MHA News Now

Economist predicts covering uninsured would save billions

Health care economist Kenneth Thorpe on May 23 projected that four models proposed by the National Coalition on Health Care to expand health care coverage to all Americans would save more money that they would cost to implement. In a report last year, the group proposed four models for achieving universal health coverage: requiring employer-based coverage while providing subsidies for low-income Americans, expanding existing public health insurance programs, creating new public programs for the uninsured, and publicly financing universal coverage. Thorpe projects each model would reduce health care spending by at least $320 billion over 10 years when combined with quality and safety improvement, administrative simplification and cost-containment measures recommended in the 2004 report. Currently, the number of uninsured Americans is expected to grow to 54 million from 45 million within a decade, he said. (via AHA News)

Charity Care on the Rise as Uninsured Patients Flood Hospitals

Fueled by rising numbers of uninsured Americans, hospitals are absorbing higher levels of charity care and bad debt, forcing them to shift those costs to other patients and payers. Today, PricewaterhouseCoopers' Health Research Institute released a new survey that shows hospitals may be providing far more in free care than the $25 billion they report annually. The research also showed that the true value of charity care is unknown because of inconsistencies in the way it is provided, reported and paid for.

The number of uninsured Americans has increased to 45 million.(1) The increase is driven by three factors: Small businesses are dropping coverage because it is too expensive; rising insurance premiums mean that employees are opting out of coverage even when it is offered; and, the economic downturn has led to job losses and subsequent loss of health insurance. In addition, there has been a 23 percent increase since 2000 in the number of undocumented workers (estimated at 10.3 million in the U.S.),(2) many of whom are afraid to apply for health insurance because of their immigration status.

"The availability of free medical care for uninsured people at hospitals across the country is masking the scope of the uninsured problem in the United States," said Kelly Barnes, a partner in PricewaterhouseCoopers Health Industries Group. "Our hospitals are being deluged by more and more uninsured patients who cannot or choose not to pay for medical care, and these acts of charity are all that stand between a thorny policy dilemma and an access crisis for millions of Americans."

The findings of the PricewaterhouseCoopers 2005 Charity Care Survey were included in a comprehensive report on hospital charity care published by PricewaterhouseCoopers Health Research Institute. The report, Acts of Charity: Charity Care Strategies for Hospitals in a Changing Landscape, included an overview of the changing landscape for charity care among U.S. hospitals, survey responses from 100 hospital financial executives and in-depth interviews with top health industry leaders. Highlights of the report include:

• Hospitals in the survey reported providing charity care equivalent to
  an average of 5 percent of net operating income, although many provided
  levels that are significantly higher
• Ninety-two percent of hospitals surveyed said that part of their bad debt could be classified as charity.
• Hospitals increasingly are revising and communicating their charity care policies.

The muddy waters between charity care and bad debt have made it a confusing and difficult topic, resulting in a wave of proposed legislation, litigation and negative press. This attention is aimed particularly at not-for-profit hospitals, which can qualify for exemptions from federal income tax and certain state and local taxes based on varying standards that take into consideration the amount of charity care they provide.

Unable to accurately quantify their community benefit, not-for-profit hospitals have become the target of trial attorneys, Congress and the Internal Revenue Service as to whether they are fulfilling the charitable purposes that qualify them for applicable exemptions. According to the report, 31 states have introduced or passed legislation related to charity care in 2004 and 2005, and federal class-action lawsuits against charitable hospitals have prompted hospitals to review their charity care and collection policies.

Who Qualifies for Charity Care?

Much of the misunderstanding over charity care has arisen from inconsistencies in hospital policies over qualifying for charity and the fact that the qualification process is extremely complex. Many people do not comply with requirements. Without patient cooperation, hospitals cannot correctly classify them as charity cases, and, when these patients do not pay for services, hospitals ultimately must write off the debt.

