The face of health care is changing. As Congress readies for a historic vote on a universal health-care bill, many in the health-care system are wondering how a government-run public option would impact their services and those patients currently with little or no health insurance.
The repercussions of such a plan might be felt more in Santa Barbara County than anywhere else in the state, since a staggering number of county residents have no health insurance whatsoever.
According to the most recent figures from the U.S. Census’ Small Area Health Insurance Estimates, released in August and compiled from 2006 data, the county claimed the highest rate of uninsured residents among all counties in the state. More than 90,000 people younger than 65—26.6 percent of the county’s total population—reported being uninsured.
Medi-Cal enrollment is on the rise in Santa Barbara and San Luis Obispo counties, where between 85,000 and 90,000 are currently on state insurance, according to CenCal Health’s Deputy CEO Bob Freeman.
The program is a tonic for the poor, providing medical care at almost no out-of-pocket cost to users, but eligibility hinges on a host of physical and income requirements.
For those making too much money to qualify for Medi-Cal but too little to afford individual health-care coverage, times are tougher, insurance agents say. Rising health-care costs and a growing number of employers offering plans with higher out-of-pocket fees have combined to put the squeeze on the “working poor.”
Underinsured patients—those with jobs and insurance, but still burdened with massive medical bills—are increasingly more commonplace at Marian Medical Center, according to Kerry Dolan, director of Patient Financial Services for CHW Central Coast.
At Marian, where patients generally have some type of health care coverage, charity care has nearly doubled over the past four years, from $16 million in 2005 to $29 million in the 2009 fiscal year. Overall, nearly 20 percent of all of Marian’s patients have had their bills written off by the hospital.
According to Marian’s chief financial officer, Sue Anderson, the upsurge in unpaid bills can’t simply be blamed on the state of the economy.
“It’s not that these people don’t have assets,” Anderson said. “I feel like there’s people who think [health care is] a right, that they should just be given free care. They just don’t want to pay for it.”
It’s human nature, Anderson said, for people to ignore their financial responsibility to the hospital after they’ve already been cared for. The situation has forced the hospital, which must make a 7 percent profit to maintain its services, to get tougher with its patients.
“People want a strong hospital, but everybody has to chip in,” Anderson said. “Nothing is free—someone has to pay for it eventually.”
Unpaid hospital bills affect the level of care as well. At Marian, some doctors have become reluctant to take patients in, she said, fearing that they won’t get paid at all.
The hospital has a financial aid program for those who meet federal poverty guidelines, offering interest-free loans to cover part or the entire cost of care. Dolan, also Marian’s senior director, said hospital staffers do all they can to get patients some form of insurance.
“We’ve seen that, across the company, more and more people are not able to afford coverage,” Dolan said. “We want to help, but it does cost money.”
Stick to the plan
Even for those who can afford insurance, when it comes to choosing a health-care plan, Dolan said, many opt for plans with lower monthly premiums. Then, when they do end up in the hospital, they’re shocked to find that even after their insurance pays up, they’re still stuck with a sizeable bill.
Underinsurance is a countywide problem, according to Michelle Mickiewicz, spokeswoman for the Santa Barbara County Public Health Department. It’s a predicament caused by a combination of low wages and high deductible medical coverage, which, according to insurance agents, is the most popular coverage for both employers and private individuals.
The self-employed or people working part-time hours may find individual insurance policies difficult to qualify for or afford, Mickiewicz said, and even full time-workers living paycheck to paycheck often have difficulty insuring their
families on their wages.
“The health-care benefits that are available to them, or their portion that the employee is able to cover for their family, might be out of reach,” she said.
With county unemployment currently hovering around 8 percent, the question on a growing number of minds is: What happens to my medical coverage if I lose my job?
For the recently laid off, the federal Consolidated Omnibus Budget Reconciliation Act (COBRA) and its state counterpart, Cal-COBRA, can provide medical coverage. But COBRA is expensive, and if a business goes belly-up, it isn’t available to the unemployed at all.
Teri Summers, a Santa Maria-based Blue Cross insurance broker for 22 years, called the situation “absolutely shameful.”
“I have clients in their 40s and 50s who are laid off and cannot afford COBRA,” Summers said. “These are people who own their own homes and have been working for their whole lives, but because they have preexisting conditions I can’t underwrite them any insurance.”
Whether by force or choice, Summers said, too many are simply foregoing coverage.
“You take somebody who’s lost their home, lost their job, they’re living on unemployment, and you want them to spend between $500 and $1,000 per month on health insurance,” she said. “Instead, they go bare.”
Public options
For those who’ve lost their insurance through their jobs, or can’t afford health care, the county’s public health system is designed to be their safety net.
According to Elizabeth Snyder, assistant deputy director of Public Health, the county is experiencing a “huge” increase in the uninsured and an influx of working people entering the system who never thought they would.
The county’s 10 public health clinics have taken in more than 30,000 people this year alone, making it the second largest health-care provider in the county.
“That number is growing, and it’s scaring me how much that’s growing,” Snyder said. “I only have so many buildings, doctors, and nurses. It’s like anything else—how do you keep taking patients in?”
The public health system’s intake has steadily increased over the past three years, with the number of clinic visits rising from 105,000 in 2006-07 to 132,000 in 2008-09.
“One of the things that’s concerning us is that population is growing in our community,” Snyder said. “Those patients are also moving closer and closer to homelessness.”
A patient’s community clinic visit, laboratory work, and prescriptions are billed to Medi-Cal and Medicare, and the costs to the patient are determined on a sliding scale. If income is low enough, the patient may not have to pay a dime.
