Premiums would cause many Medicaid members to drop

How many would drop out if they had to pay a Medicaid premium?

By
Staff writer
Published: Sunday, January 15, 2012 at 3:33 p.m.

 

Asked if she could afford $30 a month to keep her three children current on the state’s insurance for low-income Floridians, Andrea Powers said she was uncertain.

“Sometimes I can, sometimes I can’t,” said the Gainesville stay-at-home mom.

An academic exercise from Georgetown University that was released last month suggests that many parents such as Powers can’t afford such a payment.

The Jessie Ball DuPont Fund commissioned a study that GU’s Health Policy Institute authored. The study found that the $10-per-patient premium that the Florida Legislature put into the Medicaid reform measure last year likely would result in more than 800,000 children — nearly half of the state’s current caseload of children — dropped from the Medicaid rolls.

Florida’s premium would be the most far-reaching to date because of the charge to everyone regardless of income or age, the report says.

The premiums are part of a larger Medicaid reform proposal the Legislature passed and that Gov. Rick Scott signed last year. It aims chiefly to move the state’s nearly 3 million Medicaid recipients into managed care plans run by private companies. The state would pay the private companies a set amount per patient to manage each person’s care.

The federal government has to approve the changes -— including the premium requirement — and that decision is pending. Federal officials said they don’t have a timeline for approval.

State Rep. Keith Perry, R-Gainesville, said he voted for last year’s reform package that included the premiums. He has also proposed another set of reforms for this session that would put Medicaid beneficiaries into more traditional, private plans.

But he’s torn on whether they should pay premiums.

“There should be some level of support” from Medicaid recipients, he said, also adding that he wouldn’t want to see truly disadvantaged Floridians dropped from Medicaid because they couldn’t pay.

The governor’s press office laid out a similar position.

“I can tell you he wants to preserve our safety nets for our children and the most vulnerable among us,” said Lane Wright, Scott’s spokesman.

Wright declined to address whether premiums should be paid for each Medicaid patient — saying he hadn’t had the time to look into the question.

“Governor Scott hasn’t had a chance to see the study you mentioned and evaluate its claims, so we can’t respond specifically to that,” he said.

But Wright also said reform is necessary to keep Medicaid’s growth in check.

“This spending could overrun our budget,” he said.

As the economy has worsened, the number of Medicaid enrollees has grown in recent years as has Medicaid spending.

Between 2006-07 and the current fiscal year, spending on health care for the state’s poorest residents — including those in nursing homes — has increased more than 40 percent to $20.3 billion, the study found.

Meanwhile, the Medicaid caseload that the state Department of Children and Families reported for the district including Marion County in November shows a 67 percent increase since 2006. In the district that includes Alachua County, the number of Medicaid enrollees increased 32 percent to 49,254 residents in November.

To qualify for Medicaid, recipients must earn no more than set income levels, which in some cases are well below the federal poverty level.

Figuring how many Florida children would be dropped from Medicaid was done using the historic experience of other states that had instituted similar requirements with other state-sponsored health insurance, said a spokeswoman for the Jesse DuPont Fund, a Jacksonville-based philanthropic group.

“They used a mathematical formula based on what we’ve seen happen in other places,” said Mary Littlepage, fund spokeswoman.

Bruce Rueben, president of the Florida Hospital Association, said he’s not sure how the state would even begin to collect such a premium.

“I don’t know that they can kick you out of Medicaid based on any other criteria than income,” he said. “I don’t know how they can make that stick.”

Over at the pediatric clinic of the Alachua County Health Department, nurse practitioner Nancy Day said she couldn’t imagine some of the families she sees regularly coming up with the premium payments.

“They don’t have $3 to get a bus,” she said. “It’s going to be hard on families.”

 

Copyright © 2012 Gainesville.com — All rights reserved. Restricted use only.

Biggest Bucks In Health Care Are Spent On A Very Few

by for NPR

So you know how on Monday the federal government reported that the $2.6 trillion the nation spent on health care in 2010 translated into just over $8,400 per person?

Well, a different study just released by a separate federal agency shows that second number doesn’t actually mean very much.

