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Not Expanding Medicaid Can Cost Local Taxpayers

By Michael Ollove, Stateline.org (TNS)

DALLAS–Dallas County property owners paid more than $467 million in taxes last year to Parkland Health and Hospital System, the county’s only public hospital, to provide medical care to the poor and uninsured.

Their tax burden likely would have been lower if the state of Texas had elected to expand Medicaid, the federal-state health insurance program for low-income people. If more low-income patients at Parkland had been covered by Medicaid, then federal and state taxpayers would have picked up more of the costs.

Elsewhere in Texas and in most of the 20 other states that have chosen not to expand Medicaid, residents pay local taxes to help support hospitals that care for uninsured people. On top of that, they pay a portion of the federal taxes that help subsidize Medicaid in the 29 states and District of Columbia that did expand the program to cover more people _ places where residents can expect to see lower local taxes as more people become insured.

“Taxpayers (in non-expansion states) are not going to get off the hook any time soon,” said Linda Quick, president of South Florida Hospital and Healthcare Association. Florida is one of the non-expansion states where localities pay property taxes to support indigent care.

Under the Affordable Care Act, and a subsequent U.S. Supreme Court decision, states have the option of extending Medicaid eligibility to all non-elderly adults who make less than 138 percent of the poverty line (an annual income of less than $16,242 for an individual).

For the first three years, the federal government will pay 100 percent of the costs associated with new enrollees. After that, the federal share gradually declines until it reaches 90 percent in 2020 and beyond.

Nationwide, the cost of caring for uninsured people in non-expansion states between now and 2024 is projected to reach $266 billion if no new states decide to expand Medicaid, according to a report in April from the Kaiser Family Foundation. If all states decided to expand, that cost would drop by a third.

The Urban Institute reports in a study for the Kaiser Family Foundation that states and localities spent nearly $20 billion for uncompensated care in the United States in 2013. The federal government paid $33 billion and the private sector $700 million.

Last year, Texas hospitals spent $5.5 billion for uncompensated care, according to the Texas Hospital Association. The federal government reimburses hospitals for part of that cost through a $1 billion-a-year Medicaid subsidy known as the Disproportionate Share Hospital Allotments or DSH. As part of the Affordable Care Act, the DSH program will be sharply reduced starting in 2018. A recent Health Affairs article projected that Texas hospitals could see a 20 percent drop in DSH payments in the first year.

Lance Lunsford, a vice president with the Texas Hospital Association, said without that federal money, residents would have to foot the bill in the form of higher insurance premiums and, in jurisdictions with public hospitals like Dallas County, higher taxes. “Hospitals have no choice but to limit their exposure,” he said. “That means cost-shifting to consumers and taxpayers.”

Texas also receives $29 billion through a five-year Medicaid demonstration program, with about half of that money going to care for the uninsured. That program expires next year and the state is negotiating with the federal government over its renewal.

The Obama Administration made it clear in April that it prefers Texas insure more people by expanding Medicaid than continuing to reimburse hospitals that serve the uninsured.

Despite that, the Texas Legislature ended its session earlier this month with no action on Medicaid expansion. If the federal government withholds funding for hospitals, local taxpayers will likely have to make up the difference.

“If you have the federal funding source going away, the money has to come from somewhere. These people aren’t going away,” said Teresa Coughlin, a senior fellow at the Urban Institute.

Texas Gov. Greg Abbott, a Republican, and the heavily Republican Texas Legislature remain opposed to Medicaid expansion.

Abbott calls Medicaid, “an already broken and bloated … program.” In March, members of the Republican Senate caucus wrote to President Barack Obama reiterating their opposition to expansion. They noted that the “Texas Medicaid program has grown from 11 percent of the state budget in 1987 to 29 percent in 2015,” a trajectory they labeled “clearly unsustainable.”

The senators urged the Obama administration to grant the state more flexibility to control spending in Medicaid as it currently operates in the state. They asked that the state be able to impose work requirements on recipients, introduce “personal accountability requirements” such as cost-sharing, fees for missed appointments, the creation of health savings accounts, and the use of asset testing to determine eligibility for the program.

The decision not to expand has left Texas with more uninsured people than any other state: 1.7 million non-elderly adults. Texas also has the highest rate, 28 percent, of uninsured non-elderly adults.

The Urban Institute estimates that if Texas had expanded Medicaid in 2014, over the next 10 years it would have spent $5.7 billion as its share of Medicaid expenses for the newly eligible population, while drawing down nearly $66 billion in matching federal Medicaid funds.

The decision also means a continued tax burden for local citizens, including those in Dallas County. “Our taxpayers pay more to Parkland for uncompensated care than for all of our other services combined,” said Dallas County Judge Clay Lewis Jenkins, who presides over the five-member commission that governs the county. “It is also the fastest growing budget item.”

Jenkins, a Democrat, is among the highest profile politicians in the state to champion the case for expanding Medicaid, saying it would bring relief to county taxpayers by reducing what the county pays for uncompensated care.

Dallas County estimates that expansion would have extended Medicaid eligibility to an additional 133,000 county residents and would have brought an additional $580 million in Medicaid reimbursement. That money would not have eliminated all expenditures for uncompensated care because some, including undocumented workers, would remain uninsured.

In Harris County, where Houston is located, residents pay more than $500 million a year in real estate taxes for uncompensated care at its public hospitals. Bexar County, home of San Antonio, pays just short of $300 million a year for uncompensated care.

Texas isn’t the only state where local taxpayers cover the costs. Thirteen of the 21 states that have not expanded Medicaid have public hospital districts where local tax dollars pay for uncompensated care.

Grady Memorial Hospital in Atlanta, for example, receives $57 million a year from local taxpayers. The federal government’s expected cuts in uncompensated care reimbursement could eventually cost the hospital $45 million a year. Hospital CEO John Haupert said he does not expect the two counties that Grady serves to make up that loss, which could mean a cut in services.

