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Health Policy
4.1 Medicare and Medicaid HMO's will grow more slowly in next 3 years.
4.2 Medicare reform to add a pharmaceutical benefit will be a major election issue.
4.3 National health insurance for at least some of the nation's 45 million uninsured will be an important issue in the year 2000 election.
What are the basic types of Medicare plans?
What is the purpose of Medicare + Choice plans?
How serious is the withdrawal of health plans from Medicare?
What are the issues surrounding creating a Medicare drug payment program? How many people are uninsured in the U.S. and who is affected?
What plans are under way to assist the uninsured and under insured in the U.S.? What are the implications for case managers?
Many issues that have to do with our health and the need for care have come forward now in large part due to the election year of2000. The serious issues of cost of care for elders, the lack of care for 45 million uninsured, and how to reach out for these needs were no less important last year or five years ago. However, the impact of managed care and changes that have spanned off in the last two years have brought these problems into the news and papers each day. The famous Federal health insurance program Medicare is often in the spotlight.
Medicare is a federal health insurance program established by Congress for:
Today, there are two types of Medicare plans: Original Medicare and Managed Medicare (through a PPO supplement or a HMO plan) (Calipers, 2000). The Original Medicare plan is a fee-for-service arrangement. Patients could go to any doctor, hospital, or other health care provider who accepts Medicare. In this type of plan, Medicare-covered services are subject to a Medicare deductible that the patient must pay.
Managed Medicare plans provide all of Medicare's benefits to the subscriber at no cost to the subscriber, with little or no associate paperwork. In this type of Medicare plan, the member must receive all medical care through the plan's contracted network of hospitals, skilled nursing facilities, doctors, and other professionals affiliated with the member's PCP's contracting medical group or independent practice association.
Table 1 lists agency web site resources for you to get more information on Medicare and other managed care information that can be useful with your adult and disabled case management clients.
Health Plans and Insurers
One of the biggest changes in the health insurance market over the past 10 years has been the fast growth of HMO enrollment in the United States. In 1998, more than 78 million American were enrolled in HMOs, and a majority were in some kind of a managed Care plan (Robert Wood Johnson Foundation, 2000). By the year 2005, HMOs may capture the majority of the commercial insurance market and more than 245 percent of the Medicare insurance market. Sixty percent of Medicaid members will be in some type of HMO by the year 2010 (Robert Wood Johnson Foundation).
As HMOs and related health plans evolve, it will be "increasingly difficult" to distinguish one health plan from another. The health insurance market will evolve into a mix of different health plan models, many of which will be in a constant bustle of reorganization and mergers during the next few years (Robert Wood Johnson Foundation). Case management roles will be important during the time of change and new models of care during the next five to seven years.
Slower growth for Medicare and Medicaid HMOs in the next three to five years is predicted by 73 percent of the national survey panel (American Hospital Association, 2000). HMOs are battling with the Health Care Financing Administration (HCF A) to increase Medicare payments for managed care. The latest Medicare HMO enrollment trends confirm the slow-growth outlook. For 1999, Medicare HMO membership rose only 12.1 percent, compared with increases of 27 to 29 percent in 1996-97, before the Balanced Budget Act slashed the inflation factor for Medicare HMO payments.
Fewer than half of all HMOs offer a Medicare product, and 22 HMOs dropped out of the managed care program last year. Medicaid HMO enrollment grew 22.6 percent in 1999, but down from 45.7 percent annual growth. The conversion of Medicaid to managed care is still expanding. Some 245 HMOs now enroll Medicaid-eligible’s in 44 states.
However, during the year 2000, worries grew strong that all was not well with health plans and Medicare. Several private health plans announced that they would withdraw their participation in the governments' managed care programs known as Medicare + Choice. This withdrawal of huge plans could force nearly 1 million of the 6.5 million Medicare beneficiaries participating in Medicare + Choice to find alternative and often more expensive coverage (Reuters Health, 2000).
During the summer of 2000, several large health plans said they would depart Medicare HMO programs by 2001. This departure means that more than 711,000 elderly patients will have to look for new Medicare HMO coverage or return to fee-for-service (Original Medicare) (Takatsuki, 2000). All of the health plans planning to retreat say that their decision was prompted by inadequate payment by the federal government. Health plans that announced their departure from the Medicare + Choice program included:
During the same time period, other health plans said they plan to scale back current benefit levels in markets where they will not withdraw but continue to offer a Medicare HMO. For example, Los Angeles-based Foundation Health Systems, said it will reduce its coverage for pharmacy and out-of-pocket costs in the 36 counties it will continue to serve (Takatsuki). Aetna also reported that it will reduce benefit levels in the five states where it will continue to offer an HMO product during 2001.
