Leaders in Pharmaceutical Business Intelligence (LPBI) Group

This discussion is composed as two distinct chapters.  The first is a clarification of what is contained in the Affordable Care Act (ACA), the model of care it is crafted from, the insurance mandate, the inclusion of groups considered high risk and uninsured, the inclusion of groups low risk and uninsured, and the economics involved in going from a fractured for profit health care industry to a more stable coverage for patients.  The second is taken from selected articles on the care process and the cost and consequences for improving quality at lower cost.   There are inherent problems at looking at this from a systems point of view, mainly impacted by the relationship of providers to hospitals and clinics, and by the relationships of insurers to the patients and providers in an Accountable Care Organization (ACO) model.

This article has the following two parts:

Part I. The legislative act (ACA) and the model for implementation (Insurance Gateways).

The legislative act (ACA) and the model for implementation (Insurance Gateways)

A. Access and Coverage of Healthcare Reform Mandate

About 2.5 million young adults from age 19 to 25 attained health coverage as a result of the Affordable Care Act, which took effect in September 2010, according to the U.S. Department of Health and Human Services. Prior to the law’s approval, some 13.7 million young adults were uninsured, nearly one-third of the nation’s total uninsured population, according to the nonprofit Kaiser Family Foundation.

Employer-sponsored health insurance forms the backbone of our health insurance system. This leaves small businesses difficult to provide their workers with comprehensive coverage. In 2007, only 25 percent of employees in small businesses had coverage through their own employers, compared with 74 percent of workers in large firms. Moreover, there are few sources of affordable coverage outside the employer-based system, leaving millions of employees in small businesses uninsured or with inadequate health insurance. In 2007, half as many workers in small businesses were uninsured or underinsured compared to employees in large businesses. Congressional health reform bills to reform the health system include provisions specifically aimed at helping small businesses and their employees gain access to affordable, comprehensive coverage.  Then there is another issue since the “Great Recession” of 2008, that there is no stable coverage for an unemployed workforce and indigent families with competing needs for food and health.  (Kaiser Health News, 2009; 67).

The law created insurance exchanges to close the gap.  Employer interest in insurance exchanges is growing. The Kaiser Family Foundation found that 29% of employers with 5,000 or more employees are considering private exchanges as an option for buying healthcare coverage for their employees. A day later, consulting firm Towers Watson released its Health Care Changes Ahead survey, which found that 37% of employers think private exchanges are a reasonable alternative to traditional employer coverage in 2014.

See Figure.  M. M. Doty, S. R. Collins, S. D. Rustgi, and J. L. Nicholson, Out of Options: Why So Many Workers in Small Businesses Lack Affordable Health Insurance, and How Health Care Reform Can Help, The Commonwealth Fund, September 2009.

Changes in Health Insurance Coverage in the Great Recession, 2007-2010

This issue brief examines changes in health insurance coverage over the last decade, with a focus on how changes in the economy, particularly during the “Great Recession” of 2007 to 2009, have affected coverage and the number of uninsured. The paper finds that the number of uninsured grew substantially during the first recession of the decade, increasing by 5 million people from 2000 to 2004; increased more slowly during the brief recovery, growing by 2.1 million people from 2004 to 2007; and then again rose significantly during the Great Recession, rising by 5.7 million people since 2007.
The paper also finds that coverage, especially for children, through the Medicaid and Children’s Health Insurance Programs helped to prevent even more people from being uninsured. While the number of uninsured children declined in recent years, the number of uninsured adults rose. The only notable drop in uninsured adults was for young adults ages 19-25 in 2010, most likely due to the provision of the health reform law that permits young adults to stay on their parents’ insurance. The paper also considers trends in coverage by work status, race and ethnicity, citizenship status and geographical region.
http://kff.org/medicaid/issue-brief/changes-in-health-insurance-coverage-in-the/

Uninsured adults with chronic conditions or disabilities: gaps in public insurance programs.

Pizer SD, Frakt AB, Iezzoni LI. US Department of Veterans Affairs in Boston, MA. 

