An Economic Evaluation of
Information Problems and Underutilization
Natalie Newcom
Hillary Roberts
December 11,
2002
Advanced Topics
in Health Economics
Professor
Gleason
Table of
Contents
Abstract
I.
Introduction
to Subsidized Health Care
II.
Bridging
the HUSKY gaps: Connecticut KidCare
III. The
Details Behind the HUSKY Program
IV.
Information
Issues resulting from the HUSKY Program
IVa.
Connecticut Residents are Unaware
that
HUSKY Exists
IVb.
Information Issues within HUSKY
V. Opinions
of State Senator Donald Williams and Our Observations
VII.
Conclusions
“The ultimate goal for HUSKY is to make sure that ALL
eligible Connecticut children are covered by health insurance. This does not mean replacing the role of
employer programs, which help parents insure most Connecticut children. It means offering free or affordable
coverage for children who are currently uninsured or underinsured.”
(www.chnet.org/prod01.htm, p. 5)
I. Introduction to Subsidized Health Care
The Healthcare of UninSured Kids and Youth Program,
better known as HUSKY, was developed in 1997 by the Connecticut Legislature’s
Select Committee on Children, the Human Services Committee and Governor John
Rowland. They HUSKY Plan was opened by
Governor Rowland in June 1998 as a comprehensive package of children’s health
coverage services. It was unanimously
approved by the General Assembly in the special session of October 1997 and was
implemented in 1998. HUSKY was created as a direct result of the National
Children’s Health Insurance Program (CHIP), authorized by Congress under Title
XXI of the Social Security Act, which was a part of the Balanced Budget Act of
1997. The goal of the HUSKY program is
to insure that all children in Connecticut receive proper health care by making
sure that all children have health insurance.
The HUSKY Plan is administered by the Connecticut Department of Social
Services, in partnership with various private-sector, non-profit and public
organizations. Once children are
enrolled in HUSKY then a managed care organization coordinates the benefit
package, along with signing up health care providers and enrolling the children
and parents. For the purpose of this
paper, children within the HUSKY plan can be defined as any person nineteen
years of age or younger.
In the 1990s it became increasingly
obvious that many American children were going uninsured and therefore not
receiving proper medical care. Despite
advancements and expansions in Medicaid since its inception as a part of the
National Social Security Amendments in 1965, many children of low-income
families who did qualify for Medicaid coverage and were not receiving enough
medical care, some receiving none at all.
A gray area of low-income families who did not receive health care
benefits through employment, but did not qualify for Medicaid, developed. The children of these families were not
getting the necessary preventative care to keep the healthy, nor were they
receiving proper care once they were sick.
As a result, hospital emergency rooms were (and still often are) over
utilized.
In order to combat this growing
problem of uninsured American children the national government, under the
leadership of President Clinton, developed the Children’s Health Insurance
Program (CHIP) as a part of the Balanced Budget Act of 1997. The program is
available to families that earn up to $34,000 a year, which is approximately
twice the federal poverty level. Since
the creation of the CHIP program, the percentage of American children without
health insurance has dropped from 13.9 to 10.8 percent.[1] In addition, each state received federal
funding to create their own State Children’s Health Insurance Programs
(SCHIPs). The HUSKY plan was developed
as a direct result and uses a variety of funds from the national and state
level to provide health insurance and medical care for children at and below
the federal poverty level, as well as the gray area children of low income
families.
HUSKY provides three different
health care coverage programs under one umbrella organization. The three different types of HUSKY plans are
HUSKY A, B and Plus. They vary based on
income levels of the applicant families, as well as on the services they
provide. HUSKY A is an up to date
version of the longstanding Medicaid program, with a new name. All funding for the program is from Medicaid
funds. Likewise, all children that
qualify for Medicaid care are placed in HUSKY A. Those who qualify must have a family income up to 185% of the
federal poverty level. As of March 1,
2002, about 70% of Medicaid participants were enrolled in HUSKY A.[2] HUSKY B was created for the aforementioned
children in the “gray area.” It covers
children of higher income families, those with incomes between 185% and 300% of
the federal poverty level, that do not receive health care benefits but cannot
afford to purchase their insurance independently.[3] This is Connecticut’s version of SCHIP. In addition, participants in HUSKY B pay a
small co-pay or a monthly premium.
Finally, there is HUSKY Plus.
This program offers supplemental services for children with special
physical, mental and behavioral health needs.
HUSKY Plus is offered to most children that are enrolled in HUSKY
B. Similar to HUSKY B, funding for
HUSKY Plus comes from SCHIP. The
details of each HUSKY plan will be further discussed in the latter parts of
this paper.
