02

5

Paying for Health Care

Learning Objectives

After reading this chapter, you should be able to:

• Distinguish the benefits and shortcomings of private sources of payment for the care of vulnerable persons.

• Identify the benefits and shortcomings of public sources of payment for the care of vul- nerable persons.

• Recognize the most common public payer options, and understand their eligibility requirements.

• Understand how health care is financed for people with no health insurance coverage.

Courtesy of Keith Brofsky/Thinkstock

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CHAPTER 5

Critical Thinking

What do you think will be the impact if health care costs are not addressed? What future problems do you predict?

Introduction

The cost of health care is ris-ing, in part because of expen-sive new technologies and procedures, and in part because of the market failure of the health care industry. It has been argued that deregulation of health insur- ers, combined with a free market health care industry, has changed health care from a service-based structure to a commodity, or a product available for purchase. America’s health care delivery system is geared toward the mul- tibillion dollar health insurance industry rather than individual payers, many of whom lack the financial ability to cover health care expenses out of pocket, from general emergency room care to a life-threatening illness. After all, few people have $10,000 in their budgets to cover the cost of an emergency room visit for a broken arm.

Americans purchase health insurance to cover medical bills, but health insurance is too expensive for many families to afford. In 2010, 64% of the American population had pri- vate health insurance for all or part of the year. That isn’t a very large majority, consider- ing that everybody needs medical attention at some point. In that same year, 31% of the population had government-run public health insurance, and 16.3% had no health insur- ance at all for all or part of the year (DeNavas-Walt, Proctor, & Smith, 2011). The question across America, from Congress to kitchen tables, is how to insure all, how to tackle rising health care costs, and how to decipher a fair and equitable payee process.

Courtesy of Jodi Jacobson/iStockphoto

Costly new technologies and the free-market nature of the health care industry have raised the cost of health care.

Introduction

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CHAPTER 5Section 5.1 Private Payers

Self-Check

Answer the following questions to the best of your ability.

1. According to a study in 2011 by DeNavas-Walt, Proctor, & Smith, what percent- age of Americans had no health insurance?

a. 17% b. 36% c. 42% d. 16.3%

2. What has changed health care from a service-based structure to a commodity? a. deregulation b. lack of government intervention c. high consumer demand d. high employer demand

3. America’s health care delivery system is geared toward what part of the health insurance industry?

a. individual payers b. employer benefits c. the multibillion dollar segment d. children and infants

Answer Key

1. d 2. a 3. c

5.1 Private Payers

The private payer sector comprises programs that provide financial access to health care, which includes insurance companies, employer-run health coverage pro-grams, and individuals who pay for health care out of pocket. Individuals who pay for all of their health care out of pocket are rare, as the cost of health care is pro- hibitive. Employer-run health coverage programs are types of insurance wherein the employer company manages the plan. Most Americans with private health care coverage have insurance plans that are sold and managed by insurance companies. These plans are available for purchase individually, though 60% of employers offer health insurance as an employee incentive (The Kaiser Family Foundation [KFF] & Health Research and Educational Trust, 2011).

Private payer coverage is unattainable for many of America’s most vulnerable. This is primarily due to low income. Additionally, many of America’s middle class are losing private payer health insurance due to rising premium prices and employers’ inability or unwillingness to continue offering health insurance as an employee benefit. Many employers who continue to offer health insurance benefits have had to either lower the amount of coverage available or raise the out-of-pocket amount paid by the patient, called the deductible, due to rising premiums. This section discusses private payer coverage in terms of how it is able to meet the particular problems of each vulnerable population,

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CHAPTER 5Section 5.1 Private Payers

whether or not the coverage is adequate, and the unique issues faced by each population when trying to navigate the private payer system.

Vulnerable Mothers and Children

Many people cite health insurance as a strong incentive to work, but as employers omit or limit insurance coverage as a benefit, private payer insurance becomes increasingly

difficult to obtain for America’s most vulnerable. According to the Forum on Child and Family Statistics (2011), 60% of Ameri- ca’s children had private health insurance in 2009. Private health insurers have improved preven- tive care coverage for children, often covering well-child visits and immunizations at no co- pay, or the portion of the bill that the patient is responsible for. However, coverage for care of the mother and baby dur- ing pregnancy, called prenatal care, has diminished, leaving the patient responsible for an increasing amount of the asso- ciated medical bills. Prenatal care is increasingly expensive as malpractice insurance pre- miums continue to rise, causing

many obstetricians to increase their rates or drop out of the practice altogether. As the cost of prenatal care rises in response to these conditions, private health insurers are increasing patient co-pays in order to meet the higher costs.

Abused Individuals

Injuries that occur as a result of physical abuse are often treated in hospitals and urgent care centers. Many abuse victims avoid seeing their designated general practitioners and pediatricians for fear of detection. These injury treatments, and the mental health services that many victims access to recover from abusive relationships, are covered by private payers at varying levels depending on the specifics of their individual insurance plans.

Courtesy of Blend_Images/iStockphoto

Though insurance coverage for young children has improved, prior to giving birth mothers are becoming responsible for covering the cost of an increasing portion of their medical care.

