SHARING THE RISK AND ENSURING INDEPENDENCE: A DISABILITY PERSPECTIVE ON ACCESS TO HEALTH INSURANCE AND HEALTH-RELATED SERVICES SUPPLEMENT TO THE REPORT Prepared for: The National Council on Disability Prepared by: Lewin-ICF, Inc. March 4, 1993 ACKNOWLEDGMENTS The Council wishes to acknowledge and convey its sincere appreciation to the many individuals who contributed to this report. Members of the Advisory Committee, numerous persons with disabilities and their families, providers, insurers, federal agencies, state agencies, advocates, and other experts from across the country contributed to this effort. We are grateful for their participation in public forums, their attendance at advisory meetings, and their input and assistance to the Council in the process of developing the ideas and recommendations contained in this report. We particularly thank William H. Graves, III, Ed.D., former director of the National Institute on Disability and Rehabilitation Research, who helped to make this project possible. SHARING THE RISK AND ENSURING INDEPENDENCE: A DISABILITY PERSPECTIVE ON ACCESS TO HEALTH INSURANCE AND HEALTH-RELATED SERVICES Publication date: March 4, 1993 National Council on Disability 800 Independence Avenue, S.W. Suite 814 Washington, D.C. 20591 (202) 267-3846 Voice (202) 267-3232 TDD (202) 453-4240 Fax The views contained in this report do not necessarily represent those of the administration, as this document has not been subjected to the A-19 Executive Branch review process. TABLE OF CONTENTS Page MISSION OF THE NATIONAL COUNCIL ON DISABILITY..............v NATIONAL COUNCIL ON DISABILITY, MEMBERS AND STAFF........vii MEMBERS OF THE ADVISORY COMMITTEE.......................viii PROJECT STAFF.............................................ix PREFACE....................................................1 I. OVERVIEW OF THE STUDY......................................3 II. ORGANIZATION OF THE SUPPLEMENT.............................4 III. PROFILE OF PERSONS WITH DISABILITIES.......................5 A. Definitions of Persons with Disabilities................6 B. Sources of Data on Persons with Disabilities............8 C. Estimates of the Number of Persons with Disabilities...13 D. Characteristics of Persons with Disabilities...........16 IV. ISSUES IN FINANCING HEALTH CARE FOR PERSONS WITH DISABILITIES.........................................25 A. Private Health Insurance...............................25 B. Public Insurance.......................................35 C. Directly Financed Services.............................43 D. Out-of-Pocket Expenditures.............................47 V. ADEQUACY OF HEALTH INSURANCE AND HEALTH-RELATED SERVICES FOR INDIVIDUALS WITH DISABILITIES................48 A. Defining Adequacy......................................48 B. Other Factors Affecting Access to and Adequacy of Care.62 VI. EXPANDING COVERAGE FOR INDIVIDUALS WITH DISABILITIES.........................................64 A. Targeted Options for Expanding Coverage................65 B. Universal Options for Expanding Access to Care.........77 C. Health Care Reform Proposals...........................80 D. Health Care Systems in Other Countries.................84 MISSION OF THE NATIONAL COUNCIL ON DISABILITY The National Council on Disability is an independent federal agency composed of 15 members appointed by the President of the United States and confirmed by the U.S. Senate. The National Council was established in 1978 as an advisory board within the Department of Education (P.L. 95-602). The Rehabilitation Act Amendments of 1984 (P.L. 98-221) transformed the National Council into an independent agency. The statutory mandate of the National Council at the time of this study assigned the Council the following duties:  Establishing general policies for reviewing the operation of the National Institute on Disability and Rehabilitation Research (NIDRR);  Providing advice to the Commissioner of the Rehabilitation Services Administration (RSA) on policies and conduct;  Providing ongoing advice to the President, the Congress, the RSA Commissioner, the Assistant Secretary of the Office of Special Education and Rehabilitative Services (OSERS), and the Director of NIDRR on programs authorized in the Rehabilitation Act;  Reviewing and evaluating on a continuous basis the effectiveness of all policies, programs, and activities concerning individuals with disabilities conducted or assisted by federal departments or agencies and all statutes pertaining to federal programs, and assessing the extent to which these provide incentives to community-based services for, promote full integration of, and contribute to the independence and dignity of individuals with disabilities;  Making recommendations of ways to improve research; the collection, dissemination, and implementation of research findings; service; and administration affecting persons with disabilities;  Reviewing and approving standards for independent living programs;  Submitting an annual report with appropriate recommendations to the Congress and the President regarding the status of research affecting persons with disabilities and the activities of RSA and NIDRR;  Reviewing and approving standards for Projects with Industry programs;  Providing to the Congress, on a continuous basis, advice, recommendations, and any additional information that the National Council or the Congress considers appropriate;  Providing guidance to the President's Committee on the Employment of People with Disabilities; and  Issuing an annual report to the President and the Congress on the progress that has been made in implementing the recommendations contained in the National Council's January 30, 1986 report, Toward Independence. While many government agencies deal with issues and programs affecting people with disabilities, the National Council is the only federal agency charged with addressing, analyzing, and making recommendations on issues of public policy that affect people with disabilities regardless of age, disability type, perceived employment potential, economic need, specific functional ability, status as a veteran, or other individual circumstance. The National Council recognizes its unique opportunity to facilitate independent living, community integration, and employment opportunities for people with disabilities by ensuring an informed and coordinated approach to addressing their concerns and eliminating barriers to their active participation in community and family life. NATIONAL COUNCIL ON DISABILITY, MEMBERS AND STAFF* Members John A. Gannon, Acting Chairperson Cleveland, Ohio, and Washington, D.C. Kent Waldrep, Jr., Vice Chairperson Plano, Texas Linda W. Allison Dallas, Texas Ellis B. Bodron Vicksburg, Mississippi Larry Brown, Jr. Potomac, Maryland Mary Ann Mobley Collins Beverly Hills, California Anthony H. Flack Norwalk, Connecticut John Leopold Pasadena, Maryland Robert S. Muller Grandville, Michigan George H. Oberle, P.E.D. Stillwater, Oklahoma Sandra Swift Parrino Briarcliff Manor, New York Mary Matthews Raether McLean, Virginia Anne Crellin Seggerman Fairfield, Connecticut Michael B. Unhjem Fargo, North Dakota Helen Wilshire Walsh Greenwich, Connecticut Staff Andrew I. Batavia, J.D., M.S. Executive Director Billie Jean Hill Program Specialist Mark S. Quigley Public Affairs Specialist Brenda Bratton Executive Secretary Stacey S. Brown Staff Assistant Janice Mack Administrative Officer Lorraine Williams Office Automation Clerk *Sandra Swift Parrino initiated this study when she was Chairperson of the National Council on Disability. At the time of the study, Ethel Briggs was Executive Director, Harold Snider was Deputy Director, Katherine Seelman was Research Specialist, and Kathy Roy Johnson was Program Specialist at the National Council. MEMBERS OF THE ADVISORY COMMITTEE Barbara M. Altman, Ph.D. Rockville, Maryland Andrew I. Batavia, J.D., M.S. Washington, D.C. Ken Campbell (Cochair) Columbus, Ohio Ann P. Dandrow Southington, Connecticut Joseph Patrick Ditre Sabattus, Maine Daniel M. Fox, Ph.D. New York, New York Thomas A. Gustafson, Ph.D. Washington, D.C. Mary Nell Lehnhard Washington, D.C. Douglas Martin, Ph.D. Los Angeles, California Lynn Meyers Washington, D.C. Velvet G. Miller Brookline, Massachusetts Patricia M. Owens Brooklyn, New York Susan B. Parker Baltimore, Maryland Earl R. Pomeroy (Cochair) Bismarck, North Dakota Eileen Rivera Baltimore, Maryland Mark Ross, Ph.D. New York, New York Susan T. Sherry Boston, Massachusetts Daniel R. Thomas Washington, D.C. Irving Kenneth Zola, Ph.D. Waltham, Massachusetts PREFACE Lack of access to adequate health insurance is a significant obstacle for individuals with disabilities in becoming independent and integrating into mainstream society. People with disabilities often are excluded from private insurance coverage or restricted in the scope of their coverage because of their disability. When private insurance is available, it is often unaffordable because of high premiums or cost-sharing provisions. Those who do obtain health insurance through private or public means may find that benefit limitations and exclusions render the coverage inadequate to meet their needs, to encourage independent living, or to improve daily functioning. As a result, persons with disabilities may face substantial out-of-pocket costs to finance necessary care and may face uncertainty about affording care in the future. Individuals with disabilities are not alone, however. Access to health insurance has become a growing problem for all Americans. The debate over health care reform has intensified in recent years, fueled by an increasing number of persons without any insurance and rapidly escalating health care costs. While no consensus exists among consumers, business, providers, and insurers on how to reform the health care system, everyone agrees that major change is needed. As the debate on health care reform moves forward, the disability community can offer a unique perspective by demonstrating that the problems faced by persons with disabilities in obtaining health insurance represent a microcosm of the problems faced by a growing number of Americans. Examining the health insurance system from the perspective of persons with disabilities can further highlight the generic problems in the system. The reemergence of health care reform as a priority on the domestic policy agenda occurs at a time when the most comprehensive disability legislation in this nation's history, the Americans with Disabilities Act (ADA), is being implemented. Intended to eliminate discrimination against persons with disabilities, ADA sets equal opportunity, full participation, independent living, and economic self-sufficiency as the nation's proper goals for those with disabilities. However, ADA fails to address specifically the discrimination in the health insurance market that affects the ability of persons with disabilities to access health insurance and care. As our society ages, as advances in medical technology increase life expectancy and permit greater numbers of persons with chronic and disabling conditions to live with greater independence, the population with disabilities is likely to increase. In turn, addressing the problems of access to insurance and health care for this population and the country as a whole becomes more critical. The debate over health care reform thus offers an important opportunity for changes in the health care system to be shaped and influenced by the most advanced thinking in disability policy, and conversely, for disability policy to be promoted by reforms in health care. I. OVERVIEW OF THE STUDY The National Council on Disability (NCD) was established as an independent federal agency in 1984 to provide Congress and the President with advice, recommendations, and information on public policy issues affecting persons with disabilities. The Council has long been concerned about the barriers to health insurance for persons with disabilities. In its initial draft of the Americans with Disabilities Act, the Council included a requirement that prohibited discrimination in the provision of health insurance. Because congressional sponsors viewed this requirement as impossible to enact and likely to bring the entire bill to defeat, it was dropped from the legislation. Thus, access to adequate and affordable health insurance remains on the policy agenda for individuals with disabilities and for the Council. To continue its efforts in the health insurance arena, the Council funded Lewin-ICF to conduct a two-year study examining the barriers to health insurance for individuals with disabilities. The study's purpose was to articulate a disability perspective that could be reflected in the national debate on health care reform. The Council is concerned that, without the aggressive participation of the disability community in shaping the health care reform debate, individuals with disabilities will be left on the sidelines to speculate after-the-fact about the impact of various reforms on their lives. This appendix to the final report provides the background information and context for NCD recommendations on ensuring access to health insurance and health-related services for persons with disabilities. It reviews the literature on health insurance and health-related services for persons with disabilities, particularly working-age adults. It incorporates perspectives raised at three public forums that brought together consumers, insurers, the business community, disability representatives, and health policy analysts to engage in a dialogue on the barriers to health insurance and the potential options for addressing the needs of individuals with disabilities. The forums were held in 1991 and 1992 in Hartford, Connecticut; Des Moines, Iowa; and San Francisco, California. II. ORGANIZATION OF THE SUPPLEMENT The discussion that follows draws on two important sources of information: (1) literature and data analyses on the barriers to health insurance and health-related services[1] for individuals with disabilities, and (2) testimony provided by persons with disabilities on the consequences of barriers to health insurance in terms of independence and integration into mainstream society. This supplement integrates these sources and is organized into four sections: ù Profile of Persons with Disabilities defines the population with disabilities and presents estimates of the size of that population as well as the characteristics of individuals within it. ù Issues in Financing Health Care for Persons with Disabilities describes the history of the public and private financing system, and discusses