The PricewaterhouseCoopers survey found that:

• Nearly 70 percent of hospitals had voluntarily revised their charity care policy within the last year. In almost every case, the change was to expand eligibility by raising the Federal Poverty Level percentage.
• More than half of hospitals surveyed have begun posting their charity care policies online.

Accounting for Charity Care

Multiple methods of calculating and reporting uncompensated care in the hospital industry make it difficult to calculate the true cost of charity care, benchmark hospitals or track aggregate trends:

• Three-quarters of hospitals surveyed by PricewaterhouseCoopers calculate charity care based on charges, not actual costs. An additional 9 percent use a combination of charges and costs.
• Hospital charges vary widely by hospital and are influenced by market conditions and competitive pressures. Charges typically are much higher than actual costs, depending on supply and demand. This would suggest that charity care numbers may be significantly higher than true costs.

Hospital Pricing a Much Bigger Problem to Solve

Much of the negative press has focused on hospitals' attempts to collect, sometimes aggressively, on their debts as well as criticism that the uninsured are charged higher prices for services than the discounted prices negotiated by managed care plans or the prices paid by Medicaid and Medicare. Complicating the matter is that (1) hospitals apply a variety of discounts to uninsured patients which make prices difficult to track and (2) hospital charges bear little resemblance to actual costs.

Approximately 5 percent of hospital respondents revised their charity care policy in the past year to apply pricing discounts similar to Medicare or managed care rates.

"The details about how charity care is accounted for are more important today than ever before because charity care affects healthcare resources, bed spaces and physician time, and the cost is reallocated to other patients," said Reatha Clark, partner, PricewaterhouseCoopers Healthcare Industry Group. "It is foolish to think that hospitals can continue to bear the costs of the growing uninsured population. Ultimately, the question is: Whose responsibility is care for the poor and uninsured?"

In its report, PricewaterhouseCoopers provides guidance and nine recommended charity care strategies for hospitals. A full copy of PricewaterhouseCoopers Health Research Institute's Acts of Charity: Charity Care Strategies for Hospitals in a Changing Landscape is available online at http://healthcare.pwc.com/cgi-local/hcregister.cgi?link=pdf/charitycare.pdf.

The PricewaterhouseCoopers 2005 Charity Care Survey included responses from 100 hospital financial executives. Survey respondents had a broad geographic representation from across the U.S. and a strong urban hospital representation. Hospital representation by type included non-academic not-for-profit hospitals (54 percent), academic or teaching hospitals (38 percent) and for-profit hospitals (8 percent).

About PricewaterhouseCoopers Health Research Institute

PricewaterhouseCoopers Health Research Institute provides new intelligence, perspective, and analysis on trends affecting all health-related industries, including healthcare providers, pharmaceuticals, health and life sciences and payers. The Institute is part of PricewaterhouseCoopers' larger initiative for the health-related industries that brings together expertise and allows collaboration across all sectors in the health continuum.

About PricewaterhouseCoopers

PricewaterhouseCoopers (http://www.pwc.com) provides industry-focused assurance, tax and advisory services for public and private clients. More than 120,000 people in 139 countries connect their thinking, experience and solutions to build public trust and enhance value for clients and their stakeholders.

Unless otherwise indicated, "PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP, a Delaware limited liability partnership. PricewaterhouseCoopers LLP is a member firm of PricewaterhouseCoopers International Limited.
    (1) U.S. Census Bureau Report: "Income, Poverty, and Health Insurance
        Coverage in the United States: 2003," August 2004:
        http://www.census.gov/prod/2004pubs/p60-226.pdf
    (2) Jeffrey S. Passel, "Estimates of the Size and Characteristics of the
        Undocumented Population," Pew Hispanic Center, March 21, 2005

More chronically ill and other adults unable to afford prescribed drugs

More than 14 million American adults with chronic conditions could not afford all of their prescriptions in 2003, according to a new study by the Center for Studying Health System Change. Low-income, uninsured working-age adults were most likely to face financial barriers to accessing prescribed drugs, with nearly 60% reporting they could not afford all their prescriptions. Nearly one in six privately insured, working-age Americans and Medicare beneficiaries without supplemental private insurance also said they did not fill at least one prescription because of cost concerns, up from about one in eight in 2001. African Americans were about twice as likely as whites to report problems affording prescriptions.

Report highlights nation's 13 million uninsured young adults

More than 13 million young adults lacked health insurance in 2003, an increase of 2.2 million since 2000, according to a report May 4 by the Commonwealth Fund.

Many of the jobs available to younger workers are low wage or temporary, which typically do not come with benefits, the report notes. Young adults from low-income families are especially likely to lack coverage, with nearly half of 19-29 year-olds in households under the poverty level uninsured.

About 60% of employers who offer health coverage do not cover dependent children after age 18 or 19 unless they are full-time students. The report's authors propose extending coverage through age 23 for unmarried dependent children and for children in the Medicaid and State Children's Health Insurance programs, and ensuring colleges and universities require students to have health coverage and offer a school health plan.

The report was released in co nnection with Cover the Uninsured Week, an AHA-supported national campaign to focus attention on the nation's growing health coverage problem. (via AHA News)

Working but Uninsured: Millions of unemployed Americans uninsured and unable to get medical care

A new study analyzing data from the Centers for Disease Control and Prevention shows that a significant number of working Americans in every state do not have health care coverage, with more than 20 million working adults not having coverage. In eight states, at least one in five working adults is uninsured. In 39 other states, at least one working adult in every 10 does not have health care coverage. The report further reveals that in all 50 states and the District of Columbia, between one-fourth and one-half of all uninsured adults were unable to see a doctor when needed in the past year because of cost.

“Characteristics of the Uninsured: A View from the States” was released this week by the Robert Wood Johnson Foundation (RWJF) during a kickoff event for Cover the Uninsured Week, the largest nonpartisan campaign in history to focus attention on the need to secure reliable, affordable health coverage for all Americans. Cover the Uninsured Week, observed May 1-8 this year, is co-chaired by Presidents Gerald Ford and Jimmy Carter. Noah Wyle, star of the TV drama “ER,” serves as the campaign’s national spokesperson.

The report released this week was prepared for RWJF by researchers at the State Health Access Data Assistance Center, located at the University of Minnesota. Additional findings, of surveyed adults ages 18-64, include:

• The problem is pervasive among workers in every state. States with the highest rates of uninsured residents among employed adults include Texas (27 percent), New Mexico (23 percent), Louisiana (23 percent), Florida (22 percent), Montana (21 percent), Oklahoma (21 percent), Nevada (20 percent), and Arkansas (20 percent). States with the lowest uninsured rates among employed adults include Minnesota (7 percent), Hawaii (9 percent), Delaware (9 percent), and the District of Columbia (9 percent). 
• Uninsured adults are unable to see a doctor when needed. Nationally, 41 percent of uninsured adults report being unable to see a doctor when needed in the past 12 months, due to cost, compared to just nine percent of adults who have health care coverage.
• Uninsured adults are less likely to have a personal doctor or health care provider. Nationally, 56 percent of adults without health care coverage say they do not have a personal doctor or health care provider, compared with just 16 percent of people with health care coverage.
• Adults who are uninsured are much more likely to report being in poor or fair health than are adults who are insured. Nationally, one in five uninsured adults (20 percent) say their health is fair or poor, compared with nearly one in nine adults with health coverage (12 percent).

Mississippi partners have targeted outreach to the public, the faith-based community and the business community this year.

Attached are two documents that include state-by-state comparisons of the uninsured. Also attached is a Resource Guide specific to our state to help individuals who need to find health coverage. More information is also available at www.covermississippi.com.

Download chart_working_but_uninsured.doc

Download MS.pdf

Download SHADAC_Embargoed.pdf

Merck to Cut Drug Prices for Uninsured Americans

Merck & Co. Inc. said recently it will cut the price of many of its drugs by 15 percent to 40 percent for all uninsured people in the United States.

