I decided to tackle the uninsured and under-insured before I started describing the Employee Sponsored Insurance (ESI)- even though ESI covers the largest number of citizens. I was driven to do this because there is so much disinformation on the internet with regards to the uninsured and under-insured.
On the internet, in responses to articles on the health care debate, there is a category of readers with an explicit or implicit bias that those without health care insurance are either illegal immigrants or people who are milking the system. Without a doubt, in any system there is an opportunity for fraud and the opportunity for fraud is not limited to those who cannot afford health care- in this instance, or to the rich (see Enron and any number of Wall Street villains).
So, what is the composition of the 47 million or so without health care insurance? Of necessity this has to be a statistical investigation.
The Current Population Survey (CPS) conducted by the Census Bureau and The Bureau of Labor Statistics is most often used and cited in investigations of the uninsured. The CPS survey is conducted monthly and has a sample size of about 50,000 households.
http://www.census.gov/cps/
Another source of data is the Medical Expenditure Panel Survey (MEPS), which is conducted annually on a smaller sample population, but is focused on households, employers and medical providers. The typical number of families surveyed is around 12,000.
http://www.meps.ahrq.gov/mepsweb/about_meps/survey_back.jsp
Given that it is a statistical analysis, assumptions and conclusions around who the uninsured are, why they are uninsured along with what constitutes affordability for health insurance vary widely. I would recommend looking at conclusions from the Kaiser Family Foundation- "The Uninsured, a Primer" for a sympathetic view of the uninsured population (http://www.kff.org/uninsured/7451.cfm)
For a more hard-headed and analytical view of the uninsured read papers by Lisa Dubay et al from the John Hopkins Bloomberg School of Public Health. For example, see "The Uninsured and the affordability of Health Insurance Coverage"- http://www.healthaffairs.org/RWJ/Dubay2.pdf
Lisa Dubay uses data from the 2005 CPS and estimates that a quarter of the uninsured- approximately 11 million are eligible for public programs but are not enrolled. Another one fifth- approximately 9 million can afford health insurance but choose not to get it. The remainder need help in getting health insurance. It is ony at the end of the paper that she mentions that the individuals that she identifies can afford health insurance, may not have health insurance because their condition may make it unaffordable or unavailable.
I am sure the truth is somewhere in between. The issue is the extent to which higher projected numbers of the uninsured- implying higher program costs, may inhibit the passage of a health care insurance program.
My plan was to give a detailed description of the uninsured, however, watching the opposition to health care reform it has become obvious that this is not a battle over information. It is a battle over ideology- which no amount of data, logic or information can overcome.
For example, on the internet, you see unsubstantiated claims as to the number of illegal immigrants who would soak the citizenry in case there were a program to cover the uninsured. The various government surveys do not ask if a respondent is a legal or illegal immigrant. Hence claims around the number of illegal immigrants who would overwhelm the system are dubious at best.
The nation does need to wrestle with its conscience about the tension that exists between using the available means to control illegal immigration and providing affordable health insurance to those illegal immigrants who fall ill within our borders.
Monday, August 17, 2009
Saturday, August 15, 2009
Public and Private Healthcare- Medicaid
Medicaid is the second arm through which the Federal and State governments provide health care. Medicaid served 45 million low income citizens and nearly 14 million elderly and disabled people- a total of 59 million individuals (2005 numbers). This included nearly 9 million low income Medicare beneficiaries for whom it filled Medicare coverage gaps. In the absence of Medicaid, the covered individuals would join the ranks of the uninsured.
Of the 45 million low-income individuals 29.5 million are children. Total Medicaid expenses in 2008 are expected to be $339 billion and are expected to reach $674 billion by 2017.
The Federal government provides matching funds to State spend on Medicaid and there is no cap on this the matching funds. To be eligible for Medicaid, persons must meet certain financial criteria and also fall into a group that is category eligible. States are required to cover certain mandatory groups in order to be eligible for matching funds. The mandatory groups are:
- Pregnant women and children under the age of 6 in families where the family income is below 133% of Federal Poverty Level (FPL). FPL is $27,570 for a family of 4 in 2009.
- Children between the ages of 6-18 with family incomes below 100% of FPL
- Parents with incomes below states' July 1996 welfare eligibility levels (typically below 50% of FPL),
- Elderly and disabled individuals who receive Supplemental Security Income. SSI is given to people who typically have incomes 74% of FPL for an individual.
Families or individuals without children, no matter how poor are excluded- unless they fall into one of the categories above.
Immigrants are not eligible for Medicaid unless they have lived in the US for at least 5 years and meet the eligibility requirements (above)- except for emergency services. Undocumented immigrants are ineligible for Medicaid no matter how long they have lived in the country.
