While Medicaid Enrollment Rates Increase, States Face Financial Pressure to Decrease State Medicaid Spending

Last week, the Kaiser Family Foundation released a report indicating a large jump in state Medicaid enrollment from June 2008 to June 2009.  The report said that the 7.5 percent increase was the greatest one-year jump in enrollment rates ever, with over 3 million people joining the public health program funded jointly by the federal government and individual state governments.  The reason for the increase  is thought to be that because more people became unemployed due to the economic crash, more individuals turned to Medicaid for health coverage.  However, because the economic downturn meant less revenue entering into state budgets, state Medicaid programs have not been able to keep up with the rise in new enrollees.

During a convening of state governors at the White House this week, state officials will likely raise the issue of Medicaid spending. The issue is pressing in light of the impending funding cut when stimulus money from the American Recovery and Reinvestment Act of 2009 will expire in December of this year.  The governors will likely ask that the stimulus funding be continued until states can somehow make up for their large current budget deficits.  In addition to asking for more money, the governors will also likely discuss the feasibility of health care reform efforts.  With both House and Senate versions of health care reform proposing increases to state Medicaid programs to ensure the coverage of more uninsured individuals, the state governors would, understandably, like to know where the money for such expansion would come from.

The National Association of State Medicaid Directors estimates that states’ budgets will fall  short  $140 billion in the next fiscal year.  This means even less money for the likely further increase in Medicaid enrollment to come this year, as Medicaid enrollment generally lags behind unemployment.  To account for the deficit, many states are planning to reduce their Medicaid programs. USA Today finds that three categories of such reductions exist:

• California, Arizona and Virginia propose reducing who’s eligible. In Arizona, 310,000 people would lose coverage. California also wants to increase premiums.
• Michigan, Tennessee, Massachusetts and others propose eliminating benefits. Masachusetts’ elimination of restorative dental services would save $56 million, says Medicaid director Terry Dougherty.
• Texas, Pennsylvania, Louisiana and others propose cutting payments to hospitals, doctors or nursing homes. Several states are considering new taxes on hospitals as a way to avoid cutting these payments.

States that accepted stimulus money to expand their Medicaid programs in 2009 are restricted from any such cuts that would affect low-income enrollment.  However, if the stimulus funding is not extended, some states are planning on heightening eligibility requirements.  For other states, while decreasing hospital and doctor reimbursement seems like the worst possible option– given that many doctors have already stopped accepting  Medicaid patients due to what they deem to be an insufficient rate of reimbursement– many states’ officials find that the only other viable option they have is raising taxes.  Many state leaders refuse to increase taxes in fear of the political backlash come November.

Realizing the need for health care reform to help manage the burden of paying for health care, state governors have stated a desire to be part of the health care reform conversation.  Many have already expressed their dislike for individual mandates, which they believe will drive more individuals to state Medicaid programs.  For the most part, however, the governors want reform and they want it now, finding that they simply can’t afford to wait another year.

It is also worth noting that an underlying issue from these new numbers is whether the Medicaid program is actually a good prototype for expanding health care coverage.  Drew Altman, President and CEO of Kaiser, put in perspective Kaiser’s report as well as the concerns of public spending that were sparked by the Centers for Medicare and Medicaid Services’ projections for 2009-2019– which forecast that public spending on health care will surpass private spending.  He noted that while spending in public health insurance programs would increase, the cost-benefit would be better, since per capita costs on health care were lower in government-run programs than in private insurance programs.  According to Altman, such numbers did not undermine health reform efforts, but instead denoted “the need to control health care costs in the public and the private sectors alike.”

What about the Kids? Health Care Reform and Children

During the reconciliation process of the House and Senate bills, one of the issues likely to be raised is what to do with the Children’s Health Insurance Program, commonly known as CHIP.  Under the Senate bill, federal financing for CHIP would be extended for another 2 years past the current expiration date of 2013.  The House bill, on the other hand, would allow CHIP to come to a close in 2013 since the bill plans to expand coverage for children through Medicaid and through the health insurance exchange– where subsidized health insurance would be available.  Whether or not these health reform initiatives will be able to meet the medical needs of children is a matter of debate.

CHIP is a “state-federal partnership” that was created in 1997 under the Balanced Budget Act to help insure those children who are from families that earned too much to qualify for Medicaid.  Similar to Medicaid, the federal government matches state dollars spent on CHIP (average of 57% federal responsibility for Medicaid spending, 70% for CHIP), but unlike Medicaid, the allocations to states for CHIP is capped.  CHIP also places greater discretion in  individual state’s hands regarding eligibility requirements.

