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Health A ffairs
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Considering such possibilities, however, requires better estimates than we now have of
the likely per person costs of care under wellstructured safety-net systems. Previous studies
of safety-net costs have looked mainly at the aggregate funding directed to specific types of facilities, such as hospitals or community health
centers, that serve both insured and uninsured
patients. Few studies have carefully measured
the per person resource costsincluding the
value of referred, donated, and in-kind services
for care received by uninsured patients only.
This study provides such estimates for selected, well-structured safety-net programs that
coordinate access to a fairly complete range of
medical services. An annual per person cost measure that includes the value of donated services
could provide a sound basis for estimating how
best to continue or increase support for those
Americans who will remain uninsured after
2014. It could also help federal and state govern-
Exhibit 1
Use Of Health Care Services In Four Model Safety-Net Programs Compared To National Norms, 200508
Average number of annual visits per person to
Source and year of data
National survey of adults, 2007a
National medical records, 2006b
Private insurance
Medicaid
All adults
Entire population
Study safety-net programs in
Asheville, NC, 2008
Denver, CO, 2008
Flint, MI, 200708
San Antonio, TX, 2005
Any doctor
3.2
Emergency department
0.4
3.9
3.6
2.9
3.1
1.7
2.7
1.5
1.8
0.3
0.5
0.4
0.4
5.4
4.7
3.0
7.4
3.9
2.6
2.5
c
0.5
0.4
0.4
0.4
SOURCE Note 7 in text. aNational Health Interview Survey. bNational Ambulatory Medical Care Survey. cNot available.
S e p t em b e r 2 0 1 1
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1699
County characteristic
Name
Asheville, NC
Buncombe
Flint, MI
Genesee
Denver, CO
Denver
San Antonio, TX
Bexar
Population
Total
Percent nonwhite or Hispanica
Income
229,047
14
428,790
25
598,707
49
1,622,899
68
0.84
34
0.86
35
0.89
39
0.88
38
18.6
16,171
11.1
16,086
24.7
46,432
24.5
162,591
Uninsured
Percent of adultsc
Number of adults with incomes below 200% of poverty leveld
SOURCE Authors analysis. NOTE Statistics are from 2008, unless otherwise noted. aNonwhites and Hispanics make up 35 percent of the total US population. bPeople with
household incomes of less than 200 percent of the federal poverty level make up 31 percent of the total US population. cUninsured adults make up 17 percent of the total
US population. d2006.
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portion of the programs services. However, utilization data were available for all of the programs members, even for donated services, because the program tracked these services
through shadow claims from providers, as if
they were reimbursable, in order to record their
value.9
In each analysis, the covered population of
uninsured nonelderly adults was determined
by each programs particular criteria for eligibility and enrollment length. The costs of services
were estimated by calculating or imputing costs
of resources needed to deliver care. The basic
approach to measuring costs was consistent
across the four study sites, but the particular cost
imputation measures necessarily differed somewhat by type of service and payment method.
Our goal was to approximate the resources
needed to replicate similar programs elsewhere.
Thus, donated services were assigned an estimated cost or market value, and purchased services were valued at the prices actually paid for
them.10 The Asheville and Flint programs relied
heavily on both compensated and donated services, whereas the Denver and San Antonio programs purchased or paid for all of their physician
and hospital services at rates approximating
market value (Exhibit 4). Administration and
pharmacy costs were valued using the individual
programs financial reports.
Donated services were valued in different
ways, depending on the type of service. For example, expensive prescription drugs that were
provided to patients at no cost were valued according only to the large staffing costs required
to keep patients enrolled in prescription access
programs. We did not assign a greater value be-
Exhibit 3
Characteristics Of Four Model Safety-Net Programs, 2008
Community hospital programs
Program characteristic
Name
Asheville, NC
Project Access
Flint, MI
Genesee Health
Plan
Denver, CO
Denver Health
San Antonio, TX
CareLink
Size
Number of adults enrolled
Percent of county low-income adults enrolled
Care source and payment
6,000a
35a
21,669
100a
26,118
56
41,252
25
County clinic
employees
Specialists
Community doctors
donating their
services
Medical school
employees
Medical school
employees and
community doctors
paid at Medicare
rates
Hospital
Community,
donating its
services
Community
doctors
paid at 14%
above
Medicaid
rates
Community
doctors
paid at 4%
above
Medicaid
rates
Community,
donating
its services
Public, paid at
Medicaid rates
175
175
250
200
Yes
7.9
No
7.5
Yes
7.5
Yes
7.1
0.87
b
b
0.89
1.45
b
1.41
1.32
Physician
Hospital
2.56.7% of annual
income
Members
Maximum household income (percent of federal
poverty level)
Noncitizens included
Mean number of months enrolled
SOURCE Authors analysis. NOTE Relative risk is based on demographic and health status risk adjusters described in text, using either the Chronic Illness and Disability
Payment System or the Diagnostic Cost Grouper. aNumber is approximate. bNot available.
