Health Care in the USA
The American health system is the most costly, least effective, and covers the lowest percent of our citizens of any developed nation. https://www.commonwealthfund.org/publications/fund-reports/2024/sep/mirror-mirror-2024 It is important to understand it as we all live with it, and it impacts our lives, especially so, when we get sick.
Medicare
Medicare is for seniors and the disabled – about 67 million subscribers. It is not means tested, meaning once you are over 65, with a few exceptions, you can qualify regardless of your income. It covers hospitals, doctors, prescription drugs and some long-term care (nursing homes and home health care). It does not cover dental care, vision care or hearing aids. It is a national program, administered uniformly by the federal government which uses intermediaries (typically insurance companies to pay the patient’s bills.
Medicare Part A pays for hospitals, Part B pays for doctors, Part D pays for prescription drugs, and Part C brings them all together into a consolidated program, Part C, also known as Medicare Advantage. Medicare is a program passed in 1965 as part of President Johnson’s Great Society, and it was designed along the lines of the private health insurance products like Blue Cross and Blue Shield then in existence.
A bit more than half of subscribers enroll in Part C, Medicare Advantage plans offered by private insurers; these offer the advantage of merging all three components of Medicare and offering additional services, with the savings achieved. https://www.kff.org/medicare/issue-brief/medicare-advantage-in-2024-enrollment-update-and-key-trends/#:~:text=More%20than%20half%20of%20eligible,enrolled%20in%20Medicare%20Advantage%20plans. These Part C plans can be selected by an individual, an employer, a union, or a state or local government. Special Needs Plans (SNP’s) are becoming more and more common for dual eligibles – those seniors or disabled with combined Medicare and Medicaid coverage.
Some of Medicare is paid by payroll taxes that employers and employees pay in equal shares; these are deposited in the Medicare Trust Fund. Some is paid by the federal General Fund (mostly through the federal income tax). Some is paid by subscribers as their share of Part B premiums. https://www.kff.org/medicare/issue-brief/what-to-know-about-medicare-spending-and-financing/ Total cost in 2023 was $839 billion
The Medicare Trust Fund is due to partially run out of money in 2036 due to the rising costs of health care married to our aging demography (i.e. we have fewer workers per senior citizen because our society is getting older). https://bipartisanpolicy.org/press-release/medicare-trustees-report-2024/
Medicaid (MediCal in California) and CHIP (Child Health Insurance Program)
Medicaid is a joint federal state program that pays for health care to the nation’s poor citizens. It is means tested -i.e. you have to be low income as defined by the state. Texas for example sets the lowest income eligibility standard (12% of the federal poverty level) for parents, while New York sets income eligibility at 133% of FPL (about $20,000 annual income).
The federal government pays anywhere from 50% to 83% of the cost of the Medicaid program depending on the comparative wealth or poverty of the states; California’s match for example is at 50/50, while Mississippi is at 77/23 in 2024. CHIP, established in President Clinton’s second term, pays for uninsured children with modest incomes that are too high to qualify for Medicaid, but too low to purchase individual health insurance.
Prior to the adoption of the Affordable Care Act, the poor had to be categorically linked to a welfare program to qualify for the federal/state Medicaid program. That meant they had to be poor plus aged, disabled, blind, a minor child or parent of a minor child.
The Affordable Care Act, passed in 2010 and implemented in 2014, offers Medicaid coverage for all poor US citizens with incomes lower than 133% of FPL -- $20,000 for an individual and $41,500 for a family of four – the Medicaid Expansion. It eliminates the requirements of categorical linkage to the old welfare cash grant programs entirely. But it is optional with each state, as a result of the Supreme Court’s decision upholding the ACA, but making the Medicaid expansion optional with each state.
The federal matching rates for those newly eligible under the ACA was begun at 100%, then phasing down over 5 years to a 90/10 match by 2020. Forty states plus the District of Columbia have implemented the Medicaid expansion; ten states, primarily in the Deep South have not yet done so. The results in states that expanded coverage were to reduce the uninsured rates and increase appropriate access to vital care in doctor’s offices. https://www.commonwealthfund.org/publications/issue-briefs/2023/sep/impact-medicaid-coverage-gap-comparing-states-have-and-have-not
About ninety million Americans are enrolled in Medicaid. https://www.kff.org/coronavirus-covid-19/issue-brief/analysis-of-recent-national-trends-in-medicaid-and-chip-enrollment/#:~:text=After%20declines%20in%20enrollment%20from,steadily%20increase%20(Figure%201). It is a more comprehensive program than Medicare in that it covers nursing home care and home health care far more extensively. Depending on the state, it covers dental care, hearing aids, and eye care services. It has nominal copays, again depending on the state, so there are much fewer large out of pocket costs to subscribers. It pays for the largest percentage of births and of nursing home patients of all the public and private health programs. Fifteen million Californians are enrolled in MediCal. https://www.chcf.org/publication/medi-cal-facts-and-figures-2024-edition/#related-links-and-downloads
The Medicaid program cost about $728 billion in 2021, of which the federal government paid 70%, and states paid about 30%. https://www.kff.org/medicaid/issue-brief/medicaid-financing-the-basics/ Most are enrolled are in traditional managed care organizations, like Kaiser Health Plan, or in publicly operated HMO’s like LA Care or San Francisco Health Plan in California.