the current systems and the gaps in those systems for individuals with disabilities. ù Adequacy of Health Insurance and Health-Related Services for Individuals with Disabilities assesses the extent to which public and private health insurance adequately meets, the coverage needs of persons with disabilities. ù Expanding Coverage for Individuals with Disabilities examines the options that have been proposed or adopted for expanding coverage. Both targeted approaches and major health care reform proposals are examined from the perspective of persons with disabilities. In addition, a summary of health care systems in selected other countries is provided with a discussion of how these systems affect care for persons with disabilities. III. PROFILE OF PERSONS WITH DISABILITIES To fully understand the barriers to health insurance and health-related services for persons with disabilities, a profile of the size and characteristics of this population must be developed. The formulation of a comprehensive profile is complicated, however, by the diversity of the population in question and a general lack of consensus as to how to adequately define disability. Defining disability has generated controversy among advocacy groups, providers, and policymakers. Definitions of the population with disabilities have emerged from civil rights organizations, government programs, advocacy groups, researchers, and legislation. Variations in these definitions are largely a result of different purposes. For example, definitions related to civil rights legislation, such as the Americans with Disabilities Act, tend to be broader than definitions used by some government assistance programs, such as the Supplemental Security Income Program. The latter use narrower definitions of disability to control eligibility. The problems associated with defining disability are further reflected in the variation in data available on the number and characteristics of persons with disabilities. While several sources of information are available about this population, these data were not collected using a common definition. The degree of variation among data sets makes it difficult to comprehensively describe the population. Over time, the basis of the definition of disability has changed. In the case of developmental disabilities, the focus has shifted away from categorical definitions, or lists of specific conditions, and now relies on a functional definition emphasizing limitations in specific life activities and the needs that arise from those limitations.[2] The specific activities in which persons are expected to engage vary by age: playing for children under 5, attending school for those age 6-17, working or keeping house for persons age 18-64, and caring for one's self and one's home for persons 65 and over.[3] This shift is a result of the need to concentrate programmatic attention on the specific needs and abilities of persons rather than on their underlying condition.[4] This chapter of the supplement discusses the various definitions that are used to identify persons with disabilities. It also describes the data sources that have been used to analyze the size and characteristics of the population. Finally, it presents data on the population's size and characteristics. A. Definitions of Persons with Disabilities No single definition of disability has been agreed upon by the disability community and the public and private groups that address its needs. Instead, definitions have been developed around specific public programs and for civil rights legislation. Many of the definitions must be reconsidered given the aging of the population, the changing nature of disease and disability in the United States, and advances in technology that accommodate the needs of persons with disabilities and facilitate functioning in ways not previously possible. This section describes the various definitions of disability and organizes them into two major categories: (1) definitions developed for civil rights legislation and (2) definitions developed for public programs. 1. Civil Rights Legislation The most recent definition of disability, and the one that has received the broadest support, was developed for the Americans with Disabilities Act (P.L. 101-336). Under this law, individuals with a disability are defined as follows: ù Having a physical or mental impairment that substantially limits that person in one or more major life activity. ù Having a record of such a physical or mental impairment. ù Regarded as having such a physical or mental impairment.[5] The definition of persons with disabilities in ADA is primarily a functional one as is the definition used in Section 504 of the Rehabilitation Act of 1973, the predecessor antidiscrimination law to ADA. However, the Rehabilitation Act applied only to entities receiving federal funds, while the ADA is intended to extend the antidiscrimination protection to the private sector. The notion of substantial limitation of a major life activity is at the heart of ADA's definition of disability. Major life activities include caring for one's self, performing manual tasks, walking, seeing, hearing, speaking, learning, working, and participating in community activities.[6] Persons with a range of disabilities affecting these functions are included under ADA's definition. Examples of ADA-defined disabilities include mental illness, cerebral palsy, vision impairments, hearing impairments, paraplegia, quadriplegia, speech and language impairments, mental retardation, and orthopedic impairments. Definitions of disability in civil rights law are typically the most inclusive. The ADA definition encompasses the broadest constituency of persons with disabilities in its inclusion of persons regarded as having an impairment in addition to persons with or without a record of an impairment that limits major life activities. However, most other efforts to define the population with disabilities use more limiting criteria, as described below. 2. Public Program Definitions Several public programs provide cash benefits to certain individuals with disabilities. Each program establishes its own eligibility requirements and criteria for recognizing disability. Eligibility for many of these cash assistance programs is linked in turn to eligibility for medical assistance. Program eligibility criteria are primarily defined by an inability to maintain an income. The definitions of disability from major public programs are as follows: ù Social Security Disability Insurance Program (SSDI) (Title II of the Social Security Act) provides monthly cash benefits to insured disabled workers under age 65 and their dependents. Children with disabilities are not eligible for SSDI. SSDI is the primary mechanism to replace lost income when a wage earner is no longer able to work. The definition of disability used in determining eligibility for SSDI is that the person is unable to "engage in any substantial gainful activity (earnings less than $500 per month) by reason of any medically determinable physical or mental impairment which can be expected to result in death or has lasted for a continuous period of not less than 12 months." Benefits are payable in the sixth month following the five-month waiting period after disability has been determined. Eligibility for SSDI determines eligibility for Medicare for persons with disabilities. ù Supplemental Security Income Program (SSI) (Title XVI of the Social Security Act) provides monthly cash benefits to certain persons who are aged, blind, or disabled. SSI recipients must meet certain financial criteria in order to be eligible for benefits, but they do not have to demonstrate a prior work history as under SSDI. In determining eligibility, the SSI program employs the same definition of disability as the SSDI program. Unlike SSDI, however, children with disabilities are eligible for SSI if they have an impairment of comparable severity with that of an eligible adult. Eligibility for SSI is a determinant of eligibility for Medicaid. ù General Assistance Programs (GA) are state or locally financed and provide ongoing or emergency assistance to low-income persons. These programs vary by state and tend to be small. In most states, GA programs complement existing federal programs of assistance to low-income individuals and families by providing financial and medical support to those who do not qualify for the federal programs. In many states, the GA program's definition is less restrictive than SSI's. One of the major populations served by most GA programs is that of adults with disabilities who do not qualify for SSI or who are awaiting a determination of SSI eligibility. Eligibility is limited, however, by the availability of public funds. ù Vocational Rehabilitation programs under Title I of the Rehabilitation Act of 1973, as amended, help persons with physical and mental disabilities become gainfully employed. The definition used in determining eligibility is "the presence of a physical or mental disability which for the individual constitutes or results in a substantial handicap to employment and a reasonable expectation that vocational rehabilitation services may benefit the individual in terms of employability." A person who is not expected to achieve employment is ineligible for a vocational rehabilitation program. In many respects, these definitions reflect outmoded concepts of disability. Evidence suggests that persons with severe disabilities are able to work when adequate support services are provided. Today, a person's medical condition is less relevant in determining ability to work. Advances in medical science and technology; changing attitudes; increased knowledge; and modifications in the work place have fostered employment for persons with disabilities. B. Sources of Data on Persons with Disabilities No national household survey of persons with disabilities has been conducted, nor has a major survey of their health insurance status or health care needs been attempted. To study the population of persons with disabilities, researchers must combine largely incompatible data from myriad sources or rely on national survey data that typically use narrow definitions of disability. The definitions used by these surveys are often inconsistent with the definitions used by major programs. Numerous national surveys, however, do collect some information on the prevalence of disability in the population. While survey data are not generated from responses to identical questions, they do provide some complementary baseline measures of certain characteristics of the population with disabilities. A description of these surveys follows. 1. National Health Interview Survey (NHIS) The National Health Interview Survey is a nationwide sample of 40,000 households--or approximately 110,000 persons.[7] NHIS is conducted by the National Center for Health Statistics/Department of Health and Human Services and collects information about the amount and distribution of illness, the impact of illness in terms of disability and chronic impairment, and the type of health services people receive. Because the survey has been conducted annually for almost 30 years, its data capture changes in health status over time. NHIS is an important source of information on disability for all age groups of the noninstitutionalized population. NHIS measures disability in terms of long-term reduction in activity resulting from chronic disease or impairment.[8] The survey considers three indicators of disability:[9] limitations in major activity, limitations in work, and need for personal assistance with activities of daily living. a. Limitations in major activity NHIS defines the survey population using these four major categories based on individual ability to perform their "usual" or "major" activity: ù Persons unable to perform their usual activity. ù Persons limited in the amount or kind of their usual activity. ù Persons limited but not in their usual activity. ù Persons not limited. Usual or major activities are defined by age group: ù Children under age 5--participation in play. ù Children age 5-17--attendance in school. ù Working age persons aged 18-64--ability to work. ù Persons over age 65--self-care, defined as the ability to perform certain activities of daily living (ADLs) and instrumental activities of daily living (IADLs). b. Limitations in work NHIS measures work disability in particular by defined limitations in the amount or kind of work or inability to work. Respondents report whether they are limited in nonwork activity, limited in amount or kind of work, or unable to work. c. Need for personal assistance with ADLs NHIS collects information on the need for both personal assistance in activities of daily living and instrumental activities of daily living. Persons who "need the help of other persons with personal care needs, such as eating, bathing, dressing, or getting around the home," are considered limited in ADLs. Persons are classified as limited in IADLs if they "need the help of other persons in handling routine needs, such as everyday household chores, doing necessary business, shopping, or getting around for other purposes."[10] 2. Survey of Income and Program Participation (SIPP) The Survey of Income and Program Participation is a nationally representative, ongoing survey of 20,000 U.S. households (approximately 46,000 persons) conducted by the Bureau of the Census. SIPP surveys the economic status of Americans in order to provide data on income distribution, income transfer, and service programs, and to gather information important for such policy issues as tax and health care reform. In 1984, during the third round of interviews with its first panel, SIPP collected data on the extent of disability in the civilian noninstitutionalized population. SIPP data include information on the entire noninstitutionalized disabled population--children, working-age adults, and the elderly. The survey defines disability in three ways: (1) the presence of functional limitations, (2) the presence of work limitations, and (3) the receipt of benefits from disability programs. SIPP data also contain measures of the degree of functional limitations; in other words, whether or not assistance is needed for certain tasks. The survey includes information on sociodemographic and economic characteristics, such as income, assets, earnings and work history, welfare participation, family structure, and health insurance coverage.