“We would have to reevaluate the clinical services we could continue to supply and the clinical services that we couldn’t,” Haupert said.

Georgia currently is working on a proposal that would keep some federal uncompensated care funds flowing in the expectation that more of the uninsured would receive comprehensive health care.

Mayors and county executives in other non-expansion states, including Republicans, have urged their states to expand coverage. One, Republican Mayor Adam O’Neal of Bellhaven, North Carolina, marched to Washington, D.C., twice in support of expansion.

Some legislators in some other non-expansion states have expressed concerns that continuing to provide indigent care will endanger the survival of many rural hospitals. Since 2010, 55 rural hospitals have already closed, according to the North Carolina Rural Health Research Program.

DeShawn Bunton is one of Dallas County’s uninsured, who would qualify for Medicaid if the state expanded. A tiny, 51-year old, unemployed woman living in a one-bedroom, West Dallas apartment, Bunton has three ways of dealing with her lack of health insurance: visiting the emergency room, scavenging leftover medicine from friends or doing without treatment.

When her untreated diabetes makes her especially shaky and she gets a terrible taste in her mouth well known to diabetics, she goes to the nearest emergency room for treatment. During bad asthma attacks, she counts on friends to let her use one of their inhalers.

When she was hospitalized after having a heart attack on a train last year, Bunton passed on having a recommended stress test because she couldn’t afford it. She also left a prescription for a heart medicine unfilled.

Recently, she enrolled in a program at Parkland that allowed her to get back on all her medications. She is vastly relieved. “I was scared I was going to get sick at any time,” she said. “I had to watch my stress levels to make sure nothing upset me.”

The Parkland program is supported by local taxes. And Bunton now volunteers for the Texas Organizing Project, a grass-roots organization pushing for expansion.

Photo: Texas Health Presbyterian hospital on Tuesday, September 30, 2014, in Dallas. A patient at the hospital tested positive for the Ebola virus. (G.J. McCarthy/Dallas Morning News/MCT)

Some States Retreat On Mental Health Funding

By Michael Ollove, Stateline.org (TNS)

WASHINGTON — Fewer states increased their spending on mental health programs this year compared with last year, when a spate of horrific shootings by assailants with histories of mental illness prompted a greater focus on the shortcomings of the country’s mental health system.

Some states slashed their mental health budgets significantly this year. At the same time, however, a number of states adopted mental health measures in 2014 that won plaudits from behavioral health advocates.

A survey of state spending published last week by the National Alliance on Mental Illness (NAMI) found that 29 states plus the District of Columbia increased their spending on mental health in fiscal year 2015. A year earlier, 37 states plus D.C. increased their mental health budgets.

NAMI warned that the momentum to improve state mental health services, which was especially powerful after the December 2012 Sandy Hook massacre in Connecticut, has slowed.

The group is concerned that last year’s increases were just a blip, and that states are returning to the pattern of the period between 2009 and 2012, when total state spending on mental health fell by $4.35 billion. In fiscal year 2009, total mental health spending by all states was $1.55 trillion.

In many states, spending on mental health still hasn’t returned to prerecession levels.

But state budgets don’t paint a complete picture of mental health spending. In January, 27 states plus D.C. expanded Medicaid eligibility under the Affordable Care Act (ACA) to include single people without children who earn 138 percent or less than the federal poverty level, which for an individual is $11,670. That change ushered 7.5 million new enrollees into Medicaid, which provides access to a wide range of mental health services. The federal government is paying 100 percent of the costs associated with those expansion enrollees.

“That is the single most important thing that has happened in mental health this past year,” said Debbie Plotnick, senior director of state policy of Mental Health America (MHA), formerly the National Mental Health Association.

But the expansion may also have persuaded some states to pull back funding for community mental health centers and other mental health initiatives, including school and substance abuse programs.

Rhode Island, for example, citing “a continuingly constrained budgetary environment,” cut its mental health funding by $33.6 million this year, according to NAMI, a 20 percent reduction. Michigan, Arkansas, Hawaii, Kentucky and Massachusetts also expanded Medicaid but reduced mental health funding this year.

A number of states that declined to expand Medicaid also reduced mental health spending, according to NAMI. Alaska, which cut mental health spending by 37 percent between 2009 and 2012, made further cuts in the last two years as it weathered falling revenue from declining oil prices. Nebraska, Louisiana and North Carolina, also followed mental health cuts made during the recession with additional reductions in fiscal years 2014 and 2015.

Still, 29 states plus D.C. did increase mental health spending. Virginia spent an additional $54.9 million to increase the number of psychiatric beds and strengthen community mental health programs and telepsychiatry. Missouri approved an initial $14 million for the construction of a new maximum security psychiatric hospital projected to cost a total of $211 million. New Hampshire and New Jersey put more money into community mental health. Florida increased community mental health spending as well, restoring $15.2 million in cuts it had made since 2012.

Coincident with the NAMI survey, MHA released its rankings on the mental health status of all 50 states and the District of Columbia based on the prevalence of mental illness and access to mental health services in each state. Access is measured by such indicators as the presence of barriers to treatment, such as lack of insurance, copays, coinsurance, denials of coverage and insufficient numbers of mental health providers. The survey was conducted before the full effects of health insurance expansion under Obamacare had taken effect.

Massachusetts, Vermont, Maine, North Dakota and Delaware topped the list while the bottom five were Arizona, Mississippi, Nevada, Washington and Louisiana.

There is a high, but not perfect, correlation between states’ rankings and whether they are Medicaid expansion states. Maine, third on the list, is not an expansion state. Conversely, Washington (48th), Nevada (49th) and Arizona (51st), all expanded Medicaid under ACA.

Overall, the report says that 42.5 million Americans suffer from some sort of mental illness, 19.7 million have a substance abuse problem and 8.8 million report that they have seriously considered suicide.

The MHA report also ranks the mental health of young people across the states. Vermont, North Dakota and Wisconsin top the list. Nevada, New Mexico and Montana rank last.

