Dean's Newsletter

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Covering the Uninsured

May 18, 2006

Health care in the United States is truly a "best of times, worst of times" story. Many corporations, and most institutions in the public and not-for-profit sectors, provide excellent health insurance coverage that gives employees access to world-class health care. Moreover, government-sponsored programs are also available for those over 65 (Medicare) and for those who have limited financial resources and meet State-defined qualifications (Medicaid).

There are an increasing number of individuals in the United States, however, who fall between the cracks of the safety net and are uninsured. According to data from the 2005 Health Insurance Survey, there were 46 million uninsured at any given time, and 53+ million uninsured at some point during the year. At a recent UR SMD forum on Covering the Uninsured, we heard from one such individual who was laid off from her job as a masters-level social worker, and found herself "in the middle" between employer-covered health care and Medicaid. This was a 54-year-old woman (we'll call her "Jane") with a long history of diabetes, asthma and other medical conditions. During the time that she received unemployment checks, she did not qualify for Medicaid. Her unemployment checks, however, barely covered her baseline needs for rent, heating bills and food, much less medications and doctor visits. How do you choose between paying for heat to stay warm in winter and paying for insulin to keep your blood sugar under control? Indeed, an inadvertent effect of the incomplete safety net is that individuals with serious medical conditions cannot maintain their treatment schedules adequately, which ultimately worsens their health and leads to more medical care at greater expense.

To address some of her health care needs, Jane turned to St. Joseph's Neighborhood Center, a sponsored ministry of the Sisters of Saint Joseph of Rochester that is dedicated to providing quality, comprehensive health care services to people who currently are unable to access health care. This work is achieved through a web of partnerships, including volunteer medical students and faculty, that bring together the Center's 8 staff, community health care providers, and more than 150 volunteers who help to provide services and support the Center. About 10,000 primary and mental health care visits are provided annually at St. Joe's. Currently, they are caught between wanting more of those in need to know about their services and being able to meet the need. Volunteers are welcome!

Mayor Robert Duffy

Clinics like those at St. Joe's can address part of the problem in a way that can be tangibly felt and understood by those needing the help and those providing it. But what are the full dimensions of the problem throughout New York and the nation, and how might we approach this problem more comprehensively?

On Saturday, May 6, 2006, a forum entitled Covering the Uninsured: Improving Access to Health Care in the 21st Century was held at the University of Rochester. Organizers for the event were members of Region VII of the Medical Student Section of the American Medical Association. This regional forum, capably organized by second-year medical student, Joshua Miller, MPH, along with his student colleagues on the 2005-2006 Executive Board and the Region VII Meeting Committee, attracted many Rochester medical students, other medical students from the northeast, as well as faculty and community-based physicians. The keynote speaker was Mayor Robert Duffy, who spoke about the safety net for health care in Rochester in the context of the problems that the city faces with regard to poverty, safety, education, and gaps in the continuum between government-based programs and employer-based health insurance. Despite these challenges, Mayor Duffy conveyed a great deal of optimism and enthusiasm about the city of Rochester and its ability to address these problems effectively with help from the community, the University, and political leadership at the State and County levels.

After hearing from Mayor Duffy, and from Jane, the remainder of the conference was devoted to presentations, along with interactive discussion with the audience, from several speakers: Michael Boucher, a social worker at St. Joseph's Neighborhood Center; Jackie Lyttle, MBA, Director, Safety Net Programs, Excellus; Charles Phelps, PhD, MBA, Provost, University of Rochester; and myself.

Clearly, broad public-policy issues around access to health care are an abstraction to the 46 million Janes in this country and to those who wish to help them deal with their very real, present-day needs. We must accord great respect to the reality of their experience, which perhaps provides motivation for translating the abstraction of public policy into genuine change in the way our health care services are organized, delivered, and financed.

The predicament that we find ourselves in, as well as potential solutions, was broadly discussed at the Cover the Uninsured forum, with a variety of opinions expressed. What follows in the remainder of this newsletter represent my own conceptualization of the current environment and opinions about the future.