HUSKY is a managed care
program. It is very similar to the
managed care health coverage offered to employees private corporations and the
state government. HUSKY gives parents
some freedom of choice when it comes to picking a managed care organization
(MCO). They can choose one of several
MCOs to coordinate the benefits for their children (and in some cases for
themselves). After a child is accepted
into HUSKY, parents are provided various information packets including listings
of the doctors, hospitals and other health care providers that participate in
each MCO. Once the parent has chosen a
managed care organization for their child, a health insurance card is provided
for the child. Managed care
organizations that participate in HUSKY include Anthem Blue Cross/Blue Shield
(BlueCare Family Plan), Community Health Network, Preferred One, and Physicians
Health Services Healthy Options. Anthem
Blue Cross/Blue Shield, Community Health Network and Preferred One all
participate in both HUSKY A and B, and Physicians Health Services Healthy
Options only participates in HUSKY A.[4]
Since its inception in 1998
enrollment in HUSKY has increased dramatically. Initially, 158,733 children were enrolled in HUSKY. As of December 31, 2001, 185,733 children
under 19 were enrolled in HUSKY A and 10,706 in HUSKY B. Currently there are approximately 270,000
children enrolled in HUSKY.[5] However, despite the excellent increase in
HUSKY participants, there are still many children that continue to go
uninsured. This is a result of various
information issues, especially the lack of knowledge that HUSKY exists.
In addition, HUSKY has expanded its
coverage as well as changed its requirements since it was created in 1998. Legislators are currently seeking to further
enhance coverage as well as combat its many problems. Some of the expansions include the addition of coverage for
parents of HUSKY children, services for pregnant women. Also, the income guidelines have been
modified and expanded to further cover families in need of health
insurance.
While HUSKY has dramatically
increased the health insurance coverage of Connecticut’s children, there are
still many problems that must be addressed.
Many believe that there are no solutions that can provide full coverage
except a universal health care system.
Various programs, such as HUSKY Plus and Connecticut KidCare, strive to
cover some of the gaps that are left open after HUSKY coverage. However, there are also many explicit
problems that are not directly associated with health care plans. One major problem is that people do not have
a vested interest in their health and health care, nor that of their
children. Many Americans do not
understand the importance of preventative care. They will forego their well check-ups in favor of other
activities that they get more immediate utility and satisfaction from. In addition, there are many implicit
information problems associated with the HUSKY plan, on both the patient side
as well as the doctor, MCO and government sides.
In this paper we will strive to not
only explain the HUSKY program and its benefits and problems, we will also
discuss the many information issues and their possible solutions. In addition we will portray the HUSKY
program from the perspective of Connecticut Senator Don Williams. He is the Chairman of the Select Committee
on Children and a known child advocate.
Furthermore, he was a key player in the development of the 1998
legislation that created the HUSKY program, and he is currently proposing
legislation to further modify HUSKY. Finally, we will propose our initial
opinion on potential solutions to the various problems discussed throughout the
paper, as well as lingering questions.
II. Bridging the HUSKY gaps: Connecticut KidCare
Before further discussion of the
details of HUSKY it is necessary to briefly discuss another program that is
being developed to further enhance health care benefits. Since HUKSY is not capable of covering all
needs KidCare has been created to help bridge the gaps. KidCare, which is an aspect of the Connecticut
Behavioral Health Partnership, an integrated public behavioral health service
system for adults, children, and families, created by the Department of Social
Services (DSS) as well as the Department of Children and Families (DCF). The goal of the program is to provide
enhanced access to a more effective and complete system of community-based
supports and services, as well as to improve individual outcomes for people of
all ages.
The goal of KidCare is to help to eliminate the major
barriers and gaps that currently exist within the children’s mental health
delivery system. KidCare is based on
the notion that children should receive necessary services in their community
whenever possible and that their parents are key players in the planning and decision-making
process. All children under 19 that are
enrolled in HUSKY of receive services from the Department of Children and
Families are eligible for KidCare. The
Department of Social Services has estimated that approximately 184,000 children
are eligible.
KidCare has two different service
levels. A core set of services are
available for all eligible services.
They include services that are currently covered under Medicaid, such as
outpatient care, extended day, intensive outpatient treatment, as well as
partial and inpatient hospitalization.
The core services also include new “community services” like home-based
services, crisis stabilization beds and emergency mobile crisis service. Additional enhanced services are available
as well. They are specifically for
children with complex behavioral health needs, and they include comprehensive
assessment, care coordination, intensive home-based services, behavior
management services, residential care, and respite. All eligible children are assigned a care coordinator who works
with the family and service providers to form a special child-specific
team. The team then creates an
individualized service plan that summarizes the goals for the child and the
treatment and support services that will be used to provide them. Once it is fully implemented, families will
be able to access services through various entry points, including schools,
crisis service centers, courts, hospitals and clinics.
The proposed financing for KidCare
will come from various places. These
include Medicaid (HUSKY A), SCHIP (HUSKY B), as well as federal foster care
funds and general state funds. As of
the June 2002 Special Legislative session the total cost of the program was
unknown. The agencies anticipate full
implementation of the KidCare program of enhancing health care coverage by July
1, 2003. Ideally, the full
implementation of KidCare will help to cover the many children that need extra
physical and mental attention, since not all of them can be fully covered under
the HUSKY plans, even with the use of HUSKY B and HUSKY Plus.