Researchers from the Agency for Healthcare Research and Quality looked at the way people actually spend money on health care. They found that half the population spends practically nothing on health care in any given year, while a very few unlucky people account for the lion’s share.

Specifically, in 2009, just 1 percent of the non-institutionalized population accounted for 21.8 percent of all U.S. health spending. And just 5 percent accounted for half the total spending.

Meanwhile, the bottom half of the population accounted for a mere 2.9 percent of total health spending in 2009.

So just who are those high spenders? Sick people, obviously.

But in looking at who remained in that top spending tier in both 2008 and 2009, researchers found that the high spenders were more likely to be:

  • Elderly,
  • Female,
  • White and
  • Covered by public health insurance.

Conversely, those who spent the least were more likely to report themselves as being in good or excellent health and to be younger. They were also more likely to be Hispanic or African-American.

The numbers could have political implications. At the least they help explain why so many people don’t understand the health care system. They either don’t have health insurance or don’t use it if they do.

SOURCE:

To view this article by Julie Rovner for NPR, please visit http://www.npr.org/blogs/health/2012/01/12/145118410/biggest-bucks-in-health-care-are-spent-on-a-very-few

States make Medicaid expansion case

States make Medicaid expansion case
By: Jennifer Haberkorn
January 10, 2012 05:28 PM EST

Twenty-six states on Tuesday asked the Supreme Court to overturn the health care reform law’s mandatory state expansion of the Medicaid program, a sleeper issue in the health care reform lawsuit that could determine how much leverage the federal government has with the states on any issue.

The states, led by Florida, argue that the federal government can’t force them to expand the Medicaid program, which has operated as a partnership between the feds and the states, as part of the 2010 health reform law. They argue that the Medicaid expansion is possibly more coercive than the law’s individual mandate.

“While some individuals are exempt from the penalties designed to enforce the mandate, no state is exempt from the massive penalty — the loss of the entirety of funding under the single largest grant-in-aid programs for the states — and so Congress did not even contemplate the possibility of a state opting out of Medicaid,” attorney Paul Clement, who is representing the states, wrote in a brief to the court Tuesday.

The Medicaid argument, one of four issues in the health care law that the court has agreed to consider, is thought to be the toughest climb for the law’s challengers. But if the Supreme Court takes the states’ side, the ruling could limit whether the federal government can use money as an incentive for the states to act on any issue.

The states argue that the law’s Medicaid expansion is an illegal “commandeering” of states’ autonomy. Beginning in 2014, Americans who earn up to 133 percent of the federal poverty level will qualify for coverage, and the states will have to cover them if they want to stay in the program.

The states say that the federal government fundamentally changed the program in the 2010 law in ways the states never imagined when Congress created the voluntary Medicaid program in 1965.

Clement argues that the law is coercive because it ties all of the federal funding to the expansion, which is mandatory if the states want to stay in Medicaid. The states say the Medicaid program is so engrained in the national culture — and their budgets — that they have no real choice to leave it.

“If the ACA does not cross the line, no act of Congress ever will,” Clement wrote.

Many legal and health policy experts were surprised that the court agreed to review the constitutionality of the Medicaid expansion, since a lower court hasn’t struck it down and the issue of federal authority is relatively settled policy. Courts have generally agreed that the feds are allowed to use money as a carrot to get the states to act.

The last time the Supreme Court addressed the issue was in the late 1980s, when South Dakota challenged the law that tied federal transportation money to state requirements for increasing the drinking age to 21.

The Supreme Court upheld it, writing that the policy was legal — though it suggested that at some point, federal incentives will become so strong that they’re illegal.

“They said at a certain point, we don’t know what that is, incentives become coercion,” said Ilya Shapiro, an adjunct scholar at the Cato Institute who has written briefs arguing that the mandate is unconstitutional.

The states say that this time, the federal government has crossed the line and eliminated any semblance of a “choice,” so the Medicaid expansion is illegal.

The federal government argues that it is still a choice — even if it’s a difficult one. The Obama administration will have a chance to flesh out its argument in its own brief, which is due to the court by Feb. 10.

