Kentucky spends less than a penny of its tobacco-settlement money on prevention programs; few states do very much

By Molly Burchett
Kentucky Health News

A new report says that 15 years after the 1998 state tobacco settlement, Kentucky ranks 38th in the nation in funding tobacco prevention and cessation programs, only 3.7 percent of the amount recommended by the federal Centers for Disease Control and Prevention.

The CDC recommends that the state spend $57.2 million a year on programs to help people quit smoking, but Kentucky is only planning to spend $2.1 million in 2014 on them, says the new annual report from the Campaign for Tobacco-Free Kids. Last year's report ranked Kentucky 37th as it planned to spend the same amount.

The goal of these programs is to help kids and adults quit smoking. Of the $320.3 million in revenue the state will get from the settlement in the current fiscal year, Kentucky will spend just 0.7 percent of it on tobacco-prevention programs, or less than a penny of every dollar it collects in revenue, the campaign says in a news release and a chart.

Kentucky has the highest smoking rates in the country, a an estimated 28.3 percent of adults and 24.1 percent of high-school students smoke. Each year, tobacco claims 7,800 lives and costs the state $1.5 billion in health care bills, about $487 million of which are covered by the federal-state Medicaid program, and each Kentucky household pays an estimated $582 per year in taxes to cover smoking-caused government expenditures, the release says.

To reduce smoking and its negative consequences, health advocates are calling on Kentucky leaders to pass a comprehensive, statewide ban on smoking in workplaces and enclosed public spaces. Some advocates also call for an increase in the state's tobacco tax. The report says Kentucky has the 40th lowest cigarette tax in the country at 60 cents per pack, 93 cents below the state average. It was doubled a few years ago.

"Tobacco takes a terrible health and economic toll on Kentucky, but state leaders can do something about it by increasing funding for tobacco prevention and passing a comprehensive, statewide smoke-free law," said Matthew L. Myers, president of the campaign. "The evidence is clear that reducing tobacco use not only saves lives, it also saves money by reducing tobacco-related health care costs. It's one of the smartest investments Kentucky can make."

Nationally, the report finds that most states are failing to adequately fund tobacco prevention and cessation programs. States will collect $25 billion from the tobacco settlement and tobacco taxes in 2014, but will spend just 1.9 percent of it on prevention programs.

States are spending only 13 percent of the CDC's recommended $3.7 billion in funding for these prevention programs, and only two states – Alaska and North Dakota – spend the recommended amount.

Green = State spends 50 percent or more than recommended amount; Orange= 25-45 percent of recommended amount; Yellow = 10-24 percent of recommended amount; Gray = less than 10 percent of recommended amount 

"Tobacco use is the number one cause of preventable death in the U.S., killing more than 400,000 people and costing $96 billion in health care bills each year. Nationally, about 18 percent of adults and 18.1 percent of high school students smoke." says the report.

Since the states settled their lawsuits against the tobacco companies in November 1998, the Campaign for Tobacco-Free Kids has issued annual reports to hold states accountable for settlement spending, an amount estimated to be $246 billion over the first 25 years.

The annual report on states' funding of tobacco prevention programs, titled "A Broken Promise to Our Children: The 1998 State Tobacco Settlement 15 Years Later," was released by the campaign, the American Heart Association, the American Cancer Society Cancer Action Network, the American Lung Association, the Robert Wood Johnson Foundation and Americans for Nonsmokers' Rights.

A Ky. guide to the Patient Protection and Affordable Care Act

By Molly Burchett
Kentucky Health News

Few laws have generated as much confusion, opposition or news coverage as the Patient Protection and Affordable Care Act. Despite the flood of news stories about the law widely known as Obamacare, there is still much confusion about it.

That's not surprising. The 906-page law is complex and is accompanied by 10,535 pages of regulations. This guide to the law is designed to clear up confusion and offer various perspectives about how the law may affect you, your family or your business.

What does the Affordable Care Act do?

The law is a set of reforms that impose many requirements on insurance companies and requires all Americans, with very few exceptions, to have health coverage or pay a penalty starting Jan. 1.

Kynect home page

In addition to those mandates, the law created online health-insurance marketplaces and encouraged states to expand the federally subsidized Medicaid program for the poor and disabled. Gov. Steve Beshear expanded Medicaid and decided the state would run its own marketplace or exchange, Kynect, which launched Oct. 1.

Why did Congress pass the law?

The law is designed to extend health coverage, either through private insurance or Medicaid, to Americans without health insurance. More than 47 million Americans were uninsured in 2012, says the Kaiser Family Foundation, and about 640,000 of them were Kentuckians.

The law's rules for insurance will increase costs for many, so it provides Medicaid or subsidized coverage to help qualifying individuals pay for coverage. Those with incomes under 138 percent of the federal poverty threshold qualify for Medicaid, and those with incomes up to 400 percent of the poverty line get premium subsidies. The line for a family of four is $23,550, so such a family would qualify for subsidies if it makes less than $94,200 a year.

Who will be affected by the law?

