High-risk pools are, quite unintentionally, another force behind the collapse of risk pooling. Although subsidies from state general revenues do broaden risk-pooling by requiring all citizens in a state to contribute to the costs of medical care for the very sick , other features of high-risk pools effectively narrow risk-pooling. First, these pools by definition admit only people who are likely to have very high medical expenditures; under this arrangement, sick people share their high costs with other sick people.
Second, under the federal Employee Retirement Income and Security Act of ERISA , employers who self-insure are exempt from state insurance regulation; the states, therefore, cannot require them to contribute to high-risk pools. Hence, employers and their employees do not share in the medical care costs of the high-risk pool, except insofar as they contribute in other ways to state general revenues.
Third, by limiting entry into the pools to a fixed number of places, states are limiting the number of people who are allowed to pool their risks with the general public via the state subsidies and tax forgiveness. Last, and most important, the very existence of these pools as a lifeboat for people who have been rejected by private insurers reduces political pressure on private insurers to relax their criteria for providing coverage.
By creating high-risk pools, states actually make it easier for insurance companies to continue their cream-skimming.
Reforming the Small-Group Market. Many state efforts to deal with the access problem go under the heading of "small-business market reform," a strategy with support from just about everybody -- even the commercial insurance industry -- because it appears to solve the problem without costing a penny. One approach is to exempt insurers from state legislative mandates to include certain benefits, such as mental health care, treatment for substance abuse, or maternity coverage, when they sell policies to small businesses.
Conservative free-market advocates have long argued that the private insurance market could provide coverage to more people if insurance companies were not hamstrung by legislative requirements to include an enormous array of non-essential benefits. Some twenty-three states have passed permissive legislation of this sort, and another seventeen are considering bills.
Of course, the bare-bones policies fail to provide coverage for services the state has otherwise deemed essential. Of fifteen states surveyed by the Intergovernmental Health Policy Project in , only six would require prenatal care in a basic benefit package and only seven maternity care; only two would require coverage of Pap tests and only five mammograms; only four would require coverage of newborn children, only three adopted children, and only one children's preventive health services. Advocates of the bare-bones approach have sold it politically by emphasizing that the savings for small employers come from eliminating frills such as in vitro fertilization, herbal therapy, and expensive cures at substance abuse rehabilitation centers.
In fact, the bare-bones policies eliminate a great deal of primary and preventive care. Virtually all the stripped-down plans reduce the number of physician office visits and hospital days that insurance policies must cover, and they increase the deduct-ibles and copayments borne by policy-holders.
State health insurance officials estimate that two-thirds of the savings in these plans come from higher out-of-pocket costs for the insured. In the six states where marketing of these plans is already underway, employers are distinctly unenthusiastic. Blue Cross-Blue Shield introduced a stripped-down plan in Virginia in July of , and by the end of , only twenty-five firms with a total of employees had bought it.
In Washington State, 2, employees are covered under bare-bones plans, but half of these are in firms that were downgrading their plans rather than buying coverage for the first time. All in all, stripped-down benefits policies are unlikely to put a scratch in the uninsured problem.
Yet another strategy is to subsidize the purchase of health insurance. Some states, such as Maine, provide subsidies to small businesses that purchase health insurance, usually restricting the subsidizes to first-time buyers. Others, such as Washington, contract with a provider to offer subsidized insurance to the working poor. Still others market subsidized policies to special groups, such as pregnant women and children. Boosters of state-based solutions to the health insurance crisis often point to programs like these as successful demonstrations of what states can do.
Obviously, though, state fiscal realities limit the potential subsidies. With twenty-eight states now running in the red and governors everywhere cutting back services and laying off workers, subsidies for health insurance can hardly be expected to grow. In fact, Michigan cancelled its demonstration program in because of the state fiscal crisis, and Massachusetts' program is in a stall. Like the other state solutions, subsidies do not alter the market so as to make insurance affordable in the long run. Some states have established re-insurance mechanisms whereby the state or a private insurer picks up the costs of expensive medical care for individuals or for employees of small-group plans.
Connecticut assesses all sellers of small-group policies to finance the re-insurance, but many other states use state subsidies in addition. Re-insurance does ultimately spread the risk of catastrophic illness in small groups, but via an administratively complex and thereby expensive route. Reinsurance simply fragments the market, rather than aggregating expensive risks with cheaper ones. Some state and local pilot projects take on and pay for the administration and marketing of small-group insurance in order to enable private insurers to charge small groups the same low premiums as large employee groups.
This practice, too, merely subsidizes the profits of private insurers, without changing their incentives to segment the market into smaller groups. None of these reforms addresses the real problem of the small group market: small-ness. Insurance works by aggregating risks into large pools and spreading the costs widely. Each of the so-called small-group reforms in fact enables insurers to keep the market disaggregated, and to make profits on the administration of an inherently inefficient structure. Most of the other state innovations to deal with the access problem follow similar lines.
