The Gathering Storm in Health Care Coverage

By | 2017-01-13T20:43:53+00:00 May 1st, 2006|
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Activists protested Tennessee's draconian cuts to its enhanced Medicaid program, TennCare, every day for more than two months.

Activists protested Tennessee’s draconian cuts to its enhanced Medicaid program, TennCare, every day for more than two months. Photo by Al Levenson

Bill Parks relies on his SSI and Social Security checks of $625 to make ends meet in Denver. After rent, phone, transportation, food and cable, he still has to pay for Magic Bullets, exam gloves, chucks and over-the-counter medications. With the necessaries out of the way, he’s lucky to have maybe $50 left for what he calls his “have a little fun” fund to spend on dollar movies or a paperback. And now, due to cuts in Medicaid, he’s looking at co-pays for needed prescription drugs and other medical necessities. Parks is nervous. So is Norman Neff of Knoxville, Tenn. Recent cutbacks cost him his TennCare, Tennessee’s version of Medicaid. Now he must pay 20 percent of the cost of his prescription drugs from what’s left of his disposable income. Others have lost more than coverage — some have even lost their lives.

The health care of millions of people with disabilities is at risk these days due to battles going on in the nation’s capital and in state capitals across the country. While politicians garner airtime and ink posturing for political points, those of us with Medicare or private health insurance often remain silent and uninterested, thinking we have no dog in this fight.

I’ve got coverage through my job (or Medicare or from my settlement, through my spouse or parents), the thinking goes, so the cuts don’t affect me. Tough luck for some, but that’s the way it goes.

A few of us may grouse about insurance not covering that iBOT we covet, but thousands of our sisters and brothers are fighting for basic care. All people with disabilities have reason to pay attention: We’ve fought hard over the years for independence, employment and health insurance. As a community, we need to look out for each other and not ignore those left behind. Besides, our own insurance coverage may be next.

Conservative politicians and budget hawks call the recently approved $5 billion in cuts to Medicaid miniscule, a necessary first step in reigning in out-of-control Medicare, Medicaid and Social Security spending. Though proposed cuts to Medicare appear DOA in Congress, watch for similar proposals to return, paired with health savings accounts as ways to further control health care costs. Activists in the disability community claim these cuts and benefit reductions simply underwrite tax cuts and handouts to the rich while placing the burden of cost-cutting on the backs of people with disabilities.

All this might seem like yet another skirmish in the ideological battles of Beltway politicians and pundits, but the outcome will affect the lives of millions of real people like Parks and Neff in profound ways. We’re seeing a preview of the bleak landscape of health care for everyone, regardless of income or the quality of coverage.

The Cuts
With an annual budget of more than $200 billion, Medicaid accounts for 8 percent of a $2.6-trillion-dollar federal budget and provides health care for about 8 million poor and/or disabled Americans. Medicaid pays for prescription drugs, physical therapy, home health services, medical equipment, communication devices, long-term care and more. Medicaid spent $86.3 billion in 2003 for nursing home care alone, accounting for more than 47 percent of all nursing home reimbursements nationwide and 60 percent of all such spending for persons with disabilities. Medicaid is often the only means for a person with a disability to remain independent. Some recipients may be employed but receive no medical benefits through work, others find individual coverage unaffordable or unavailable, and those who do manage to obtain insurance rarely find a policy to meet all their disability needs.

While a cut of $5 billion over five years is, realistically, a drop in the overall budget bucket — less than a week’s interest on the national debt — those billions come in the form of increased co-pays for drugs and doctor visits for approximately 13 million poor and disabled recipients. An extra three bucks a prescription might sound like peanuts to you, but most of Parks’ and Neff’s meager incomes already go to rent, phone, food, transportation and non-covered medical expenses.

“Medicaid is the health insurance of last resort. People who rely on it are already pinching pennies,” says Henry Claypool, a former beneficiary and long-standing advocate for people with disabilities. He’s worked for years as a CIL worker and then as a Centers for Medicare and Medicaid Services insider and nonprofit lobbyist.

