Managed Healthcare Executive - November 2008 - (Page 22)

{ S P E CI AL RE PO R T} two years and notes there are only three ways to manage Medicaid costs—rate structure, bene ts and eligibility. He’ll try to better manage bene t design and control utilization, but he might have to scrap valuable bene ts, such as interpreter services for patients. “After that, rates to providers may have to roll back,” he says. “Eligibility is the last thing we want to cut.” And it isn’t just higher expenses and greater enrollment that pose a challenge to state Medicaid plans. Revenues are likely to shrink as well. For anyone who doesn’t quite make the connection between Wall Street and Main Street, David Parrella, director of the Medical Care Administration in Connecticut, lays it out in black and white. Because of Connecticut’s proximity to the largest U.S. nancial markets, “a very large percent of our state revenues every year are generated by capital gains on Wall Street, so a sharp downturn and disruption is going to be re ected in January by some dramatically reduced revenue projections,” Parrella says. OUT OF POCKET IMPACT OF UNEMPLOYMENT ON MEDICAID, SCHIP AND UNINSURED $3.4 1% 1.0 1.1 $1.4 State $2.0 Increase in National Unemployment Rate Increase in Medicaid and SCHIP Enrollment (million) Increase in Uninsured (million) = & Federal Increase in Medicaid and SCHIP Spending (billion) Source: Medicaid, SCHIP and Economic Downturn: Policy Challenges and Policy Responses, prepared for the Kaiser Commission on Medicaid and the Uninsured, April 2008 Jim King, MD, doesn’t consider himself an economist, but the Selmer, Tenn.-based physician, has a bead on the state of the economy. Visits to his rural family practice were down 10% to 15% last summer, compared to a year earlier, and he nds himself having more and more conversations with patients about healthcare choices. Although roughly 90% of Dr. King’s patients have insurance, many must pay for preventive medicine, such as screenings and immunizations. As for the Medicare bene ciaries, who make up more than a quarter of his patients, many are in the “donut hole,” which means they have to pay 100% of their prescription costs. “They’re facing drug costs of $400 or $500 a month,” he says. “They’re having to make choices like, ‘Do I pay for gas or the electric bill or food?’ I have conversations with patients in my o ce on a daily basis when they tell me they can’t a ord their medicine and we have to 22 NOVEMBER 2008 try to manipulate their medications, and prioritize them to control costs.” Dr. King’s patients are likewise putting o elective procedures and visits to specialists, many of whom are located in Jackson, Tenn., 40 miles away. “They tell me they can’t a ord the gas to drive there,” he says. Consumer surveys support what Dr. King is seeing. Nearly one in four (22%) consumers say economic conditions have caused them to cut back on doctor’s visits, according to a July survey by the National Association of Insurance Commissioners (NAIC), and 11% say they have cut back the number of prescription drugs they take or have reduced the dosage to make the prescriptions last longer. Five percent say they have had to drop their insurance coverage, have fallen behind in their payments or have had to reduce their coverage because they could not a ord it. Kaiser Family Foundation researchers heard the same feedback. Nearly three in 10 respondents say they or their families have had a serious problem paying for healthcare and health insurance as a result of the economic downturn. In fact, respondents say paying for healthcare posed a bigger problem for them than paying their rent or mortgage, dealing with credit card debt and or losing money in the stock market. Nor is this a problem limited to the working poor and elderly. More than a quarter of the people who say they are having a serious problem paying for healthcare or health insurance earn between $30,000 and $75,000, according to the Kaiser poll. Young adults are a ected, too. Nearly 70% of 25- to 34-year-olds say the economic downturn has made it somewhat or signi cantly more di cult to pay for health expenses, according to a Medco Health Solutions survey. THE ROAD AHEAD So what does all this mean for the future? Ask a dozen pundits and you’ll get a dozen di erent answers. While observers decry the end of Western capitalism, others—including state Medicaid directors who have seen their budgets cut during past recessions—take a more subdued approach. “The dot-com bust of eight or 10 years ago may not have been quite as severe, but there was a pretty big sell o , and that had a ripple,” says Whetsell. “At the moment, the unemployment rate is still low. A lot of money has evaporated on paper, but if everybody is still working, then eventually, the economy will cycle back up.” In the meantime, healthcare stakeholders are in pretty much the same boat. So hang on, because it’s likely to be a bumpy and uncomfortable ride. MHE

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Managed Healthcare Executive - November 2008 For Your Benefit Editorial Advisors Contents News Analysis State Report Politics &�Policy Letter of the Law Affordable Access Economic Ripple Effect Hospitals &�Providers Technology Managed Care Outlook Desktop Resource Ad/Edit Index

Managed Healthcare Executive - November 2008

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