One of the first bills Obama signed as President was the Children’s Health Insurance Program Reauthorization Act, or CHIPRA, in February 2009.  CHIPRA added $33 billion in federal funds to use towards providing coverage to 4.1 million children via Medicaid and CHIP through the year 2013.

In 2007, over 80% of eligible children nationwide participated in Medicaid or CHIP. Currently, 29 million children are enrolled in Medicaid, 7 million in CHIP. If CHIP were to be allowed to expire and absorbed (at least partially) by an expansion of Medicaid, however, the lower reimbursement rates for Medicaid could mean that those children transferred would not have access to as many health care providers as they would have had under CHIP.  While Medicaid might seem to be a sufficient substitute, it would still leave gaps that CHIP had filled if the reform does not include higher reimbursement rates for Medicaid and automatic enrollment provisions, as proposed by the House. In addition, as it stands, because of the relatively low reimbursement rates from Medicaid, many doctors have ceased to accept either new or all Medicaid patients.

The alternate option of funneling children to the insurance exchange does not seem promising either.  Many children currently enrolled in CHIP could become uninsured if their families cannot afford the plans offered in the exchange, which is a concern– as many families will still have a hard time meeting the premiums– even after the proposed subsidies from the government.  Senators Jay Rockefeller of West Virginia and Bob Casey of Pennsylvania have proposed to avoid some of these issues by expanding CHIP until 2019, a move that they say would benefit our country’s children by ensuring their access to health coverage.

In considering the options, it would behoove us to remember that “a stitch in time saves nine,” and that the regular health maintenance of children– much more likely for those children who have insurance– will pay dividends in the form of less of those costly visits to the emergency room and hospital stays. We would also be advised to remember that uninsured children in the hospital have bbeen shown to face a 60% greater risk of death than those children who have either private or government health insurance.

Home and Community Based Services in Health Reform

As we head to floor votes and reconciliation, it’s important to keep our eyes on some of the less visible programmatic issues in the reform proposals. Many of these issues are old friends, have been kicking around Congress for years, and have been hammered out by members, advocates, and staff over many months. It would be a shame for them to be left on the cutting room floor in the interest of a “cleaner” bill. Home and community based care is one of those issues.

The reform bills adopt two complementary strategies to improve access to long term care (LTC): correct Medicaid’s institutional bias, and shift some LTC financing away from Medicaid. There is some history on which to build for the first strategy. Home and community based service (HCBS) reforms have chipped away at Medicaid’s institutional bias over recent years. HCBS waivers have increasingly moved care to the community settings, and reforms derived from DRA ’05 allowed further state flexibility in this area. Governors are strongly in favor of moving LTC funding to the community –- usually the most appropriate and economical setting –- but are seeking financial protection from increased demand. A recent paper from Harriet Komisar and others for the Scan Foundation proposed a four-prong proposal for HCBS Medicaid reform:

• Require –- or provide strong financial incentives for –- states to expand home and community-based services.
• Provide federal financial assistance to states through an enhanced matching rate to help finance expansions.
• Make home and community-based services eligibility available on an equal footing with nursing home care.
• Invest in workforce development.

Read more

The Truth About Young Invincibles

Recently released data has indicated that young people don’t care about health care reform.  Or at least not in large numbers. The poll, released by Gallup, says that only 34% between the ages of 18 and 34 want their Congress members to vote for reform legislation.

But this conclusion, drawn by so many, may be somewhat at odds with what the underlying situation might realistically be: that young people actually do care about health care reform itself– but are reluctant to bear the costs for not only themselves–but aging boomers as well–especially as young people have borne disproportionately the effects of the economic crisis.  For those of us who are in between still being dependents on our parents’ insurance and having health coverage of our own through employment, health care coverage is important –and we’re not so stubborn so as to not admit it– but the cost of insurance at the onset of a working life can be a significant barrier.

Why is there a problem of young uninsured people anyway?  19 years of age seems to be the limit for when young people in our country can still get medical coverage under their parents’ policies.  Although many states have altered this equation, many have not. For many private insurance companies as well as Medicaid, young people are cut off from coverage at the age of 19 or when they graduate from high school.  Many insurance companies cover those dependents that go on to college, and many college insurance plans provide some level of coverage. But those who choose to join the workforce  directly following high school graduation are largely left without.  In addition, once a “young and invincible” graduates from college, most are severed from insurance coverage altogether (that is, if they weren’t already).

Again, what might lend itself to misconstrual among all the data on health care legislation support is the difference between young people wanting health reform and being able to afford it– even if we get it.  According to the Commonwealth Fund, the majority of the uninsured young adult population (ages 19-29) are from low-income households.  Also, more than 2.5 million recent college graduates are unemployed.  Important to remember is the fact that recent graduates simultaneously face the difficulty of paying off college loan debt.  Thankfully, President Obama has not forgotten that fact.

