USPHS Quiz
ACA: Medicaid
1. States to expand Medicaid to 138% of PL if they want (supreme court said they couldn't make this mandatory, June 2012)
Differences between Medicare and Medicaid
1.Medicare built off of social insurance wing of social security act, classic social insurance program available to anyone regardless of income 2.Medicare administered by federal government using third party private insurance administrators; NO state role 3.Medicare run relatively uniformly throughout the country, same eligibility and benefits 4.Medicare has limited benefit package (compared with Medicaid), so most beneficiaries (90% today) have supplemental coverage, either private coverage, pension type program, managed care plan, or Medicaid (about 9 million today) 5.Financed: o Medicare Part A - funded by federal income tax, 2.9% of salary paid into a federal trust fund (half taken from employee, half from employee) - similar to social security except it is NOT capped for Medicare, (ACA has changed this a little so wealthier people pay a higher) • If you've paid into the trust for 10 years you automatically get Medicare when you turn 65; about 500,000 people who haven't done this (immigrated too recently) will buy into it each year o Medicare Part B - covers outpatient physician bills, you buy into this part- pay a premium every month (targeted to pay 25% of cost) - the rest of the funding is from general federal money (bonds) o Medicaid is joint state and federal funding - federal portion from bonds, general funds (no specific taxes)
Reasons healthcare costs ARE high in the US: Price differentials
1.Price differentials - things cost more in the US (both when we have fewer machines and more machines); this could be because • "Defensive medicine" - ordering/implementation of services/ tests that aren't necessary - maybe because of fear of malpractice, or because of American culture (people want the tests and we have very low accepted miss rate for tests) • Americans value individual liberties and the right for people to have the best care is prized over equity • No central budget to regulate costs • Lack of market failure regulation, lack of gatekeepers • Most often attributed to lack of price regulation/global caps/rationing, but rationing doesn't go over well in US • Republicans say it's about moral hazard and people overusing care, they don have any stake in game and we need more competition
ACA: Exchanges
2. States must develop exchanges - a purchasing pool for unemployed, self-employed and small businesses to buy private health insurance, both decrease costs and subsidize costs for people under 400% of FPL; if the states don't do it the federal government will do it - the exchange steer people towards Medicaid if they're eligible •In exchanges there are at least 5 different types of programs - Bronze (60% coverage), Silver (70%), Gold (80%), Platinum (90%), Catastrophic plans (100% - young people with deadly diseases) •36 states opted not to make their own exchanges, using federal exchanges; this was unexpected; very messy initial sign-up period •Give more power to purchasers of insurance; provides other information for other options like Medicaid •Single place you can go and see all of your options for insurance. Concept of HealthCare.gov
Reasons costs ARE high in the US: High volume
2.High volume of high cost services (lower volume of low cost services)
Reasons costs ARE high in the US: Administrative costs
3. Administrative costs are higher - lots of payers/people involved, lots of for-profit systems • Obama had three options to try to contain costs o Regulation - set prices, no one in favor of this nationally o De-regulation - right wing approach to encourage competition, increase consumer cost to reduce moral hazard; open up markets across state lines; reduce court presence and have a more consumer directed system o ACA APPROACH: reduce provider driven care - fiscal incentives to providers to encourage them to be more cost + quality conscience - pay for performance, tax breaks, funneling of services, penalties for hospital readmissions
ACA: Employer Mandate
3. Each employer with 50+ full time employees (work 30+ hours a week) is required to provide and make available heath insurance to their employees - pay for equivalent of Bronze plan (60% coverage) OR pay a fine •Potential issue with medium size businesses cutting employees/work time to get under 50; govt will count up half time workers to avoid this, but still potential glitches •Delayed until 2015
ACA: Small businesses
4. Small businesses eligible for tax credits presumably to buy health insurance for their employees (<25 employees with average income below X)
