Robert E. Hurley, Ph.D. Virginia Commonwealth University and the Center for Studying Health System Change Cross Community Perspectives on Safety Net Models

Overview Indigent care eco-systems Approaches to ensuring access to care Community Tracking Study Illustrative market experience Extracting some lessons Conclusion

Communities have distinct indigent care “eco-systems ” Multiple approaches to ensure acute medical care availability to low income persons without insurance coverage Community mores, public policy, provider capacity, extent and nature of demand influence access to indigent care Communities implicitly or explicitly customize approaches to meet unique needs based on particular circumstances A balance is achieved, somehow: an eco-system emerges

Methods to Ensure Access to Care Make it Buy it Subsidized it -Direct subsidy -Cross-subsidy

Make it Directly provide services via government owned facilities and/or employed providers Classic “safety net” providers, e.g. publicly-owned hospitals, FQHCs, local health dept. clinics Open door policy (serve all comers) Traditional emphasis on acute care and episodic delivery Challenge is how to get best value for investment

Buy it Public sector purchases care from private providers on behalf of persons who cannot afford it themselves -”vendor payment” programs - payments typically below market rates Provide/purchase coverage for persons who cannot purchase it for themselves -Medicaid expansions, SCHIP, etc -Opportunities to “privatize” coverage

Subsidize— Direct Subsidy Provide support to selected providers to defray cost of uncompensated care - designated for groups/classes of individuals - may include (arguably) tax exempt status Public and private (e.g. conversion foundations) resources committed to targeted programs and populations - e.g. Disproportionate share payments to hospitals (DSH), free clinics Limited ability to meet large scale needs

Subsidize-- Cross-subsidy Require providers to donate care and finance donation by generating surpluses from other payers e.g. EMTALA and other non-discrimination policies Convenient kind of default public policy decision (“hidden tax” most easily supported; hospital as tax collector) In addition to providing funds for uninsured, seen as source to make-up for public payer shortfalls Promotes/perpetuates “cost-shifting”

“Cost-shifting” to Private Payers Hospital Payments as % Costs-1990 Source: ProPAC, 1992.

“Cost-shifting” to Private Payers Hospital Payments as % Costs-2001 Source: MedPAC, 2003

The Rise and Fall and Rise of Cost-Shifting — Hospital payments as percentage of costs by payer Source: MedPAC, 2005

Cost-Shifting and its Implications Cost shifting to private purchasers played key role in promoting managed care revolution Managed care = systematic suppression of cost shifting Cost shifting is growing again Many current state reform initiatives (ME, MA, CA) highlighting cost shifting consequences Can a hidden tax be replaced by not-so-hidden financing sources???

Community Tracking Study Sites* Phoenix, AZ Orange County, CA Little Rock, AR Miami, FL Greenville, SC Indianapolis, IN Lansing, MI Northern NJ Syracuse, NY Cleveland, OH Boston, MA Seattle, WA, WA *Community Tracking Study—Funded by the Robert Wood Johnson Foundation; carried out by the Center for Studying Health System Change

Mix of Coverage in CTS Markets

Mix of Coverage in HSC Markets

Eco-systems in Illustrative Markets Boston Indianapolis Little Rock Orange County

Boston Extensive private coverage; relatively generous Medicaid coverage; low level of uninsured (7-8%) Make Two major public hospitals, 20+ CHCs Buy Free care pool-DSH and hospital tax supported Subsidize Public hospitals offer managed care products to uninsured via subsidies New universal coverage program being rolled out; combinations of strategies including make, buy, and subsidize—good sensitivity to protecting safety net in transition

Indianapolis Solid employer coverage, modest Medicaid, manageable uninsured burden Make Public hospital with tax support and AHC affiliation, several CHCs Buy Publicly supported local managed care product for uninsured paying for ambulatory care at CHCs Subsidize Inpatient care for uninsured concentrated in public hospital Rapid growth in local low income coverage program and growing demands on public hospital and academic specialty departments creating some financial distress.

Little Rock Modest employer coverage, Medicaid expansive only for children, substantial uninsured population Make UA Medical Sciences Center major regional source of inpatient and specialty care for indigent Buy Highly inclusive ARKids (Medicaid and SCHIP) Cross subsidize Reliance on NFP hospitals and physicians for donated care Marked disparities between access to care for kids vs. adults; serious shortage of specialty care for uninsured even at AHC

Orange County, CA Limited employer sponsored coverage, moderate Medicaid participation, substantial uninsured MakeUC-Irvine—public AHC, only 2 FQHCs in county with 3 million, 19 private CHCs BuyMedically indigent vendor program for legal county residents Subsidize Donations to private clinics and free clinics/CHCs, childrens’ hospital Cross subsidize FP/NFP hospitals provide limited uncompensated inpatient and ED care Access to specialty care significant problem and disproportionate burden on relatively small AHC New state universal coverage proposal now in play

Common Themes Strength of employer coverage is key Scope of Medicaid is important Public providers (makers) typically backbone Many private providers prone to avoid uninsured where they can Some success in local low income coverage models—but typically exploit inpatient care providers Specialty care and prescription drugs can’t be “made” and are expensive to buy or subsidize, so increasingly difficult to acquire

Contemporary Concerns Employer-sponsored insurance growth has stalled and appears to be slipping Premiums rising; benefits being trimmed; take-up rates likely to fall Extent of “under-insurance” increasing Donor fatigue (contributed charity care) growing Public programs expanding enrollment but financial burden growing Cost-shifting being quantified and vilified, but replacement financing mechanism unclear

Broad Strategies—What Could be Done? Incrementally expand public programs to cover more people Shore up erosion in employer coverage Expand availability of private coverage via incentives to individuals Create new grouping mechanisms to overcome limitations of employer sponsorship Compel private firms to provide coverage or individuals to acquire coverage Consider a national health insurance scheme to complement or replace existing patchwork

What’s Likely to be Done? Not very much on a national level, yet, though universal coverage for children may be in sight Promising, but uneven, action at state level— “mosaic approach” is most common: fill in picture with separate pieces targeted to distinct populations Affordability remains a crucial impediment Local eco-systems will remain key

If We Do Nothing... Growing strains on public providers Default public policy to remain cost-shifting in many/most markets Uneven burden by -communities -provider types -service lines “Deserving kids” vs. others Economics disparities are at the root of much of the contemporary disparity concern

The Widening Rift... A widening rift in access is inevitable among the have, the have-little, and the have-not No likelihood of broad gauge, near term response Eco-systems will adapt but stress and distress will become more evident on all parties