Andrew Sprung at Xpostfactoid has been chasing down the details of a man from Kentucky whose Obamacare experience has not been good as he was making just enough money to not qualify for very high subsidies on premiums nor cost sharing but he had a chronic condition. His monthly nut was close enough to his income limit that another $350 a month bill was not managable and he decided to keep on running uncovered and hope he was healthy enough until something better came along. It did not. Now his uncontrolled diabetes has led to end stage renal disease and Medicare paying for his dialysis.
Andrew makes a specific point that I want to generalize a bit more:
To hazard a generalization, ACA subsidy formulas perhaps don’t work very well for chronically ill patients with incomes between, say, 150% and 300% of the Federal Poverty Level. Subsidized private insurance leaves them on the hook for too much out-of-pocket cost.
The traditional insurance model of deductible, co-pays and co-insurance is not a good model for chronically ill patients at any income level.
The theory behind these three types of out of pocket payments are to discourage people from consuming unneeded care. That works fine when the person is like my wife, in generally good health, and is debating on going to her primary care physician or sending me to the over the counter drug aisle at the supermarket to address a nasty head cold. That is marginal care, and it is voluntary care. Right now, over the counter drugs and lots of tea seem to be working but if it lasts another couple of days, the decision could change.
However someone with a chronic condition should always be getting their regular, preventative maitenance care without barriers as that type of care minimizes the number of truly acute high cost incidences from a broad society paying perspective as well as greatly improving the individuals counterfactual quality of life. A year of dialysis costs Medicare roughly $90,000 (depending on what county it is performed in etc), while regular care, medication and nutritional counseling for a diabetic costs the insurer $3,000. It is a massive net win for society for someone to stay in the bucket of managed diabetic rather than unmanaged diabetic with kidney failure. Some people may move from the managed diabetic bucket to the unmanaged bucket, but it should never be for the deterrant effect of a $25 co-pay or a $1,500 deductible preventing people from getting the routine, low level and far cheaper care.
Now what is the solution?
Medicaid and Special Needs Plans which are combined Medicaid and Medicare plans absorb a significant percentage of the truly chronically ill people at high risk and high utilization in this country. Medicare picks up end stage renal disease treatment (dialysis), so they get another chunk. Medicaid and SNP plans tend to be no cost sharing or de minimas cost sharing with no collection enforcement mechanisms, so they remove the barrier to routine care. They also tend to be on capitation models where there is a provider side cash incentive to keep preventative care accessible.
On the private market side, a person with a chronic illness is a problem for an insurance company as they are a money loser. The best case scenario from an insurance company point of view is that someone else takes that person off their hands. It can be another insurer, it can be Medicaid, it can be Medicare, or it can be moving that person to the uninsured pool. The second best case is to minimize costs over the length of the current remaining contract and hope that they go elsewhere next year. This second best scenario from an insurance company POV should lead to a change in benefit design.
If a person has a certain set of ICD-9 diagnosis codes, a certain history of procedure codes, a certain set of pharmacy claims or whatever other clinical indicators of a long term chronic illness, they will be flagged anyways for case management. The change would be a significant modification of what services applies to cost sharing and what do not. Right now, basic prevenatative screenings, birth control, annual PCP/OBGyn visits are free from cost-sharing in non-grandfathered plans. These services apply to everyone. The difference would be for qualified chronically ill individuals, the services that are cost sharing free expand to cover routine prevenative care for their specific chronic disease. Regular deductibles and co-pays would still apply for the heli-skiing accident, but for a diabetic, a nutritionist visit, a podiatrist visit, several PCP visits and wound care training would be no cost sharing services as those are the “little” things that prevent big catastrophic claims. An epiletic would have a different class of codes that are cost sharing free, while someone with COPD would see a different set.
From a plumbing perspective, this is a pain in the ass to set up, but fairly easy to run once built, and it would lead to better outcomes and lower system wide costs while improving quality of care and quality of life. The biggest challenge is still churn. Most people in most years with chronic diseases that are only moderately or worse managed won’t spin out of control to catastrophic claims. Initial payments to treat may go up by any particular insurer but the benefits may accrue to either other insurers or more likely to averted crisis claims that are now not paid for by Medicare and Medicaid. It is a system wide win, but the payers may be losers.
James
Try managing chronic conditions on a high deductible plane when that is the only type of qualifying healthcare plan your employer offers and the chronic conditions sufferer is your unemployed spouse.
Richard Mayhew
@James: It does not work, or at least it does not work well….. I know.
Nicole
Great post, thank you. You’re right that the chronically ill are a different situation and don’t fit into the US’s desire for one-size-fits-all solutions.
There were some articles recently about cancer researchers saying that ultimately, cancer is less a result of bad lifestyle choices and more a result of bad luck. I hope that we, as a populace, can start to accept that many, if not most, chronic conditions are bad luck, because I think some folk are inclined to try to find a way to blame an individual for health conditions, because it offers an excuse for not helping them. You know, if they can blame diabetes on poor eating habits, instead of heredity, they can justify being opposed to universal health care.
justawriter
Slightly off topic, but my congresscritter sent this out yesterday:
Is this actually an issue, or is it just part of the death by a thousand nibbles plan of the “be quick about it and reduce the surplus population” caucus?
Jasmine Bleach
@Nicole:
Single payer. One size fits all. Including chronically ill patients. Works beautifully. Push for it!
mai naem mobile
I read.the article. You don’t go on dialysis overnight unless you had trauma to the kidney or a medication issue. His diabetes must have been out of control for a while. I wouldn’t be surprised if he wasn’t able to cover his diabetic meds pre-ACA being that he was self employed making $28k.
Nicole
@Jasmine Bleach: Oh believe me, preacher, choir. And I hope someday we get there, but right now the 8 Ball says Ask Again Later.
I had a European doctor who told me no way in hell would universal health care pass today in European nations because they’re much more racially diverse now than they were back then and Europeans are just as prejudiced against those people getting things for free. That was depressing to hear.
Nancy Brown Supler
Please explain the PACE program in Medicare. Is it good, bad, or as it sounds totally wonderful?
Stella B.
The guy had been chronically non-compliant with the charity care he had been receiving before the ACA, too. He didn’t make good decisions.
Richard Mayhew
@justawriter: In a rational world, that is the type of tweak that would have gone through the PPACA Technical Corrections and Amendment Act of 2013….
If I understand it correctly, a vet who already has government sponsored healthcare would be removed from being counted as part of the 50 or more FTEs when deciding if the employment mandate applied to a particular firm. So a company that has 51 FTEs including 3 qualified vets would have an adjusted FTE count of 48 and thus not have an employmer mandate responsibility.
This is a marginal change, and in a rational political world it is a reasonable little tweak. Now will it do much? Hell no, it really only helps firms that will hire vets that are just marginally over the 50 FTE line, but it slightly favors vets, and it slightly lowers federal revenue and slightly increases fed exchange expenses as a few more firms won’t cover all of their employees who now go on the exchange.
Richard Mayhew
@Nancy Brown Supler: Big explainer later this week, but short version is PACE is a targeted program for people who normally would need nursing home care (very expensive) with the goal of keeping them in their own homes/communities by wrapping services around them. Goal is better quality of life, medical outcomes while reducing net governmental costs.
If done well, it is a very good thing.
Jay
I have a chronic (and expensive) condition. Prior to the ACA, I was basically screwed. At the moment, I’m self employed. I bought the cheapest bronze plan I could find – I basically know I’m going to hit the out of pocket limit every year, so whether that cost comes via a deductible or copays or whatever makes no difference.
Kylroy
@Nicole: DINGDINGDINGDING!
Every time I hear people grouse about why can’t America be like some Scandinavian social paradise, I immediately ask them the racial/ethnic demographics of their promised land. Most lefties get a little less thrilled when realizing they’re rooting for the national equivalent of a gated community.
We haven’t found a way to get people to reliably vote for assistance to people who don’t look and live like them.
Nancy Brown Supler
@Richard Mayhew: Thanks for the quick answer. Fairfax County, VA has 1 PACE program in action. It looks like it is INOVA’s baby. Are they only created when a hospital decided to do that or can communities create one? It looks so great but is so rare here in Virginia. I wonder why? Thanks again.
Richard Mayhew
@Jay: Have you taken a look at cost sharing assistance Silvers if those are applicable to your situation? The premium is a little higher but total out of pocket is way less in some situations….