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Quality of care followed by publicly provided care

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Title: Quality of care followed by publicly provided care


1
Quality of care followed by publicly provided
care
2
How to improve quality
  • Role of malpractice
  • Role of Report Cards and other measures of quality

3
Reason for Malpractice System
  • Policing issue of how to insure quality of
    care. The objective is to create incentives for
    providers to only provide care for which they are
    competent and take appropriate care focus both
    on process and care.
  • Compensation compensate if care fail to meet
    community standard.
  • Role based on asymmetric information.

4
Judge Learned Hand Rule malpractice basis
  • Wish to have correct incentives to take care
  • Tied to information asymmetry. Want to send
    signal
  • Judge learned hand rule negligence occurs
    whenever it would cost less to prevent a mishap
    than to pay for the damages predicted to result
    from it. Let P probability of mishap. Below,
    any medical accident to left of P is a mishap.
    Need all instances with sizeable loss to have
    suit brought to get correct signal. Hope to have
    influence on competence and care. Competence
    skills and knowledge (also use licensing,
    educational standards. Care effort and time
    taken.
  • Defensive medicine use of medical resources
    beyond point justified by an evaluation of true
    social benefits and costs. (Can get if physician
    wants to avoid a legal action at all costs
    difficulty in learning standard, inconsistent use
    of standards.)


Cost of Prevention
E(L)
P
P
5
Does system work?Do we know?
  • For system to operate to send correct signal need
    case to be brought whenever there is any
    significant negligence. Amount of remedy must
    signal correct or full loss. Cost of medical
    care, cost of lost time, and loss of utility.
    The last is the justification for payment for
    pain and suffering.
  • Similarly for system to work, all unjustified
    cases must be correctly identified with no
    payment made.
  • Signal should be to provider today we have
    major role of insurer which weaken system.
  • Penalty to provider to be involved in case. Loss
    of time, reputation.
  • Problem if reduction in those providing certain
    types of risky care? Ex. Primary provider stop
    activities re risky pregnancy. (Often desired
    outcome of system.)
  • Evidence re defensive medicine? Easier to show
    did tests, etc. then spent time providing
    information or asking relevant questions.
  • In studies of medical accidents fine many more
    reported than cases ever brought (10 to 1)
  • Most cases settled out of court (if expectations
    for outcome similar). Less than 5 go to trial.

6
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7
Question for discussion
  • What modifications of existing malpractice law
    would improve signals regarding quality of care?
  • Can you think of any modifications that would
    reduce defensive medicine? How do you know if we
    have defensive medicine?

8
Report Cards and other quality measures are they
beneficial?
  • Goal send signal to provider to improve care or
    drop out of care in particular specialtyimprove
    quality
  • Danger provide incentive to not care for the
    riskiest patients.
  • Study New York State heart bypass operations
  • Find a reduction in volume to hospitals with low
    ratings
  • Find an improvement in outcomes for hospitals
    with low ratings.

9
Market for nurses - monoponistic
  • MFC as hospital hires more nurses, need pay more
    but also to all other nurses this line is cost
    of hiring an additional nurse

Wage
MFC
S
Vacancies reported
W
D
D
Q2
QN
Q1
10
Public Programs
  • Reasons for Intervention.
  • Risk sharing
  • Equity
  • Market Failures
  • Types of Public Programs
  • Supply Side
  • Demand side
  • A Comparison to Other Countries
  • Our Programs
  • Medicare
  • Medicaid
  • Others
  • Incentive Effects
  • Problems

11
What lies behind a role for government subsidies?
  • 1. Externalities in consumption
  • Healthier and wealthier persons in community may
    not wish to see those less fortunate go without
    medical caree and are willing to contribute to
    such care. Their utility depends on this
    consumption. Then those who contribute benefit
    but so do those who do not contribute.
    Government is an efficient way to gather and
    distribute contributions.
  • Implication design of program to satisfy donors
    rather than recipients.