[11] a. Functional limitations SIPP collects information on limitations in six sensory and physical functions: seeing, hearing, speaking, walking, lifting, and climbing the stairs without resting. SIPP distinguishes between persons who have difficulty with a function and persons who are unable to perform it at all. SIPP also asks about the need for personal assistance in ADLs, such as feeding oneself, maintaining continence, using the toilet, bathing, dressing, getting in and out of bed or a chair (transferring), and getting around inside the house.[12] While ADLs capture basic functions of daily living, IADLs include activities more pertinent to independent living. IADLs generally include such tasks as using the telephone, traveling beyond walking distance, shopping, preparing meals, doing housework and laundry, taking medication, managing finances, and doing yard work.[13] In SIPP, respondents are asked these three questions about ADLs: ù Do they need assistance to carry out the activities of dressing, undressing, eating, or personal hygiene? ù Do they need help or have difficulty getting into and out of bed? ù Do they need help or have difficulty getting around inside the house? Respondents are also asked whether they need assistance in the following three IADLs: ù Light housework. ù Preparing own meals. ù Getting around outside the house. Although SIPP is directly administered to persons age 16 or older, it asks parents whether or not their child has an ongoing condition that limits certain life activities. Specifically, SIPP collects information on whether or not children have a physical condition that limits their ability to walk, run, or play and if they have a mental or emotional problem that limits their ability to learn or to perform regular school work. b. Limitations in employment SIPP collects data on whether the amount or type of work a person can perform is limited by a health condition. Employment limitation questions in SIPP pertain to persons age 16-72. For persons who report being limited in work and not having worked in the four months preceding the interview, SIPP asks whether their health or physical condition has prevented them from working. For persons who report still working despite a work limitation, SIPP asks the following: ù At the time of the interview, can the person work full- or part-time despite the limitation? ù Does the person work regularly, or only occasionally and irregularly? c. Receipt of disability benefits SIPP also asks whether an individual is receiving cash benefits from SSDI, SSI, and Department of Veterans Affairs (VA) disability programs. The survey does not distinguish between disability benefits received from these and other types of programs. Some research has used the reasons that persons age 15-64 receive Social Security benefits and the type-of-benefit code for Medicare recipients to develop a beneficiary index code for recipients of Social Security.[14] 3. ICD and NCD Survey of Disabled Americans In late 1985, Louis Harris and Associates conducted a telephone survey for the International Center for the Disabled (ICD) and the National Council on the Handicapped.[15] The survey was designed to assess the attitudes and experiences of persons with disabilities over age 16. Individuals were included if they met any one of three criteria: (1) having a health condition that prevented full participation in work, school, or other activities; (2) having a physical disability--a seeing, hearing, or speaking impairment--an emotional or mental disability, or a learning disorder; or (3) reporting that one considered oneself disabled or that others would consider one disabled. In addition to questions on the nature and severity of their disability, the respondents were asked about the impact of disability on their social and working lives, and about barriers to entering the mainstream, disability benefits, and other matters.[16] C. Estimates of the Number of Persons with Disabilities The multiple data sources and definitions of disability produce estimates of the number of persons with disabilities of between 23 million and 43 million.[17],[18],[19] Exhibit 1 prese nts these different estimates. The ADA legislation puts the number of persons with disabilities at 43 million but does not specify how this estimate was determined. It appears that this figure was derived from an estimate of the number of persons with impairments based on the 1980 NHIS.[20] It has been argued, however, that this number does not reflect the true number of persons with disabilities as defined by ADA because the NHIS definition of impairment does not include certain conditions that would be covered under ADA, and further, that the Exhibit 1 ESTIMATES OF THE NUMBER OF INDIVIDUALS WITH DISABILITIES (In Millions) TYPE OF DISABILITY NUMBER OF INDIVIDUALS ADA Degree of Activity Limitation (NHIS 1989) Any activity limitation Limited in major activity Unable to carry on major activity Limited in amount or kind of major activity Limited, but not in major activity 43.0 34.2 23.3 10.1 13.2 10.9 Functional Limitation, age 15+ (SIPP 1984) Any functional limitation Severe limitation 37.5 13.5 Work Disability, age 18-69 (NHIS 1983-85) Limited in amount or kind of work activity Unable to work 17.4 7.5 9.9 Work Disability, age 16-64 (SIPP 1984) Limited in amount or kind of work activity Unable to work 18.2 8.0 Need for Assistance (NHIS 1983-85) With ADLs With IADLs 2.5 5.1 Need for Personal Assistance, age 15+ (SIPP 1984) With getting around, housework, meal preparation, or personal care With personal care 7.7 2.5 Sources:Bob Griss. (September 1988). Access to Health Care 1 no. 1-2. Washington, DC: World Institute on Disability. Mathematica Policy Research, Inc. (1989). Adams and Benson. (1990). LaPlante. (1988). estimate is not restricted to limitation in major life activities.[21] Exhibit 1 also presents estimates of the number of people with disabilities derived from subsequent NHIS surveys and the 1984 SIPP survey using other definitions of disability. ù According to 1989 NHIS data, approximately 34 million noninstitutionalized persons have a disability that limits their daily activity. Of these, 23.3 million have a limitation in major activity.[22] ù NHIS data from 1983-85 indicate that 17.4 million persons age 18-69 report some degree of work limitation due to their disability. Of these, 9.9 million report being unable to work altogether.[23] ù NHIS data from 1983-85 estimate that 7.6 million persons need assistance in either ADLs or IADLs. About 2.5 million of these only need assistance in ADLs.[24] ù The 1984 SIPP estimates that over 37 million persons age 15 and over have a functional limitation. Persons are considered functionally limited if they have difficulty performing one of the ADLs described earlier.[25] About 13.5 million had a severe limitation, meaning they were unable to perform one or more of the activities or needed the help of another person to perform one or more of the activities. ù The 1984 SIPP estimates that 18.2 million persons age 16-64 have a work disability. Approximately 8 million are prevented from working by their disability.[26] ù The 1984 SIPP also estimates that 7.7 million persons need personal assistance with one or more of the IADLs SIPP contains.[27] D. Characteristics of Persons with Disabilities Using available survey data, studies have analyzed the characteristics of individuals with disabilities. A description of this population in terms of age, race, gender, income, employment status, health status, and insurance status follows. Data from the NHIS are used because they contain the most recent information on the characteristics of persons with disabilities. Data from NHIS will be supplemented by data from other surveys, where appropriate. 1. Age Over 23 million people, or 9.6 percent of the total U.S. population, have limitations in their major activity.[28] About two-thirds (61 percent), or 14 million, are working-age persons between 18 and 64. About 2.4 million are children and 6.7 million are elderly. The prevalence of activity limitations increases with age. In 1989, the prevalence of any activity limitation was 3.8 percent in children under age 18 compared with 22.8 percent in adults age 65 or older.[29] In addition, the severity of the activity limitation increases with age. While the majority of persons with disabilities are in the working-age population, the likelihood of having a disability increases with age (exhibit 2 ). For example, two-thirds of persons with disabilities are of working age, but only 9.5 percent of working-age persons have a disability.[30] 2. Race The prevalence of disability varies across racial and ethnic groups. Among Black adults of working age (18-69), 14.7 percent have a limitation in their major activity. In contrast, 11.3 percent of working-age White adults are limited in their major activity. The highest prevalence of disability is experienced by working-age Native American adults--17.4 percent are limited in their major activity. Working-age adults of Asian or Pacific Islander origin have the lowest rate of disability of all racial groups, with 5.6 percent limited in major activity.[31] Exhibit 2 MOST PERSONS WITH DISABILITIES ARE OF WORKING AGE, BUT THE PREVALENCE OF DISABILITY INCREASES WITH AGE Source:Adams and Benson. (1990). In general, the groups that have higher rates of disability also experience a greater degree of activity limitation. For example, 10.3 percent of Black adults are unable to work, compared with 6.1 percent of White adults.[32] 3. Gender Women account for a slightly higher proportion of the general population than men (51.3 percent versus 48.7 percent); similarly, nearly 53 percent of all persons with disabilities are women. Persons limited in their major activity are slightly more likely to be female, while persons unable to carry on their major activity are more likely to be male.[33] About 5.2 percent of working-age men are unable to perform their major activity, compared with 3.8 percent of working-age women.[34] 4. Income Persons with lower incomes report significantly higher rates of activity limitations. Employed persons with disabilities earn less income than their nondisabled working counterparts (exhibit 3 ).[35] Among working-age persons, 8.3 percent of the general population reports earning less than $600 per month, compared with 19 percent of persons with a functional limitation. At the opposite extreme, 34 percent of persons without a functional limitation earn over $3,000 per month, compared with 19 percent of persons with a functional limitation.[36] A national survey of persons with developmental disabilities found that these individuals are significantly poorer than the general population. Persons with developmental disabilities are more likely to rely on public support for income than the general population. Among the general population, households report receiving 75 percent of their income from earnings, while persons with developmental disabilities live in households that receive less than 40 percent of their income from earnings. Even when persons with developmental disabilities do work, they still earn less than persons without these disabilities. Of those with a developmental disability, 58 percent report monthly earnings of less than $300, compared with 13 percent of the general Exhibit 3 PERSONS WITH DISABILITIES ARE MORE LIKELY TO HAVE LOWER INCOMES Source:Adams and Benson. (1990). population.[37] However, it is possible that some persons with developmental disabilities earn below a certain amount in order to retain eligibility for public programs. SIPP provides estimates of the number of persons receiving disability benefits from SSDI, SSI, and VA. Among persons age 18-64, 4.4 million are receiving benefits.[38] NHIS and SIPP found three to four times as many people with some health condition or impairment that limited their ability to work. Specific eligibility requirements for these benefit programs exclude many people from receiving coverage. 5. Employment Status Persons with disabilities are less likely to be employed than persons without disabilities. Over 74 percent of all working-age persons are employed; only 47.8 percent of persons with disabilities work either full- or part-time.[39] Various surveys provide estimates of the number of persons with a work disability. Work disability is a narrower definition of disability that measures conditions limiting the kind or amount of work a person can do. According to SIPP, among persons 16-64 years of age, 18.2 million have a work disability. Working-age Blacks have higher rates of work disability than Whites or Hispanics. Similarly, females have higher work disability rates than men.[40] Among the 18.2 million working-age persons with a work disability, 42 percent work full-time. Another 14 percent work, but not full-time, and 44 percent are prevented from working because of their disability.[41] 6. Health Status According to SIPP data, about 20 percent of working-age adults with limitations in functioning report that they are in excellent to very good health, compared with 70 percent of the general working-age population. Approximately 50 percent of working-age persons with a limitation in functioning report themselves to be in "fair" or "poor" health, compared with 5 percent of those without such limitations.[42] About 2.5 million persons with disabilities require personal assistance with activities of daily living and 7 million require assistance with housework, meal preparation, transportation, or personal care (exhibit 4).[43] Persons with disabilities also use health services more than the general population. For example, in 1979, persons with activity limitations made 9.5 physician visits per person, compared with 3.9 visits for persons with no activity limitation.[44] Persons who report that they are unable to conduct their major activities made 11.9 visits per person per year. An analysis of more recent data from the 1987 National Medical Expenditure Survey also found that among insured persons with work limitations, approximately 20 percent to 30 percent visit doctors 11 or more times per year.[45] Rice and LaPlante (1988) estimated that total expenditures for medical care for persons with activity limitations were $63 billion in 1980, more than two-fifths of the total medical care expenditures for noninstitutionalized persons. On a per capita basis, medical spending equaled $1,620 per person for those individuals limited by one condition and $2,456 for those persons limited by two or more conditions, compared with $486 for those not limited in activity.[46] 7. Health Insurance Status An analysis of the 1989 National Health Interview Survey found that about 4.1 million persons under age 65 with activity limitations were uninsured.