Although NAMI pointed to the retreat from state mental health spending this year, its report did note a number of new laws that it hailed as possible models for other states. Among them:

Virginia established a registry of available beds in public and private psychiatric facilities to help place individuals who meet the criteria for temporary detention as a result of mental illness. The bill arose after the mentally ill son of Virginia state Sen. Creigh Deeds stabbed his father and then killed himself with a rifle a year ago. Only hours before the incident, the young man had been released from emergency detention when officials were unable to find a hospital with an available bed where he could receive a psychiatric evaluation before being released, as required under law.

Minnesota passed a measure that would base community mental health workers in schools to handle acute mental health cases. Sita Diehl, NAMI’s director of state policy and advocacy, said, “School counselors are focused on general mental health issues. They may not be equipped to handle serious mental health in children.”

Massachusetts enacted a comprehensive “safe and supportive school” measure, which, among other provisions, encourages schools to explore mental health issues when they assess the poor performance or poor behavior of students. “Schools think in terms of academics,” said state Rep. Ruth Balser, a Democrat, who sponsored the bill. “It’s a matter of us educating the educators to think of the whole child.”

For people in the throes of psychosis or another mental illness crisis, Minnesota now provides transportation to a hospital in unmarked cars driven by mental health professionals rather than in police cars with flashing lights and sirens. “When law enforcement is called for medical situations it’s really embarrassing and humiliating for people who didn’t break any law,” said NAMI’s Diehl.

Illinois passed a law aimed at preventing parents with limited or no health insurance from having to relinquish custody of their severely mentally ill children to foster care to get those children intensive mental health treatment. The law requires the state to identify children at risk of state custody and work with their families to get the needed services. In the past, children were taken away from parents to get them treatment. “It was a dirty, dirty secret,” said Sara Feigenholtz, the Democratic state representative from Chicago who sponsored the legislation.

Kentucky allows trained nurse practitioners to prescribe psychiatric medications, a measure intended to help patients without easy access to psychiatrists. Illinois passed a similar measure pertaining to psychologists.

At the other end of the spectrum, North Carolina approved a law requiring Medicaid patients to get authorization from Medicaid before obtaining psychiatric drugs. While supporters cited cost-savings as a rationale for the measure, NAMI’s Diehl predicted it will lead to otherwise avoidable hospitalizations or arrests that will cost the state far more than the medications.

Idaho’s legislature voted to allow the use of restraints with mentally ill patients without a physician’s permission. Georgia terminated the University of Georgia’s “navigator” program, which provided trained helpers to assist people trying to obtain insurance on the federal health exchange.

And Georgia, Arkansas and Tennessee all enacted measures barring promotion of ACA’s provisions or preventing those states from expanding Medicaid eligibility and improving access to mental health care.

Photo: Taber Andrew Bain via Flickr

Social Impact Bonds Tap Private Money For Public Health

By Michael Ollove, Stateline.org (MCT)

South Carolina is turning to an unusual source to finance a new program intended to reduce the state’s high rate of premature births: private investors.

If the program succeeds in reducing that rate among Medicaid beneficiaries, and reduces state spending as a result, the state will repay the principal plus a yet-to-be determined rate of return. If the program doesn’t meet expectations, the state will owe the investors less or even nothing at all.

The state sees the plan as a way to launch a promising health program without having to bear the costs for years to come, if ever.

“If we achieve the results we hope for, the state wins by getting an innovative program that works and the investors get a payback,” said John Supra, a deputy director of the state Department of Health and Human Services.

The financial instrument powering the project is called a social impact bond (SIB), also referred to as a pay-for-success contract. In the past several years, a number of states and municipalities have used SIBs for multiyear projects pertaining to education, homelessness and prisoner recidivism. In most cases, the money goes to a nonprofit that provides the services.

Lately, as in South Carolina, projects related to health care have begun to turn to the same mechanism. In Fresno, Calif., for example, where more than 20 percent of children have been diagnosed with asthma (compared with 8 percent nationally), the city is expected to use an SIB in a project to reduce the number of emergency room visits and hospitalizations resulting from childhood asthma.

Connecticut, New Jersey, North Carolina, Utah and Oregon also have or are considering using SIBs to fund a variety of health-related programs for such things as substance abuse treatment and early childhood health interventions. The District of Columbia is turning to an SIB for a teenage pregnancy prevention program.

Many of these health projects are geared toward prevention and save money if they help states avoid paying for expensive services, such as hospitalizations and surgeries. Because SIBs extend for many years, there is time for those savings to emerge and be measured.

Enthusiasm among some of those involved in SIBs is high. “When I first heard about this concept, I was not sold, but over time, I have become a believer,” said Kevin Hamilton, chief program officer at Clinica Sierra Vista, a health-care organization providing services to the poor in central California that is a partner in the Fresno asthma project.

Hamilton says he now believes that SIBs could be used to create prevention programs for all types of chronic diseases, including diabetes and heart failure.

Others are skeptical. SIBs relieve governments of having to pay money upfront for these projects. But if the projects succeed, they have to repay the money along with what might be a sizeable return on investment, not to mention additional administrative expenses.

Critics are also quick to point out that SIBs have been around only since 2010 — not long enough to have had to pay out on their investments. So while more jurisdictions are pursuing SIBs, they are unproven.

In 2013, the Maryland legislature was considering an SIB for a prisoner reentry program until an analyst in the Maryland Department of Legislative Services, Kyle McKay, showed that the cost of the SIB would be far greater than previously believed and that the probable state savings from a successful program were greatly overstated.

McKay, who now works for the Texas Legislative Budget Board, a permanent joint committee of the legislature that develops budget and policy recommendations, has become a prominent critic of SIBs. “It is my personal opinion that social impact bonds are expensive and risky,” he testified at a U.S. Senate hearing in May. “They may also distract governments from a more comprehensive, sustainable approach to improving public policy.”