MPC
MEB
MSB
MPB
Qp
Q
Q
12
What lies behind a role for government
subsidies?-2
  • 2.Public health reduce spread of disease.
    Improve productivity.
  • Immunizations
  • Clean water
  • 3.If person self insures and faces catastrophe,
    community pays. Not equitable across areas and
    ability to pay.

13
Types of Public Subsidies
  • Demand side
  • Subsidize insurance via tax system
  • Medicare for elderly and disabled
  • Medicaid for certain low income groups
  • SCHIP for lower income children and in some cases
    parents
  • Supply side
  • Community health centers
  • VA system
  • Subsidies to educate providers
  • Subsidies to build facilities

14
Design
  • Target program to those with low income and of
    poor health. If reach high income, inefficient
    (could achieve at lower cost re taxes, increase
    in demand for medical care.

15
A bit of history about government role re
subsidies
  • Goal
  • Hill Burton or Hospital Survey and Construction
    Act of 1946 goal improve the supply,
    distribution and quality of general hospital
    beds in the U.S. and possibly the distribution
    of physicians.
  • July 1947 June 1971 central government invest
    3.7 billion in construction, modernization of
    existing facilities.
  • Success? Only in terms of increasing number of
    beds.
  • Health Education Act of 1965
  • Perceive shortage subsidize
  • Passed 1970.
  • CHCs 1967 enabling legislation
  • Overall view of supply side interventionsHealth
    Education Assistance Act 1965.
  • Subsidy to institution such that if agree, agree
    to increase slots,
  • National Health Service tiny until mid 1970s
    when begin to distribute scholarsgip funds in
    retirn for commitment of service to underserved
    area.
  • Question are such interventions efficient? Who
    benefits?
  • If locate in poor area may increase use by those
    in area. But those outside of the area do not
    improve their well-being.

16
The Community Health Center (CHC) Program is a
Federal grant program funded
under Section 330 of the Public Health Service
Act to provide for primary and preventive health
care services in medically-underserved areas
throughout the U.S. and its territories.
The FY 2002 appropriation for this program is
1.3 billion. Program Statistics from the
2000 Uniform Data System (UDS)
Total Users - 9.6 M of that 3.9 are
uninsured users Total
Physicians - 4,803 (19,220,237encounters)
Total NPs/PAs - 2,367
(6,657,449 encounters)
Total Dentists - 977 (2,606,326 encounters)
Total Hygienists - 283
(401,946 encounters)
17
  • Community Health Centers (CHCs) were first funded
    by the Federal Government as part of the War on
    Poverty in the mid-1960s.
  • By the early 1970s, about 100 neighborhood
    health centers had been established under the
    Economic Opportunity Act (OEO). These centers
    were designed to provide accessible, affordable
    personal health care services to low income
    families.
  • The Public Health Service began funding
    neighborhood health centers in 1969. With the
    phaseout of OEO in the early 1970s the centers
    supported under this authority were transferred
    to the Public Health Service. Currently, the CHC
    Federal grant program is authorized under section
    330 of the Health Centers Consolidation Act of
    1996.
  • CHCs provide family-oriented primary and
    preventive health care services for people
    living in rural and urban medically underserved
    communities. CHCs exist in areas where economic,
    geographic, or cultural barriers limit access to
    primary health care for a substantial portion of
    the population and they tailor services to the
    needs of the community.
  • Provide services that include primary and
    preventive health care, outreach and dental care.
  • Provide essential ancillary services such as
    laboratory tests, X-ray, environmental health,
    and pharmacy services as well as related services
    such as health education, transportation,
    translation, and prenatal services.
  • Provide links to welfare, Medicaid, mental health
    and substance abuse
    treatment, WIC, and related services. Provide
    access to a full range of specialty care
    services.
  • CHCs are a catalyst for economic development,
    generating jobs, assuring the presence of health
    professionals and facilities in underserved
    areas, and utilizing local services. In FY
    2000, the CHC investment generated over 3
    billion in revenues for impoverished underserved
    communities across the country.