So far, the lower courts have agreed with the federal government. Both the Florida district court and the 11th Circuit Court that heard the 26 states’ lawsuit said the Medicaid expansion is valid.

Ron Pollack, executive director of Families USA, which supports the law and the Medicaid expansion, said the Medicaid question could have wider-reaching implications than whether the mandate to buy insurance is valid. A ruling for the states would be a “radical change in doctrine in what the federal government can do in respect with states on various initiatives,” he told POLITICO.

It would also be a blow to the health care reform law.

“This really is an essential piece of the architecture for expanding coverage for those people who don’t have it,” Pollack said. About half of those who will get new insurance coverage through the ACA will do so through Medicaid.

Pollack argues that states will be better off immediately after the expansion goes into effect. For three years, the expansion is 100 percent financed by the government (it gradually decreases to 90 percent). Plus, with more residents covered by Medicaid, the states’ bills for uncompensated care and uninsured emergency room visits would presumably decrease.

“For the states to argue this is harmful is really just incredible,” he said.

Jocelyn Guyer, co-executive director at the Georgetown Center for Children and Families and a senior researcher at the university’s health policy institute, said she’s confident the expansion will be upheld.

“The fact that all the states have taken up [Medicaid] reflects that it’s such a great deal,” she said. “We see this as highly unlikely, so we’re not spending a lot of time on it.”

This article first appeared on POLITICO Pro at 5:22 p.m. on January 10, 2012.

CORRECTION: A previous version of this story misstated the name and affiliation of Ilya Shapiro.

SOURCE:
To view this article by Jennifer Haberkorn for Politico in its original context, please visit Politico.com

Insurers Profit From Health Law They Spent Millions to Fight

Insurers Profit From Health Law They Spent Millions to Fight
Sarah Frier
Jan 05, 2012 4:26 pm ET

(Updates with closing share price in 10th paragraph.)

Jan. 5 (Bloomberg) — Insurance companies spent millions of dollars trying to defeat the U.S. health-care overhaul, saying it would raise costs and disrupt coverage. Instead, profit margins at the companies widened to levels not seen since before the recession, a Bloomberg Government study shows.

Insurers led by WellPoint Inc., the biggest by membership, recorded their highest combined quarterly net income of the past decade after the law was signed in 2010, said Peter Gosselin, the study author and senior health-care analyst for Bloomberg Government. The Standard & Poor’s 500 Managed Health-Care Index rose 36 percent in the period, four times more than the S&P 500.

“The industry that was the loudest, most persistent critic of this law, the industry whose analysts and executives predicted it would suffer immensely because of the law, has thrived,” Gosselin said. “There is a shift to government work under way that is going to represent a fundamental change in their business model.”

Health insurers contributed $86.2 million to the U.S. Chamber of Commerce to oppose the law after Obama administration officials criticized the plans for enriching themselves by raising customer premiums.

“We remain very concerned that major health-care reform provisions that go into effect on Jan. 1, 2014 will raise costs and disrupt coverage for individuals, families, seniors and small businesses,” Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, the industry’s Washington lobbyist, said after reading the study.

Profit Margins

Still, the companies saw their average operating profit margins expand to 8.24 percent in the six quarters since the overhaul became law, compared with 6.88 percent for the 18 months before it was passed.

Quarterly earnings per share from continuing operations between the third quarters of 2008 and 2011 jumped 29 percent, and the results have on average beaten analyst estimates since the first quarter of 2009. WellPoint, based in Indianapolis, raised its 2011 earnings forecast in October after third-quarter earnings of $1.77 a share beat by 10 cents, the average estimate of 20 analysts surveyed by Bloomberg.

At the same time, companies are changing their business focus to gain from provisions in the law that will expand the size of Medicaid, the $401 billion government health plan for the poor. “Only by substantially reshaping their businesses can they profit,”  the study says.

Health-Care Overhaul

The report compares the 18 months before and after the overhaul became law, Gosselin said. The companies studied are WellPoint; UnitedHealth Group Inc., of Minnetonka, Minnesota; Aetna Inc., of Hartford, Connecticut; Humana Inc., in Louisville, Kentucky; and Philadelphia-based Cigna Corp.

