Public Health, Mental Health, and Health Policy in a Post-ACA World

Now that the ACA decision is behind us, what’s on the horizon in the world of public health, mental health, and health policy?

The truth is that ACA was essentially neutral with respect to prevention and public health.  3% of our nation’s health funding went to these services last year, and 3% will continue to go to these services with or without ACA.

That won’t stop the assault on public health.  Federal, state, and local governments have all cut public health services in recent years and, unless we have a public health crisis, may well cut further.

And Chief Justice Roberts took a swipe at public health programs in his majority decision, when he wrote on page 22 and 23:

“To consider a different example in the health care market, many Americans do not eat a balanced diet. That group makes up a larger percentage of the total population than those without health insurance…. The failure of that group to have a healthy diet increases health care costs, to a greater extent than the failure of the uninsured to pur­chase insurance.… Under the Gov­ernment’s theory, Congress could address the diet problem by ordering everyone to buy vegetables.”

In other words, the majority went out of its way to raise a question about how far it will let health promotion programs can go in the future.

ACA still points the way toward some of the most promising strategies for improving our nation’s health.

It created:

• A new $16 billion prevention fund (that has already been raided for other purposes).
• A “community transformation grants” program to promote individual and community health and prevent or reduce the incidence of chronic diseases associated with obesity, tobacco use, or mental illness.
• A primary care extension program to train primary care providers about evidence-based therapies in preventive medicine, health promotion, chronic disease management, and mental health.

Why is it so hard to fund public health and prevention?  Simply put, because when prevention works, nothing bad happens.  So prevention develops no new constituencies over time.

Mental disorders also directly get about 3% of our nation’s total health expenditures, but people with mental illnesses gained much more through ACA, and had more at stake in the Court debate. 

These gains included:

• Guaranteed access to health insurance, regardless of pre-existing conditions. 
• Coverage for mental health services as part of the basic benefits package in health insurance.
• The right of children who develop mental illnesses to remain on parents’ insurance policies until the age of 26.
• Beginning in 2014, guaranteed Medicaid and Medicare Part D coverage for benzodiazepines (such as xanax and valium), barbiturates, and smoking cessation drugs.
• A mandatory 3-year, 8-state demonstration project to reimburse inpatient and residential treatment facilities for services to adult Medicaid beneficiaries in need of medical assistance to stabilize a psychiatric emergency.  
• Grants to states to prevent and manage co-morbid chronic conditions in the Medicaid population; grants to organizations to co-locate and integrate health and behavioral health services; and grants to educational institutions for the development or enhancement of behavioral health training programs in the areas of child and adolescent behavioral health.

These initiatives now all move forward.  The challenge of protecting them from future Congressional assault will fall to the families and advocates of the one in four people with a mental illness each year and, especially, the one in twenty with a serious one.

Looking toward future health policy in general, there are two things about health care that neither ACA nor the Supreme Court’s ruling changed.

First, health care costs will continue to rise.  Keep in mind the number 5.7%.  That’s the average annual increase that CMS analysts project over the next ten years – far above the rate of inflation. 

Second, health care costs will rise not just because of new drugs, new technology, and higher labor costs, but for a much simpler reason, too – because policy leaders give altogether too much attention to how we pay for health and mental health services after we get sick, and too little attention to how we protect health and mental health in the first place.

Keeping people out of the health care delivery system whenever we can is by far the wisest health care cost containment strategy we can pursue.

It’s the one thing everyone wants, no matter whether they are liberal or conservative, Republican or Democrat, rich or poor.

In the post-ACA political world, this at least should be possible.

This is the fifth in a series of five OHPM columns on the impact of the Supreme Court decision on the Affordable Care Act. 

What the New Mitt RomneyCare Would Mean for Health Care Costs

“States and private markets, not the federal government, hold the key to improving our health care system.”

Those are the words of Presidential candidate Mitt Romney, as he articulates his health reform vision on his campaign web site.

U.S. health care costs are around $2.5 trillion. This money buys a lot of care, and pays a lot of salaries.  One out of every six workers in America relies on the health care industry for a paycheck. 

