Compounding an Old Mistake

Lots of things happened in 1986 – Britain and France announced plans to build that Channel Tunnel. That was nice, but then the Space Shuttle Challenger disintegrated just after launch, killing all seven astronauts aboard, including that schoolteacher, Christa McAuliffe. That was awful, but Jean-Claude Duvalier (“Baby Doc”) fled Haiti, and Ferdinand Marcos left the Philippines and went into exile in Hawaii. Things were looking up, but then there was that bombing at that Berlin discotheque where our soldiers hung out. Three died and over two hundred were injured. Libya was responsible, so we bombed the crap out of Libya. Meanwhile, Geraldo Rivera opened Al Capone’s secret vault. There was nothing there and no one cared – but there was the Chernobyl disaster. Everyone cared. Much of Europe was slightly irradiated. Here it was “Hands Across America” – five million people formed a human chain from Manhattan to Long Beach, to raise money to fight hunger and homelessness. We’ll never see that again. And Ronald Reagan met Mikhail Gorbachev in Reykjavík to chat about scaling back intermediate-range nuclear missile arsenals in Europe. That first try didn’t work out and the year ended with the Iran–Contra affair – we’d been selling weapons to Iran in secret, to raise funds to overthrow the elected government in Nicaragua, which Congress had forbidden. Ronald Reagan apologized on national television. He said that he had no idea what his own people had been doing. He had been completely out of the loop – but he was sorry. It wouldn’t happen again. Coincidentally, that was also the year that Matt Groening created The Simpsons – first as a comic strip out here in Los Angeles. The clueless Homer Simpson was born. Perhaps that isn’t a coincidence.

That was also the year that Ashley and Mary-Kate Olsen and Lindsay Lohan came into the world – for better or worse. James Cagney and Kate Smith left this world, as did Simone de Beauvoir and Jean Genet and Jorge Luis Borges. That may mean something, or it may not. It’s hard to tell what is of lasting significance in any given year. It’s hard to separate the signal from the noise. Sometimes, big things, at the time, don’t really matter, later.

The reverse is true too. Small things, that seemed a fine idea at the time, can cause no end of trouble later. That year it was this:

The Emergency Medical Treatment and Active Labor Act (EMTALA) is an act of the United States Congress, passed in 1986 as part of the Consolidated Omnibus Budget Reconciliation Act (COBRA). It requires hospital Emergency Departments that accept payments from Medicare to provide an appropriate medical screening examination (MSE) to individuals seeking treatment for a medical condition, regardless of citizenship, legal status, or ability to pay.

That’s the decent thing for a decent nation to do. The Emergency Medical Treatment and Active Labor Act showed that America wasn’t heartless. Capitalism be damned – an inability to pay doesn’t mean people have to die – but this wasn’t thought through:

There are no reimbursement provisions. Participating hospitals may not transfer or discharge patients needing emergency treatment except with the informed consent or stabilization of the patient or when their condition requires transfer to a hospital better equipped to administer the treatment.

EMTALA applies to “participating hospitals.” The statute defines “participating hospitals” as those that accept payment from the Department of Health and Human Services, Centers for Medicare and Medicaid Services (CMS) under the Medicare program.

That was asking for trouble. Because there are few hospitals that do not accept Medicare, the law applies to nearly all hospitals, and uncompensated care represents roughly six percent of total hospital costs – the difference between profit and loss, the difference between staying open and shutting down. Hospitals cannot eat that cost. They charge more to their paying customers, those with insurance. Everyone’s premiums go up and up, and the rules are strict:

Individuals requesting emergency care – or those for whom a representative has made a request if the patient is unable – must receive a medical screening examination (MSE) to determine whether an emergency medical condition (EMC) exists. The participating hospital cannot delay examination and treatment to inquire about methods of payment or insurance coverage, or a patient’s citizenship or legal status. The hospital may only start the process of payment inquiry and billing once they have ensured that doing so will not interfere with or otherwise compromise patient care.

When an Emergency Department determines an individual has an EMC, the hospital must provide further treatment and examination until the EMC is resolved or stabilized and the patient is able to provide self-care following discharge, or if unable, can receive needed continual care. Inpatient care provided must be at an equal level for all patients, regardless of ability to pay. Hospitals may not discharge a patient prior to stabilization if the patient’s insurance is canceled or otherwise discontinues payment during course of stay.

If the hospital does not have the capability to treat the condition, the hospital must make an “appropriate” transfer of the patient to another hospital with such capability. This includes a long-term care or rehabilitation facilities for patients unable to provide self-care. Hospitals with specialized capabilities must accept such transfers and may not discharge a patient until the condition is resolved and the patient is able to provide self-care or is transferred to another facility.