III. The
Details Behind the HUSKY Program
When something is not visibly wrong,
why fix it? This attitude is often
experienced by many in regards to purchasing health care and health
insurance. When a family can spend
their money on goods or services that immediately benefit them, they may not
have the incentives to invest in health insurance to protect them against
misfortune that may or may not occur in the future. Any household may lack incentives to purchase health insurance,
but these tradeoffs between goods that are immediately beneficial and health
insurance that may or may not be used are even more difficult for low-income
families who already have problems paying for the necessities such as food and
electricity. In these circumstances,
individuals may take a chance that nobody in their family will need medical
care and neglect to buy health insurance or health care for their
children.
In 1998, the State of Connecticut
fashioned the HUSKY program, with funds from the federal government, to remedy
the need for incentives for low and lower-middle income families to purchase
health insurance. If a household receives money below a specified level or if
they have other special circumstances, the children receive free or low cost
health care. In addition, the program
offers health coverage plans for children of higher income households. When HUSKY legislation was first proposed,
only children were eligible for the program.
But once legislators realized that more parents would apply to enroll
their children in the program if they too could receive coverage, they added
the option for many parents. Since
1994, Medicaid has covered certain low-income children in working families, but
Medicaid at that time was not extensive and did not include the thousands of
uninsured children from lower-middle income homes.[6]
The HUSKY program offers various
benefits, ranging from preventative care, such as doctor visits and flu shots,
to emergency care. Other benefits
include: outpatient physician visits, school physical exams, prescription
medicines, inpatient hospital and physician services, outpatient surgical
facility services, mental health and substance abuse services, short-term
rehabilitation and physical therapy, hospice care, diagnostic x-ray and
laboratory services, eye care, dental care and many other services[7]. The state recognizes the importance of not
only responsive care but also preventative care and offers an extensive list of
benefits to HUSKY enrollees.
The original HUSKY program has been
modified, and the eligibility and plans offered are as follows. The total budget for HUSKY, as of fiscal
year 2000-01, was just under $416 million.[8] HUSKY is divided into three sections, HUSKY
A, HUSKY B and HUSKY Plus, each with its own subsets geared toward a different
income or health circumstance for the parent and child. The specific guidelines spell out the number
of children and the incomes necessary to qualify for each of the HUSKY
Plans. Families in HUSKY A have no
co-insurance requirements while those in HUSKY B pay premiums and co-payments.[9] HUSKY Plus enrollees are also enrolled in
HUSKY B so their payments are the same as those for HUSKY B. See Appendix A for income guidelines for
HUSKY.
According to statistics from the
Office of Legislative Research Report entitled “Connecticut Medicaid Overview
and Recent Changes,” HUSKY A is a Medicaid Managed Care program that subsidizes
children up to age 19 with family incomes up to 185% of the FPL (Federal
Poverty Level) and often times parents with incomes under 150% of the FPL. To
give a more specific idea of HUSKY A eligibility, as of April 1, 2002,
households with two children with an annual household income under $17,911 per
year are eligible for both parents and children to receive coverage. Households with the same number of children with
an annual household income up to $22,090 per year are also eligible for HUSKY
A, but only the children receive coverage.
Once the child is accepted to HUSKY, his or her parents are given a list
of Managed Care Organizations (MCO) to choose from. Once the parents decide which MCO is the most fitting for their
situation, they sit down with representatives from the MCO and the child’s
doctor to devise a benefit plan. The
government pays a capitated, per child, monthly fee to the MCO. This means that despite the amount of use
the child gets out of his insurance plan, the government pays the same amount
of money. The MCOs, in turn, have financial
incentives to provide the child with inadequate care in order to increase their
profits. They are getting a set price
per child but have to pay the doctors for each time a child utilizes health
care. Conversely, the physicians have
incentives to induce demand because MCOs provide a more reliable source of
payments than individual patients. In addition, patients have the incentive to utilize
more health care than they would otherwise because it is of no cost to them.
These information issues will be discussed further in the following sections.
Fewer information issues arise with
the HUSKY B program due to the fact that patients must pay co-payments and
premiums. HUSKY B uses SCHIP funds to
offer low cost health care for families of higher yearly incomes who fall
between 185 and 300% of the FPL. To
give a general idea of HUSKY B income guidelines, for two child households with
an annual income between $22,090 and $28,059, children receive free care with
the exception of small co-payments to the doctor and pharmacy. Those with incomes between $28,059 and
$35,820 yearly are also eligible for HUSKY B but pay a monthly premium of $30
for the first child with a maximum of $50 monthly per household. Finally, HUSKY B offers households making
over $35,820 yearly a group premium rate ranging from $137 to $200 monthly per
child along with some co-payments.
