(This article appeared in the Winter 2013 issue of SSA Magazine.)

In this Conversation, Harold Pollack and Mike Koetting talk through the specifics of Illinois’ progress in implementing the ACA, including nuts-and-bolts challenges, the state’s unique problems, and the impact of politics on health care reform.

Pollack, SSA’s Helen Ross Professor, is an expert on the intersection of poverty policy and public health. He has been appointed to three committees of the National Academy of Sciences’ Institute of Medicine and is a faculty advisor for SSA’s Graduate Program in Health Administration and Policy (GPHAP).

The deputy director for planning and reform implementation at the Illinois Department of Healthcare and Family Services, Koetting has primary responsibility for coordinating the Medicaid aspects of implementing the ACA in Illinois. For almost 25 years he was the vice president for planning at the University of Chicago Medical Center, where his work included involvement with GPHAP and serving as an adjunct member of the faculty.

Pollack: From your perspective, how is the implementation of the ACA going?

Koetting: Well, this is what got me out of retirement. If the ACA works, in Illinois we will get health insurance coverage to almost a million people who do not have it today. In one state, virtually a million people.

But the nuts-and-bolts to expand the Medicaid program is a rocky road. Medicaid is like a mosaic. You see a mosaic from far away it looks like a picture, and then you get close and you see that it’s a lot of little pieces. Medicaid is not an item, it’s a lot of little pieces, and you have to deal with each one of those.

In Illinois we also have been operating with a 30-year-old COBOL [computer] eligibility system, and it would have been very difficult to use it to actually enroll people for the ACA. And as luck would have it, the federal government put a lot of money out there for us to put in a new eligibility system and start moving into the 21st century. But it means a whole other level of unbelievably complicated and difficult logistic issues. It’s going to be a $136 million contract. It has a million things that could go wrong.

Pollack: I think the public is very focused on the political dimension of health care reform and the ideological polarization. Even if we had complete consensus, though, this thing would be filled with those kind of glitches and need for fixes. But it’s impossible to do any kind of mid-course corrections right now because the politics is so completely gridlocked.

Koetting: You’re absolutely right. In any sane environment, for a bill as complicated as the ACA, after a year, two years of trying to implement it, people would come back and say, “Well,  gee, here’s the list of fixes that you would do.” We have to do this in Illinois all the time. But nobody will introduce a bill to fix things with this. There are obviously unintended consequences that no one in Congress supports. Republicans have put forth no option other than repeal it, and the Democrats have said no, we’re not going to repeal it. Hardly constructive conversation.

Pollack: What are some of the particular difficulties that are emerging with the ACA that you can see?

Koetting: There’s a wealth of tiny ones. The New York Times wrote about a really good example. The law sensibly did not want workers who had access to employee insurance coverage to go to the [new public health care] exchange looking for subsidies. And the law says to determine whether or not they have affordable coverage, you look at 7 percent of the family’s income. But the only coverage that has to be offered is for the employee. So if a three-person family could buy health insurance for the one employed person for less than that 7 percent, then the whole family is not eligible to use the exchange. That clearly is a case where the legislative language was just not precise enough, but nobody knows how to fix it, either.

Pollack: So do we know what’s going to  happen with that?

Koetting: Well right now, depending on which estimate you believe, somewhere between two million and four million people will not have coverage available for them as a consequence.

Pollack: It’s too bad that they never were really able to go through a conference committee to clean up the bill before it was passed. There were a bunch of things like this that in a somewhat less frantic process might have been cleaned up.

Koetting: We started out with this bill that was strange because they never had a conference committee. Then you have this toxic environment where no one can go back and make fixes, even if everybody agrees that the fix would be appropriate.

Pollack: From my perspective, for Illinois, it’s hard to give a thumbs up or a thumbs down in a global way to how the ACA is being implemented. I would say that Illinois faces a couple of unique challenges, and it also has some advantages. It’s a state that has committed to many of the values of health care reform in a way that some other states have not. Texas or South Carolina, for example, are deeply opposed to health care reform and have huge numbers of uninsured people. And that starts Illinois with a high base in some of the elements that health reform requires.

We do have a couple of challenges. We essentially want to pay red state taxes for blue state services. And we have a tradition of poor governance in Illinois that poisons the sales pitch for some of the things that we need to do. When you have five of the last nine governors incarcerated, it becomes very, very hard to go to the electorate and say we need more resources, when in fact we do need more resources. Medicaid is one issue—the pension crisis is another one—where we have created a justified public cynicism about the capacity of government to accomplish what it needs to do.