In California, we create terrible unnecessary challenges for those MediCal enrollees who require substance abuse treatments, mental health services and physical health care, conditions not altogether uncommon among the homeless. We put these patient services into three separate health plans, one for each special condition, which the patient with a serious mental illness paired with substance abuse must then navigate; we require patient confidentiality so that their providers cannot communicate with each other about their shared patient’s condition and treatment, absent informed patient consent. Some have developed the necessary workarounds to improve patients’ care and treatments.
The Exchanges (Marketplaces; Covered California in our state)
The Affordable Care Act established Exchanges for the uninsured and individually insured with incomes in excess of the federal poverty level (FPL) -- $15,000 annually for an individual, $31,000 for a family of four in 2024. Over 21 million Americans are now enrolled. https://www.hhs.gov/about/news/2024/01/24/historic-21-million-people-choose-aca-marketplace-coverage.html Nearly 1.8 million Californians are enrolled in Covered California. https://www.coveredca.com/newsroom/news-releases/2024/02/08/february-8/#:~:text=As%20of%20Jan.,set%20in%202022%5B1%5D. States have an option; they can choose to run their own Exchanges or use the federal Exchange.
Enrollment growth in the Exchanges has been particularly explosive in the states with high uninsured rates like Texas or Mississippi which did not expand their Medicaid coverage. https://www.kff.org/affordable-care-act/press-release/states-with-the-fastest-recent-growth-in-aca-marketplace-coverage-started-with-high-uninsured-rates/ This is likely due to two factors: 1) the Biden improvements in premium assistance, and 2) ten state’s decisions not to expand Medicaid, leaving the Exchanges as the only option for their many uninsured citizens.
The Exchanges offer accessible and affordable coverage in the individual market through four features: 1) premium assistance, 2) cost sharing reductions, 3) group purchasing, and 4) no pre-existing condition exclusions.
Premium assistance helps an individual or family pay for their premium. The assistance is graduated based on an individual or family’s income such that those with incomes below 150% of FPL ($22,500 for an individual) pay no premiums and those with incomes above 600% of FPL ($90,000 for an individual) do not qualify for premium assistance. The Biden improvements which reduced premiums quite significantly expire at the end of 2025. https://www.kff.org/affordable-care-act/issue-brief/inflation-reduction-act-health-insurance-subsidies-what-is-their-impact-and-what-would-happen-if-they-expire/
Cost sharing reductions help an individual or family pay for their copays and deductibles. The cost sharing reductions are available to those with incomes of less than 250% of FPL ($37,500 for an individual and $78,000 for a family of four). They are linked to enrollment in the silver plans, which otherwise pay 70% of expected medical costs (i.e. you pay 30% in the forms of copays and deductibles and the plan pays 70%). For those with incomes at the lower end enrolling in enhanced silver, they would pay 7% of the costs of care in the form of copays and deductibles, and their plan would pay 93%. This would be phased down and out as the subscriber’s income reaches 250% of FPL. In other words, the copays and deductibles in the silver plans are set at a sliding fee scale. This important cost sharing feature is not available for those subscribers who buy bronze (60%), gold (80%), or platinum (90%) levels of coverage.
Exchanges offer the pricing and negotiating advantages of group purchasing. This leads to lower administrative costs and lower premiums than would otherwise be available to an individual purchasing solo. Some insurance brokers, associations and some insurance companies are less than thrilled with the Exchanges, who may cut into their profitable business opportunities. Individuals have an option to purchase coverage inside or outside the Exchanges.
The ACA banned the exclusion of pre-existing conditions by health insurers. This ban applied to individual, small business and large employer policies. This type of cherry-picking the healthiest customers had been an extremely profitable tactic by many insurers in the individual and small business markets, which left many millions of Americans uninsured because the health insurance industry labeled them as uninsurable. The first Trump Administration sought to approve insurance policies that would reinstate pre-existing condition exclusions. Under Obamacare, there was a small tax (the much reviled individual mandate) that uninsured individuals would pay if they could afford coverage and refused to enroll in any coverage. This was repealed under Trump.
Veteran’s Administration Health Care
VA health care is available to many American veterans. https://www.va.gov/health-care/eligibility/ The VA offers a comprehensive integrated set of benefits. https://www.va.gov/health-care/about-va-health-benefits/ They are delivered through VA facilities, doctors and other health professionals. https://www.va.gov/health-care/about-va-health-benefits/where-you-go-for-care/ The services are free if they are connected to a service-related disability. https://www.va.gov/health-care/about-va-health-benefits/cost-of-care/
The VA serves about 9 million veterans through its integrated VA health system at a cost of $68 billion. https://www.va.gov/health/aboutvha.asp#:~:text=The%20Under%20Secretary%20for%20Health,than%209.1%20million%20enrolled%20Veterans. Veterans can of course use any other coverage or delivery system of care, but the VA does not typically pay for care out of the VA system.