Similar to HUSKY A, the government pays a capitated fee for each child
enrolled in HUSKY B. This payment is lower
than that for children enrolled in HUSKY A because the patient pays a co-payment
to the physician and pharmacy. The
benefit packages for HUSKY B children are also decided between the MCO, the
parents and the provider. In this case,
the MCO receives less money per child from the government and relies on further
payments from the patients via their monthly premiums. The doctors end up receiving generally the
same fee-for-service payments from the MCOs, depending on the income level of
the child and the co-payment his parents are required to pay. For the lower subset of HUSKY B, doctors
have a greater incentive to induce demand because more of the payment comes
directly from the MCO than from the co-payment of the patient. Doctors prefer to treat patients who require
lower co-payments and higher coverage by the MCO because MCOs are more reliable
than patients. If the patient does not
pay his bill, the doctor will lose less money than if the MCO foots more of the
bill. Patients enrolled in HUSKY B also
have less incentive to commit moral hazard because they are paying a portion of
the cost. Again, these information
issues will be discussed in greater detail in the following sections.
The final portion of the HUSKY plan,
named HUSKY Plus, offers supplemental coverage for special physical and
behavioral health needs for children in HUSKY B levels.[10] HUSKY Plus offers many more covered benefits
than does HUSKY B. While there are
strict income guidelines for the various sections of the HUSKY program,
exceptions are made due to special circumstances of families, such as the
family’s assets or employment status.
For those of us who are informed of
the program, HUSKY seems like a fitting solution to the problems involving
incentives to purchase health care. But
if this is the case, why are there so many eligible children who are not
enrolled in HUSKY? As of March 1, 2002, total HUSKY A enrollment was roughly
265,000 of which about 67,000 were over the age of 21.[11] According to Department of Social Services
statistics from November, 2002, 13,928 children were
enrolled in Husky B.[12] HUSKY Plus is a subset of HUSKY B so those
enrolled in HUSKY Plus are also enrolled in HUSKY B. Although these numbers seem large and are, in fact, dramatic
increases from the numbers of insured children in Connecticut from prior to the
HUSKY program as well as during the program’s early years, a large number of
children are eligible for HUSKY but are not enrolled. As of now, we do not have specific data regarding the numbers of
children who could be enrolled in HUSKY, but can give an estimate using 2000 Census
Data and our own economic and math skills.
Given the assumption that average households have 2.5 children, we will
use that number to estimate the HUSKY eligibility data. According to Census data (from the 2000
Census but for 1999 numbers), 120,278 Connecticut families have income under
$24,999. We used this income because it
is the median income between HUSKY eligibility for two and three children. We
can then estimate a total of 300,695 children are eligible for HUSKY A, making
total under enrollment for HUSKY A in 1999 102,695 children.
Doing the same math using the same
statistics for HUSKY B, we found that the number of households with income
between $25,000 and $40,000 are 115,859.
Multiplying that number by 2.5 gives an estimate of 289,649 children
eligible for subsidized insurance under HUSKY B in 1999. The number of children enrolled in HUSKY B
today is 13,926, making the total number of potentially eligible children for
HUSKY B was 275,723 in 1999. We must
keep in mind that the numbers for HUSKY B include those who are eligible for
the first two subsets of HUSKY B, meaning those whose plans are partially
subsidized by the government, not those of higher incomes. Also, many families in this income level
could very likely be receiving health insurance through their employment and
therefore would not be eligible for HUSKY B.
As a result of the lack of knowledge of the circumstances surrounding
these families, estimating the under enrollment of HUSKY B is not possible at
this time.
Along with the problem of under
enrollment is the problem of underutilization, meaning that children who are
enrolled in the HUSKY program and who theoretically receive free health care do
not receive that care. According to the
Children’s Health Council, “less than half (48%) of children ages 2 to 19 who
were enrolled in HUSKY A for a year received well-child checkups.”[13] This statistic means that children are not
going in for their regular checkups that are covered under their insurance
plan. Not only is this a tremendous
waste for the government who is paying for these visits, the children are not
receiving preventative care. The
reasons for underutilization will be discussed further in the following section.
IV. Information Issues resulting from the HUSKY Program
In order to properly assess the many
information issues associated with the HUSKY program, we have divided them into
three subcategories: those relating to eligible families that are not enrolled
in HUSKY, families that are enrolled in HUSKY, and the information issues
concerning health care providers and managed care organizations. Please note that the majority of the
information issues presented in this section are not substantiated by data or
facts. Instead it is speculative
information that we have compiled based on the information learned about HUSKY,
as well as our conversation with Senator Williams, and our base of economic
knowledge. In addition to acknowledging
the issues, we will also strive to present some of our own solutions as well as
others that we have read or heard about.
In the following months we plan on collecting and analyzing more
concrete data regarding the information presented here.
IVa. Connecticut Residents are Unaware
that HUSKY Exists
The most common and basic
information issue with the HUSKY program is simply that people are unaware that
it exists. There are many families that
have children who qualify for HUSKY, but they have no idea that there is a program
that can help them. Since many of the
qualified families have one or two working parents, they believe that since
they do not qualify for Medicaid there are no other solutions for them besides
going without insurance and possibly the necessary medical care. HUSKY is designed to cover these working
uninsured families, however if they do know about the program then they cannot
participate.
