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The Rising Crisis of Underinsurance: How the Biden Administration May Shape Inequities in Patient Affordability

Posted on by • Posted in ACA, Employer-Based Health Insurance, Health Equity, Health Inequity, Health Insurance Benefit Design, Health Insurance Coverage Adequacy, Health Policy, High Deductible Health Plans, Out of Pocket Expenses, Public Option, Underinsured, Uninsured • Leave a comment
The Rising Crisis of Underinsurance: How the Biden Administration May Shape Inequities in Patient Affordability
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The Affordable Care Act (ACA) made historic strides in expanding access to health insurance coverage by covering an additional 20 million Americans. President Joe Biden ran on a platform of building upon the ACA and filling in its gaps. With Democratic majority in the Senate, aspects of his health care plan could move from idea into reality.

The administration’s main focus is on uninsurance, which President Biden proposes to tackle in three main ways: providing an accessible and affordable public option, increasing tax credits to help lower monthly premiums, and indexing marketplace tax credits to gold rather than silver plans.

However, underinsurance remains a problem. Besides the nearly 29 million remaining uninsured Americans, over 40% of working age adults are underinsured, meaning their out-of-pocket cost-sharing, excluding premiums, are 5-10% of household income or more, depending on income level.

High cost-sharing obligations—especially high deductibles—means insurance might provide little financial protection against medical costs beneath the deductible. Bills for several thousand dollars could financially devastate a family, with the insurer owing nothing at all. Recent trends in health insurance enrollment suggest that uninsurance should not be the only issue to address.

A high demand for low premiums

Enrollment in high deductible health plans (HDHP) has been on a meteoric rise over the past 15 years, from approximately 4% of people with employer-sponsored insurance in 2006 to nearly 30% in 2019, leading to growing concern about underinsurance. “Qualified” HDHPs, which come with additional tax benefits, generally have lower monthly premiums, but high minimum deductibles. As of 2020, the Internal Revenue Service defines HDHPs as plans with minimum deductibles of at least $1,400 for an individual ($2,800 for families), although average annual deductibles are $2,583 for an individual ($5,335 for families).

HDHPs are associated with delays in both unnecessary and necessary care, including cancer screenings and treatment, or skipped prescription fills. There is evidence that Black patients disproportionately experience these effects, which may further widen racial health inequities.

A common prescription has been to expand access to Health Savings Accounts (HSAs), with employer and individual contributions offsetting higher upfront cost-sharing. Employers often contribute on behalf of their employees to HSAs, but for individuals in lower wage jobs without such benefits or without extra income to contribute themselves, the account itself may sit empty, rendering it useless.

A recent article in Health Affairs found that HDHP enrollment increased from 2007 to 2018 across all racial, ethnic, and income groups, but also revealed that low-income, Black, and Hispanic enrollees were significantly less likely to have an HSA, with disparities growing over time. For instance, by 2018, they found that among HDHP enrollees under 200% of the federal poverty level (FPL), only 21% had an HSA, while 52% of those over 400% FPL had an HSA. In short, the people who could most likely benefit from an HSA were also least likely to have one.

If trends in HDHP enrollment and HSA access continue, it could result in even more Americans who are covered on paper, yet potentially unable to afford care.

Addressing uninsurance could also begin to address underinsurance

President Biden’s health care proposal primarily addresses uninsurance by making it more affordable and accessible. This can also tangentially tackle underinsurance.

To make individual market insurance more affordable, Biden proposes expanding the tax credits established under the ACA. His plan calls for removing the 400% FPL cap on financial assistance in the marketplaces and lowering the limit on health insurance premiums to 8.5% of income. Americans would now be able to opt out of their employer plan if there is a better deal on HealthCare.gov or their state Marketplace. Previously, most individuals who had an offer of employer coverage were ineligible for premium subsidies—important for individuals whose only option might have been an employer-sponsored HDHP.