18
Administered grants to over 700 community-based
public and private nonprofit organizations that
develop and operate CHCs, and in turn support
over 3,000 clinics. Supported CHCs that serve
over 11 million people in FY 2000, of whom 66
percent live below the poverty level. CHCs
demonstrate cost effective responsiveness,
empower underserved communities, reduce infant
mortality rates, lower hospital admission rates
and length of hospital stays for patients, lower
Medicaid patients health costs, and provide
care for specific conditions that meets or
exceeds protocols for the general population.
Supported Integrated Services Delivery System
grantees to improve the quality and reduce the
cost of health care services for underserved,
uninsured people. Administered new Facilities
and Managed Care loan guarantee programs, as
well as a national technical assistance strategy
in partnership with the National Association of
Community Health Centers and the Primary Care
Associations in Massachusetts, North Carolina,
Texas, and Illinois.
19
The Migrant Health Act was enacted in September
1962 by Public Health Law
87-692, which added Section 310 to the Public
Health Service Act. The Migrant Health Program
(MHP) provides a broad array of medical and
support services to migrant and seasonal
farmworkers and their families. The Migrant
Health Program is currently authorized under
Section 330(g) of the Public Health Service Act.
The vision of the MHP
is the universal accessibility to quality and
appropriate health care for our Nations Migrant
and Seasonal Farmworkers (MSFW) and their
families. The MHP provides MSFW and their
families access to comprehensive, culturally
competent, primary care services. Budget, FY
2002 107 million. Indian Health Service is
another example though it is becoming
increasingly similar to Medicaid.
20
Demand Subsidies
  • Basic reason externalities in consumption but
    what is goal?
  • Minimum to poor equal financial access? Equal
    treatment for equal needs? Equal health status?
  • How achieve each of these? Equal price does not
    create equal utilization. High income consume
    more.


P
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22
Medicaid
  • Joint federal state program- Each state
    establishes its own eligibility standards,
    benefits package, payment rates and program
    administration under broad federal guidelines. As
    a result, there are essentially 56 different
    Medicaid programs one for each state, territory
    and the District of Columbia.
  • Begun in 1965
  • Financing
  • The Medicaid program is jointly financed by the
    states and the federal government. Medicaid is an
    entitlement program and the federal spending
    levels are determined by the number of people
    participating in the program and services
    provided. Federal funding comes from general
    revenues.
  • The federal government contributes between 50
    percent and 83 percent of the payments for
    services provided under each state Medicaid
    program. The federal matching rate for
    administrative costs is uniform for all states
    and is generally 50 percent, although certain
  • administrative costs receive a higher federal
    matching rate.
  • Categorically eligible
  • Families who meet states Aid to Families with
    Dependent Children (AFDC) eligibility
    requirements in effect on July 16, 1996.
  • Pregnant women and children under age 6 whose
    family income is at or below 133 of the Federal
    poverty level.
  • Children ages 6 to 19 with family income up to
    100 of the Federal poverty level.
  • Caretakers (relatives or legal guardians who
    take care of children under age 18 (or 19 if
    still in high school)).
  • Supplemental Security Income (SSI) recipients
    (or, in certain states, aged, blind, and disabled
    people who meet requirements that are more
    restrictive than those of the SSI program).
  • Individuals and couples who are living in
    medical institutions and who have monthly income
    up to 300 of the SSI income standard (Federal
    benefit rate).

23
Medicaid eligibility - 2
  • Medically Needy
  • The medically needy have too much money (and in
    some cases resources like savings) to be eligible
    as categorically needy. If a state has a
    medically needy program, it must include pregnant
    women through a 60-day postpartum period,
    children under age 18, certain newborns for one
    year, certain protected blind persons and persons
    required to sign up for their employers health
    plan if it is cost-effective.
  • States may also include Children under age 21,
    20, 19, or under age 19 who are full-time
    students. If a state doesnt want to cover all of
    these children, it can limit eligibility to
    reasonable groups of such children.
  • Caretaker relatives. Aged persons (age 65
    and older). Blind persons (blindness is
    determined using the SSI program standards or
    state standards). Disabled persons (disability
    is determined using the SSI program standards or
    state standards). Persons who would be eligible
    if not enrolled in a health maintenance
    organization.
  • 37 states have medically needy programs Alaska
    Hawaii Maine Nebraska Oklahoma Utah Arkansas
    Illinois Maryland New Hampshire Pennsylvania
    Vermont California Iowa Massachusetts New Jersey
    Puerto Rico Virginia Connecticut Kansas Michigan
    New York Rhode Island Washington Dist. of
    Columbia Kentucky Minnesota North Carolina
    Tennessee West Virginia Florida Louisiana Montana
    North Dakota Texas Wisconsin Georgia
  • Texas' medically needy program covers only the
    mandatory" medically needy groups. It does not
    cover the aged, blind and disabled. 2

