Category Archives: Health Care

State Health Care Costs Vary Significantly – Demographics, provider fees, Medicaid, and the economy can all drive spending

Source: Maria Schiff, Pew Charitable Trusts, State Health Care Spending, June 3, 2016

When it comes to health care spending, states face a complicated set of challenges and financial burdens, with obligations ranging from caring for their most vulnerable populations—the poor, elderly, very young, chronically ill, or incarcerated—to providing coverage for state employees and retirees as part of compensation packages.

All told, states spend hundreds of billions of dollars a year on various kinds of health care. But the amount each state spends doesn’t necessarily reflect either efficiency or waste. And the ability to control costs often falls outside the control of policymakers. For example, certain states must pay a larger portion of Medicaid costs (the program is jointly funded by the federal government), others pay their providers higher fees, and some residents require more care than others. Demographics—including poverty rates, the population’s age and overall health, and the number of prisoners and retirees—can affect a state’s health costs. A state’s economy also plays a major role in determining its health expenses….

A Three-Dimensional Action Plan to Raise the Quality of Care of US Correctional Health and Promote Alternatives to Incarceration

Source: Homer Venters, American Journal of Public Health, Vol. 106, No. 4, April 2016
(subscription required)

From the abstract:
The United States has the world’s highest incarceration rate. Nonetheless, health care provided during approximately 12 million annual incarcerations remains disconnected from the rest of the nations’ health apparatus. Care delivered to the incarcerated disproportionately impacts the poor, people of color, and those with behavioral health problems. The scope and quality of this care is inconsistent and often directed by security leadership, not health professionals. Additionally, vital information gathered in these settings is rarely used to coordinate care with community providers or consider alternatives to incarceration. To increase the quality and coordination of correctional health care, three key areas must be addressed: the funding model, the scope of services, and correctional health staff.

Workplace Wellness Programs Characteristics and Requirements

Source: Karen Pollitz and Matthew Rae, Kaiser Family Foundation, Issue Brief, May 19, 2016

From the summary:
The majority of large employers that offer health benefits today also offer at least some wellness programs in an effort to promote employee health and productivity and reduce health related costs. Workplace wellness programs vary in the services and activities they include, and about three-in-ten large employers use incentives to encourage employees to participate. Depending on a program’s characteristics, different federal rules might apply. Final regulations recently issued by the Equal Employment Opportunity Commission (EEOC) would change standards applicable to certain workplace wellness programs that use incentives to encourage workers and their spouses to provide personal health information. These new rules are intended to be more consistent with other standards implementing requirements in the Affordable Care Act (ACA) that apply to certain workplace wellness programs. Both rules seek to balance employer interest in incentivizing workers to participate in wellness programs against requirements that prohibit discrimination based on health status, disability, and genetic information.

Hospital Community Benefit Spending: Leaning In on the Social Determinants of Health

Source: Sara Rosenbaum, Milbank Quarterly, Volume 94 Issue 2, June 2016

For as long as the Internal Revenue Code has existed, federal tax policy has exempted corporate entities organized and operated for charitable purposes, as long as they meet applicable federal requirements. The Code does not identify the promotion of health as an explicit charitable purpose, but since 1956 the IRS has recognized that hospitals can qualify as tax-exempt charities. The 1956 standards identified the provision of charity care as the sine qua non of tax-exempt status. But in 1969 the Nixon administration revised the standard, eliminating charity care as a basic requirement and substituting in its place a nebulous “community benefit” standard that gave hospitals broad latitude to define activities that would benefit their communities. These activities ranged from financial assistance to uninsured and underinsured patients to participation in government insurance programs, research, health professions education and training, and other “community health improvement” activities identified by a hospital. Legal services advocates for the poor unsuccessfully sought to halt this basic shift in federal policy; over many decades, the IRS offered no further elaboration on its revised standard and engaged in virtually zero enforcement activities. With some notable exceptions, state laws, which typically parallel federal tax law, remained unenforced.

Several important developments have led to renewed attention on tax-exempt hospitals’ community benefit spending practices….