Some solutions to the lack of
knowledge regarding the HUSKY program include various education programs. With rent to pay, children to feed, clothes
to buy and bills to pay, there are many trade offs for low income
families. Particularly with health
insurance, which is a speculative, preventative good, it is much easier to buy
goods from which a higher immediate satisfaction is gained, such as dinner for
one’s children. This, however, also
detracts from the necessary preventative care, such as well check ups, and
makes costs rise when there is a medical emergency. Insurance helps to protect from serious financial risk and
loss. But, when the cost is so high
relative to other goods, it is easy for families to turn away from purchasing
insurance and to purchase other goods.
Since many of these people avoid the doctor’s office, to avoid high
costs, perhaps the best way to educate them about HUSKY is not through primary
care physicians. Rather, they should be
told about HUSKY when they visit the emergency room, or walk in clinics. If plenty of information is available at
these locations, when they realized the necessity and importance of health
insurance, then perhaps they will apply for HUSKY coverage.
Another venue to solicit information
regarding the HUSKY program is through the public school system. It is reasonable to assume that children of
all incomes will be attending school, as it is a law to attend until the age of
16. This program can start by educating
the children. If one afternoon per
semester or year is set aside to explain to the children the importance of
medical care, and to make going to the doctor seem fun and exciting while
explaining HUSKY, then perhaps children will go home and tell their parents
about this great thing that they learned about in school. In addition, pamphlets and letters can be
sent home with the children to better inform their parents. Finally, there can be program education
nights for the parents. If parents are
told that there is low cost or free health insurance available for their
children, even if they don’t qualify for Medicaid, then they would almost
certainly show up for an information.
An added incentive would be for the school to provide childcare during
the meeting. That way parents would not
skip the HUSKY information session because they could not find or afford a
babysitter. In addition, rather than
simply making these evening educational sessions solely to provide information,
they can also have applications available, with representatives from the
Department of Social Services, as well as translators to help the parents that
do not speak English as a first language.
In our discussion with Senator
Williams he suggested that he believes employers would be the most effective
way to promote HUSKY. Since many of the
families that do qualify for HUSKY have parents that are employees, what better
place to start than with an employer who knows how much their employee will be
making, how many kids they have, and whether or not they will be receiving
health care benefits. Senator Williams
said,
“I have often thought that the best
way to get out HUSKY information would be through employers. Because if you are unemployed and you have
children then they are covered under Medicaid.
HUSKY exists for children of parents who actually are working, but not
receiving health care benefits. So I
had an idea that I put into legislation….
It occurred to me that we should require a business to give HUSKY
information to their new employees, just as they are required to fill out W2
tax forms. Employers who do provide
health care benefits for their employers up to the level of HUSKY will be
exempt from having to provide that information.”[14]
Spreading
the benefits of HUSKY through employers is definitely a good and feasible
solution to the lack of knowledge information problem. If employers are required to provide such
information and will be punished if they do not, it seems to me a much more
effective and reliable system than through the public schools. However, if all of the aforementioned ideas
are implemented, then perhaps a solution can be reached to insure that as many
parents as possible are informed about HUSKY and all of the benefits it has to
offer.
IVb. Information Issues within
HUSKY
There are many different information
issues amongst the players within the HUSKY program. The patients and their parents, the doctors or providers, and the
MCOs or payers, all have different goals and incentives. First of all, there is the basic health care
information issue that individuals, especially children, have no real way of
gauging their own health. They must rely
on doctors to do this, and to provide them with proper medical care to maintain
their health. The doctors and MCOs, on
the other hand, also have a profit motive.
While we can assume that doctors want to help their patients, it is also
somewhat safe to assume that they are also consumers and participants in the
marketplace and therefore want money to spend on their desired goods. The intertwined issues amongst these three
players of the health care market are also very visible within the HUSKY
program.
The first step that must be taken
once families are enrolled in the HUSKY program, whether they are in A or B, is
to educate them on the importance of preventative care. Many Americans do not realize the importance
of yearly well check-up doctor visits. Once children are receiving health insurance, their parents need
to make sure that they go to their check ups so as to insure they remain
healthy. This, after all is just as important as having insurance. Going to check ups is in essence guarding
oneself against the risk of the future possibility of serious illness,
especially since many illnesses can be prevented if caught early on. Once families are educated on the importance
of preventative care then they can take full advantage of the health care opportunities
that HUSKY can provide for them.
A typical information issue within
the health care market is moral hazard.
