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Robert E. Hurley, Ph.D.Virginia Commonwealth University and
the Center for Studying Health System Change
Cross Community Perspectives on Safety Net Models
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Overview
Indigent care eco-systems Approaches to ensuring access to care Community Tracking Study Illustrative market experience Extracting some lessons Conclusion
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Communities have distinct indigent care “eco-systems”
Multiple approaches to ensure acute medical care availability to low income persons without insurance coverage
Community mores, public policy, provider capacity, extent and nature of demand influence access to indigent care
Communities implicitly or explicitly customize approaches to meet unique needs based on particular circumstances
A balance is achieved, somehow: an eco-system emerges
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Methods to Ensure Access to Care
Make it Buy it Subsidized it
-Direct subsidy
-Cross-subsidy
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Make it
Directly provide services via government owned facilities and/or employed providers
Classic “safety net” providers, e.g. publicly-owned hospitals, FQHCs, local health dept. clinics
Open door policy (serve all comers) Traditional emphasis on acute care and episodic
delivery Challenge is how to get best value for investment
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Buy it
Public sector purchases care from private providers on behalf of persons who cannot afford it themselves
-”vendor payment” programs
- payments typically below market rates Provide/purchase coverage for persons who cannot
purchase it for themselves
-Medicaid expansions, SCHIP, etc
-Opportunities to “privatize” coverage
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Subsidize—Direct Subsidy
Provide support to selected providers to defray cost of uncompensated care
- designated for groups/classes of individuals
- may include (arguably) tax exempt status Public and private (e.g. conversion foundations)
resources committed to targeted programs and populations
- e.g. Disproportionate share payments to hospitals (DSH), free clinics
Limited ability to meet large scale needs
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Subsidize-- Cross-subsidy
Require providers to donate care and finance donation by generating surpluses from other payers
e.g. EMTALA and other non-discrimination policies Convenient kind of default public policy decision
(“hidden tax” most easily supported; hospital as tax collector)
In addition to providing funds for uninsured, seen as source to make-up for public payer shortfalls
Promotes/perpetuates “cost-shifting”
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“Cost-shifting” to Private Payers Hospital Payments as % Costs-1990
89.0% 80%
21.00%
126.60%
103.60%
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
140.00%
Medicare Medicaid Uninsured Private Total
Source: ProPAC, 1992.
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“Cost-shifting” to Private Payers Hospital Payments as % Costs-2001
99.4% 98%
12.20%
113.10%104.80%
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
140.00%
Medicare Medicaid Uninsured Private Total
Source: MedPAC, 2003
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The Rise and Fall and Rise of Cost-Shifting—1990-2005
Hospital payments as percentage of costs by payer
60.00%
70.00%
80.00%
90.00%
100.00%
110.00%
120.00%
130.00%
140.00%
Private Payers
Source: MedPAC, 2005
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Cost-Shifting and its Implications
Cost shifting to private purchasers played key role in promoting managed care revolution
Managed care = systematic suppression of cost shifting
Cost shifting is growing again Many current state reform initiatives (ME, MA, CA)
highlighting cost shifting consequences Can a hidden tax be replaced by not-so-hidden
financing sources???
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Community Tracking Study Sites*
Phoenix, AZPhoenix, AZ
Orange County, CAOrange County, CA
Little Rock, ARLittle Rock, AR
Miami, FLMiami, FL
Greenville, SCGreenville, SC
Indianapolis, INIndianapolis, IN
Lansing, MILansing, MI
Northern NJNorthern NJ
Syracuse, NYSyracuse, NY
Cleveland, OHCleveland, OH
Boston, MABoston, MA
Seattle, WA, WASeattle, WA, WA
*Community Tracking Study—Funded by the Robert Wood Johnson Foundation; carried out by the Center for Studying Health System Change
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Mix of Coverage in CTS Markets
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Mix of Coverage in HSC Markets
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Eco-systems in Illustrative Markets
Boston Indianapolis Little Rock Orange County
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Boston
Extensive private coverage; relatively generous Medicaid coverage; low level of uninsured (7-8%)
Make Two major public hospitals, 20+ CHCs
Buy Free care pool-DSH and hospital tax supported
Subsidize Public hospitals offer managed care products
to uninsured via subsidies
New universal coverage program being rolled out; combinations of strategies including make, buy, and subsidize—good sensitivity to protecting safety net in transition
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Indianapolis
Solid employer coverage, modest Medicaid,
manageable uninsured burden
Make Public hospital with tax support
and AHC affiliation, several CHCs Buy Publicly supported local managed care product
for uninsured paying for ambulatory care at CHCs Subsidize Inpatient care for uninsured concentrated in
public
hospital
Rapid growth in local low income coverage program and growing demands on public hospital and academic specialty departments creating some financial distress.
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Little Rock
Modest employer coverage, Medicaid expansive only for children, substantial uninsured population
Make UA Medical Sciences Center major regional source of inpatient and specialty care for indigent
Buy Highly inclusive ARKids (Medicaid and SCHIP)
Cross subsidize Reliance on NFP hospitals and physicians for donated care
Marked disparities between access to care for kids vs. adults; serious shortage of specialty care for uninsured even at AHC
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Orange County, CA
Limited employer sponsored coverage, moderate Medicaid participation,
substantial uninsured
Make UC-Irvine—public AHC, only 2 FQHCs in county with 3 million, 19 private CHCs Buy Medically indigent vendor program for
legal county residents
Subsidize Donations to private clinics and free clinics/CHCs, childrens’ hospital
Cross subsidize FP/NFP hospitals provide limited
uncompensated inpatient and ED care
Access to specialty care significant problem and disproportionate burden on relatively small AHC
New state universal coverage proposal now in play
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Common Themes
Strength of employer coverage is key Scope of Medicaid is important Public providers (makers) typically backbone Many private providers prone to avoid uninsured
where they can Some success in local low income coverage models
—but typically exploit inpatient care providers Specialty care and prescription drugs can’t be “made”
and are expensive to buy or subsidize, so increasingly difficult to acquire
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Contemporary Concerns
Employer-sponsored insurance growth has stalled and appears to be slipping
Premiums rising; benefits being trimmed; take-up rates likely to fall
Extent of “under-insurance” increasing Donor fatigue (contributed charity care) growing Public programs expanding enrollment but
financial burden growing Cost-shifting being quantified and vilified, but
replacement financing mechanism unclear
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Broad Strategies—What Could be Done?
Incrementally expand public programs to cover more people
Shore up erosion in employer coverage Expand availability of private coverage via
incentives to individuals Create new grouping mechanisms to overcome
limitations of employer sponsorship Compel private firms to provide coverage or
individuals to acquire coverage Consider a national health insurance scheme to
complement or replace existing patchwork
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What’s Likely to be Done?
Not very much on a national level, yet, though universal coverage for children may be in sight
Promising, but uneven, action at state level— “mosaic approach” is most common: fill in picture with separate pieces targeted to distinct populations
Affordability remains a crucial impediment
Local eco-systems will remain key
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If We Do Nothing. . .
Growing strains on public providers Default public policy to remain cost-shifting in
many/most markets Uneven burden by -communities -provider types -service lines “Deserving kids” vs. others Economics disparities are at the root of much of
the contemporary disparity concern
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The Widening Rift. . .
A widening rift in access is inevitable among the have, the have-little, and the have-not
No likelihood of broad gauge, near term response
Eco-systems will adapt but stress and distress will become more evident on all parties