Mental Disorders Top The List Of The Most Costly Conditions In The United States: $201 Billion

Source: Charles Roehrig, Health Affairs, Vol. 35 no. 6, June 2016
(subscription required)

From the abstract:
Estimates of annual health spending for a comprehensive set of medical conditions are presented for the entire US population and with totals benchmarked to the National Health Expenditure Accounts. In 2013 mental disorders topped the list of most costly conditions, with spending at $201 billion.

Building The Mental Health Workforce Capacity Needed To Treat Adults With Serious Mental Illnesses

Source: Mark Olfson, Health Affairs, Vol. 35 No. 6, June 2016
(subscription required)

From the abstract:
There are widespread shortages of mental health professionals in the United States, especially for the care of adults with serious mental illnesses. Such shortages are aggravated by maldistribution of mental health professionals and attractive practice opportunities treating adults with less severe conditions. The Affordable Care Act (ACA) and legislation extending mental health parity coverage are contributing to an increasing demand for mental health services. I consider four policy recommendations to reinvigorate the mental health workforce to meet the rising mental health care demand by adults with serious mental illnesses: expanding loan repayment programs for mental health professionals to practice in underserved areas; raising Medicaid reimbursement for treating serious mental illness; increasing training opportunities for social workers in relevant evidence-based psychosocial services; and disseminating service models that integrate mental health specialists as consultants in general medical care. Achieving progress in attracting mental health professionals to care for adults with serious mental illnesses will require vigorous policy interventions.

How Big Pharma Uses Charity Programs to Cover for Drug Price Hikes

Source: Benjamin Elgin, Robert Langreth, Bloomberg Businessweek, no. 4476, May 23-29, 2016

A billion-dollar system in which charitable giving is profitable. …. But this is not a feel-good story. It’s a story about why expensive drugs keep getting more expensive, and how U.S. taxpayers support a billion-dollar system in which charitable giving is, in effect, a very profitable form of investing for drug companies—one that may also be tax-deductible. ….

The ARC and the Covenants, 2.0: an update on the long-term credit risk of US states

Source: Michael Cembalest, J.P. Morgan, Eye on the Market, May 19, 2016

As managers of ~$70 billion in municipal bonds across our asset management business (Q1 2016), we’re very focused on the total indebtedness of US states. New GASB rules have now standardized the reporting of municipal liabilities, so we’re taking this opportunity to update our assessment of how much it will cost states to service them. Total liabilities include bonds and obligations related to underfunded pensions and retiree healthcare benefits (referred to as “OPEB”, an acronym for Other Post-Employment Retirement Benefits). Pensions and OPEB are a big part of the debt picture: while US states have ~$500 billion of bonds supported by state tax collections and general revenues, they have another $1.0-$1.5 trillion of unfunded pension and OPEB liabilities, depending on rates used to discount them.

After analyzing 330 single-employer and multi-employer pension and OPEB plans, we created a single measure for each state. The chart shows the ratio of what states currently spend on bonds, pensions and OPEB as a percentage of their revenues (blue bars), and what they would be spending assuming a 6% return on plan assets, amortizing any unfunded pension and OPEB liabilities over 30 years (total bars). For multi-employer plans, we only include the state’s share of pension and OPEB liabilities since local entities are responsible for the rest.

Premium Subsidies, the Mandate, and Medicaid Expansion: Coverage Effects of the Affordable Care Act

Source: Molly Frean, Jonathan Gruber, Benjamin Sommers, National Bureau of Economic Research (NBER), NBER Working Paper No. w22213, April 2016
(subscription required)

From the abstract:
Using a combination of subsidized premiums for Marketplace coverage, an individual mandate, and expanded Medicaid eligibility, the Affordable Care Act (ACA) has significantly increased insurance coverage rates. We assessed the relative contributions to insurance changes of these different ACA provisions in the law’s first full year, using rating-area level premium data for all 50 states and microdata from the 2012-2014 American Community Survey. We employ a difference-in-difference-in-difference estimation strategy that relies on variation across income groups, areas, and years to causally identify the role of the ACA policy levers. We have four key findings. First, insurance coverage was only moderately responsive to price subsidies, but the subsidies were still large enough to raise coverage by almost one percent of the population; the coverage gains were larger in states that operated their own health insurance exchanges (as opposed to using the federal exchange). Second, the exemptions and tax penalty structure of the individual mandate had little impact on coverage decisions. Third, the law increased Medicaid coverage both among newly eligible populations and those who were previously eligible for Medicaid (the “woodwork” effect), with the latter driven predominantly by states that expanded their programs prior to 2014. Finally, there was no “crowdout” effect of expanded Medicaid on private insurance. Overall, we conclude that exchange premium subsidies produced roughly 40% of the ACA’s 2014 coverage gains, and Medicaid the other 60%, of which 2/3 occurred among previously-eligible individuals.