This can be defined as the over utilization of health care when each
additional unit of health care used is of no additional cost to the
patient. While there is no conclusive
evidence that moral hazard occurs within the HUSKY program, it seems likely
that it may be a problem to a certain extent with the families enrolled in
HUSKY A. Since the children in HUSKY A
do not have to pay any co-payments nor a premium, then for each additional unit
of medical care they consume, they bear no further burden of the cost. Because of this it seems that parents would
be much more likely to take their children to the doctor for a small cough or
cold, when before they were participants in HUSKY and they had to pay the full
cost of the doctor visit, the parent would have likely bought an over the
counter remedy at CVS. On the other
hand, it seems less likely that moral hazard occurs as often with patients
enrolled in HUSKY B, as they are required to pay a co-pay per doctors visit,
prescription or procedure, or a monthly premium, depending on thief income
level. Since they are in fact paying a
small cost for each unit of health care utilized, they are less likely to take
advantage of their health insurance and over utilize the available medical
care.
In the system of payments within
HUSKY the MCOs are paid a capitated fee for each HUSKY patient. They, in turn, pay the physician or provider
on a fee for service basis. This
provides the MCOs with the incentive to enroll and maintain as many HUSKY
patients as possible, but not necessarily remind them of the importance of well
check-up visits, or to promote doctor visits in general. The MCOs lack incentives to provide quality
care since they get paid even if the HUSKY kids do not utilize their health
care. This is clearly a waste of
government money that could be used much more efficiently. There are currently no programs of reimbursement
for the government if the HUSKY child does not fully utilize his/her medical
care. Perhaps if such a reimbursement
plan was initiated, then MCOs would have greater incentive to promote children
to use the services provided.
Since HUSKY doctors are paid a fee
for service payment from the MCOs, they may be likely to create demand
inducement. This occurs when doctors
encourage unnecessary use of medical services, such as extra well check-ups or
unneeded follow up appointments, to further their own profit without benefiting
the patient. Similar to moral hazard,
supplier induced demand occurs throughout the health care market. However, it seems likely that it is very
common in HUSKY since there is little or no additional cost to the patient for
extra care, so they will likely listen to the doctor, and also since the doctor
is paid on a fee for service basis from the MCO. Demand inducement, like moral hazard, is much more likely to
occur with doctors who serve kids enrolled in HUSKY A, since they are
guaranteed the full fee from the MCO as opposed to only partial payment from
the MCO and a premium or co-pay from a low-income family. MCOs that directly receive a per capita fee
from the government are a reliable source of payment.
Unfortunately many MCOs and
physicians do not want to take part in HUSKY or other government subsidized
programs because they think that they will lose money and that the rates that
they are paid per patient are too low.
One problem that physicians often cite, as Senator Williams told us, is
that patients with appointments routinely do not show up, therefore the doctors
do not receive payment from the MCOs and they lose money. While this is clearly a problem from the
doctors point of view, there are other problems that also must be addressed to
fully understand why this no show dilemma may be occurring. Doctors tend to assume that patients do not
show up for their scheduled appointments because they have no interest in their
health or in preventive care. Instead,
it is more likely that there are outside reasons. For example, it could be that the reason a patient does not show
up is because they lack the necessary transportation to get to the doctors
appointment. In addition, it is very
possible that there are not enough doctors that provide HUSKY care in the
concentrated areas of low-income family homes.
One solution to these problems is to provide transportation for HUSKY
children to doctor appointments and to create a more widespread network of
doctors who participate in the HUSKY program.
Another solution that was suggested
by Senator Williams to help combat the no show dilemma is to provide an
appointment schedule and reminder information with the final enrollment
package. For example, a refrigerator
magnate with a list of important types of appointment reminders could be
included. In addition, other incentives
could be used to insure that parents are reminded to take their children in for
well-visits, as well as to get important shots and other preventative
treatments.
While it is difficult to combat
information issues throughout the health care market, perhaps some of the
proposed solutions could be developed to further increase not only the use of
HUSKY, but also to insure that HUSKY patients receive the highest possible
utility and level of care from the physicians and MCOs. Speaking with Senator Williams gave us some
hope that there is legislation in the making to further enhance and help the
HUSKY program as well as combat the many information issues.
V.
Opinions of State Senator Donald Williams and Our Observations
Connecticut State Senator Donald E.
Williams Jr. is a co-chairman of the Select Committee on Children and a key
influence on the foundation of the HUSKY program. We met with the Senator to discuss his take on the information
issues encompassed throughout the HUSKY program as well as to learn of the
direction he wishes the program will take in the future.
We began by discussing the waste we
believe is caused as a result of underutilization of health care by those
enrolled in the HUSKY program. We
mentioned our concerns, namely that nearly half of the children enrolled in
HUSKY did not attend well-child checkups.
We asked if there is any sort of reimbursement to the state when a child
does not use the health care allotted to him by HUSKY. Senator Williams agreed that
underutilization is a problem and stated, “I don’t think that we are maximizing
our Medicaid dollars from the federal government.” He continued to say, “a key concern for me is that since we have
switched over to a fixed payment per person Managed Care system for HUSKY, as
opposed to fee for service, then we are losing money.” Because the government is paying a fixed
price for each child, despite the child’s actual use of health care, the
Senator believes the government is not using its resources to the best of its
ability.