[47] Working-age persons with activity-limiting disabilities are more likely to be uninsured than the overall working-age population. The 1984 SIPP Exhibit 4 WORKING-AGE PERSONS WITH DISABILITIES REPORT POORER HEALTH STATUS Source:Wave 3 on the 1984 SIPP Panel, supplemented with data from Waves 1, 2, 4. Analyzed by Mathematica Policy Research. (1989). found that 19 percent of the 21.7 million working-age persons with an activity-limiting disability were uninsured.[48] The 1989 NHIS shows that of the 19.8 million working-age persons with activity limitation, about 17.8 percent were uninsured.[49] This number is slightly higher than the proportion of uninsured in the overall U.S. working-age population. The health insurance status of persons with disabilities differs substantially from the insurance status of persons without disabilities. Individuals with disabilities have less private health insurance coverage and more public coverage than persons without limitations. Exhibit 5 shows a comparison of insurance status for persons with and without a major activity limitation based on 1984 data; other data reflect the insurance distribution presented here. An analysis of the 1989 NHIS found that approximately 63 percent of working-age persons with an activity limitation have private insurance, compared with 79 percent without activity limitation.[50] An examination of the 1987 National Medical Expenditure Survey (NMES) found similarly that persons reporting work, activity, or functional limitations were more likely to have public insurance than those without limitations; for example, about 25 percent of persons severely limited in activity (nonwork associated) had public insurance coverage, whereas only about 6 percent of those without limitation had public coverage. The data also show that as the severity of limitation increases, regardless of the limitation category, the proportion receiving employment-based insurance declines and the proportion receiving public insurance increases.[51] This situation is largely a result of a growing inability to maintain employment as the limitation worsens. Exhibit 5 HEALTH INSURANCE STATUS FOR PERSONS AGE 18-65 PERCENT OF PERSONS INSURANCE STATUS MAJOR ACTIVITY LIMITATIONSWITHOUT MAJOR ACTIVITY LIMITATIONS Private Insurance 62.2 80.9 Public Insurance Medicaid Medicare CHAMPUS-VA 14.1 14.8 8.1 2.8 0.2 2.8 Uninsured 15.6 14.8 TOTAL* 100.0 100.0 Source:Griss, Access to Health Care. (September 1988). p. 25. *Percentages may not sum to total because some people have more than one source of insurance. IV. ISSUES IN FINANCING HEALTH CARE FOR PERSONS WITH DISABILITIES Access to health care is based on the availability of adequate financing. Health care in the United States is financed through a variety of mechanisms, including private and public insurance, direct service programs, and out-of-pocket expenditures. The current financing structure reflects the acute care orientation of the health care system, which emphasizes curative treatment to restore health following severe illness or injury. Health insurance routinely covers expenses related to acute episodes of illness, such as hospitalization, but does not usually cover health maintenance or long-term care for chronic conditions or preventive services to avoid the onset of illness or disability. This orientation has created gaps in coverage for persons with disabilities and, increasingly, for the general population. This section describes the major components of the health care financing system and looks at issues affecting access to health care financing for persons with disabilities. It first examines the origins and structure of private health insurance. Then it discusses public insurance, directly financed services, and out-of-pocket expenditures. A. Private Health Insurance Private health insurance, particularly employer-sponsored insurance, is the cornerstone of the American health insurance system. Three-quarters of Americans under the age of 65 are covered by some form of private health insurance. Over 60 percent of persons with a limitation in their major activity have private health insurance. Despite the large number of persons with disabilities who have private insurance, barriers to obtaining coverage exist. These barriers result from insurer practices that restrict the availability and scope of coverage. The following pages provide an overview of the private-sector insurance industry and descriptions of the major insurance mechanisms for employers--self-funding, Blue Cross and Blue Shield plans, commercial insurance, and managed-care plans. Insurance industry practices that affect the availability and accessibility of coverage for persons with disabilities are also examined. 1. Overview of the Private Health Insurance Industry The origins of private health insurance in the United States may be traced to the mid-1940s when the exclusion of employer-paid fringe benefits from the taxable income of employees provided a strong impetus for the growth of employment-based insurance. A change in the Internal Revenue Code in 1954 allowed employer health insurance premiums to be excluded from an employee's taxable income. This move created an incentive to offer workers increased benefits in lieu of cash compensation. Many of the changes in the health insurance industry since the 1940s can be understood through the strategies used by insurers to influence the selection of risk. The original concept of insurance was that all members of a community would pay into a pool to protect each member against the high costs of an illness. This arrangement, known as community rating, recognized that illness occurred randomly and spread the risk over a large number of people. With community rating, everyone in an area faced the same premiums regardless of their personal health history. Over time, community rating has been largely replaced by experience rating. Under this arrangement, premium costs are based on an individual's or group's prior health history. Individuals and groups with a high risk of large health expenses have found the risk-based premiums excessive, compared with community-based rates. Individuals and groups that constitute better risks, in turn, found experienced-rated terms financially preferable. These better risks selected commercial plans that moved toward experience rating, while poorer risks selected Blue Cross and Blue Shield plans, which continued to set premiums through community rating. Today, most insurance plans use experience rating to set premiums, except for some Blue Cross plans that are prohibited from this method by state law. a. Employer self-funding In 1974, rising costs and a federal legislative change combined to produce a new era in market segmentation--employer self-funding. In that year, Congress passed the Employee Retirement Income Security Act (ERISA). The law allowed federal preemption of state regulatory statutes for qualified employer benefit plans. The federal preemption under ERISA has been interpreted to include exemption from state premium taxes, mandates for benefit provisions, and levies to fund state-operated risk pools. In response to ERISA, many large companies have chosen to self-insure, retaining insurer involvement only for administrative services. With the departure of large employer groups, the general insurance pool has a group of smaller employers representing greater risk. As employers found they could save more money from self-insuring than from experience rating, many moved to self-insure. In addition, small employers are self-insuring if they have better-than-average risks compared with their actuarial class, and if they can capture the advantages of favorable selection. The availability of stop-loss coverage for self-insured employers, which limits their financial risk for unexpectedly high health care expenses, has also contributed to the increase in employer self-insured plans. b. Blue Cross and Blue Shield plans Blue Cross and Blue Shield plans ("Blues plans") are typically not-for-profit corporations chartered under state statutes that require them to make affordable health insurance available to the public. These obligations often include holding open enrollment periods, offering individual policies, providing community rating for individual and small-group policies, and in some states, helping low-income persons obtain coverage. In return for compliance with these requirements, Blues plans are often granted some compensatory advantages, such as exemption from health insurance premium taxes that may apply to other insurance sellers or guarantees that other insurers cannot negotiate lower discounts with providers. Blue Cross and Blue Shield plans have contracts with hospitals, physicians, and other providers that guarantee price discounts to the carrier when an insured patient receives services from that provider. These plans generally offer hospital and medical insurance packages. Because of their unique obligations (e.g., open enrollment, community rating, or both), Blues plans are the primary insurers in the small-group and nongroup market. c. Commercial insurance The commercial insurance companies that market health insurance are typically either large, multiline insurance firms or smaller companies specializing in small-group coverage. The products offered by commercial insurers are of two basic types: disability income and medical expense. Disability income policies, which now represent less than 10 percent of the commercial health insurance market, provide cash benefits in the event of certain adverse health occurrences. The balance of the commercial health insurance sold takes the form of hospital and medical expense policies that provide payment for specific medical services. Commercial insurers also sell insurance and services to employers who wish to self-fund some portion of the benefit package for their employees. Many of the larger commercial insurers offer service contracts to such employers providing claims administration and other services that insurance companies typically provide. In addition, commercial insurers are the primary offerers of stop-loss and minimum-premium policies to such employers in exchange for a prepaid premium. These policies limit the employer's liability in the event of significant variations from the expected claims payout. As a result of these products, self-funding has become a viable option for many employer groups too small to self-insure without significant risk of catastrophic loss. d. Managed care Managed-care organizations integrate health services delivery with insurance coverage. Under managed-care plans, an organized group of physicians (and often affiliated hospitals) agrees to provide an array of medical services to an enrolled group in exchange for a prospectively determined rate per person enrolled (capitation rate). The traditional managed-care organization is the health maintenance organization (HMO). However, managed care now includes independent practice associations (IPAs), preferred provider organizations (PPOs), and exclusive provider offerings, all of which limit a subscriber to seeking care from networks of otherwise unrelated providers who have agreed to accept designated price discounts or capitation payments. HMOs and other managed-care organizations have the potential to provide comprehensive health services for lower premiums than traditional insurers because they require enrollees to obtain services only from contracted providers, and because they have some control over the decisions of contracted providers through price negotiations. 2. Private Health Insurance Coverage Among Individuals with Disabilities As exhibit 5 illustrates, private health insurance is the major source of health care coverage for most Americans, including most persons with disabilities. The extent of private health insurance coverage declines as the levels of functional limitations increase, so that about 80 percent of working-age persons with no functional limitations have private health insurance compared with 41 percent of working-age persons who need assistance with ADLs.[52] The difference between the proportions of these populations is related to the fact that most private health insurance in the United States is linked to employment. Given higher levels of unemployment among persons with disabilities, it follows that these individuals are less likely to have private health insurance than those without disabilities. About 70 percent of all persons who are employed full-time have employment-based insurance. Among persons with severe limitations, however, the percentage with employment-based insurance declines to 63 percent, and only 19.5 percent of working-age persons employed part-time have employment-based insurance. Among workers, persons with the most severe limitations have the highest percentage of employment-based health insurance. This finding may be explained by the fact that persons with severe limitations who are employed have higher levels of education than persons who are employed with less severe limitations. This higher level of education may enable these persons to obtain professional positions that are more likely to have health insurance as a fringe benefit.[53] Among working-age persons who are not employed, 14 percent have private insurance in their own name. These persons are likely to have obtained this coverage through nongroup sources that often carry higher premiums and limited benefits. Persons with the most severe limitations have lower rates of coverage in their own name (12.4 percent). About 43 percent of unemployed working-age persons have private health insurance in someone else's name, often as a dependent on a family member's health plan. Those with the most severe limitations have substantially lower rates of coverage as dependents on private plans (18.5 percent).[54] 3. Barriers to Availability and Affordability of Private Health Insurance Faced with spiraling health care costs, insurers have adopted a number of practices designed to reduce the extent to which high-risk individuals are included in their pools. Premiums for private health insurance plans have increased substantially in recent years. The cost of premiums for family coverage increased 12.7 percent between 1987 and 1988, 24.4 percent between 1988 and 1989, and 14.6 percent between 1989.