Administration and Leadership, Columns, Patient Care

Family Healthcare on an EMS Budget

It’s not news to anyone that public service employees are chronically underpaid, and that the degree of payment is often inversely proportional to the responsibility entrusted to the employee. That s why benefit packages are so important as a means to compensate, even in a small way, for the low wage scales in these critical community roles. The reliance on benefit plans as a “perk” of public service makes it difficult for most people to envision a scenario where the families of these same employees are uninsured and lack access to heath care. But the national debate over SCHIP has brought this issue home to the EMS community.

SCHIP stands for the State Children s Health Insurance Program. It’s a government program that provides states with block grants to provide expanded health insurance coverage to children who have financial need but whose families may not meet traditional Medicaid income requirements. Currently, the $5 billion program serves 6 million children each year. The proposed expanded price tag of $35 billion ($7 billion per year) extends the reach of SCHIP to 10 million youngsters nationwide.

States choose to adapt their allocation of SCHIP funds for the most optimal coverage for their populations. For example, in Kansas, Medicaid and SCHIP funds are administered under a plan called Kansas HealthWave. This program offers coverage to children in families whose income is at or below 200% of the Federal Poverty Level (FPL).

Drawing the line
A note about the FPL is probably in order before we continue. The development of the federal poverty line is an interesting story. According to the Department of Health and Human Services Web site, Mollie Orshansky developed the poverty thresholds in 1964 for the Social Security Administration. To do this, Orshansky took the dollar costs of the U.S. Department of Agriculture s economy food plan for families of three or more persons and multiplied these costs by three. She used a factor of three because the Agriculture Department s 1955 Household Food Consumption Survey found that the average dollar value of food that families of three or more persons used during a week accounted for one third of their after-tax income. Poverty thresholds are updated for price changes only using the Consumer Price Index. The poverty line doesn’t take into account changes in food pricing or consumption habits over the past 40 years, nor does it evaluate the proportional costs of other needs as housing, transportation and utilities. There s no doubt in my mind the system needs an update, but you’ve still got to hand it to Ms. Orshanky (who was quite literally nicknamed “Miss Poverty” by her colleagues) for a nice piece of work.

Back on the SCHIP
Although political pundits want to paint the SCHIP debate as government-run healthcare versus private enterprise, the debate really centers on income levels. How poor — or rich — does someone need to be to qualify for government-subsidized health insurance?

The income-level debate focuses on what percentage of the federal poverty level should allow a family to qualify for coverage. FPL varies by family size, but a family of four is the basic model for our needs (and most SCHIP discussions in the popular press). For 2007, the FPL for a family of four is $20,650 per year (100% FPL). A family bringing home $41,300 per year has reached 200% of FPL, a household income of $51,625 is 250% FPL, and 300% FPL brings the total family income to $61,950.

However, family income isn’t the only number to keep in mind. Both sides in the political debate tend to consider these numbers absolute, meaning they think either you have enough money to purchase private health insurance or you don t. But it s actually not that simple, and a discussion on the affordability of health insurance is missing from an informed debate.

Affordability refers to what proportion of your income you re able to spend on any given product. A study on the online version of Health Affairs has assessed the limits of affordability of health insurance. It defines affordability as the percentage of income those who currently pay for health insurance pay to fund premium costs. This number becomes an indirect measure of how much people can afford to pay without jeopardizing other costs of living. It finds wide variability among those who pay for health insurance, but the affordability percentage is about 8.5% for individually purchased, family coverage among those who make between 300-499% of FPL The Health Affairs study also noted that the affordability constant was between 2 and 4% for those employees who receive some help with healthcare insurance costs.

Getting some help
It s worth mentioning that other factors also affect affordability. The predominant one is the availability of subsidized health insurance through the workplace (sometimes referred to as group healthcare plans).

The cost for the most basic coverage offered to State of Kansas employees is $4,178.98 per year for a family of four. If your family income is a generous 300% of FPL (roughly $62,000) per year, your coverage totals 6.7% of your pre-tax income. This falls somewhere between the two limits not as bad as trying to purchase insurance yourself but still not an affordable option for everyone.

However, some works suggests that 47% of those with annual household incomes less than $50,000 have access to health insurance at work. Again, using the State Employee Health Plan as a model, if the family of four making 300% of FPL purchases a comparable policy on their own, the total cost of $12,965 per year is equal to 21% of their income. The family is likely to go uncovered.

So what does all of this have to do with EMS?
There are two answers. The first is that expanded funding for SCHIP may result in increased reimbursement for EMS services provided to children who currently have no source of payment. Bad-debt ratios decrease because the families have less financial burden, and prehospital agencies have the potential for increased revenue.

The second, which is the more complex but the more meaningful, harkens back to the initial statements about public service wages. If my contention that EMS providers are underpaid for the work they do isn t enough, data from October s 2007 JEMS Salary Survey provides the needed backup. According to the survey, the median salary for an EMT-B working for a 40,000 call volume service is $27,050 per year. An EMT-I working for the same service may make $32,946.90, while the median wages for a Paramedic are $45,459.25. Given these low wages, is health insurance currently affordable for prehospital staff? In an SCHIP world, is there more healthcare assistance available for EMS caregivers and their families?

Fortunately, the salary survey also shows us that nearly half of all systems pay major medical for employees, and 15% pay for all family health insurance costs. However, 16% must fund family coverage on their own and 1% must even pay for their own coverage.

So let’s see how the latter might live in an SCHIP world. Let’s assume that the combination of Medicaid and SCHIP funds allow fully subsidized coverage for all children of families with income levels below 250% of FPL. By this measure, we find that children of EMS professionals paid the median wage with no employer-provided coverage would qualify for benefits under SCHIP. Expansion of SCHIP can have a direct impact on the healthcare coverage of their children.

The effects of SCHIP expansion on those with partial payment plans, especially at higher income levels, are harder to discern. If we use the numbers above for our hypothetical family of four with an income of 300% FPL ($62,000), we’ve already noted that it takes $4,178.98 of employee dollars each year to cover the family. If we focus on coverage for the employee and children only, the out-of-pocket expense goes down to $2,072.20 per year, or 3.3% of the family income. This cost share is well within the affordability limits. But if the copay for an SCHIP expansion costs only $100 per month ($1,200 per year), one might assume that those “fence-sitters” who are unwilling to purchase coverage may now be motivated to do so through lower costs.

We’ve got issues
Will expansion of the SCHIP program act as a disincentive to the purchase of private insurance? If more families can qualify for SCHIP at lower costs, and the coverage is viewed to be comparable to the private market, won’t they jump ship from the private sector and hurt the health insurance industry? The latter scenario has been used as an argument to reject the SCHIP expansion. The fact that the insurance industry has, on the whole, been supportive of the SCHIP expansion seems to invalidate this proposition.

As mentioned before, there are a host of other issues surrounding SCHIP. Do insurance companies support it the program out of altruism or greed? How much of the effort is to score political points? Is SCHIP coverage as good as that provided by other sources? Is funding SCHIP expansion through tobacco taxation an unfair burden on those smokers who can least afford the price increase? (This is one you don’t ask a public health person. Every 50-cent increase in the cost of a pack of cigarettes decreases smoking rates by 10%. I ll take a tax to combat the No. 1 killer in the nation any day, anytime.)

All are probably valid arguments in somebody’s mind, but to me the only thing that matters is giving kids access to care. This includes immunizations, developmental screenings, and all the other early interventions that insure our kids grow up happy and healthy. And if expanding SCHIP gives us another way to relieve the financial burden on prehospital professionals who save priceless lives for so little reward, then so much the better.