Health Aff (Millwood). 2009;28(6):w1141-50. http://dx.doi.org/10.1377/hlthaff.28.6.w1141
http://www.ncbi.nlm.nih.gov/pubmed/19843552
Among nonelderly U.S. adults (ages 25-61), uninsurance rates increased from 13.7 percent in 2000 to 16.0 percent in 2005. Despite the existence of public insurance programs, rates remained high for low-income people reporting serious health conditions (25 percent across years) or disabilities (15 percent). Previous research has established that low-income workers, those facing more stringent Medicaid eligibility requirements, and people employed by smaller firms are more likely than others to lack health insurance. Residents of southern states had even higher rates (32 percent with health conditions, 22 percent with disabilities). Those who did not belong to a federally mandated Medicaid eligibility category were about twice as likely as others to be uninsured overall, and uninsurance among this group increased more rapidly over time.
To address this growing problem, President Barack Obama and leaders in Congress passed health insurance reform legislation that is still taking shape. A common feature of the major proposals at this point is that coverage would be expanded by building on existing arrangements. This approach allows people to keep their current insurance if they wish to do so. The Medicaid program is particularly complicated because it is jointly financed and operated by the federal and state governments and because each state has implemented it differently.
See Table 1.

Ultimately, if Congress decides not to eliminate categorical eligibility restrictions, our results indicate that the preservation of eligibility expansions for people with disabilities or chronic conditions would target a population that is particularly vulnerable to uninsurance and its deleterious effects on health.

How Many Are Underinsured? Trends Among U.S. Adults, 2003 And 2007

Healthcare Costs: Another Top 1% Issue

By Chris Kaiser, Cardiology Editor, MedPage Today  Sep 11, 2013  http://www.medpagetoday.com/TheGuptaGuide/PublicHealth/41539

In the U.S., the top 1% of patients ranked by their healthcare expenses accounted for 21% of total healthcare expenditures in 2010, with an annual mean expenditure of $87,570, according to 2010 Medical Expenditure Panel Survey from the Agency for Healthcare Research and Quality in Rockville, Md.  In addition, the top 5% of the U.S. population ranked by healthcare expenses accounted for half of the total of healthcare expenditures, with an annual mean expenditure of $40,876, wrote Steven B. Cohen, PhD, and Namrata Uberoi, MPH, in the Statistical Brief No. 421.  Both of these figures are down from 1996, when the top 1% accounted for 28% of the total healthcare expenditures and the top 5% accounted for slightly more than half.  The total healthcare expenditures for 2010 were $1.26 trillion.

It is important that policy makers are aware of the the “concentration of healthcare expenditures … to help discern the factors most likely to drive healthcare spending and the characteristics of the individuals who incur them,” the authors noted.

Overall, there was a huge divide between the top and bottom 50% of the population in terms of total healthcare expenses. The top 50% accounted for 97% of total healthcare costs, while the lower 50% accounted for only 3% of the total healthcare expenditures.  In terms of income status,

• the top 5% of those designated as poor accounted for 57% of the total healthcare expenditures, with an annual mean expenditure of $46,600, while
• the top 5% of those in the highest income group accounted for 45% of the total healthcare expenditures, with an annual mean expenditure of $40,800.

The report also broke down healthcare spending by the number of chronic conditions, age, race/ethnicity, sex, and insurance. The survey found that chronic diseases take a big chunk of healthcare dollars.

The top 5% of those with four or more chronic conditions accounted for 30% of all healthcare expenditures, with an annual mean of $82,000 — a figure that is

• seven times higher than those in the top 5% with no chronic diseases and nearly
• three times higher than the top 5% with one chronic condition.

A report from 2012 found that Medicare could cut up to 10% of its spending if it focused on chronic disease prevention and coordinated care for those with chronic conditions.   Conditioned on insurance coverage status, the uninsured had the most concentrated levels of healthcare expenditures and the lowest annual mean expenses. Regarding public insurance, the top 5% accounted for 56% of the total healthcare expenditures.

