A Different Kind of Individual Health Mandate

According to a recent report in Health Affairs, health spending in the United States is projected to rise by 5.8% per year over the next decade.

source: CT OPM

Rising health care costs are a problem that must be brought under control.  One approach is to do what Florida's doing.  It is forcing state employees into a single HMO, removing all competition from the market while praying that the HMO won't be motivated by making a profit. 

Another is to look at what the State of Connecticut is doing.

It is betting over $100 million that its employees and retirees will respond to a different kind of “individual mandate” from the one under fire in the Affordable Care Act.  Connecticut has decided to give financial incentives to employees and retirees to manage their health.  It will also penalize financially those who do not. 

State workers overwhelmingly voted to accept the new deal earlier this month.  If the plan works, then it may signal a new path for every state hoping to cut its future health care spending.

Connecticut was motivated to undertake this challenge by its mind-boggling budget deficit.  The deficit in the coming two years was projected to be 50% higher than the entire annual state budget was just a little more than 30 years ago.

To avoid thousands of layoffs, it entered into negotiations with its unions to change salary and benefit packages.

At the bargaining table, negotiators decided not just to employ the old, failed cost-containment strategies of reducing benefits to workers and squeezing payments to providers.  They took a different approach by promoting the participation of employees and retirees in disease management and health maintenance programs. 

They created a new “Health Enhancement Program” for all Connecticut state employees and all future retirees. Those who choose to participate in the “voluntary” program will benefit financially.  Those who do not will pay higher insurance rates as a penalty.

Participants in the Health Enhancement Program will receive some excellent chronic disease management services, including free health care and drugs.  They will not have to pay any co-pays for office visits related to diabetes, asthma, heart disease, hyperlipidemia, or hypertension, as long as they adhere to the schedule of visits recommended by their health care provider.

Participants in the program will also pay reduced co-pays for drugs needed to treat these conditions.  The co-pays will be as low as zero for all diabetes prescriptions and for generic drugs used to treat the other conditions.

In return, participants will have to agree to focus on staying healthy.  They must get regular physicals, eye exams, and dental cleanings.  If they and their dependents do all these things, they will receive a cash award of $100 per year for their efforts.    

On the other side, those who choose not to participate will pay more for health insurance and health care.  They will pay an additional $100 per month for their insurance.  They will pay higher drug co-pays.  They will also pay a new $350 deductible per individual, with a $1,400 family cap, for health care services not covered by co-payments.

Connecticut is betting heavily that its employees, retirees, and their dependents will want to manage their health – and, most importantly, that it will pay off in reduced costs to the state.

In June, the Office of Policy and Management estimated that the Health Enhancement Program will save the state over $100 million annually in health care costs.  OPM believes that 50% of those eligible will choose to participate, and that this will result in a 10% reduction in health insurance claims – even though some participants will be required to visit health and dental health professionals far more often than they do now.

The penalty provisions save the state another $18 million, which the non-participants will pay out-of-pocket in higher premiums and deductibles.

There may be two big holes in the Connecticut plan that will reduce the savings to the state.  While mental health and chronic pain services are still included in health plans just as before, the Health Enhancement Program does not include them among the conditions managed in the program.

Both affect a large number of people, lead to many expensive and preventable health care encounters, and often co-occur in a patient with the covered chronic conditions.  If a patient’s unmanaged mental illness leads to a failure to comply with a diabetes disease management program, both the patient and the state will lose.

Still, the Connecticut plan goes beyond what most other states have attempted, and is well worth a try. Changing the trajectory of increasing health care costs isn’t easy.  It will be interesting to see if Connecticut’s health “mandate” proves more popular and effective than the alternatives.    

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Are Healthy Infants Really Clogging our Emergency Rooms?

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A growing number of highway billboards encourage people to use hospital emergency rooms.  The ones in my area advertise pre-registration to avoid lines or shorter waiting times.

These billboards clearly aren’t targeted to people riding in the backs of ambulances, who generally aren’t ER comparison-shopping.  They’re for potential ER users who are in a position to make a choice.  That’s the “non-urgent” crowd.

The irony is that these billboards are proliferating just as state policymakers impose new charges to discourage non-urgent ER use.