Some policymakers think that because young people are so “invincible” we make an ideal group to add into the health care insurance pool: we are healthy, cheap to cover, and take up a small percentage of overall costs on health care.  For them, it makes perfect sense to add a relatively healthy group to the larger pool of Americans requiring insurance so as to drive premiums down overall and/or increase the profitability of insurers.  Ideas like this overlook (or disregard) the resultant fact that young people will then bear the responsibility of subsidizing health care costs of older generations– counterintuitive and somewhat contraindicated  when we look at wage status and unemployment numbers for recent high school and college graduates entering the workforce, don’t you think?

Importantly, besides the issue of unemployment, the types of work young people are usually able to secure affect their chances of getting health coverage too.  Those who are able to obtain jobs usually start off working part-time or lower-wage jobs, ones which typically do not offer benefits such as medical insurance.  Read the story about this young woman who was highlighted in the LA Times; she was unlucky enough to need an operation to remove a cyst while she was still in the introductory period as a new-hire (no insurance until you prove yourself, of course).  The only way she was able to cover the out-of-pocket expense of $12,000 was through her parents’ refinancing of their home.

Implicit in all this is age rating. For many reasons beyond its potential negative effects on both young and old, age rating should be divorced from actual health care reform.  Age rating would allow insurance companies to actively discriminate against its beneficiaries based on age alone.  For young people, such proposed age-rated, young-invincible plans are not even comprehensive; they would only cover medical care in times of emergencies or extreme illness, giving the plans the name of “catastrophic insurance.”  That sounds enticing.  Hard to believe young people wouldn’t be banging down the doors of their elected officials, adamantly demanding “catastrophic insurance,” right?

Better plans would incorporate the real needs of young people: preventive care, prescription benefits, and affordability.  These issues are not just unique to older generations.  If we want to keep the so-called invincibles healthy, we have to give them better options than just care in times of dire need.  Keeping young people on their parents’ insurance until a certain age limit is a good idea, as long as it plays out in practice too.  Anything is better than forcing young people to get coverage they can’t afford.  If you want our support for health care reform, try tailoring some of the reform bills to what we actually need.

Maternity Care and Health Care Reform

In the last few weeks, health reform has been receiving more public attention than it had before, much of which can be attributed to President Obama’s efforts to unify Congress in passing a bill.  For consumers, the politics of reform have helped to blur the defining components of each reform bill, leaving them unsure of what their health care insurance will or will not cover (let alone how they will pay for it) if reform is passed.  This is a real frightening thought considering that consumers will be the ones directly affected by whatever Congress decides.  In most American family units, the women make the majority of health care decisions for the rest of the family; women also have a lot at stake when it comes to their own health care access.  For these reasons, it is essential for women to understand and know what their legislators are planning for their health.

One of the areas of women’s health care that certainly needs to be reformed is maternity care.  Currently, women in the individual market can be denied health coverage if they seek coverage after becoming pregnant.  And that’s not the only  pregnancy related preexisting condition out there - if you’ve had a C-section before, you could be charged far greater premiums or even denied health coverage altogether.  It may seem that women who are uninsured are the only ones that would have to deal with such scenarios; however, women with insurance from the individual market or employer-based insurance face similar challenges in accessing care.  Read this story about a woman who had coverage through a private insurer and still had to pay $22,000 for having a baby.

Among the different types of private insurance that women have (or can have), there are major discrepancies with regard to maternal health coverage.  You are most likely best-off if you have employer-based insurance; best being a relative term.  Protection from discrimination in employer-based coverage exists through the Pregnancy Discrimination Act of 1978, which made any pregnancy-based discrimination unlawful.  However, the individual market is another story altogether.  The Pregnancy Discrimination Act and a number of other consumer safeguard regulations do not apply to the individual market.  States allow for insurance companies in the individual market to calculate premiums based on categories like gender, age, and pregnancy status.

The issue of access to maternity care for uninsured women, however,  is surely the case of the worst-off.  The obvious translation here is poor prenatal care, which is a vital aspect of not only the mother’s health but the child’s as well.  Considering the fact that our country has one of the highest infant mortality rates among developed nations, the need for reform to address maternity care for the uninsured is a serious one.  While Medicaid is able to assist in covering some of these uninsured women, a large overhaul of the maternity health care services of public programs like Medicaid should be requisite within national health care reform.

Congressional health reform proposals have not yet fully revealed what they will do to ameliorate the maternity health challenges that women face in our country.  However, we do know that certain systems have historically served women’s maternity health care needs better than others.  At this point in the national health care reform stage, women should be particularly concerned with the type of reform that Congress will pass.