24
Medicaid eligibility-3
  • SPECIAL GROUPS Medicare BeneficiariesMedicaid
    pays Medicare premiums, deductibles and
    coinsurance for Qualified Medicare Beneficiaries
    (QMB)individuals whose income is at or below
    100 of the Federal poverty level and whose
    resources are at or below the standard allowed
    under SSI.
  • There are additional groups for whom Medicare
    related expenses are paid by MedicaidMedicare
    beneficiaries with income greater than 100 but
    less than 120 of the Federal poverty level and
    those whose income is at least 120 but less than
    135 of the Federal poverty level.
  • Qualified Working Disabled IndividualsMedicaid
    can pay Medicare Part A premiums for certain
    disabled individuals who lose Medicare coverage
    because of work. These individuals have income
    below 200 of the Federal poverty level and
    resources that are no more than twice the
    standard allowed under SSI.
  • States may also improve access to employment,
    training and placement of people with
    disabilities who want to work through expanded
    Medicaid eligibility. Eligibility can be extended
    to working disabled people between ages 16 and 65
    who have income and resources greater than that
    allowed under the SSI program.
  • States can extend eligibility even more to
    include working individuals who become ineligible
    for the group described above because their
    medical conditions improve. States may require
    such individuals to share in the cost of their
    medical care.
  • There are two additional eligibility groups that
    states may include under their Medicaid plans
  • women who have breast or cervical cancer
  • People with tuberculosis (TB) who are uninsured.
  • Women with breast or cervical cancer receive all
    plan services TB patients receive only services
    related to the treatment of TB.

25
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27
What is covered under Medicaid?
  • States are required to offer the following
    services to those covered under Medicaid
  • Inpatient and outpatient hospital services
    laboratory and x-ray services, nursing facility
    services for those over age 21
  • home health services, prenatal care vaccines for
    children, physician services, family planning
    services,
  • rural health clinic services, pediatric and
    family nurse practitioner services, diagnosis and
    treatment for
  • those under age 21, nurse-midwife services, and
    ambulatory services by federally qualified health
    centers.
  • States may also receive matching funds for
    providing optional services such as drugs,
    eyeglasses, and inpatient psychiatric care for
    individuals under age 21 or over 65, diagnostic
    services, clinic services, transportation
    services, rehabilitation and physical therapy
    services, and home and community-based care to
    certain persons with chronic impairments.

28
Medicaid enrollment in managed care trends
29
Financial Aspects of Medicaid
  • The federal government helps states pay the cost
    of Medicaid services by means of a variable
  • matching formula which is adjusted annually. This
    share is known as the Federal Medical Assistance
    Percentage (FMAP). The FMAP is a matching rate
    inversely related to a states per capita income
    and can range between 50 to 83 percent. The
    federal share of administrative costs is 50
    percent for all states.
  • Medicaid operates as a vendor payment program.
    Within federal guidelines states have broad
  • discretion in determining payment methodology and
    rates. States have the option of paying providers
    directly or paying for Medicaid services through
    various prepayment arrangements, such as health
    maintenance organizations (HMOs). Payments must
    be sufficient to enlist enough providers so that
    covered services are available at least to the
    extent that comparable care and services are
    available to the general population within that
    geographic area. Providers participating in
    Medicaid must accept Medicaid payment rates as
    payment in full, except where nominal
    cost-sharing charges may be required. States may
    impose nominal deductibles, coinsurance, or
    copayments on some Medicaid recipients for
    certain services. Some, however, must be excluded
    from cost-sharing pregnant women, children under
    age 18,
  • hospital or nursing-home patients, who are
    expected to contribute most of their income to
    the cost of institutional care. In addition, all
    Medicaid recipients must be exempt from
    copayments for emergency services and family
    planning services.