Two examples from recent weeks:  Florida’s Legislature voted to impose a $100 charge on non-urgent emergency room visits by the Medicaid population.  Connecticut decided to impose a new $35 charge on state employees doing the same.

It’s important to recognize that these fees aren’t that high compared to the $500+ co-pays and deductibles in many private insurance plans.

But it’s wishful thinking that they will reduce program costs without consequence.

To justify its decision, Connecticut used the example of an unnamed state employee who had 150 ER visits in a single year.  There are a handful of such people in every state.  They’re often called ER “frequent flyers,” and health care providers generally know who they are.  Though it’s not clear how many should be admitted as inpatients instead, there’s no question that we should want to keep them from overusing the ER.

However, ER charges target too many innocent parties, and when you decide to impose them can make a huge difference in whether they discourage use, or just penalize people for guessing wrong about their emergencies.

According to the Centers for Disease Control and Prevention, we all collectively accounted for nearly 124 million emergency room visits in 2008.

At the time of triage, only 8% of all visits were considered to be non-urgent – a pretty small percentage.  The percentage wasn’t too different among payer groups.  The two groups targeted by Florida and Connecticut – Medicaid recipients and state employees with private insurance – had 9.5% and 6.3% non-urgent visits, respectively.

On the other hand, if you look at the same patients after the visit, the percentage of non-urgent visits is closer to half.

This is because apparent emergencies often turn out to be minor maladies.

Aside from injuries, people go to ERs for mostly common complaints.  Almost 4 million (or 17%) of all ER visits by children were because of fever.  Children also had 1.5 million visits related to coughs, and 1.1 million visits because of vomiting.

Non-elderly adults had 7 million visits (or over 8% of all visits) for stomach pain.  Chest pain accounted for 4.8 million visits. Back pain accounted for 2.8 million visits.

Chest pain and shortness of breath were the two most common reasons for ER visits by elders.  Each accounted for over 1.4 million visits.

When the underlying causes of these complaints were diagnosed, the most common non-injury diagnosis was respiratory disease.  13 million people of all ages, or 10.7 percent, had this.  Over 7 million had diseases of the digestive or muscular-skeletal systems, and over 6.5 million had diseases of the nervous system. 

Though not commonly given as the reason we went to an ER in the first place, diagnoses of mental disorder accounted for just over 4 million visits – the 8^th most common diagnosis after injury.

The main culprits using ERs for non-urgent reasons are not adults, but infant children.  They don’t read billboards, but they are the only group whose non-urgent visit percentage was greater than 10% of all visits at the time of triage.

Around 381,000 U.S. ER visits by infants were non-urgent in 2008.  If it is normal for 8% of ER visits at triage to be non-urgent, then the number of excess non-urgent visits by infants was 85,100.  Florida’s share of these was around 5,000, and Connecticut’s was around 1,000.  The Florida Medicaid share and the Connecticut state employee health insurance share were even lower.

Keeping a small number of infants out of our ERs may not be good public policy.

The infant mortality rate in Connecticut is around 6 per thousand, and the infant mortality rate in Florida is around 7.  The best-in-the-world standard is around 2 per thousand.  That means that in 2008 there were statistically as many as 25 preventable deaths among Florida infants who visited ERs for non-urgent reasons, and 4 among the Connecticut infants.

Accepting 6,000 excess infant ER visits in Florida and Connecticut to try to prevent almost 30 excess infant deaths seems like a good trade-off to me.

No one questions the goal of getting frequent flyers out of ERs.  The way to do this is to require them to participate in disease management programs. 

If co-pays work to discourage everyone else from using the ER, we’re going to lose lives.

Column update: In a past column entitled A Long Term Care Win for Everyone I wrote about Florida Governor Rick Scott's decision to accept a $35.7 million federal grant for the "Money Follows the Person" program, which would have enabled people (especially young people) with disabilities to move from institutions back into their own homes.  However, it was reported recently that the Florida Legislature declined to allow the State Medicaid agency to draw down the money.  If this decision stands, it means that FL residents with disabilities will lose access to these $35.7 million, and will have to remain in more costly institution-based settings. 

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