Charles Phelps, PhD, MBA, Provost, University of Rochester

The 46 million Americans under 65 who lack health insurance coverage represent a paradox in health care access. On one hand, the United States already spends substantially more per capita than any other country in the world, and its expenditures on safety-net programs such as Medicare and Medicaid are spiraling out of control. Despite these high and rapidly increasing expenditures on health care, and despite extensive safety net programs, the ranks of the uninsured have grown by over 7 million people since 2000. While the majority of Americans obtain health insurance through their employer as a benefit, being employed does not guarantee insurance. The uninsured come primarily from working families with low and moderate incomes, families for whom coverage is not available in the work place or is unaffordable. According to data from the Kaiser Commission on Medicaid and the uninsured, (the Henry J. Kaiser Family Foundation, January 2006), 17.8% of the non-elderly in the United States were uninsured; in New York State, the figure was 16.7%.

Let's now look more closely at the different components of the "access paradox" and alternative approaches to solving it.

In 1960, spending on health care as a share of gross domestic products (GDP) was 5%. By 2004, expenditure on health care in the United States was $1.9 trillion, or about 16% of GDP. A comparison of spending on health care in selected countries in the Organization for Economic Cooperation and Development (OECD) shows that health care spending per capita in the U.S. is approximately twice that in Canada and Japan, approximately 2 ½ times that of the United Kingdom and three times that of Spain. Of course, a given level of spending on health care is not intrinsically "too high" or "too low." It all depends on the value of the spending. Are we getting our money's worth? International comparisons of health status show that relative health outcomes in the U.S. do not reflect its level of expenditures. The United States is ranked 28th in life expectancy, 28th in infant mortality, and 31st in deaths under five years of age. Japan is ranked 1, 3, and 3 in these three measures of health status, the United Kingdom is ranked 19, 21, and 24, and Spain is ranked 17, 21, and 15. Indeed, using these broad measures of health status, the United States is only slightly ahead of South Korea, where the spending per capita on health care is 1/5 that of the United States.

Along with this overall increase in spending, spending on safety-net programs—Medicaid and Medicare—have also increased dramatically. Hitting close to home, for example, Monroe County Medicaid costs have doubled in only the last six years, from $84 million to $161 million. This compares—as one important reference point—to increases in Monroe County sales tax revenue of only $9 million during this period, from $112 million in 2000 to $121 million in 2006. Thus, the cost of Medicaid to the County taxpayers now exceeds sales tax revenue by $40 million in Monroe County! In New York State, Medicaid spending per capita ($1,350) is more than twice the national average ($600). Medicaid spending per enrollee also varies widely between states: from a high of $7,506 per enrollee in New York to a low of $2,472 per enrollee in California, based on 2002 data. Interestingly, on average across the nation, 67.6% of Medicaid expenditures covered costs for elderly and disabled enrollees in that year, and 16.9% covered costs for children age 17 and younger. Only 11% covered costs for adults age 18 to 64 (a small share of expenditures are not categorized).

Medicare was 8.5% of federal spending in 1990, is 13% of federal spending in 2006, and is projected to be 20% by 2012. Indeed, based on a forecast from the Social Security Administration released on May 2, 2006, Medicare will exhaust its trust fund reserves 12 years from now.

It is indeed paradoxical that, despite the spiraling increase in the cost of safety net programs (which themselves are unsustainable in terms of depletion of the federal trust funds available to Medicare and the State and the local taxpayer funds available to Medicaid), the ranks of the uninsured continue to grow. As a consequence, the safety net providers—prominent among them, academic health centers such as ours—are increasingly stressed by the resultant need to provide uncompensated care to the uninsured, or highly discounted care (i.e., well below cost) for Medicaid services. At Strong Memorial Hospital, total uncompensated care has increased from $8 million in 1999 to over $25 million in 2006. On the physician side, our faculty physicians are seeing an increasing proportion of Medicaid patients, because few private-practice physicians in Western New York, and virtually no private-practice specialists, will see such patients in their practices. This is not a sustainable financial model for the Medical Center, nor is it a just one for the community; such a responsibility should be shared by providers across the community.