“If you take five prescriptions a month with co-pays of $3 each, that’s $15 a month, often a very significant percentage of disposable income.”

That $15 is 30 percent of Parks’ “have a little fun” fund.

But doesn’t the new Medicare Part D drug plan solve this? Not exactly.

“Nothing changes for those people who only have Medicaid coverage,” says Bob Kafka, National Organizer and ADAPT co-director. “But the folks who are on both Medicare and Medicaid, the dual eligibles, are now facing co-pays for drugs. This is a big shock to many people who were getting their drugs for free under Medicaid.”

“Co-pays are clearly not where to go to save money,” says Claypool.

These spending cuts from Washington come after years of benefit slashing at the state level, which have affected more people each year. Tennessee is a stark example. Recent cuts there spelled the end to the Medicaid buy-in for some working poor and put the cost of medications or doctor visits out of reach for many others. Similar cutbacks will cause people with disabilities in every state to lose coverage and some to forgo critically important medications.

And the cuts are happening everywhere. “All levels of government say they are strapped for cash,” says Randy Alexander, a community organizer with the Memphis CIL.

But Alexander’s not buying that claim and says that even if true, the proposed cuts won’t save much. That’s because the medical needs won’t go away and their cost will simply get shifted either to emergency room visits or hospital stays when conditions worsen. Numerous studies indicate that if low-income individuals need to pay for care, they are likely to delay seeking that care when sick and receive less of it when seriously ill or dealing with a chronic condition. The impact of Medicaid cuts can often affect entire communities in the form of decreases in general health, increases in work absenteeism, drops in productivity and a rise in the number of uninsured people local health care systems must treat. Bottom line: People will become ill and they will die sooner.

Tennessee activists grabbed nationwide attention last summer when they protested Gov. Phil Bredesen’s announced plans to cut nearly one quarter of all the state’s Medicaid recipients, including many who had been unable to purchase health insurance anywhere else at any price. Despite warnings of dire consequences to those cut from the program, the governor proceeded apace. Many viewed the predictions of suffering as a bit too theoretical, hypothetical or wild hyperbole. Actually, the results were worse.

“I wish you could talk to Deborah, Floyd, Dorothy and four other people down here,” Alexander writes in a recent e-mail, “but they all died. Their deaths were all directly connected to their inability to pay for meds because of losing Tenncare.”

Since losing TennCare coverage, Don DeVaul, a para from Jackson, Tenn., won’t be able to pay for his seven different prescription drugs for pain, cholesterol, depression and esophagus problems. He’s alive but struggling. And in possibly the darkest example of how draconian the Tennessee cuts promised to be, Deneen Coleman-Ruff learned she might lose her chemotherapy coverage while she was in the middle of treatments. Only through a separate law, the Breast and Cervical Cancer Prevention and Treatment Act, was she able to maintain her coverage and continue treatment.

“There’s a human side to this,” Alexander says, his voice rising, “and those of us who have jobs and insurance have an obligation not to turn our backs on those left behind.”

Another view of that human side is how these cuts affect rehab, equipment and independence. Not only are the dual eligible clients at Rancho Los Amigos now facing co-pays for their prescriptions, they’re also struggling to maintain their freedom. The cuts to MediCal (California’s Medicaid program) coming out of Sacramento are creating a house of cards for people seeking to live independently, says Greg Thompson, a Rancho social worker. With only four to six weeks of rehab, most people need in-home help when discharged but face a Herculean task getting MediCal to pay for in-home services.

“Unless people have family to help them, they’re often discharged directly to nursing homes,” says Thompson. “If they have Medicare, MediCal and Section 8 housing in place, then maybe they can get some in-home support, but all that’s next to impossible to set up in only six weeks of rehab. Subsidized housing is the key, but with the waiting lists often six years or more, it’s all pretty tough.”

The Savings
So if government spending for health care is out of control, how should lawmakers begin to reign it in?