Romney thinks that’s too big a cost for care.

“At its core of this debate,” he writes (jarringly inarticulately for an official campaign web site), “is the question of what creates better patient outcomes and more efficiency: free enterprise and consumer-driven markets, or government management and regulation?”

I realize that he wants us to answer “free enterprise and consumer-driven markets.” But in this case, that doesn’t happen to be true.

The reasons why we have even a semblance of an affordable health care system in America are government management and government regulation.  Relying on free enterprise and consumer-driven markets in their place would lead to an unmitigated (sorry about the pun) health care financing disaster.

It is the salaries of professional athletes that may best illustrate why.

In a free enterprise system akin to what Mitt Romney proposes, the salaries of the most highly skilled health care professionals might be similar to the salaries of the most highly skilled professional athletes.   In fact, they once were.  In 1950, family physicians earned an average annual salary of $12,480.  That was before Medicare, Medicaid, and a whole lot of governmental regulation. 

In 1950, the average salary of a major league baseball player was comparable - $13,300.  That was before television advertising. 

Let’s look at what has happened to health care salariessince then. 

Today, the average salary for a registered nurse is just over $67,000.  Pediatricians make almost $166,000.  Psychiatrists make $168,000, and anesthesiologists make $336,000 a year to ensure that we undergo surgery without pain and without losing our lives to a drug overdose. 

Governmental management and regulation have a great deal to do with those salaries, because the Medicare system drives the prices providers can charge to patients and private insurers.

Are they too high?  When valued public sector employees such as police officers are making $55,000 and firefighters only $47,000, it may seem so.

And in the private service sector a house painter who makes $37,000, a janitor who makes $24,000, and a child care worker making $21,000 may wonder if health care professionals would really be ten times more valuable in a free enterprise system than they are.

The answer is yes, they probably would be.  We demand highly-skilled, highly trained professionals to tend to our health.  We can’t perform surgery on ourselves, but if we had no alternative most of us would do our own painting, clean up our own messes, and give up school and work to raise our own children.

So in a free enterprise system, how highly might we value health care professionals?

There are only 4,600 neurosurgeons in the entire country.  It just so happens that there are also just over 4,600 elite professional athletes playing in the National Football League, Major League Baseball, the National Basketball Association, and the National Hockey League combined. 

Neurosurgeons are at least as highly trained and as elite a group of professionals as major league athletes.  Neurosurgeons make, on average, around $220,000 a year, though in some areas of the country the number is higher and the best can earn upwards of three-quarters of a million dollars annually.

However, major league professional athletes, who sixty years ago earned what doctors earned, now make, on average, $2.7 million dollars each, more than ten times what neurosurgeons make.  That’s the effect of free enterprise.

If we turned our health care system into more of a free enterprise system, would a professional athlete still be worth ten times as much to us as a highly-skilled surgeon and forty times as much as a nurse? 

Probably not.  The salaries of health care professionals would undoubtedly go up.

Mitt Romney’s new health care vision for America is far different from the one he envisioned as Governor of Massachusetts.  In a consumer-driven, less-regulated market, the high demand for health care would increase, not decrease, health care costs.  There isn’t really any question about this. 

In fact, the only question is why is Mitt Romney pretending otherwise?

If you have questions about this column, or wish to receive an email notifying you when new Our Health Policy Matters columns are published, please email gionfriddopaul@gmail.com.

America's Health Insurance Myth

The recent heavy-handed action by Blue Cross and Blue Shield of Florida (BCBSFL) to terminate and amend all of its contracts with mental health providers brings to light a well-kept national health care financing secret.

It is an American myth that we rely on private insurance companies to finance our healthcare delivery system. 

America’s privately-financed private health insurance companies pay so small a share of the nation’s healthcare bill today that they could vanish tomorrow and we would barely notice anything but the cheering.

Insurance companies have been marginalizing themselves by years of short-sighted actions against both providers and patients. They are well on the way to becoming little more than bundles of administrative costs and profits. And it may already be too late for them to do anything about it. 

