face lower payments from insurers and pressures to consolidate. One in three Georgia hospitals lose money. All are busy preparing for new standards under the law that, if not met, could mean millions of dollars in penalties.
It’s hard to imagine how hospitals like Grady can continue to act as a safety net in that environment. The article notes that “Georgians already pay for the cost of care provided to people without insurance through higher hospital bills and inflated insurance premiums.” If that trend continues, all the states refusing Medicaid 2.0 may end up doing is shifting the cost of the Medicaid expansion population from national taxpayers to Georgians with insurance. The superwealthy Americans of Marin County and Manhattan ought to send Georgia Governor Nathan Deal a thank you note for keeping Georgians’ problems for Georgians themselves to solve.
I didn’t think I’d be blogging on this again. I’ve posted twice, here and here, on the trap the Supreme Court’s Medicaid decision created for the poor. Briefly, NFIB v. Sebelius makes the ACA’s Medicaid expansion (“Medicaid 2.0″) optional with the states, allowing them to choose or reject the federal support for Medicaid expansion without facing any reduction in federal funding for original Medicaid. The trap is the following: while it might seem that the poor single adults who were the beneficiaries of this expansion would, in states rejecting Medicaid 2.0, at least be eligible for the subsidies the ACA makes available for low-income purchasers of insurance through the Exchanges. But no. Under 26 USC 36B(c)(1), only persons at or above the federal poverty level qualify for the subsidies (because Congress assumed that the states would adopt Medicaid 2.0, and subsidies for the very poor were unnecessary in private markets).
Professor Tyler Cowen, writing in the Sunday New York Times business section, gets this point exactly wrong. In a piece discussing the “tug of war” between the federal and state government, Cowen argues that states may have an incentive to turn down Medicaid 2.0 in order to shift the insurance costs for the poor to the feds. After all, even with the very high level of federal funding for Medicaid 2.0, states will have some financial exposure. Cowen says:
State officials know that limiting Medicaid will place more individuals in the new, subsidized health care exchanges, and that those bills will be paid by the federal government. The basic dynamic is that state and federal governments have opposite incentives as to how many people should be kept in Medicaid.
Wrong. The fact is that all residents below the poverty level who are frozen out of Medicaid coverage in states that refuse Medicaid 2.0 are also ineligible for Exchange subsidies. This mistake is significant; Cowen, suggests that states may be convinced to refuse Medicaid 2.0 (or perhaps not feels so bad about doing so) because they see an alternative source of coverage. That error, if picked up by the many governors and legislatures now weighing their options under the ACA, could lead to disastrous results.
The ACA raises charged issues between the Obama administration and the states. It would be a shame if misinformation about the effects of a state refusal of federal funding for Medicaid 2.0 were to influence state decisions on Medicaid.
I recently wrote about the plight of poor adults in states that reject “Medicaid 2.0″ — that is, the expansions of Medicaid contained in the ACA. Just to recap, the Supreme Court upheld the constitutionality of the expansions, but held that Medicaid’s historical power to enforce state uniformity — sanctioning states up to and including the withdrawal of some or all of their federal funding — could not be used to require states to adopt the ACA expansions. Thus, Medicaid was conceptually split between Medicaid 1.0 (existing Medicaid) and Medicaid 2.0 (ACA expansion Medicaid), and a state could not lose Medicaid 1.0 funding if it declined to participate in Medicaid 2.0 funding. Several governors have expressed the intent to refuse to participate in Medicaid 2.0.
My previous post highlighted Kevin Outterson’s observation of an under-appreciated effect of a state’s refusal to participate in Medicaid 2.0. Of course, people living below the poverty level who were ineligible for Medicaid 1.0 will be shut out of Medicaid in refusing states. But they’re also ineligible for any subsidies to purchase coverage under the exchanges. Why? Because Congress assumed that states would participate in Medicaid 2.0, and didn’t provide seemingly redundant subsidies. These poor residents of refusing states will fall into a Medicaid donut hole — ineligible for Medicaid, but shut out of exchange-based subsidies.