Koetting: I agree with absolutely everything you say. I do want to comment on the bad spiral that’s happening. Because of the cynicism, the legislature keeps enacting more and more safeguards and reforms, many of which further impede productivity, which leads to an increase in cynicism, which leads to more reforms. I meet regularly now with people from other states, and Illinois is really a hard place to work in government. Day-to-day, the ability to purchase things, to hire people—we’ve made it brutal.

 

Contributed By:

Harold Pollack and Mike Koetting

 

Abstract:

SSA’s Helen Ross Professor Harold Pollack and Mike Koetting, the deputy director for planning and reform implementation at the Illinois Department of Healthcare and Family Services, discuss how Illinois is implementing the changes to Medicaid required in the Affordable Care Act, the impact of politics on health care reform and the state’s unique challenges and opportunities.

Harold Pollack

Pollack: Are we going to have an exchange in Illinois up and running in accordance with the various deadlines that we have to meet?

Koetting: Well, Illinois is not going to run their own exchange effective 2014. There was too much uncertainty in the legislature and there’s just insufficient time now. Will Illinois ever have its own exchange? There is quite a bit of sentiment that if there is going to be an exchange, we ought to run our own exchange, but until that sentiment gets translated into votes in the legislature, it’s hard to say.

Will the feds have an exchange up and running, as they’re required to do? There are a lot of people out there who say, “Oh, they’ll never do it. They’re too far behind.” My own advice is do not bet against the feds on this. They have an infinitely deep pocket, and they have the ability to [get a lot of experts involved] because people are excited about participating in a change of a lifetime. I think that they will get these exchanges up. They won’t be as slick as people envision in the law, but I would be somewhat surprised if they aren’t running.

Pollack: I take care of someone who’s intellectually disabled, who is a dual-eligible Medicare Medicaid person, and I get very anxious about some of the proposed reforms. We could really use the right kind of managed care, but it’s kind of frightening to imagine the wrong kind of managed care. What’s happening with that dual-eligible population in health reform in Illinois?

Koetting: Dual-eligibles are a subcategory of Medicaid clients that we refer to as seniors and persons with disabilities: SPDs. We have about 400,000 SPDs in the state, about two-thirds of whom are dual eligibles.

Because the care for these clients is often very complex, we would really like to get all of them in some form of coordinated care—some situation where there was an entity formally responsible for making sure that they were getting the appropriate care (and only the appropriate care) across the various settings where they receive services. The rules from the federal government limit our options to mandate care coordination for those SPDs who are dual-eligibles, but we will mandate for all SPDs who are not dual-eligibles and will give all (or at least most) dual-eligibles the choice of care coordination across all services or just for the long-term care and support services they need. (Long-term care services for dual-eligibles are covered by Medicaid, even though the individual is also on Medicare.)

Health Affairs has recently had a spate of articles about dual-eligibles, and what was really striking to me was that none of the articles said the whole idea of dual-eligibles is insane. We need to cut the knot and come up with a way of giving these people one health coverage instead of making them navigate between two systems that don’t fit together and are incoherently joined.

Pollack: So do you think that the feds should take over? That Medicare should basically assume full responsibility financially for the dual-eligibles?

Koetting: Either Medicare or Medicaid should have all responsibility for dual-eligible coverage. And I think Medicaid coverage for people under 65 should be combined with coverage under the exchange. Both ideas create a whole set of new problems. But life in policy analysis is about your choice of problems.


(The text above appeared in the print edition of the Winter 2013 SSA Magazine. Below is an extended version of this Conversation available only on this website.)


POLLACK: In Illinois, how has health reform changed peoples’ lives already, if at all? What’s next?

KOETTING: If Obama wins, there’s relative certainty that the ACA will continue, and instead of having 2.7 million [on Medicaid in Illinois], we will probably end up with something like 3.1 million or 3.2 million. There will be coverage for perhaps as many as a million additional people through the Health Insurance Exchanges, where people can buy coverage on a sliding scale.  These are big differences.

There will also be changes in the delivery system—which I actually think will be more profound than the number of people added—that will happen regardless [of who wins the election]. They might happen faster with the ACA, but these are things that are underway because of bigger issues.

For the ACA so far in Illinois: It has had very specific impacts, but targeted. One obvious example is the high-risk pool that was created. It’s not a lot of people, but those are people who were specifically unable to get insurance in the open market and now they get coverage. The rule that you can stay on your parents’ insurance policy up until you’re age 26: that means a whole bunch of kids who are in college or out of college still looking for a job are able to get health insurance, and this makes a great deal of difference.

Insurance companies now have to have a medical loss ratio of 85 percent, meaning that they cannot keep more than 15 percent of what they charge in premiums for profit and overhead. That has resulted in the repayment of millions and millions of dollars to consumers nationwide.

As other parts of the insurance reform kick in, one that will be particularly important is the whole provision called guaranteed issue, which means that insurance companies can’t throw people off insurance because they’re sick—which they are able to do now—and they can’t say to someone, “Well, we’re not going to give you insurance because you have a preexisting condition.”

There’s also a group of changes that I think are very subtle, but are quite significant to the policy community, including launching experiments devoted to how we bring down cost, which is the underlying issue. The American health care system runs now primarily on the question of, “How can I shift my cost to someone else?” The rate of growth of health care cost is simply not indefinitely sustainable.

And so now there are opportunities for people to take on issues that, as health policy analysts, we’ve known are problems forever, with ideas like trying to get accountable care organizations [ACOs] up and running, increasing the amounts of coordination and care people get. It’s something that seems like an obvious idea, but it has foundered for so long on inertia of existing programs and existing rules and the fact that the HMO seem to be a little too structured as a way to get there.

I think creating some of these alternatives and launching demonstrations will pay enormous dividends. It’ll take much longer than an electoral cycle for these dividends to be realized, though, therefore rendering it irrelevant to American politics, which is unfortunate.

POLLACK: A couple thoughts about that. One is how we expect and demand health reform to do so many different things at the same time. You mentioned the cost issue, trying to cover 50 million uninsured. We’re trying to regulate insurance. We’re trying to create accountable care organizations. And ideally we’re trying to improve population health, trying to protect individuals from financial consequences...

KOETTING: And evaluate effectiveness....

POLLACK: Right, compare effectiveness—and by the way please don’t come in with a bill that’s more than one page for every billion dollars in the health care system. And you get one crack at this every couple of decades. Many of the things that you identify—even without health reform—would be massive challenges.

I think that the fee-for-service model is dying and no one quite knows what the new alternatives are. That model provides high incomes to a lot of people, but it really is misaligned in the fundamental way with what we need.

KOETTING: Absolutely, absolutely. It is not sustainable. I don’t know that it is the core of what’s not sustainable about American health care policy, but it’s in there contributing.

POLLACK: I don’t actually know what managed care would be in our life [for my brother-in-law]–we’ve never had anyone to try to manage the care that we have. There’s a certain insanity to the lack of management. On the other hand, there’s also a tremendous freedom from that. We’re not being micromanaged.

KOETTING: As a department, when we say managed care, we have been very, very careful to say that we do not necessarily mean traditional HMOs or traditional HMO companies. And we have gone out of our way to encourage people to submit proposals of what amount to ACOs or something like an ACO, for SPD [seniors and persons with disabilities] populations. We hope to get a bunch of those experiments in place over the next six months and want to see those as alternatives to traditional managed care.

POLLACK: Maybe we should be clear here of the distinctions between an HMO and an accountable care organization. An ACO has one or more health care provider organizations, say an academic medical center, take responsibility for a population of patients with complicated problems. They are paid on the basis of both cost and quality, and that they have greater credibility and expertise than a traditional insurer or HMO would have. And the public might just have greater willingness to see them manage the care. People don’t necessarily see it as appropriate for a company like Aetna or Cigna to do that.

KOETTING: Right. One of the real advantages of the ACO is that the network is inherently organic. These are the people who have chosen to work together and designed their own mechanisms for interaction, as opposed to the HMO, which is assembling its network from people who are willing to contract with it and may not have historically worked together.

I think the other thing that’s important in that discussion is that today’s managed care entities are not the same ones that existed in the late ’80s and the early ’90s. We had this huge craze toward integrated delivery systems—except they weren’t systems and they weren’t integrated—and then we threw them out before they ever had a chance to grow. Like many things in this country, we embraced an idea and then rejected it, all with a wild enthusiasm, without giving it a chance to develop.

And what has happened is those that survived had the strongest genes, if you will, and have been mutating and learning how to actually manage care. They are infinitely more sophisticated and thoughtful. Traditional HMOs—which aren’t really “traditional”—will be a very important part of what we do with Medicaid in Illinois. Oregon has gone the route of saying we’re through with the era of HMOs.

POLLACK: There are some great opportunities for innovation in the communities.

KOETTING: I’ve been making the case for a couple of years that you can come up with a real system for more coordinated care by matching FQHCs [federally qualified health centers]—which are primary care providers—with the Cook County Health System, which has a deep core of specialists, some of whom are horrifically overused, some of which are actually underused. This would not increase options for coordination, but would increase access to specialists that might otherwise be difficult to obtain.

