Natural Beauty Breakthrough

Posted By Sofia Schonell on January 2, 2011

Now that health insurance reform has begun, safety-net programs throughout the United States are struggling to adapt their missions to suit the post-reform composition of the uninsured population. Most such programs are organized at the local level, with funding largely premised on their serving low-income uninsured residents. Examples include well-structured comprehensive care programs in some major cities, more than 1000 limited-service free clinics, and dozens of volunteer physician-referral programs.

When the Affordable Care Act (ACA) is fully implemented, 8% of the U.S. population is projected to remain uninsured. Other than undocumented immigrants, however, most such people will be eligible for Medicaid or highly subsidized private insurance and will be subject to tax penalties if they don’t obtain coverage. So beginning in 2014, most people who are currently served by access programs for the uninsured will have insurance, be eligible for insurance, or be undocumented immigrants.

Some people will remain uninsured because their income is too high for a subsidy but low enough to make insurance unaffordable (costing more than 8% of their household income). But subsidies will be available to people with family incomes up to 400% of the federal poverty level, which currently calculates to $88,200 for a family of four — well above the country’s median household income of about $50,000.

Access programs for the uninsured usually serve people with household incomes below about twice the federal poverty level. They may therefore be hard pressed to adapt their missions to the new uninsured population in ways that will maintain their fragile support from funders and volunteers. Since safety-net systems are already on life support,¹ any major shock may threaten their very existence. Therefore, access programs must consider carefully how best to refocus and justify their function and mission.

First, health care reform’s chickens should not be counted until they’ve hatched. During the 3 years before full implementation begins, constitutional challenges and conservative politicians threaten to upend the ACA.² Safety-net programs must remain intact at least until reform takes effect — and just in case it never does. Second, even after reform, the newly insured will face barriers to access arising from provider shortages, transportation difficulties, and language differences — all of which safety-net organizations can help to overcome.

Third, the future uninsured population will probably deserve more safety-net support than one might imagine. Some people will be uninsured temporarily when their economic circumstances change. New workers may earn enough to lose their subsidy for individual insurance but remain ineligible for group insurance during the 3-month probationary period that employers may impose. People without good jobs whose income increases just enough to nudge them over 138% of the poverty level will be disqualified from Medicaid and be required to purchase subsidized private insurance. It may be difficult to make this public-to-private transition smoothly. Medicaid enrollment can start instantaneously, sometimes even retroactively, but private coverage typically begins on the first day of the month after all forms have been completed and the initial check has cleared.

Characteristics of Uninsured Persons in Massachusetts (2008–2009).

If the experience in Massachusetts is any guide, these wrinkles will probably cause short-term coverage gaps for many people (see table). Coverage discontinuity will also occur within households, when different family members qualify for coverage from different sources, depending on their citizenship and employment status. Safety-net programs can therefore serve a critical function in maintaining continuity of care and access for entire family units over time.

Another category of people with justifiable need will be those in middle-income households for whom insurance remains unaffordable. This problem is most likely to affect older people who lack employer-sponsored insurance, since insurers may vary rates for adults by a factor of three on the basis of age. The Urban Institute has estimated that nearly 2 million uninsured legal U.S. residents will be exempt from the individual mandate because premium costs will exceed 8% of their household income. In Massachusetts, 15% of tax-filing uninsured adults were exempt from the state’s individual mandate in 2008 because they had no affordable option (see table).

Many of these uninsured people will face great difficulty finding affordable sources of care, especially since they’ll lack the benefit of deep discounts negotiated by health plans. Perverse market conditions allow U.S. hospitals to charge uninsured patients two to four times as much as insured patients for the same services, and physicians often charge them 50 to 250% more.³ One critical function of safety-net programs, therefore, could be to negotiate lower-end market rates for people who can’t afford insurance and to provide deeper discounts as medical costs mount over the course of a patient’s treatment. Deeper discounts are also needed by insured people whose cost sharing exceeds an affordable threshold, since the ACA’s cost-sharing subsidies phase out at 250% of the federal poverty level.

The largest category of justifiably uninsured people will be unauthorized immigrants. There are compelling reasons — both humanitarian and self-protective — to provide undocumented residents access to at least basic medical services.⁴ Nevertheless, it would be controversial and potentially divisive to focus a comprehensive free care program primarily on people who are here illegally. Most safety-net programs currently serve undocumented immigrants, but many, such as free clinics, offer only basic services, and others charge sliding fees.

Simple pragmatic considerations provide one important justification for including immigrants. Screening for legal residence means that all patients must document their legitimacy. Doing so is often burdensome, requiring records that many citizens don’t have readily at hand. In acute care settings, it is not feasible to document legal residence before providing medical services, and doing so in other settings breeds resentment, so most safety-net programs dispense with citizenship documentation. Nevertheless, whether open-door policies are based on pragmatic factors or higher principles, free care programs may face difficulty defending such policies if they increasingly concentrate on an undocumented population.

A key strategy for adapting to these changing social conditions is structuring access programs to serve broader socioeconomic groups, including some people with family incomes that are substantially above the poverty level. Two key moves will be critical: designing program eligibility to fit the major categories of people who are exempted from the federal insurance mandate and adopting sliding fee scales that require all patients to make some contribution and middle-income people to pay substantial but affordable amounts.

The ACA’s individual mandate is a convenient way to define who can justifiably remain uninsured. Its principal exceptions are people with short-term gaps in coverage and those for whom premiums are unaffordable. Providing safety-net access much beyond these boundaries would probably cause adverse selection by inducing people who could afford insurance to avoid the expense until their needs became more pressing. Using the ACA’s criteria will increase the complexity of screening for safety-net eligibility, but this screening can also be an important service for identifying, referring, and helping to enroll eligible people in Medicaid or subsidized insurance.

Adopting a sliding fee structure could be disruptive for free clinics and volunteer physician programs, but some such programs already require modest copayments. Extending safety-net programs to reach the middle and upper middle classes is unconventional but not unprecedented. San Francisco’s universal-access program covers people with incomes up to 500% of the poverty level, and programs in Denver and Massachusetts go up to 400%, as does a pilot program in Portland, Oregon.⁵

These changes will represent a substantial shift for most programs, and not all programs must adopt this model. But adapting to fit the future contours of the uninsured population will enable safety-net programs to help advance the larger, still elusive goal of health care reform: universal access to coordinated, comprehensive care.

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