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CHAPTER 5Section 5.1 Private Payers

Chronically Ill and Disabled Persons

Private insurance coverage for chronic illnesses and disabilities varies depending on the individual insurance plan. Many insurance companies have preexisting condition clauses that make it difficult to obtain insurance coverage or that reduce coverage for specified chronic ill- nesses. As the cost of delivered health care rises, many insurance companies are increasing indi- viduals’ financial responsibilities in the form of co-pays or reject- ing payment of insurance claims. Although it is difficult for insur- ance companies to deny claims for many procedures associated with chronic illness and disabil- ity, many have reduced coverage for mobility and motility aids that help with activities of daily living (ADLs).

Persons Diagnosed With HIV/AIDS

Antiretroviral drug therapy is expensive, and HIV/AIDS patients with compromised immune systems often need costly inpatient hospital treatment. Private health insurers have discriminated against people diagnosed with HIV/AIDS by charging them higher premiums, limiting coverage, and screening for preexisting conditions. HIV/AIDS patients benefit from managed care, as managed care plans can lower medical costs through plan- ning, organization, and deal brokering and can help HIV/AIDS patients maximize their health insurance benefits.

Recent legislation works to increase access to health care coverage for people with dis- abilities, chronic illness, HIV/AIDS, and mental conditions. The Patient Protection and Affordable Care Act (2010) created a Pre-Existing Condition Insurance Plan (PCIP) to pro- vide affordable health insurance coverage to all people living with medical conditions, including those with HIV/AIDS. The act also prohibits insurers from declining coverage based on preexisting conditions, beginning in 2014.

Persons Diagnosed With Mental Conditions

Plan coverage for mental health services has increased in recent decades. Many private insurance plans offer some level of coverage for outpatient therapy sessions and allow intense nonresidential therapies. Mental health benefits often have higher co-pays than general practitioner benefits.

Courtesy of Lisa Eastman/fotolia

Insurance companies have increased co-pays and decreased the amount and types of procedures they will pay for in order to offset the rising costs of delivered health care.

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CHAPTER 5Section 5.1 Private Payers

On the insurer side, managed behavioral health care programs (MBHCPs) have become a common method of managing mental health costs. MBHCPs come in two basic formats:

• Administrative services-only payments, which are flat monthly fees that are paid in advance, usually based on the number of enrollees, or insurance plan participants

• Monthly per capita payments made by the insurer to a managed behavioral health care organization (MBHCO) that make the MBHCO liable for services costs and administration costs

The monthly per capita pay structure involves contracting a network of providers to per- form the services. In this form of plan, mental health services have different coverage from other medical services covered under the plan. Per capita payment plans face challenges in minimizing the tendency for high-risk patients to be excluded from coverage and for providers to unnecessarily perform covered services to increase their ability to bill.

Suicide- and Homicide-Liable Persons

Caucasian males have the highest suicide rates and also have the highest incidence of sub- scribing to private health insurance plans. Suicide ideation and planning is an aspect of major depression, which is considered a mental condition eligible for insurance coverage. As discussed, many plans do offer mental health services benefits, which may be helpful in stopping a person from committing suicide but are not useful after the fact.

Persons Affected by Alcohol and Substance Abuse

Most private insurance plans offer some amount of coverage for alcohol and substance abuse services. In the private payer sector, these services are usually administered by pro- viders that focus on patients with private insurance or the financial ability to pay out of pocket. Private sector alcohol and substance abuse programs boast nearly double the rev- enue per admission that public sector providers charge. Private payer programs usually limit alcohol and substance abuse program spending by capping the amount of benefit available in dollars and by limiting the number of program inpatient days and outpatient visits per enrollee, per year. State law varies on the subject, so some insurance plans offer more coverage than others.

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CHAPTER 5Section 5.1 Private Payers

Self-Check

Answer the following questions to the best of your ability.

1. According to the 2009 Federal Interagency Forum on Child and Family Statistics, what percentage of America’s children had private health insurance?

a. 60% b. 80% c. 40% d. 50%

Critical Thinking

Many of America’s middle class are losing private payer health insurance due to rising premium prices and employers’ inability or unwillingness to continue offering health insurance as an employee benefit. How do you think this will affect the health care system? Do you think it will change demand and costs?

Indigent and Homeless Persons

Not all homeless people are without jobs or fam- ily ties, which might account for the 4% of home- less people who reported having private health insurance in the 1996 National Survey of Home- less Assistance Providers and Clients published by the U.S. Census Bureau (U.S. Census Bureau, 1996). Another 10% reported having health cov- erage by means other than private and public payer organizations. Unsurprisingly, those who reported some form of private or “other” health insurance coverage (as opposed to public payer), were significantly more likely to belong to home- less families, rather than being on their own.

Immigrants and Refugees

Immigrants in the United States are less likely than native-born citizens to have any type of health care coverage. In the private payer sector, this is attributable to the fact that immigrants hold fewer white-collar jobs, which are more likely to offer health care coverage benefits. Language barriers may also contribute to a lack of private

insurance access because a language barrier makes it more difficult for a person to negoti- ate benefits with employers and insurers. Language barriers and lower incomes also make it difficult for immigrants to purchase health insurance individually. Immigrants with jobs that do offer private insurance have access equal to their native-born colleagues.