Obamacare will affect almost everyone, but it will have less impact on people 65 and up because they're eligible for Medicare. Virtually everyone must have health insurance coverage by 2014 or pay a penalty. Beginning in 2015, employers of 50 or more full-time workers (defined as working at least 30 hours a week) must provide coverage for their employees.

Insurance companies can no longer deny coverage because of pre-existing conditions such as a disability, pregnancy, or chronic disease. Under one part of the law that took effect early, parents are able to keep their children on their insurance until the children turn 26.

The law aims to help people who can't get affordable insurance through an employer or who aren't ineligible for public coverage through Medicare or Medicaid. It also affects the self-employed, small businesses and employees of businesses that don't provide coverage.

Because the law is making fundamental changes in the health-insurance system, "In the long run, pretty much every American will be affected by Obamacare," reports Abby Hayes of The Dough Roller, a financial-advice site. "Next year, employer-sponsored insurance premiums are likely to fluctuate as insurance companies adjust their offerings."

Will the law lower health costs?

It's too soon to tell what impact the law will have on costs. Remember, there are two types of health costs: the country's overall cost and the cost that you feel in your pocketbook from the money your household spends on health services.

If you buy an insurance policy through the state exchange, www.kynect.ky.gov, your cost will depend on your individual situation, such as the size of your household and the number of smokers in it, and your income, which will determine your eligibility for subsidies or Medicaid.

Most people who buy coverage in the individual market will pay higher premiums in 2014, mainly because companies are required to cover people with pre-existing conditions and a broader range of services, such as prescriptions, than many people have been paying for.

Rates in the individual market will change yearly, as explained in a report from the Kaiser Family Foundation. It says the broader coverage, and limiting surcharges due to age, will spread the overall cost of care across the insurance marketplace, tending to lower premiums for people who are older and sicker and raise them for people who are younger and healthier. Thus, the trade-off for pre-existing coverage is the individual mandate, which requires everyone to purchase coverage to spread the cost.

Think of it this way: When you go out to eat with two grade-school children, they can order off the kids' menu, so you pay less for their smaller portions. The total bill is $30. Your kids' chicken finger platters are $5 each, and you and your spouse both have $10 items. However, if the restaurant must charge all patrons equally for the same meal, the $30 cost would be assessed differently. The cost for each individuals would be $7.50; the cost of your kids' meals would be higher and you and your spouse's meal would cost less.

Many Kentucky businesses have expressed concern about rising premiums for employee coverage. Some are moving to high-deductible plans that require employees to pay a larger share of their costs, and some may drop coverage, letting employees obtain insurance and subsidies through the government exchanges.

How do I get coverage from the exchange?

The Kynect website will determine your eligibility for Medicaid or subsidies, allow you compare plans and process the insurance application. If you don't have a computer, you can call toll-free to 1-855-459-6328 to apply or locate a local "Kynector."

Unless you qualify for a special enrollment period, you must enroll in a health plan by March 31, 2014. A "life-changing event," such as moving to a new state, major changes in income and changes in family size, can make you eligible for a special enrollment period, says Healthcare.gov, the federal website. (Kentuckians do not use the federal site because the state has its own site, Kynect.)

The date coverage starts depends on when you buy it. If you enroll before Dec. 15 and pay your first premium, your coverage starts Jan. 1. Likewise, in succeeding months, if you enroll between the 1st and 15th, your coverage starts on the 1st of the next month. If you enroll after the 15th, coverage starts the month after the next one.

What do the health plans cover?

Regardless of which plan you chose, the law requires all plans offered by any insurance company to cover these essential health benefits:

1. Ambulatory patient services (outpatient care)
2. Emergency services
3. Hospitalization
4. Maternity and newborn care
5. Mental health and substance abuse services (including behavioral health treatment)
6. Prescription drugs
7. Rehabilitative and habilitative services/devices
8. Laboratory services
9. Preventative, wellness, and chronic disease management services
10. Pediatric services (including oral and vision care) 

What will I pay for a plan?

Premiums depend on individual circumstances, such as income and the level of coverage, such as the amounts of deductibles and co-payments. Kynect is connected to federal databases — including Internal Revenue Service databases — to determine whether you qualify for assistance in paying a premium. People on Medicaid do not pay premiums.

Plans on Kynect vary widely. In addition to comparing premiums, it is important to consider deductibles, co-payments and other plan details. Kynect offers four basic types, labeled bronze, silver, gold and platinum. Bronze plans have the lowest premiums but have a $6,300 deductible. As you move up the plan spectrum to platinum, your premiums increase and your deductibles decrease. The exchange also offers people under 30 a plan that provides only catastrophic coverage with a "very high deductible" and no subsidy.

Let's consider a basic example. A 45-year-old Floyd Countian named John Smith earns $36,000 a year, which means he is eligible to buy subsidized insurance through Kynect.

The individual market in Floyd County is limited to two companies, Anthem Blue Cross and the non-profit Kentucky Health Cooperative; Humana Inc. isn't offering individual coverage there. Depending on the type of plan John chooses, his premiums will range from $182 (bronze) to $421 (platinum), with deductibles ranging from $6,300 (bronze) to $500 (platinum).

Kynect shows selected plans' ranges of premiums, 
deductibles and out-of-pocket limts.

John has several options. Let's say he decides that he needs to keep his premium payments below $250 per month because he just bought a house and is on a tight budget. He doesn't expect to have many doctor visits because he's pretty healthy, but he doesn't have enough money saved to afford a $6,300 deductible if things went south.

Considering his obligations, John decides to set aside 15 percent of his monthly income for health care. Based on this budget, he narrows his options down to three plans. The Kynect website displays them.

After eliminating the gold plan, John decides he would prefer to pay an additional $40 per month to reduce his deductible to $2,000, so he purchases the cooperative's PPO Silver plan. About 7 percent of his income each month will go toward the premium. He will save the other 8 percent ($240) to apply to his deductible, prescription drug costs and co-pays for office visits.

A $2,000 deductible means that John must pay all of his medical costs, excluding certain preventive services like immunizations and screening, until he reaches this threshold. Co-payments and premiums cannot count toward the deductible.

John really likes his family doctor, whom he's been seeing for 20 years, and the doctor is in the cooperative's network. This plan has a $30 co-pay for primary care and mental health services, and he feels comfortable paying this amount for an office visit. If he were to see an out-of-network doctor, he would pay co-insurance: 60 percent of the doctor's full charge for the visit. For prescription drugs, there is a $500 deductible, and John will pay $20 per prescription for generic drugs after reaching this amount.

John has peace of mind knowing that he's covered if he were to have an accident. The total amount he may have to pay each year is his out-of-pocket limit of $6,350, and since he has purchased this plan during the enrollment period, he will not face a penalty for not having coverage.

As he navigates the site, John sees that he qualifies for a payment assistance in the form of a tax credit that will either reduce the amount John will pay in taxes or increase his refund, depending on his personal situation; or it will reduce his monthly premiums, if he so chooses.

What happens if I don't get covered?

The penalty for 2014 will be the larger of either $95 per adult and $47.50 per child under 18, up to a total of $285 per family or 1 percent of household income in excess of $10,000 for an individual or $20,000 for a family.

For example, let's say an individual making $40,000 per year doesn't buy health insurance in 2013. This person would would pay 1 percent of $30,000, or $300, in 2014. What about a family with a $50,000 household income? It would pay a penalty of 1 percent of $50,000, or $500.

The initial penalties are much less than the cost of health insurance, but will go up each year. The minimum penalty may increase to as much as $695 per person by 2016.

What if I'm on Medicare or Medicaid?

Almost nothing will change if you have coverage through Medicaid, but there are some changes for Medicare beneficiaries. The law doesn't require Medicare beneficiaries to buy more insurance and won't force beneficiaries to see different doctors, reports Andrea Adleman of U.S. News.

Obamacare does, however, increase premiums or prescription-drug costs for some Medicare beneficiaries, and it mandates $716 billion in Medicare payment reductions over the next 10 years. These cuts are made by changing payment formulas for hospitals, nursing homes, home-health agencies, hospice agencies and Medicare Advantage plans, says the Congressional Budget Office.

The law already affects higher-income Medicare beneficiaries. Those who earn more than $85,000 ($170,000 for a couple) are paying higher Part B premiums, which cover physician and outpatient services, and for Part D, which covers prescription drugs, says Kaiser Health News. As a result of this sliding scale, about 5 percent of Medicare beneficiaries are paying more for premiums and prescription drugs.

It is projected that by 2019, 7.8 million beneficiaries will be paying the higher Part B premiums and of that group, 4.2 million will pay the higher Part D premiums. Kaiser estimated the combined premium in 2019 would be $299 to $683 a month, depending on income.

However, typical Medicare beneficiaries, those below the $85,000/$170,000 income threshold, will pay less for their premiums since the the law closes the "doughnut hole," the coverage gap in prescription benefits, by 2020. The National Council on Aging estimates the savings could reach $1,800 for some beneficiaries.

Also, both Medicaid and Medicare beneficiaries will qualify for more free preventive care, such as a yearly wellness visit, vaccinations and colorectal screenings, starting Jan. 1.

What if my employer covers me?

About 57 percent of Americans have health insurance through an employer with fewer than 200 employees, and those who are covered do not have to purchase a new plan on Kynect. If your employer’s plan covers less than 60 percent of allowed medical expenses, or costs you more than 9.5 percent of your household income, you can shop on the exchange.

Over the past 10 years, employers have been shifting more health costs to employees. Worker contributions increased 89 percent during the decade, and are 14 percent higher than in 2009, Kaiser Health News reports. So, while the nature of your work plan may be changing, this is not a direct result of the health law.

If you aren't covered by your employer or if your employer decides to drop your coverage, you must obtain coverage or face a penalty. Religious conscience and hardship exemptions to this mandated coverage exist, and you will need to complete an application to request such an exemption.

What if I'm an employer?

Steve Wilson, senior vice president of Benefit Insurance Marketing in Lexington, said in an email that employers with fewer than 50 employees are facing 2014 premium increases that may lead them to drop coverage for their employees.