Virtually every state experienced deteriorating access to care for adults over the past decade

GM Kenney, S Zuckerman, D Goin, S McMorrow, Urban Institute  May 2012

We use the Behavioral Risk Factor Surveillance System (BRFSS) to examine state-level changes in three key access indicators over the past decade. Specifically, we explore changes in the likelihood of having unmet medical needs due to cost, receiving a routine checkup, and receiving a dental visit for all nonelderly adults and for the subgroup of uninsured adults. We also consider differentials in access between uninsured and insured adults within each state in 2010, and how these differences are reflected in the relationship between access to care and state-level uninsurance rates.

We find that the deterioration in access to care observed in national trends during the past decade was evident in virtually every state in the country. Similarly, consistent with the national trends, the situation deteriorated more for the uninsured than for other adults in most states, which exacerbated the differentials in access and use between the insured and uninsured that had prevailed at the beginning of the previous decade. At the end of the decade, the uninsured in every state were at a dramatic disadvantage relative to the insured across the three access measures we examined. This analysis suggests that the potential benefits of the coverage expansion in the Affordable Care Act (ACA) are large and exist in every state.

We also found that states with higher uninsurance rates have worse access to care for all three measures, which implies that these states have the most to gain from the ACA. In particular, the ACA coverage expansion has the potential to reduce unmet needs due to costs and other cost-related barriers, problems that are more severe in states with high uninsurance rates.

DOCUMENTATION ON THE URBAN INSTITUTE’S AMERICAN COMMUNITY SURVEY-HEALTH INSURANCE POLICY SIMULATION MODEL (ACS-HIPSM)

Matthew Buettgens, Dean Resnick, Victoria Lynch, and Caitlin Carroll    May 21, 2013

We use the Urban Institute’s American Community Survey – Health Insurance Policy Simulation Model (ACS-HIPSM) to estimate the effects of the Affordable Care Act on the non-elderly at the state and local level. This model builds off of the Urban Institute’s base HIPSM, which uses the Current Population Survey (CPS) as its core data set, matched to several other data sets including the Medical Expenditure Panel Survey-Household Component (MEPS-HC), to simulate changes under ACA. To create HIPSM-ACS, we apply the core behavioral components of the base HIPSM to ACS records to exploit the much larger sample size for more precise estimates at the state and sub-state level. The modeling on the ACS-HIPSM produces projections of coverage changes related to state Medicaid expansions, new health insurance options, subsidies for the purchase of health insurance, and insurance market reforms (see Appendix 1 for more detail on HIPSM).

We simulate eligibility for Medicaid/CHIP and subsidies using the Urban Institute Health Policy Center’s ACS Medicaid/CHIP Eligibility Simulation Model, which builds on the model developed for the CPS ASEC by Dubay and Cook.  (Dubay, L. and A. Cook. 2009. “How Will the Uninsured be Affected by Health Reform?” Washington, DC: Kaiser Commission on Medicaid and the Uninsured.)

We simulate both pre-ACA eligibility and the MAGI-based eligibility introduced by the ACA. This allows us to simulate different scenarios for Medicaid maintenance-of-eligibility under the ACA. The distinction between pre-ACA eligible and newly eligible is also important in determining the share of a beneficiary’s costs paid by the federal government.

Using the three-year pooled sample, the model simulates eligibility for comprehensive Medicaid and CHIP coverage or subsidy using available information on the regulations for implementing the ACA, including the amount and extent of income disregards for eligibility pathways that do not change under the ACA and for maintenance-of-eligibility for each program and state in place as of approximately June 2010.

Under the ACA income eligibility is based on the IRS tax definition of modified adjusted gross income (MAGI), which includes the following types of income for everyone who is not a tax-dependent child: wages, business income, retirement income, investment income, Social Security, alimony, unemployment compensation, and financial and educational assistance (see Modeling Unemployment Compensation in the appendix). MAGI also includes the income of any dependent children9 required to file taxes, which for 2009 is wage income greater than $5,700 and investment income greater than $950. To compute family income as a ratio of the poverty level, we sum the person-level MAGI across the tax unit.