30
Medicare Beneficiaries Source of Eligibility and
Coverage, 2002
Source of Eligibility
Source of Coverage
ESRD 0.6
MedicareChoice Cost HMOs 13
Disabled 14
Elderly 85
Fee-for-Service 87
Beneficiaries 40 million
Notes 1) Totals may not sum due to rounding
2) ESRD refers to beneficiaries under age 65 with
End-Stage Renal Disease 3) the Disabled
category refers to beneficiaries under age 65
without ESRD. Source Elderly, disabled, and
ESRD data from CMSs Office of the Actuary
MedicareChoice and cost plan data from CMSs
Medicare Managed Care Contract Report, March 2002.
31
Number of Medicare Beneficiaries
The number of people Medicare serves will nearly
double by 2030.
76.8
61.0
45.9
Medicare Enrollment (millions)
39.6
34.3
28.4
20.4
Numbers may not sum due to rounding. Source
CMS, Office of the Actuary.
32
Medicare Premiums for 2005 Part A (Hospital
Insurance) Premium Most people do not pay a
monthly Part A premium because they or a spouse
has 40 or more quarters of Medicare-covered
employment. The Part A premium is 206.00 for
people having 30-39 quarters of Medicare-covered
employment. The Part A premium is 375.00 per
month for people who are not otherwise eligible
for premium-free hospital insurance and have less
than 30 quarters of Medicare-covered employment.
Part B (Medical Insurance) Premium 78.20 per
month. Medicare Deductible and Coinsurance
Amounts for 2005 Part A (pays for inpatient
hospital, skilled nursing facility, and some home
health care) For each benefit period Medicare
pays all covered costs except the Medicare Part A
deductible (2005 912) during the first 60 days
and coinsurance amounts for hospital stays that
last beyond 60 days and no more than 150
days. For each benefit period you pay A total of
912 for a hospital stay of 1-60 days. 228 per
day for days 61-90 of a hospital stay. 456 per
day for days 91-150 of a hospital stay (Lifetime
Reserve Days). All costs for each day beyond 150
days Skilled Nursing Facility Coinsurance 114.00
per day for days 21 through 100 each benefit
period. Part B (covers Medicare eligible
physician services, outpatient hospital services,
certain home health services, durable medical
equipment) 110.00 per year. (Note You pay 20
of the Medicare-approved amount for services
after you meet the 110.00 deductible.)
33
National Personal Health Care Expenditures, by
Type of Service and Percent Medicare Paid, CY 2000
Total national personal health care spending in
CY 2000 was 1.1 trillionMedicare accounted for
19 percent.
412 Billion Medicare pays 31
286 Billion Medicare pays 21
1
122 Billion Medicare pays 2
92 Billion Medicare pays 10
60 Billion Medicare pays 0
39 Billion Medicare pays 12
37 Billion Medicare pays 0
32 Billion Medicare pays 29
31 Billion Medicare pays 4
19 Billion Medicare pays 25
1 Medicare payments are from managed care plans
only, since fee-for-service Medicare does not
generally cover outpatient prescription
drugs. Source CMS, Office of the Actuary,
National Health Statistics Group
34
Where the Medicare Claims Dollar Went, FY 2001
Total 236 billion
Inpatient Hospital 93 billion
Managed Care 42 billion
Skilled Nursing 13 billion
Hospice 3 billion
Home Health 9 billion
DME, Supplies, Independent Labs and Other
Services 2 16 billion
Hospital Outpatient and Other Outpatient
Facilities1 20 billion
Physicians 40 billion
1 Other outpatient facilities include ESRD
freestanding dialysis facilities, RHCs,
outpatient rehabilitation facilities, and
federally qualified health centers. 2 Other
services include ambulatory surgical center
facility costs and ambulance services. Note
Spending includes benefit dollars only. Data do
not sum due to rounding. Source CMS, Office
of the Actuary
35
Sources of Payment for Medicare Beneficiaries
Medical Services, 1999
Medicare pays a little more than half of the
total cost of beneficiaries medical care.
Medicaid 12 (1,103)
Medicare 53 (5,043)
Private Insurance 12 (1,161)
Direct Out-of-Pocket 19 (1,825)
Other Sources 5 (441)
Overall Medical Expenses per Medicare Beneficiary
9,573
Beneficiary out-of-pocket spending does not
include their payments for Medicare Part B
premiums, private insurance premiums, or HMO
premiums. Note Data are for all beneficiaries,
both fee-for-service and MedicareChoice
enrollees. Source CMS, Office of Research,
Development, and Information Data From the
Medicare Current Beneficiary Survey (MCBS) 1999
Cost and Use File.
36
Types of Supplemental Health Insurance Heldby
Fee-for-Service Medicare Beneficiaries, 2000
Most beneficiaries using fee-for-service Medicare
have private, supplemental health plans.
No Supplemental Insurance 15
Medicaid 19
Other 2
Individual Medigap 27
Employer-Sponsored 33
Medigap Employer-Sponsored Insurance 5
Note Medicaid (shown above) includes both
Qualified Medicare Beneficiaries (QMBs) and
Specified Low-Income Medicare Beneficiaries
(SLMBs). Source CMS, Office of Research,
Development, and Information Data From the
Medicare Current Beneficiary Survey (MCBS) 2000
Access to Care File.
37
Why does supplementary insurance matter?