Any health reform or insurance plan legislation which fails to provide access to care to ensure healthy pregnancies should be seen as strongly suspect-as this fundamental disregard for the basic needs of women (and children), dire in itself, would surely be a harbinger for a further disregard of women’s rights going forward.

Immigrants, Health Reform, and “Lies”

In a much-anticipated prime time address to Congress, President Obama made the case for health care reform.  One ostensible goal of the speech was to correct misinformation about the bills proposed by Congress.  As a scholar who studies both health care and immigration (and sometimes the intersection between the two), I’ve grown increasingly frustrated with the misconceptions surrounding this issue — and I very much hoped the President would deflate the myth that health reform would provide federal benefits to undocumented immigrants.

Of course, when President Obama made this very point (”The reforms I’m proposing would not apply to those who are here illegally”), he was greeted with a heckle from South Carolina Representative Joe Wilson, who shouted “You lie!”  Although Rep. Wilson later apologized for his “lack of civility,” he didn’t recant the basic factual assertion, making clear that he still disagreed with the President’s statement that health reform doesn’t cover undocumented immigrants.  Of course, the media has jumped on this story, but perhaps unsurprisingly, few bothered to clarify the underlying factual dispute.

Neither bill published by the House or Senate covers undocumented immigrants.  In fact, both bills state in pretty plain terms that they don’t do it.  The House bill, titled America’s Affordable Health Choices Act of 2009, states in Section 242 that those not lawfully present in the United States are not eligible for insurance subsidies or tax credits.  To make it even more clear, Section 246 is titled “No Federal Payment for Undocumented Aliens,” and states “Nothing in this subtitle shall allow Federal payments for affordability credits on behalf of individuals who are not lawfully present in the United States.”

Likewise, the Senate Health, Education, Labor, and Pension Committee’s bill, titled the Affordable Health Choices Act, states in Section 3111(h) that “Nothing in this Act shall allow Federal payments for individuals who are not lawfully present in the United States.”  The Senate Finance Committee has yet to release its bill, but it’s a good bet that undocumented immigrants similarly will be excluded.

Although nothing in the bills apparently would prohibit undocumented immigrants from purchasing health insurance in the new national marketplace (called an “exchange” and a “gateway” in the House and Senate bills), it’s not clear why anyone would take issue with immigrants purchasing insurance on their own, without federal subsidies.  Moreover, although nothing in the bills seems to alter federal funding for emergency care provided to immigrants, nothing creates such a benefit either — thus undercutting Rep. Wilson’s contention with the President.

This controversy should remind us that immigrants remain in a sort of health care purgatory, caught in our two most dysfunctional systems — immigration and health care.  In the mid-1990s, Congress severely limited immigrant access to programs like Medicaid as part of welfare reform, making it difficult for even lawful immigrants to enroll.  In fact, even lawful immigrants aren’t eligible for Medicaid for five years after entering the United States — and various peculiarities of immigration law often push this waiting period to ten years.  At the same time, immigrants do receive indirect federal funding for health care through the Emergency Medical Treatment and Active Labor Act (EMTALA), which requires hospitals with emergency departments to screen and at least stabilize patients presenting with emergent conditions.  Thus, hospitals must provide emergency care regardless of the patient’s immigration status.

Unfortunately, most immigrants are ineligible for means-tested public insurance programs like Medicaid.  This regulatory framework has led to “medical repatriation,” in which hospitals effectively deport immigrant patients to unload expensive long-term care burdens.  Of course, hospitals — most of which are run by state and local governments — complain about unfunded federal mandates like EMTALA.  Hospitals can be “stuck” treating immigrants whose medical needs have shifted from acute to long-term (as with the car accident victim who needs neurological rehabilitation and nursing care).  As Prof. Boozang discussed, a growing number have begun “repatriating” immigrant patients by sending them back to their country of origin — without consulting immigration officials — sometimes by purchasing commercial plane tickets or even hiring air ambulances.

Certainly, there are more humane ways to handle health care for immigrants.  California, for example, legalized cross-border health insurance, thus allowing immigrants living in the state to purchase insurance with lower premiums and deductibles that covers care provided in Mexico.  Arizona and Texas have considered similar legislation, to no avail.  Recently, UCLA researchers estimated that over 950,000 people travel from California to Mexico for medical care every year.  For a population being left out of health care reform, traveling to Mexico for care may be the future — whether voluntary or not.

Kaiser Health News, New Jersey Gets a New Hospital?, & Kicking Medicaid Grandma to the Curb

In the wake of declining newspaper presence, the Kaiser Family Foundation, a nonprofit private operating foundation known for its health care concerns, has started Kaiser Health News. In the present issue, there are two articles of special note for New Jerseyans. The one regards the plans of Hackensack University Medical Center, a 775-bed teaching and research hospital that is one of New Jersey’s most prestigious, [which] requested state permission to open a new hospital in Pascack Valley’s empty [hospital] buildings. Although Hackensack is a nonprofit, it announced that Westwood would be getting a for-profit facility financed by a private equity firm from Texas.