Federal Poverty levels can be viewed at: http://aspe.hhs.gov/poverty/09poverty.shtml
In general they are as follows (annual income):
- single person: $13,530
- 2 people in family: $18,210
- 3 people in family: $22,890
- 4 people in family: $27,570
etc.
For a detailed description of Medicaid, readers are encouraged to go to: http://www.kff.org/medicaid/upload/7334-03.pdf
Other than the mandatory federal coverage rules, states have a lot of leeway in terms of how they want to run Medicaid programs. For example, states can charge beneficiaries premiums, within certain bounds. Total cost sharing cannot exceed 5% of family income in any case. Cost sharing is prohibited for mandatory children.
Enrollment in HMOs is the primary delivery mechanism for Medicaid with nearly 2/3rds of beneficiaries being enrolled in HMOs. In other cases, Medicaid provides services to beneficiaries through a fee-for-service arrangement with providers. So, though Medicaid is publicly financed, health care is purchased through the private sector.
Medicaid also makes special payments to hospitals that serve a disproportionate share of low income and uninsured patients (6% of Medicaid costs).
Medicaid beneficiaries have a positive feedback on the program. Administrative costs are less than 4% of overall program costs. The elderly and disabled make up 25% of all medicaid enrollees and account for 70% of program spend. Children and adults on average cost the program $1,617 and $ 2,012 respectively (2005 numbers). The elderly and disabled account for much larger per capita costs- $11,839 and $13,524 respectively.
Medicaid's growth has also fared much better than the cost growth rates for private insurance. For example, Medicaid costs have been growing at a rate of 4% between 200 and 2006, while monthly premium increases for employee offered insurance increased at a rate of 10% during the same period.
So, overall, it would be fair to say that this government program is run pretty well- in spite of the general perception that the government cannot do anything well.
Of the 45 million low-income individuals 29.5 million are children. Total Medicaid expenses in 2008 are expected to be $339 billion and are expected to reach $674 billion by 2017.
The Federal government provides matching funds to State spend on Medicaid and there is no cap on this the matching funds. To be eligible for Medicaid, persons must meet certain financial criteria and also fall into a group that is category eligible. States are required to cover certain mandatory groups in order to be eligible for matching funds. The mandatory groups are:
- Pregnant women and children under the age of 6 in families where the family income is below 133% of Federal Poverty Level (FPL). FPL is $27,570 for a family of 4 in 2009.
- Children between the ages of 6-18 with family incomes below 100% of FPL
- Parents with incomes below states' July 1996 welfare eligibility levels (typically below 50% of FPL),
- Elderly and disabled individuals who receive Supplemental Security Income. SSI is given to people who typically have incomes 74% of FPL for an individual.
Families or individuals without children, no matter how poor are excluded- unless they fall into one of the categories above.
Immigrants are not eligible for Medicaid unless they have lived in the US for at least 5 years and meet the eligibility requirements (above)- except for emergency services. Undocumented immigrants are ineligible for Medicaid no matter how long they have lived in the country.
Federal Poverty levels can be viewed at: http://aspe.hhs.gov/poverty/09poverty.shtml
In general they are as follows (annual income):
- single person: $13,530
- 2 people in family: $18,210
- 3 people in family: $22,890
- 4 people in family: $27,570
etc.
For a detailed description of Medicaid, readers are encouraged to go to: http://www.kff.org/medicaid/upload/7334-03.pdf
Other than the mandatory federal coverage rules, states have a lot of leeway in terms of how they want to run Medicaid programs. For example, states can charge beneficiaries premiums, within certain bounds. Total cost sharing cannot exceed 5% of family income in any case. Cost sharing is prohibited for mandatory children.
Enrollment in HMOs is the primary delivery mechanism for Medicaid with nearly 2/3rds of beneficiaries being enrolled in HMOs. In other cases, Medicaid provides services to beneficiaries through a fee-for-service arrangement with providers. So, though Medicaid is publicly financed, health care is purchased through the private sector.
Medicaid also makes special payments to hospitals that serve a disproportionate share of low income and uninsured patients (6% of Medicaid costs).
Medicaid beneficiaries have a positive feedback on the program. Administrative costs are less than 4% of overall program costs. The elderly and disabled make up 25% of all medicaid enrollees and account for 70% of program spend. Children and adults on average cost the program $1,617 and $ 2,012 respectively (2005 numbers). The elderly and disabled account for much larger per capita costs- $11,839 and $13,524 respectively.
Medicaid's growth has also fared much better than the cost growth rates for private insurance. For example, Medicaid costs have been growing at a rate of 4% between 200 and 2006, while monthly premium increases for employee offered insurance increased at a rate of 10% during the same period.
So, overall, it would be fair to say that this government program is run pretty well- in spite of the general perception that the government cannot do anything well.