The managed care index, which includes all of the companies studied plus Coventry Health Care, rose less than 1 percent at the close in New York. WellPoint also increased less than 1 percent to $68.51.

Cynthia Michener of Aetna wouldn’t comment before reading the complete study. Declining to comment were Tyler Mason, a UnitedHealth spokesman and Phil Mann from Cigna, while WellPoint’s Jill Becher referred questions to AHIP. Humana’s Jim Turner said he wouldn’t speculate on the law’s effects ahead of a Feb. 6 earnings call.

Commercial business now accounts for less than half of the companies‚ combined revenue for the first time in at least two decades, according to the study. That‚s partly a result of the companies‚ growing investments in plans that provide services to Medicare and Medicaid patients, the report said.

Medicare Revenue

At the same time, quarterly revenue from Medicare, the $525 billion federal health program for the elderly and disabled, increased by one third, to $16.39 billion, for the four insurers that reported figures, the study shows. Medicaid revenue more than doubled to $4.11 billion.

The companies run managed-care plans for Medicare that may see revenue rise by $10 billion by 2015 as more baby boomers retire, industry analysts have said. The insurers also administer benefits for Medicaid, which is being expanded under the health-care law starting in 2014 to cover more uninsured people. States have turned to private plans to manage Medicaid caseloads and help control health spending.

Health plans will be able to bid on an estimated $40 billion in state Medicaid contracts from now to 2014, the study found.

The top five insurers have completed at least 10 deals to add Medicare HMO‚s or programs dealing with the chronically ill, which usually involve Medicare or Medicaid enrollees. The deals include UnitedHealth’s $2 billion purchase of XL Health Corp. and Cigna’s $3.8 billion for HealthSpring Inc.

The push toward government programs may prove to be a risky wager, Gosselin said in an interview.

The Supreme Court will rule on the law’s constitutionality this year and opponents of the law in Congress may target individual provisions in the overhaul for budget cuts, he said. Additionally, states may devise onerous rules for the way coverage is sold to uninsured Americans, he said.

–Editors: Adriel Bettelheim, Chris Staiti

SOURCE:
To view this article by Sarah Frier for Health Leaders Media and Bloomberg News in its original context, please visit http://www.healthleadersmedia.com/content/FIN-275045/Insurers-profit-from-health-law-they-spent-millions-to-fight

State’s decision to halt health exchanges worries insurers

By Guy Boulton of the Journal Sentinel
Jan. 1, 2012 |<http://www.jsonline.com/business/states-inaction-on-health-exchanges-concerns-reform-advocates-ud3km6u-136515053.html?page=1>

A recent decision by Gov. Scott Walker could give the federal government greater influence over the state’s health insurance market – and that worries some in the industry.

Walker announced late last month that the state would halt work on the online marketplaces, or exchanges, required under federal health care reform until the U.S. Supreme Court rules on the constitutionality of the law.

The exchanges could help consumers and small businesses compare competing health plans.

They also could increase price competition by requiring health insurers to offer more standardized plans and by providing consumers with better information about what they are buying.

But how well they work will depend on dozens of decisions, such as how much flexibility to give health insurers in determining what to cover, and the roles of insurance agents and brokers.

Under the health care reform law, the state must have a plan in place to set up an effective exchange by January 2013. If it doesn’t, the federal government will set up the exchange.

There’s a risk in halting the work on the exchanges until the Supreme Court rules: If the law is upheld, the state would have only about six months to put together a plan.

Whether that can be done in that time frame is a question. It also is a concern for health insurance companies.”We do not want decisions about Wisconsin’s insurance market to be made in Washington,” said Phil Dougherty, senior executive officer of the Wisconsin Association of Health Plans.

One worry is that health insurers would face stricter regulations from the federal government than from the state Office of Free Market Health Care.”No question,” said Jon Rauser, president of the Rauser Agency, an insurance broker in Milwaukee.

The Office of Free Market Health Care has said it backs a “free-market, consumer-driven approach” for the state’s exchange. Consumer advocates have already criticized the working groups set up to advise the state, saying they are dominated by representatives of insurance companies and brokers.

Walker betting against it
Walker, who opposes federal health care reform, said that moving forward with the exchanges could be a waste of time and effort if the law is declared unconstitutional.

He denied that he was bowing to pressure from conservatives who have encouraged states not to plan for the exchanges.

His decision could be seen as a bet that the revamping of the health insurance market under federal health care reform won’t happen.

Under this scenario, the Supreme Court would declare the entire law unconstitutional – not just the provision that requires nearly everyone to have health insurance – or a Republican candidate would win the presidency in 2012 and be able to stop the law from being implemented.

Walker contends the state still can put together an exchange by the end of next year if the law is upheld.

But that would require the state to make a slew of quick decisions, ranging from arcane details on how to determine the actuarial value of the health plans to what information to provide consumers.”There are a lot of things that have to be worked out and thought through to make it work effectively,” said Barbara Zabawa, a Madison lawyer who is on the main working group to advise the state.

The state could meet the deadline, she said, but it would be a challenge.

Spokesmen for the state Office of Free Market Health Care have not responded to interview requests.

Legislation needed
Another potential obstacle is that the state may need to pass legislation to set up an exchange. That would require a special session of the Legislature if the law is upheld.

A lengthy debate on that legislation could further delay work on the exchange. Whether the Walker administration could get lawmakers to pass legislation is also a question.

Sen. Frank Lasee (R-De Pere), chairman of the Senate Committee on Insurance and Housing, has pledged to block legislation needed to set up an exchange.”We can come up with a lot of questions,” said Dougherty of the Wisconsin Association of Health Plans. “But we don’t have a lot of answers just now.”The state also may have to give back at least part of a $37 million federal grant to offset the initial cost of the exchanges.”I don’t know why the feds don’t pull that money, because they are not accomplishing anything with it,” said Bobby Peterson, a lawyer with ABC for Health, a public-interest law firm in Madison. “It’s a shame, because Wisconsin was in a position to be a leader.”At the same time, consumers might fare better if the federal government sets up the exchange rather than the Walker administration, Peterson said.

If nothing else, the governor’s decision adds to the uncertainty surrounding federal health care reform for health insurers.”The uncertainty is the worst part, because it’s hard to plan, it’s hard to budget, without knowing what’s on the horizon,” said Zabawa, the Madison lawyer on the working group.

She was disappointed by the state’s decision to stop work on the exchanges.”Wisconsin would be best served to have its own exchange tailored to the needs of the people of the state,” Zabawa said.

Rauser of the Rauser Agency said even people who oppose the federal law agree with that.”It’s a pragmatic alternative to doing nothing,” he said.

© 2012 <http://www.jsonline.com/copyright.html> , Journal Sentinel Inc. All rights reserved.


SOURCE:
To view this article by Guy Boulton for The Journal Sentinel in its original context, please visit  http://www.jsonline.com/business/states-inaction-on-health-exchanges-concerns-reform-advocates-ud3km6u-136515053.html

Why Medicaid Is No Longer a Voluntary Program

Why Medicaid Is No Longer a Voluntary Program

BY Jeffrey A. Singer

It is widely believed that Medicaid is a voluntary program. While this may have once been true, it is no longer the case. Today, states confront the dilemma of having to choose between joining Medicaid or being forced to sacrifice any health care “safety net” for their indigent populations. This is all because of a law enacted by Congress in 1986 called the Emergency Treatment and Labor Act (EMTALA).

In 1986, Congress passed EMTALA, making it a federal crime to transfer a patient from one hospital/emergency room to another for financial reasons. It compels hospitals to render care, even without any compensation.

EMTALA led to an explosion in uncompensated care. It became common knowledge that, if a person presents to a hospital emergency department, the hospital must provide care and may not transfer the patient elsewhere without the patient’s permission. This became a major cause of “cost-shifting,” as hospitals and doctors tried to recoup their losses from uncompensated care by raising their fees on insured patients.

Many doctors resigned from emergency room coverage, tired of rendering uncompensated care to people who might turn around and sue them for malpractice. EMTALA forced many hospitals to close their emergency rooms.

But EMTALA did more. It killed the voluntary nature of the Medicaid system.

