The Future of Disability in America (2007) / Chapter Skim
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8 Access to Health Insurance and the Role of Risk-Adjusted Payments to Health Plans
8 Access to Health Insurance and the Role of Risk-Adjusted Payments to Health Plans
Pages 222-252
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From page 222... ...
Yet others lose coverage when they lose their job or their employer stops offering health insurance. Although people with disabilities are somewhat more likely than other people to have insurance (especially public insurance)
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From page 223... ...
The second issue, health insurance coverage of assistive technologies, is discussed in the next chapter, which also examines the coverage of personal assistance services. In addition, the next chapter reviews the fiscal context of decisions about expanding coverage, the constraints that rising costs place on policies to expand access to needed services, and the confusion surrounding complex federal and state changes in Medicaid.
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From page 224... ...
The major sources of health insurance for people with disabilities continue to be Medicare, Medicaid, and private employer-sponsored health plans. For many veterans with disabilities, especially those that are combat related, the Veterans Health Administration is an additional source of coverage.1 Nevertheless, as described below, depending on their age and type of disability, between 5 and 14 percent of people with disabilities who are under age 65 lack insurance.
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From page 225... ...
Moreover, individuals with disabilities are more likely than others to have low incomes that make deductibles, copayments, and coinsurance a burden, which may deter them from seeking these products and services. Health Insurance for Older Adults with Disabilities Approximately 36 million people age 65 or over are covered by the federal Medicare program without regard to their disability status or income (CMS, 2006a)
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From page 226... ...
Those with very low incomes often have additional Medicaid coverage. The main concern for this group is the scope of coverage, for example, coverage of assistive technologies and personal care services, as discussed in Chapter 9.
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22 HEALTH INSURANCE AND THE ROLE OF RISK-ADJUSTED PAYMENTS Health Insurance for Younger Adults with Disabilities Health insurance coverage is more varied and uncertain for younger adults with disabilities than for older, Medicare-eligible adults. A recent analysis of data collected from 1997 to 2002 by Olin and Dougherty (2006)
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From page 228... ...
Companies that sell health insurance to individuals generally restrict the ability of people with serious chronic health conditions or disabilities to purchase coverage.5 In the Medical Expenditure Panel Survey for 2004, only 13 individuals of the 7,000 adults under age 65 with a disability (broadly defined) in the 30,000-person sample reported having nongroup insurance (Jeffrey Rhoades, survey statistician, Agency for Healthcare Research and Quality, personal communication, August 30, 2006)
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From page 229... ...
employer-provided health insurance who become disabled (or whose family member becomes disabled) generally do not face a higher premium or the loss of coverage, as long as they remain in the employer group.
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Six years after passage of the ADA, however, the Health Insurance Portability and Accountability Act (PL 104-191) added some restrictions on insurer group health plans.
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From page 231... ...
With few exceptions, adults under age 65 who qualify for SSDI benefits must wait 24 months after they start receiving benefits before they can enroll in Medicare.8 (The exceptions allow benefits to start earlier for qualifying individuals who have been diagnosed with amyotrophic lateral 7 The federal Employee Retirement Income Security Act restricts state regulation of large employers who use insurers to administer their insurance benefits but who self-insure the cost. 8 In 1971, when the House Committee on Ways and Means recommended the extension of Medicare to working-age adults with disabilities, it explained that the waiting period served several purposes, including to "help keep the costs within reasonable bounds, avoid overlapping private health insurance protection, particularly where a disabled worker may continue his membership in a group insurance plan for a period of time following the onset of his disability and minimize certain administrative problems that might otherwise arise.
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From page 232... ...
.) The waiting period for Medicare coverage is a serious hardship for many individuals, most of whom qualify for disability insurance in the first place because they have a serious medical condition that precludes working and is expected to end in death or to last at least 1 year.9 One study estimated that approximately 400,000 of the 1.26 million individuals in the Medicare waiting period in 2002 lacked any form of health insurance (Dale and Verdier, 2003)
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From page 233... ...
. This survey showed lower levels of private health insurance for children with activity limitations (52 percent)
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. (During the period of disenrollment in SCHIP, some children will have become eligible for Medicaid and some will become covered by a parent's private health insurance, but specific information is lacking.)
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The focus is on certain aspects of health insurance markets that create difficulties for this population. Standard Models of Insurance Standard economic models of private health insurance build on the expectation that insurance is valuable to individuals because it mitigates the financial risk associated with medical care costs resulting from unpredictable illnesses or injuries (Phelps, 2003)
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From page 236... ...
If people with chronic health conditions or disabilities are able to work -- and particularly if they can work for a large employer -- they can generally obtain private health insurance. If they must purchase private health insurance on an individual basis, they may find that no insurer will cover them or will do so only by charging them a premium that they cannot afford.
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From page 237... ...
Market Failure and Publicly Financed Health Insurance for Certain Groups About 15 percent of the U.S. population lacks health insurance, and proposals to make insurance coverage universal through public programs or public subsidies have repeatedly failed.
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From page 238... ...
As noted above, Medicare focuses on acute medical care and was not intended to finance the long-term institutional or personal care services needed by many beneficiaries with disabilities. Nonetheless, the program covers more non-acute care than is covered by private health insurance plans.