Wednesday, August 5, 2009
Public and Private Healthcare- Medicare
In the last blog we talked about the 5 segments of health care consumers in the US (Medicare, Medicaid, Employer Based Insurance, Private Insurance and the uninsured.) The US spent $374 million on Medicare in 2006 (about 2.3% of GDP) and it accounted for about 12% of the federal budget. Medicare provides health care for the elderly and disabled and is a popular program. Medicare is Insurance provided by the Federal Government and consists of 4 parts: Parts A, B, C & D.
1) Part A: Pays for Hospital insurance and accounts for 39% of benefit payments and is largely financed through a dedicated tax of 2.9% of earnings paid by employers and 1.45% of earnings paid by employees
2) Part B: Pays for Supplementary Medical Insurance (SMI) and accounts for 32% of the total benefits paid out. It is financed by general revenues (investments of the HI and SMI Trust Funds?) and premiums.
3) Part C: Pays for Medicare Advantage, consisting of private health care plans, and accounts for 15% of benefits payments. Part C is not financed separately.
4) Part D: Pays for prescrition drug coverage and accounts for 9% of benefit payments. It is financed from beneficiary premiums, general revenues and state payments.
Because of the age of the beneficiaries, as would be expected, older beneficiaries consume more of health care benefits than younger beneficiaries. So, 10% of beneficiaries account for two-thirds of total Medicare spending. Medical spending on for beneficiaries in their last year of life is on average 4 times greater ($22,107) than for all other beneficaries ($5,694).
To the beneficiaries, Medicare should not be supposed to be free. Medicare Part B costs beneficiaries $93.50 per month. In addition, of the $12,763 in per beneficiary costs in 2004, Medicare paid for about half, while beneficiaries had out of pocket expenses amounting to about 19%.
Since the Reagan years people have been led to believe that the government cannot do anything right. However, the popularity of Medicare as well as the fact that growth in Medicare spending has increased annually by 7.8%- 1% below that for private health insurance. It is true that private health insurance spends money on sales and marketing that Medicare does not have to. However, there is no indication that Medicare- simply because it is a Government provided service is run poorly.
From an overall health care perspective, there are problems ahead for Medicare. Firstly, it is estimated that Medicare will form 10.8% of GDP by 2082 (Office of the Actuary in the Centers for Medicare and Medicaid Services). Because these are projections based on estimates around population growth and health care consumption statistics there can be debate on the exact percentage of GDP that Medicare will form.
Secondly, there is a tsunami of baby-boomers who will be retiring and begin to participate in Medicare. Because of the constitution of the population, there will be far fewer employees to support those in retirement.
Thirdly, the same disease that ails overall health care expense increases, ails Medicare.
For all these reasons, there is a potential Medicare funding shortfall that will need to be addressed.
1) Part A: Pays for Hospital insurance and accounts for 39% of benefit payments and is largely financed through a dedicated tax of 2.9% of earnings paid by employers and 1.45% of earnings paid by employees
2) Part B: Pays for Supplementary Medical Insurance (SMI) and accounts for 32% of the total benefits paid out. It is financed by general revenues (investments of the HI and SMI Trust Funds?) and premiums.
3) Part C: Pays for Medicare Advantage, consisting of private health care plans, and accounts for 15% of benefits payments. Part C is not financed separately.
4) Part D: Pays for prescrition drug coverage and accounts for 9% of benefit payments. It is financed from beneficiary premiums, general revenues and state payments.
Because of the age of the beneficiaries, as would be expected, older beneficiaries consume more of health care benefits than younger beneficiaries. So, 10% of beneficiaries account for two-thirds of total Medicare spending. Medical spending on for beneficiaries in their last year of life is on average 4 times greater ($22,107) than for all other beneficaries ($5,694).
To the beneficiaries, Medicare should not be supposed to be free. Medicare Part B costs beneficiaries $93.50 per month. In addition, of the $12,763 in per beneficiary costs in 2004, Medicare paid for about half, while beneficiaries had out of pocket expenses amounting to about 19%.
Since the Reagan years people have been led to believe that the government cannot do anything right. However, the popularity of Medicare as well as the fact that growth in Medicare spending has increased annually by 7.8%- 1% below that for private health insurance. It is true that private health insurance spends money on sales and marketing that Medicare does not have to. However, there is no indication that Medicare- simply because it is a Government provided service is run poorly.
From an overall health care perspective, there are problems ahead for Medicare. Firstly, it is estimated that Medicare will form 10.8% of GDP by 2082 (Office of the Actuary in the Centers for Medicare and Medicaid Services). Because these are projections based on estimates around population growth and health care consumption statistics there can be debate on the exact percentage of GDP that Medicare will form.
Secondly, there is a tsunami of baby-boomers who will be retiring and begin to participate in Medicare. Because of the constitution of the population, there will be far fewer employees to support those in retirement.
Thirdly, the same disease that ails overall health care expense increases, ails Medicare.
For all these reasons, there is a potential Medicare funding shortfall that will need to be addressed.
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