Humana, perhaps one of the large health plans, has offered Medicare HMO plans for more than 14 years and had a large elderly following. Humana reported that pre-tax losses that exceeded $26 million in 1999 related to the Medicare + Choice plans will likely exceed $39 million in losses for the year 2000 (Reuters Health, 2000). PacifiCare said that although it was planning to drop its Secure Horizons plan in primarily rural counties and smaller market sin Arizona, Colorado, Ohio, Texas, and Washington, the had no plans to ext counties in California, Nevada, Oklahoma, or Oregon (Reuters Health, 2000).
Pacify Care is based in Santa Ana, California
The President of the American Association of Health Plans, Karen Gianni, testified that Capitol Hill needed to support a $40 billion effort to save Medicare + Choice (Reuters Health). Such a safety net would expand Medicare coverage to may low-income elderly people in our country.
The recent health plan withdrawals out of Medicare are the latest in a trend that started in 1998, the year after Congress created Medicare + Choice as part of the Balanced Budget Act (Reuters Health). The program was created as a means to cut the cost of caring for the elderly and then to use the savings to offer additional benefits such as prescription drug coverage. But, built into the program was a limit on the payment increases for the health plans. Plans offering Medicare + Choice get a 2 percent dollar increase from the government each year, a rate that is slower than the annual rise in healthcare costs or the rise in inflation (Reuters Health).
In July 2000, a private foundation in California awarded an $8.5 million grant to an Alliance of consumer groups that will help consumers navigate the state's healthcare system and secure needed medical care (Reuters Health, 2000). The Health Consumer Alliance (HCA) is a network of legal service and health policy agencies focused on solving health problems of low-income consumers. They will be assisting families who do not understand how to get care with an HMO and what their rights are in that type of system. Such assistance may become necessary for certain elderly members as well as Medicare HMO changes occur.
Impact on Providers of Care
Hospital, nursing home, and managed care industry groups warned a House committee in July that unless Congress voted to restore some of the cuts imposed by the 1997 Balanced Budget Act, Medicare beneficiaries might be unable to receive adequate care (Reuters Health, 2000). The situation for nursing homes is so serious that 25 percent of for-profit facilities filed for bankruptcy in the past year. An elderly woman lying in a nursing home bed; waiting for someone to help her, does not know that Medicare cuts took her facility by surprise, and that the home is chronically understaffed.
Reports show that more than half of the nation's homes do not have enough nurse’s aides and nearly one-third do not have enough registered nurses to ensure a safe minimum standard of care for residents (Dom rose, 2000). It is also becoming more difficult to find people willing to work with ill, elderly people in some settings, leading to chronic staffing shortages (Dom rose).
'The Health Care Financing Administration, which administers the Medicare Choice program, said in mid-2000 that it would streamline some administrative Rules that health plans have faulted as burdensome and unnecessary (Takatsuki). To this End, the agency reduced some HMO contracting requirements, loosened restrictions on marketing materials aimed at seniors and helped health plans work with employers seeking retiree medical coverage for their workers. However, the serious financial crisis that battered many health plans in the past year was not affected by those changes.
Congress had overhauled the way Medicare HMOs were paid as part of the Balanced Budget Act of 1997 based on the belief that most of them were being paid too much (Takatsuki). Congress has been rethinking that belief. Late in 1997, both the House and Senate rushed to introduce legislation aimed at stemming the exodus of private managed care plans from the Medicare program (Rover, 2000).
The wild exodus of HMO plans from Medicare comes at a time when Congress, the presidential candidates, and the Clinton White House were all debating the creation of a new Medicare prescription drug benefit (Takatsuki). Coverage for drug costs is a key Reason many seniors chose a Medicare HMO product over traditional fee-for-service and are a serous Issue.
President Clinton's proposal in 1999 to give seniors a pharmacy benefit could push Medicare reform to center stage in the coming year's political debate. The national AHA panel agreed that this will be an important issue; the no one has predicted the outcome. About 80 percent of Americans with an employer-sponsored health benefit have pharmaceutical coverage. Medicare has never offered a pharmacy benefit (Calipers). Medicare HMOs such as PacifiCare and Humana have used supplemental drug coverage extensively in marketing their senior managed care products, but many Medicare HMOs are now reducing pharmacy benefits and increasing consumer copes for drugs.
Seniors today are spending 19 percent of the disposable income on out-of-pocket costs; according to the AARP, and prescription drugs are 17 percent of that personal spending. Senior citizens who need healthcare the most can least afford it, and they face the greatest burden of out-of-pocket expenses for medical care, according to a new study (Crystal, 2000). The study reveals that elderly Americans do indeed spend on average 19 percent of their total income on out-of-pocket medical expenses annually, with more than half of these payments going toward prescription drugs and dental care. Out-of-pocket expenses include health insurance premiums, medical copayments, and prescriptions.
Tragically, some senior citizens report skipping medications for reducing their dosages to try to managed the cost of prescription drugs. In New York for example, 26 percent of New York Medicare beneficiaries said that they were skipping medications and skimping on dosages (pill-splitting) because they can't afford the medications (Reuters Health, 2000). Pharmacists have responded to this tragic trend by taking a stand against pill-splitting. The trade group that represents senior care pharmacists said that they "strongly oppose" health insurance policies that require patients to split tablets of medication to save money, because of the potential danger to patients.
Nineteen percent is "fairly burdensome for the average elderly person, but the figures are even worse for those in the lowest income levels, for those with chronic health problems and for the oldest of the old" (Crystal). The lead author, Crystal, is chairman of the Division on Aging of the Institute for Health, Health Care Policy and Aging Research at Rutgers University. According to the study, the most vulnerable groups are:
The same study found that prescribed medication costs have grown to account for 33.9 percent, more than one-third, of the alderfly’s overall all out-of-pocket payments to healthcare providers. The share is even higher; 40percent; for those in the lowest two fifths of income (below $9384 per capita family income). Medicare does not cover most outpatient prescription drug costs. Dental services, which are not covered by Medicare and rarely covered by most insurance plans, accounted for l8percent of expenses.
The cost burden is also affected by the type of insurance coverage an elderly person has. Those with self-purchased supplemental insurance spent 25percent of their total income, while those relying solely on fee-for-service Medicare spent 23percent. The lowest cost burdens were associated with employer-sponsored coverage, which averaged l6percent, and health maintenance organizations (HMOs), which ranged between l4percent and l5percent of income.
The sample used in the study of older people in the community, Medicare covered only 65 percent of payments to health care providers (doctors, hospitals, pharmacies) Leaving more than one-third of health care expenses uncovered. Although private insurance and Medicaid paid for some of the uncovered expenses, private insurance is often costly and Medicaid was available to only the poorest elderly. "This leaves IS percent of older people's expenditures to be covered out-of-pocket," and expanded supplemental coverage through Medicaid could help fill these gaps for the low-income elderly (Crystal).
This recent study uses data from the 1995 Medicare Current Beneficiary Survey and provides the latest figures available on older people's out-of-pocket expenses. It takes a comprehensive look at out-of-pocket medical expenses that different groups of elderly people are facing and the factors, such as health, age, and education, can influence the medical financial burden. What this study reveals is that despite Medicare, the elderly are exposed to substantial out-of-pocket health-care expenses, particularly in the area of prescription drugs (Crystal).
As Medicare reform proposals are considered, it's important to know how proposed changes will impact those elderly who need health care the most, such as the chronically ill and the near poor (Crystal). These are the individuals who are most heavily burdened and have a pressing need for subsidized prescription drug coverage. Americans need to bring this information to the forefront to protect the health and well-being of our most vulnerable elderly citizens.
One specialized group that will be hard-hit by continued cuts in coverage are patients needing cancer care (chemotherapy) in doctor's offices. The American Society of Clinical Oncology said that the HCF A plan to revise average wholesale prices posed an "imminent threat" to physicians who provide chemotherapy in their won offices, and Would force elderly clients to seek care elsewhere (Reuters Health, 2000).
Health economists estimate the potential costs to Medicare would be $17.5 to $24 billion for adding a pharmacy benefit (Gardner, 1999). The rising costs of drugs for care will make this a priority for older Americans in voting and other choices.
Don and Brenda Jackson work full-time in jobs-and are totally uninsured. They are raising two teenagers, a son and a daughter, and provide for a nephew who has no home right now. Together Don and Brenda make about $35,000 a year and cannot afford the $4,600 a year it would cost them to get health insurance for their family through their employers. They live in Southern California, are in their mid-40s, and are now beginning to experience health problems. Brenda has hypertension, and Don suffers periodic chest pain that keeps him home after a night in the ER.