ACA: Regulation of private insurance industry
5. Insurance companies can't deny coverage/charge more for pre-existing conditions; no annual or life time limits; must provide a basic care package; 80-85% of premiums must go directly to medical cost; up to 26 on parents
ACA: Individual Mandate
6.Individual Mandate - reduce adverse selection - since insurance company will have to cover a lot more people and a lot more sick people, govt makes all people have to get insurance so more healthy people will buy in •Must show proof of insurance on tax returns, or pay penalty of $95 or 1% of income; increases over time •Legal under the Congress' ability to tax (argued under commerce clause) •Issue of delaying the individual mandate would be that insurance companies have already set up their plans/programs/options (federal and state) on the assumption that most everyone is going to buy-in; if individual mandate is delayed, insurance companies will have to change these plans/programs/options for 2014, and then will likely make their 2015 plans based on the 2014 people who bought in (which would be limited) - as they have already put in this work, it is most efficient to keep going now
HMO Act, 1973
Aimed to expand Kaiser type organizations - pre-empted the state laws banning this type of model, Kaiser can go anywhere; give federal grants for expanding/creating HMOs - doesn't catch on
James Madison
Believed in large national govt to protect against chaos, but we need a lot of checks and balances - big govt that can't act in any easy way
Rise of Insurance: Justin Kimball
Brought Baylor hospital into the insurance business so they can make money/stay solvent: akas school teachers to give Baylor Hospital $6/year and in exchange, if they get sick they can use the hospital for up to 21 days, says they'll only do this if at least 75% of teachers agree to do this oAlready worries of moral hazard by hospital (won't get healthy people to sign up) and teachers (what if they don't need it)
Managed Care in the 1990s
Costs rose through the 80s Employers tell insurance companies they need to start cutting costs somehow and if not they have to move towards national health insurance •Insurance companies decide to mix traditional insurance model with Kaiser model oCreate networks where people can go, limit their choice rather than remove it (PPOs, IPAs, etc.) oCreate practice guidelines/protocols - encourage, but don't require physicians to use them (fiscally, discussion) oSwitch to capitation from fee-for-service oAdd gatekeepers - PCP or insurance company to approve secondary care oInsurance companies have more power to negotiate prices with hospitals because hospitals need to get in their PPO networks
Obama vs. Clinton Strategy
Did everything opposite of Clinton oMoved quickly, done in year 1 oDelegated the issue to key Congressmen - make this their issue to own (rather than Clinton who held it as an executive task force) oSummer 2009-Spring 2010: tea party opposition, Scott Brown replaces Kerry (59 D in Senate); but House adopts Senate bill, so they only need a majority to pass oMarch 2010 - PPACA enacted
John Locke
In a state of nature life wouldn't be that bad (as Hobbs said), govt is a "necessary evil" to protect individual rights, esp. right to private property, govt should be limited and if they exceed authority/act arbitrarily than citizens have the right to revolt and to revolution
Alexander Hamilton
New colonies coming together have the potential to become an economic superpower but they need a strong national central govt with a president with a lot of power (suggested a life term) - Federalists
Thomas Jefferson
Opposed Hamilton, thought he wanted a form of monarchy, in favor of citizen legislature, lots of term limits, low federal and presidential power, power in the local govts, cities, villages - almost boycotted convention - Anti-Federalists
Opposition to Kaiser Model
Organized medicine/AMA did not like Kaiser model - less autonomy, less money, working in a clinic - organized medicine was able to go to most states in the country and got laws passed to ban the Kaiser model - prohibiting the corporate practice of medicine
Hight Costs in the US
Other countries have single payer systems, these can vary a lot as seen in Canada, UK (NHS), Germany (thru employer) - they can also have supplemental private insurance - fundamentally different than US where private insurance is primary
HMO
Paul Elwood brands managed care and Health Maintenance Organizations (HMOs) Groups that fully manage your health, focus on preventative care
Kaiser Model
Pre-paid health plan with salaried doctors oCapitated - pay doctor to treat per patient depending on dx oSalary - paid each year independent of care provided