The United Kingdom is usually credited with launching the first SIB, a six-year project started in 2010 to prevent recidivism among prisoners released after serving short sentences. Although the project showed some success in the early stages (though below its goals), it was aborted earlier this year in favor of another approach. So far, it has not paid out to investors, but still could if the first-phase goals are reached.

In 2012, New York City became the first American jurisdiction to use an SIB, for a prisoner rehabilitation program that received $9.6 million in private investment money.

With funding from the Rockefeller Foundation, the Harvard Kennedy School created the Social Impact Bond Technical Assistance Lab, which is helping some states and municipalities. Applicants identify a social service project they would like to launch, often one that has shown success in a pilot program, and the lab helps them put financing together and establish measurable benchmarks.

The California Endowment, a private health foundation, has contributed $1.1 million to fund a two-year project in the Fresno area in which trained health-care workers will visit the homes of 200 children with asthma who have had previous emergency room visits or hospitalizations as a result of the condition.

The workers will educate families on asthma and also rid the homes of environmental triggers that lead to the ailment, such as cigarette smoke, dust mites and other contaminants. If the program proves successful by reducing the medical costs associated with asthma, the plan is to attract private money to extend the program to an additional 3,500 children.

Recently, South Carolina health officials began to think that an SIB might be the best way to attack the state’s high rate of premature births. The state ranked fourth highest in those births in 2013 and more than 11 percent of Medicaid births in the state were premature.

The state had been involved in a small but effective program that sent visiting nurses or other trained health-care workers into the homes of poor, pregnant women before births and for 18 to 40 months afterward to provide support and education. The result was healthier births and healthier children in the first three years of life. With SIB funding (the amount has yet to be determined), the state plans to increase the number of beneficiaries from a few hundred to 4,000.

John Supra, deputy director of the South Carolina Department of Health and Human Services, said the hope is that the seven-year program will lead to reduced state costs in several areas, from less use of neonatal intensive care, to less spending on child abuse and special education services — all of which are linked to premature births. Supra expects the full program to be up and running in April.

Narev Shah, a director at Social Finance, which has helped a number of jurisdictions put together SIB contracts, said SIBs are in line with the Affordable Care Act, which encourages better health outcomes while reducing health care costs. “The ACA aligns nicely with social impact bonds with its focus on preventive measures that will alleviate longer term expensive utilizations,” he said.

As with all SIBs, in order for investors to recoup their money and turn a profit, the projects must achieve measurable success in improving health outcomes and saving money. Goldman Sachs and Bank of America are among the commercial institutional investors that have invested in SIBs.

The reason, says David Juppe, an analyst with the Maryland General Assembly who worked with McKay on his report, is that the SIBs promise high rates of return. “I haven’t seen anything less than double-digit returns,” Juppe said. Often, though, McKay has testified, the SIB deals are so complicated and involve so many entities, that determining exactly what results deliver what rates of return is almost impossible.

For many commercial investors, the financial risk isn’t as great as it first appears to be. Many of the SIBs are designed with the involvement of foundations, which often guarantee at least some payout to investors if the program doesn’t achieve the established goals. In the New York City prison project, for example, former Mayor Michael Bloomberg’s foundation, Bloomberg Philanthropies, has guaranteed to pay back investors up to $7.2 million from their $9.6 million investment if the program falls short.

Cohen also questions whether SIBs actually fulfill the goal of spawning innovations. Because of the investment risk, he says the projects that are backed by SIBs tend to be models that have already proven that they do work.

“If you’re investing the SIBs in things with a high probability of success,” he said, “why doesn’t government just do it themselves in the first place?”

Photo: Joe Shlabotnik via Flickr

Vermont Is ‘Single-Payer’ Trailblazer

By Michael Ollove, Stateline.org

BERLIN, Vt. — Dr. Marvin Malek has been yearning and advocating for a publicly financed, single-payer health care system for at least two decades. Now, as Vermont stands on the threshold of being the first state to launch such a plan, he’s confessing to trepidation.

“I am pretty damn nervous,” he confided before bounding off for rounds at the Vermont Central Medical Center, still clutching the bicycle helmet he wore on his ride to work.

It’s not that Malek has reservations about the desirability of a single-payer system. He and other supporters in Vermont point out that it is already in place in many developed countries that produce better health outcomes at lower cost than the United States.

It’s that getting there seems so fraught with complexity. “The problem is that the tentacles of our completely dysfunctional U.S. health system reach so deeply into every state,” he said. “How do you disentangle from that abysmal structure to create single-payer?”

That explains why Malek and many others here believe the Vermont legislature’s landmark vote in 2011 to move the state to a single-payer system by 2017 was the easy part of the process. Devising how to actually do it, a process the state is enmeshed in now, will be much more grueling.

The outcome couldn’t be more consequential, not only for Democratic Gov. Peter Shumlin, who put single-payer health care at the center of his first gubernatorial campaign in 2010, but also for many others who have long cherished the idea of universal health care built on the foundation of a single-payer system.

Some believe that if the Vermont experiment is successful, other states could follow. In Canada, they note, single-payer started in one province and then spread across the country.

“We could be the Saskatchewan of America,” said Bram Kleppner, CEO of Danforth, a pewter manufacturer in Middlebury with roots tracing back to colonial America. He is among a group of business executives in Vermont Businesses for Social Responsibility, which actively promotes single-payer. He also sits on a board advising the governor on the financing of the plan.

A single-payer system is one in which the government, rather than private insurance companies, pays all health care costs. Some on the left have long harbored hopes for a national single-payer system, but the odds that Congress would ever extinguish the private insurance industry have never been anything but long.

Vermont is different. Vermonters proudly bring up the state’s maverick, progressive past: first state to mandate public financing for universal education in its constitution, first to partially outlaw slavery in its constitution, first to introduce civil unions for same-sex couples, and first to allow gay marriages by legislation, rather than through a court order. Many Vermonters hope a single-payer health system will be the latest addition to that list.

