Study by health care experts at VCU find way to save nearly 50% in care costs

While the Supreme Court now considers whether the individual mandate provision in the Affordable Health Care Act is constitutional, a new report by health care experts at VCU have found a way for the act to save upwards of 50% of the costs associated with providing coverage to the uninsured.

March 30, 2012; 6:00 AM • by Nathan Cushing

As the Supreme Court begins to consider arguments on whether the Affordable Health Care Act’s provision requiring all citizens to purchase health insurance or face a penalty is constitutional, local experts have found evidence that the act has the potential to save money.

Should provisions for Medicaid expansions under the Affordable Health Care Act go into effect in 2014, members of VCU and the VCU Health System have found a way to save a significant amount of money—nearly 50%—in costs associated with providing health coverage to the uninsured. Their findings were published last month in Health Affairs.

“The potential for health care savings does exist,” said Cathy J. Bradley, Ph.D., one of the contributors to the findings. Dr. Bradley is the Cabell Professor in Cancer Research and chair of the Department of Healthcare Policy and Research at the School of Medicine at VCU.

The Affordable Care Act of 2010 is estimated to expand coverage to approximately thirty-two million uninsured Americans beginning in 2014. Many cite that uninsured individuals exact significant costs when they visit emergency rooms and receive other medical services. A 2009 report found that the average US family paid an extra $1,017 in health care premiums in 2008. About 37% of health care costs ($42.7 billion) went unpaid in 2008. It is argued that those unpaid costs are largely absorbed by the costs of premiums for the insured. That’s where the report’s findings come in.

In 2000, the VCU Medical Center established a coordinated care program to provide uninsured adults in the Richmond region with medical care. To qualify, individuals had to have family incomes below 200% of the federal poverty level and have no other health coverage. These individuals were then assigned to a primary care physician near their residence. Enrollment was for one year, with the ability to re-enroll should they still qualify.

The study analyzed the cost differences between those who remained in the program for only one year and those who remained in the program continuously or who enrolled in multiple one-year coverage, among other measurements.

“From the first to the third year of enrollment, average annual inpatient costs decreased from $3,719 to $1,642 for multiple-year enrollees and from $4,293 to $1,460 for continuously enrolled patients,” the study found. “Average total costs per year also diminished over time for both groups.” The total annual cost declined across all enrollees. However, people who were continuously enrolled had the largest reduction in their health care costs (46% from first to third year). The longer and more continuous an uninsured individual remains covered, the less expensive their health care costs become over time.

Dr. Bradley said that some who enroll for just one year may “feel they don’t need healthcare,” and so decide not to be continuously enrolled despite qualifying. “Patients who lack continuous coverage or who are uncertain about their coverage may revert to more costly modes of utilization—such as hospitalization and visits to the emergency department—when they need health care,” said the report. “We have to do something to keep people engaged [in the primary care system],” said Bradley.

While the specific coordinated care program included only a select population in the Richmond region, Bradley said the savings associated with continuous enrollment in health care and insurance program “could be extrapolated” on the national level. However, she cautions that these potential savings are not immediate, but “will take some time.” While the Supreme Court now considers the constitutionality of the individual mandate component of the Affordable Health Care Act, savings are possible at the local and national level if participants would remain enrolled in the program. Even though the uninsured receive tax-payer dollars for their coverage, the cost associated with their coverage drop over time, and ultimately saves taxpayers money.