What Health Reform Is About: Real People, Real Needs
We now stand on the threshold of historic reform of our health care system. But make no mistake, crossing that threshold, or doing so with the particular provisions in current legislation, is not a certainty. As legislators merge and amend the bills before them, it’s worth pausing for a moment and considering what this is all about: real people in real need–millions of uninsured and vulnerable Americans for whom successful reform would bring relief or for whom failure would bring additional years, possibly decades, of struggle.
Research released today in the journal Health Affairs, by me with colleagues Steve Pizer and Lisa Iezzoni, shines light on a particularly vulnerable set of Americans in desperate need of health insurance and the access to care it would facilitate. In particular the study reveals that low-income people with chronic health conditions or disabilities can have outrageously high uninsurance rates, nearly 50% if they live in the south and do not qualify for public health programs (see figure below; click for larger, sharper image).
How can so many low-income Americans be uninsured? It is a common misconception that a health care safety net—Medicaid—protects all such individuals. In reality, due to the design of the program and state variation in implementation, many fall through the cracks. We’ve all heard that the number of uninsured in America has been rising and that health reform would finally reverse that trend. We may be aware that we could lose our own insurance if we lose our jobs, develop a serious illness or disability, or both. What we may not be aware of is that the safety net of public insurance, the Medicaid program, is tremendously uneven and might not protect us if we really needed it.
Current federal law specifies that adults with low incomes and assets can qualify for Medicaid if they belong to specific federally defined eligibility categories including: old age, blindness, disability (narrowly defined), being pregnant, or having young children. That means that, in general, under federal law Medicaid may not cover individuals who do not fall into any of these categories no matter how low their income and assets or how seriously ill or functionally impaired they may be. The states have wide discretion in setting eligibility rules for these groups.
Even for those in the federal categories, states establish their own income and asset thresholds, which can vary substantially. For example, income thresholds for unemployed parents in 2009 were 21% of the federal poverty level (FPL) in Florida, 29% in Georgia, and 13% in Texas. Corresponding income thresholds were typically much higher in northeastern states: 150% in New York, 90% in Ohio, and 133% in Massachusetts (source: statehealthfacts.org).
The geographic and categorical variation in Medicaid eligibility is reflected in rates of uninsurance. The above figure from our study, based on publicly available Medicare Expenditure Panel Survey data, illustrates rates of uninsurance nationally and by U.S. region for two populations of low income individuals with functional limitations or serious health conditions: those in federal Medicaid categories (in blue) and those who are not in federal Medicaid categories (in red).
The sub-population of low income individuals with functional limitations or serious health conditions is small, about 6% of the working-age population. But it is a group that is in particular need of health insurance coverage, and as the figure shows, many members of the group fall through the holes in our health care systems’ safety net and are uninsured. Except for those in federally defined Medicaid categories in the northeast, uninsurance rates illustrated in the figure are above the U.S. population average of about 15% for the time period illustrated (2000-2005). For individuals not in federal eligibility categories and living in the south, the uninsurance rate is nearly 50%.
If health reform passes in something like its current form, Medicaid would become available to all individuals with incomes below 135-150% of the federal poverty level (source: The Henry J. Kaiser Family Foundation, “Side-by-Side Comparison of Major Health Care Reform Proposals”). Regional variation in uninsurance rates for low income individuals would be vastly reduced and the seemingly capricious eligibility distinctions that exclude so many chronically ill and disabled individuals would disappear. Expanding coverage for these groups would have profound implications for their health, as described in our paper.
As the debate over health reform grinds on it is worth keeping in mind what this is really all about. Those in desperate need of coverage who have fallen through the holes in the current system may not get as much attention as lawmakers and political tactics, but in reality they are far more important.
Non-Medicare Retiree Health Options: Medigap, Employer Plans, and Other Government Programs
This post originally appeared on The Finance Buff.
In my recent three-post series on Medicare’s structure and payment systems (part I, part II, part III), I deliberately did not discuss other sources of health benefits for retirees. These include individually purchased Medicare supplements (Medigap), employer-sponsored plans, and benefits from other government sources (e.g., Medicaid, Veterans Health Administration, and others).
With one caveat, none of these are formally part of Medicare in the sense that Medicare does not administer or finance the benefits. The caveat is that Medicare does pay a subsidy to employers who offer a qualified drug benefit. Also, employers can offer Medicare Advantage (MA) plans as their retiree health benefit which is subsidized by Medicare (as described in a prior post). Nevertheless, employer plans are conventionally thought of as outside Medicare proper.
Medigap
Of the additional sources of retiree health benefits listed above, Medigap is the only one available to every elderly Medicare beneficiary. Medigap policies supplement Medicare in the sense that they cover some of the FFS Medicare cost sharing (copayments, deductibles, and coinsurance). They also complement Medicare to the extent they provide benefits not offered by FFS Medicare. Medigap policies are standardized and identified by letters A through L, except in Massachusetts, Minnesota, and Wisconsin, which have their own standardization scheme (source).
Beneficiaries must be enrolled in both Medicare Part A (hospital insurance) and Part B (outpatient insurance) before purchasing a Medigap policy. One cannot enroll in both an MA and a Medigap plan. Since Medigap policies are not subsidized by Medicare, beneficiaries pay the full premium, which varies by insurer, plan type, and state, and can be several hundred dollars per month. Medigap policies are guaranteed renewable (can’t be canceled due to health problems) but are not always guaranteed issue (you can only buy them during open enrollment periods or after certain events). Since 2006, Medigap policies do not offer prescription drugs (source).
Employer Plans
Employer plans are another common, though not universally available, way retirees receive health benefits. Because employer plans vary in benefits and cost by employer, there is not much that can be said about them in general. Comprehensive information on such plans is not publicly available so they are not as widely studied as other sources of retiree health benefits (one source for further reading is the Kaiser/Hewitt survey).
Other Government Sources
The other major sources of health benefits for retirees are Medicaid and the Veterans Health Administration (VHA). The former is available for low income/low asset elderly individuals but the qualification levels and exact benefits vary by state. The latter is available for certain veterans with service-connected health issues or low incomes. Both Medicaid and VHA benefits are very low cost to the beneficiary. Medicaid programs for Medicare beneficiaries are widely studied (source for Medicaid). The VHA is less widely studied (here’s one source). Both can be important sources of financing of health care for qualified beneficiaries but the majority of Medicare beneficiaries are not eligible for either.
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