But it’s way too early to predict that other states will fall like dominoes for single-payer. Vermont’s unusual characteristics helped make that legislative vote possible. It is tiny and it has Democratic super-majorities in both legislative chambers. Its seven hospitals (eight if you count Dartmouth-Hitchcock Medical Center just across the border in New Hampshire), are spread out and tend not to think of themselves as competitors.

Nevertheless, other states will be watching closely to see if Vermont can successfully build the elements of its single-payer plan, including a unified data and claims system, a method for measuring the delivery of quality health care and a pay-for-performance scheme to replace the traditional “fee-for-service” model.

“Even for states that are keeping it ‘old school,’ watching a state create a unified health budget and seeing how it benefits them and the process they use, that will be enlightening to everybody,” said Hilary Heishman, a program analyst at the Robert Wood Johnson Foundation.

Medicare, Medicaid, and health benefit plans for both veterans and active duty military personnel will continue to operate in Vermont after 2017. Other plans would also continue, including those serving employees and retirees of out-of-state companies, and tourists and other visitors. Plus, there are major businesses in the state that could continue to self-insure if they are exempted from the new taxes. (Some countries with single-payer systems also have separate health plans for some constituencies, such as veterans.)

Despite those caveats, Act 48, as it is called, represents the first time a state has guaranteed all its citizens health care simply on the basis of their residency. Instead of premiums, Vermonters and businesses would pay for health care through yet-to-be determined taxes. Benefits and formularies (the prescription medicines that are covered in a plan) would be uniform, excluding Medicare and Medicaid, although both programs, through waivers, would be folded into a unified claims administration and payment system run under a new, independent agency called Green Mountain Care.

The Vermont plan largely derives from Harvard economist William Hsiao, who described it in a 2011 Health Affairs paper. He estimated that single-payer would save 25.3 percent over current state health spending, cut employer and household health care spending by $200 million, create 3,800 jobs, and raise the state’s economic output by $100 million.

The savings, according to Hsiao, would come from the consolidation of insurance functions, reduced administrative costs for providers, better mechanisms for detecting fraud and abuse, and shifting to a no-fault medical malpractice model.

Hsiao said the savings, an estimated $4.3 billion over five years, could be used to pay for coverage of the uninsured and improved benefits, reducing the overall savings to a still healthy $2.3 billion.

Those numbers quickly proved overly optimistic. The legislature didn’t adopt the malpractice reforms Hsiao recommended, and the multiple payers still active in the state could reduce the expected administrative savings. Meanwhile, a University of Massachusetts study commissioned by the state estimated Vermont would have to raise $1.6 billion in new revenues each year to support the plan. A later report by Avalere Health, a consulting firm, estimated the annual cost to be $1.9 billion to $2.2 billion.

Robin Lunge, director of Health Care Reform for the Shumlin administration, said last week the state is assuming it will need between $1.7 billion and $2.2 billion in additional annual revenue. Right now, Vermont collects about $2.85 billion in annual revenue from state sources, mainly through taxes, so raising that amount would be a huge lift for the state. But Lunge thinks a fairer comparison is the amount of new revenue that would have to be raised versus the $1.9 billion in private health insurance premiums that Vermonters pay now.

Shumlin missed a 2013 deadline for revealing exactly how he planned to finance the reforms. Now he is promising to do so in January, in time for the next legislative session. Some critics say he purposely withheld the details to not imperil his re-election in November.

Lunge said the state will raise most of the revenue through some combination of income and payroll taxes on both employers and employees. People will not be asked to pay premiums, although Lunge said she expects there will be some kind of cost-sharing (as in co-pays or co-insurance) to discourage overuse of medical services.

“You can say it will be the biggest tax increase in Vermont’s history,” Lunge said, “but you could also say it’ll be the biggest premium decrease in our history, too.” She also pointed out that the tax increase will be based on household income, while under the current system people pay the same premiums no matter how much they earn.

Photo: Orange County Register/MCT/Ana Venegas

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Helping The Mentally Ill Join The Workforce

By Michael Ollove, Stateline.org

By his own admission, for many years Cyrus Napolitano’s mental illness — bipolar disorder — did not make him an ideal employee. Perhaps the worst moment came when he walked into the Brooklyn McDonald’s he was managing to discover some now-forgotten worker infractions.

“Whatever it was,” he said last week, “it triggered an explosion where I was screaming at the top of my lungs and beating a path of destruction all the way to the back, knocking everything off shelves and kicking the back door with my boot.”

He left the job at McDonald’s, as he did various other jobs over the decades — as a waiter, a bartender, a concierge at a luxury condo building. During one eight-year period in the 2000s, after his third suicide attempt, he could barely work at all.

But that was some time ago. Thanks to his eventual involvement with Fountain House, a community mental health center in Manhattan, Napolitano, now 53, is in his fourth year of steady, part-time employment as the “scanning clerk” at an international law firm, a stress-free job he credits with helping him manage his illness.

“For me, it goes back to stability, structure, support, and acceptance,” he said.

Because of poor funding from state and other sources, the “supportive employment” that benefited Napolitano is unavailable to most of those with serious mental illness. According to one study, only 1.7 percent of those served by state mental health systems received supported employment services in 2012, even though it has proven to be the most effective way to keep the mentally ill in steady jobs.

Soon that situation may change. Under the Affordable Care Act (ACA), states can apply to use Medicaid funds to train and employ the seriously mentally ill, under the theory that steady employment is a form of treatment.

The unemployment rate in that group is strikingly high, about 80 percent in 2012 among those receiving state mental health services, according to the federal Substance Abuse and Mental Health Services Administration (SAMHSA). The range among the states is broad. Maine, West Virginia, Hawaii, Pennsylvania, and California all had unemployment rates for the mentally ill above 90 percent. Wyoming had the lowest rate at 56 percent.

