POSITION PAPER: MEDICAID
Alliance4Action Healthcare Action Team
November 8, 2017
Prepared by Peggy Hendrickson
Medicaid funding has been threatened repeatedly during the past several months by proposals to repeal and replace the Affordable Care Act (ACA). It continues to be threatened by 2018 federal budgets proposed by the President and Congress. Medicaid is a jointly funded Federal-State health insurance program for low-income and otherwise needy people. In May, 2017, 74.6 million Americans were enrolled in Medicaid[i], making it the largest source of health insurance in the country. In October, 2017, 1.9 million Arizonans were covered by Medicaid through the Arizona Health Care Cost Containment System (AHCCCS)[ii]. The federal government has been a reliable partner for state Medicaid programs since 1965. The federal match rate is from 50% to 75%. For ACA Medicaid expansion recipients it is even higher. Eligible persons include families with children, pregnant women, elderly individuals, persons with disabilities, or income below 138% of the federal poverty level guidelines.
The Medicaid program saves many lives and millions of dollars in uncompensated care cost that otherwise would increase everyone’s cost for health care.
HEALTH CARE WORKGROUP POSITION ON MEDICAID
Health care should be a universal right for every American. Until that becomes a reality, we believe public funding for accessible comprehensive health care for those who cannot afford to pay the increasingly high costs of health insurance or to self-pay is essential. The federally-funded Medicaid Program is a critical component of the current social safety net of the United States. It must be sustained until our nation implements a system of affordable, comprehensive, universal health care coverage for all Americans. We believe Medicaid should be available to all who meet the Affordable Care Act (ACA) eligibility requirements, and that Medicaid expansion options as available through the ACA should be made available in all states.
OUR SPECIFIC POSITIONS
· Our nation must provide access to affordable health care for Americans who cannot afford health care services paid out-of-pocket or through private health insurance plans with their high premiums, deductibles, and co-pays. This burden cannot be borne by our most vulnerable citizens and should not be placed on our health care providers, clinics, and hospitals.
People enrolled in the Medicaid Program cannot afford to purchase health insurance or to pay out-of-pocket for the health care they need. Many have physical or developmental disabilities, are elderly, or are otherwise unable to work. Others are employed in low wage jobs without health care benefits. People who cannot afford preventive or early intervention care seek treatment for disease only after symptoms become severe or life-threatening and require more intensive and expensive treatment. Prevention and early intervention are more effective, reduce human suffering, and are significantly less costly. Under urgent circumstances, children and families must turn to hospital emergency rooms where they cannot be turned away. If the patient requires inpatient care, the hospital must continue to provide uncompensated care until the patient’s condition stabilizes. These unreimbursed costs incurred by hospitals are passed onto patients who have comprehensive health insurance or those who can afford to pay out-of-pocket. This drives up the cost of care for all. Hospitals can be driven out of business.
· The Medicaid Program should be funded adequately to maintain physician participation and a comprehensive array of accessible providers.
Low reimbursement rates have contributed to the fact that about 30% of physicians nationally either refuse to see Medicaid patients or limit the number of Medicaid patients in their practices[iii]. By comparison, in Montana, where reimbursement rates were raised, only 10% of providers have limited access to care for Medicaid patients. Lack of access, due in part to low reimbursement levels, has resulted in less patient access that can contribute to poorer health outcomes.
AHCCCS, which operates under an integrated managed care model, has “proven itself equal to the task of operating efficiently and effectively. It is often upheld as a national role model for other states to emulate[iv]”. Block-grants, under proposed formulas, would actually penalize them for their successful outcomes by basing Arizona’s funding allocation on these historical lower costs. A recent failed health care proposal that included block-grants to states was predicted to have reduced Arizona’s Medicaid funding by $10.4 billion from 2020 through 2026[v].
· Medicaid should continue to be administered by the federal government rather than being block-granted to states.
Capping and block-granting Medicaid to states would have disastrous long-term consequences for many thousands of Arizonans. Under current block-grant proposals, once grant amounts are determined, they will not be increased if state costs are greater than expected. While some claim that block grants will increase state flexibility, in reality this flexibility will be about how to make up for Medicaid funding shortfalls: which services to cut, how to reduce eligibility, which hospitals’ or doctors’ reimbursements to cut, or which taxes to increase.