Exhibit 4
Monthly Costs Of Care For Uninsured Nonelderly Adults In Four Model Safety-Net Programs, 2008
Community hospital
programs ($)
Type of cost
Asheville, NC
Denver, CO
San Antonio, TX
Paid services
Donated services
36
109
51
80
221
0
176
0
2
5
a
10
12
b
34
5
149
141
209
147
Flint, MI
SOURCE Authors analysis. NOTES Costs are based on actual payments for paid services, cost-to-charge ratios for donated hospital
services, and Medicare rates for donated physician services. Categories may not sum to totals because of rounding. aCost sharing is
paid to the provider, not the program. bNot calculated separately; built into service cost.
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Study Results
Costs Of Care The estimated cost of care per
adult in 2008, net of patient copayments, was
remarkably similar across three of the four
safety-net programs, at $141$149 per member
per month (Exhibit 4). The estimated cost of
the Denver program$209 per member per
monthwas the exception, but the benefits provided in Denver were more comprehensive than
those in the other programs, including routine
dental care and a full range of behavioral health
services.
Over half of the costs of care in the Asheville
and Flint programs were borne by community
providers who donated their services. Most donated care was for hospital services, amounting
to roughly $70$80 per member per month. In
Denver and San Antonio, members made substantial copayments (Exhibit 4). The minor copayments in Flint of $1$5 were not reported
since they were paid only to participating providers and not to the program itself. Also, administrative costs were not separately calculated in
Denver. A component of administration was already built into the institutions overall cost-tocharge ratio that we used to determine program
costs, and there was no separate accounting for
the program-specific administration available.
We estimated that to cover the same uninsured
patients by either private or public insurers locally for a similar range of services would cost
$217$347 per member per month, with an average among comparison programs of $281
(Exhibit 5). This amount is 82 percent more than
the average costs for the uninsured in the safetynet programs, with the difference ranging from
37 percent to 124 percent across the four locations.
Comparison Groups We targeted the comparisons to the most comparable population for
which data were available in each location. For
example, in Flint the comparison group was the
local population in a large commercial health
maintenance organization. The other three comparison groups were nondisabled adults in the
Exhibit 5
Actual And Comparison Monthly Costs Of Care For Uninsured Nonelderly Adults, By Model Safety-Net Program, 2008
Risk-adjusted comparison ($)
Program
Asheville, NC, 2008
Flint, MI, 2008
Denver, CO, 2008
Estimated Medicaid
costs
302
a
273
Estimated
private insurance
costs
a
217
a
Ratio of insurance
to safety-net
program costs
2.03
1.54
1.37
155
129
a
267
347
a
2.24
2.07
SOURCE Authors analysis. NOTES Risk-adjusted comparisons are based on local insurers using the same providers. Risk adjustment is
based on age, sex, and health status, as described in text. aNot available.
Discussion
Studies of safety-net systems usually focus on
their more glaring shortcomings.15,16 This study
focused instead on model programs that give the
uninsured access to services that are roughly
similar to what basic health insurance covers.
Studies of safety-net costs usually measure aggregate funding streams. Instead, we estimated
costs based on provider and program resources
per uninsured enrollee (including donated services) and weighted by the average period of
enrollment to obtain a per member per month
estimate.
We recognize that it is not conventional to
measure uncompensated care this way. By definition, the uninsured are not enrolled in an insurance plan. Nevertheless, an adequate safety
netwith a system structured like those of the
four we examinedcan be thought of as providing a form of coordinated access to care for a
defined population.7 Each program gave eligible
people an enrollment card; provided them with a
primary care medical home that coordinated
their care; and arranged for prescription drugs,
specialist referrals, and hospitalization when
needed.
We estimated that the cost of care provided by
these well-structured safety-net programs in
2008 was roughly one-quarter to one-half less
than what it would have cost to give the same
populations similar coverage from Medicaid or
private insurance. If the value of donated prescription drugs were included, the cost of the
safety-net programs might be 510 percent
greater than our estimates, but it would still be
substantially less than the cost of similar coverage from Medicaid or private insurance.11
Estimated Costs From Massachusetts
Ours is the first study to evaluate safety-net costs
in this manner, and we profiled only four programs. Nevertheless, the plausibility of our findings can be gauged by comparing them to a more
general estimate from Massachusetts, which had
a superior safety net prior to the states comprehensive insurance reforms.4
In 2004 Urban Institute researchers estimated
that private insurance coverage in MassachuS ep t e m b e r 20 1 1
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tem.25 The most thorough study to date concluded that it would have cost about 20 percent
more had Medicare paid for the services that the
VA provided in 1999.26 This estimate was based
on Medicares billing rates for services that the
VA actually provided, with the greatest savings
being for prescription drugs and specialized
inpatient facilities.
A more recent study covering 200107 appears
to provide conflicting evidence: It concluded that
the VAs actual costs were 33 percent more than
what insurers would have paid had the services
been purchased at market rates.27 However, this
estimate is based on treatment costs reported by
roughly 500 veterans in the Medical Expenditure
Panel Survey, which may be too few to generate
reliable estimates, particularly because that survey underrepresents higher-cost institutionalized or homeless VA patients.28
Remaining Uncertainties In the present
study, the data that were available for most of
the safety-net programs did not permit a detailed
causal analysis of why the programs had lower
costs than insurance. However, several findings
provide insights.
Differences in benefits were not the main
driver, because we adjusted for major benefits
differences. Still, the comparison plans had
some elements of coverage that were more generous than safety-net coverage. Safety-net administrative costs were lower than those reported by or attributed to public and private
insurance plans. In addition, private insurers
and Medicaid managed care plans may have paid
somewhat higher rates to some providers than
the average unit costs we used to value these
safety-net services.
Some differences also result from the fact that
most safety-net programs provided only generic
and inexpensive medications, relying on donated medications for the more expensive
brand-name drugs. However, we valued most
donated services at their actual costs or market value.
Program members use of services may have
been dampened either by the cost-sharing elements in Denver and San Antonio or by the need
to seek charity care from hospitals in Asheville
and Flint. Hospital use in Asheville and Flint was
roughly one-third to one-half less than might
have been expected for a population with the
same general demographics, which suggests that
some members might not have received the hospital care that they needed.
Finally, other factors than those we measured
may have contributed to lower safety-net costs,
such as longer waiting times or stricter medical
criteria for more expensive services than in insurance programs.
Conclusion
The finding that better safety-net programs appear to cost less than conventional coverage
should not be viewed as an indication that public
or private insurance is wasteful or inefficient.
The access to care provided by generous insurance is superior to that provided by even wellstructured safety-net programs such as the ones
we studied, whose coverage is limited to small
geographic areas. Also, model programs may be
difficult to replicate elsewhere. However, there is
much to be learned from such programs about
the cost of services required to meet the basic
health needs of the uninsured.
As a whole, the model programs we studied
provided an adaptable range of possible structures for other situations. For example, although
all four programs targeted the low-income uninsured, the programs in Denver and San
Antonio, which required substantial copayments
as income rises, could be adapted for the middleincome uninsured. Learning from these models
as health reform unfolds could help policy makers and community leaders elsewhere to develop
sustainable organizational structures for the uninsured throughout the country.
NOTES
1 Buettgens M, Hall MA. Who will be
uninsured after health insurance
reform? [Internet]. Princeton (NJ):
Robert Wood Johnson Foundation;
2011 Mar [cited 2011 Aug 10].
Available from: http://www
.rwjf.org/files/research/71998.pdf
2 Weinick RM, Billings JD, editors.
Tools for monitoring the health care
safety net [Internet]. Rockville
(MD): Agency for Healthcare Research and Quality; 2003 Sep [cited
2011 Aug 10]. Available from: http://
archive.ahrq.gov/data/safetynet/
tools.htm
3 Andrulis D, Gusmano M. Community initiatives for the uninsured:
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18
19
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&
Wenke Hwang is an
associate professor
at the Penn State
College of
Medicine.
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