Paying for community health centers
Using Primary Care to Bend the Curve: Estimating the Impact of a Health Center Expansion on Health Care Costs
By Leighton Ku, PhD, MPH, Patrick Richard, PhD, Avi Dor, PhD, Ellen Tan, MSc, Peter Shin, PhD, MPH, Sara Rosenbaum, JD
The George Washington University
School of Public Health and Health Services
Geiger Gibson / RCHN Community Health Foundation Research Collaborative
September 1, 2009
This research brief, the third in a series examining the link between national health reform proposals and community health centers, estimates the cost savings that would be realized by making important investments in non-profit health centers as an element of national health reform.
These projected savings to the nation’s health care costs become possible because of the insurance reforms on which they build, supplemented by a direct health center investment. Health insurance coverage expansions, coupled with investments in the nation’s primary health care infrastructure, can spur high quality and sustainable primary health care in medically underserved rural, urban, and suburban communities, and help bend the curve of health care cost growth.
Under the health reform proposals, a large number of people will gain insurance coverage from the health insurance exchanges, which will primarily offer private plans (although the House bill also offers a public plan option). As reported earlier, private insurance plans tend to pay health centers considerably less than the actual costs of providing care at health centers; data from the 2007 Uniform Data System indicate that private insurance underpays by about 43 percent. One option under health reform would be to require plans offering care under the exchange to pay health centers according to the prospective payment system (PPS) used in both Medicaid and Medicare, which comes much closer to paying full costs. In 2007, Medicaid payments were about 15 percent below health centers’ estimated costs.
As has been demonstrated by a number of studies, in addition to this one, health centers are a cost-effective means to furnish primary health care, which can lead to better health and lower health care expenditures. Investments in health centers can serve as a complement to health reform efforts to expand the number of people with health insurance, by ensuring that there is an increased availability of primary health care providers to serve the newly insured, as well as those who remain uninsured. This will be particularly important in medically underserved areas where there is already an insufficient supply of primary care providers. Thus, this is a case in which the national economic value of the investment is further enhanced by its ability to bring better health to the nation’s most underserved communities.
Comment:
By Don McCanne, MD
Regardless of what proposals for health care reform are adopted, it is essential that financing be included for non-profit community health centers in underserved rural, urban and suburban communities. Would these centers be better served by health insurance exchanges and their private plans, or by a public financing program?
Although the insurance industry whines that public plans would provide unfair competition because they pay less than private plans, what is the record with community health centers? Unfortunately, Medicaid does underpay - by about 14 percent below the health centers’ estimated costs. But the private plans, which the members of Congress are so diligently protecting, are underpaying by about 43 percent!
There are two financing considerations for community health centers: 1) capital investments to build and expand the facilities, and 2) operating expenses, including payment for health care services.
Capital investments can be authorized through various legislative efforts, including as a component of the current health care reform legislation. But such efforts tend to be sporadic and not always well aligned with need. In contrast, the single payer model separately budgets capital improvements, providing more coordinated capital allocations based on community need. It ensures a perpetual resource that is responsive to fluctuating needs.
For operating expenses, the thousands of private health plans each do whatever they can to avoid paying health care costs. Community health centers serving vulnerable populations do not have the clout to demand that their expenses be met by the private insurers. Medicaid, a chronically underfunded welfare program, comes much closer, but still falls short. In contrast, a single payer system is designed to pay for the legitimate costs of appropriate health care. The community health centers would be served much better by an improved Medicare-like plan that covers everyone.
Community health centers have strong bipartisan support. Now if only we could could get our legislators to agree on adopting an efficient and equitable system of financing the centers…