October 8, 2019

Medicaid is Crucial to Rural Hospitals

Rural hospital closings can be a matter of life or death.

Residents in these remote locations may have to drive 100 miles or more for emergency medical care. One new study found that hospital closings increase mortality in rural areas by 6 percent. No such impact occurred in urban areas with multiple medical centers.

Both urban and rural hospitals serving poor and low-income patients face myriad financial pressures, led by Medicare and Medicaid’s relatively low reimbursement rates for their disproportionate numbers of older and sicker patients. The 2013 federal budget, which cut Medicare reimbursements for hospitals and physicians by 2 percent, compounded the problems.

But what has become increasingly clear in rural areas is that the option given to states under the Affordable Care Act (ACA) to expand their Medicaid-covered populations of high-need patients has created a dividing line between the most vulnerable hospitals and the survivors, said Brock Slabach, senior vice president of the National Rural Health Association, a hospital trade group.

With closures accelerating across the country over the past decade, 24 of the 31 rural hospitals that closed in 2018 and 2019 were located in the minority of states (14) that have not expanded their Medicaid programs, according to the Sheps Center for Health Services Research at the University of North Carolina, which tracks hospital closures.

In contrast, the ACA has bolstered rural hospitals in expansion states by cutting their uninsured populations roughly in half by bringing in a fresh supply of federal and state revenues to insure more patients under Medicaid. …Learn More

September 19, 2019

Many Demands on Middle Class Paychecks

Ask middle-class Americans how they’re doing, and you’ll often get the same answer: there are still too many demands on my paycheck.

Several recent surveys reach this conclusion, even though wages have been rising consistently at a time of low inflation.

Student loans trump 401(k)s. Two top financial priorities are in conflict: student loan payments, which people described as a “burden,” and saving for retirement, which they viewed as “important” in a TIAA-MIT AgeLab survey.

The debt seems to be winning: three out of four adults paying off student loans say they would like to increase how much they save for retirement but can’t do it until their loans are paid off – and that can take years. One woman described her loans as “draining” her finances.

A promising sign on the horizon is that some employers are finding creative ways to help employees pay down college debt, giving them more leeway to save money in their 401(k)s. But these efforts impact a small number of workers, and the amount of debt continues to rise year after year for every age group, from new graduates to baby boomers who helped send their children and grandchildren to college, a Prudential study found.  

Buying a house isn’t an option. The good news is that about half of Millennials already own a home. Most of the others want to buy a house but can’t afford it, 20- and 30-somethings told LendEdu in a survey. Their top reasons were student loan and credit card payments and a lack of savings, which is the flip side of having too much debt.

Millennials are also putting off other goals until they get a house – marriage, children, even pets. “It’s quite obvious that this uphill battle” and debt “is having secondary effects,” said LendEdu’s Michael Brown.

Medical debt looms large. Americans borrowed $88 billion last year to pay their hospital, doctor, and lab bills. That debt fell hardest on the 3 million people who owe more than $10,000, according to an estimate by the Gallup polling company and a group of healthcare non-profits. …Learn More

September 10, 2019

Medicaid for Children Pays Off Later

Medicaid health insurance, which covers a third of the nation’s children, has a payoff down the line: fewer adults on disability.

A well-known benefit of Medicaid is that low-income children covered under the insurance program turn into healthier adults. But a recent study found that these health improvements translate to another positive outcome for adults: fewer applications to Social Security’s Disability Insurance (SSDI) program, which provides monthly cash benefits to people who are not healthy enough to work.

The study, conducted by researchers at Middlebury College and Vanderbilt University, used U.S. Census data to follow 63,000 individuals between ages 25 and 64 who were exposed to Medicaid for various lengths of time during childhood, depending on when they were born and when their state first implemented the program, which Congress passed in 1965.

First, the study confirmed the health benefits of Medicaid coverage for children: the adults in the study could more easily pass a few basic tests of health and physical stamina, such as lifting 10 pounds, standing for an hour, and walking up 10 stairs.

And better health did, indeed, reduce their applications for SSDI – and ultimately, the number of adults receiving disability benefits. In fact, the longer they would have been insured under Medicaid as children, the less likely they were to apply for disability, said the study, which was for NBER’s Retirement and Disability Research Center.

This is a clear example of how early intervention can reduce government spending down the road. …Learn More

August 27, 2019

The ACA and Retirement: Is there a Link?

When older workers are able to get health insurance from a source outside of their jobs – Medicare, a spouse’s job, or an employer’s retiree health coverage – they become much more likely to decide it is time to retire.

So it’s reasonable to ask whether the Affordable Care Act, which provided millions of people with health insurance for the first time, has also helped to nudge more older workers into early retirement.

The answer, surprisingly, is no, according to a recent study for the University of Michigan Retirement and Disability Research Center.  This finding is important, because baby boomers who are poorly prepared financially to retire should be working longer – not retiring sooner – to improve their retirement outlook.

The researchers, who are at the University of Michigan and Vanderbilt University, estimated that the uninsured rate of 50- to 64-year-olds dropped substantially after the ACA went into effect in 2014 – from 16 percent in 2013 to 12 percent in 2016.  But when they tracked these older workers for several years, they found no evidence that they started retiring at a faster pace after the ACA established the state insurance exchanges and gave tax subsidies to people who purchased coverage on the exchanges.

The study also looked at whether retirement activity increased in response to a separate provision of the ACA: the expansion of the Medicaid health insurance program for low-income Americans.  The expansion, which was voluntary for each state, was achieved by increasing the income ceiling for eligibility. The federal government gave a financial incentive to states that broadened eligibility for Medicaid coverage, and about two-thirds of the states have expanded to date.