Money is so tight for this family that they ration care, and only go to the doctor or the ER if it is absolutely necessary and they can find extra cash to afford it. Both parents worry that they are gambling by not getting health coverage for them and their children, and worry that a major trauma or illness could wipe them out. Both teens have begun driving and the couples worry that they would never be able to afford injury care if one of them were in an accident. Don and Brenda are just one example of lives affected by the crisis in the health and insurance market today.
At least 45 million Americans are uninsured, unable to seek and "purchase" the very medical benefits that many Americans take for granted. Dealing with the uninsured is a national concern, as the percent of uninsured Americans rises to 17 percent. The uninsured issue is a time-bomb which could get worse in the next few years, especially if there is an economic downturn. Informative web sites for studies and statistics on the Uninsured are listed in Table 2.
The Health Insurance Association of America predicts that the total number of uninsured may rise to 55 million by 2008 (Week in Healthcare, 1999). If America suffers with a sever recession, the number of uninsured could jump to 60 million, or higher, in a scenario where many small and mid-sized companies would abandon employer-sponsored health benefits. Until there is a national solution to the medically uninsured, few sate governments can afford to implement their own universal coverage.
In 1997, over 1 in 4 workers (28.8percent) with annual income under $20,000 are uninsured (workers earning over $40,000/yr. are uninsured at a rate of 5percent) (Employee Benefit Research Institute, 1998). On the whole, part-time workers are more likely to be uninsured than full-time workers; 24percent are uninsured compared to 17percent.
In 1997, almost 48percent of all uninsured workers were either self-employed or working in private-sector firms with fewer than 25 employees (Employee Benefit Research Institute). In large firms with more than 1,000 employees, 20percent of those earning Under $20,000 is uninsured (based on 1995 data). *(see note below on poverty level.)
Minority groups are often the most hard-hit by lack of insurance, as listed in Table 3. Of the 7.3 million uninsured with income between 100-150 percent of poverty, 3.2 million are white (44 percent of the total), 2.4 million are Hispanic (32 percent); and 1.3 million are African Americans (17 percent) (Kaiser Family Foundation, 1998). Although whites comprise the largest number of the uninsured, there are higher percentages of
Uninsured among Hispanics and African Americans. Among individuals whose income is within 100-150percent of the federal poverty level: 45.3 percent of Hispanics are uninsured; 33 percent of African Americans are uninsured; and 30.2 percent of whites are uninsured (Kaiser Family Foundation).
In 1997, men aged 18-64 were more likely to be uninsured than women in the same age category. This difference is considered most striking among young adults. A Kaiser Family Foundation "Fact Sheet"-The Uninsured and Their Access to Health Care, states that in 1995, nearly half ( 46 percent) of men 18-44 with income less than 200 percent of the federal poverty level are uninsured compared to 27 percent of women in the same age group. This is due in part to Medicaid's eligibility categories that cover more women than men (Kaiser Family Foundation).
The proportion of the low income population (below 200percent of the federal poverty level) that is uninsured varies by state from a low of 8percent in Hawaii where employer-provided health insurance is mandated, to a high of 38percent in Texas. In 18 states (most of which are in the south and west), over 25 percent of the population with incomes below $20,000 is uninsured. In general, southwest and south central states have higher levels of uninsured than other regions of the country.
Compared to the percentage of uninsured nationally (18 percent), 20 percent or more of the population is uninsured in these states. In 1997, the percentage of uninsured is only slightly (percent) higher on average in Consolidated Metropolitan Statistical Areas (Camass) than the national percentage. But the variation among CMSAs can be significant. For example, the Houston-Galveston-Brazoria, TX CMSA had the highest uninsured rate at 28.2 percent, compared to the lowest (8.2 percent) in the Milwaukee Racine, Wisconsin CMSA.
*Poverty threshold is based on 1997 US Census Bureau, Current Population Survey for one and two persons without children. The fact sheet relies on data gathered in 1995¬1997. Less current figures were included in the studies referenced above only when data from 1997 for the income level 100-150 percent were not available.
Much has changed in recent years for those who rely upon Federal insurance programs. Those changes will continue on into the years ahead and impact not only the elderly or disabled, but also the working adult who has no means to afford health care coverage. The implications for case managers are many. As you are faced with cases of medical neglect, lack of insurance, lack of medication coverage, and assorted issues, it will be important to consider the role of the case manager as client advocate.
References
Table 1. Resources for Medicare and Managed care Information
| Medicare
800.633.4227 |
| Healthcare Finance Administration
800.633.4227 |
| American Association of Retired Persons
800.424.3410 |
Table 2. Studies and Statistics on uninsured: