Welcome to another edition of “What’s the Deal?”, where the IV part of this series on health reform has a fun double meaning (insert catheter joke here).
In this week’s post, we’ll look at a complicated issue of health care and insurance and see how health reform is looking to address it. We’ll examine who the “dual eligibles” are, why this population is important to health insurance and health economics, and what challenges remain ahead for the full implementation of health reform.
The Current: “Hi, I’m Ella Gibble”
Americans who are dual eligible are those who are both old enough (or have a serious disability) to receive Medicare (health care for the elderly) and with a limited enough income to qualify for Medicaid (health care for the poor). A surprising 9 million plus Americans fit into the Dual Eligibles category and they face a unique set of circumstances that unfortunately leaves many DE’s without quality care.
Many DE’s have a complicated set of medical issues that are costly, such as having a severe disability, mental illness, or requiring assisted living and frequent hospital visits. The current system for dual eligibles is antiquated and is not set up for quality care to be coordinated between the two programs. Medicaid spending is often slated for certain costs while Medicare is set aside for others and the lack of coordination doesn’t provide an incentive for either program to improve their services. This means that DE’s are spending more than they should be, and that their health care is often bungled behind too much regulation and red tape.
DE’s health care costs take up a disproportionately large percentage of the total cost of Medicare; 36% of the costs despite only being 21% of the beneficiaries. Similarly, DE’s make up 15% of Medicaid beneficiaries yet account for 39% of its costs.
Given the cost of DE’s, there are several new initiatives at the state and federal levels to help reduce costs on both the Medicare and Medicaid sides. Some plans are very controversial as they limit the federal funding that their state receives and combine both plans into a single managed care organization. To make ends meet for their plans with limited federal dollars, states would have to provide their own funding (unlikely in this budget trimmed climate) or cut care services – imposing a major risk for DE’s.
Many plans seek to improve coordination of care between the two programs for DE’s especially when it comes to financing and administering the programs.
Demonstration projects at the state level are currently under way or are being studied to determine how to coordinate care and save money. The Patient Protection and Affordable Care Act (Obamacare) created the Medicare-Medicaid Coordination Office to improve coordination of care and services for DE’s and has set up these demonstration projects in many states.
DE’s are a diverse group who do not have a universal Medicare and Medicaid spending regimen nor the same set of health circumstances. Therefore, to be successful, coordinated care plans must not lump all DE’s into the same category so that some folks are left without the care they need.
The conundrum of dual eligibles has to do with the set up of the programs of Medicare and Medicaid themselves. They were not initially set up to cover people simultaneously; therefore coordination between the two programs is absent, leaving DE’s hurt.
Providing Care for the Vulnerable
Both Medicare and Medicaid programs have their government roots from the 1935 Social Security Act – a depression era law that recognized a need to help the most vulnerable populations: the young, poor, disabled, and elderly. In addition to including financial assistance and unemployment compensation, the SSA included health provisions for “old age assistance” and “dependent children” as well as setting up administration for public health.
President Truman wished to extend this assistance by creating federally provided health insurance for both the elderly and the poor in 1945, but was unable to do this during his administration. It wasn’t until President Kennedy restarted the initiative and President Johnson helped pass legislation in the 1960s that public health insurance for America’s most vulnerable became a federal reality.
When President Johnson signed the Social Security Amendments Bill into law in 1965, this created both Medicare and Medicaid (Titles 18 & 19 under the Social Security Act). This was a long and controversial fight (a big understatement) to get this government run/funded health insurance programs passed.
Medicare was initially two parts, A and B. Part A consists of hospital insurance coverage paid for by payroll deductions (that nice little deduction from your paycheck) with no payment needed from the beneficiary (since the beneficiary has paid for it throughout their working life). Part B is an optional government run medical insurance program with a cheap monthly premium for doctor’s visits, and other short term services. Both parts are for short term health coverage (emergency services, doctors visits, home visits, x-rays, etc.)
Part C (added in 1997) and Part D (added in 2003) added a private insurance option (Medicare Advantage) and financial assistance for prescription drugs, respectively. Neither of these two additions to Medicare contained specific provisions for coordinating care for dual eligibles.
Medicaid was initially called ‘Medical Assistance for the Needy’ and included people receiving welfare benefits, severely disabled people, and dependent children – basically, people who are low income or who need financial assistance for medical care. Unlike Medicare, the program is run by the states with matching Federal dollars. Medicaid beneficiaries receive a health insurance plan that covers hospital services, nursing home services, and medical testing services (x-ray, laboratory, etc).
In the initial Medicaid law, there is a provision for dual eligibles that allow ‘elderly needy’ people financial assistance to pay for the Medicare Part A hospital insurance monthly payments. But that’s it. There is no mention of how to administer both programs for these beneficiaries. The law simply did not plan for a large portion of Americans to need both programs at the same time and to use so much money to cover their medical needs.
The initial Medicare and Medicaid laws:
- Derive from the Social Security Act of 1935 and were advocated for a long time before implementation in 1965.
- Were and still are administered at different levels: Medicare by the Feds, Medicaid by the States w/ Federal money.
- Cover different medical services: Medicare = acute, short term services – Medicaid = both short and long term services.
- Do not contain sufficient provisions for Dual Eligibles to receive coordinated care.
So there you have it, the conundrum: the 2 government run health programs were not set up to serve people who qualify for both programs.
Conclusion: Dual Analysis
Given the impact of Dual Eligibles on health economics and the fiscal standing of Medicare/Medicaid, health reform should address the high costs that DE’s bring to the table. More importantly, health reform should be making sure this population (one of the most vulnerable) is receiving quality care.
Both these issues could be addressed with better coordinated care with better communication and administration of Medicare and Medicaid. The demonstration projects currently being tested around the country will be essential to making services better for DE’s. They should be tested to the fullest extent, however, to ensure that any changes do not compromise services for this population.
Saving money for the future of Medicare/Medicaid is very important; Quality care for our most vulnerable citizens should be our highest priority.
Until we’ve ensured every American is insured,
Your Faithful Historian,
Eric G. Prileson
Sources and Further Reads: