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.