Current eligibility is determined based on state rules for 2010. State rules include income thresholds for the appropriate family7 size, asset tests, parent/family status, and the amount and extent of disregards8, for each program and state in place as of the middle of 2010 .

we estimate two separate probit models, each with the following covariates:

1. Age Category: 0 – 5, 6 – 18, 19 – 44, 45 – 64.
2. Health Status
3. Worker Status (Household Level)
4. Wage (Logarithmic Transformation)
5. HIU Income to Poverty Threshold Ratio
6. Number of Children
7. Presence of a child in Public Coverage
8. Citizenship Status
9. Number of Adults in the Family

The dependent variable is an indicator of non-group non-exchange policy holder status. Again we compare each respondent’s predicted probability to a standard uniform random number and assign enrollment in the non-group non-exchange to those observations with probabilities that exceed the random number. Appendix Table 5 shows the overall new enrollment in the non-group non-exchange coming out of our model. It shows that the large majority of non-group enrollees outside the exchange are expected to come from single-person policyholders.

We develop a model, again based on HIPSM output, to predict which single ESI policy holders in the ACS are likely to switch to a family plan. We restrict our model to HIUs in which there is at least one single policy holder and at least one other member of the HIU that could potentially be covered by an ESI family plan. The eligible dependents include those with baseline non-group or uninsurance that had not already taken up coverage in a previous model. Note that we only model moving from an individual plan to a family plan; we did not model adding a dependent to a current family plan. Within the eligible group of single ESI policy holders, we use the following covariates to estimate the probability that they will switch to a family ESI policy:

1. HIU Type: Individual, Unmarried with child, Married without Child, or married with children
2. Age Category: 0 – 5, 6 – 18, 19 – 44, 45 – 64.
3. Health Status
4.  Worker Status (Individual Level)
5. •Wage (Logarithmic Transformation)
6. •HIU Income to Poverty Threshold Ratio
7. •HIU Income to Poverty Threshold Categories (<138% FPL, 138% – 200% FPL, 200% – 300% FPL, 300% – 400% FPL, 400%+ FPL)
8. •Number of Children
9.  Presence of a child in Public Coverage
10.  Citizenship Status
11.  Firm Size
12.  Education Status

These estimates assume that the ACA is fully implemented with the Medicaid expansion in all states and that the same basic implementation decisions are made across the states. At the time of writing, even states such as Massachusetts which have been on the forefront of ACA implementation had not finalized their plans, so any modeling of variation in state decisions would necessarily involve a lot of guesswork. Also, it will take several years for enrollment in new programs such as the exchanges and Medicaid expansion to ramp up so the full effects that are estimated under the simulation model would not be felt until 2016 or later. Enrollment in the initial years would also be affected by state and federal decisions. For example, in the proposed rules released by HHS in January 2012, the deadline for establishing unified eligibility and enrollment between Medicaid and the exchange was pushed back to 2015.

Health insurance status change and emergency department use among US adults.

Ginde AA, Lowe RA, Wiler JL.
Department of Emergency Medicine, University of Colorado School of Medicine, Aurora, CO.   http://www.ncbi.nlm.nih.gov/pubmed/22450213 
Arch Intern Med. 2012 Apr 23;172(8):642-7.   http://dx.doi.org/10.1001/archinternmed
Recent events have increased the instability of health insurance coverage. We compared emergency department (ED) use by newly insured vs continuously insured adults and by newly uninsured vs continuously uninsured adults. Overall, 20.7% of insured adults and 20.0% of uninsured adults had at least 1 ED visit. However, 29.5% of newly insured adults compared with 20.2% of continuously insured adults had at least 1 ED visit. Similarly, 25.7% of newly uninsured adults compared with 18.6% of continuously uninsured adults had at least 1 ED visit. After adjusting for demographics, socioeconomic status, and health status, recent health insurance status change was independently associated with greater ED use for newly insured adults (incidence rate ratio [IRR], 1.32; 95% CI, 1.22-1.42 vs continuously insured adults) and for newly uninsured adults (IRR, 1.39; 95% CI, 1.26-1.54 vs continuously uninsured adults). Among newly insured adults, this association was strongest for Medicaid beneficiaries (IRR, 1.45) but was attenuated for those with private insurance (IRR, 1.24) (P < .001 for interaction). Recent changes in health insurance status for newly insured adults and for newly uninsured adults were associated with greater ED use.