“The first thing to do,” says Julie Reiskin, director of the Colorado Cross-Disability Coalition, “is to remove the entitlement to nursing home services. In Colorado those rates can’t be cut because they’re set in statute and increased by about $35 million last year alone, yet the people of Colorado have a fit when the schools get a 1 percent increase.”

She points to consumer-directed care, which avoids home health agencies and saves the state $700 per month per client, as one answer. “It’s been a hassle getting the state to expand it in order to save more money,” Reiskin says. Why? Politics and that very powerful nursing home lobby.

Kafka agrees, adding that some basic systemic reform is in order. “Medicaid is the largest payer of home-based services,” he says. “For all its faults, the program allows people to work and get help with attendant care through the buy-in; it helps millions pay for drugs, hospital stays and long-term care; it provides assistance to low income moms and kids. But with the nursing home lobby receiving nearly 65 percent of Medicaid’s long-term care money, the program is broken and is in need of reform.

“The governors want ultimate flexibility in spending the money,” he adds, “but we need to insure strong federal oversight and guidance.”

His concerns are well founded. Most Medicaid programs serving people with disabilities are created under optional waivers that allow the states to tinker with how they are administered. With states hurting for money, these programs are a convenient target. Those who died in Tennessee are the casualties.

Previously, most congressional cuts reduced allotments to states or reimbursement fees to health care providers. Some policy experts claim these latest cuts directly target beneficiaries and change the program in very basic ways, much to the detriment of the poor and disabled.

States now have vast power to reconfigure benefits, charge premiums and raise co-payments for health care and prescription drugs, scale back benefits and end Medicaid coverage for people who fail to pay premiums. Doctors, hospitals and pharmacists will be able to deny services and/or prescriptions to those who can’t afford the co-payments. A recently approved waiver allowed Arkansas to gain federal Medicaid money for coverage that falls below usual Medicaid eligibility and benefits standards and permits the state to offer a benefit package much more limited than Medicaid’s. Beneficiaries will have to pay an annual $100 deductible and 15 percent co-pay for each service, with out-of-pocket costs of up to $1,000 a year.

The result of such state waivers, according to the Congressional Budget Office, will be some Medicaid recipients either forgoing care or dropping out of the program because of the increases.

“We need to look at ourselves as a

[disability] community and Medicaid as the program for the least of us,” Kafka says. “These cuts may not affect all of us directly, but they affect our community. We can’t let them divide us by class or leave all these groups fighting amongst themselves for precious resources.”

In Tennessee those cuts were made in the name of education.

“We need education,” Alexander says, “but kids need parents just as much.”

The Threats
These cuts should trouble all of us because they foreshadow price hikes and further losses of coverage to come.

John Williams of GTB Medical in Strongsville, Ohio, near Cleveland, sees how these cuts play out every day. He says Medicaid just keeps getting worse.

“They deny power chairs left and right and the small percentage they reimburse is sometimes below our cost, meaning we lose money on the deal. Funding for custom seating is next to impossible to get and authorizations take forever. I’ve been waiting over three months for approval to repair the motors in a little girl’s power chair; not only can you hear the gears grinding, it now only turns in one direction. What people need and what they get are two very different things.”

And don’t think that insurance through work is a worry-free guarantee.

“More and more, insurance companies are following Medicare and Medicaid guidelines,” Williams says, “and that’s not good for anybody.”

Nancy Becker Kennedy says it’s all smoke and mirrors.

“They’re killing the programs not with a bang but a whimper,” says the long-time California activist. “It’s hard to tie any of this directly to Medicaid or Medicare, but it’s all due to the delays in reimbursements and reductions in allowables for equipment. This is all about money and it’s all being done by obfuscation. It’s one huge shell game and it’s very hard to follow the pea.”

Just a preview.

The high cost of health care is now placing everyone — young or old, rich or poor, working or unemployed, disabled or nondisabled — at risk right alongside Medicaid and dual eligible recipients. Health care cost increases have been significantly outpacing inflation for years, and the increases show up regardless of coverage. The two biggest culprits? Advances in medical technology and cost-shifting.