The Decline of American Unions Is a Threat to Public Health

Source: Michael J. Wright, American Journal of Public Health, Vol. 106, No. 6, June 2016
(subscription required)

From the abstract:
Empowerment is critical for public health. The empowerment of women translates to health for all members of society. Community empowerment enables access to affordable health care, decent housing, and public safety. Unions are the organizations through which workers collectively become empowered. But today unions are under attack and in decline. Two articles in this issue of AJPH demonstrate why this is a threat to public health.

Hagedorn et al. examined 16 binding union contracts with employers in the Pacific Northwest, showing how the contracts improved the lives and promoted the health of union members. They found that the contracts raised earnings, provided retirement benefits, included employer-paid health insurance, promoted occupational safety and health, and protected workers from discrimination and unfair treatment. All are important determinants of health.

The article by Tsao et al. indirectly shows why union efforts to increase earnings are especially important. The authors modeled an increase in New York City’s minimum wage to $15, and found that it could have prevented 2800 to 5500 premature deaths between 2008 and 2012. Of course, wage increases for members are usually at the top of union collective bargaining agendas, especially for newly organized low-wage workers. Unions also are at the forefront of efforts to increase the minimum wage for all workers.
The Role of Labor Unions in Creating Working Conditions That Promote Public Health
Jenn Hagedorn, Claudia Alexandra Paras, Howard Greenwich, Amy Hagopian, American Journal of Public Health, Vol. 106, No. 6, June 2016
(subscription required)

From the abstract:
We sought to portray how collective bargaining contracts promote public health, beyond their known effect on individual, family, and community well-being. In November 2014, we created an abstraction tool to identify health-related elements in 16 union contracts from industries in the Pacific Northwest. After enumerating the contract-protected benefits and working conditions, we interviewed union organizers and members to learn how these promoted health. Labor union contracts create higher wage and benefit standards, working hours limits, workplace hazards protections, and other factors. Unions also promote well-being by encouraging democratic participation and a sense of community among workers. Labor union contracts are largely underutilized, but a potentially fertile ground for public health innovation. Public health practitioners and labor unions would benefit by partnering to create sophisticated contracts to address social determinants of health.

Estimating Potential Reductions in Premature Mortality in New York City From Raising the Minimum Wage to $15
Tsu-Yu Tsao, Kevin J. Konty, Gretchen Van Wye, Oxiris Barbot, James L. Hadler, Natalia Linos, Mary T. Bassett, American Journal of Public Health, Vol. 106, No. 6, June 2016
(subscription required)

From the abstract:
Objectives. To assess potential reductions in premature mortality that could have been achieved in 2008 to 2012 if the minimum wage had been $15 per hour in New York City.

Methods. Using the 2008 to 2012 American Community Survey, we performed simulations to assess how the proportion of low-income residents in each neighborhood might change with a hypothetical $15 minimum wage under alternative assumptions of labor market dynamics. We developed an ecological model of premature death to determine the differences between the levels of premature mortality as predicted by the actual proportions of low-income residents in 2008 to 2012 and the levels predicted by the proportions of low-income residents under a hypothetical $15 minimum wage.

Results. A $15 minimum wage could have averted 2800 to 5500 premature deaths between 2008 and 2012 in New York City, representing 4% to 8% of total premature deaths in that period. Most of these avertable deaths would be realized in lower-income communities, in which residents are predominantly people of color.

Conclusions. A higher minimum wage may have substantial positive effects on health and should be considered as an instrument to address health disparities.