Typical strategies, each used by several states, include creating special state pools for some uninsured workers but not non-workers , poor pregnant women, the disabled, or children; establishing trust funds or special accounts to cover hospitals' costs of uncompensated care; and providing tax credits or subsidies to small firms who offer health insurance.
Because each of these strategies addresses only part of a large systemic problem, each stopgap measure lets the overall system continue to operate -- and to continue excluding those with high risks from full protection.
Contact Us Blog. However, there are primarily two different types of entities that provide private healthcare coverage: State-licensed Health Plans offered by fully funded plans : State-licensed managed care organizations are regulated under state law, although federal law may add additional standards and in some cases supercedes state authority. This clinical program increases access to services by expanding the provider network to include medical providers, pharmacies, and laboratories. There are also several non-profit organizations that serve as watchdogs and accreditation institutions for health care in America:. However Doctors cannot discriminate because of disability, ADA, abandon a patient, or not render services in an emergency according to EMTALA it aims doctors in emergency rooms, where they need to screen, stabilize and transfer. Kaiser Family Foundation. Are you ready to stop?
The cure for lack of insurance has to be risk-pooling. Unless we create mechanisms to re-aggregate people into large groups to share the costs of health care, we will continue to siphon money into unnecessary and wasteful insurance contraptions. Barriers to State Solutions. The big problems of health care transcend state boundaries and require more political power than state governments have.
The federal Medicare program is the payer for about 40 percent of hospital costs. States and community coalitions can try to do something about controlling hospital costs, but the lion's share of the costs is controlled by a lion outside their jurisdiction. Indeed, the federal government's chief cost-containment strategy for Medicare has been to use price controls and other methods to curtail its own costs, and to withdraw from sharing the costs of uncompensated care with other payers. Medicaid accounted for nearly 14 percent of state budgets in , the second biggest line item after elementary and secondary education.
United States .. Download the report; Health care regulations topics; Regulatory Outlooks homepage; Look again; Join the conversation We've provided a projection of the key regulatory trends health care companies will likely need to. Health care payers rely on licensure and other credentialing mechanisms to . Besides occupational regulation, states also oversee allied health personnel.
Although it is nominally a federal matching program for expenditures the states decide to make, in practice the states have less and less autonomy to decide what they will spend on Medicaid, let alone how they will manage the program. Federal mandates have increased the types and income-level of people states must cover, first through the federal Supplemental Security Income SSI program, then through mandates built into budget acts of the s.
What started out in as a physician and hospital insurance program for the poor has become, through the SSI program, primarily a funder of long-term care and other services for the elderly, disabled, and blind. These three groups account for about 30 percent of the Medicaid population but 75 percent of Medicaid expenditures. Poor adults and children on Aid to Families with Dependent Children AFDC comprise about 70 percent of the Medicaid population but account for only 25 percent of the expenditures.
As Medicaid expenditures have grown, states have covered a declining proportion of the poor. The ratio of Medicaid enrollees to the poverty population dropped from 65 in to only 42 percent in As a result, states and their county and local public hospitals are forced to pick up the tab for uncompensated care. Meanwhile, the federal government no longer shares in those costs through Medicare. No wonder, then, that state officials feel powerless to control their programs and their budgets. An official in Tennessee complained of "state programs being turned into federal programs," and many speak of the "federalization" of Medicaid.
The executive director of the National Governor's Association, commenting on its most recent survey of state budgets, says that Medicaid requirements imposed by the federal government are "devouring virtually every new dollar of revenue and leaving little money for new programs. Mandates without Power. Federal rules simultaneously require states to expand their coverage of people and services and constrain their ability to control costs.
States could try to squeeze hospital and physician reimbursements. But a federal rule, known as the Boren amendment after Senator David Boren of Oklahoma, guarantees hospitals and nursing homes "reasonable and adequate rates," and a amendment requires that nursing home rates take into account the cost of services necessary to provide the "highest practicable" well-being. Also in , the U. Supreme Court interpreted the law to allow facilities to sue states for adequate reimbursement. Such suits are on the increase, and the mere threat has made states more cautious about holding down reimbursement.
States are left to find budget cuts elsewhere -- in physician services, outpatient care, immunization programs and other health services not protected under the Boren amendment, and in AFDC and General Assistance programs. For many state officials, federal restrictions on their capacity to control reimbursement are not nearly as annoying as the federal propensity to issue mandates and then fail to provide regulations for carrying them out. A section of the Omnibus Budget Reconciliation Act, for example, requires states to monitor nursing home performance by assessing residents, staff, and facilities.
But even though states were required to implement the program by October , the Bush Administration did not issue final regulations by then, and, even now, there are no final or even proposed regulations for some of the provisions.
States must operate in the dark. When states want to experiment with innovative ways of managing their health expenditures, they need to get a waiver from normal federal program rules. Precisely because Medicaid is a joint federal-state program, designed originally to induce states to make greater fiscal efforts on behalf of health care for the poor, it has certain national standards for state programs.
These include not only eligibility conditions and minimum service packages, but other design requirements, such as offering recipients a free choice of medical provider, making all program rules applicable across the state, and using particular forms of provider reimbursement. While often laudable and highly effective, national standards also seriously constrain the ability of states to experiment.
If a state wants to conduct any kind of an experiment on a community or county level, for example, it needs a waiver from the "statewideness" requirement.
If it wants to experiment with more centralized budgeting and planning by combining all revenue sources for health care, it needs waivers to include Medicare and Medicaid in its plans. Moreover, the federal government requires that all state experiments be budget neutral for the first year to qualify for a waiver. The federal waiver process has, by all accounts, been at best a discouragement and at worst an obstacle to state innovation.
Even though the Omnibus Budget Reconciliation Act encouraged states to experiment with different cost-containment strategies and authorized waivers to permit states to limit recipients' choice of providers, subsequent congressional acts and amendments gave conflicting signals to the states. The Consolidated Omnibus Budget Reconciliation Act permitted states to provide case-management as an optional service, without seeking federal waivers, and gave an extraordinarily broad definition of case-management.
But when the National Governors Association surveyed state officials in about their plans to implement case-management experiments, many indicated they were "waiting for guidelines and regulations" and that they were uncertain how the federal government might interpret statutory language and administer its review of state plans. Perhaps the most vivid example of how the federal waiver process puts the brakes on state innovation is the current Oregon plan to deny Medicaid coverage for certain medical procedures deemed not cost-effective.
Oregon leaders conceived of the plan as incremental.
Initially, the service exclusions would apply only to poor adults and children in Medicaid, but not to the elderly, disabled, and blind recipients of Medicaid nor to state employees or anyone else in the state. Since the Oregon plan calls for eliminating some services from the federally specified basic Medicaid benefit package, the state must have a waiver to implement it.
After the Health Care Financing Agency HCFA indicated its reluctance to use its administrative authority to grant a waiver for such a major change, the state turned to Congress for a legislative waiver.
The Senate Finance Committee voted in favor of a waiver, and the debate moved to the full Senate for consideration as part of the budget bill. Once the waiver request entered the congressional arena, it became highly visible. Sara Rosenbaum, then Director of the Health Division for the Children's Defense Fund, saw inequities for poor women and children and teamed up with Representative Henry Waxman of California to oppose the waiver.
The Oregon waiver was dropped like a hotcake from the budget bill and continues to be embroiled in national politics. There is much to criticize in the Oregon plan [see Bruce Vladeck, "Unhealthy Rations," TAP, Summer ], but holding aside its merits, one dramatic lesson is surely that states are not their own masters in the making of health policy. Medicaid is the biggest state program addressing the health problems of the poor, yet federal regulations ensure that states cannot innovate without national political support. States are so hungry for solutions to the problems of health care for the poor that they sometimes pick up an innovation before it has gotten off the drawing boards in its home state.
For example, the Colorado, Ohio, and Michigan legislatures have debated proposals patterned on Oregon's. Although never conceived as a piece of health legislation, the Employee Retirement Income Security Act of indirectly had a major impact on the American health insurance system, perhaps more than any other legislation since Medicare and Medicaid. By exempting firms that self-insure from state insurance regulation, as well as from state premium taxes, ERISA gave employers a strong incentive to exit from the commercial and Blue Cross-Blue Shield insurance markets.
In , self-insured plans covered only 5 percent of people with employee health insurance; now they cover over 50 percent. The very same ERISA exemption that promoted the break-up of large risk pools in health insurance also prevents state governments from rectifying the disintegration.
Because they cannot regulate self-insured businesses, they cannot reach the major insurers. This exemption has drastically curtailed the possibilities for state reforms. New Book. Shipped from UK. Established seller since Seller Inventory CM More information about this seller Contact this seller. Language: English. Brand new Book. Healthcare organizations in the UK and the USA face a growing tide of regulation, accreditation, inspection and external review, all aimed at improving their performance. In the US, over three decades of regulation by state and federal government, and by non-governmental agencies, has created a complex, costly and overlapping network of oversight arrangements for healthcare organizations.
In the UK, regulation of the government-run National Health Service is central to current health policy, with the creation of a host of new national agencies and inspectorates tasked with overseeing the performance of NHS hospitals and other organizations. This book:. It is particularly suitable for use on postgraduate health and health-related programmes. Seller Inventory AA Usually Dispatched within Business Days , Buy with confidence , excellent customer service.
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Regulating Healthcare State of Health. Publisher: Open University Press , This specific ISBN edition is currently not available. View all copies of this ISBN edition:. Synopsis About this title Healthcare organizations in the UK and the USA face a growing tide of regulation, accreditation, inspection and external review, aimed at improving their performance.