Not everyone approves.

The other regards measures that New Jersey legislators are considering in response to a recent investigation of assisted living facilities. KFN reports

Associated Press/Philadelphia Inquirer reports that “lawmakers this week will consider measures to enhance protections for assisted living residents in New Jersey to ensure they aren’t discharged simply because they pay with Medicaid.” The legislation comes in response to an investigation that found a Wisconsin-based assisted living firm called Assisted Living Concepts, which has eight facilities in New Jersey and more than 200 nationwide, “wrongly showed New Jersey residents the door once they exhausted their savings and were about to go on Medicaid, despite promises to allow them to stay.”

Both stories are worth reading.

Health Care Reform and the Public Insurance Plan: “Framing the Debate,” and Fording the Corporate Dam of Shareholder Wealth Maximization

Kaiser.org has recently noted that “Liberal and conservative interest groups ‘have begun a fierce ideological battle, with each side trying to shape the public’s perception of a public insurance plan,’ the Christian Science Monitor reports.”

Kaiser states:

The Health Policy Consensus Group, a coalition of conservative interest groups spearheaded by the Heritage Foundation, listed the creation of a public insurance option as the No. 1 “deal killer” for health care reform. The group argues that the government would use its “regulatory, pricing, and taxing authority” to make it nearly impossible for private insurers to compete, leaving U.S. residents without a private alternative.”

Let’s attempt to understand the argument against a public insurance plan. To do so, I would suggest that it will be of some help to understand the nature of a “public plan,” and, perhaps just as importantly, where the interests lie.

When we speak of “a public insurance plan,” we speak essentially of expansion, not creation: Medicare, Medicaid and SCHIP are “public plans,” as are those administered by the Veterans Administration and the Indian Health Service.  At present, however, these plans are tailored to bring medical care to people who meet certain criteria. At present, this country is estimated to have close to 50 million people who are uninsured: primarily people who either lack the money or employment requisite to obtain private health insurance or who fail to meet the criteria requisite for enrollment in any of the public plans as they are presently configured.

The “public plan” proposal would expand the criteria for enrollment in extant “public plans” and perhaps constitute other service providers to administer to the need.   So…the argument against a public plan is essentially an argument against making these plans (or very similar plans) available to a greater number of people. Why? Simply put, those who would be serviced by an expanded “public plan” would thereby be rendered unavailable to Private Insurers as customers and generally speaking, less customers = less profit.

Understandably, those who oppose a “public plan,” such as America’s Health Insurance Plans (AHIP), have proposed that as a means of achieving universal coverage, all Americans should be forced (”mandated”) to purchase health insurance from, well, Private Insurers. The plan calls for the Government to subsidize this purchase of private insurance. Given that there are close to 50 million uninsured, this would result in an increase of tens of millions of paying customers for Private Insurers.  This proposal has been rather aptly compared by Jeff Emanuel of The American Spectator to an automaker bailout which would require each American to buy a car.

The Heritage Foundation’s Health Policy Consensus Group, opposed to a public plan, is said to argue that with the advent of an expanded public plan

“the government would use its “regulatory, pricing, and taxing authority” to make it nearly impossible for private insurers to compete….”

Read more

Quality of Care Differences by Insurance Status at Community Health Centers

On the heels of President Obama’s announcement designating $155 million to establish 126 new community health centers across the country, a study recently published in the American Journal of Public Health found that these centers do not provide the same quality of care to all their patients.  These centers, also known as Federally Qualified Health Centers or safety net providers, are intended to “enhance the provision of primary care services in underserved urban and rural communities.”  Unfortunately, studies appear to indicate that even within the confines of the same community health centers, quality of care received by patients varies depending on insurance status — those with private insurance receiving the best quality of care and those without insurance at the opposite end of the spectrum.

In their article, Insurance Status and Quality of Diabetes Care in Community Health Centers, Zhang et al. found that uninsured patients were the least likely to satisfy specified diabetes quality of care measures and Medicaid patients’ quality of care closely resembled that of the uninsured.  It might be tempting to explain away this phenomenon by pointing out that this study is limited only to diabetes care and may not be representative of quality of care overall.  This assertion, however, may be at least somewhat quelled by a study published last year in Inquiry, where Bradley et al. found a similar pattern in breast cancer patients treated in a safety net setting.  In that study, Differences in Breast Cancer Diagnosis and Treatment:  Experiences of Insured and Uninsured Women in a Safety-Net Setting, researchers found that within the same safety net setting, “insured women with breast cancer were diagnosed with smaller tumors and at earlier disease stages, and received surgery and initiated chemotherapy considerably faster than otherwise similar uninsured women.”

