Medicaid

It hasn’t been a good week for healthcare in the CNMI; not for healthcare as an industry and certainly not for the families who rely upon Medicaid to cover their healthcare expenses.

With the announcement last week that Medicaid payments to local providers will be capped at $1.3 million, a reduction from last year’s spending of around $9 million, those of us in healthcare hear the grim reaper arriving within the next few weeks. As the policies to stay below this cap are implemented, the scythe will begin to cut down medical practices and patients alike.

It has never been easy to provide care for the Medicaid program. Whereas most insurance companies pay within 45 or 60 days for services, most of us receive payment from Medicaid once, maybe twice a year. In a good year, we might get paid once a quarter. It has always been unpredictable. Many providers often considered ending their contracts with Medicaid but always held on because although the payments were slow in coming, they came. We understood that the Medicaid office has hardworking people, but is short-staffed. We waited patiently. And it worked. Not ideally, but it worked.

Now, with a annual $5.3 million cap-$4 million for the hospital and $1.3 million for private providers-we know that limits will have to be placed either on the amount paid per service, on the range of services covered, or both. No private provider can afford to see the same number of patients they are currently seeing and take an 86-percent reduction in reimbursement for providing those same services. The Medicaid program knows that. We can take a bit of a cut but we can’t provide services below our costs. That’s just a reality. Most of us understand the difficulties of the economy and are able to take some reduction in reimbursement, but nothing on the scale called for by the $1.3 million cap. There may be some fat to be trimmed, but not $8 million worth. Everyone knows that too.

If private providers cannot afford to care for the Medicaid population, those patients will have nowhere to go but to the hospital. And even there, the $4 million set aside will not cover the hospital’s costs to care for all those patients. Furthermore, with the flood of patients to CHC, their staff will become overwhelmed and overworked, and as we have seen throughout the years, in such situations staff quit. They go back to the mainland, where the pay is better, and where they can practice medicine in a setting that is not so acutely stressed. The entire healthcare system and the health of the island suffers as we lose doctors in important specialties.

And what about the health of those on Medicaid? In my experience, the sickest patients I have are those on Medicaid. I treat hundreds of Medicaid patients a year with diabetic eye disease. If they don’t get the treatment they need, they go blind. I treat those with cataracts. If they don’t get the surgery they need, they lose their ability to see. And although people fear going blind more than dying, the reality is that when the Medicaid program cannot pay for medications or ongoing care or even preventive care, people-maybe you, or your parent or your child-will die. The human body doesn’t really understand economics. Science has its own cruel equations that do not bend to budgets.

No one thinks that you can reduce services by 86 percent and still provide the same level of healthcare. So the Medicaid program is faced with some excruciating choices about which illnesses will be treated and which will not; which medications will be covered and which will not; who, in the grand scheme of things, will live, and who will die. I don’t envy their position.

Of course, there is another option. Make no decision about limiting the care and just let the bills run up, then later default on them. The fact that the Medicaid program has announced that it will be sharing its plan is reassurance to providers that the limitations will be clearly delineated and that “no plan” will not be “the plan.”

It’s tragic that we are in such a situation. It’s tragic that healthcare-one of the primary measures of the level of development of a society-will have to be sacrificed. The irony is that here is a program where for every dollar we invest in the program, we get another dollar back in federal matching funds. We just don’t have that dollar to invest. The Medicaid program is a good thing. It provides care for those who can’t afford it. It helps people live better. And it is one area where the dollar spent by the government not only goes toward a noble purpose, and not only gets a free federal dollar into the CNMI, but also pushes those funds into the local economy. It seems like there must be other areas in the government budget where cuts could be made to shunt funds to the Medicaid program. Surely some other area must be less important than healthcare.