Wilson said unless companies act quickly to renew early based on 2013 underwriting rules, the average 2014 renewal for his company's small business clients will increase 63 percent. He said his clients represent a broad range of industries that will, on average, pay $3,508 more per employee for coverage next year.

On the other hand, a study by the RAND Corp. says Obamacare could alleviate some of the difficulties for small employers by putting their employees into a single risk pool. The study predicts that the number of workers offered coverage will increase after the reform, mainly because more small businesses will offer coverage.

If you have a small business with 25 or fewer employees, there may be significant tax credits available through Kynect to help cover the cost of insurance.

Kentucky Health News is an independent news service of the Institute for Rural Journalism and Community Issues, based in the School of Journalism and Telecommunications at the University of Kentucky, with support from the Foundation for a Healthy Kentucky.

Adair County residents will get an extra tax bill as trustees of bankrupt hospital vote to levy a tax to pay its debts

Facing a $20 million debt and in bankruptcy, the Adair County Hospital District trustees voted unanimously Oct. 4 to impose a 10 cents-per-$100 value property tax, effective immediately.

In August, in a move perhaps unprecedented in Kentucky, the district filed for protection under Chapter 9 of the bankruptcy code, which is designed to allow time for a government debtor to reorganize and restructure its debt.

As a result of the filing, creditors such as Farmers National Bank of Danville have sued the district in state court, seeking to force the district to levy a tax to pay its debts. In addition to passing the tax on real estate, the trustees also passed a 10-cent tax on motor vehicles and watercraft, effective in January, reports the Adair County Community Voice. Part of Green River Lake lies in Adair County.

"Neal Gold, vice chair of the board, who has been overseeing hospital operations, said after the meeting they could have taxed Adair County at a higher rate but couldn’t morally do so and decided to stick to the 10-cent minimum," the Voice reports.

Adair County Property Valuation Administrator Junior Feese told the Voice that the real-estate tax will generate $573,000 this year. He said Adair County residents can expect a separate tax bill in the mail this week because this year’s tax bills had been mailed.

State health-insurance exchange plans to make smokers pay 40 percent more for coverage; varied interests, observers object

By Molly Burchett
Kentucky Health News

Supporters of the Patient Protection and Affordable Care Act have touted its goal to provide health insurance to all Americans without discrimination, such as prohibiting insurers from denying coverage due to pre-existing conditions. But it allows them to charge smokers more for it, and the officials running Kentucky's health-insurance exchange plan to do just that.

When Kynect, the state's online insurance exchange, opens Oct. 1, smokers can expect to pay up to a 40 percent surcharge, not far from the 50 percent limit in the law. That has brought objections from a wide range of observers, including tobacco companies and anti-cancer activists, saying it may be well-intended but is unfair and may backfire.

"Ranked No. 1 in adult smoking and cancer deaths, Kentucky should be doing all it can to bring tobacco users under the care of medical professionals. Yet some Kentucky smokers — perhaps many — will still be unable to afford health insurance, even after historic reforms take effect next year," says a recent Lexington Herald-Leader editorial. In 2011, the last year for which figures are available, 29 percent of adult Kentuckians smoked, and that does not include those who use smokeless tobacco.

UPDATE, Sept. 11: The state Department of Insurance says the 40 percent is a ceiling, and some companies are charging less, but 40 percent is the most common tobacco surcharge on health insurance policies sold in Kentucky. "There are health care costs associated with tobacco use," spokeswoman Ronda Sloan said. "With no tobacco use surcharge, insurers would have raised rates for everyone to offset those costs. . . . Plans will provide benefits for tobacco use cessation."

Seven states (California, Connecticut, Massachusetts, New Jersey, New York, Rhode Island and Vermont) and the District of Columbia will not charge smokers higher premiums. Connecticut voted against a smoking surcharge for individual policies, saying higher individual rates would disproportionately penalize poor people who tend to smoke.

Surchage critics in Kentucky agree. "This penalty is being applied to the working poor and medically indigent," writes Dr. Kevin Kavanagh, chairman of Health Watch USA, in a Herald-Leader op-ed. "Tobacco use is inversely related to education and income. In Kentucky, 48 percent of adults without a high school diploma smoke. These are the working poor."

Since most smokers tend to have lower incomes, the surcharge could discourage them from signing up for coverage at all because they can't afford it, restricting health care access for those that need it most, critics say. Although people with incomes up to four times the federal poverty level will get premium subsidies on the exchanges, the tobacco surcharge will be added to the final rate, reports Sarah Kliff of The Washington Post.

"The smoker's premium alone will account for 24 percent to 29 percent of his salary not counting deductibles and co-pays," Kavanagh writes. "This policy clearly blocks insurability for the low-income worker." Cigarette makers say the policy amounts to discrimination against smokers, reports Kliff.

The surcharge makes sense from a strictly actuarial perspective, and is supported by the insurance industry because smokers have much higher health costs, reports WebMD Health News. Kentucky's health costs attributable to smoking add up to about $1.5 billion a year, and smoking-caused productivity losses total $2.3 billion a year, says the Centers for Disease Control and Prevention.