That is curious. Lack of insurance coverage and even citizenship and legal status don’t matter. No one is turned away. This is universal health care, like in France or something, but without any mechanism to pay for any of it at all. It seemed like a good idea at the time of course. It wasn’t.

Obamacare was supposed to fix this. The federal government would provide subsidies for those who couldn’t afford health insurance, so they could, and establish rules that made sure those policies weren’t junk – they had to cover the basics. Those who still couldn’t afford those policies would be shifted to Medicaid – that Medicaid Expansion – so they’d also have health insurance. Hospitals wouldn’t have to eat the cost of the uninsured any longer, or pass those costs on to the insured, with everyone’s insurance premiums going through the roof. Sure, it would cost money, in the form of slightly higher taxes on the wealthy, but the wealthy were, well, wealthy. They could afford it. There was, finally, mechanism to pay for this. That would fix the Reagan administration’s 1986 mistake.

Forget that. It’s time to compound that mistake. The Los Angeles Times’ Noam Levey explains how to make things worse:

Congressional Republicans, who for years blasted the Affordable Care Act for disrupting Americans’ healthcare, are now pushing changes that threaten to not only strip health coverage from millions, but also upend insurance markets, cripple state budgets and drive medical clinics and hospitals to the breaking point.

President Trump and GOP leaders have touted their Obamacare repeal bills – one passed by the House last month and a Senate version unveiled last week – as a necessary fix to problems created by the Affordable Care Act, known as Obamacare

But in physicians’ offices and medical centers, in state capitols and corporate offices, there are growing fears that the unprecedented cuts proposed in the GOP legislation would create even larger problems in the U.S. healthcare system.

This is worse than 1986:

“These reductions are going to wreak havoc,” warned Tom Priselac, chief executive of Cedars Sinai Health System in Los Angeles, one of the country’s leading medical centers. “It will be a tragic step backward not just for the people most affected, but for the country as a whole.”

It’s the funding problem again:

Even supporters of the ACA acknowledge the current law needs adjustments, especially to insurance markets, where premiums have risen sharply in recent years and many insurers have pulled out.

But there are few indications the GOP repeal bills will bring much stability.

The nonpartisan Congressional Budget Office estimated the House repeal bill, which Trump celebrated in a Rose Garden ceremony last month, would nearly double the number of Americans without health coverage over the next decade, pushing the ranks of the uninsured to more than 50 million.

And the Senate bill, which includes even deeper cuts over time, is unlikely to be much less disruptive.

The cascading effects of such a retrenchment will reach far beyond those who lose coverage, according to doctors, hospital leaders, insurance executives, patient advocates and state officials across the country. To date, not a single leading patient group or physician organization has supported the GOP repeal bills.

And it’s not just them:

Governors and state legislators, facing huge reductions in federal Medicaid funding, may soon have to decide whether to reduce services, limit who can enroll in the healthcare safety net or make cuts to other state programs, such as education or transportation.

On Friday, Nevada Gov. Brian Sandoval, a Republican who expanded his state’s Medicaid program through Obamacare, warned that the Senate bill would cost Nevada nearly half a billion dollars.

“That’s a cost that the state cannot sustain,” he said.

And though the Medicaid cuts may be phased in over several years, many states that have two-year budgets would have to begin confronting the cuts sooner.

The math just doesn’t work:

Overall, the House bill slashes more than $800 billion in federal Medicaid spending over the next decade, according to the CBO, slashing close to a quarter of federal aid for a program that now covers more than 70 million poor Americans.

The extent of the cuts in the Senate bill is still unclear, but the Senate version caps federal Medicaid spending even more aggressively over time than the House legislation, fundamentally changing the program’s historic coverage guarantee.

Over the past half-century, the federal government has paid a share of all medical costs incurred by Medicaid patients. But under the GOP plans, that funding would be replaced by fixed payments to states, regardless of what it costs to care for patients.

Under the Senate plan, because that cap would increase only at the rate of inflation, states may bear a larger and larger share of medical costs, which have historically increased faster than inflation.

And it gets worse:

In addition to the Medicaid reductions, both the House and Senate repeal bills would dramatically scale back financial assistance to low- and moderate-income Americans who buy health plans on Obamacare insurance marketplaces.

Those cuts would make health coverage substantially more expensive for many consumers, forcing some to drop their insurance coverage altogether, independent analyses, including from the CBO, have concluded.

Those coverage losses, in turn, will put new pressures on doctors, clinics and hospitals as they face growing numbers of patients with no insurance who are unable to pay their medical bills.

It’s the same problem from the past:

Marshfield Clinic, a large health system that serves more than 2 million patients in central Wisconsin, is anticipating that passage of the GOP plan would lead to a major increase in the amount of care it would have to provide for free, said Dr. Susan Turney, the system’s chief executive.