D
MC
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0
Q
38
Elderly Health Spending as a Percentage of
Income, 2000
Most elderly households have incomes below
40,000 and spend a high percentageof their
income on health care.
Elderly Households Health Spending as a
Percentage of Income
Percent of Elderly Households by Income
Percent of Elderly Households
Percent of Income Spent on Health
Income in Thousands
Income in Thousands
The Elderly Poor Spend a GreaterPortion of Their
Income on Health
Most Elderly Households Have Incomes Below 40,000
Source CMS, Office of the Actuary data from the
Bureau of Labor Statistics, Consumer Expenditure
Survey, 1999-2000.
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41
Per Capita Total Health Care Expenses, by Payer,
for Beneficiaries Living in Long-Term Care
Facilities and the Community, 1999
Beneficiaries in assisted living facilities have
lower total expenses than those in nursing homes,
but higher out-of-pocket costs.
40,036
40,442
32,616
6,366
2
1
Notes 1) Because a Skilled Nursing Facility stay
is a Medicare covered benefit, Medicare covers a
large portion of the expenses for beneficiaries
in this group. 2) Assisted Living/Retirement Home
also includes Domiciliary Care Homes, Board and
Care Homes, and Independent Living Units. All of
these arrangements offer some level of assistance
to the beneficiary. Source CMS, Office of
Research, Development, and Information Data from
the Medicare Current Beneficiary Survey (MCBS)
1999 Cost and Use File.
42
Provider Reimbursement under Medicare
  • Medicare Physician Fee Schedule (MPFS).
  • provides more than 10,000 physician services,
  • the associated relative value units,
  • a fee schedule status indicator, and various
    payment policy indicators needed for payment
    adjustment (i.e., payment of assistant at
    surgery, team surgery, bilateral surgery, etc.).
  • The Medicare physician fee schedule pricing
    amounts are adjusted to reflect the variation in
    practice costs from area to area.
  • A geographic practice cost index (GPCI) has been
    established for every Medicare payment locality
    for each of the three components of a procedure's
    relative value unit (i.e., the RVUs for work,
    practice expense, and malpractice). The GPCIs are
    applied in the calculation of a fee schedule
    payment amount by multiplying the RVU for each
    component times the GPCI for that component.
  • Hospitals are paid using DRGs for inpatient care
    and by another diagnosis or treatment based
    payment system for outpatient care.