Courtesy of Hemera/Thinkstock

Not all homeless people are without health coverage; 4% reported having private insurance, and another 10% claimed coverage by other means.

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CHAPTER 5Section 5.2 Public Payers

2. Beginning in 2014, what federal act will prohibit insurers from declining cover- age based on preexisting conditions?

a. Medicare Part D Act b. Welfare Reform Act c Patient Protection and Affordable Care Act d. Housing and Insurance Act

3. Which of the following factors makes it difficult for immigrants to purchase health insurance individually?

a. nationality b. language barriers c. citizenship d. physical handicaps

Answer Key

1. a 2. c 3. b

5.2 Public Payers

The public payer sector comprises government-funded programs that provide finan-cial access to health care. These programs include Medicaid, Medicare, health care available to military veterans through the Veterans’ Administration, the Federal Employees’ Health Benefits Program, states’ employees’ health benefits programs, and the states’ Children’s Health Insur- ance Program (CHIP). These pro- grams all differ in coverage and accessibility.

Medicaid provides health insur- ance to qualifying adults, primar- ily those with limited income and resources. It is funded through a federal program but is adminis- tered by the states; they provide 20% to 50% of each state’s own Medicaid funding through state budgets. Approximately half of the people who receive Supple- mental Security Income (SSI) also receive Medicaid benefits based on eligibility due to physical and mental disabilities and disorders. The Patient Protection and Afford- able Care Act (PPACA) worked to increase access to public payer programs by changing eligibility requirements, among other program changes. In March 2012, the U.S. Centers for Medicare and Medicaid Services (CMS) announced a “final rule” on the PPACA that increases coverage and

Courtesy of Stephanie Kennedy/iStockphoto

Dental care for children provided by Medicaid is funded with a combination of state and federal monies.

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CHAPTER 5Section 5.2 Public Payers

accessibility to government-funded health care plans. The final rule outlined that Medic- aid eligibility would expand in 2014 to include childless adults without disabilities. It also increased the income eligibility requirements to 133% of the federal poverty level (U.S. Centers for Medicare and Medicaid Services [CMS], 2012a), which translates to $14,856 for an individual and $30,656 for a family of four (U.S. CMS, 2012a).

Legislation on both federal and state levels has worked to increase Medicaid access, par- ticularly for vulnerable women and babies. The Children’s Health Insurance Program (CHIP) is part of the Medicaid collaboration between the federal government and the states, though it is not part of the Medicaid program. CHIP provides extended eligibility and coverage for qualifying children up to age 19. CHIP coverage differs by state, but in all cases provides preventive care, hospital care, and dental care (U.S. CMS, 2012b). As of February 2011, a record 90% of children in the United States had health insurance cover- age, either through private payers, Medicaid, or CHIP. However, 8 million children con- tinue to be uninsured. Of these, 5 million are eligible for Medicaid and CHIP but are not enrolled (The Kaiser Family Foundation (KFF), 2012d).

Children and the elderly are the most vulnerable subgroups in any at-risk population. Whereas children are eligible for CHIP, many elderly people are eligible for Medicare, a federally run health insurance program. Medicare also covers adults who are unable to work due to permanent disabilities. Medicare can be combined with private payer cover- age, though private coverage is the consumer’s responsibility.

Medicare provided health insurance coverage for 47,672,971 people in 2011 (KFF, 2012c). Medicare eligibility is based on a few factors:

• You or your spouse must have worked for a minimum of 10 years in Medicare- covered employment, and

• you must be age 65 or older, and • you must be a citizen or legal permanent resident of the United States.

People with end-stage renal failure or disabilities may be eligible for Medicare even if they are under age 65. Some people are eligible for both Medicare and Medicaid based on income and illness or disability. These individuals are called “dual-eligibles.”

Medicare offers a variety of coverage levels, referred to as “Parts.” Medicare Part A has no premium for people over age 65 and covers specified inpatient medical treatments in hospitals, skilled nursing facilities, long-term care facilities, hospice care, and other inpatient settings. Medicare Part B costs the insured person a monthly premium ($99.00 in 2012) and covers preventive care and medically necessary services. This includes some coverage for mental health therapies. People who wish to enroll in a Medicare private fee-for-service plan or a Medicare managed care plan must be enrolled in both Medicare Parts A and B. It is important to note that Medicare Parts A and B do not cover long-term residential care, dental care, and eye care. Prescription drug coverage is available through Medicare Part D. This section discusses how vulnerable populations access public payer coverage like Medicaid and Medicare (Medicare.gov, 2012).

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CHAPTER 5Section 5.2 Public Payers

Vulnerable Mothers and Children

Generally speaking, women are paid less than men, and women represent a higher percentage of the low-income population. Women also report more cost barriers to accessing health care for themselves and their children than are reported by men (DeNavas-Walt, Proctor, & Smith, 2011). This is one of the reasons that public health care programs benefit high-risk mothers and children so significantly. Medicaid and the Children’s Health Insurance Program (CHIP) are the tradi- tional public health care coverage resources for high-risk mothers and children. These programs are state-run, so benefits coverage is vastly dif- ferent depending on location. Since the Omni- bus Budget Reconciliation Act of 1981 (OBRA), these programs have lost funding and eligibility requirements have tightened repeatedly. OBRA restricted tax deductions for child care expenses, work-related expenses, and earned-income cred- its. In doing so, many working poor who did not have health insurance through their employers were, in effect, pushed above the income thresh- old eligibility requirement for public payer health coverage, though their incomes did not increase.