1800-1937 - Jeffersonian democracy in the US
State-based small govt - seen as unwise and unconstitutional for US to be involved in healthcare, pensions, (small exceptions); government sponsored social welfare groups and policies would ONLY happen on the local level, not state or federal; era of localism, very Lockian; strong individual rights oSocial welfare system modeled on the English Poor Laws - discourage most people from using it, harsh working requirements, work hard for aid; govts created poor houses in some places, not universal; all poor houses were (1) operated by locals and (2) were restricted to the "deserving poor" (elderly, disabled, orphaned) oEventually poor houses created medical clinics to provide very basic healthcare to the people that lived there (Bellevue)
Hobbs
We need govt prevent us from being barbaric
Potential ways to cut/contain Medicaid
oCut Medicaid eligibility - increase uninsured and increase burden on hospitals •Explicitly: cut levels •Implicitly: make it harder to enroll in the program; 27-page application •Pro: save money at the state level •Con: increase number of uninsured; increase burden on local public hospitals and other safety nets; lose a lot of federal money oCut reimbursement - already the lowest payer oCut benefits - people will use hospitals when they need to regardless •Issues: may not save money; those benefits don't cost a lot of money, but if you cut off those benefits they may end up in the ER with an emergency condition and end up costing even more oIncrease co-pays - could be a deterrent from getting necessary care and doesn't matter if people don't pay them to begin with •Primary outcomes: deters low-income people from seeking primary and preventive care that they need; and providers often suggest that with the Medicaid population, co-pay becomes rate compensation for provider because those people don't ever pay oReduce admin costs - already pretty low and HIT is complicated oUse managed care - private sector use •Delegate problem to other health plans; pay a managed care plan a set amount of money to take care of individual, up to managed care to figure out how to balance the money •Not only saving money, but getting better access for beneficiaries, improved quality, etc. oReduce fraud oPrevention oLong-term care costs, cuts
Medicaid - Era of Limited, Narrow, Ungenerous, Varied Medicaid Programs: 1967-1985
oDifferences among states over who received Medicaid, what the benefit package was, and how much providers were paid oNo two states had the same benefit package or the same formulas for reimbursing providers; they didn't spend the same amount on per-capita basis oIn addition to 8-9 mandatory benefits, another 30 or so optional benefits (drugs, dental, podiatry, mental health, substance abuse) exists; it was up to the state whether or not to include them in the Medicaid program •If you include optional programs, the Feds kick in their share of the cost oFeds said that states able to cover other benefits (such as abortion or contraception), but the Feds provide any kick backs oEarly 1980s - Regan as president, huge reductions in state welfare programs, AFDC, Medicaid enrollment declines because less people are on welfare
Opposition to ACA
oInterest groups - AMA, insurance companies, hospitals, unions, small businesses, pharma cos oUS culture - large part of population opposed to big government and prefer all de-regulation oGovernment structure - veto power of Congress real threat oExisting health insurance structure - entrenched employer system
US costs are NOT high because:
oMore doctors: US has fewer doctors/capita and people go less often oMore hospitals: US has fewer hospitals and people go less often, stay for shorter time oMore drugs: US takes fewer prescription drugs than other countries oRisk factors: US smokes less than other countries, and rate of increase of obese people is growing a slower rate than people in other countries (although still a lot of obese here) oOlder population: not older population than other countries, aging at a slower rate
Pre-paid health plan (Justin Kimball and Baylor Hospital)
oNew versions of pre-paid health plans are the Kaiser's of the world. - non-profits. •Focus on primary care and prevention •Owned clinics, had to go to Kaiser clinics. •Doctors hated the model because they lost autonomy and money. •Some parts of country had a culture where doctors liked the non-profit status, community, prevention orientation, and organization. •States banned the Kaiser model due to physician lobbying. •Prohibited corporate practice of medicine.