At Valley Health, a network of clinics serving mostly poor patients in West Virginia, southern Ohio and eastern Kentucky, fewer patients with insurance would probably force cutbacks in services, such as extended pediatric hours that allow working parents to bring in sick children evenings and weekends.

“There will be kids and families that will suffer, and the healthcare in our communities will suffer,” said Valley Health Chief Executive Steve L. Shattls.

But it’s more than that:

American employers, which provide health coverage to more than 150 million workers and their families, could see their costs rise as hospitals and physicians try to make up for losses they incur caring for more uninsured patients.

“Ultimately, if there is inadequate insurance coverage, medical providers will try to get the revenue they need by increasing prices,” said David Lansky, head of the Pacific Business Group on Health, a consortium of large West Coast employers, including Boeing, Chevron, Intel and Wells Fargo. “That hits employers.”

It also will probably hit employees, who will see insurance premiums increase and wages stagnate as businesses shift healthcare costs onto workers, as has happened repeatedly in the past.

And there’s this:

Insurance markets, too, could see increasing turmoil as states eliminate national standards in the current law that require all plans to cover a list of basic benefits and forbid charging sick patients more, pushing insurance companies back to designing health plans tailored to attract cheaper, healthier consumers.

The CBO’s analysis of the House bill, which is broadly similar to the Senate legislation unveiled last week, estimated that insurance markets serving about a sixth of the country would become unstable in coming years.

Adding to the instability, the Senate bill would eliminate the unpopular Obamacare mandate that all Americans buy insurance, while failing to replace it with any kind of penalty on consumers who don’t get coverage until after they get sick.

Such penalties, which Medicare has long relied on to keep that system financially sound, are widely viewed as critical to functioning insurance markets because they induce younger, healthier people to get coverage.

So expect chaos:

Before Obamacare, several states, including New York and Washington, saw their insurance markets collapse when state leaders tried to guarantee coverage without any insurance requirement.

“No one in any community in New York wants to see history repeat itself,” said Karen Ignagni, chief executive of EmblemHealth, one of the state’s leading insurers.

Some 1,500 miles away, in Athens, Texas, Dr. Douglas Curran, a family physician, is equally troubled by what he sees happening in Washington.

“When it comes to the politics, I don’t have a dog in the fight,” said Curran, who has been tending to patients in the small city southeast of Dallas for nearly 40 years.

“There is plenty that I’d like to see fixed, but it sure would be nice if we just focused on making sure everyone could get care,” he said.

Sure, but it requires a funding mechanism to make sure everyone gets care. There were no reimbursement provisions in the 1986 Emergency Medical Treatment and Active Labor Act. Oops. They hadn’t thought about that, but this is worse. Congressional Republicans have thought about that this time. They’re ripping out existing funding.

Keven Drum sums it up:

Republicans have been saying for seven years that they want to repeal Obamacare, so I can hardly pretend to be surprised that they’re doing it after winning the 2016 election. But now that it’s actually happening, I still find it hard to believe. What kind of people do this, just so the rich can get a modest tax cut? How cold-blooded do you have to be? Especially when Obamacare’s modest problems could be fixed with nothing more than a few minor changes and additional funding of $5-10 billion or so. Of course, if we did that the millionaires wouldn’t get their tax cut.

This whole thing is just profoundly depressing. What the hell kind of country is this?

The Reagan administration, in 1986, tried to do the decent thing for a decent nation to do – no one should die because they can’t pay up. What kind of country is this now?

The New York Times’ Jordan Rau explores that country:

Alice Jacobs, 90, once owned a factory and horses. She has raised four children and buried two husbands.

But years in an assisted living center drained her savings, and now she relies on Medicaid to pay for her care at Dogwood Village, a nonprofit, county-owned nursing home here.

“You think you’ve got enough money to last all your life, and here I am,” Ms. Jacobs said.

Medicaid pays for most of the 1.4 million people in nursing homes, like Ms. Jacobs. It covers 20 percent of all Americans and 40 percent of poor adults.

On Thursday, Senate Republicans joined their House colleagues in proposing steep cuts to Medicaid, part of the effort to repeal the Affordable Care Act. Conservatives hope to roll back what they see as an expanding and costly entitlement. But little has been said about what would happen to older Americans in nursing homes if the cuts took effect.

Alice Jacobs, in a nursing home in rural Virginia, is not alone:

Under federal law, state Medicaid programs are required to cover nursing home care. But state officials decide how much to pay facilities, and states under budgetary pressure could decrease the amount they are willing to pay or restrict eligibility for coverage.