AHCCCS, which operates under an integrated managed care model, has “proven itself equal to the task of operating efficiently and effectively. It is often upheld as a national role model for other states to emulate[vi]”. Block-grants, under proposed formulas, would actually penalize AHCCCS for its successful outcomes by basing Arizona’s funding allocation on these historically lower costs. A recent failed federal health care proposal, that included block-grants to states, was predicted to have reduced Arizona’s Medicaid funding by $10.4 billion from 2020 through 2026[vii].
· Medicaid is an essential support rather than a detriment to a person’s or family’s ability to become financially self-sufficient.
Low-income individuals and families live in “survival mode” because our nation’s minimum wage is not a living wage. Being able to afford food, clothing, shelter, school supplies, and transportation is already a daunting task for minimum wage families. Working parents face even more financial challenges because of the costs of being employed, including having appropriate clothing and good hygiene, dependable transportation, and child care. Many find it necessary to have two or three jobs at one time. Low-income families trying to stretch limited dollars to pay for all of these “basics” have no money left to pay for health care.
All children need immunizations, dental care, developmental assessments and medical care for common childhood maladies. Children with special needs (physical, behavioral, developmental) require a variety of health services. And, of course, parents must have access to health care in order to be healthy enough to raise healthy children. Access to affordable, comprehensive health care is critical for families.
There are serious public health implications for the fact that our nation has a large population of medically uninsured persons. Amongst these are that health insurance not only spreads financial risk, but also promotes appropriate use of preventive and routine health care services that keep people well at the least expense. Their lack of coverage is rarely voluntary and can have negative consequences for all of us. Amongst the ramifications of not being insured are “economic costs (worse health, developmental, and functional outcomes for children and adults) that result from their lack of health insurance; the impact on family economic stability and psychosocial well-being when any member of a family lacks coverage; and the spillover effects within communities of relatively high uninsured rates on health care services and institutions, local economies, and population health.[viii]”
· Work requirements for Medicaid recipients will not increase their rate of employment.
Employment requirements for Temporary Assistance for Needy Families (TANF) demonstrated an initial increase in employment among enrollees. Over time it was found “that the employment gains were ephemeral, inconsistent, and have often been questionably attributed to ‘welfare reform’”[ix]. In fact, employment rates rose for people who were on TANF and not subject to work requirements, even as people with work requirements lost jobs[x]. The conclusion was that there are other economic factors, including a strong job market and investments in Medicaid, Children’s Health Insurance Program, and child care grants that help sustain long-term employment more than work requirements.
Parents, especially those who have children with special needs, have enormous parenting responsibilities. They must coordinate their children’s services and provide or arrange transportation to and appropriate involvement in required health and support services scheduled throughout the business day. Most low wage jobs do not permit workday flexibility. For all parents, the cost of developmentally-appropriate, dependable child care continues to soar, in some cases absorbing the majority of a small paycheck. Proponents of work requirements for Medicaid recipients do not understand that the size of a minimum wage paycheck is not sufficient to fund the costs associated with being employed and having a family.
Single adults, especially those with diagnosed medical conditions or developmental disabilities, may appear to be able to work, but, in reality may not have the capacity to maintain a household, a wardrobe, transportation, and a work schedule over time. To assume that all single adults who are unemployed are “lazy” or that receiving Medicaid allows them to remain jobless, is a shallow conclusion that doesn’t take into consideration numerous underlying issues.
Public funding for Medicaid must continue as currently provided and commensurate with the needs of the eligible target population. Eligible persons should continue to be enrolled using the ACA’s Medicaid expansion criteria. States that did not expand Medicaid under the ACA should expand Medicaid now. To increase access to care, Medicaid reimbursement rates should match Medicare’s. We believe state block grants would result in significant cuts to eligibility, services, and number of participants. Medicaid is an essential support for low-income families and all eligible persons, not a detriment to financial independence. It is an essential component of our nation’s social safety net and a vital component of public health.
[i] Kaiser Family Foundation
[ii] AHCCCS.gov, Oct 2017
[iii] FactCheck.org, March 29, 2017
[iv] Vitalyst Health Foundation
[v] Ken Alltucker, The Republic, azcentral, Sep 22, 2017
[vi] Vitalyst Health Foundation
[vii] Ken Alltucker, The Republic, azcentral, Sep 22, 2017
[viii] Costs, Benefits and Values: Context, Concepts, and Approach, Hidden Costs, Values Lost: Uninsurance in America, NCBI Bookshelf, National Institute of Health.