This had negative consequences on child and maternal health outcomes. The legislature responded with the PPACA in 2010, by extending the income eligibility threshold to 185% of the poverty level for families and 133% for individuals. The application process was also sped up with shortened application forms, and the programs were made more acces- sible by placing Medicaid administrators in locations other than just welfare offices.

The Welfare Reform Act of 1996 (WRA) created the Temporary Assistance for Needy Fam- ilies (TANF) program, thus limiting coeligibility between welfare and Medicaid. TANF decreased accessibility to high-risk mothers and children by demanding that mothers who could work, must work to be eligible for TANF benefits. Many women who got jobs or continued in their current employment made too much to be eligible for Medicaid, even though they were the working poor and lacked access to private health insurance.

The Patient Protection and Affordable Care Act of 2010 (PPACA) expands access to cover- age for all people, but high-risk mothers and babies may stand to gain the most from the expanded access (see Figure 5.1). The PPACA mandates expand private health insurance access through many qualifying employers. It also increases the income threshold eligibil- ity requirement for Medicaid, allowing access for more of America’s working poor.

Courtesy of Rosemarie Gearhart/iStockphoto

Public health care coverage resources make it possible for high-risk mothers and their children to receive basic health care.

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CHAPTER 5Section 5.2 Public Payers

More than half of high-risk mothers are eligible to receive coverage through Medicaid.

The Henry J. Kaiser Family Foundation (KFF). (2010a). Retrieved from http://www.kff.org/womenshealth/upload/7987.pdf

Abused Individuals

Estimates of treatment for bone injuries, brain injuries, internal injuries, burns, poisoning, and other abuse-related ailments put the total inpatient annual cost in the United States around $20 million. Child abuse is more prevalent among low-income households (U.S. Department of Health and Human Services, Administration for Children and Families, Administration on Children, Youth and Families, Children’s Bureau, 2011). As such, most of the cost of treating patients for injuries from abuse is paid for by public payer programs, namely Medicaid. Similarly, Medicare bears the brunt of the cost of treating injuries result- ing from elder abuse.

Chronically Ill and Disabled Persons

Under the Social Security and Disability Insurance (SSDI) program, the federal govern- ment provides a financial safety net for people who become disabled. SSDI pays monthly income to eligible people who have worked enough to contribute to the SSDI program before becoming disabled. The Social Security Administration (SSA) determines eligibility by using the following criteria:

• The applicant cannot do the same type of work that was done before incurring his or her disability or medical condition;

Figure 5.1: Improved access to health insurance under the Patient Protection and Affordable Care Act

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CHAPTER 5Section 5.2 Public Payers

• The applicant has been unable to adjust to other work because of the disability or medical condition(s); and

• The disability has lasted or is expected to last for at least one year or to result in death (U.S. Social Security Administration, 2011).

At the end of calendar year 2011, the SSA reported that 8,576,000 people were regularly receiving disability benefits under SSDI: Old-Age, Sur- vivors, and Disability Insurance program (OASDI) (U.S. Social Secu- rity Administration, 2012a). SSDI participants are automatically eli- gible for Medicare after two years.

Supplemental Security Income (SSI) is also managed by the federal SSA and also covers some people with disabilities. Unlike SSDI, SSI eligi- bility is not dependent on work his- tory but is based on having limited means to support oneself. SSI par- ticipants immediately gain access to Medicaid in most states. Some states supplement SSI payments, increas- ing the benefit.

Those receiving disability benefits under SSDI and SSI may benefit from the Ticket to Work and Self-Sufficiency program (Ticket). Ticket helps place SSI and SSDI participants in jobs, while allowing them to continue to receive benefits. Ticket participants can receive reha- bilitation services without endangering their disability benefit eligibility as well. Under the Ticket program, working beneficiaries are not audited for disability qualification by the Administration; benefits can only be diminished or lost based on income eligibility requirements as workers advance their careers and if deemed no longer disabled. Ticket also allows many workers who lose income benefits from SSI and SSDI to continue Med- icaid and Medicare coverage (U.S. Social Security Administration, 2012b).

Many SSI and SSDI participants are covered by either or both Medicare and Medicaid. Adults over age 65 who have Medicare may also qualify for Medicaid. Medicare and private insurance plans offer limited coverage for institutionalized care, including nurs- ing homes, and the costs associated with long-term care often drain patients’ financial resources. This has created a system in which Medicaid is the single largest payer for long-term care services.

Persons Diagnosed With HIV/AIDS

Public payer programs bear the brunt of medical costs for HIV/AIDS. This is partially because HIV is more prevalent among low-income populations, which utilize Medicare and Medicaid programs. Though public payer programs do limit benefits for antiretroviral

Courtesy of Dean Mitchell/iStockphoto

Those who have worked enough to contribute to the Social Security and Disability Insurance (SSDI) program before becoming disabled are eligible to collect monthly SSDI benefits if they also satisfy other criteria.