Sita Diehl, director of state policy and advocacy at the National Alliance on Mental Illness, which hosted a presentation with an accompanying report in Washington last week to highlight the issue, said the variation among the states is less a reflection of policy differences than the overall condition of the economy in each state. The reality, she said, is that programs to help the mentally ill obtain and maintain employment are so scarce they wouldn’t register significantly in unemployment statistics.

Surveys have shown that as many as seven out of 10 people with severe mental illness would like to work. Robert Drake, a Dartmouth psychiatrist who develops and evaluates community mental health programs, said the benefits of work for the mentally ill are multiple.

“First of all, of course, it provides them with money,” Drake said. “It makes them feel better about themselves. It integrates them more into their communities. And often, they do better in managing their illnesses.”

Drake said the old “step-wise” models for helping the mentally ill obtain and retain employment often failed. In these programs, people would train in some sort of sheltered job program and then, if deemed ready, released to the market to find jobs. Mostly, Drake said, it didn’t work.

Under the supportive employment model, an employment specialist is part of the patient’s mental health team. The specialist, who may have a degree in vocational rehabilitation counseling, social work, psychology, counseling, or divinity, helps plot a job-seeking strategy with the patient. Then the specialist remains involved once the patient has a job to help with any problems that arise.

“There have been 21 randomized controlled trials run on supportive employment models,” Drake said. “Every one shows that under this model, the majority of these people will succeed in competitive employment.”

And, he said, at a negligible cost: between $4,000 and $5,000 per participant.

Drake’s Dartmouth Psychiatric Research Center developed one of the most successful supported employment models, called Individual Placement and Support (IPS). With seed money from Johnson & Johnson, Dartmouth began handing out grants to fund IPS programs in 2001. The grants went to 16 states or jurisdictions and ultimately helped fund 191 sites that follow the IPS method. According to Johnson & Johnson, the programs now serve more than 11,000 people a year and have achieved an employment rate of 40 percent.

“Without question, (it is) the most effective supportive employment model out there,” according to Kandy Ferree, a consultant in Johnson & Johnson’s charitable arm who heads up the mental health portfolio.

Most of the programs, however, rely on private fundraising and limited state funding, often by way of federal mental health block grants. Money, program administrators say, is always an issue. “Funding is always a problem and continues to be a problem,” said Kenn Dudek, president of Fountain House. He said he gets a third of his budget from city and state sources. The rest he has to raise privately.

Dudek said Medicaid has traditionally been of little help because that money had to be used for health purposes, and not for education or training. Furthermore, the paperwork involved in taking Medicaid money was too onerous to be worthwhile.

Earlier this year, however, the Obama administration, acting on a provision in the ACA, completed the writing of new rules that will enable states to apply for federal waivers to more easily use Medicaid funds for supportive employment programs. So far, Drake said, Wisconsin and Iowa have received waivers.

Not all supportive employment models follow the Dartmouth IPS model, but all share certain attributes. The most important is that there is an employment specialist charged with supporting patients in their job searches and for many months after they start working.

The support is as varied as the clientele. Some patients need help strategizing on the kind of jobs that would interest them and how to prepare for interviews. Sometimes, a patient’s illness influences the job choices. Those with high levels of anxiety, for example, may be better suited for jobs where there is little interaction with other people. Others are more likely to benefit from human contact.

Some patients may need the counselor to accompany them on the interview. Some may need assistance to arrive at the job on time, or organizational help so they can perform once they are there.

In the most effective models, the job counselor is part of the mental health team that is assisting the patent.

Integrating the job counselor into the team is crucial, Drake said. Some patients may need higher dosages of medication to control anxiety when they start a new job. Others, like Cyrus Napolitano, may require lower dosages to wake up in time for a job and to stay focused while there.

Kathy Rohr, clinical director of the Family and Children’s Center in La Crosse County, Wisconsin, which NAMI named a model IPS program, said she frequently sees patients improve thanks to the jobs they hold.

“I’m working with someone who suffers from significant anxiety who had trouble getting out of house at all,” she said. “We helped get him a job that didn’t put him around too many other people and with his own space. Now he’s been inspired to get out on his own to go to the grocery store. That’s a huge step for him.”

Stephanie Joseph, 50, from Gaithersburg, Md., has severe depression and a bipolar disorder. She said her counselor, from Cornerstone, a community-based center in Montgomery County, accompanied her every moment of her first week of work as an office administrator to help her get acclimated. Nearly a year into the job, she continues to meet with him every week to review the previous week and to set goals for the one coming.

Joseph said her life has turned around. A certified public accountant, she was fired from numerous jobs over the years for not showing up for work when she was too depressed to get out of bed. Eventually she didn’t work at all.

“I was floundering for probably eight or nine years,” she said. “Basically, all I did was sleep. Now, I get up, I go to work, I have social interaction. I have a sense of accomplishment.”

AFP Photo/Scott Olson

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National Strategy Needed To Eliminate Hepatitis C, Expert Says

By Michael Ollove, Stateline.org

WASHINGTON — The U.S. is in the midst of a hepatitis C epidemic with as many as 3.9 million Americans infected with the liver-damaging virus. Aggressively targeting a concentrated population with the contagious but curable disease could be the best approach to eradicating the deadly virus.

The most logical place to launch the counterattack is in the country’s jails and prisons, where the infection rate is about 17 percent, compared with 1 percent to 2 percent overall in the U.S., said Josiah Rich, a Brown University infectious disease physician. A recent study estimated that 1.86 million people with the virus were incarcerated.

“With more than 10 million Americans cycling in and out of prisons and jails each year, including nearly one of every three HCV (hepatitis C)-infected people,” Rich said, “the criminal justice system may be the best place to efficiently identify and cure the greatest number of HCV-infected people.”

Rich, the lead author of an opinion piece published last week in the New England Journal of Medicine, said treating prison populations could have a “substantial effect on this epidemic.”