[ix] The Atlantic, Mar 23, 2017
[x] Center on Budget and Policy Priorities
Position Paper: Single Payer Healthcare
Alliance4Action Healthcare Action Team
The United States has a fragmented “system” of healthcare coverage funded by private insurance, governmental programs and individuals’ out of pocket payments. We spend more on healthcare than any other industrialized country yet health outcomes are poorer than those of comparable nations and coverage is not universal.
We support a single payer or single payer hybrid model of healthcare funding.
Why we have this position
We feel quality healthcare is a right and should be affordable and accessible to all. A single payer or hybrid system is the best means to achieve universal coverage because it is the most cost-effective model, the least complex administratively, and offers opportunities for better quality control.
A single payer healthcare system is one where the insurer, usually a government, pays for all covered health care costs. A hybrid system includes private insurance as part of the system.
Three main models of universal healthcare systems, based on single-payer or hybrid systems, have been implemented around the world:1
This system, established in postwar England, Spain, New Zealand, Hong Kong, Cuba, and most Scandinavian countries, is named for the British social reformer, William Beveridge. This model is typically referred to as “socialized medicine”. Healthcare is universal and is funded by taxes. Most clinics and hospitals are owned and run by the government. Physicians and other providers are generally government employees. However, private insurance is still available for purchase by those individuals who can afford it and who prefer non-governmental healthcare providers and facilities.
Prussian Chancellor Otto von Bismarck originated this system in 1883. This model and variations of it are implemented in Germany, France, the Netherlands, Switzerland, Japan and, to some degree, in Latin America. This system is not technically a single payer system because it consists of non-profit insurance companies (called “sickness funds”) which are financed jointly by employer and employee payroll deductions. These monies are deposited with the government which then disburses the funds to insurers. Insurers are required to cover everyone. Funds from governmental general revenues cover the cost of insurance for non-contributors. Coverage and reimbursement is strictly regulated by the government which results in tight cost control. Most facilities and providers are private. Insurance, outside of the system, is available for purchase.
National Health Insurance model:
This model combines elements of both the Beveridge and Bismarck systems. Canada, Taiwan and South Korea have implemented this type of healthcare system. Similar to our traditional Medicare system, all citizens pay into a government run insurance program that deals directly with doctors and hospitals which are privately operated. Fees and coverage are regulated by the government. Individuals can purchase supplemental, private insurance policies to pay for medical and dental care that is not covered by the governmental insurance.
What are the benefits and negatives of a single payer system?2
· Universal coverage.
· Reduced healthcare costs without sacrificing quality outcomes based on other countries’ experiences. For example, Canada’s spending is $2,233 less per person than in the United States yet has a life expectancy rate which is 2 years higher than that of the US and a lower infant mortality rate as well. Some of the reasons that total costs are lower under single-payer systems include lower administrative costs and little need for advertising. Administrative costs are about 2% for a single payer program such as traditional Medicare vs. approximately 12% for many private insurers. Competitive advertising can account for more than 15% of total expenses for private insurers but virtually nothing for single payer.3
· Potential for spending leverage and cost containment. “The most important source of cost savings under single-payer is that large government entities are able to negotiate much more favorable terms with service providers. In 2012, for example, the average cost of coronary bypass surgery was more than $73,000 in the United States but less than $23,000 in France.”3
· Simplified billing for providers and hospitals.
· Private care can still be available. (This can also be a negative, however, as it can create a two-tiered system.)
· The U.S. has several single payer type systems already in place, so transitioning using these structures may be easier.
· Bonuses or incentives, for example, based on outcome, providing care in underserved areas, etc. could be built into the program.
· Health insurance costs for individuals and employers could be significantly reduced or eliminated which could counter-balance possible tax increases.
· Medical providers may opt to serve only private-pay patients unless there is a legal mandate prohibiting this. This could result in a two-tiered healthcare system.
· Does not solve and may exacerbate the doctor shortage.
· Funding sources need to be resolved.
· May reduce healthcare innovation, particularly for pharmaceuticals and equipment, due to lack of monetary incentives.
· Wait times for specialists could be long and not all conditions and treatments may be covered
What type of single payer system would work best in the U.S.?
The U.S. has several systems that incorporate elements of single payer models, although they cover only certain populations.