Williams went on to explain the need
for a body to oversee the actions of the Managed Care Organizations that HUSKY
uses. He stated, “Some of the problems
we are seeing with health care in general are that HMOs are trying to restrict
health care to hold down overall costs, therefore increasing their
profits. There is a need for checks and
balances.” In other words, the
government pays a per child fee to the MCOs and the MCOs pay the doctors based
on the amount of care they provide to the children. This gives the MCOs an incentive to withhold care whenever
possible in order to increase their profits.
In addition, we explored the
possible causes for this underutilization, both because doctor appointments are
not available for the enrollees to attend and because enrollees are not
attending available appointments. The
first issue we discussed was a lack of doctors being available to
patients. Williams stated, “Before
HUSKY, in regards to children and families covered by Medicaid, doctors would
say one of the things that drives them crazy in terms of Medicaid patients is
the high rate of patients not showing up for appointments. They can’t survive financially if 35% of
their patients are canceling habitually.”
Because these lower-income patients have a tendency not to attend their
appointments, many doctors are hesitant to sign on with these MCOs to serve individuals
on government subsidized insurance.
This problem leads to a lack of doctors available to the enrollees of
HUSKY. Senator Williams said, “Certainly
not having enough doctors who accept Medicaid patients is a problem. This also
happens with HUSKY.”
Williams continued to say that he is
unsure why lower income patients do not attend their appointments, but had a
few ideas. He stated, “Transportation is a problem,” meaning that lower income
individuals may rely on public transportation and if they cannot book an
appointment with a physician nearby, they may not find it worth it to attend
the appointment at all. Williams
continued his explanation of underutilization and said, “I think that there are
a lot of problems involved, especially with personal responsibility. Stressing the importance of prevention and
that people need to go in for their well-visits is key. Unfortunately that is a problem across the
board, whether you are in HUSKY or have the greatest, most comprehensive health
care plans there are.” While articulating
that the importance of well-visits should be stressed, the question of how
realistically to go about this comes about.
In response to this question, Williams said, “With more education, maybe
more parents can see the importance of well checks for their children. Perhaps with the enrollment information
there can be reminders to schedule appointments or give the parent an actual
schedule of when the child should go in for visits.” While these are all smaller suggestions, in general, Senator
Williams believes that education is a necessity and that parents must learn of
the importance of giving their children adequate health care, preventative
health care as well as emergency care included.
We next discussed Williams’ opinions on the under
enrollment of the program and his opinions for remedying this problem. He mentioned,
“When we launched HUSKY in the late
90s, after a year and a half of lots of advertising, only a small percentage of
eligible children were enrolled. We advertised
some in schools, doctors’ offices and other similar places. We have tried to advertise in traditional
ways where we reach the lower levels who are already receiving social
services. Instead we need to reach the
people that do work, but do not have health insurance for their children.”
Again,
this idea sounds logical, but how is the state to implement these changes? Williams’ main suggestion was to target
employers and have them notify any employees that they believe would be eligible. He said,
“Who better to know who qualifies
for HUSKY than an employer who knows how much an employee will be making and
whether or not they will receive health care benefits. I thought that would be the best way. From the employers point of view isn’t it
better to at least have health care coverage for the children, if not for the
employee. How many times does a parent
have to take off work to take care of their child? This would allow for those well check ups to try and prevent illnesses
keeping the children out of school and parent out of work.”
This
statement explains the incentives that employers have to notify their employees
of HUSKY benefits. Not only could they
potentially save money by not having to insure employees and their families,
productivity of the workers will also be raised by having less unscheduled sick
days as well.
As for general opinions about the
program, Senator Williams had much to say. He believes that the state can work
harder to improve the program both by changing the way it is set up and by
working to receive more federal money.
Williams explained, “I would like to see a greater state commitment that
can result in more federal dollars. I would also like to expand HUSKY options
for children and link it with KidCare that provides mental health services for
children.” But aside from increasing
funding and changing one portion of the HUSKY program, we asked the senator how
he feels about the program as a whole and if it is, in his opinion, an effective
solution to the vast problems in the health care industry today. He responded,
“In the big scheme of things, HUSKY
is a band aid approach to dealing with the health care problem in the US. I think that we should have a single payer
of health care coverage for all parents and children. Trying to do this piecemeal approach for children who are low
income with parents who are not covered is a problem. You may also have, especially in a state like Connecticut where
the cost of living is high, a single parent who is earning above 35,000
dollars, has two children and does not qualify for HUSKY, has many other high
costs that cannot afford any health insurance. It is a fact that HUSKY does not
cover all children that are uninsured.”
We asked Senator Williams’ opinion
about the economic efficiency of the program as well, and he replied, “I just
think from an economic point of view, there is a lot of waste from creating all
of these crazy quilt systems that cover small parts of society, as opposed to
one large system that covers all people.