So, how could quality of care disparities exist in a safety-net setting whose very goal is to “enhance” care to the underserved?  Read more

Florida Senators Move to Pass Bill to Prevent Medicaid Fraud

Kaiser Family Foundation reports that Florida Senators will likely pass legislation aimed to prevent Medicaid fraud.

KFF states:

Florida Senate Health Regulation Committee Chair Don Gaetz (R) and state Senate Health and Human Services Appropriations Committee Chair Durell Peaden (R) at a news conference on Wednesday “expressed confidence” that lawmakers will pass legislation (SB 1986) aiming to prevent and detect Medicaid fraud, the Tallahassee Democrat reports. Medicaid fraud has become a considerable issue in Southeast Florida, where home health care clinics open quickly and operate with little to no regulation or accountability, according to Gaetz and Peaden. Miami alone has twice as many home health providers than all of California, they noted.

Florida is susceptible to heightened Medicaid abuse given its relatively large Medicaid enrollment and the concomitant funds devoted to Medicaid.  In 2005, Medicaid enrollment in Florida was almost 3 million people.  In Florida, Medicaid home health participants have increased by approximately 50% between 1999 and 2005 (from 14,793 in 1999 to 21,192 in 2005). In 2006, Florida spent approximately $12.7 Billion on Medicaid.  Approximately $1.5 billion of the $12.7 billion was spent on home health and personal care.  In 2007, Florida Medicaid expenditures increased to over $14 Billion.

In addition to other fraud prevention and detection measures, the bill would also create greater incentives for whistleblowers.  KFF states:

The bill also would increase to 25% the share of recovered money that whistleblowers would be eligible to receive. Peaden said money recovered from fraud would be redirected by his panel “into health care for the truly needy.”

Further, KFF reports:

The bill also would target companies’ recruiting of patients and the practices of filing claims for non-existent patients and ordering unneeded devices and treatments. Gaetz said Florida would work with federal and local agencies to create a database that would prevent operators of fraudulent companies from re-incorporating new clinics or home services and allow regulators to prevent fraudulent companies from renewing their operating licenses. Peaden said a companion bill is being worked out in the state House (Cotterell, Tallahassee Democrat, 3/26).

As we noted recently, a Florida case (Federal Court) which would fall rather squarely within the intended aim of the proposed legislation took 10 years to discover and prosecute.  The Florida legislation is similar in purpose to the Federal Civil False Claims Act, which members of  the U.S Senate have proposed to amend to strengthen a whistleblower’s action as well.

Universal Health Insurance for America’s Children - Can It Happen?

It is no secret that America’s health care infrastructure leaves much to be desired.  It spends more on health care than any other country in the world, but is far from achieving the best results.  The extreme cost of care has contributed to increased rates of the un- and underinsured — climbing from 41.2 and 15.6 million in 2003 to  49.6 and 25.2 million, respectively, in 2007.

Most observers agree that the American health care system is badly broken–if it ever was intact–as evidenced by the large number of Americans without health insurance, the high and rising costs of health care, and the relatively poor health outcomes achieved for the money spent.

What might be lesser known is the degree to which lack of health coverage affects children.  In their article, Universal Health Insurance for Children, published in the Journal of Health Care for the Poor and Underserved, Hughes et al. note that despite programs designed to enhance children’s access to coverage like State Children’s Health Insurance Program (SCHIP), about 8.1 million children were a part of the uninsured population in 2007.  Confusion about eligibility is often cited as a reason many children — over 80% of low income uninsured children - who are eligible for coverage do not have it.

Children’s health insurance status helps predict whether they receive needed health care and provides a critical means for identifying and addressing their health problems early in life… Children  who experience unmet health problems are more likely to miss school, to incur high costs for medical care, and to have parents miss work due to caring for an ill child.

Consequences of non-coverage of children start with compromised access to health care and turn into compromises to the American economy.

Lack of insurance coverage for children not only has an immediate impact on those whose access to care is limited, but it also has social implications in terms of potential public health threats due to untreated communicable diseases, higher health care costs for end-stage treatment, and consequences for the economy in terms of productivity and high insurance costs to businesses.

It has been well documented that providing health insurance coverage is cheaper than paying for the consequences associated with the alternative, but America has been resistant to providing universal coverage.  Providing coverage specifically for children, on the other hand, has been met with less resistance.

The social and individual benefit of extending preventive care and health insurance to children, however, is somewhat less contentious [than providing insurance to adults], largely because children are viewed more sympathetically than adults by health care leaders and the American public.

