Health Reform Hits Stanford

Although the first major changes of the health care reform bill have already begun to take effect, most universities, including Stanford, have not yet been hit – at least for the time being.

Since student health care plans were settled in advance of the September 23 implementation date of the bill, campuses will not be subject to many of its provisions until next year. This fact, however, has only contributed further to the growing speculation about possible effects the bill may have in store for colleges.

Signed into law in March, the reform bill includes such provisions as an elimination of limits on pharmacy costs and a required inclusion of preventative care measures into insurance plans. With these mandates in mind, Dr. Ira Freidman, director of Vaden Health Center, discussed the various scenarios he and his colleagues are considering in preparation for the 2011 school year.

Friedman commented that, on the one hand, Cardinal Care would likely expand its medical benefits and preventative care measures under the new bill, a good outcome in his estimation. But at the same time, he noted that such changes would probably also be accompanied by an increase in student premium costs.

“Given students’ limited budgets, I’m very concerned about [raising premium costs],” said Freidman.

This year, students will pay $1,024 per academic-quarter for health insurance. Alternatively, students can opt out of Cardinal Care entirely if they so choose, an option which may now be used more commonly.

“Increasing premium costs for Cardinal Care may lead some students to choose other, less expensive plans,” pointed out Freidman.

Some university groups have taken to Washington, D.C. in hopes of ensuring that college health care plans remain permanently exempt from parts of the new bill. A recent article published in the Wall Street Journal suggested that one of these groups, the American College Health Association, might be making significant strides in having its requests written into legislation.

According to Freidman, “The American College Health Association, of which we [Stanford] are members, has been working with officials in Washington on behalf of students nationwide to assure that students will have options in the future that are specifically meeting their needs.”

Beyond Student Coverage

Thus far, many reports about health reform and colleges have focused on student health care packages. However, more profound changes might manifest themselves in other realms, especially at schools like Stanford that are affiliated with Hospitals and other health clinics.

Beginning in 2014, Medi-Cal is projected to expand by 2 million people under the bill, growing from 7 to 9 million people. Medi-Cal is the Medicaid program in California that serves low income individuals and families.

But that increase in coverage will introduce a whole new set of questions. Professor Jay Bhattacharya, an expert in health care economics, said, “But then the questions will be: how will we care for two million more people with the same health infrastructure we currently have? And the answer is we don’t. There’s going to be a lot of people waiting to get care.”

This dilemma will particularly affect Stanford Hospital.

Currently, Stanford Hospital is paid to care for indigent patients in the form of “disproportionate share payments.” But the new bill will effectively eliminate this method of funding and hospitals will instead have to take on patients through Medi-Cal.

As Bhattacharya pointed out, “It’s not clear whether the money that Medi-Cal pays hospitals to take care of poorer patients will make up for the loss in disproportionate share payments.  So in terms of just care for the poor, hospitals could face a pretty substantial loss in revenue.”

Stanford Hospital may also encounter a scenario in which low-income employers drop the health coverage of their employees.

Under the bill, employers will only incur a small penalty for dropping coverage, especially in comparison to the total expenditures of providing health insurance. At the same time, large insurance subsidies will be made available to low-income families, which would be defined as up to 400 percent of the federal poverty line, whose coverage is dropped.

Bhattacharya contended that this relationship would result in “a strong incentive for low-income employers to drop coverage.”

The likely result is a significant change in the source of revenues for Stanford Hospital.

“It will no longer be mostly employer-provided coverage, which tends to provide very generous payments to hospitals. Instead, hospitals will have to rely on the insurance in the exchange,” said Bhattacharya. “And at this point, it is not clear how generous that will be.”

Other hospitals and organizations are now also fighting for their respective positions in areas where the legislation is not complete. One issue which could come to the forefront soon is children’s health.

“Health care reform isn’t being talked about in terms of pediatrics, yet,” said Sherri Sager, who serves as the chief government relations officer at Lucile Packard Children’s Hospital. “So we’re trying to do what we can to be ahead of the curve and to learn as much as we can to prepare for the future.”

In particular, Sager has been working eagerly to make sure reform will work well for children and children’s hospitals. And although the legislation does increase coverage for children, Sager cautioned that “coverage doesn’t necessarily mean access.”

Sager noted that there is currently a shortage of pediatric sub-specialists. In order to alleviate this problem, Sager is working with Congress to provide further incentives to medical school students who decide to pursue studies in pediatrics and pediatric sub-specialty areas.

“As we see more children who have coverage, we want to make sure that if they need to be seen by pediatric specialists, they are able to do that,” concluded Sager.

Various elements of the healthcare bill will continue to be implemented until 2018.