There can’t be more problems than what we have right now where some 41
million Americans go uninsured each year.”
As a whole, Senator Williams agreed
with many of the problems that we noted with the HUSKY program. However, what we found to be very
interesting and indicative of the program itself was the senator’s lack of
knowledge of many components of the program.
For someone who worked on the legislation for the program, Williams was
unsure of many of the specifics of the program, specifically the type of
payment the government makes to the Managed Care Organizations. While he was very knowledgeable about the
reasons for the implementation of HUSKY as well as potential future changes, he
was unaware of the vast losses caused by underutilization of the program. He did not realize that payments were, in
fact, made on a per child basis and was surprised at the statistic we read to
him that slightly less than half of children enrolled in HUSKY attended well-child
doctor visits. In addition, Senator
Williams was unable to get in touch with anyone who could answer specific
questions about the program.
The fact that such a key influence
in the program did not know some of the basic components makes us wonder about
the knowledge of administrative individuals at other levels of HUSKY. Who are the people who make decisions
regarding the type of payments the government makes, the possibility for
government reimbursement when a child does not utilize his health insurance,
and the potential for a body to monitor the honesty of HMOs and
physicians? While this interview was
informative in the sense that it gave us further information issues to
consider, it was also informative in giving us a general sense of the
organization of the HUSKY program and the need for change.
VII. Conclusions
People generally value goods and
services that are immediately beneficial to them over other goods and services
that will possibly provide a future benefit but may potentially not provide any
benefit at all. And when people have low
household incomes and must make tradeoffs with what they can purchase and what
they cannot, that second good or service, the one does not provide immediate
benefit, might not be purchased at all. When dealing with health care, health insurance is that second
good. All too often individuals decide
not to obtain health insurance because it is too costly. The federal government realized this
tradeoff was occurring and, knowing the importance of proper health care,
decided to grant money to each state to form their own health insurance plans
for low income children. Connecticut’s
plan, which we examine throughout this paper, is HUSKY.
While at first thought, free and
low-cost health insurance seems to be a perfect solution for the ever growing
population of uninsured children, many problems arise. More specifically, information issues arise
that lead to problems fulfilling the goals of the HUSKY program. While this paper is only preliminary research
and our data, as well as our analysis, is speculation at this point, we suspect
that many of our thoughts are accurate and attempts should be made to remedy
these situations. The two most urgent
problems caused by information issues are under-enrollment and underutilization
by those who are enrolled. While the
enrollment into the HUSKY program has increased dramatically over the years,
there is still a vast population of children who would be eligible for the
program but are uninformed or for some other reason, fail to apply. The goal of HUSKY, to make certain that all
uninsured children in the state of Connecticut receive health care, is not
being met.
The second problem,
underutilization, we believe also occurs due to information problems. Are parents educated about the importance of
well-child check ups? Is there a
shortage of doctors concentrated in low income areas? Is transportation and getting to and from doctors’ offices a
problem? Are MCOs not providing quality
care because they are receiving capitated payments as opposed to
fee-for-service? Our preliminary
research leads us to believe that the aforementioned issues are all problems of
the current HUSKY program. In the
following months, we plan to venture further into these complicated issues and
hopefully have comprehensive opinions and solutions to the immense difficulties
associated with the government subsidized health insurance that is the HUSKY
plan.
Appendix A
HUSKY
Family Income Guidelines
(effective April 1, 2002, to March 31, 2003)
|
Family of
2 |
Family of
3 |
Family of
4 |
Family of
5 |
Family of
6 |
HUSKY
Plan features |
|
under $17,911 |
under $22,531 |
under $27,151 |
under $31,771 |
under $36,391 |
Free health
care for parents who live with child or for a relative caregiver like a
grandparent who lives with the child. [HUSKY A] |
|
under 22,090 |
under $27,788 |
under $33,486 |
under $39,184 |
under $44,882 |
Free health
care for children under 19; and pregnant women (note: for eligibility of
pregnant women, unborn child is also counted as a family member). [HUSKY A] |
|
from $22,090 to $28,059 |
from $27,788 to $35,297 |
from $33,486 to $42,535 |
from $39,184 to $49,773 |
from $44,882 to $57,011 |
Health care
for children under 19; no cost, except small co-payments at the doctor and
pharmacy. Eligible for
HUSKY Plus.* [HUSKY B] |
|
from $28,060 to $35,820 |
from $35,298 to $45,060 |
from $42,536 to $54,300 |
from $49,774 to $63,540 |
from $57,012 to $72,780 |
Health care
for children under 19; monthly
premium of $30 for first child; maximum monthly premium of $50, regardless of
number of children; some co-payments. Eligible for HUSKY Plus.* [HUSKY B] |
|
over $35,820 |
over $45,060 |
over $54,300 |
over $63,540 |
over $72,780 |
Health care
for children under 19: Group
premium rate, currently ranging from $137 to $200 monthly per child; some
co-payments. [HUSKY B] |