Attempt to re-invent managed care in the 2000s
oProvider profiling - insurance companies assess providers to compare •Use malpractice rate, diagnostic tests they order, how much money they're spending, hospitalizations, morbidity/mortality rates, number of patients they treat/productivity, patient satisfaction, average wait time, services they perform overall, etc. •Issues with comparing: privacy, different pt profiles, academic centers/use of residents; messy records •Risk adjustment strategies introduced to control for outside factors and try to standardize records/tools of assessment, EMR •Contemporaneous increase in use of crowd-sourcing to judge doctors oPay-for-performance - use of monetary incentives to improve outcomes; strategies include: •Monetary ranking system - payment incentives to high performing hospitals and take money for low performing hospitals - again problematic with different pt profiles •Benchmark system - payment incentives for those who reach specified levels of care •Comparative ranking system - payment incentives given for sites improving themselves year to year
Solutions to issues
oSolution to small area variation = limited physician autonomy, care guidelines oSolution to uncoordinated care = gatekeepers to manage care oSolution to payer/provider split = single coordinated system, clinic
Medicaid - Era of Competing Visions: 1965-1967
oVision based on states like NY; relatively and liberal state •Idea of an expansive program, with NY enacts in 1966 •Vision behind this program was to use Medicaid as the first step on the road to universal coverage •Robust benefits involved in program oSecond competing vision was based on a right-wing view that promoted states paying a portion of the cost, in addition to what the Feds contributed •Supporters of this view don't like the idea of a new insurance program •If going to have Medicaid program at all, it should be narrow/small program that focuses on the poorest population •Limited eligibility and limited coverage oThe conservative view won out over the liberal vision, and legislation was passed that made Medicaid a safety net for the poorest populations
Healthcare in the 20s and 30s
•1920s: hospital boom - first time middle class people would go to hospital - hospitals borrowed $ to build (would default during Depression) and people paid out of pocket to go •1929 = Depression - hospitals need money
The New Deal
•1935: Congress enacts New Deal Social Welfare system = major change oSocial Security - social insurance program - earned right pension program for seniors run by federal govt, uniform around country oAid to Dependent Children/Welfare - fiscal relief to low income families, state run (determined amounts and eligibility), unearned right (less popular) •Challenged by courts, FDR's court packing scandal looks bad, ultimately upheld under commerce clause that allows federal got to regulate any area of interstate commerce •Truman fails to get national health insurance passed in 1940s (when other countries are doing so) •1940s brought about the creation of the employer sponsored private health insurance system oDuring war it was incentive employers could provide that wasn't prohibited (good for employer), and it was non-taxable for employee (good for employee)
Beginning of Managed Care
•1960s on: steady increase in US healthcare spending; attributed somewhat to private/public insurance model, which brings about 3 issues: oRising costs because of combo of third party payment and fee-for-service model; clear split between the provider and the payer so provider has almost total clinical autonomy and can charge whatever they want - financial incentive to do more and more and spend more and more oSmall-area variation - John Wennberg (Dartmouth) -varying rates AND costs with same procedures in different neighborhoods/cities/hospitals, even when they are very close and are very similar in makeup; varies because of local cultures and physician autonomy oUncoordinated care: little coordination of healthcare - minimal communication between specialists, PCPs
Medicare - Era of Crisis: 1994-1998
•1994: Clinton fails at national health insurance; private health insurance world moving towards managed care organizations; right wing argued Medicare should be phased out and administered through managed care organizations without govt •Medicare began to pay hospitals more than it was taking in; predicted Part A would be bankrupt by 2001 •1996 election: How to fix Medicare is crucial question; possibilities: oRaise the tax oCut eligibility (raise the age) oCombine Part A and B (use general revenues to pay for A) oCut benefits oMove towards managed care in private sector oShift Medicare to states like Medicaid oVoucher program (like a pension system where people get defined amount of money to buy health insurance) oCut down on fraud, increase preventative care, increase efficiency •Clinton wins re-election; his strategy is highly regulatory, and worked oMAJOR reimbursement cuts targeting hospitals and nursing homes/home care agencies (many go bankrupt) oCHIP, Balance Medicare Act oHired a lot of inspectors and auditors to limit fraud and abuse oBy 1999 trust fund is taking in more than it's giving out
Medicare - Era of ACA: Present