Hughes et al. argue for immediate universal coverage for children, rather than waiting for universal coverage for the country as a whole and note that it would have to occur at the federal, as opposed to state and local, levels.  They make two recommendations for achieving this goal.

One option is to create a Medicare-like federal program under which all children are automatically enrolled in a comprehensive insurance program, regardless of income. By and large, Medicare works well for seniors and is a reasonable model for children. Another option involves modifying Medicaid, SCHIP, and other categorical programs to create a uniform insurance program for low-income and undocumented children that eliminates the confusion and complexity associated with multiple programs. Both options would require sufficient minimization of paperwork and reimbursement to providers to ensure that coverage translates into genuine access to care.

Hughes et al. point out that most Americans support universal coverage, especially for children, despite the added tax burden it may cause.  This is probably a sentiment reflecting the reality of the extreme cost and gross inefficiency of the American health care system.  As children constitute a categorically vulnerable population which affords them the sympathy of the country, it makes sense to begin the road to universal health care in this country with them.  The vast majority of taxpayers are willing to foot the bill and we have an administration ripened to bring about such a change.  If ever there was the time to begin the process of providing universal health insurance to children in America, it would be now.

Biopharmaceutical Companies Continue to Advance and Invest In Rough Economic Times

A recent press release from the Pharmaceutical Research and Manufacturers of America (PhRMA) reports that pharmaceutical and biotech companies continue to invest substantial amounts of money into research & development, despite the dismal current economic situation.  Research from PhRMA and Burrill & Company shows that “pharmaceutical research and biotechnology companies invested a record $65.2 billion last year in the research and development of new life-changing medicines and vaccines — an increase of roughly $2 billion from 2007.”  There are almost 30,000 medicines in development in the country right now.

In a time when most other industries are struggling and the unemployment rate is the highest it has been in 25 years, it is encouraging to see that the biopharmaceutical industry, one whose existence and success directly impacts the health of our nation, is continuing to invest and advance.  For example, this week we saw Merck make a serious investment through its $41.1 billion merger with Schering-Plough.    In addition, as we posted in December, Merck announced its plan to enter the biosimilars market, which will cost an estimated $1.5 billion.

Biopharmaceutical companies are continuing to spend on R & D, and the great majority of their investments are within the US.  According to “The Biopharmaceutical Sector’s Impact on the U.S. Economy: Analysis at the National, State, and Local Levels”, a study out this month by Archstone Consulting and Dr. Lawton R. Burns, this industry creates millions of US jobs and contributed three times as much to the GDP than the average of other industries and sectors in 2006.

Besides the struggling economy, drug companies face other challenges.  As we recently reported, President Obama’s health reform plan may negatively impact pharmaceutical companies through an increased discount to Medicaid (from 15.1% to 22.1% of avg. manufacturer’s price).   Despite the economic crisis and health care reform changes, it is hopeful to hear the industry’s continued commitment to progress. Said PhRMA President and CEO, Billy Tauzin:

America’s pharmaceutical research and biotechnology companies are not immune to the challenges presented by our current economic crisis.  However, the important work that we do every day in the battle with disease cannot stop. The U.S. is the world’s hotbed of medical innovation, and throughout the country, we remain committed today to finding tomorrow’s cures, despite the incredible challenges that are posed by the current economy.

Private Insurers Respond to Threats of Lost Profit

Reed Abelson of the New York Times reported recently about private health insurance companies’ response to the “bleak economy” and Washington’s most recent attempts to make health insurance affordable and available to greater numbers. Large private insurers, such as Aetna, have developed “2,000- page strategic plan[s]” and are meeting “almost every other working day” in response.  Private insurance companies are said to be feeling threatened by the Democratic Party’s new found dominance.

The NY Times states:

Almost every business in the country is feeling buffeted by the recession. But for health insurance companies, the bleak economy is only part of the problem: the changing of the guard in Washington is an equal if not more dangerous threat. Together, these forces could deal a body blow to a business model that was already teetering.

The bottom line, of course, is the bottom line. And the fear of the “new guard,” is the fear of lost profit. Although many private insurers have experienced declining enrollment and diminished profits over the course of 2008, two of the country’s largest private insurers, Aetna and United Health, were described by the Times as still being “solidly profitable.” It should also be noted, as we reported in a recent post on this blog, that in 2007 Aetna’s CEO, Ronald A. Williams, received total compensation of $23,045,834 . Despite that lofty number, Aetna managed to record a  profit in 2007 of 1.831 Billion.

The NY Times reports:

Both Aetna and UnitedHealth had double-digit declines in earnings last year, but both remain solidly profitable. Aetna earned $1.4 billion, down 24 percent, on sales of $31.6 billion, while UnitedHealth had net earnings of nearly $3 billion, down 36 percent, on revenue of $81.2 billion.

Although profits are declining, attributable in part to rising premiums and customer dissatisfaction in a declining economy, perhaps a greater threat to insurers is present uncertainty. Markets abhor uncertainty. And as the Times states,

As the conversation intensifies in Washington about health care reform, no one knows for sure what role the insurance industry will play in a revamped system.

President Obama, along with the Democratic majorities in Congress, may simply rewrite the rules, forcing insurers to take all comers as customers, including those who previously would have been rejected because of poor health. The government may sharply cut how much it pays insurers to take care of the elderly. And, in what some people say would be a clear step toward a government-run system, there is even discussion about expanding the Medicare program, now limited to the elderly and the disabled, so that anyone could enroll in it.

Although private insurers have made sure to take a seat at the health reform table so as to “influence the debate,” the Times reports that:

Given the current sentiment, the insurers understand that they won’t be able to beat back all efforts at sweeping change, as they did so successfully during the Clinton administration.

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As the Obama Budget Unfurls, Details About Health Care Reform Emerge

The New York Times has published an article, “Obama Offers Broad Plan to Revamp Health Care” which ably outlines the contours of the emergent health plan–and the way we’ll pay for it. Or at least the way President Obama proposes we’ll pay for it. According to the Times, “Mr. Obama asked Congress to set aside $634 billion in a ‘reserve fund for health care reform.’”

Suffice it to say, for the moment, that there are winners:

Cancer research, a multi-year plan designed to double it; Biosimilars (generic versions of biotech drugs), speeded approval through “a new regulatory pathway” at the Food and Drug Administration;” low-income women, increased access to family planning through Medicaid; and doctors, who will not be subjected to the Medicare cuts in payments scheduled to take effect in 2010 under current law (21% in 2010, 5% for a few years thereafter);

And there are losers:

Drug Companies, an increased discount to Medicaid (from 15.1% to 22.1% of avg. manufacturer’s price); Private Insurers, a cut in payments to Medicare Advantage providers; higher income Medicare recipients, increased prescription drug premiums; Hospitals, a decrease in Medicare payments for those hospitals with a high proportion of re-admits within 30 days of initial release (said to be indicative of  poor initial performance); home health agencies, a $37 billion cut over the next 10 years.

Of course, “loser” is a relative term; and sometimes a gored ox, if it lives, is better than no ox at all. And I would imagine that is easier to bear the loss of  some oxen than it is others: specifically, an increased discount in Medicaid prescription drug pricing, is not the ability of Medicare to bargain for the price of prescription drugs. A topic we wrote about in early January, and a reform which the Obama Health Care campaign plan promised:

“At present, Medicare is itself unable to negotiate drug pricing. In Obama’s campaign health plan, he stated that he would

‘Allow Medicare to negotiate for cheaper drug pricing. The 2003 Medicare Prescription Drug Improvement and Modernization Act bans the government from negotiating down the prices of prescription drugs, even though the Department of Veterans Affairs’ negotiation of prescription drug prices with drug companies has garnered significant savings for taxpayers. Barack Obama and Joe Biden will repeal the ban on direct negotiation with drug companies and use the resulting savings, which could be as high as $30 billion, to further invest in improving health care coverage and quality’ (footnotes omitted).”

My guess is that this is an ox the drug companies are trying to save.

Two New Reports Look at Increases in Health Care Spending

The Wall Street Journal reports that CMS estimates overall U.S. health care spending will reach $4.35 trillion in 2018, accounting for one-fifth of GDP. The findings by CMS were published Tuesday in the journal Health Affairs. In 2009, U.S. health care spending is expected to reach $2.5 trillion, a 5.5% increase from 2008.

The CMS study expects government health care spending to increase by 7.4% to $1.19 trillion this year. However, the study forecasts that, by 2016, the government will pay for more than 50% of total health care spending. The increase in government health care spending is expected to come from baby boomers enrolling in Medicare and increased enrollment in Medicaid.

Meanwhile, The New York Times reports that Medicare spending continues to vary widely across the U.S., according to a report to be published today in The New England Journal of Medicine.

According to The Times, Dartmouth researchers found that:

The regional differences in the growth of Medicare spending suggest doctors are helping to drive up costs when they more frequently order tests or admit patients to the hospitals. In areas where there are plenty of hospital beds and sophisticated imaging equipment available, doctors generally spend more on their patients.

Dr. Elliott S. Fisher, the director of the Center of Health Policy Research at the Dartmouth Institute for Health Policy and Clinical Practice and one of the work’s authors, told The Times that:

[A]ny attempt to rein in health care costs . . . needs to address how doctors and hospitals are paid, where they are rewarded on the basis of the volume of services they perform.

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