Secretary Sebelius, in a letter dated July 10, implicitly acknowledged this problem. After reiterating previous offers to work with states flexibly in health reform matters, and expressing hope that states would take up the federal funds available for Medicaid expansion, she addressed a donut hole question: would poor residents in refusing states be subject to a triple whammy of (1) no access to Medicaid; (2) no access to subsidies for coverage through the exchanges; and (3) penalties for not having qualifying coverage? Sebelius couldn’t offer much on the first two — refusing states won’t offer Medicaid coverage to many of their poor residents who would be eligible for Medicaid 2.0, and subsidies are simply not available (for reasons I explained in my previous post) for persons living below poverty. But on the third, she promised that the very poor uninsured would at least escape sanction for noncompliance with the ACA’s individual responsibility provision: Sebelius assured the governors that she would use her authority to provide a “hardship exemption” from penalties for these uninsured folks where needed. That may be snow in January for these disenfranchised folks, but those seem to be the tools left to Sebelius.
Now that Medicaid 2.0 is optional, what are the effects of a state’s accepting or rejecting the Affordable Care Act’s Medicaid expansion? Much of the commentary, naturally, has discussed how many potential new Medicaid enrollees a state could add — or not — depending on whether it accepted “Medicaid 2.0,” and how much it would cost a state to embrace the full expansion. But states opting out of Medicaid expansion may be buying into a problem they haven’t considered: the Medicaid donut hole. That new donut hole, created by the Court’s approval of private health insurance reform but mixed review of Medicaid expansion, could leave millions of single, very low income people out in the cold.
Many states are suggesting that they may turn down Medicaid 2.0 for budgetary reasons, even though the ACA places the lion’s share of the cost on the feds through 2022. Surely, some states are making a calculation that they’d rather turn down the feds’ offer to pick up about 93% of the expansion’s cost through 2022, because the remaining state costs in this economy are significant, and there remains uncertainty in the out years.
But wait — the Supreme Court upheld Title I of the ACA (the private insurance reforms); aren’t the folks excluded from Medicaid at least eligible for subsidies (made up of federal funds) through the exchanges? Put another way, could a Medicaid-expansion-refusing state off-load to the feds the subsidy costs of their poorest single adults? No. That’s where the Medicaid donut hole comes in.
As Kevin Outterson has observed at The Incidental Economist, a state refusing Medicaid 2.0 could be creating a group of very poor residents unexpectedly excluded from any access to health insurance. How is that possible? Don’t the subsidies available through exchanges support private market insurance for low-income people? Not if they’re very poor. The simple fact is that people not covered by Medicaid 1.0 with income below 100% of the FPL are out of luck in states that reject Medicaid 2.0.
The reform provides insurance subsidies through tax credits. The credits are calculated on a sliding scale, according to household level, for people with income up to 400% of FPL — subsidizing more generously someone earning 200% of FPL, for example, than someone earning 350% of FPL. But, under 26 USC 36B(c)(1), credits will not be distributed to those with incomes below 100% of the FPL. Why? Because Congress assumed states would take up the Medicaid expansion, obviating the need for exchange-based subsidies for the very poor.
Bottom line: states rejecting Medicaid 2.0 will not only forego about 93% federal funding for the program between 2014 and 2022, but they could also be depriving the poorest of the uninsured from any shot at coverage — potentially affecting millions nation-wide. And with DSH funding decreasing, hospitals may have concerns if states voluntarily opt out of coverage for those likely to impose uncompensated care costs. States, then, won’t be pushing costs to the feds– they’ll be denying available coverage to their own residents and making life difficult for their hospitals.
First, the Medicaid “coercion” decision should initiate an interesting political debate. Should those states calling most loudly for repeal/overrule of the ACA now be true to their convictions and walk away from Medicaid expansion? To do so would be a remarkable triumph of ideology over their constituents’ public interest and economic interest. They would be abandoning a large segment of their most needy citizens AND leaving a lot of money on the table (the Federal government will pick up 90% of the cost of the newly enrolled and give other benefits to the states).
The States standing to benefit the most from Medicaid expansion are by and large red states, so the political dynamic will be interesting. As an aside, I’d note the willingness of the Congressional representatives from many of the poorest states to ignore a generous federal subsidy for their indigent citizens by voting against the ACA is a tribute to the gerrymandering that distorts congressional districts and to the influence of our distorted campaign financing laws. Federal subsidies aside, there may be considerable savings to State employee insurance and private insurance as the cost shifting from care to the poor is reduced. (Zeke Emanuel says that California is expected to save $2 billion as a result of Medicaid expansion). All in all its a nice way of putting the ball in the court of the critics and framing the issue pretty starkly: do you want to participate in the shared national responsibility to take care of the less fortunate or is your State willing to leave a sizable segment of its citizens exposed to the dire consequences of being uninsured?
Second, the tone of the opinions was surprisingly moderate. One wonders whether the remarkably vituperative talk about the ACA in the Presidential primaries and on the Hill caused the dissenters to temper the language of their opinions. Perhaps the biggest surprise to me over the last two years has been the ability of opponents to generate enormous anger over the ACA. Removing the “rights” element from the debate might at least calm the waters a bit.
As America waits for the U.S. Supreme Court to hear oral arguments in, and decide on, the constitutionality of the Patient Protection and Affordable Care Act of 2010 (PPACA) in March, state cuts in mental health funding continue unabated in many states throughout the country. As previously mentioned here, the PPACA review undertaken by the Court will not only focus on the constitutionality of the individual mandate but will also examine PPACA’s Medicaid expansion. By expanding Medicaid, PPACA will provide coverage to millions of those living with serious mental illness. PPACA also provides for increased community-based outreach, from changing the waiver laws to awarding grants for new programs, in order to further improve essential services for those living with mental illness.
While many fixate on late March, local governments continue a practice that started a few years ago: slashing funding for mental health services. Just last week, Chicago’s Department of Public Health announced they were closing half of their mental health clinics — disproportionately affecting the city’s African-American and Hispanic populations, according to advocates. Over the last fiscal year, New York has cut its mental health budget by $95 million, and California has by $177 million. According to a new NAMI study released late last year, from 2009 to 2012, four states have slashed their mental health expenditures by more than 30 percent; South Carolina, at the top of the list, has cut funding by nearly 40 percent. Alaska and Nevada — the two states with the highest suicide rates in the country — are both in the top five. In total, “general funds for mental health” are down $1.6 billion overall between 2009 and 2012.
Besides painful, the cuts are likely to be counterproductive: advocates argue that they will actually cost states more in the long run. Ronald Hornberg, director of legal and policy affairs at NAMI recently told ABC news that the cuts are resulting in those in need of services showing up in emergency rooms or prisons, where they are expensively boarded because there is nowhere else for them to go. Eric Lindquist, a clinical therapist at the Chicago Department of Public Health, called the mental health clinics that Chicago has decided to cut, when compared to hospitalizations or incarcerations, “one of the taxpayer’s best bargains.”
At the same time, headlines late last week brought news that 20 percent of Americans were diagnosed with mental illness in 2010 — nearly one in four women and about one in six men. Among other findings, nearly nine million Americans “thought seriously” about suicide in 2010, with over one million attempting to kill themselves. Almost two million teenagers “experienced a major depressive episode.” Those aged 18 to 25 had the highest incidence of illness: nearly 30 percent.
Obviously, the incidence of illness and prevalence of spending cuts nationwide does not bode well for the future of mental health care in this country. Those that depended on the services being cut are left to try and make it on their own, and those who worked for gutted agencies are looking for jobs. And this is why advocates look toward March. The Court’s decision later this year will shape the future of mental health services in this country for years to come — services that, right now, are increasingly endangered nationwide.
Receiving most of the attention and coverage following the passage of ACA has been the debate over the constitutionality of the individual mandate, in which Congress has required individuals to purchase health insurance. This discussion has grown louder in the wake of the Eleventh Circuit’s Florida v. Health and Human Services decision, which invalidated the individual mandate as exceeding Congressional power under both the Commerce Clause and Taxing and Spending Clause. As mentioned on this blog, that decision, along with the parties’ responses to it, has paved the road to Supreme Court review, likely early in 2012.
But also in the Eleventh Circuit’s decision — and a clear focus of the petitioners’ reply brief filed last week — is a discussion of whether, by expanding Medicaid under ACA, Congress exceeded its spending power. This assertion was rejected by Judge Vinson in the Northern District of Florida, see Florida v. U.S. Dept. of Health and Human Svcs., 780 F.Supp.2d 1256, 1269 (N.D. Fla. 2011), as well as the Eleventh Circuit, see 648 F.3d 1235, 1268 (11th Cir. 2011). The Eleventh Circuit relied on a few determinative factors to reject the argument: (1) Congress has reserved the right to make changes to Medicaid, and the participating states were aware of this possibility; (2) the federal government will pay for nearly all costs of the Medicaid expansion; (3) states have “plenty of notice” to decide whether they want to continue to participate in Medicaid before the changes go into effect; and (4) it is not conclusive that states who do not participate in the new Medicaid lose their funding. Id. at 1267-68.
Putting constitutional concerns aside, petitioners’ argument, if adopted by the Supreme Court early next year, can work to undo much of the good the ACA accomplishes on the ground level, including the ACA’s positive effect on those living with mental illness. Today, according to CMS, Medicaid pays for the mental health services of 58 million Americans. See Mental Health Services Overview, Centers for Medicare & Medicaid Services, available at https://www.cms.gov/MHS/ (last modified Sept. 6, 2011). But according to an interesting Perspective piece in September’s issue of the New England Journal of American Medicine, the ACA would likely result in coverage for at least an additional “3.7 million currently uninsured people with severe mental illnesses and many more with less severe needs for mental health and addiction treatment.” Colleen L. Barry and Haiden A. Huskamp, Moving Beyond Parity – Mental Health and Addiction Care under the ACA, 365 N. Engl. J. Med. 973-975 (Sept. 15, 2011). Further, in addition to mandating that Medicaid benchmark plans and state-based insurance exchanges cover mental health services as part of an essential benefits package, the ACA assists in the coordination and implementation of more community-based services, from changing the waiver laws to assist the states in administering behavioral health services to establishing grants for further community outreach. Id.
So instead of focusing on the individual mandate debate, those in the mental health field should note the Florida petitioners’ other target of attack — Medicaid expansion. Already rejected twice, the ultimate resolution early next year will affect millions of mental health providers as well as those who use their services and will have a profound effect on the administration of mental health services in this country.
Filed under: Cost Control, Disparities, Long Term Care, Medicaid
This week the Obama Administration formally abandoned the CLASS Act, a component of the ACA designed to provide long-term care. Robert Reich explains why it was doomed from the start:
First, it required beneficiaries to receive at least $50 a day if they had a long-term illness or disability (to pay a caregiver or provide other forms of maintenance). That $50 was an absolute minimum. No flexibility on the downside.
Second, insurance premiums had to fully cover these costs. In budget-speak, the program was to be self-financing. Given the minimum benefit, that meant fairly hefty premiums. Third, unlike the rest of the healthcare law, enrollment was to be voluntary. But given the fairly hefty premiums, the only people likely to sign up would know they’d need the benefit because they had or were prone to certain long-term illnesses or disabilities. Healthier people probably wouldn’t enroll.
The failure of CLASS has led to a flurry of proposals for alternatives to long-term care insurance. Some want a purely private sector solution. Maybe a new Rube Goldberg financing scheme could be implemented as a part of 401(k) plans. Perhaps Wall Street could sell disability derivatives and ability default swaps, engineering away the “risk of non-use” that keeps people from enrolling in programs like this.
In thinking about these proposals, my mind turns back to Robert Bork’s Antitrust Paradox. For Bork, antitrust law was “at war with itself” because it professed to promote simultaneously 1) a cutthroat competitive process that would encourage firms to maximize efficiency and 2) the threat of penalties for any firm that succeeded in being so efficient that it outcompeted all or nearly all of its rivals, if its efforts to do so stepped over the line into monopolization. Of course, one could resolve the so-called paradox if one recognized that the Sherman and Clayton Acts were passed not merely to maximize “consumer welfare,” but also to prevent concentrations of economic power from exercising excessive influence. But as the judicial interpretation of antitrust law took on more of the assumptions of the Chicago school, the paradox loomed ever larger in efforts to characterize antitrust as futile in an era of consolidation.
So what’s the CLASS paradox? There are actually several. Those who are not so well off (such as the 50% of American workers who made less than $26,000 last year) are likely to be the most in need of the program, but have the least amount to spare for premiums. Those in the top 1% (that is, those who make over $506,000 annually) will probably want to use their own savings and investments, rather than an insurance program, to pay for LTC. That leaves a middle 49%, making between $26,000 and $506,000, who are the most likely participants. But among that group, the more healthy, well-connected, wealthy, and younger you are, the less likely you are to buy in because the benefits are speculative, distant, and/or unneeded. And by and large, the sicker, more isolated, poorer, and older you are, the less likely you are to have the resources to participate now.
The question finally becomes: are we serious about social insurance in this country, or are we content with treating the very frail elderly like possessions in the home, to be insured as need and whim allow? The solution to the LTC crisis is a right to basic care and residence, funded by general tax revenues. Sure, we can have extensive and difficult debates about the obligations of individuals and families to contribute to long-term care, particularly in order to make better-than-basic options available. But the general focus needs to be on redistribution from the currently well-to-do to the currently needy, rather than an ownership society mirage of individuals anticipating distant futures that may never materialize (and that many or even most can’t very well prepare for even if they do materialize).
We should also consider funding more of Medicare out of general tax revenues, rather than from dedicated payroll taxes and premiums. Richard Kaplan has argued that this shift could better serve both equity and cost-control goals:
The use of general tax revenues, moreover, would make clear that financing the health care needs of the Medicare population is a societal undertaking, much like the Medicaid program, which targets low-income individuals of any age. At a minimum, eliminating the separate taxes for Medicare would simplify the lives of employees and employers alike and would additionally reduce the cost to employers of adding new employees. Perhaps changing the financing of the Medicare program along the lines just suggested might also make its beneficiaries less inclined to protest every proposed programmatic restriction and to understand that their benefits are indeed coming from a communal funding source. The resulting change in budgetary debates can only be salutary for the republic as a whole.
Health care finance in general must adopt to a world of massive and growing income and wealth inequality. From 1947-1980, when Americans’ incomes more or less grew together at the same rate, there was some justification for modeling the purchase of long term care as an investment that individuals would manage one by one, to reflect their tastes and preferences. Since 1980, the divergence in fortunes has become so great that such choices far more reflect ability-to-pay rather than taste for risk or comfort. It is unfair to expect struggling middle and lower class individuals to continue with such burdens. And to the extent tough choices need to be made, they ought to better reflect the collective wealth of the nation, rather than the tragic choices that can befall an individual forced to choose between preparing for bleak penury in old age or investing in present purchases that could make that neediness less likely.