•2007: very high Medicare costs; Medicare gets tied up in healthcare reform conversations •Medicare is pivotal to the ACA - need to extend time before Medicare excess ends - create savings to bolster funds: oRaised the Part A income tax for high income Americans from 1.4% to 2.25% (form of means testing) to increase revenue oDramatically cuts Medicare reimbursement to Medicare managed care plans, outpatient care •Use this money to: oPhase out the donut hole and increase benefits for Medicare beneficiaries oFund uninsured and expansions •ACA calls for creation of advisory board ICAB used to propose potential changes if there are increased in spending to keep them in check, supposed to be politically independent
Rise of Insurance: Blue Cross/Blue Shield
•Blue Cross founded: in 1930s 4 hospitals band together to make a pre-paid plan where people can choose to go to any of them for care, thru Plan E: people pay premium to Plan E, Plan E pays hospitals •Blue Shield - doctors use this same model •Blue Cross/Blue Shield created as a nonprofit, way to protect hospitals and doctors during Depression - insurance companies realize this and the for profit and nonprofit systems compete - providers in favor of private health insurance, hospitals want to stay with blue cross/blue shield •Commercial insurance was not limited by "community ratings models" (required all members to be charged the same for nonprofits), so they allowed healthier people to pay less •FDR fails to enact national health insurance because of AMA opposition (tries and fails continuously thru presidency)
Era of Clinton, 1992-2000
•Clinton attempted to fight for national health insurance, but was not successful oIn 1994, Republicans took over both sides of the House; conservative and hostile Congress was at odds with Clinton •Clinton proposed to convert Medicaid from entitlement program to a block-grant plan •In 1996, they work out a deal to convert aid to family with children oAFDC program eliminated and replaced with block-grant program called Temporary Systems to Needy Families Program •Following his reelection in 1996, Clinton wanted to re-focus attention on health insurance, and achieved incremental expansion/coverage with a focus on children •Child Health Insurance Program (CHIP), 1997 oBlock-grant program oCongress gave the states money and each state decided how to implement the program; wide variety between states oInitial lack of sign up because of stigma attached, fear of loosing other benefits, lack of knowledge, illegal immigrants, lengthy process oTried to repair this with making applications easier, branding, making it clear they won't deport people; allowed parents to sign up too oLate 1990s: budget surplus
Medicare - Era of Consensus: 1965-1994
•Consensus: liberals like it because it's close to universal care; conservatives like it because of focus on seniors, low cost •US spending on healthcare dramatically rises beginning in mid 1960s - Medicare model made insurance companies pay whatever doctors charged •Until 1980s Medicare used retrospective payment system (pay after the care) - caused govt to worry they're paying too much money - reform to a prospective payment system (Medicaid came up for formulas coded by diagnoses, paid to treat per DRG, diagnostic related groups) -bipartisan support •1994: trust fund has a surplus of $100 billion - trust fund taking more from taxes than it's giving to hospitals
ERISA
•ERISA (employee retirement income security act) - federal pension law, has had bigger impact on health care in US than any other law oSets minim standards for pension plans (doesn't require them outright), did not want state involvement, just a single federal regulatory scheme oPreemption clause that bars states from enacting any laws or policies that "relates to an employee benefit program" - with exception of regulating any part of the "traditional regulation of insurance" oDisallows states from requiring employers to provide insurance (done in Hawaii and given exception, no other exceptions made)
Era of Bush, 2000-2007
•Early 2000s: 9/11, war, recession, rising costs of Medicaid = states struggling to pay for Medicaid and CHIP •Bush believed that Medicaid should be a true safety net for the poorest populations •Saw that there were many poor people who weren't involved in Medicaid and argued that we shouldn't be signing people up for it who were at 300-400% of the poverty level oBelieved that the more expansive Medicaid was, the more it crowded out private health insurance oSee crowd out - increased public insurance spending causes private insurance to drop low income people, forces them into the public industry (substituting of public programs for private arrangements) •Result: emphasis around Medicaid was the think about how we can focus on cost containment in programs, focus less on using Medicaid as a vehicle to help uninsured, and focus more on containing costs
Medicare - Era of Extra Money: 1999