Four years before the passage of EMTALA, Arizona still had its own state-run indigent care program.

Arizona law required each county to establish a comprehensive indigent care system. Maricopa County, home to metropolitan Phoenix, maintained a system of health clinics staffed with full-time physicians. At its heart was the Maricopa County Medical Center, a full-service teaching medical center, including a trauma center and the largest burn unit in the southwest. Patients who were seen in private hospitals and needed hospitalization were transferred over to “County.”

The system provided preventative care, prenatal care, mental health, and long-term care. Eligibility was tied to income and assets. Patients presenting for the first time as an emergency would be treated and retroactively enrolled in the system.

I was a surgical resident at “County” (1976-81). It was commonplace for a doctor at some other hospital to phone me and say, “I have an indigent patient in my emergency room who has an ‘acute gallbladder’ and who doesn’t have insurance. Can I send her over to you?” Like all of my fellow residents, I would enthusiastically accept the patient (we were a teaching hospital and wanted the experience). They would get prompt treatment, supervised by full-time faculty, cared for in a ward setting.

This system worked well and was popular. But in 1982, after pressure from various factions, Arizona became the last state to join Medicaid.

Today, if Arizona decided to leave Medicaid and resume its pre-Medicaid system, it couldn’t do so. EMTALA would prevent it from functioning. EMTALA specifically bans any hospital from transferring patients for financial reasons. Arizona’s pre-Medicaid system depended upon the transfer of indigent patients from private centers into its indigent health system, thus relieving private hospitals and providers from the burden of constantly providing uncompensated care.

Last year, when 26 states and the National Federation of Independent Business challenged, in federal court, the Patient Protection and Affordable Care Act (“Obamacare”), they argued there was no constitutional authority for the so-called “individual mandate.” But they also challenged the authority of the PPACA to require states to expand their Medicaid rolls, and thus their Medicaid budgets.

The plaintiffs claimed that compelling the states to increase the amount they spend on Medicaid was a federal “commandeering” of the states’ treasuries.

Medicaid is a voluntary program, said the Feds. If the states opt in they receive matching funds of 50% or more from the federal government to fuel the system. But nothing prevents the states from opting out of Medicaid, so state sovereignty is not being usurped.

The states responded that the loss of federal matching funds resulting from an opt-out would be so severe as to amount to coercing the states to stay in the program.

The District Court, and later the Appeals Court, didn’t buy this part of the states’ case. While they agreed that the “individual mandate” is unconstitutional, they didn’t see the state Medicaid mandates as usurping state sovereignty.

The U.S. Supreme Court recently agreed to hear the case in the spring of 2012. And it will revisit the Medicaid issue. Hopefully, at that time, the EMTALA factor will finally get the attention it deserves.

If a state opts out of Medicaid, it forfeits federal matching funds amounting to anywhere from 40% to 60% of the state’s Medicaid budget. It is fiscally impossible for the state to create anything remotely resembling Medicaid using solely state funds without imposing massive tax increases on its residents, as well as draconian cuts in other services.

But if a state chose to leave Medicaid and adopt a less extravagant, more cost-effective, county-based indigent care system, like Arizona enjoyed until 1982, it couldn’t do that either. How, for instance, can an indigent patient be transferred to the County Medical Center or any of the satellite County treatment centers for financial reasons? It would be a violation of EMTALA.

By banning the transfer of indigent patients to indigent care facilities, this 1986 federal law unintentionally denies states the freedom to exercise their traditional sovereign powers to design their own cost-effective forms of indigent care.

EMTALA leaves states no real choice. Any choice to opt out of Medicaid effectively forces them to abandon indigent health care delivery.

EMTALA is the heretofore-unnoticed 800-pound gorilla in the room that just might secure the argument that “Obamacare” violates state sovereignty.

Jeffrey A. Singer, MD practices general surgery in metropolitan Phoenix, writes and lectures on regional and national public policy, and writes for Arizona Medicine (the journal of the Arizona Medical Association).


SOURCE:
To view this article by Jeffrey A. Singer for The Hawaii Reporter in its original context, please visit http://www.hawaiireporter.com/why-medicaid-is-no-longer-a-voluntary-program/123