We may focus on getting costs down but the ultimate challenge is to get disease down. One of the major drivers of the cost of care-not just here but throughout the United States-is the lifestyles we lead. The vast majority of disease that we face-the vast majority of expense to the Medicaid program-are the result of choices we make. Tobacco use, alcohol use, and obesity, which are all the result of lifestyle choices, are what lead to diabetes, hypertension, cancer, stroke, and heart disease. These are the disease that are draining the CNMI’s healthcare dollars.

Lifestyles are difficult to address. But one of them-the leading culprit-is not too difficult: tobacco use. It’s well known that raising the cost of cigarettes results in decrease use. Once in a while, someone will bring up the idea of a “sin tax” on tobacco to reduce usage and generate revenue. I don’t like the term “sin tax,” because it seems like we’re trying to tax someone’s fun. I prefer to call it what it is: a “cost recovery fee.”

The Centers for Disease Control places the cost to the economy of a pack of cigarettes at $10.47. Yes, that’s per pack. For every pack smoked, $5.23 is spent on direct medical costs and $5.24 cents on costs related to loss of productivity.

What does this mean for us? Over the past two years, 2010 and 2011, the CNMI imported an average of 2.1 million packs of cigarettes per year. That’s hard for me to believe. But the numbers actually add up.

If it’s startling that we’re smoking 2.1 million packs of cigarettes per year in the CNMI, then it’s even more startling what we spend on those cigarettes in direct medical costs: 2.1 million packs x $5.23, or almost $11 million. We should not “tax” cigarettes. We should merely charge what they are costing us-our community and our government programs-in medical expenses. Add this $5.23 cost recovery fee to every pack of cigarettes, and we’ve funded the Medicaid program. Eleven million dollars more into the program, plus another $11 million from match by the federal government (if that’s what’s available), and suddenly, we have a program that is not underfunded at all. And if as a result, fewer people smoke, all the better. Over time, as the number of packs sold goes down (and the dollars coming into the program go down), so will the cost to the Medicaid program, and the need for these dollars.

I don’t expect such a cost recovery fee to materialize. It seems too radical, too “harsh” for the smokers. But it shouldn’t be viewed as anything personal. (After all, we use the same principle to recover the cost of power generation.) It’s merely pointing out that the costs to the Medicaid program do come from somewhere, and we know that for each pack of cigarettes that someone on Medicaid smokes, the program incurs $5.23 in medical costs. The truth is that over 70 percent of smokers want to quit. A $5.23 cost recovery fee can help make quitting easier to bear. Quitting is hard, but no one suffers in the long term because they quit smoking, even if it was for economic reasons.

Is $5.23 a pack too much? Fine, but let’s at least implement a partial cost recovery fee. Need more revenue? Put a bit of attention on another major cost to the healthcare system: alcohol. During 2010 and 2011, we imported 10 million cans of beer into the CNMI per year. That’s 200 cans for every man, woman and child in the CNMI. Do you think this is costing our healthcare system money? You bet it is. Place a 25 cent cost recovery fee on every can of beer-not much of an increase, really-and we generate $2.5 million. With the federal match, this results in $5 million more into the Medicaid program. It’s not about taxing some concocted sin. It’s just about recovering the costs that are incurred by the healthcare system as a result of tobacco and alcohol use. No judgment. No blame. Just cost recovery.

Our population is getting poorer and sicker, driving more people into the Medicaid program and increasing the requirements of care. It’s my hope that healthcare will improve in the CNMI, not worsen. I hope that because we are talking about people’s lives, because we are talking about an industry-healthcare-that directly impacts our quality of life, and because we get a 100 percent dollar-for-dollar return on our investment in Medicaid, we can find ways to put more money into the Medicaid program, not less. With the harsh reality of the $5.3 million cap, the outcome is not a mystery, not for healthcare as an industry and not for the health of those covered by the program.

David Khorram, MD is the CNMI’s only ophthalmologist and the medical director of Marianas Eye Institute. Prior to founding the eye clinic, he worked at the Commonwealth Health Center. Dr. Khorram is listed in Guide to America’s Top Ophthalmologists. For comments or questions, call 235-9090.