[55] This rise in the cost of premiums has led some businesses to drop coverage, and private insurers to develop new ways to reduce risks. Insurers have found that risk selection can result in significant cost savings. For example, in 1988, 5 percent of the privately insured U.S. population accounted for 52 percent of the health care services delivered. An insurer who could design a method to exclude all of these individuals from the risk pool could charge a premium equal to one-half of the nationwide per capita expenditures for health care. Although risk selection reduces the amount of incurred claims for an insurer, the costs for individuals who are excluded from coverage or who are underinsured shift to public programs, or to hospitals and other providers in the form of uncompensated care. Insurers have also received a great deal of pressure from business to slow the rate of growth in health insurance premiums. For employers, health benefits have become a major component of labor costs. In 1970, health benefits represented 2.4 percent of total compensation and 23 percent of total benefits. By 1989, these figures had increased to 5.8 percent and 36 percent, respectively. One survey of employers who offer health benefits found that the average cost per employee in 1989 was $2,600, which represented almost 11 percent of payroll.[56] The same survey found that average costs per employer rose to $3,217 in 1990, a 24 percent increase. These pressures on insurers and employers have led to industry practices that adversely affect the availability and affordability of private health insurance for persons with disabilities. Medical underwriting and preexisting-condition limitations, particularly in the small-group and individual insurance markets, pose the largest obstacles to obtaining health insurance for persons with disabilities, and the use of these practices is growing. They are the principal methods insurers use to identify and eliminate those most likely to incur high health costs. In addition, private health insurance has been criticized for posing greater uncertainty for persons with disabilities because insurers have canceled or refused to renew policies for individuals with high claims experience. This section examines the barriers for persons with disabilities that these insurance industry practices create. a. Medical underwriting Medical underwriting, the process by which an insurer selects the risks it will (and will not) cover, permits insurers to analyze the health characteristics of individuals or small-group members to determine whether they present an acceptable risk. Medical underwriting is typically employed for individuals and groups of 10 or fewer workers; recently, however, the practice is being used by firms with up to 100 employees. Medical underwriting is usually used to deny coverage to an entire group, although it can be used to exclude certain individuals in the group unless prohibited by state law. Many states have statutes that outlaw excluding coverage for one or more persons in a group. This prohibition means that for many small groups, the presence of one high-risk individual results in very high premiums or in denial of coverage for all. Insurers may establish underwriting criteria related to the claims experience, or fears of claims, and have traditionally used these criteria to deny coverage to persons with health conditions or high-risk demographic or occupational characteristics. Insurers aim to find any health-related circumstance that might signal cost. Health status questionnaires, physical examinations, and other direct and informal screening techniques have been used to identify personal or family histories of serious chronic illness. Studies indicate that the list of conditions excluded from coverage or subject to limitations has grown longer and includes AIDS, asthma, emphysema, cancer, leukemia, diabetes, epilepsy, heart disease, rheumatic fever, rheumatism, and arthritis, as well as any chronic condition, spinal or muscular disease or disorder, mental or emotional disease or disorder, and neurological disease or disorder.[57] Medical underwriting criteria are not disclosed by private insurers because this knowledge would give their competitors an advantage in the health insurance market. As a result, the criteria cannot be evaluated to determine the reasonableness of assumptions or the methodologies employed. Specific underwriting practices vary by insurer. Some insurers issue questionnaires to collect information on past history of disease, vital statistics, and recent visits to hospitals. Questions concerning AIDS have also been added in jurisdictions where permitted. Some insurers rely upon the truthfulness of applicant statements while others make use of attending physician statements (APSs) and data from the Medical Information Bureau (MIB) to confirm reported information. The purpose of this detailed review is to avoid accepting persons with conditions that will require some type of medical intervention, such as expensive hospitalization or extensive testing and treatment, and thus incur above-average medical claims expenses during the first year or years of coverage. b. Preexisting-condition exclusions Preexisting-condition exclusions are used to reduce an insurer's expected first-year medical claims expense. Exclusions on the basis of preexisting conditions are widely prevalent and problematic for persons with disabilities. Insurers willing to underwrite coverage for a person with a disability usually place a number of limitations on the coverage. The most common limitations are exclusions for certain services, and waiting periods for coverage related to the preexisting condition. Although these provisions are legal and considered by insurers to constitute sound business practice, many in the disability community consider them discriminatory. A discussion of the discrimination arguments surrounding both medical underwriting and preexisting-condition exclusions follows. The industry experience with preexisting-condition exclusion (PCE) clauses has been that first-year utilization is low to normal. However, in the second year, utilization is often significantly higher because individuals have met the PCE waiting period, and insurance premiums are raised accordingly. Some small businesses find the premium no longer affordable and secure coverage through another insurer who most likely includes PCE language in the policy. As a result, the individual is once again not eligible for coverage of an existing medical problem for yet another waiting period of up to a year. Persons with disabilities may change jobs or face a number of insurers within the same job so often that they never satisfy the preexisting-condition clause and remain uninsured for services related to their disability. c. Underwriting as discrimination Business practices considered common and acceptable in the health insurance industry may be discriminatory for persons with disabilities. The arguments that medical underwriting and preexisting-condition exclusions constitute discrimination are fostered by the lack of standards or criteria used by insurers to render coverage decisions. At the same time, however, insurers are precluded from collectively establishing such criteria under antitrust law, since such activity may be interpreted as collusion. Most states have passed laws prohibiting discrimination against persons with physical or mental impairments, but these laws contain two important loopholes. First, although insurers cannot discriminate solely on the basis of disability, they are permitted to exclude persons from coverage based on "sound actuarial principles or actual or reasonably anticipated experience." Since insurers claim that all medical underwriting is based on sound actuarial principles, this loophole may become a means of excluding persons with disabilities from coverage. Minnesota requires insurers to submit substantial data, actuarial projections, or claims experience that support the underwriting standards used, but most states allow insurers to rely on sound actuarial principles. Second, in many states, antidiscrimination laws permit preexisting-condition exclusions. Private insurers treat persons with specific conditions as a homogeneous group and attribute the average level of health care utilization to every member of that group. Since insurers are unable to predict who will be high users of health care, they deny coverage to all persons with specific conditions even though some will be low users. Critics have charged that little scrutiny is given to the quality of the data used to determine exclusions. They argue that the actuarial data used to justify excluding certain conditions are often outdated or do not reflect the most effective treatment modalities available. The American Diabetes Association recently conducted an evaluation of the accuracy of underwriting practices in Massachusetts' commercial insurance industry. The Association perceived that insurance underwriting practices were based on inaccurate clinical and cost information and were thus inappropriately preventing individuals with diabetes from qualifying for health insurance. However, the study concluded that insurance companies in fact did have accurate information and were correctly classifying the risk of persons with diabetes and determining premiums that accurately reflected the costs of providing health care to them.[58] The question of whether insurers base underwriting decisions on recent and appropriate data is clearly an important issue requiring further research. With the passage of the Americans with Disabilities Act, persons with disabilities are guaranteed greater protection against discrimination in the private sector. Guidance from ADA with respect to the provision of health insurance is unclear. While the Act does prohibit discrimination against an employee in the "terms and conditions of employment," it also explicitly permits the continuation of underwriting risks, classifying risks, and administering risks, unless such practices are used as a "subterfuge" to evade the purpose of ADA. At this time, it appears that the parameters ADA sets in relation to health insurance are as follows: ù An employer may not refuse to hire an individual because the individual's health care costs or premiums may be high. ù An employer may not have a health plan that refuses to provide any coverage to a person with a particular disability or diagnosis. ù Exclusions and limitations are allowable so long as they are based on sound actuarial principles.[59] ADA contains at least two limitations that may restrict access to health insurance for persons with disabilities: ù ADA only applies to firms with 15 or more employees. ù ADA permits exclusions based on preexisting conditions. Section 501 (c) was added to ADA "to make it clear that this legislation will not disrupt the current nature of insurance underwriting or the current regulatory structure for self-insured employers or of the insurance industry in sales, underwriting, pricing, administrative or other services, claims, and similar insurance-related activities based on classification of risks as regulated by states."[60] d. Uncertainty in private health insurance coverage The uncertainty associated with private health insurance has created another barrier to coverage. The rapid changes in private health insurance that are reducing benefits and increasing the number of Americans deemed uninsurable have caused concern among persons with disabilities. Even those with disabilities who have secured private health insurance are questioning the stability of that coverage. Persons with disabilities are vulnerable to policies being cancelled because of high claims experience or policies being renewed at prohibitively high rates. Increasingly, insurers are moving out of the individual market because adverse selection has resulted in higher costs. In addition, some persons with disabilities may be denied coverage if they change jobs, modify their insurance coverage, or if their employer switches insurers. e. High cost of nongroup insurance The difficulty persons with disabilities have in affording health insurance is most evident in the nongroup insurance market. Individual policies are heavily underwritten, with the exception of Blue Cross and Blue Shield open enrollment policies. As a result, premiums tend to be high. Only a few large commercial insurers still offer individual insurance at any price. Aetna Life and Health Insurance, the largest firm still willing to offer individual health plans, is currently divesting its individual business. As the last commercial insurers leave the nongroup market, the remaining sources for individual insurance are Blue Cross and Blue Shield plans, many of which offer state-regulated individual plans at standard prices. However, since Blue Cross and Blue Shield are the individual insurers of last resort, their plans are becoming increasingly more expensive. For example, in the past year Blue Cross and Blue Shield of New Jersey asked the state insurance regulator for a rate increase of 47 percent in its individual business. In addition, Blue Cross and Blue Shield are more reluctant to sponsor open enrollment for individual policies or offer guaranteed issue or community rating for individual plans as the costs of adverse selection and commercial competition in the group market increase. As individual plans become more expensive and less available, high users will increasingly try to obtain coverage through public means. B. Public Insurance Public insurance programs, such as Medicare and Medicaid, are an important source of health care financing for persons with disabilities. Because private insurance is largely employer-based, it is likely to cover those persons with few limitations in work activity. Public insurance is likely to cover persons who cannot work or who have major limitations in their ability to work, since eligibility for many of these programs is essentially tied to receipt of cash assistance and thus based on income and categorical (i.e., demographic) requirements. This section describes the role played by Medicare, Medicaid, General Assistance, and CHAMPUS (Civilian Health and Medical Program of the United States) in providing health insurance for persons with disabilities. It also discusses the access barriers to these programs persons with disabilities face. The adequacy of coverage is described in a subsequent section. 