The Comer Foundation has started a medical network, an alliance between a number of hospitals, including Cook County, Rush and Holy Cross, with FQHCs. It’s a very creative way of trying to address this issue. They’ve got some software that other FQHCs in California have been using to communicate among primary care providers and hospitals. It’s the leading edge of providers establishing a communication network. If somebody is in an emergency room, the primary care physician gets virtually real-time notice, and when the patient gets discharged from the hospital, there’s a mechanism for getting him back to his primary care physician.

POLLACK: Can you tell me a little bit about what, as you understand it, Medicaid’s budget challenge in Illinois is, and then we can talk about how you think it affects everyday people.

KOETTING: Well, the Medicaid budget challenge is enormous because Medicaid is such a huge part of the state budget, and the state budget is structurally unsound. The amount of revenue coming in is simply not capable of sustaining the services people demand. And that’s just a fact.

Now, there are all sorts of problems with the way these services are delivered, and Lord forbid I be in any way be accused of suggesting that Illinois is running it efficiently or that all of the money is being well-spent.

But there’s just a second structural problem particularly impacting Medicaid, because Medicaid is a prisoner of the overall health economy. People talk about the Medicaid problem or the Medicare problem, but that’s so incomplete as to be just wrong. It’s a health care problem.,  Both Medicaid and Medicare’s per capita costs have increased by less than private insurance over any period you want to look at, except for one micro period during the early 1990s. But as private insurance has shed people, some of these, and a disproportionate amount of  the sickest, wind up on Medicaid. Consequently, Medicaid expenses in total have risen at a higher rate than private insurance in total not because it’s paying more for the services or because it’s more inefficient, but because it has more people in the program who are not getting covered elsewhere. Medicaid remains the insurer of last resort.

And it is also impacted by the basic fact that all health care in America runs at one and a half times the rate of inflation in the overall economy. Unless one comes up with a magic formula of completely disengaging Medicaid from the larger health economy, its budget is always going to be running ahead of other programs in state government. Legislators look at this and think, “Well golly it’s cutting away all the room we had to address other problems,” and they get very, very upset with Medicaid.

POLLACK: One of the most common criticisms of Medicaid from policy wonks is that Medicaid so underpays providers that we don’t really give patients legitimate access to services that they are nominally eligible for. To what extent do you think that’s a global problem? For example there’s that study that Karin Rhodes did, where in audit phone calls, two-thirds of specialty doctors would not take a SCHIP or Medicaid child with somewhat significant presenting symptoms in a timely way, whereas almost all of them took the patient when the child was identified as having insurance like Blue Cross-Blue Shield. Can you say a little bit about that?

KOETTING: Well first of all, in some ways I think that’s a fair enough perception, I think Karin’s study was done fine, no serious methodological problem, I think you’re talking about a real fact there.

There is a reason that Medicaid per capita costs have grown slower than private insurance per capita costs—we have more stringent reimbursement systems. There’s no question that that creates real access issues across the state, and that the access issues are different in some areas than in other areas.

But I believe that some of adaptations have happened. We have seen the rise of FQHCs that have developed styles of delivery systems that are particularly focused on dealing with the more vulnerable parts of the population. And I believe in some ways that’s actually resulted in better care for that population, because FQHCs and their partners have better mechanisms for managing care than a lot of other individual practitioners out in the community.  I wouldn’t want to try to oversell this argument, but there is something there.

POLLACK: I must say that, as a family that receives services from the state, we see a lot of that bad stuff, but we are also very grateful that we have received hundreds of thousands of dollars of medical and social services that we need, and it has protected our family. If this were 25 or 30 years ago, my brother-in-law would be in the back of a large state institution, and these programs, imperfect as they are, make it possible for families to be treated decently.

KOETTING: You know, most people’s image of Medicaid is welfare recipients. But when you look at it, 14 percent of the Medicaid population accounts for 80 percent of all our expenditures. These are people who are in nursing homes, these are people who are having liver transplants, these are people who are in neo-natal nurseries. These are very, very sick people.

If you ask me if there is fraud out there, I will tell you yes, of course there is fraud. We have 2.7 million people on this program and thousands of providers; there must be some. But that’s not what’s driving the cost. People can rant and rave all they want about the overall expenditures of the program, but those 14 percent are just people in our society who have had misfortunes accumulate on them. In the absence of [Medicaid] taking care of them, who is going to do it?

And among the 86 percent of the people that only account for 20 percent of the expenditures are people for whom this might be their only kind of avenue out. They have a kid who’s sick, who has a problem, needs glasses, needs dental work. If this kid’s going to have a chance, we need to be investing in this kid in a whole variety of spectrums. For the people who are opposed to this, what’s supposed to happen to this kid? Well, yeah, his parents should have more money. Yeah, she should not have been born to the parents she was born to, but hello! What kind of a society are we?