In comparing states that expanded their Medicaid programs to states that had not, the researchers again found virtually no change in low-income workers’ retirement trends.

There is widespread agreement that turning 65 and becoming eligible for Medicare motivates people to retire. So why is the ACA different?

One possible explanation is that the “political uncertainty” surrounding the ACA and Medicaid expansion “discourage[s] older workers from counting on them when making career decisions,” the researchers said. …Learn More

May 30, 2019

Health Plan Deductibles Triple in 10 Years

The evidence continues to pile up: workers are having a very hard time affording their high-deductible health plans, which have gone from rare to covering nearly a third of U.S. workers.

Between 2008 and 2018, the deductibles in employer health plans more than tripled – growing much faster than earnings. Workers’ full insurance coverage doesn’t kick in until they pay the deductibles, which now exceed $3,000 for individuals and $5,000 for families in the highest-deductible plans. Add to that a 50 percent hike in premiums during that time.

Some 156 million people get health insurance through work, and they’re largely grateful to have it. They blame rising medical costs on insurers and pharmaceutical companies – and not their employers and healthcare providers – a new Kaiser Family Foundation survey said.

One in four said medical bills or copayments for drugs and doctor visits are severely straining their budgets, and the Commonwealth Fund, another healthcare researcher, estimates that the typical worker spent about 12 percent of his income on deductibles and premiums in 2017, compared with 8 percent in 2008 – the figure is closer to 15 percent in Louisiana and Mississippi.

The solution is often to forgo or postpone care. And the higher an employee’s deductible – no surprise – “the more likely they are to experience problems affording care or putting off care due to cost,” Kaiser said. Inadequate medical care is especially dangerous for people with chronic conditions. …Learn More

April 4, 2019

Doctor: Why Medical Costs Keep Going Up

“We are rapidly approaching the point where we will simply be unable to afford medical care,” says Dr. Edward Hoffer. This is no exaggeration, according to the Henry J. Kaiser Family Foundation: health insurance deductibles and copayments are rising so fast that a significant share of working families have great difficulty paying for their care.

“We as a society have to decide whether healthcare is a right or a privilege,” Dr. Hoffer said. “I happen to think it’s a right. We can’t all drive a Mercedes but every American deserves to have access to healthcare.”

His book, “Prescription for Bankruptcy,” provides his insider’s view of why healthcare costs keep going up. For 46 years, he has worked in Massachusetts as a cardiologist, public health official, and hospital and private practice administrator.

Question: How do U.S. medical costs compare with other countries?

Dr. Hoffer: The U.S. spends roughly twice as much per capita on healthcare as most other countries. Switzerland is nowhere near us, and they’re more expensive than the rest of Europe. Canada, Germany, France – they all have excellent healthcare systems and spend about half per capita what we do.

Q: What does this have to do with patient care?

A family policy costs the employer roughly $20,000 per employee per year, and many employers have been reacting by increasing employees’ deductibles and copays.  If you’re the line worker who’s making $50,000 and you’re faced with a $5,000 deductible, you behave like somebody who doesn’t have insurance. You skip your preventive care or you avoid a medication because all of this comes out of your pocket. Women are deciding not to get a mammography or someone who has a colonoscopy recommended to them looks at the prices and says, ‘Maybe I’ll put it off.’

Q: You criticize high pay for hospital administrators. You once visited a Boston hospital CEO whose office was so large that you “could barely see him at the far end.” But aren’t administrators crucial to the system? …Learn More

April 2, 2019

Retirees Ration or Forgo Dental Care

In April, Trudy Schuett will have a procedure to save a tooth, which she estimates a dentist would charge $3,000 to $5,000 to do.

But Schuett, who lacks dental insurance, will pay about $1,000, because the procedure will be performed by dental students at Midwestern University Clinics in Glendale, Arizona. Her cleanings at the school are affordable too.

Regular clinic visits have saved “buckets of money,” she said.

She is one of those resourceful retirees who always finds a way. But two out of three people over 65 do not have dental insurance, according to the Henry J. Kaiser Foundation, often because they lose the coverage when they leave their employer. Medicare does not pay for routine dental expenses, though it sometimes covers care for medical procedures considered integral to a retiree’s health, such as jaw reconstruction or heart surgery; some Medicare Advantage plans offer dental insurance.

But retirees who lack dental insurance are often forced to forgo care or limit their visits to the dentist. Half of seniors haven’t been to a dentist in over a year, Kaiser said. When they do see a dentist, they spend an average $922 out of pocket. For the half of Medicare beneficiaries trying to live on $26,200 or less, dental care consumes, at minimum, 3.5 percent of their income.

Poor dental care also causes health problems. Dry mouth, a side effect of some medications, can cause teeth to loosen or fall out. Tooth loss makes it more difficult to eat. For a variety of reasons, 15 percent of retirees have lost all of their natural teeth – in West Virginia, a low-income state, 30 percent of retirees have no teeth, Kaiser said.

Schuett, who is 67, is working five hours a week for extra income, but she would rather not spend it on expensive dental care. By saving money at the university clinic, she gets to “blow some cash on the grandkids.”

Squared Away writer Kim Blanton invites you to follow us on Twitter @SquaredAwayBC. To stay current on our blog, please join our free email list. You’ll receive just one email each week – with links to the two new posts for that week – when you sign up here. This blog is supported by the Center for Retirement Research at Boston College. …Learn More