The Washington Post has featured two interesting pieces recently on Medicaid managed care. Christopher Weaver reported on a battle between providers and insurers in Texas. Noting that “federal health law calls for a huge expansion of the Medicaid program in 2014,” Weaver shows how eager insurers are to enroll poor individuals in their plans. Each enrollee would “yield on average $7 a month profit,” according to recent calculations. Cost-cutting legislators see potential fiscal gains, too, once the market starts working its magic.
There’s only one problem with those projections: it turns out that “moving Medicaid recipients into managed care ‘did not lead to lower Medicaid spending during the 1991 to 2003 period,’” according to a report published by the National Bureau of Economic Research this month. Sarah Kliff is surprised to find that this is “the first national look at whether Medicaid managed care has actually done a key thing that states want it to do.”
Almost daily, there is a new article or study emphasizing the need for innovative reform to save Medicaid amidst growing threats of deep cuts to the already struggling program. New Jersey, as one of the states with the highest Medicaid spending per beneficiary in the country, is paying attention. And help may be on the way in the form of a medical home/safety net.
Showing promise, the medical home model of care is an oft proposed reform. As Mary Takach explains in the July 2011 edition of Health Affairs, “[a] patient-centered medical home is an enhanced model of primary care in which care teams, led by a primary care provider, attend to the multifaceted needs of patients and provide whole-person, comprehensive, coordinated, and patient-centered care.” (See “Reinventing Medicaid: State Innovations to Qualify and Pay for Patient-Centered Medical Homes Show Promising results,” Health Affairs, July 2011, 30(7):1325-34.)
According to the National Academy for State Health Policy, thirty-nine states are working to implement medical homes for Medicaid and CHIP participants, and New Jersey is one of them. In September 2010, Governor Christie signed Assembly Bill 226 into law, which established a three-year Medicaid medical home demonstration project that, at minimum, will include “primary care providers utilizing a multi-disciplinary team that provides patient-centered care coordination through the use of health information technology and chronic disease registries across the patient’s life-span and across all domains of the health care system and the patient’s community.” The statute requires that the payment system “be structured to reward quality and improved patient outcomes” and that Medicaid “[c]onsider payment methodologies that support care-coordination through multi-disciplinary teams, including payment for care of patients with chronic diseases and the elderly, and that encourage services such as: (a) patient or family education for patients with chronic diseases; (b) home-based services; (c) telephonic communication; (d) group care; (e) oral health examinations, when applicable; and (f) culturally and linguistically appropriate care.” You can learn about various medical home initiatives in New Jersey at the National Center for Medical Home Implementation web site.
Takach’s report focuses on seventeen states that have aligned “patient-centered medical home standards with incentive payments to support reform in the delivery of primary care” — Colorado, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, and West Virginia.
Although these programs are in their infancy, Takach interprets limited early data from a few states as encouraging. Vermont, for example, documented that inpatient use had decreased twenty-one percent, with a corresponding twenty-two percent decrease in per person per month inpatient costs, and that emergency department use had decreased thirty-one percent, with a corresponding reduction of thirty-six percent in per person per month costs (although its second pilot community had what Takach describes as “mixed results”). Colorado similarly has seen decreases in its median Medicaid costs per patient for children.
Both Colorado and Oklahoma also have seen increases in participating providers since the medical home model started operating. In Oklahoma, more than 244 new physicians enrolled in Medicaid. Ninety-six percent of pediatricians now accept Medicaid in Colorado, up from only twenty percent before the program began. Increasing the number of Medicaid providers is critical, given national shortages of available primary care Medicaid providers.
As Takach summarizes:
Some of the early findings from Colorado and Oklahoma, which have statewide Medicaid initiatives, demonstrate that modest increases in payment aligned with quality improvement standards have not only resulted in promising trends for costs and quality, but have also greatly improved access to care. This is an important finding for other states as they consider how to meet the tremendous increase in demand for care that will result from the expansions to Medicaid in the Affordable Care Act of 2010.