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The next section discusses this dynamic, its implications for health insurance markets, and methods for risk adjustment of payments to health plans to compensate them fairly for their enrollee population. DISABILITY AND RISK ADJUSTMENT OF PAYMENTS TO HEALTH PLANS The market dynamic just described is called "risk segmentation" or "risk selection."16 The growth of employment-based health insurance and public insurance was a response to the insurance industry's understandable efforts to limit their exposure to this dynamic in the market for individual health insurance.
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From page 240... ...
, then only health plans with minimal benefits will survive, except perhaps for well-to-do or low-risk individuals. Given the subsidies and rules established by Medicare and Medicaid, program beneficiaries with disabilities are not at the same disadvantage as individuals trying to buy individual health insurance, but, as described below, they -- and the system overall -- can still encounter problems with competitive health plans.
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From page 241... ...
These and other administrative policies -- which are important for health insurance programs that offer multiple health plans -- attempt to focus plan competition on price and quality rather than risk selection. Each of these strategies has some value, but they do not substitute for a robust risk adjusted payment method that limits the pursuit and consequences of risk selection.
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From page 242... ...
Private employers that offer multiple health plans to their employees also create the conditions for biased risk selection. Employees with chronic conditions may be disadvantaged by risk selection if the employer plans with more generous benefits are more costly, not just because they have more extensive benefits, but also because they have members with more chronic health problems.
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From page 243... ...
Health plans would therefore not fear enrolling people with chronic conditions but might actually seek them both because they would bring in more income per enrollee and because they would offer more potential for profit through the efficient and economical management of services (especially if individuals were enrolling from fee-for-service Medicare)
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From page 244... ...
. For policy reasons (e.g., to avoid disincentives for health plans to manage or control health care use)
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From page 245... ...
It resulted in overpayments to health plans with favorable selection (disproportionate enrollments of healthier individuals) and underpayments to plans with unfavorable selection.
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From page 246... ...
In addition to diagnostic information, the model also incorporates information about a beneficiary's age, sex, Medicaid status, and basis of qualifying for Medicare, specifically, qualifying on the basis of disability rather than age. During the development of the current methodology, the analysts considered but rejected the inclusion of data on the rates of use of home health care services and durable medical equipment (Pope et al., 2000, 2004)
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From page 247... ...
. The adjuster for a health plan starts with information about a person's difficulty TABLE 8-5 Prediction of Medicare Beneficiary Costliness by Risk Adjustment Method Predictive Ratios from Two Risk Adjusters Beneficiary Group CMS-HCCs Age and Sex Only Quintile of costliness in 2001 Lowest 1.34 2.53 Second 1.30 1.96 Third 1.19 1.47 Fourth 0.98 0.96 Highest 0.83 0.44 Number of impatient stays in 2001 Zero 1.07 1.38 One 0.96 0.65 Two 0.92 0.49 Three or more 0.80 0.29 Conditions diagnosed in 2001 Alcohol or drug dependence 0.99 0.39 Congestive heart failure 0.90 0.50 Chronic obstructive pulmonary disease 0.93 0.67 Cerebral hemorrhage 1.09 0.65 Hip fracture 1.08 0.80 NOTE: Predictive ratio for a group = the group's mean costliness predicted by a risk adjuster divided by the mean of the group's actual costliness.
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Thus, in addition to methods of adjusting health plan payments, it would be desirable to have risk-adjusted measures of the quality of care provided by health plans. RECOMMENDATIONS Improving Risk Adjustment Methods The committee recognizes the long history of work by CMS to develop methods for paying health plans that do not encourage plans to favor healthier Medicare beneficiaries over beneficiaries who have more serious health conditions.
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Recommendation 8.1: The U.S. Congress should support continued research and data collection efforts to • evaluate and improve the accuracy and fairness of methods of risk adjusting payments to health plans serving Medicare and Medicaid beneficiaries; • assess how these methods affect the quality of health care for people with disabilities, including those enrolled in special needs plans; and • evaluate differences in the risk adjustment methods that state Medicaid programs use to pay health plans that enroll people with disabilities.
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Other Issues in Medicare and Medicaid Although this committee supports the extension of health insurance to all people with serious chronic health conditions or disabilities, recommendations for achieving this goal are beyond its charge. The committee commends the principles for extending coverage that were set forth by a recent IOM committee that examined uninsurance in America (see Box 9-5 in Chapter 9)
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Recommendation 8.2: To improve access to health insurance for peo ple with disabling or potentially disabling health conditions, the U.S. Congress should • adopt a phased-in or selective elimination of the 24-month wait ing period for Medicare eligibility for people who have newly qualified for Social Security Disability Insurance; • encourage continued testing of methods to reduce disincentives in public insurance programs for people with disabilities to return to work; and • direct states to limit recertification and reenrollment for the State Children's Health Insurance Program to no more than once a year for children with disabilities.
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From page 252... ...
Requiring recertification no more often than every 12 months would reduce administrative barriers to continuing enrollment in SCHIP of children with disabilities or special health care needs. As noted above, Chapter 9 includes recommendations related to Medicare and Medicaid coverage for assistive technologies and personal care services.
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