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CHAPTER 5Section 5.2 Public Payers

Expenses for care and treatment make up more than half of the spending on HIV/AIDS programs.

The Henry J. Kaiser Family Foundation (KFF). (2010b). Retrieved from http://www.kff.org/hivaids/upload/7029-06.pdf

Persons Diagnosed With Mental Conditions

According to the Substance Abuse and Mental Health Services Administration (SAM- HSA), Americans spent $135 billion on mental health and substance abuse services in 2005, which accounted for 6.1% of all health care spending. Public payer programs covered the

drug therapies, treatments for illnesses that result from having a compromised immune system due to HIV/AIDS, such as viral infections and pneumonia, are covered. Grant- funded Ryan White clinics (see Chapter 3) are located in many public health departments to meet the specific needs of HIV/AIDS patients. Additionally, federal and state govern- ments offer preventive programs and nonmedical support to HIV/AIDS patients, which add to the total cost of HIV/AIDS to the government.

As many as 50% of people diagnosed with HIV/AIDS are estimated to receive Med- icaid benefits. The number of children living with HIV/AIDS receiving public payer health coverage is estimated to be as high as 90%. In 2011, the United States federal government spent an estimated $27.2 billion in domestic and international HIV/AIDS programs and research (KFF, 2010b). Figure 5.2 shows a detailed breakdown of how the money was spent.

Figure 5.2: Federal spending on HIV/AIDS programs in 2011

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CHAPTER 5Section 5.2 Public Payers

majority of mental health costs, accounting for 58% of the total spent on mental health care. Medicaid alone covered 28% of the total spent on mental health during that year (Substance Abuse and Mental Health Services Administration [SAMHSA], 2010).

SAMHSA estimates that spending on mental health and substance abuse treatments will continue to increase but will do so at a slower pace than spending on other medical care, as there is less need for mental health and substance abuse treatments than for all other medical care combined. It is projected that overall spending on mental health and sub- stance abuse will be $239 billion in 2014 (Levit et al., 2008). Forecasting predicts that 2014 mental health and substance abuse spending will continue to be covered by public payers at the current rate of 58% of the country’s total.

Suicide- and Homicide-Liable Persons

Low-income minority males have the highest homicide rate (Xu, & Kochanek, & Mur- phy, & Tejada-Vera, 2010). This group also represents a significant number of people who have no health care coverage or use public payer programs. As such, public programs like Medicaid are responsible for much of the cost of violent deaths. Medicaid offers limited coverage for emergency care of gunshot wounds. Many social programs that work to pre- vent suicide and homicide focus on children. These include Head Start, Child Abuse and Neglect Program, Foster Care programs, and Child Welfare Services. Programs that focus on adults and the elderly include block grants, social services, and community services.

The criminal justice system is responsible for the vast majority of costs associated with violent crime and death. These costs are accrued through investigation of violent deaths and prosecution of offenders. Once offenders are successfully prosecuted, they enter the penitentiary system, where the government pays their room, board, and health care costs.

Persons Affected by Alcohol and Substance Abuse

SAMHSA (2010) reports that spending on substance abuse treatments com- prised 1.2% of the nation’s health care spending in 2005. Of the portion spent on substance abuse, 52% was spent at centers that specialize in mental health and alcohol and substance abuse. State and local public payers, excluding Med- icaid, paid for 36% of the nation’s sub- stance abuse spending in 2005. Medicaid paid 21% of the cost, and private insur- ance paid 12%. Overall, public payers were responsible for 80% of the nation’s substance abuse medical spending. Most of this spending went to publicly owned and not-for-profit programs that mostly serve indigent people.

Courtesy of Big City Lights/Fotolia

More than one third of the United States’ substance abuse spending in 2005 was covered by public payers, excluding Medicaid.

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CHAPTER 5Section 5.2 Public Payers

There has been a shift in substance abuse treatment therapies from the 1980s to 2005. Inpatient treatments represented 56% of substance abuse treatment spending in 1986. A shift to outpatient therapies due to improved pharmaceuticals and deinstitutionalization is evident in the decrease in inpatient spending to 17% in 2005. Outpatient spending rose from 23% in 1986 to 48% in 2005 (SAMHSA, 2010).

Indigent and Homeless Persons

The Homeless Eligibility Clarification Act of 1986 (HECA) improved Medicaid access for indigent people. HECA mandated that a person without a mailing address or income may be denied Medicaid eligibility. Two programs that focus on connecting indigent people with available resources, such as food stamps, Medicaid, and job training, include the Health Resources and Services Administration Health Care for the Homeless department and the Department of Veterans Affairs Health Care for Homeless Veterans program.

Immigrants and Refugees

Access to public payer programs is restricted for immigrants for various reasons. Lan- guage barriers make it difficult for immigrants to access and apply for government pro- grams. Some cultures prohibit the use of these programs, regardless of need. American attitudes toward immigrants, and undocumented immigrants in particular, have encour- aged legislation that limits public program eligibility for many foreign-born people.

The Welfare Reform Act of 1996 (WRA) stripped many immigrants of their SSI and Med- icaid eligibility by declaring that noncitizen immigrants are not eligible for the programs. It went on to make all immigrants ineligible for public means-tested programs for their first five documented years in America, after which point they must declare their spon- sors’ incomes on means-tested applications. State and local laws often go further, making undocumented immigrants entirely ineligible for public benefit programs.