CT scans, MRIs, bypass and joint replacement surgery, electronic prosthesis and designer drugs have all become commonplace and expected. The cost of such care is often both astronomical and unpredictable. Hospitals and providers negotiate different deals with each insurance company, and with hospitals in some circumstances being forced to treat all comers regardless of their ability to pay, charges get inflated to recoup non-reimbursed expenses.

The difference between the cost and the charge can vary wildly, depending on who’s providing the care and who’s being billed. Hospital and physician charges may total $5,000 for a minor surgery, but you’ll be hard pressed to pin down the actual costs. Ditto for drugs: A friend recently paid $313 for a generic blood pressure medication at Kmart only to find the same drug at Costco and Sam’s Club for $96. Who knows what the actual cost is? And that MRI or colonoscopy? If someone else is footing the bill, we often don’t notice or care about either the charge or the cost. But one thing is certain: Those with no coverage have to pay the most.

Insurance companies footing the bills for diagnostic tests and procedures, treatments, drugs and equipment compensate by raising rates. Employers respond in kind by increasing worker premiums or dropping coverage altogether.

Everyone is affected by cost-shifting, which Claypool says has increased dramatically in recent years. People with disabilities, however, even those making big bucks and with great coverage, face the greatest risk. No one wants us in their plan because our equipment, medical supplies, prescription drugs and occasional skin surgery or extended hospital stays cost too much in big premium and rate increases. The obvious solution for the boss is to either dump us from the plan or not hire us in the first place.

The Possible Future
Americans tend to think that their nation has the best health care in the world. But if quality of health care is judged in longer life expectancy and lower infant mortality, we’re getting shortchanged. We spend a larger share of our gross domestic product on health care than any other major industrialized country in the world yet fewer of our babies survive their first year, and we die sooner than those in other industrialized countries.

Enter health savings accounts, supposedly the latest answer to ever-rising health care costs. HSA advocates suggest that costs are out of control because someone else is paying the bills and we lack motivation to be efficient consumers. They say the problem is that we have too much insurance, with deductibles that are too low and co-pays that are too small. Proponents say HSAs, which require people to purchase a high deductible insurance policy ($1,050 for individuals, $2,100 for families) and pay more of the initial costs of health care — doctor visits, procedures, drugs — will drive costs down by making us think twice before seeking care. They point out that poor people with little or no coverage spend less than $1,000 a year on health care while those with private insurance consume nearly $2,400 worth of care.

But is that extra $1,400 just wasteful consumption? The responsible consumer argument makes sense only if we buy health care the way we buy, say, potato chips, Levis or plasma TVs. HSAs and high deductibles are supposed to make us more discriminating consumers and think twice before going to a doctor. After all, we usually drive less if we have to pay more for gas; we don’t travel as much when airline tickets prices go up; we rent more videos when movie prices increase. People actually do cut back on health care when they have to pay a bigger share of the cost, but they’re just as likely to cut back on necessary care as frivolous care because it’s difficult to know which care is necessary and which is frivolous without a diagnosis. If that MRI reveals a cyst on your spinal cord, it’s necessary care; if the test finds nothing, then that $2,000 MRI was, well, frivolous.

Some say our basic sense of compassion should motivate us to be outraged over budget cuts. Others say that recent cuts at the national and state levels, talk of bigger cuts to come, and fundamental changes in the delivery of health care — such as HSAs — place the most vulnerable in our community at risk and are cause for grave concern. Then there’s the fact that most of us have benefited or are still benefiting from one or more government programs such as Medicare, Medicaid, SSI, SSDI, Voc Rehab or the like, and we now have an obligation to not leave others behind.

If you’re unmoved by those arguments, try enlightened self-interest: your own coverage may be next. The idea of 300 million Americans in 300 million individual lifeboats, each negotiating with the power of a group of one is a very real possibility. That’s reason enough for all of us to be worried.