The new prescription drug discount program will apply to more than 45 million uninsured people, regardless of age or income, the company said.

HSAs little use to uninsured but may have other future

Health savings accounts as proposed in President Bush's health care plan would likely expand coverage to less than 1 million of the nation's 45 million uninsured and could destabilize the group market for small employers, according to a study commissioned by the Commonwealth Fund. Separately, two major hospital industry groups said their survey of large insurers indicated that a competitive market was evolving for HSAs and similar Health Reimbursement Arrangements, with the most such products on the market offering comparable access to hospitals and physicians as insurers' other plans.

According to the Commonwealth Fund study, the tax incentives meant to promote HSAs would be of little benefit to the uninsured. More than half of uninsured adults owe no income taxes, while for middle-income uninsured individuals, tax incentives would offset just 3% to 6% of a typical high-deductible plan's annual $2,000 premium. Consequently, 100,000 to 900,000 uninsured adults - 0.3% to 2% of the adult uninsured population - would adopt HSAs, the study estimated. A companion study found that for individuals with annual incomes of up to 200% of the federal poverty level, premiums for a high-deductible plan would take 6% to 30% of their incomes and accompanying out-of-pocket costs would consume up to 30% more. Two-thirds of uninsured have incomes below the federal poverty level. The studies may be downloaded from the Commonwealth Fund's Web site here.

Meanwhile, the American Hospital Association and the Federation of American Hospitals said most HSAs and HRAs, representing 95% of current enrollment in such plans, build on the insurers' existing provider networks and contracted rates. About 60% of health plans provide comparative cost information for consumers, and of those, about half provide average costs for specific services across the HSA/HRA market, the survey found. Nearly half of HSAs and HRAs publish quality data, with 40% providing information about hospitals. Download a PDF of the survey results. (via Modern Healthcare)

Report examines state efforts to cover uninsured populations

A report released April 22 by the Commonwealth Fund examines how states are using grants from the federal Health Resources and Services Administration to study and craft policies to cover uninsured populations. Most states awarded pilot project planning grants are exploring strategies that build on employment-based coverage, generally through publicly funded premium assistance, according to the report by researchers at the Economic and Social Research Institute. Some states uncovered support among employers and providers for tax credits to subsidize the employer or employee share of the premium. Others are exploring premium assistance through Medicaid and the State Children’s Health Insurance Program, among other strategies.

Resources available to help Cover the Uninsured Week event planners

Materials hospitals and others can use to plan and publicize community activities and other events for Cover the Uninsured Week, May 1-8, can be ordered for free or at little cost at the campaign’s Web site. They include campaign fact sheets, information cards, posters, banners, bookmarks and stickers, as well as event planning guides, an educational slide show, and state guides to resources for uninsured individuals  - some available in Spanish also. Event planners also can register to have their events appear on the main Cover the Uninsured Week 2005 calendar, invite people to their events by email, set up a personalized Web page for their events, and gain access to online assistance.

The Mississippi Hospital Association, in conjunction with our state's Covering Kids & Families Coalition, is heading the planning for the statewide observance of the Week for the third year. For more information, visit www.covermississippi.com. If you would like to include your hospital's events on this site, e-mail information to Shawn Lea at slea@mhanet.org or fax to (601) 368-3200.

For daily news updates on issues affecting the uninsured, visit http://covermississippi.blogspot.com.

It’s The Premiums, Stupid: Projections Of The Uninsured Through 2013

Increases in the cost of health care from 1979 to 1999 accounted for the decline in health insurance coverage that occurred during that time period, as our earlier work demonstrated. Here we examine whether the model we presented adequately accounts for the observed changes in health insurance coverage from 1999 through 2002, and we show that the model accurately predicted the increase in uninsured people during that time period. Using the model and projections for national health spending, we project that the number of nonelderly uninsured Americans will grow from forty-five million in 2003 to fifty-six million by 2013. For the full story from Health Affairs, click here.