Hepatitis C is a blood-borne virus most typically spread through intravenous drug use, transfusions and tattooing. Although it can remain asymptomatic for decades, the virus can eventually cause catastrophic liver damage, including cirrhosis, cancer, liver failure and death.

In addition to teaching at the medical school at Brown, Rich is director and co-founder of the Center for Prisoner Health and Human Rights at the Miriam Hospital Immunology Center in Providence, Rhode Island. He has raised the possibility of eradicating the disease following the government approval last year of two new medications that boost the cure rates for hepatitis C from about 45 percent for the older drugs to better than 90 percent.

But there’s a big hitch: the price tag. At $1,000 a pill for the new medicine, a single course of treatment for an individual costs as much as $84,000. Because of the high cost of the new drugs, all payers, public and private, are grappling with questions about which patients should get the new medications and how to pay for them.

The new drugs, simeprevir (marketed as Olysio by Janssen Therapeutics, a division of Johnson & Johnson) and sofosbuvir (sold as Sovaldi by Gilead Sciences) offer other advantages aside from their cure rates. They can be taken orally rather than through injection. The course of treatment is much shorter than previous drugs — 12 to 24 weeks compared with 48. And they produce none of the serious side effects caused by the previous medications, including nausea, fever, headaches and insomnia.

To Rich, the advent of these drugs presents an opportunity that he insists must include correctional facilities as an essential component.

“We can invest now in treating this epidemic and curing large numbers of people and preventing a lot of illness, death, and expense,” Rich told Stateline. “If we made a national push to avoid that death and illness and expense, we’d want to roll out as much treatment as possible in the place where we’d find the highest number of people with the virus. And that’s in the jails and prisons.”

But as Rich notes in his article, treating all the infected people currently incarcerated would cost $33 billion. He said that treating just half of the people with hepatitis C who cycle in and out of jail or prison in a year’s time would cost $76 billion. To put those numbers in perspective, total government spending for all states combined in fiscal 2013 was just under $700 billion.

Correctional systems, funded by states or localities, hardly have those kinds of resources, which is why Rich believes federal intervention will be necessary. He suggested as a precedent the Ryan White CARE Act, originally authorized in 1990, which provided federal resources to combat HIV/AIDS.

But more than three times as many Americans are believed to be infected with hepatitis C than HIV. Rich’s article does not address how to overcome the cost, but in an interview, he suggested the federal government should negotiate a rate with the pharmaceutical companies on behalf of states and their corrections systems.

“The government could come back and say, ‘You should make a profit, absolutely. But you can make a profit by selling a few doses of the medication or you could make a profit by selling a whole lot of doses.'”

Photo: Me via Flickr
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Fearing Abuse, States Challenge FDA On Painkiller Approval

By Michael Ollove, Stateline.org

WASHINGTON — Notwithstanding a court order, Massachusetts and other states plan to restrict use of a new painkiller drug, setting up a showdown with the federal government over who gets to decide the best way to protect public health.

In the case of Zohydro, the argument pits the needs of millions of chronic pain sufferers against the urgent desire of states to combat an already catastrophic epidemic of prescription drug abuse. Although there haven’t been specific cases of Zohydro abuse in Massachusetts, Democratic Governor Deval Patrick fears the powerful new drug will make the painkiller abuse crisis even worse.

In the first round earlier this month, U.S. District Court Judge Rya W. Zobel came down on the side of Washington, ruling that Massachusetts could not ban a drug deemed to be safe and effective by the Food and Drug Administration. In thwarting Patrick’s move — perhaps the first time a state has ever tried to ban a drug approved by the FDA — Zobel emphasized that federal law trumps state law.

But Patrick responded to his loss in court by slapping other restrictions on Zohydro, beyond those mandated by the federal government. Whether those steps will invite another court challenge remains to be seen.

Next door in Vermont, Democratic Governor Peter Shumlin has already taken similar steps. Meanwhile, the GOP-controlled Ohio legislature is considering its own ban on Zohydro.

There also has been action in Washington, D.C. Members of Congress from Massachusetts, Kentucky and West Virginia have introduced bills to ban the drug, and 29 state attorneys general — representing both parties — have asked the FDA to reconsider its October approval of Zohydro.

And in February, nearly four dozen consumer and anti-addiction groups signed a letter to FDA Commissioner Margaret Hamburg urging her to overturn the approval of Zohydro.

“We’re in the context of a very serious epidemic of opioid drug addictions and opioid deaths and that’s a public health crisis that has been growing over the last decade and half,” said Michael Carome, director of the Health Research Group at the consumer organization Public Citizen, which signed the letter to Hamburg. “The last thing we needed was another extended release opioid for treating chronic pain.”

Zohydro is in the class of naturally occurring or synthetic chemicals containing the psychoactive chemical opioid, as are a number of legal prescription pain medications such as Vicodin, Percocet and OxyContin. Heroin is also an opioid. The opioid painkillers not only are easily abused, but they often prompt users to try heroin, which is far cheaper.

According to a 2013 report by the Trust for America’s Health, 6.1 million Americans abuse or misuse prescription drugs. Overdose deaths involving prescription painkillers have quadrupled since 1999, and now outnumber those from heroin and cocaine combined.

Zohydro is the first single-ingredient, long-acting product containing the semi-synthetic opioid hydrocodone. Until Zohydro, which is just reaching the market now, all the other painkillers on the market containing hydrocodone were combined with the anti-inflammatory analgesic acetaminophen. The use of acetaminophen, which is not addictive, allows patients to take less potent opioids which are both addictive and can cause nausea, constipation and dangerously shallow breathing. Acetaminophen is a common ingredient in over-the-counter painkillers, such as Tylenol and Excedrin, as well as opioid medications like Percocet and Vicodin.

The problem is that in high dosages, acetaminophen is highly toxic to the liver and can cause irreparable, even fatal damage to the organ. One University of Pennsylvania study found that half of the deaths caused by acetaminophen overdose were unintentional. That explains why the FDA last year began limiting the amount of acetaminophen in painkilling medications to 325 milligrams. But even that amount may be too much for those with compromised livers. Until now, many of them were forced to either do without hydrocodone painkillers, risk further damage to their livers, or take other opioids that do not contain acetaminophen.