43
Issues tied to income tested programs such as
Medicaid and SCHIP
  • Stigma?
  • Incentive effects re maintaining eligibility
  • Zero one nature of eligibility
  • Provider willingness to provide services


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45
Inadequacies of Public Programs
  • Difficulties obtaining care
  • Medicaid recipients face a number of
    difficulties obtaining care. They often find that
    their coverage is limited to a specific provider,
    usually an HMO, which may or may not have a
    facility near by may require changing providers
    may not be open when the adults in the family are
    not working may have long delays to get an
    appointment or long waits at the time of the
    appointment.
  • Access problems have gotten worse. Some children
    in a family may be covered while others are not.
    Recent evidence suggests that welfare reform,
    which broke the tie between Medicaid and other
    programs, has reduced the take-up of Medicaid
    coverage.
  • The all or nothing character of Medicaid, means
    that persons are either eligible or they are not.
    If the family income goes up by one dollar,
    Medicaid eligibility is lost. This notch effect
    creates an incentive to become eligible and stay
    on Medicaid. The effect is stronger, the less
    likely women are to receive private insurance at
    their place of employment, should they work.
  • Moffitt and Wolfe (1992) found that Medicaid did
    keep some women on AFDC and out of the labor
    force, but the impact was likely to be large only
    for women whose families have high expected
    medical care expenditures.
  • This notch problem has been reduced somewhat by
    mandating coverage of poor pregnant women and
    young children below the 185 percent of the
    poverty line.

46
Inadequacies of Public Programs-2
  • Medicaid coverage is inequitable. Because it
    varies by state, the eligibility income levelthe
    income cutoffvaries considerably. States also
    differ in the service limitations they have
    imposed. Some states have limits on the number of
    inpatient days covered some states require a
    second opinion for certain surgery many states
    have limits on the quantity of any prescription
    and a few states have a limit on the number of
    physician office visits. Thus, a poor single
    mother with income at 75 percent of the poverty
    line may receive no coverage in one state, full
    coverage with few constraints in a second, and
    have limited benefits covered and difficulty in
    finding a provider in a third state.
  • The level of reimbursement is another factor that
    influences access to quality care. In a study of
    childbirths, physician-reimbursement policies
    were found to influence physicians choices of
    treatment modalities so that relatively low
    reimbursement rates (specifically, Medicaid
    reimbursement rates) result in reductions in the
    intensity with which patients under the care of
    low-reimbursement providers are treated (Gruber
    et al., 1999).
  • Disproportion Share Reimbursement may create
    incentives to care more for those covered than
    those not covered.

47
Inadequacies of Public Programs-3
  • Medicare reflects coverage in effect in 60s no
    outpatient pharmaceutical coverage, No stop-loss
    coverage limited coverage of inpatient care (90
    days), freedom of choice of providers.
  • Medicares inpatient reimbursement (DRGs which
    are a weight) creates issues of fairness in terms
    of formula for reimbursement and creates
    incentives for hospitals to shift costs to other
    parts of hospital outpatient, SNF, rehab unit.
    Issues re why same service reimbursed at
    different levels depending on site of care.
  • Incentives to join Managed care and for Managed
    Care (HMOs) to offer package risk adjustment
    (95 when first established). Increase in
    enrollment increases awareness of differences in
    payment generosity and creates pressure to redo
    formula. HMOs get positive selection but how far
    can regulators go re reflecting this and still
    get HMOs to be part of program? Who bears risk?
    Rural areas with few options of HMOs raises
    equity issue. Payment rates vary year to year and
    across nearby counties though since 2000 a blend
    of national and county rate. Floors set mean
    disequilibrium re traditional FFS plans.
  • The Medicare Hospital Insurance program is
    projected to become insolvent in 2019, and
    Medicare expenditures are projected to rise
    rapidly in coming decades as the baby-boom
    generation retires and health care costs continue
    to increase. 
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