•In 2000 election: govt running at a surplus; questions of what to do with extra money in the Part A trust fund: o Raise reimbursement o Increase benefits o Increase eligibility o Lower tax o Do nothing, hold onto money o Prescription drug coverage (1990s - increase in drug use and increase in drug prices: Gore presents idea of outpatient prescription drug coverage as Medicare addition) •Bush wasn't opposed, but wanted to use this as a way to fundamentally change Medicare and give prescription drug coverage as a block grant to states and have them means test methods (also wanted pharma cos to do more voluntary donations and increased use of managed care) •2003: Congress passes Medicare Modernization Act, includes Medicare part D for drug coverage - one of the last bipartisan pieces of legislation by Congress in the last decade (effective January 2006) oTo get prescription drug coverage people had option of outside managed care program or Medicare Part D
Branded as "managed care"
•Initially appears successful; short-lived; costs rise again oHospital mergers decrease insurance companies ability to negotiate oPhysicians opposed, frustrated with regulations and less income oPatients having issues getting care with limited choice •Late 1990s: media portrays managed care as bad - creates wave of patient's rights laws for states; wanted a federal law but couldn't decide if patients could sue for poor care (left wing against; right wing for)
Medicaid - Era of Obama/ACA: 2009-2013
•Obama was facing a nation during a fiscal catastrophe •One of the first things he did was sign the re-authorization and expansion of CHIP •Stimulus Bill strategies: oThird of the money spent on infrastructure enhancements, construction, get people back to work oThird of stimulus was middle-class take cut, more money in pockets oTook $87 billion and increased federal financial participation that every state gets in Medicaid program, by minimum of 6.2% •March 2010: PPACA enacted; supreme court ruled that the Medicaid expansion had to be converted from a mandate to an option (only half of the states have opted in thus far) •March 2010 - PPACA enacted - supreme court ruled that the Medicaid expansion had to be converted from a mandate to an option - as of now only half of states have opted in
Rise of Medicare/Medicaid
•Post-JFK assignation, Truman proposes universal elderly hospital insurance (opposed by right wing and AMA), but a very empowered Congress passes massive amendments to SSA oMedicare Part A: Hospital insurance for the elderly - social model from the New Deal oMedicare Part B: physician/outpatient insurance for elderly oMedicaid: Health insurance to low income populations - follows welfare model from the New Deal
Medicaid - Era of Federal Mandates, Rising Medicaid Costs, and Intergovernmental Tension: 1985-1992
•This expansion of Medicaid created significant tension oBegan with election in the South of new, young Democratic governors; when they came into office, each had relatively similar political agendas - top priorities: •Reform the public education system in the South •A series of studies in the mid-1980s demonstrated that the infant mortality rates and rates of low birth weight babies in the South were unbelievably high (worse than many developing countries) •Believed that women didn't have access to prenatal care due to being uninsured •Thus, second goal was to reduce infant mortality •Democrats took over Congress in 1986 oWanted to expand Medicaid in states for pregnant women and infants oCongress allows states, at the state's decision, to expand coverage of pregnant women and children up to 5 years old, up to 100% of the poverty level oIn 1987 - allow states to cover pregnant women up to 185% oft the federal poverty level •However, simply expanding eligibility level does not necessarily lead to improved outcomes •Waxman, a democratic congressman from CA, advocated for national health insurance, but knew there was no chance with Reagan and Bush in presidencies •Congress passed a law in 1988 that requires states to cover all pregnant women and infants before 100% of the poverty level oCaused upset states, weren't happy that the federal government was mandating coverage, which led to increased costs •From 1988-1993, Medicaid enrollment more than doubles, and there are huge increases in cost •Link between welfare and Medicaid is significantly split •Role of budget bills: in 1974 law changes, budget bills can't be filibustered; Regan uses budget bill to make cuts in welfare and avoid filibuster; Henry Waxman (D, CA) suggests using budget bill to expand Medicaid •1985 - Congress passes expansion of Medicaid eligibility, successive increases thru 1990; from 1988-1993 Medicaid enrollment more than doubles, huge increase in costs •Medicaid fundamentally changes, covering many more people than those just on welfare, costs more money, uses Medicaid to expand coverage
Rise of Employer-Based Insurance
•Truman surrenders to the private insurance system - BUT says lots of people won't be covered (unemployed, retired, self-employed, small businesses, part time worker, independent contractor, disabled) oPresents idea of public insurance safety net for those that can't buy into the employer sponsored system oInitially starts with the elderly - amend SSA to include hospital insurance for seniors, opposed by right wing (they would prefer social insurance approach with power to states) o1950: Congress passes SSA expansion for poor elderly to get hospital care o1950s: left wing keeps trying to get universal elderly care