Indian Health Services (IHS)
Indian Health Services operates hospitals and clinics to deliver care to qualified Native Americans and Alaska Natives. It serves about 2.5 million Native Americans through its care networks. It is funded by Congress ($8 billion), but at a level far below the average per person costs of Medicaid, private insurance or other health programs.
Native Americans can apply for and qualify for other federal health programs like Medicaid, the Exchanges, the VA or Medicare which offer access to a broader range of providers and services.
Private health insurance through Employment (ESI or Employer Sponsored Insurance)
ESI covers about 60% of all Americans under the ages of 65. It is undergirded by favorable federal and state tax treatment, which offsets about 1/3rd of the cost. The tax advantages are linked to the income tax levels, giving strong financial incentives to cover high wage workforces and weak support for coverage of low wage workers; not surprisingly therefore, higher wage workers (above 400% of FPL) have a much larger share (85%) covered by ESI while lower wage workers (below 200% of FPL) are not often covered through ESI (24%). https://www.kff.org/health-policy-101-employer-sponsored-health-insurance/?entry=table-of-contents-how-many-workers-have-access-to-employer-sponsored-health-insurance-at-their-job
The ACA required large employers (50 + employees) to cover their full time workers; smaller employers (less than 50) are not required to offer coverage, except in Hawaii. The standard for coverage was very low; employers must offer to pay 60% of the cost of a bronze plan (60% of expected medical expenses). Nevertheless, employers on average pay 1/3rd of the premium costs of family coverage and 82% of the costs of individual coverage, and more typically the ESI coverage is equivalent to the gold plans or better.
America’s Uninsured
About 26 million still remain uninsured; that’s about 8% of the nation’s population. https://www.pgpf.org/article/the-share-of-americans-without-health-insurance-in-2023-remained-low/ We have cut the nation’s uninsured rate in half in 10 years through the ACA. However, the uninsured rate differs widely by state. Texas is the worst state (18.8% uninsured), and Massachusetts the best (2.9% uninsured). https://www.axios.com/2024/08/06/uninsured-americans-texas-map
A big part of the reason for its high uninsured rate is that Texas has not enacted the Medicaid expansion, and its Medicaid eligibility standard for adult parents is embarrassingly low at 12% of FPL, and it offers no coverage for other adults (the working poor). Nine other states, primarily in the deep South have also blocked the ACA’s Medicaid expansion.
Another part of the explanation in Texas involves health coverage for undocumented workers. Although they work and pay payroll, income and sales taxes, the undocumented are not eligible for Medicare; they are not eligible for full scope Medicaid, and they are not eligible for the Exchanges. They often work in industries, such as agriculture, hospitality, and construction that have low rates of employer sponsored coverage.
Very few states offer health coverage for the undocumented other than the federally matched emergency Medicaid which covers births and genuine emergencies. https://www.nilc.org/resources/healthcoveragemaps/ In 2024, California took the pioneering first step of offering state coverage for undocumented workers. https://calmatters.org/health/2023/12/undocumented-health-insurance-new-california-laws-2024/
There is no organized system of care for the nation’s uninsured, and while there is some federal funding, but little to no federal responsibility or accountability for state and local governments and providers to care for the uninsured outside of emergencies.
EMTALA does require hospital emergency rooms to care for emergency patients regardless of their insurance status or ability to pay for care. It does not require follow up care once the emergency is resolved.
DSH (Disproportionate Share Hospital) funding is allocated to those hospitals that see particularly large shares of Medicaid and uninsured patients through increases in their Medicaid and Medicare reimbursement rates. FQHC (federally qualified health center) funding is allocated to some community clinics to help pay for their care to the uninsured.
At the state and local levels, some states have allocated funding and limited accountability to local county or city governments to care for the uninsured. California for example funds county governments to deliver health care to the indigent and public health to all residents. Some counties like Los Angeles and San Francisco operate public hospitals and county clinics; others like San Diego and Orange do not.
Mississippi and Alabama have no state or local responsibilities or funding to care for the uninsured and rely on a patchwork of charitable non-profits. https://mississippitoday.org/2021/02/17/nonprofits-help-uninsured-mississippians-patch-together-health-care-services/ and https://dollarfor.org/state_sheet/alabama/ Texas and Florida do care for some of their millions of uninsured at local public hospitals, and their local governments do have some limited responsibility and funding to care for some of the uninsured. https://www.hhs.texas.gov/services/health/county-indigent-health-care-program and https://ahca.myflorida.com/content/download/9602/file/HCRA_TrainingPresentation.pdf