People who have lost their jobs and insurance can also apply for the department’s Medically Indigent (uninsured) Adult program. It’s not particularly well known; most patients don’t find out about it until they have an emergency and are referred to it by the hospital.
According to Snyder, the program has served 2,500 people this year, but more than twice that number applied and didn’t qualify because they made too much money or didn’t have the right documentation.
“The MIA program is amazing, but there’s only so much money to go around,” Snyder said. “I think that’s concerning all of us.”
Patients with serious long-term illnesses who can’t find private insurance coverage can also turn to state programs like the Major Risk Medical Insurance Program—state subsidized insurance for people denied coverage because of a preexisting condition.
Cancer sufferers, even those with coverage, can find their medical costs exceeding the payment caps found in even robust health care plans, according to Mary Solis, counselor at the Cancer Center of Santa Barbara.
A single dose of certain chemotherapy drugs, the most
expensive part of cancer treatment, can cost more than $5,000. With surgeries and chemotherapy, bills can reach into the tens of thousands of dollars, Solis said, which—even with a 20 percent cost share—can bankrupt low-wage earners.
“It’s not impossible to get insurance after a cancer diagnosis, but it is difficult,” Solis said. “Most insurance does pay what they say they will for cancer therapy, but there are a few policies that people buy where they end up surprised to find out what their lack of coverage is.”
That’s where the Cancer Center steps in. The private nonprofit group specializes in treating cancer patients from all over the county who have little or no insurance. Offering diagnostic testing and chemotherapy, the center also employs social workers to help its underinsured patients afford their co-payments and finds secondary insurance to cover costs.
Often, Solis said, the balance of the treatment is waived or significantly discounted.
Something’s got to give
According to the Organization for Economic Cooperation and Development, Americans spend a greater portion of their income on health care than any other industrialized nation on the planet—and costs keep rising every year.
Buying health care isn’t like making other large purchases, and most people don’t worry about how much their care costs until their medical problems are already solved, according to Blue Cross insurance agent David Stockdale. That attitude helps drive bills higher because it makes patients more likely to request unnecessary services and diagnostics.
“When people have full insurance they have a tendency to over-utilize,” Stockdale said. “There’s no economic incentive to not do that.”
According to Public Health’s Snyder, a former health-care executive, the increase in medical cost is tied to two major factors: technology and pharmaceuticals. Patients demand top-of-the-line care when they’re sick, Snyder said, and the best treatment has its price.
“If you’re in the emergency room, you want the nurses and doctors who are highly specialized,” she said. “The specialty has been incredible for us in terms of patient care, but you’ve got to pay for it.”
In the long run, catching medical problems before they become more serious is in the public’s best interest.
“People get concerned because they don’t want us to be ‘giving away’ care,” Snyder said. “The reality is we’re all going to pay for it one way or another. It’s much better for us to pay for it when it’s affordable and before people really get sick.”
The price for the uninsured or underinsured ending up in county hospitals because they haven’t received preventative care means a heavier burden on state health insurance, she said.
Consensus is that Medi-Cal and Medicaid don’t compensate doctors well, and Marian’s CFO Anderson is worried that payments from current government programs won’t be enough to cover the rising costs.
“There need to be changes,” Anderson said. “At some point the whole system is going to crumble.”
The great debate
As the debate on government-run health care nears its zenith, supporters on both sides can agree on one thing: There’s no silver bullet solution.
“If I had the answer, I’d be talking to the people in Washington,” Anderson said. “I’m sure they could use the help.”
For insurance agents like Stockdale, whose job security could depend on the outcome of a public option vote, the government’s latest attempt at universal health care is dubious.
“The track record of the federal government is to not pay its fair share of health care costs,” Stockdale said. “If they went with a public option, you could be assured the same thing will happen.”
While Stockdale said a public option would help people who can’t afford insurance, he thinks the trade-off is too big a price to pay.
“Any solutions have to be in line with what I consider to be the American character: personal individual liberty and personal responsibility,” Stockdale said. “If the government’s making decisions for you on what your health-care plan is going to look like, what benefits it has, whether you have to take it or not, and how much it’s supposed to cost, that’s not individual liberty.”
The purpose of health insurance is to keep people from getting a huge bill, Stockdale said, and it can do that if people would make smarter decisions regarding their coverage.
A better approach by Congress, he said, would be targeting groups who have played by the rules but are medically unable to work, thereby keeping the current infrastructure in place.
“If they pass the law the way it is now, with very minimal fines on people who don’t buy insurance, but require insurance companies
to take all comers, that’s the end for the private insurance industry,” he said.
Most health-care agents and providers share that stance, according to Blue Cross agent Summers. However, she supports the plan, especially if preexisting conditions are included in coverage.
“I don’t really care if the public option and everything puts me out of business,” Summers said. “If they have to cut commissions to us agents and they have to cut salaries, fine. Wouldn’t it be worth it to have a nation where everyone was covered?”
Summers said a public option would prevent the cost of insurance from spiraling out of control and help people who have had to spend an inordinate amount of their income on medical bills.
As for the insurance companies, she said, the competition from government would simply force insurers to make their plans more enticing to consumers.
“They’re not going to go out of business, they’re going to figure out something,” Summers said. “I’m not worried about the health of the health-care companies, or the agents—including me.”
As a former health-care executive, Public Health’s Snyder thinks the public option would help the underinsured.
“In our area, I think it would work really well,” she said. “I think it would adequately fund our clinics and give us resources so we can take care of population that falls through the cracks.”
Staff Writer Jeremy Thomas can be contacted at jthomas@santamariasun.com.
This article appears in Nov 5-12, 2009.