1. Medicare Medicare is the nationwide health insurance program for the elderly and for certain persons with disabilities. Medicare was established in 1965 by Title XVIII of the Social Security Act to finance health care for the elderly. The 1972 amendments to the Social Security Act extended Medicare eligibility to certain persons with disabilities and to most persons with end-stage renal disease. The following is an overview of the Medicare program and the access barriers to it. a. Overview of the Medicare program Medicare is the largest public health insurance program in the United States, providing coverage to over 30 million people. The Medicare program has two components for different types of services that are financed through different sources of funds. Part A, the hospital insurance program, covers inpatient hospital, skilled-nursing facility (SNF), and home health care. Part B, the supplemental medical insurance program, provides coverage for most physician services, laboratory tests, and outpatient hospital care. The program provides acute care coverage, not long-term care, and allows for SNF and home health care benefits only following acute care hospital stays. All persons over age 65 who receive Social Security benefits are automatically eligible for Part A coverage. Persons with disabilities are eligible for Medicare if they have received SSDI benefits for 24 months. Many persons who have chronic kidney disease are also eligible for Medicare. Part B coverage is optional and requires a monthly premium payment. Federal law now requires states to pay this premium and any other cost sharing for Medicare beneficiaries with incomes below 100 percent of the federal poverty level ("qualified Medicare beneficiaries"). Medicare is financed through a compulsory payroll tax on the earned income of all wage earners, one-half contributed by the employer and one-half by the employee. Self-employed persons are responsible for contributing both the employer and employee shares. The small number (less than 5 percent) of persons over age 65 who have not contributed to the Social Security system are permitted to buy into Medicare. In 1990, about 34 million people received Medicare. Of these, about 3 million were persons with disabilities. This population represents about 10 percent of total Medicare Part A beneficiaries and about 9 percent of total Part B recipients. Participation of SSDI recipients grew steadily for several years but has stabilized in the past decade. Persons with disabilities accounted for about 11 percent of all Medicare expenditures in 1990. Annual per capita costs for disabled Medicare beneficiaries in 1990 were $3,406, compared with $3,035 for aged Medicare beneficiaries.[61] b. Barriers to Medicare coverage The barriers to Medicare coverage are essentially related to eligibility requirements. Medicare eligibility for persons with disabilities is based on eligibility for SSDI. The SSDI definition of disability requires that the individual be unable to engage in any substantial gainful activity by reason of physical or mental impairment. The impairment must be expected to last for at least 12 months or to result in death, and must be medically determinable. The Social Security Administration defined substantial gainful activity (SGA) as earnings of at least $300 per month since 1980. The SGA level was raised to $500 per month on January 1, 1990. Furthermore, persons must have satisfied a work requirement and thus contributed to the Social Security system for a certain period. Persons under age 18 are not eligible for Medicare even when their parents have contributed to Social Security, except in cases of chronic kidney disease. Persons over 18 whose disability began before age 22 and who are the children of a parent who is covered by Social Security and is disabled, retired, or deceased are also eligible for coverage. There is also an initial five-month waiting period before SSDI benefits commence. In order to receive Medicare coverage, an additional 24-month waiting period must be satisfied by SSDI recipients. Congress included this waiting period in order to "...help keep program costs within reasonable bounds, avoid overlapping private insurance protection...and provide assurance that the protection will be available to those whose disabilities have proven to be severe and long-lasting."[62] It has been shown that many beneficiaries may go without any type of health insurance during this waiting period. A study of the impact of eliminating the waiting period found that 27 percent of SSDI recipients had no health insurance coverage during months 18-24 of the waiting period.[63] Another study found a trend towards increased Medicaid coverage and decreased "other" coverage (presumably private coverage) associated with the length of time since entitlement to SSDI benefits.[64] The Social Security Administration reported that as many as 55 percent of SSDI beneficiaries with cancer do not survive the two-year waiting period.[65] 2. Medicaid Title XIX of the Social Security Act provides for a program of medical assistance for certain individuals and families with low incomes. The program, known as Medicaid, became law in 1965 as a jointly funded venture between the federal and state governments. Federal oversight responsibility for Medicaid lies with the Health Care Financing Administration (HCFA) in the Department of Health and Human Services. Within broad federally established guidelines, each state determines (1) eligibility requirements; (2) the amount, duration, and scope of services; (3) the rate of reimbursement for services; and (4) administrative practice. As a result, Medicaid programs vary considerably among states. a. Overview of the program Contrary to popular understanding, the Medicaid program was never intended to cover all of the poor. In 1990, Medicaid provided services to about 25 million low-income persons who were pregnant, aged, disabled, or blind, or in certain families with dependent children. The combined total federal and state expenditures for Medicaid in 1990 were $68.7 billion ($38.9 billion federal and $29.8 billion state). In fiscal year 1990, about 3.6 million persons with disabilities received Medicaid, accounting for about 14 percent of all Medicaid enrollees.[66] This population represented about 36 percent of all program expenditures. In contrast, recipients of Aid to Families with Dependent Children (AFDC)--including adults, pregnant women, and children--account for 70 percent of all Medicaid enrollees but only 27 percent of program expenditures. The disproportionate amount of expenditures attributable to Medicaid enrollees with disabilities results from the fact that they typically receive substantial amounts of long-term and other care on a continual basis. Care for pregnant women and children tends to be episodic and low cost (with the exception of complicated deliveries, high-risk newborns, and care for chronically ill children). Medicaid eligibility is determined by two factors: categorical requirements (i.e., family composition or demographic characteristics) and income standards. Assets and resources also factor into Medicaid eligibility. Until recently, Medicaid eligibility was linked primarily to eligibility for two federally subsidized cash assistance programs: Aid to Families with Dependent Children and Supplemental Security Income. However, changes in federal law since 1986 have allowed states to move beyond this linkage by establishing new eligibility groups not related to receipt of cash assistance. Persons with disabilities may be eligible for Medicaid in most states if they are eligible for SSI. Thirteen states have elected to use the 209(b) option under the Social Security Act. This option permits more restrictive eligibility criteria than were in effect in a state's Medicaid plan in January 1972, when SSI was created; three of the 209(b) states have more restrictive definitions of disability than that used by SSI. All 209(b) states must allow Medicaid applicants to spend down to the SSI income eligibility level even if the state does not have a medically needy program. Under the optional medically needy program, persons who meet categorical requirements but exceed AFDC or SSI income standards may be eligible for Medicaid only if their income is below a state-established medically needy standard. States may set the medically needy level at up to 133-1/3 percent of the AFDC payment standard. The medically needy provisions also permit persons to spend down to become eligible for Medicaid in most states by incurring large health expenses, which effectively bring their incomes below the income standard. The spend-down provision is particularly important for persons who incur unexpected catastrophic illnesses or health expenses. Medicaid offers one of the most comprehensive benefit packages for persons with disabilities because it covers services outside the traditional acute care model. States are required by federal law to provide a number of specific basic services under Medicaid. In addition, states can cover a number of optional services, many of which are health-related or therapeutic interventions. Services in the optional category include physical therapy; occupational therapy; speech, hearing, and language disorder services; prosthetic devices; rehabilitative services; and transportation. Although states can select which, if any, optional services to offer to their categorically and medically needy adult populations, they are required to cover these services for children under the Early and Periodic Screening, Diagnosis, and Treatment Program (EPSDT). Under EPSDT, children must receive screening and diagnostic services as well as any medically necessary treatments that may not be available under a state's Medicaid plan but are allowable under federal law. b. Barriers to Medicaid coverage Despite the program's intent to facilitate access to care for certain low-income populations, several barriers to accessing Medicaid remain for low-income persons with disabilities. The extent of many of these obstacles to Medicaid coverage varies from state to state because of the latitude states have in determining program eligibility criteria. For persons with disabilities, the primary barrier to access to Medicaid is the SSI definition of disability and related income eligibility criteria. The federal SSI definition requires that the individual be unable to engage in any substantial gainful activity by reason of physical or mental impairment. The impairment must be expected to last for at least 12 months or to result in death, and must be medically determinable. Some states, however, use a more restrictive definition of disability as permitted under the 209(b) option. The limiting criteria may include not only a more restrictive definition of disability but also different levels of income disregards, resources, treatment of household goods, income-producing property, life insurance, and burial space and funds.[67] States exercising the 209(b) option, however, must allow persons with disabilities to spend down to the Medicaid income eligibility standard regardless of whether or not there is a medically needy program. Many children with disabilities have been deemed ineligible for SSI because they do not have a condition that meets the Social Security Administration's Listing of Impairments. In an attempt to correct this problem, the U.S. Supreme Court decided in Sullivan v. Zebley (110 S. Ct. 885,1990) that the Social Security Administration must establish a new functional assessment step beyond the Listing of Impairments to determine whether a child should qualify for SSI on the basis of functional limitation. The Social Security Administration also does not make a presumption of disability in very young children with genetic or congenital impairments who have not yet evidenced the developmental disabilities they will show at a later age. Legislation has been introduced to establish a category of "presumptive disability" at birth for genetic or inborn conditions that have a high probability of resulting in disability. The presumption would continue through the child's third year of life, at which time the condition would be evaluated against the appropriate disability standards. In addition to a restrictive SSI definition of disability, the federal SSI income level is well below the poverty line in most states. Although most states augment the SSI financial requirement under state supplementation payment (SSP) programs, the SSI/SSP income eligibility level is above the federal poverty level in only a few states. Medically needy standards also tend to be below the poverty level in most states. Thus, many persons with disabilities must incur very high medical expenses in order to obtain Medicaid benefits. Because states establish medically needy programs and income levels, where people live affects their access to Medicaid. Furthermore, the Omnibus Budget Reconciliation Act of 1986 (OBRA 86) established the option for states to extend Medicaid eligibility to elderly persons with disabilities who have incomes up to 100 percent of the poverty level; seven states have elected this option. Counting the income and assets of nondisabled persons in determining the eligibility of disabled persons is another problem. According to Social Security Administration regulations, the income and assets of the parents of children with disabilities under age 18 must be counted when determining the eligibility of the child, as long as the child is living in the parent's household. This regulation has disqualified many children with disabilities from Medicaid eligibility and has created an incentive for families to place these children in institutions so that the children may receive Medicaid benefits. This dilemma received wide public attention in the case of Katie Beckett, in which Katie, a ventilator-dependent child, remained institutionalized because discharge would have made her ineligible for Medicaid. As a result of this controversy, Congress created the Katie Beckett Waivers, which gives states the option of ignoring the parent's income if the child is at risk of institutionalization. In most states, the number of waivers permitted is capped. Caps range from about 50 to 200. Federal Medicaid requirements that a service be deemed medically necessary to qualify for reimbursement may also bar individuals from obtaining Medicaid services. Some services, such as physical and occupational therapy, require a prescription as evidence of medical necessity, and a physician referral is necessary for speech pathology and audiology services as well. States have discretion in specifying medical necessity criteria for other services as well. As a result, the limits on services vary across the country. Many public programs, including Medicaid, are believed to give beneficiaries cause to decline employment for fear of losing their benefits. To alleviate this problem among persons with disabilities, Section 1619 of the Social Security Act was enacted as a temporary provision in 1980 and made permanent in 1986 under the Employment Opportunities for Disabled Americans Act. Section 1619 is a work incentive program that allows SSI recipients to earn income up to the value of the cash assistance, Medicaid payments, and publicly funded attendant care benefits that they would have been eligible for without the earnings. Persons with attendant care costs, higher-than-average Medicaid costs, impairment-related work expenses, or income set aside under a plan for achieving self-support may have higher earnings and still qualify for Section 1619(b). Individuals must also state that they would be inhibited from continuing employment without Medicaid coverage. Despite this relaxation of income limits for SSI eligibility, a survey of eight states found that Section 1619 recipients accounted for less than 1 percent of all Medicaid recipients without disabilities. Some major reasons that persons with disabilities do not take advantage of Section 1619 appear to be a lack of information about the provision and a lingering belief that working will disqualify them from coverage. A study of work incentive policies found that the perceptions surrounding work and loss of benefits were powerful and included a large amount of wrong and outdated information.