In sum, the safety net is becoming less secure, despite a marked increase in health care expenditures overall and spiraling costs in Medicaid and Medicare. And yet, the capacity and ability of health care providers (hospitals and physicians) to absorb those already in a safety net, as well as those left behind, is increasingly jeopardized by economic constraints. The latter is reflected in annual operating losses among New York State hospitals over the past five years that have ranged from $250–500 million, and in reduced reimbursement rates for physicians that have jeopardized recruitment and retention of new doctors in this area.

What can be done to provide universal health care coverage in a manner that utilizes our scarce resources most efficiently to facilitate access and improve the overall health status of the population? To define the goals, a good starting point is the Institute of Medicine's recommendations on "Insuring America's Health":

• Health care coverage should be universal.
• Health care coverage should be continuous.
• Health care coverage should be affordable to individuals and families.
• The health insurance strategy should be affordable and sustainable by society.
• Health insurance should enhance health and well-being by promoting access to high-quality care that is effective, efficient, timely, patient-centered and equitable.

[Note: the last bullet point is based on the IOM report "Crossing the Quality Chasm"]

At our Covering the Uninsured forum, Provost Phelps, a prominent health economist, reviewed the complexity of the various issues around universal insurance, demographics, technology and financing. In what follows, I will use some of his ideas, but the opinions are, again, solely my own.

Accepting the premise that health care should be universal, continuous, affordable, and of high quality, what should be the overall administrative mechanism? I would argue that, although there is considerable experience with a single-payer system in Canada, Europe and elsewhere, the history, culture and political realities of life in the U.S. would suggest that such an approach is not viable here. Rather, a system that mandated the purchase of baseline health insurance—through a combination of commercial insurance through employers and public plans—is more realistic. In this regard, it is noteworthy that some variant of such an approach is being proposed for covering the uninsured in Massachusetts and many other states. Under such a system, there would be a mix of financing: employer-based insurance would continue, and a minimum "catastrophic/chronic illness" plan (see below) would be mandated for workers and their families. (This runs the risk of job loss, particularly for those near the minimum wage.) The second prong would be Medicare for the elderly. And the third prong would be some form of federalized Medicaid program as the insurance plan of last resort for those not in Medicare and not working.

What should be covered? In my opinion, as a baseline universal benefit there should be coverage for catastrophic care, chronic illnesses (independent of "pre-existing illness"), and certain preventive services. Other insured risks could then be purchased in a tiered pricing structure. This approach would capture the concept of basic health care as a "right," while recognizing that the current high levels of utilization of some services reflect the low (or zero) net price faced by the consumer. The tricky part of this answer relates to what is included in the baseline, particularly as it pertains to nursing homes, because there are so many non-market substitutes available, and new technologies, which may have variable degrees of evidence regarding efficacy and cost effectiveness when they are introduced. Coverage for catastrophic care can be viewed as analogous to homeowner's insurance when your house burns to the ground. Regarding coverage for chronic illness, recall the extraordinary increases in uncompensated care experienced by Strong Memorial Hospital, much of which occurs in the E.D.; baseline coverage for chronic illnesses will avert many E.D. visits and other health care costs. There are many preventive services that have been shown to be effective in averting future morbidity and cost; it makes sense for those to be included in the baseline. Prescription drugs have become pretty much standard now, as they should be. Here too, chronic medications such as Jane's insulin and asthma medications should be included in the baseline, but the cost of other medications should be borne in larger part by the patient, so that again price can play some role in rationing utilization. The federal government should be able to use its leverage to negotiate drug prices, and effective generics should be encouraged through tiered pricing.

I believe that as a major University-based academic health center, we should not only be providers of health care but a participant in the debate and, potentially, a contributor to a more inclusive, functional and effective system of health care delivery and financing.

Meliora,

David S. Guzick, MD, PhD
Dean, School of Medicine and Dentistry