That is why Zohydro represents a welcome advance to many. “It does have an advantage for some people in that it delivers hydrocodone without the risk of acetaminophen,” said Lynn Webster, immediate past president of the American Academy of Pain Medication.

But it is the potency potential for illegal users that has opponents so worried and angry at the FDA, not only for its approval of the drug but also its failure to require the manufacturer, Zogenix, to develop a version that is more difficult to abuse. Critics have seized on the fact that the FDA’s own advisory committee voted 11-2 against approving the drug. An FDA spokesperson, Sandy Walsh, said the agency often takes the counsel of its advisory committees, but not always.

Walsh acknowledged the potential for Zohydro’s misuse. But she argued that revised labeling — including a boxed warning about the serious risks of addiction, abuse, and misuse — along with other safeguards would “support its safe and appropriate use.”

Unlike some other extended release opioids already on the market, Zohydro doesn’t yet come in an abuse deterrent form, which would cut its potency when crushed for the purpose of smoking, snorting or injecting. Zohydro pills can come in dosages as high as 50 milligrams, which isn’t unusual for a drug released over 12 hours. But when crushed by illicit users, the entire 50 milligrams can be delivered at once.

Zogenix argues that on a per milligram basis, Zohydro is no more potent than Vicodin and equally as potent as oxycodone. It also points out that when used appropriately, Zohydro is released into the body over 12 hours rather than two or three hours as is the case with quick-release medications.

Photo: Prescription Drugs Melloveschallah via Flickr

Should Prisoners Get Expensive Hepatitis C Drugs?

By Michael Ollove, Stateline.org

WASHINGTON — If used widely, a new generation of antiviral drugs has the potential to wipe out the deadly hepatitis C virus in the United States. But the high price of the drugs might prevent their use in prisons, which house as many as one-third of those who are infected.

The drugs cost anywhere from about $65,000 to $170,000 for a single course of treatment — between three and nine times more than earlier treatments. Ronald Shansky, former medical director of the Illinois prison system and founder of the Society of Correctional Physicians, described that price as “extortionarily high, criminal.”

Fair or not, the cost of the new drugs is likely to keep them out of reach for most infected prisoners. To put the price in perspective, the average annual cost for states to house an inmate is $29,141. The minimal cost of treating a single patient with the new hepatitis C drugs is more than double that amount.

The two manufacturers, Janssen Therapeutics and Gilead Sciences, defend their prices, saying their medications represent a huge advance in treatment.

Hepatitis C progresses slowly, but without treatment it can lead to liver failure and death. Given the grave consequences, the availability of the new drugs creates a wrenching dilemma for correctional systems. With more expensive specialty drugs expected to enter the marketplace in the coming years, the decisions will only get more vexing.

“The question is if you have a cure rate of approximately 90 percent or higher, is there justification for not treating someone other than the huge cost?” asked Jack Beck, director of the Prison Visiting Project of the Correctional Association of New York, “But no state has the budget to absorb those huge costs.”

Approval of the new drugs late last year by the U.S. Food and Drug Administration marked a welcome advance in the treatment of hepatitis C. It is estimated that as many as 5.5 million Americans have the disease. At least twice as many carry the virus but don’t know it, since it can remain asymptomatic for decades.

A new study estimates that 1.86 million people with antibodies to the virus were incarcerated during the study year. The virus is passed most frequently through needle-sharing during intravenous drug use and tattooing, which are common in prisons. The study estimated the prevalence rate of hepatitis C in state correctional facilities to be about 17 percent, compared with a rate of 1 percent to 2 percent in the general population.

The new drugs, simeprevir (marketed as Olysio by Janssen Therapeutics, a division of Johnson & Johnson) and sofosbuvir (sold as Sovaldi by Gilead Sciences), have a cure rate of 95 percent or better in some clinical studies, compared with 45 percent for previous medications. Unlike the alternatives, simeprevir and sofosbuvir cause only mild side effects, and can be taken orally. Furthermore, patients only have to take them for 12 to 24 weeks, compared with at least 48 weeks for the previous treatments.

Yet at approximately $1,000 per pill, the cost is likely to prove a challenge for the entire health care system, including Medicaid, Medicare and private insurance companies. The difference is that prisons are constitutionally bound to provide adequate health care to prisoners.

States and municipalities typically pay for prisoner health care out of their corrections budgets. When effective HIV treatments emerged in the late 1990s, those budgets grew to accommodate the cost of the drugs, said Edward Harrison, president of National Commission on Correctional Health Care, which sets standards for prisoner health care.

But the new hepatitis C medications present a much bigger challenge. “The prevalence of HCV (hepatitis C) is 10 times greater than HIV and the cost of treatment is probably 10 times greater than a year’s worth of treating HIV,” said Anne Spaulding of Emory University, one of the leading researchers on hepatitis C in prisons.

“It’s something that everyone is grappling with right now,” said Lara Strick, the infectious disease consultant to the Washington State Department of Corrections. “I can’t say I or anyone else now knows the right answers.”

Whether states have the option to not treat prisoners with the new drugs is open to debate. Under the Eighth Amendment, prisons are barred from demonstrating “deliberate indifference” to the well-being of prisoners. But Gabriel Eber, staff counsel of the ACLU National Prison Project, said that mandate falls far short of a requirement to provide optimum care. Most states don’t even provide prisoners with the old, less expensive hepatitis C drugs, and only 12 states screen inmates for the disease.

The courts generally have dismissed prisons’ pleas of poverty as an excuse for not providing care. At the same time, however, they tend to defer to prisons on the question of what constitutes “medical necessity.”

As a result, Eber said, “I don’t see (the new treatments) being widely available until costs come down.”

Photo: x1klima via Flickr