[68] Recent state budget crises have created additional problems for the Medicaid program. In fiscal year 1992, several states did not increase their AFDC standard while others scaled back eligibility for their medically needy programs. Some states reduced service coverage; and many of these service cuts particularly affect persons with disabilities. For example, one state reduced the number of covered prescriptions per month and the number of home health visits per year and eliminated coverage of eyeglasses and hearing aids.[69] As states struggle to constrain rising deficits, it is likely that they will continue to consider deep cuts in the Medicaid program as a mechanism for reducing spending. 3. General Assistance/Medical Assistance In addition to Medicaid, some states have statewide or local-level General Assistance (GA) or medical assistance programs. These programs provide financial support and health care coverage to certain low-income persons ineligible for federal programs, including persons with disabilities not eligible for Medicaid or Medicare. Data about the number of persons with disabilities receiving medical help under GA-medical assistance programs are not readily available. However, in a national survey of 22 statewide GA programs conducted in 1989, 16 states reported that persons with disabilities who could not qualify for SSI or who were awaiting SSI payments accounted for at least 20 percent of the state's GA caseload.[70] As a result of fiscal crises, however, many states have significantly curtailed their General Assistance programs. As of early 1992, at least one state had eliminated its GA altogether; others are considering major reductions in funding for these programs. 4. CHAMPUS/CHAMPVA CHAMPUS is the principal insurance program for families of active duty, retired, or deceased persons of the uniformed services and for uniformed-service retirees themselves. Eligibility for CHAMPUS is contingent on a family member's current or prior participation in the military. Eligibility for this program ends explicitly when an individual becomes eligible for Medicare. However, if Medicare eligibility is the result of a disability that eventually subsides, CHAMPUS benefits may resume once Medicare coverage is lost. In general, CHAMPUS covers physician care, inpatient and outpatient hospital care, prescription drugs, and several other services when determined medically necessary. Covered services may include physical therapy, the rental or purchase of durable medical equipment, and home health care when it is less expensive than hospitalization. Although there is a standard CHAMPUS benefit package, covered services may vary across the country because CHAMPUS is conducting several demonstration projects in different regions. Payment depends on the patient's beneficiary category and the type of care--inpatient or outpatient. Approximately, 20 percent to 35 percent of CHAMPUS eligibles also have coverage under another source, usually their employer. It is difficult to estimate the number of persons eligible for coverage under CHAMPUS. Information is available only for those persons filing a claim, which includes only information on the type of treatment received. CHAMPUS has a special Program for the Handicapped (PFTH) for some disabled dependents of active duty military personnel. Benefits provided under this program include services specifically related to an individual's disability, such as diagnostic services; inpatient, outpatient, and home treatment; training, rehabilitation, and special education; institutional care in certain facilities; and necessary supplies. However, individuals may be deemed eligible for PFTH only after they have documented that no other state or local programs, facilities, or funds for these services are available. Because state and local coverage or services for persons with disabilities vary across the country, CHAMPUS subscribers must reapply for PFTH benefits if they relocate. The military family must help pay for the care in an amount dependent upon rank and the cost of medical services. Once members have met their monthly share of the costs, CHAMPUS pays up to $1,000 per month for the individual. The family is responsible for all costs above the $1,000. C. Directly Financed Services Another important source of health care financing comes from grants or appropriations made directly to providers. Federal and state governments are the principal sources of funding for direct services, although private organizations also make important contributions. In 1987, HCFA estimated that federal, state, and local governments spent $45 billion on health care services, in addition to Medicare and Medicaid.[71] Directly financed service programs are typically targeted at specific populations or services. Funding is usually contingent on providing care to certain populations, such as the medically indigent, or providing certain types of care, such as immunizations. Persons with disabilities are the target for several direct services programs funded with federal, state, and local dollars. 1. Federal Direct Services Programs Federal programs providing direct services to persons with disabilities include the following: ù Department of Veterans Affairs. The Department of Veterans Affairs provides medical care to military personnel who have left the services, primarily those persons with some service-related disability. Veterans requiring treatment for conditions not related to their service may receive care at VA facilities if they cannot afford private hospital care. Approximately 70 percent of VA patients have incomes below the poverty level.[72] The VA system includes 172 hospital centers, 119 nursing homes, 233 outpatient clinics, and 26 domiciliary care facilities. In 1987, about 2.9 million recipients received health care services through the VA system. Program expenditures were $10.8 billion in 1988.[73] ù Program for Children with Special Health Care Needs. Formerly known as the Crippled Children's Program, this program is funded by the Maternal and Child Block Grant under the U.S. Public Health Service. The program provides services to children with a wide range of chronic health conditions. Although programs vary by state, most provide for the screening and treatment of chronic conditions and for ongoing support services, such as case management and counseling. As other financing sources for children with disabilities have developed in recent years, the program has tried to help families access necessary services through other programs, such as Medicaid. ù Handicapped Infants and Toddlers Program. This program was authorized by the Education for all Handicapped Children Act amendments in 1986, now known as the Individuals with Disabilities Education Act (IDEA). It is funded through the Department of Education's Office of Special Education and Rehabilitative Services. The program funds the provision of early interventional services to children with disabilities. It is designed to minimize developmental delay so that children will be less likely to need special education services in school or to be institutionalized later. In fiscal year 1988, $75 million was allocated to states for this program.[74] ù Vocational Rehabilitation. The Vocational Rehabilitation program helps persons with physical and mental disabilities become gainfully employed. In 1988, the federal government provided $1.38 billion to states to operate the program. Services provided include an evaluation of vocational rehabilitation potential, counseling and guidance, physical and mental restoration services, and vocational and other training. The Vocational Rehabilitation program does not provide any ongoing support services that may be necessary for an individual to continue working. In fiscal year 1989, approximately $1.44 billion was awarded to states.[75] ù Community Health Centers. Community Health Centers (CHCs) provide a comprehensive set of services to a defined geographic region. CHCs often target services to medically underserved populations, such as pregnant women and children in areas with high infant mortality, low-income minorities, low-income persons with disabilities, and substance abusers. The delivery of primary care is the major service provided by CHCs. Other services include case management/social services, mental health, dental care, and substance abuse. Currently, there are 550 CHCs receiving federal funding, and serving approximately 5.35 million people. 2. State and Local Funding for Direct Services States and localities support a variety of direct services, including preventive, acute, and long-term care. These services are typically offered through systems of hospitals, clinics, health departments, and other providers. Most direct care systems owned and operated by state or local governments receive some federal support through categorical and block grants. In addition, state and local governments provide a large amount of funds themselves through their own tax resources. In 1987, states and localities spent nearly $12 billion on direct care services.[76] The majority of these funds are appropriated monies used to support publicly owned hospitals and clinics. These funds also finance institutional care for specialized populations in such areas as mental health, developmental disabilities, and rehabilitation services. States operate a wide variety of acute and long-term care hospitals. Every state operates at least one hospital for mentally ill and mentally retarded residents who cannot afford private care.[77] Many states also operate one or more chronic disease or tuberculosis hospitals. Many cities and counties also operate hospitals of their own. City and county hospitals serve both patients who can afford private care and those who cannot. In addition to hospital-based care, states and localities frequently provide ambulatory services related to disease prevention, health promotion, and communicable disease control. Services typically provided at the state and local level include maternal and child health programs, school health, nutrition, alcohol and drug abuse treatment, family planning, and health education. These efforts are often sponsored by different state agencies and delivered through a variety of community health centers, school clinics, and government offices. 3. Private Support for Direct Services Private foundations also contribute to the wide array of directly financed services. Private support includes funding from corporate grants, private foundations, and individual donations. These funds may be used to finance charity care or may be tied to certain population groups or services. A variety of voluntary organizations, at least partially funded by private contributions, also provide direct services for specific populations. The National Easter Seal Society, for example, spent over $160 million in 1990 on direct client services. These services include speech and language therapies; medical treatment, physical therapy, and prosthetic care; vocational evaluation, occupational therapy, training, and placement; psychosocial evaluation and counseling; educational evaluation and services; camping, recreation, and social services; and prevention of and screening for potentially disabling conditions. D. Out-of-Pocket Expenditures In the absence of third-party coverage or comprehensive third-party coverage, many persons pay for care out-of-pocket. Among the general population, about one-third of total health care expenditures is financed out-of-pocket. Among persons with disabilities, that percentage is likely to be higher and to constitute a larger portion of total family income. Persons with disabilities face high out-of-pocket costs for a number of reasons. Many require services not covered under traditional insurance plans. Some may require services on a long-term basis or need intensive and expensive treatment, which causes them to reach and exceed insurance expenditure caps. As high medical expenses are incurred, persons with disabilities may exhaust financial resources and eventually become eligible for Medicaid through spend-down. V. ADEQUACY OF HEALTH INSURANCE AND HEALTH-RELATED SERVICES FOR INDIVIDUALS WITH DISABILITIES For most persons with disabilities, the major difficulties of financing health care arise not from lack of insurance but from lack of coverage for certain medical and health-related services. With certain services, such as prescription drugs, home care, and assistive technology, excluded from coverage or subject to restrictions, insurance coverage may not meet the specific needs of individuals with disabilities. In order to meet their health care needs, persons with disabilities may refuse employment to remain on public programs with more comprehensive benefits, or they may incur significant out-of-pocket costs to supplement their insurance. Lack of access to needed services may hinder independence and result in deteriorating health status. This section describes issues related to adequacy of coverage for health care and health-related services and the implications for persons with disabilities. A. Defining Adequacy What constitutes adequate health insurance coverage is not clearly or consistently defined. Issues surrounding adequacy are at the heart of the health care reform debate as attempts are made to enumerate a set of basic benefits. Arguably, the extent to which a particular package of health care benefits is adequate may be defined differently for people with different health care needs, incomes, and priorities. Measures of the adequacy of health insurance coverage have typically focused on underinsurance. Estimates of underinsurance are based on the expected risk of incurring a catastrophic health expense. Farley's (1985) analysis of the 1977 National Medical Care Expenditures Survey (NMCES) found that an estimated 12.6 percent of the nonelderly population with private health insurance had a 5 percent expectation of out-of-pocket expenses in excess of 10 percent of income.