The Patient Protection and Affordable Care Act of 2010 (PPACA) improves immigrant access to health coverage only slightly. Undocumented immigrants remain ineligible for Medicaid and many other public assistance programs and are also ineligible to pur- chase health insurance through the insurance marketplace created by the PPACA. Under PPACA, states may waive the five-year waiting period for Medicaid and CHIP program eligibility for documented immigrants. Documented immigrants are also granted access to the health insurance marketplace, and marketplace tax benefits are not subject to the five-year waiting period for Medicaid. The PPACA grants naturalized citizens full access to Medicaid and insurance marketplace benefits that all U.S. citizens have (KFF, 2012c).

Critical Thinking

According to the reading, 90% of children in the United States are eligible to receive some type of health insurance, either through private payers, Medicaid, or CHIP. Do you think it is possible to provide health insur- ance to 90% of adults? What obstacles stand in the way? What possible solutions would you recommend?

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CHAPTER 5Section 5.3 Uninsured People

Self-Check

Answer the following questions to the best of your ability.

1. According to the U.S. Substance Abuse and Mental Health Services Administra- tion (SAMHSA), Americans spent how much on mental health and substance abuse services in 2005?

a. $135 billion b. $17 trillion c. $13 million d. $20 trillion

2. Which of the following social programs works to prevent suicide and homicide and focuses on children?

a. Health in the Community b. KinderCare c. Head Start d. Montessori

3. Which group of immigrants is granted access to the health insurance marketplace and may not have to wait for five years?

a. undocumented immigrants b. those from Cuba c. those from Canada d. documented immigrants

Answer Key 1. a 2. c 3. d

5.3 Uninsured People

Approximately 16.3% of the United States population has no health insurance cov-erage. Children under age 18 lack health insurance at a rate of 9.3% overall and at a rate of 15.4% for those living in poverty (DeNavas-Walt et al., 2011). Uninsured people are more likely to avoid or delay seeking health care. Although there is little evi- dence to suggest that this lack of preventive care increases emergency room (ER) visits for the uninsured, those living below the poverty line have a significantly higher incidence of ER visits, as shown in Figure 5.3 (Garcia, Bernstein, & Bush, 2010). When uninsured people do seek medical care, they are often stuck with the entire bill. In some cases, they may be eligible for financial assistance through the health care organization where they were treated and other charities that exist to help people pay for medical treatments.

Many hospitals offer financial aid programs for patients who cannot afford medical treat- ment. These programs are eligibility-based. When a patient cannot pay his or her medi- cal bills and does not qualify for financial aid, the hospital absorbs some of the cost. But how? The answer here is both simple and complex. The simple answer is that the hospital absorbs the loss and passes it to others through cost-of-service increases. The complex answer is that the high rates everyone pays through the system are charged at such a high rate to pay for the service and all those services the hospital will never get paid for. The insurance companies absorb the cost of this and pass the rest to the populace through the

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CHAPTER 5Section 5.3 Uninsured People

Emergency room visits per year decrease the farther a person moves above the poverty level.

CDC/NCHS, National Health Interview Survey. (2010). Retrieved from http://www.cdc.gov/nchs/data/databriefs/db38.pdf

Vulnerable Mothers and Children

Women of childbearing age have a particularly high incidence of having no health care payer coverage. Only 64% of America’s pregnant women are estimated to have any amount of coverage for pregnancy and childbirth expenses, whether they have insur- ance or not. This is partially due to health insurance plans that do not cover pregnancy expenses, and partially due to the fact that one-quarter of pregnant mothers lack health insurance of any type when they become pregnant. These women are often low income, of minority ethnicity, young mothers, and unwed. Obstetricians and other women’s health service providers can provide these women with information and access to resources, including the Program for Children with Special Health Care Needs, which supports pro- viders who care for these high-risk mothers. Through programs like this, the uninsured rate decreases to 15% by the time of delivery.

use of insurance premiums. So those with insurance pay for that service in a snowball chain and thereby end up paying for it twice. Large insurance pools spread this out a little further, where it is shared more equally.

Figure 5.3: Prevalence of emergency room visits by poverty level

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CHAPTER 5Section 5.3 Uninsured People

Abused Individuals

As abusive offenders are often under- or unemployed, it stands to reason that many offenders and victims of abuse have no health insurance coverage at all. It is thought that abused individuals may also avoid seeking public payer coverage for fear of being found out. No data is available on the number of uninsured abused individuals or the reasons they are uninsured.

Chronically Ill and Disabled Persons

Chronically ill and disabled people may have difficulty obtaining health insurance due to preexisting conditions exemptions. The Patient Protection and Affordable Care Act works to create access for these individuals by diminishing insurers’ ability to decline coverage based on preexisting conditions. Public payer programs are available to the most chroni- cally ill and disabled, who are unable to work due to their conditions. However, a great many are able to work but unable to work full time or maintain gainful employment because they have limited functioning. Low wages and jobs that do not offer medical cov- erage benefits make it difficult for those who do not qualify for public payer programs to obtain private health insurance.