Biden also proposes to index the tax credits that subsidize premiums to gold plans, rather than silver plans as currently done. This would increase the size of these tax credits, making it easier for Americans to afford more generous plans with lower deductibles and out-of-pocket costs, substantially reducing underinsurance.

The most ambitious of Biden’s proposed health policies is a public option, which would create a Medicare-esque offering on marketplaces, available to anyone. As conceived in Biden’s proposal, such a plan would eliminate premiums and having minimal-to-no cost-sharing for low-income enrollees; especially meaningful for under- and uninsured people in states yet to expand Medicaid.

Moving forward: A need to directly address underinsurance

More extensive efforts are necessary to meaningfully address underinsurance and related inequities. For instance, the majority of persons with HDHPs receive coverage through an employer, where the employer shares in paying premiums, yet cost-sharing does not adjust with income as it can in the marketplace. Possible solutions range from employer incentives to expanding the scope of deductible-exempt services, which could also address some of the underlying disparities that affect access to and use of health care.

The burden of high cost-sharing often falls on those who cannot afford it, while benefiting employers, healthy employees, or those who can afford large deductibles. Instead of encouraging HSAs, offering greater pre-tax incentives that encourage employers to reabsorb some of the costs that they have shifted on their lower-income employees could prevent the income inequity gap from widening further.

Under the ACA, most health insurance plans are required to cover certain preventative services without patient cost-sharing. Many health plans also exempt other types of services from the deductible – from generic drugs to certain types of specialist visits – although these exemptions vary widely across plans. Expanding deductible-exempt services to include follow-up care or other high-value services could improve access to important services or even medication adherence without high patient cost burden. Better educating employees about what services are exempt would make sure that patients aren’t forgoing care that should be fully covered.

Health insurance is complicated. Choosing a plan is only the start. More affordable choices are helpful only if these choices are fully understood, e.g., the tradeoff between an HDHP’s lower monthly premium and the large upfront out-of-pocket cost when using care. Investing in well-trained, diverse navigators to help people understand how their options work with their budget and health care needs can make a big difference, given that low health insurance literacy is related to higher avoidance of care.

The ACA helped expand coverage, but now it’s time to make sure the coverage provided is more than an unused insurance card. The Biden administration has the opportunity and responsibility to make progress not only on reducing the uninsured rate, but also in reducing disparities in access and patient affordability.

Medicare Cuts Payment to 774 Hospitals Over Patient Complications

Posted on by • Posted in ACA, Health Policy, Health System, Hospital, Hospital Acquired Infections, Hospital Industry, Medicare, Medicare Payment, Medicare Payment Advisory Commission (MedPAC), Quality of Care, Readmission • Leave a comment
https://khn.org/news/article/medicare-cuts-payment-to-774-hospitals-over-patient-complications/
A man in a hospital gown sits on a hospital bed

The federal government has penalized 774 hospitals for having the highest rates of patient infections or other potentially avoidable medical complications. Those hospitals, which include some of the nation’s marquee medical centers, will lose 1% of their Medicare payments over 12 months.

The penalties, based on patients who stayed in the hospitals anytime between mid-2017 and 2019, before the pandemic, are not related to covid-19. They were levied under a program created by the Affordable Care Act that uses the threat of losing Medicare money to motivate hospitals to protect patients from harm.

On any given day, one in every 31 hospital patients has an infection that was contracted during their stay, according to the Centers for Disease Control and Prevention. Infections and other complications can prolong hospital stays, complicate treatments and, in the worst instances, kill patients.

“Although significant progress has been made in preventing some healthcare-associated infection types, there is much more work to be done,” the CDC says.

Now in its seventh year, the Hospital-Acquired Condition Reduction Program has been greeted with disapproval and resignation by hospitals, which argue that penalties are meted out arbitrarily. Under the law, Medicare each year must punish the quarter of general care hospitals with the highest rates of patient safety issues. The government assesses the rates of infections, blood clots, sepsis cases, bedsores, hip fractures and other complications that occur in hospitals and might have been prevented. The total penalty amount is based on how much Medicare pays each hospital during the federal fiscal year — from last October through September.