Health Insurance and Access to Health Care in the United States

Catherine Hoffman, Julia Paradise
Annals of the New York Academy of Sciences 2008; 1136.    http://dx.doi.org/10.1196/annals.1425.007 
Reducing the Impact of Poverty on Health and Human Development: Scientific Approaches pages 149–160, June 2008

In the United States, where per capita health care costs are the highest in the world and continue to escalate, health insurance has become nearly essential. Having reasonable access to health care rests on many factors: the availability of health services in a community and personal care-seeking behavior, for example. However, these and other factors are often trumped by whether a person can afford the costs of needed care. Health insurance enables access to care by protecting individuals and families against the high and often unexpected costs of medical care, as well as by connecting them to networks and systems of health care providers.
Health insurance, poverty, and health are all interconnected in the United States. This article synthesizes a large and compelling body of health services research, finding a strong association between health insurance coverage and access to primary and preventive care, the treatment of acute and traumatic conditions, and the medical management of chronic illness. Moreover, by improving access to care, health insurance coverage is also fundamentally important to better health care and health outcomes. Research connects being uninsured with adverse health outcomes, including declines in health and function, preventable health problems, severe disease at the time of diagnosis, and premature mortality.
Most working-age adults obtain health coverage for themselves and their dependents as a benefit of employment. However, this benefit has been gradually eroding as health premiums, in tandem with higher health care costs, grow at a rate far outpacing rates of general inflation and wages. In 2005, 61% of the nonelderly had insurance through an employer, down from 66% in 2000.1 Low-wage workers are far less likely than higher-wage workers to have access to job-based coverage. In 2005, more than half of workers in poor families and more than a third of those in near-poor families had no offer of job-based coverage in the family.2 When it is available, health insurance is often unaffordable for low-income people, whose household budgets are strained to meet food, housing, and other basic needs.

Figure 1. Health insurance coverage of the nonelderly population, 2006.

http://onlinelibrary.wiley.com/store/10.1196/annals.1425.007/asset/image_n/NYAS_1136007_f1.gif    Source: Kaiser Commission on Medicaid and the Uninsured/Urban Institute analysis of Current Population Survey, March 2007.
Those with Medicaid coverage are the most likely to be in fair or poor health because the program’s eligibility requirements include being severely disabled and/or low-income (fig. 2).

Figure 2. Percentage of U.S. nonelderly population reporting fair or poor health, by income and insurance status, 2006.

http://onlinelibrary.wiley.com/store/10.1196/annals.1425.007/asset/image_t/NYAS_1136007_f2_thumb.gif       Source: Kaiser Commission on Medicaid and the Uninsured/Urban Institute analysis of Current Population Survey, March 2007.
The model for healthcare reform was selected from that enacted in Massachusetts. Important statements from the Massachusetts Act are as follows:
to promote patient-centeredness by, including, but not limited to, establishing

• 1137 mechanisms to conduct patient outreach and education on the necessity and benefits of care
• 1138 coordination, including group visits and chronic disease self-management programs;
• 1139 demonstrating an ability to effectively involve patients in care transitions to improve the
• 1140 continuity and quality of care across settings,
• 1146 establishing mechanisms to protect patient provider choice,

Individual Mandate

A provision called the individual mandate, requires all Americans to buy some form of health insurance. Whether it is constitutional was in question before the Supreme Court. While the mandate is separate from the provision allowing young adults up to the age of 26 to be covered under their parents’ policies, the court could have decided to scrap the entire law — instead of just the mandate — leaving millions of young adults in the lurch. The mandate was upheld.

For many young adults, affording health insurance on their own will be particularly difficult.  The unemployment rate for young adults age 16 to 24 was 16.4% in March, twice the national average for the population as a whole.  And many of those who do find jobs, often aren’t being offered health benefits.  Less than a quarter, or 24%, of workers between the ages of 19 and 25 were offered health insurance by their employers in 2010, down from 34% in 2000, according to the Employee Benefit Research Institute, an independent public policy organization. Meanwhile, nearly 57% of the rest of the working population between the ages of 26 and 64 were covered.

B. Economics of Universal Delivery of Care – Stakeholders’ Trade offs