Persons Diagnosed With HIV/AIDS

Around 29% of HIV/AIDS patients lack health insurance. Many lose coverage due to losing employment when they become very ill. Others have their coverage canceled, or cannot get cover- age, due to health insurance company exclusions. Some public payer programs are available, how- ever, some people with HIV/AIDS who receive Social Security and Disability Income benefits may not be eligible for government health care programs because their incomes are too high.

Persons Diagnosed With Mental Conditions

Lack of health insurance is particularly problem- atic for those with severe, chronic mental con- ditions. According to the National Alliance on Mental Illness (NAMI) and SAMHSA, one-fifth of all patients with serious mental illness are uninsured (National Alliance on Mental Illness [NAMI], 2007). The truth is that these patients need a great amount of inpatient and outpatient therapies. Many are prescribed costly pharma- ceuticals to help stabilize their conditions. Drug compliance can be difficult to maintain in this

Courtesy of kmiragaya/fotolia

According to the National Institute for Mental Health and the National Center for Health Statistics, psychiatric patients have a 2% higher incidence rate of being uninsured than other medical patients.

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CHAPTER 5Section 5.3 Uninsured People

vulnerable group, and lack of health insurance to offset the price of mental health drugs exacerbates the compliance problem when uninsured patients cannot afford to have their prescriptions filled.

Suicide- and Homicide-Liable Persons

Mental health therapy is often cost prohibitive for uninsured suicide-prone people and homicide-prone people, both victims and offenders, pose a particular strain on the public health system. Young African American and Hispanic males are both homicide-prone and have high uninsured rates. Emergency room visits for gunshot wounds are expensive. Many hospitals offer financial aid for patients who qualify. For those who don’t, the bills for treatment can lead to financial ruin.

Persons Affected by Alcohol and Substance Abuse

Most Medicaid and private insurance plans limit coverage of substance abuse treatments. State Medicaid coverage of substance abuse therapies differs on scope and price coverage. An estimated 13% of the total cost for treatment is paid directly by patients in the private sector. Because low-income, vulnerable populations have a higher incidence of substance abuse, it follows that the majority of patients treated for substance abuse either are on public health plans or have no insurance at all.

Indigent and Homeless Persons

The majority of homeless people and many indigent people lack health insurance of any kind. However, many are eligible for Social Security and Disability Insurance (SSDI) and Medicaid. Although the Welfare Reform Act of 1996 tightened eligibility requirements, making it more difficult for many people to qualify for SSDI, Medicare, and Medicaid, the Patient Protection and Affordable Care Act worked to widen eligibility requirements to cover more people. Even with increased eligibility, the safety net of services for the home- less has large gaps in access and coverage. Connecting the homeless with medical cover- age services continues to be extremely difficult.

Immigrants and Refugees

Many immigrants and refugees hold low-paying jobs that do not offer health insurance as a benefit of employment. The language barriers and low incomes make it difficult for them to find private health insurance on their own. Many make too much to qualify for public payer coverage but cannot access private payer coverage through work. Undocumented immigrants cannot get health insurance because they lack the necessary documentation, such as a Social Security card. The U.S. Department of Health and Human Services data shown in Figure 5.4 illustrates that Hispanics are disproportionately represented among the uninsured, as they compose 14% of the American population but represent 30% of the total number of uninsured in America (U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, 2005).

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CHAPTER 5Section 5.3 Uninsured People

Critical Thinking

Many hospitals and insurance agencies pass on the cost of caring for uninsured patients. How effective is this policy, and what changes might be made to improve it?

Figure 5.4: Portion of uninsured as compared with portion of the total population

Blacks and Hispanics are uninsured disproportionately to the percentage of the American population they represent.

Department of Health and Human Services. (2005). Distribution of the uninsured and total U.S. population by race/ethnicity in 2004. Retrieved from http://aspe.hhs.gov/health/reports/05/uninsured-cps/ib.pdf

Self-Check

Answer the following questions to the best of your ability.

1. What proportion of pregnant mothers lack health insurance of any type when they become pregnant?

a. 64% b. 50% c. 25% d. 15%

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CHAPTER 5Chapter Summary

Chapter Summary

The United States spends more per capita, meaning for each person, on health care than any other nation at $8,086 per person (Centers for Disease Control and Preven-tion [CDC], 2011). For the sake of comparison, the United States spent $7,538 per capita on health care in 2007, Norway spent $5,003 per capita in that same year, and the United Kingdom (which has a single-payer health care system) spent $3,129 per capita on health care in 2007 (KFF, 2011b). In 2009, spending on health care accounted for 18% of the gross domestic product (GDP) in the United States. As health care costs continue to increase, America struggles to find a way to mitigate the problem of growing costs while creating affordable coverage for everybody.

2. What percentage of HIV/AIDS patients lack health insurance? a. 17% b. 20% c. 29% d. 42%

3. An estimated 13% of the total cost for treatment is paid directly by patients in the private sector who suffer from what condition?

a. HIV/AIDS b. at-risk pregnancies c. PTSD d. substance and alcohol abuse

Answer Key

1. a 2. c 3. d

Case Study: Thinking Outside the Cash Box at St. Jude Children’s Research Hospital

For America’s uninsured, and even those with public or private health insurance, catastrophic medical events can create financial hardship. Many hospitals offer financial aid services for families that cannot afford to pay for treatments. Some have hospital foundations that are used to cover these expenses. Of these, St. Jude Children’s Research Hospital is a shining example.