Read more here: http://www.kentucky.com/2013/09/08/2810231/pricing-smokers-out-of-health.html#storylink=cpy

However, punitive measures like higher premiums have not been proven to reduce smoking, say health organizations opposing the surcharge, such as the American Cancer Society and American Lung Associaton. In addition to being ineffective, higher premiums for smokers could make health insurance coverage unaffordable, leaving tobacco users without coverage for smoking-cessation programs, or any other type of coverage that Obamacare has sought to provide.

"From the longer-term perspective on how to improve people's health and contain medical costs, the tobacco penalty is a policy disaster," says the Sept. 8 Herald-Leader editorial. The Cancer Society says states would see greater public health and economic benefits from increased tobacco taxes, implementation of strong smoke-free laws and the funding prevention efforts, rather than penalizing smokers.

In closing, Kavanagh poses an important question: "Wouldn't it be better to provide these individuals access to the health care system where tobacco withdrawal could be encouraged and assisted and preventative care for other ailments can be provided?" (Read more)

Effort for kids' dental health in Clark, started by volunteers and continued by health department with tax, earns national award

"A community effort to fight tooth decay in children in Clark County has been named a model for the nation," veteran journalist Al Smith reports in an op-ed for the Lexington Herald-Leader. The Clark County Dental Health Initiative received the award for model practice last month at the annual conference of the National Association of City and County Health Officials, and the county health board recently raised taxes to pay for it.

"Its five-year campaign for change by volunteer dentists, hygienists and engaged citizens should inspire all Kentuckians in a state further scandalized by its own Diane Sawyer in her '20/20' program on ABC in 2009 when she showed 11 million viewers shocking scenes of Appalachian kids with disfigured teeth called Mountain Dew Mouth," writes Smith, former federal co-chair of the Appalachian Regional Commission and co-founder of the University of Kentucky's Institute for Rural Journalism and Community Issues, which publishes Kentucky Health News.

The Clark County program was inspired by Winchester dentist Rankin Skinner, after he and his wife, Ruthi, had started a preventive program for poor children in Ecuador, Smith writes: "He developed a similar plan for Clark County, became its unpaid director and persuaded all 16 other Winchester dentists and 116 volunteers to apply dental fluoride varnish to children in preschool through fifth grade. Every Winchester dentist donated service and staff to take the initiative inside the schools.

Five years later the decay rate in sixth graders has dropped to 11 percent, a decline of 78 percent since 2008 when Kentucky's decay rate for children was reported in national media to be a shameful 50 percent, the country's worst."

Smith notes that the effort was boosted by "a local banker who raised money with help from the Clark County Community Foundation and First Lady Jane Beshear, who urged Gov. Steve Beshear to use the Clark initiative as an example in organizing treatment for underserved children in Eastern Kentucky." The Beshears' permanent home is in Clark County.

Volunteerism only lasts so long, but the Clark County Health Department is now funding the program with a tax increase that will let it hire the state's first public-health dental hygienist. "With continued help from the local dentists and citizen volunteers, [it hopes to] eventually extend the program to students through high school," Smith reports.

The Clark County Board of Health voted this month to raise its tax rate to 4.6 cents per $100 of assessed property value from last year's 4 cents, to generate about $150,000 in additional revenue for the program. Public Health Director Scott Lockard "estimated that funding the program would take $127,531 per year, but the board wanted a cushion in the budget to help pay for dental care for students not covered by Medicaid, KCHIP or private insurance," Rachel Gilliam reports for The Winchester Sun. Lockard told the board, “I can think of nothing better to invest in other than our children.”

Adair County Hospital District files Chapter 9 bankruptcy

In a move perhaps unprecedented in Kentucky, the Adair County Hospital District has voted to file for protection under Chapter 9 of the federal bankruptcy code, the same chapter used by bankrupt cities such as Detroit.

The district has a $20 million debt, creditors demanding payment, and no clear way to pay them. "The Chapter 9 filing will allow the hospital district to reorganize by extending the timeline to repay debt, refinance debt, or reduce debt by different means. It does not liquidate the taxing district nor does it close down operations" of Westlake Regional Hospital in Columbia, reports Sharon Burton of the Adair County Community Voice.

David Cantor, an attorney with Seiller Waterman LLC in Louisville, told Burton the filing is “incredibly rare” and perhaps the first in the state. “We cannot find any published cases of a Chapter 9 in the Commonwealth of Kentucky,” he said.

Farmers National Bank of Danville has sued in state court, seeking to force the  district board to levy a local property tax to pay its debt. "The federal court will, however, now likely decide the local taxation issue," Burton reports. "The hospital board voted to establish a tax but it is stalled until at least the 2014 general election after a group of citizens successfully filed a recall petition."

Only part of the Community Voice story is online, but a 7 MB PDF of its three pages with hospital news can be downloaded here.

Knox County converting ambulance tax, taking 3/8 of health tax and asking library for same in order to save hospital

The Knox County Fiscal Court and the Knox County Board of Health reached a deal Monday to aid its debt-laden county hospital's recovery from bankruptcy by diverting, at least temporarily, 37.5 percent of local health tax revenue to the hospital, asking the local library to do likewise and converting an ambulance tax into a hospital tax.