“The states are going to make it harder to qualify medically for needing nursing home care,” predicted Toby S. Edelman, a senior policy attorney at the Center for Medicare Advocacy. “They’d have to be more disabled before they qualify for Medicaid assistance.”

States might allow nursing homes to require residents’ families to pay for a portion of their care, she added. Officials could also limit the types of services and days of nursing home care they pay for, as Medicare already does.

That, however, may be a demographic problem:

A combination of longer life spans and spiraling health care costs has left an estimated 64 percent of the Americans in nursing homes dependent on Medicaid. In Alaska, Mississippi and West Virginia, Medicaid was the primary payer for three-quarters or more of nursing home residents in 2015, according to the Kaiser Family Foundation.

“People are simply outliving their relatives and their resources, and fortunately, Medicaid has been there,” said Mark Parkinson, the president of the American Health Care Association, a national nursing home industry group.

Even so, these people might not matter:

“Moms and kids aren’t where the money is,” said Damon Terzaghi, a senior director at the National Association of States United for Aging and Disabilities, a group representing state agencies that manage programs for these populations or advocate on their behalf. “If you’re going to cut that much money out, it’s going to be coming from older people and people with disabilities.”

The House health care bill targets nursing home coverage directly by requiring every state to count home equity above $560,000 in determining Medicaid eligibility. That would make eligibility rules tougher in ten states – mostly ones with expensive real estate markets, including California, Massachusetts and New York – as well as in the District of Columbia, according to an analysis by the Center for Budget and Policy Priorities.

These people will start paying up, one way or another, but something is wrong in that nursing home in rural Virginia:

Some residents do not even know they are on government insurance; administrators often complete the paperwork to start Medicaid once other insurance expires. Others are embarrassed that they are dependent on a program that still carries stigma.

They should not be, said Jennifer Harper, the assistant director of nursing. Relying on Medicaid for nursing home care has become the new normal.

“These folks have worked their whole lives, some with pretty strenuous jobs, and paid into the system,” she said. But with changes looming, she said, “it may be a system that fails them.”

The system hasn’t failed them, but it will now. That’s the plan, or it isn’t:

Presidential counselor Kellyanne Conway asserted Sunday that the Senate health care bill does not propose cuts to Medicaid, despite projections that it would cut the federal health insurance program by $800 billion.

“These are not cuts to Medicaid,” Conway said to ABC News Chief Anchor George Stephanopoulos on “This Week” Sunday.

“This slows the rate for the future and it allows governors more flexibility for the future with Medicaid dollars,” she said.

“If you are currently in Medicaid, if you became a recipient through the Obamacare expansion, you are grandfathered in. We’re talking about in the future,” Conway said.

When pressed by Stephanopoulos on how the proposal doesn’t amount to cuts when it directly curtails funding for Medicaid, Conway said the administration sees its actions as putting Medicaid back to pre-Obamacare levels.

That’s curious. Once again, with Obamacare, those who still couldn’t afford the subsidized healthcare policies would be shifted to Medicaid – that Medicaid Expansion – so they’d also have health insurance. Hospitals wouldn’t have to eat the cost of the uninsured any longer, or pass those costs on to the insured, with everyone’s insurance premiums going through the roof. Sure, it would cost money, in the form of slightly higher taxes on the wealthy, but the wealthy would be fine. They could afford it. Now they can’t? Putting Medicaid back to pre-Obamacare levels would compound the Reagan administration’s 1986 mistake.

The Reagan administration’s 1986 mistake was to make sure no one would die – no one would be turned away from emergency rooms because they couldn’t prove they could pay to stay alive – but without any mechanism to pay for any of it at all. It seemed like a good idea at the time. It wasn’t – but there’s no need to make things worse. Creating chaos in the healthcare system and insurance markets, by intentionally taking as much money as possible out of it all, as soon as possible, makes things far worse.

That’s what to remember from 1986 – an odd year. Forget the big events. Small things, that seemed a fine idea at the time, can cause no end of trouble later.


About Alan

The editor is a former systems manager for a large California-based HMO, and a former senior systems manager for Northrop, Hughes-Raytheon, Computer Sciences Corporation, Perot Systems and other such organizations. One position was managing the financial and payroll systems for a large hospital chain. And somewhere in there was a two-year stint in Canada running the systems shop at a General Motors locomotive factory - in London, Ontario. That explains Canadian matters scattered through these pages. Otherwise, think large-scale HR, payroll, financial and manufacturing systems. A résumé is available if you wish. The editor has a graduate degree in Eighteenth-Century British Literature from Duke University where he was a National Woodrow Wilson Fellow, and taught English and music in upstate New York in the seventies, and then in the early eighties moved to California and left teaching. The editor currently resides in Hollywood California, a block north of the Sunset Strip.
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