St. Jude treats approximately 7,800 pediatric patients per year. The 78-bed research hospital sees critically ill children, mostly on a recurring, outpatient basis. Among its many accomplishments is the creation of treatment protocols that improved the survival rate for acute lymphoblastic leukemia, the most common cancer type among children, from 4% in 1962 to the current 94% survival rate (St. Jude Children’s Research Hospital, n.d.).

St. Jude’s daily operating cost is $1.7 million for research and patient treatments (St. Jude Children’s Research Hospital, n.d.). Absolutely none of that money comes from the patients’ families’ pocket- books. St. Jude is bankrolled by the hospital foundation, which exists almost entirely thanks to public donations. Through fund-raising efforts, St. Jude’s foundation is able to continue to treat patients with- out billing directly to families, and further research lifesaving cures for catastrophically ill children.

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CHAPTER 5Self-Check

A small majority of Americans have private payer health insurance, usually provided through employers. For those who do not have affordable access through employer bene- fits plans, health care costs limit access to providers. Public payer programs like Medicare and Medicaid exist to provide affordable coverage to many Americans. However, many argue that these programs are a burden on the country’s budget. Private plans and public programs still do not cover all Americans, and the working poor and immigrants often fall through the cracks in America’s health care delivery system.

Critical Thinking

Considering the amount the United States spends on health care each year, what changes could be made to increase access to health insurance for the working poor and immigrants? Would increased spending be an effective way to address this deficit? Can you think of other possible solutions to this problem?

Self-Check

Answer the following questions to the best of your ability.

1. In 2010, 64% of the American population had private health insurance. a. True b. False

2. The Patient Protection and Affordable Care Act created a Pre-Existing Condition Insurance Plan (PCIP) that will begin in what year?

a. 2016 b. 2015 c. 2014 d. 2018

3. To be eligible for SSDI, the Social Security Administration requires that a. the applicant’s medical condition or disability is very severe. b. the applicant is unable to perform the same type of work that he or she did

before incurring the medical condition. c. the applicant’s medical condition has lasted for at least six months. d. the applicant’s income is at or below the poverty line.

4. What available resources exist for homeless people through the two federal programs Health Resources and Services Administration Health Care for the Homeless department and the Department of Veterans Affairs Health Care for Homeless Veterans?

a. community outreach b. service animals c. Medicaid d. faith-based programs

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CHAPTER 5Web Exercise

5. What makes it difficult for those who do not quality for public payer programs to obtain private health insurance?

a. low wages b. jobs that do offer insurance c. understaffed government housing offices d. preexisting conditions

6. _________________ and low incomes make it difficult for foreign-born people to find private health insurance on their own.

a. Language barriers b. Immigration regulations c. The Welfare Reform Act d. The Patient Protection and Affordable Care Act of 2010

Answer Key

1. a 2. c 3. b 4. c 5. a 6. a

Additional Resources

Visit the following websites to learn more about the topics covered in this chapter:

The SSA’s website explains disability benefits.

http://www.ssa.gov/dibplan/index.htm

St. Jude’s website

http://www.stjude.org/stjude/v/index.jsp?vgnextoid=f87d4c2a71fca210VgnVCM1000001e 0215acRCRD

Shriner’s Hospital for Children

http://www.shrinershospitalsforchildren.org/

Web Exercise

Using the Internet, locate three local health care foundations that benefit patients. Cre- ate a 10-slide PowerPoint presentation that covers your findings. Be sure to include the following:

• contextual information (who, what, where) • history of foundation • mission or belief of service

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CHAPTER 5Key Terms

Children’s Health Insurance Program (CHIP) Administered under the Med- icaid services umbrella, CHIP provides extended eligibility and coverage for quali- fying children up to age 19.

commodity A product available for purchase.

co-pay The portion of a patient’s bill for which he or she is responsible at the time a medical service is provided.

deductible The portion of expenses a person must pay out of pocket before an insurer pays any expenses.

enrollees Insurance plan participants.

insurance claims Bills sent to the insur- ance company to pay for a covered patient’s health care services rendered.

Medicaid A health insurance program funded with state monies, which provides health insurance to qualifying low-income adults.

Medicare A federally run health insurance program for people age 65 and over, and those unable to work due to permanent disabilities.

per capita For each person.

prenatal care Care of the mother and baby during pregnancy, including ultrasounds, gestational diabetes screening, and obstet- ric and gynecological care.

private payer sector Programs that provide financial access to health care, which includes insurance companies, employer-run health coverage programs, and patients who pay for health care out of pocket.

public payer sector Government-funded programs that provide financial access to health care.

Social Security and Disability Insurance (SSDI) program A federal government that provides a financial safety net, in the form of monthly income checks, for people who become disabled and who have worked enough to contribute to the SSDI program before becoming disabled.

• population served • funding sources/types • any affiliations (corporate, such as McDonald’s or Wendy’s, or noncorporate, such

as Shriner’s, Knights of Columbus, Masons, Rotary, etc.)

As always, spelling, grammar, and readability are important.

Key Terms

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