Hospitals can be punished even if they have improved over past years — and some have. At times, the difference in infection and complication rates between the hospitals that get punished and those that escape punishment is negligible, but the requirement to penalize one-quarter of hospitals is unbending under the law. Akin Demehin, director of policy at the American Hospital Association, said the penalties were “a game of chance” based on “badly flawed” measures.

Some hospitals insist they received penalties because they were more thorough than others in finding and reporting infections and other complications to the federal Centers for Medicare & Medicaid Services and the CDC.

“The all-or-none penalty is unlike any other in Medicare’s programs,” said Dr. Karl Bilimoria, vice president for quality at Northwestern Medicine, whose flagship Northwestern Memorial Hospital in Chicago was penalized this year. He said Northwestern takes the penalty seriously because of the amount of money at stake, “but, at the same time, we know that we will have some trouble with some of the measures because we do a really good job identifying” complications.

Other renowned hospitals penalized this year include Ronald Reagan UCLA Medical Center and Cedars-Sinai Medical Center in Los Angeles; UCSF Medical Center in San Francisco; Beth Israel Deaconess Medical Center and Tufts Medical Center in Boston; NewYork-Presbyterian Hospital in New York; UPMC Presbyterian Shadyside in Pittsburgh; and Vanderbilt University Medical Center in Nashville, Tennessee.

There were 2,430 hospitals not penalized because their patient complication rates were not among the top quarter. An additional 2,057 hospitals were automatically excluded from the program, either because they solely served children, veterans or psychiatric patients, or because they have special status as a “critical access hospital” for lack of nearby alternatives for people needing inpatient care.

The penalties were not distributed evenly across states, according to a KHN analysis of Medicare data that included all categories of hospitals. Half of Rhode Island’s hospitals were penalized, as were 30% of Nevada’s.

All of Delaware’s hospitals escaped punishment. Medicare excludes all Maryland hospitals from the program because it pays them through a different arrangement than in other states.

Over the course of the program, 1,978 hospitals have been penalized at least once, KHN’s analysis found. Of those, 1,360 hospitals have been punished multiple times and 77 hospitals have been penalized in all seven years, including UPMC Presbyterian Shadyside.

The Medicare Payment Advisory Commission, which reports to Congress, said in a 2019 report that “it is important to drive quality improvement by tying infection rates to payment.” But the commission criticized the program’s use of a “tournament” model comparing hospitals to one another. Instead, it recommended fixed targets that let hospitals know what is expected of them and that don’t artificially limit how many hospitals can succeed.

Although federal officials have altered other ACA-created penalty programs in response to hospital complaints and independent critiques — such as one focused on patient readmissions — they have not made substantial changes to this program because the key elements are embedded in the statute and would require a change by Congress.

Boston’s Beth Israel Deaconess said in a statement that “we employ a broad range of patient care quality efforts and use reports such as those from the Centers for Medicare & Medicaid Services to identify and address opportunities for improvement.”

UCSF Health said its hospital has made “significant improvements” since the period Medicare measured in assessing the penalty.

“UCSF Health believes that many of the measures listed in the report are meaningful to patients, and are also valid standards for health systems to improve upon,” the hospital-health system said in a statement to KHN. “Some of the categories, however, are not risk-adjusted, which results in misleading and inaccurate comparisons.”

Cedars-Sinai said the penalty program disproportionally punishes academic medical centers due to the “high acuity and complexity” of their patients, details that aren’t captured in the Medicare billing data.

“These claims data were not designed for this purpose and are typically not specific enough to reflect the nuances of complex clinical care,” the hospital said. “Cedars-Sinai continually tracks and monitors rates of complications and infections, and updates processes to improve the care we deliver to our patients.”