According to the Centers for Medicare and Medicaid Services (CMS), our total U.S. health care expenditures in 2009 were just under $2.5 trillion.   Privately-financed private insurance pays a stunningly small percentage of that – far, far less than most people believe and far less than the sky-high health insurance premiums they often charge would suggest.

Like it or not, it is the government that pays most of the bill. 

Medicare and Medicaid pay over one-third.  According to the Office of Management and Budget, Medicare paid $517 billion in 2009-2010 – 21% of the total.  CMS calculated that the combined federal and state Medicaid share was $374 billion in 2009, which accounts for 15%.

Other direct governmental health care expenditures account for another 20%, or $510 billion.   These include mental health and substance abuse spending, workers compensation, Indian Health Services, vocational rehabilitation, maternal and child health, CHIP, Department of Defense, Veterans Affairs, and other federal, state, and local expenditures.

As a result, the government’s direct share of health care expenditures comes to approximately 56% of the nation’s total healthcare bill.

But there’s more.  Government workers account for around one-sixth of our national labor force.  Their private health insurance is paid for by governments.   The Federal Employee Health Benefits Program costs $40 billion.  And according to a source at the Manhattan Institute, state and local benefit programs cost an additional $132 billion in 2008. Government-fundedprivate insurance therefore accounts for another7% of total health care spending.

But we’re not finished yet.

The government also subsidizes private insurance through tax deductions for premiums.  The Kaiser Family Foundation estimatedthat the value of this tax expenditure was around $200 billion in 2007.

When you add that in, too, it brings the government’s share to around 71% of the total.

According to CMS, private insurance paid $801 billion, or 32%, of our total health care bill in 2009.  But when you remove the $372 billion of government contributions to this share, the privately-funded private insurance share of health care costs goes down to $429 billion, or to around 17% of the nation’s health care bill.

CMS reported that in 2009 the remaining 12%, or almost $300 billion, was paid out-of-pocket for health care, through co-pays, deductibles, and other direct payments by or on behalf of individuals.  

But here’s the thing about the 17% paid by private insurance companies using private dollars.  It costs us all at least one-third of that to pay for their profits and administrative expenses. 

Private insurers regularly keep at least 15-20% of every public or private premium dollar they collect for profit and expenses.  This means that we have to pay insurance companies something like 6% on top of the 32% they pay toward health costs for their profits and administration.  If we didn’t have to cough up that 6% in fees, we could spend it all on healthcare.

 This means that the net value of the privately-funded private insurance share of the nation’s health bill is something like 11% of the total, just about what we already pay out-of-pocket.

It is maddening that private insurers pay out so little for the privilege of treating providers and patients so shabbily.  According to one Florida mental health provider, BCBSFL is also adding new paperwork requirements, random and aggressive auditing, other intrusive requirements, and even “legibility reviews” to the mental health treatment manual it will release to its new provider network in December.    

We need our government to be more aggressive by enforcing mental health parity laws and the consumer protections in the Affordable Care Act.  It must improve its regulation of an industry where the administrative bloat is already at least half as big as the benefit, and the benefit is no bigger than what we already pay in co-pays and deductibles. 

But the most telling anti-consumer position was staked out in an August 17, 2011 letter from the Deputy Insurance Commissioner of Florida to a representative of a coalition of mental health parity advocates: "I would note that the Office of Insurance Regulation has no jurisdiction with respect to enforcement of federal law."  Since Florida also denies the authority of the federal government to enforce insurance mandates, who's left to advocate for consumers? 

Where private insurance is concerned, it seems that we have laws with teeth, but regulators with no bite.  I wonder why.

 

If you have questions about this column, or wish to receive email notices when future Our Health Policy Matters columns are published, please email gionfriddopaul@gmail.com.

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.    

If you have questions about this column, or wish to receive an email notice when Our Health Policy Matters columns are published, please email gionfriddopaul@gmail.com.

For a Less Healthy State, Cut Business Taxes

In a recent column, I wrote about the importance of public health spending in reducing the death rate. 

What other public policy strategies also lead to a healthier state?

Chart shows positve healthy state rank relationship to health spending, negative to business tax climate. 