The proposed agreement is "revenue neutral" and would not create any additional tax for Knox County residents while allowing the Knox County Hospital in Barbourville to stay open, writes Jeff Noble of The Times-Tribune in Corbin.

To save the hospital, the hospital board needs a tax of about 8 cents per $100 worth of property, County Judge-Executive J.M. Hall said. The deal would convert a 5-cent ambulance tax to a hospital tax, and the county health board has agreed to shift 1.5 cents of its 4-cent tax to the hospital. The library board is considering similar action, which would make up the total 8 cents, Hall told Noble.

Health Department Director Susan Liford said the two-year deal with the health board will begin in January 2014 and will be re-evaluated at the end of that period. The health department will be diverting $300,000 to $400,000 a year to the hospital, Noble reports.

"The board felt like we needed to help the hospital, and they were very adamant they did not want to put the health department in jeopardy and have no one here lose their jobs," Liford told Noble. "I think it’s the moral thing to do. And we need our hospital."

The hospital has a debt estimated at $23 million, though the Knox County Fiscal Court purchased it out of bankruptcy by in 2004 for just $7.2 million, according to documents analyzed by the Barbourville Mountain Advocate, Knox County's weekly newspaper. Last July, the fiscal court took over hospital operations of the hospital, borrowing $6 million to fund them, after the former owners filed Chapter 11 bankruptcy. (Mountain Advocate graphic; click on it for larger version)

Health departments raise, or try to raise, tax rates to offset state cuts, higher benefit costs and Medicaid payment problems

Some county health departments are trying, and others may try, to increase property-tax rates to make up for Medicaid shortfalls, program cuts and the rising costs of employee benefits so they can continue providing essential public health services for their communities.

Anderson County Health Department Director Tim Wright has proposed a 33 percent rate increase from 3 cents per $100 of assessed property value to 4 cents per $100. The increase would add an estimated $150,000, which Wright says he would use to end employee furloughs and make up for $200,000 that has not been paid by the Kentucky Spirit managed-care company, reports Editor Ben Carlson of The Anderson News.

Many departments have already cut positions and implemented furloughs to compensate for Medicaid shortfalls, state program cuts and employee benefit costs, said Scott Lockard, past president of the Kentucky Public Health Association and director of the Clark County Health Department. Most departments have done everything possible to increase efficiency of the departments' resources, he said.

A recent tax increase in Boyle County will make property owners pay a little more to help fund the county health department. The fiscal court recently voted to raise the county's health tax from 2.4 cents per $100 to 2.5 cents.

As funding streams have changed, departments need additional revenue sources, said Brent Blevins, director of the Boyle County Health Department. Blevins said without the rate increase, the already short-staffed department would have to cut services.

Declining property values during the recession have decreased tax revenue, said Marcia Hodge, director of the Garrard County Health Department. It proposed a tax rate increase from 4 cents to 4.25 cents in September that was estimated to bring in about $21,000, but the fiscal court did not approve it, she said.

Another problem that health departments face, Hodge said, is that they are required to participate in the state's insurance and retirement system. Over the 12 years she has been at the department, retirement contributions have increased from 4 percent to 25 percent, while costs of fringe benefits have more than doubled while salaries have only increased 10 percent, she said.

The Floyd County Health Department increased its tax rate last September for the first time in 20 years, primarily because of increased costs of employee benefits and department funding cuts, said Thursa Sloan, director of the department.

Sloan said she anticipates a big change in the services that health departments provide over the next 10 years.  Primary care will take a much more preventive approach, she said, and health departments will have to pull back in such services and go back to the basics.

Commission says drastic changes to doctor pay and cuts to wasteful services can fix Medicare problem without tax hikes

A national advisory panel says “drastic changes” in how Medicare reimburses doctors and other providers are needed to shore up Medicare's finances, improve patient outcomes and rein in health care costs, and there is no need to seek more taxpayer money.

Medicare needs $138 billion over the next decade to avoid steep cuts in physician pay, and avoiding those cuts has become an annual scramble in Congress known as "the doc fix."  A panel dominated by internal-medicine specialists, The National Commission on Physician Payment Reform, has concluded that reduction of wasteful medical services can help solve the problem and "our nation cannot control runaway medical spending without fundamentally changing how physicians are paid," it says in its report.

Source: Henry J. Kaiser Family Foundation and Congressional
Budget Office, Budget and Economic Outlook, January 2011

The U.S. spends nearly $3 trillion a year on health care, and that level of spending is unsustainable. The report says that as a proportion of the federal budget, the cost of Medicare has risen from 3.5 percent in 1975 to 15.1 percent in 2010 in 2010). In 2020, it is projected to consume 17 percent, or 4 percent of the U.S. gross domestic product.