But beyond a medical home, there needs to be a safety net for the most vulnerable urban populations who are, in a sense, medically homeless– and are, by EMTALA default, frequent utilizers of high cost emergency room services.
As this blog and other sources, including The New Yorker, have discussed, New Jersey is home to the Camden Coalition of Healthcare Providers, which describes itself as “a citywide organization of social workers, nurses, physicians, administrators, hospitals, health services organizations, and clinics that serve the health needs of Camden, New Jersey residents. [It] work[s] in a variety of settings — from small neighborhood based practices to hospital based offices — with the goal of improving the coordination and capacity of the healthcare system for residents of Camden.” Dr. Jeffrey Brenner has been leading this effort since 2002. His work offers promising program models for safety-net providers throughout the country to “improve the quality, capacity, and accessibility of the healthcare system for vulnerable populations.” Indeed, even though the budget bill signed by Governor Christie slashed Medicaid funding in New Jersey by $540 million, his Commissioner of Human Services has expressed continuing support for the Coalition’s pilot because it is seen as a smart reform that could save money while improving care. Newark and Trenton also have established citywide healthcare coalitions to improve medical care for their vulnerable, underserved residents. And we at the Center for Health and Pharmaceutical Law and Policy have worked closely with the Greater Newark Healthcare Coalition.
In a recent post on the Health Affairs blog, Dr. Brenner and Nikki Highsmith note that although the Camden Coalition “has had preliminary successes and offers potential long-term savings, such community-based endeavors are difficult to initiate and sustain without start-up financing, ground-level technical assistance, and buy-in from state and local policymakers, health plans, patients, and community members.” They thus call on CMS to “jump start investments in safety-net ACOs” by pursuing a national demonstration project to support programs similar to Camden’s pilot.
New Jersey is poised to be ready if CMS heeds this call for a national Safety Net ACO demonstration project because the Coalition and other New Jersey stakeholders, including Seton Hall Law Professor John Jacobi, have been active in advocating for a bill (S2443) authorizing geography-based Medicaid ACOs in New Jersey. As the Coalition’s web site summarizes:
The proposed New Jersey law would authorize a three-year Medicaid ACO demonstration project whereby community-based, non-profit coalitions can apply for recognition by the State of New Jersey as a Medicaid ACO. The applicants must propose a geographic focus and will need 100% of the [general] hospitals, 75% of the primary care providers, [four] behavioral health providers, and two community [organizations] from that geography on the board of the organization. The providers in the community will continue to receive their usual Medicaid payments and the ACO, if its providers meet quality benchmarks, would be eligible to receive shared savings payments, that can be distributed to participants based on a proposed gain sharing plan.
The proposed legislation specifically recognizes that patient-centered medical home models are one way, among others, to achieve coordination. On June 27, 2011, the Assembly and Senate passed S2443, and it is awaiting Governor Christie’s signature.
New Jersey’s proposed Medicaid ACOs go beyond Medical Homes. They are built on a foundation of sound primary care, but they offer the promise of reaching vulnerable populations in many settings, and of assuring that the right care is provided at the right location for people who are often left out of health reform efforts. The financing mechanisms provided by the bill awaiting the governor’s signature go some way towards financing these innovating community organizations, although, as Brenner and Highsmith point out, more needs to be done –particularly in the way of providing start-up funding for community providers.
Appropriately cultivated, patient-focused collaborations such as these may yield synergies in care and cost of a substantial scale. But another recent Health Affairs article suggests that adoption of the medical home may well develop at a slower pace in states, like New Jersey, where physicians tend to be organized in smaller practices. New Jersey’s Medicaid ACO pilot could help to accelerate the development of practice reformation in New Jersey — particularly if CMS provides the support advocated by Jeff Brenner and Nikki Highsmith.
It’s an exciting time for growth and innovation in the Garden State … if we just get that signature.