There are quite a few.  I compared several other state rankings with the most recent state health rankings published earlier this year. These included health care spending per capita, per enrollee Medicaid spending, Medicaid spending for people with disabilities, Medicaid spending on children, and state mental health agency spending.  I also looked at rankings in per capita income, household income, the percentage of people with private health insurance, and business tax climate.  

It turns out that a higher state ranking in eight of the nine areas is related to a higher state health ranking.  In only one area – business tax climate – did a higher ranking predict a lower state health ranking.

Like spending on public health, more generous health care spending – including safety net spending – is a strong indicator of a healthier state.  The healthiest state, Vermont, was 8^th overall in per capita health care spending.  Massachusetts, the second healthiest state, ranked second in Medicaid spending for people with disabilities.  Maine, which topped the state list in mental health spending, was the eighth healthiest state overall. 

The strongest indicators of a healthier state among the five areas of health spending were Medicaid expenditures on behalf of people with disabilities and the state’s ranking in per capita mental health spending. 

The next strongest was overall Medicaid spending.  Behind this were overall health care spending per capita and Medicaid per capita spending on children. Spending more on children generally means better prevention, and spending more on health care usually means better health care.  Both contribute to a healthier population. 

Some people might argue that there are economic factors at play here.  After all, wealthier people are healthier than poor people, so it stands to reason that higher per capita income would be a much better predictor of a state’s health ranking than entitlement spending would be. 

Higher per capita income is, in fact, related to a higher healthy state ranking.  Eighteen of the states in the top 25 in the healthy state rankings are also in the top 25 in per capita income.  However, a state’s per capita income ranking is no better a predictor of the state’s health ranking than is its overall spending on Medicaid.

Put another way, a state’s spending on mental health and disabilities services is a better indicator of a state’s health ranking than is its per capita income.

Another economic factor – the state’s ranking in the number of people who are privately insured in the state – is strongly related to the state’s health ranking.  The more people on private insurance, the healthier it is for a state. 

So it turns out that there are many policy decisions state legislators can make to improve the health of the people of their states.  They can spend more on Medicaid, put more state resources into mental health services, get more people on private insurance, increase minimum and living wage standards, and make sure that health care providers are plentiful and paid decently for their services.

Most states are doing exactly the opposite today. 

Some are even taking it one step farther.  They are cutting business taxes in an effort to improve their business tax climate.

However, the better the business tax climate ranking, the lower that state’s health ranking seems to become.

Nevada, for example, has the 4^th best business tax climate, but it was the 47^th healthiest state.  Florida has the 5^th best business tax climate, but it was the 37^th healthiest state.  The least healthy state, Mississippi, had the 21^st best business tax climate. 

Chart shows poor relationship of business tax climate to per capita income and private insurance rankings.

There is a reason why so-called “business tax expenditures” don’t translate into a healthier state.  It is that these don’t appear to improve a state’s economy. 

A better business tax climate ranking is related to lower, not higher, per capita income, and has no effect at all on the state’s ranking in the number of people who are privately insured.

A good business tax climate does not have to lead to a poor state health ranking.  New Hampshire, for example, is the third healthiest state and has the seventh healthiest business tax climate.  But it also prioritizes health and worker benefits.  It is in the top tier of state per capita mental health and Medicaid spending, its per capita income is high, and its employers are tops in providing private health insurance to workers.

We can have a healthier population working within the constraints of bad economic times.  We just have to stop knee-jerking about entitlements and taxes, focus our attention on what works, and invest in our people again.

Column note:  The two charts accompanying this blog may be difficult to interpret because of the number of state data points on them.  I added the liner trend lines to simplify them.  Trend lines that move in the same direction as the line to which they are being compared (the healthy state ranking in the first chart and the business tax climate in the second) have a positive relationship to it; flat lines have no relationship and those moving in the opposite direction have a negative one.  For further reference, I have created a new page with a table (see the “State Rankings” tab) of all the state rankings I used.  The sources for the rankings and the charts are on that page.

 If you have questions, or if you wish to receive an email notifying you when new Our Health Policy Matters columns are published, please email gionfriddopaul@gmail.com.