Recognizing the way that physicians are paid contributes substantially to the high cost of health care, The Society of General Internal Medicine convened the commission in March 2012 to make recommendations for payment reform. According to the report, some of the factors that drive up health care expenditures are:

• Fee-for-service reimbursement
• Consolidation in the health-care industry
• Reliance on technology and expensive care
• Reliance on a high proportion of specialists
• Paying more for the same service or procedure when done in a hospital setting as opposed to an outpatient setting
• A disproportionate percentage of health care spending directed to a small number of people who are very sick and costly to treat
• High administrative costs
• Fear of malpractice lawsuits
• Fraud and abuse

The commission says increased taxes are not needed to fix the Medicare problem, and the Medicaid shortfall could be entirely found by reducing overuse of services within Medicare. See the chart to the right for a breakdown of those excess medical costs.

The commission developed 12 recommendations to reduce health costs, calling for drastic changes to the current fee-for-service payment system and a five-year transition to a physician payment system that rewards quality and value-based care and not the volume of care.

The 12 recommendations were based on the principles that payment reform should improve care quality and efficiency, encourage care for the medically disadvantaged, reduce marginal and ineffective services, increase transparency to the public and should reward patient-centered comprehensive care. (Click here to see those recommendations)

The world is getting fatter, but Kentucky's rate of obesity is two and a half times the world rate

Take no solace from The Economist, which proclaims in its yearly analysis-and-prognostication issue that this is the year world leaders will take on worldwide obesity because, writes Charlotte Howard, "they will realize something must be done."

So, no, it is not just you, Kentucky. In fact, Howard, the health-care correspondent for the magazine, writes that 30 percent of Mexico's adult population is obese. That is precisely the same percentage of Kentuckians that were considered obese by a Robert Wood Johnson Foundation and Trust for America's Health analysis released in August. (We ranked sixth fattest state nationwide.) It is also the same percentage of Chinese adults that are, as Howard put it, "too wide" -- a term that Howard uses here to include the overweight as well as the obese.

But there is no room to crow here. Kentucky is far ahead of the trend. Only 12 percent of the world counts as obese today. We beat that two and half times over. (The number of Kentuckians who were merely overweight was not calculated or included in the figures in the study.) A study released in September by the same group found that if trends continue, 60 percent of Kentuckians will be obese by 2030. The World Health Organization's estimate of the world's obesity was at 15 percent by 2020.

The Economist folks favors an approach that a democratic path to better health and fiscal sanity, given the health care cost ramifications of obesity. They like a tax on soda -- it's pure sugar, no real nutrition. They like subsidies to make fresh produce cheaper. And they like better school lunches and labeling, labeling, labeling so consumers will make better choices.

Biggest problem with health-care reform law is advocates' poor sales job to the American public, Rep. John Yarmuth tells C-J

By Tara Kaprowy
Kentucky Health News

The biggest problem with the federal health-care reform law is not the law itself, but the fact that "We've never done as good a job as we could have" in explaining what it is about, Democratic U.S. Rep. John Yarmuth of Louisville told the editorial board of The Courier-Journal Friday.

In his lengthy interview, Yarmuth said the problem started at the law's inception when President Obama outlined his parameters but  let Congress decide what the bill should be. "The challenge was explaining what the bill even was because we didn't know what it was going to be," he said.

The issue was compounded by the fact that, unlike energy legislation where its "impact is relatively uniform," with health care "everyone wants to know how it will affect you and your family ... and it's all different," Yarmuth said. "It's hard to market something individually to 300 million people."

Also contributing to the problem is the complexity of the subject itself, which Yarmuth likened to "the biggest Rubik's cube that ever existed," since "Every time you move one piece, 100 pieces move."

That has resulted in deeply-seated misconceptions about the law that are difficult to undo. The biggest, he said, is "that it is some form of government takeover." Those with that view note that the law's individual mandate in the law will force people to buy insurance or pay a fine, and the law will impose new rules on health-insurance companies and put many other controls on the system.

But Yarmuth argues the law uses "free enterprise and competition" to "provide more affordable care for individuals." Indeed, state insurance exchanges will feature different benefits packages from private companies from which people who qualify for the exchange can choose. People who qualify for the exchange — those who earn up to 400 percent of the federal poverty level — will be given subsidies in the form of tax breaks to help pay for their premiums. "The reason why the Republicans don't have an alternative is Obamacare was their alternative," Yarmuth said. "This was their plan: creating competition among insurers and letting them compete for individual business."

Another misconception is that people who don't have health insurance are "deadbeats," Yarmuth said. But he said 37 percent of Americans who are uninsured make over $50,000 a year and almost 20 percent make over $75,000 a year (those percentages are confirmed here). "No, these are solid citizens," he said. He pointed out that all families pay the cost of those who are uninsured, adding that an estimated $1,000 of every health insurance policy goes toward paying for uncompensated care.

Yarmuth said in Kentucky nearly $600 million is spent on uncompensated care each year. (A Kentucky Hospital Association report estimated it is far higher: $1.67 billion in 2010.) Regardless of the figure, Yarmuth said losses could be offset by expanding Medicaid, a claim supported by a report by the Urban Institute. Expansion would cover almost 300,000 Kentuckians and would cost the state $515 million through 2019, he said. "It will bring in $12 billion of federal money," he said. "Is that a good trade-off?"