· The Veterans Administration health care system is a Beveridge model system. Medical facilities are owned and run by the U.S. government and all staff are employees. Some HMOs (Health Maintenance Organizations) are based on a similar model whereby facilities are owned by the HMO and providers are salaried.
· The traditional Medicare system is a National Health Insurance system which is paid for by a combination of taxes and premiums. The government pays private providers and hospitals directly. Costs and coverage are regulated by the government.
· Tricare for military and some retired military personnel contains some elements of the Bismarck model. The government pays private insurance companies to administer plans which are tightly regulated
· Medicaid, which covers low income, elderly and disabled individuals, varies by state, but generally involves government payments to private providers for allowable services.
Any one of the above existing systems could be expanded to provide universal coverage. However, the most discussed possibilities to date have been “Medicare for All”, “Medicaid for More”4 and various other single payer hybrid proposals which include public option plans.
Medicare for All
“Medicare for All” has been proposed most notably by Senator Bernie Sanders.5 This label resonates well with many individuals because Medicare is a well-known, popular and successful program with low administrative costs. However, Sanders’ plan would actually expand Medicare by increasing covered services and eliminating deductibles, copays and premiums. Private insurance companies, which are currently part of the system (Medicare Advantage) would be eliminated.6
His proposals for paying for such a system include: a 6.2 percent payroll tax on employers, an additional 2.2 percent tax on individual incomes, and several taxes on wealthier Americans and corporations. In addition, the elimination of employer tax deductions for insurance premiums would save trillions of dollars.6
Sanders estimates the cost to be a little over $1.6 trillion per year and his funding mechanisms would generate sufficient revenue—about $16 trillion over ten years. Coincidently, (or not), $1.6 trillion per year is nearly identical to what the U.S. government is currently spending on healthcare. However, the Urban Institute estimates that this plan would cost closer to $32 trillion over 10 years.7
Medicaid for More
Hawaii senator Brian Schatz has proposed “Medicaid for All (who wish it)” as a public option plan.8 His proposal allows states to offer Medicaid to anyone who wishes to purchase coverage. Current low-income enrollees would keep their coverage and those receiving ACA subsidies would continue to do so. Reimbursement rates to doctors and hospitals would be increased to match Medicare rates to encourage service providers to accept enrollees. Since premiums would cover the cost of this plan, no increased taxes are anticipated. Because Medicaid varies by state, some federal standards would need to be developed and legislated to avoid 50 different “Medicaid for More” plans.
Public Option Alternative for Employers
Some plans propose offering a public option to employers rather than solely to individuals. 9 To be attractive to employers and individuals, these public option plans would need to offer coverage competitive with the private insurance marketplace at a lower price. To avoid creation of a two-tiered healthcare system, the plans would need to reimburse service providers at rates comparable to those of private insurers.
Arguments for a Single Payer Hybrid Plan
Although hybrid plans are not pure single payer systems, given the current political climate and the near impossibility of abolishing private insurance carriers, a hybrid plan which includes a public option is potentially the first step toward universal healthcare.
An analysis by Jacob S. Hacker, a professor of political science and director of the Institution for Social and Policy Studies at Yale, contends that a public option is politically feasible because it is not a threat to private healthcare plans. He cites the following advantages of a public option plan: 10
· A public option is crucial to making a system of broad coverage work. He notes that in many sections of the country, there is already only a single payer, albeit a private plan as the payer. Such lack of competition makes regulation difficult and hurts consumers who face higher costs. A public plan would provide a competitive benchmark both for coverage and premium rates.
· More people covered results in a larger pool for all plans. A public plan provides everyone with a choice. The result will be greater numbers of covered individuals and a broader pool for all plans, public and private.
· A public plan can offer a broader network of providers, thus making it attractive to more consumers.
· Cost containment may be the biggest advantage of a public option plan. A public plan may be able to set reimbursement rates, just as Medicare has done, resulting in slower cost growth than that of private insurance. However, reimbursement rates must not be so low that providers refuse to take those individuals insured by a public plan.
Single payer and hybrid systems in other industrialized nations have resulted in lower healthcare costs and better health outcomes as compared to healthcare in the United States. The U.S. already has several structures in place that could be used as a foundation for a universal single payer or hybrid system. The major obstacles are identification of funding and opposition by private insurance companies. A transitional approach which offers a quality, lower cost public option to employers and individuals, while retaining private insurance options, may be the most realistic mechanism at this time.