Asked how provisions in the law would be paid for, Yarmuth acknowledged "If you're adding 30 million more people, it's going to add cost to the system." Ultimately, costs will continue to go up but "less than they otherwise would," he said. He referred to pre-law estimates by the Congressional Budget Office that the cost of employer-based insurance would double to $25,000 a year for a family of four, but the law seems to have slowed that trend. Yarmuth referred to an article published in the journal Health Affairs that indicated that between 2010 and 2011, overall national health-care expenditures increased by 3.9 percent. "That's the lowest rate of growth in the last 50 years," he said. "It is having an effect." The CBO estimated the law will reduce the deficit over the next 10 years by $130 billion, with an estimated $1.2 trillion saved in the second 10, Yarmuth noted. "We all knew we were on an unsustainable path."

But most still don't know that, and on Saturday, a day after the Yarmuth interview, the C-J editorial board criticized Democrats for not doing a better job getting their message out about the new law: "The problem is partially that the law is complex and 2,000 pages long. It's partially that the Republicans have successfully put the Democrats on the defensive, forcing them to defend the law to people who have already had the GOP message driving into their heads. But it's also that the Democrats don't trust that the American people will be willing or able to understand them when they defend the health-care law."

Does Obamacare tax the middle class?

U.S. Sen. Mitch McConnell speaks at
a Rotary Club meeting in Louisville.
(C-J photo by Michael Clevenger)

With Senate Republican Leader Mitch McConnell calling the federal health-care reform law a tax on the middle class, Courier-Journal Washington correspondent James R. Carroll collects the findings of independent fact-checking services to assess whether McConnell is accurate.

The Congressional Budget Office estimates that 4 million people would pay the tax or penalty for not being covered by insurance in 2016, which translates to about 1.2 percent of the population. But Glenn Kessler of The Fact Checker at The Washington Post, relying on CBO estimates, reported "that 16 million people will receive subsidies or tax credits to help pay for health coverage — about 5 percent of the population."

"It's worth noting that the health law involves more taxes than just a penalty on the uninsured," Kessler notes, including an excise tax on plans with very high premiums; fees for manufacturers and insurers; higher Medicare payroll taxes for people who make more than $200,000 a year; a tax on manufacturers of medical devices; and a tax on indoor tanning services. All told, "it's a stretch to say that any of these taxes will affect the middle class."

McConnell's assertion that President Obama is raising taxes with the individual mandate is also a double-edged sword: a similar penalty was passed with the health-care overhaul in Massachusetts while Republican presidential nominee Mitt Romney was governor. On that point, McConnell said "Romney will have to speak for himself." Last week, Romney said requiring all Americans to buy health insurance is equivalent to a tax, but that ran counter to how he viewed it earlier in the week.

McConnell told the Louisville Rotary Club last week that repealing the law would be his top priority if Republicans win the presidency in November, reports Chris Kenning for The Courier-Journal. (Read more)

Penny-per-ounce tax on sugar drinks could save $17 billion, cut consumption and prevent disease and death, academics say

More than $17 billion in medical costs over 10 years could be saved if sugared drinks were taxed at 1 cent per ounce, and it would prevent 95,000 cases of coronary heart disease, 8,000 strokes and 26,000 premature deaths, say researchers at Columbia University and the University of California.

The tax would mean an extra 12 cents per can or 20 cents per bottle, and would generate about $13 billion in annual tax revenue. The study, published in this month's HealthAffairs, found the consumption of sugary drinks, including soda, sports drinks like Gatorade and energy drinks like Red Bull, would be cut by 15 percent among adults ages 25 to 64.

"Even our conservative estimates show that a penny-per-ounce tax on sugar-sweetened beverages could substantially reduce the negative health and financial impacts of obesity, diabetes and cardiovascular disease," said Dr. Y. Claire Wang, assistant professor at the Mailman School of Public Health at Columbia  and lead author of the study. "Putting the money raised by the tax into efforts to prevent obesity and other health problems could potentially increase the impact of such a policy."

In 2009, Americans consumed 13.8 billion gallons of sugar-sweetened beverages, which translates to about 45 gallons per person. The average 20-ounce bottle of a sugar drink contains almost 17 teaspoons of sugar. (Read more)

Kentucky Youth Advocates gets $100,000 to push for income-tax policies aimed at helping the poor improve their health

Kentucky Youth Advocates is one of 12 coalitions nationwide to receive a "Roadmaps to Health" grant from the Robert Wood Johnson Foundation. The non-profit children's advocacy organization will receive $100,000 for two years to build statewide support for tax policies that would help low-income families keep more of their income to pay for doctor visits, healthier diets and weight-loss or smoking-cessation services.

The 12 grantees were selected from more than 300 initial applicants. "Kentucky Youth Advocates has long been a proponent of improving economic policies for families, and promoting child health throughout the state," said Tara Grieshop-Goodwin, deputy director of the coalition. "We know income can impact health, and we are excited to ahve the opportunity to combine our economic well-being efforts with our health work and look forward to fostering partnerships between advocates from both disciplines throughout the state." (Read more)