[78] The Department of Health and Human Services conducted a study of catastrophic illness that examined the out-of-pocket medical costs of persons with disabilities and chronic illness. The report concluded that "a significant portion of catastrophic out-of-pocket expenses occurs in families that have members with acute or chronic catastrophic conditions resulting in severe and permanent limitations of activities."[79] Using the National Medical Care Expenditure Survey, the report found that 9.6 percent of families who had a family member with a major limitation in activity had out-of-pocket costs that exceeded $2,200. Out-of-pocket costs exceeded $4,400 for 3.6 percent of such families. These estimates indicate that families with individuals having a limitation in major activity are more than twice as likely to experience catastrophic out-of-pocket expenses than are families without a limited member.[80] The NMCES data indicate that 21.4 percent of families with members having a limitation in major activity have out-of-pocket medical expenses that exceed 5 percent of their income, while 9.2 percent have out-of-pocket expenses exceeding 15 percent of their income, and 5.1 percent have out-of-pocket expenses exceeding 25 percent of their income. Although these findings provide a useful baseline measure of the prevalence of underinsurance, they are limited in that they reflect only the risk of incurring catastrophic health expenses over a certain percentage of income and do not address the adequacy of coverage with respect to services offered. Other important determinants of adequacy include the extent to which needed services are covered by insurance. Many studies have used national survey data to analyze the health insurance status of persons with disabilities. These data indicate whether a person has private health insurance, public health insurance, or is uninsured. National survey data, however, do not reveal the types of services that are covered by different insurance plans or the adequacy of that insurance for the health-related needs of persons with disabilities. Three large-scale surveys examine the health care costs, utilization, and sources of payment for a random sample of the U.S. noninstitutionalized civilian population--the 1977 National Medical Care Expenditure Survey, the 1980 National Medical Care Utilization and Expenditure Survey (NMCUES), and the 1987 National Medical Expenditure Survey. These surveys examine health care expenditures by sources of payment, and thus provide a basis for measuring the extent to which health insurance covers various health services. The drawback of these surveys is that the services examined are aggregated into broad categories, such as hospital and physician services, that are not defined to assess the adequacy of coverage for specific services essential to persons with disabilities. NMES perhaps provides the most information about services of particular relevance for persons with disabilities. Unlike the other two surveys, NMES asks questions about long-term care services (in addition to acute care services) that respondents need to live in the community, including home health services, special equipment or aids, medical supplies needed for self-care, therapies, and various forms of personal assistance. NMES also oversampled various groups, including persons with functional limitations, and persons in nursing and personal care homes and facilities for the mentally retarded. The Department of Labor surveys large- and medium-sized firms every year to examine trends in health insurance premiums and cost sharing as well as the benefits offered. The survey focuses on the types of services most likely to be used by employees, such as hospitalization, surgery, physician services, diagnostic X-ray and laboratory charges, private duty nursing, mental health benefits, alcohol and drug abuse treatment, dental benefits, vision care, and prescription drugs. The survey does not, however, provide information about many of the health-related services that many persons with disabilities need, such as rehabilitation, durable medical equipment, disposable medical supplies, personal assistance, or experimental therapies. In general, these three factors are considered in determining the adequacy of health care coverage: ù Are needed health care services covered? ù Are there specific conditions that must be met in order for a service to be covered? ù Are cost-sharing provisions reasonable? 1. Are Needed Health Services Covered? As described earlier, the traditional role of insurance is to insure against unexpected, presumably high risk and expense. Both public and private health care financing and reimbursement systems reflect the acute care orientation of the delivery system, which is focused on acute, episodic, high-technology treatment modalities aimed at restoring prior health or functional capacity. Partly because of the success of this type of care, many more individuals now survive beyond the acute stage of illness or injury and have the potential to live independently if they can obtain traditional medical services as well as health-related services on a consistent basis over time. But are these services covered at all? Can coverage be retained or is it sufficient to meet long-term needs? Persons with disabilities often need many health-related services that are not necessarily medical in nature and are thus generally not covered. Unless prescribed by a physician as medically necessary, these services tend to be regarded as conveniences and may be excluded from coverage. Griss (1988) identifies these six general service areas that are often inadequately available or financed for persons with disabilities:[81] ù Rehabilitation. Rehabilitation services include physical therapy, occupational therapy, speech-language and hearing therapy, and counseling. The primary purpose of rehabilitation is to improve functional ability and prevent institutionalization. Rehabilitation is often viewed as an issue for the elderly; however, it has been reported that 40 percent of persons needing rehabilitation assistance with activities of daily living are under age 65. ù Maintenance. Maintenance services include the rehabilitation services above provided on an ongoing or long-term basis. While therapies may be covered for acute episodes of care, they are often explicitly excluded from coverage for maintenance. ù Personal Assistance. Personal assistance services include personal hygiene, mobility tasks, housework, meal preparation, communication services, and other activities that individuals would normally do if they did not have a disability.[82] SIPP data suggest that about 15 percent of working-age persons with a work disability need some form of personal assistance to meet their daily needs.[83] A national survey of 13,000 persons with developmental disabilities found that the most frequently identified (by 25 percent to 40 percent of respondents) "specialized supports" desired by persons with disabilities included community living assistance/training, homemaking assistance, and communication and language services, all of which might be found in the realm of personal assistance.[84] However, to the extent that these services are not medically necessary and do not markedly improve the functional capacity of the individual, they are not likely to be covered by insurance. ù Assistive Medical Devices. Like personal assistance, assistive technology is often perceived as convenient rather than medically necessary. As a result, it is often not covered by health insurance or public programs. Assistive medical devices include durable medical equipment (such as wheelchairs), prosthetics and orthotics, sensory and communication devices, seating and positioning aids, and equipment for modifying the environment (e.g., architectural aids, such as ramps; transportation aids, etc.). ù Disposable Medical Supplies. Data are not available on the extent to which daily use of supplies, such as catheters and diabetic testing materials, contributes to high out-of-pocket costs for persons with various disabilities or chronic conditions.[85] However, these supplies may not be covered by insurance even though they may be medically necessary. ù Drugs. Many persons with chronic conditions require medications on a daily and long-term basis. However, many insurance programs may cover prescription drugs but not over-the-counter medications. Other insurance requires deductibles and coinsurance for the prescription drug benefit, which may present a serious obstacle to access for the low-income person with a disability or chronic condition. The orientation of the current system has not kept pace with the demand for long-term management services. Long-term or chronic care needs that require services to maintain health or functional capacity and foster independence typically do not fall within the scope of traditional insurance coverage. As a result, the financing mechanisms do not encourage the funding of services provided on a long-term basis. In addition, many of these services are not perceived as being medical in nature and for this reason alone are excluded from insurance benefit packages. For persons with disabilities, the acute care orientation of the insurance system and resultant exclusion of services from coverage means that many needs remain unmet. When these services are covered by insurance, reimbursement tends to be contingent on the individual's continuing to show improvement in functional capacity.[86] While persons with disabilities are likely to show improved functional capacity following an acute episode, they require certain services to maintain that capacity. Without such services, it is likely that their condition will deteriorate and require further acute treatment. The paradox appears to be that if the health-related/maintenance treatment were provided on a consistent basis, the need for periodic acute and typically expensive care would be reduced. a. Private coverage of needed services The private health insurance industry in general is oriented toward providing medical services for acute health needs, and as a result, insurers have a high incentive to limit access to coverage for individuals who present a risk of long-term or high health expenses. DeJong et al. (1989) describe five ways in which private health insurance carriers can limit coverage or payment for their subscribers with disabilities:[87] ù Including preexisting-condition clauses that exclude coverage for specific conditions for a period of time. These waiting periods can be as long as two years or more for persons with diabetes or other conditions. ù Excluding services, or benefits such as medical equipment, needed by particular eligibility groups. ù Limiting coverage to certain providers in selected settings, such as hospitals, and not in others, such as the home. ù Requiring that certain services be covered only when designated by a physician as medically necessary. ù Imposing deductibles or copayments that the subscriber must pay. A few studies have been conducted on the extent to which health-related services are covered by private insurance. Fox and Newacheck (1990) surveyed a random sample of employers of different sizes to determine whether their health insurance plans contained many of the services needed by persons with disabilities. In their 1987 survey of 140 employer-based health insurance plans, Fox and Newacheck found that 96 percent covered medical equipment, 93 percent covered medical supplies, 99 percent covered X-ray and laboratory services, and 96 percent covered prescription drugs. In addition, the survey found that 89 percent covered physical therapy, 77 percent covered speech therapy, and 57 percent covered occupational therapy. While these results are encouraging, the survey did not probe further on the extent of the coverage.[88] It also has been reported that employers are becoming inclined to select indemnity benefit plans that offer a broader range of coverage, including benefits that may be alternatives to hospitalization in order to reduce hospital costs. In particular, home health care benefits have grown in popularity among employer plans, covered by 79 percent of employers in 1986 and 88 percent in 1989.[89] Unfortunately, the limit on this type of benefit is not well understood or documented. An alternate methodology for assessing the adequacy of coverage for persons with disabilities was tested by Griss, a researcher on health insurance for persons with disabilities.[90] This methodology entailed surveying national voluntary health associations (VHAs) about the experience of their consumer members with health insurance. The survey asked respondents to report on the extent to which their health insurance paid for various health-related services they had used within the past year. While numerous VHAs were contacted, not all were interested or able to participate partly because participating VHAs had to contribute resources to distribute and collect the surveys. The VHAs that participated represented persons with cerebral palsy, diabetes, epilepsy, head injury, ileitis and colitis, mental illness, mental retardation, multiple sclerosis, and spinal cord injury. In interpreting the results of this survey, it should be noted that the consumer sample is not representative of the overall population with disabilities or chronic illness. Compared with the general population of persons with disabilities, consumer members of VHAs are more likely to have severe disabilities and higher family incomes. In addition, the overall response rate was low (33.6 percent), yielding a total of 742 completed surveys. Finally, because in some instances services were used by few respondents, some estimates may be statistically unreliable. For instance, slightly more than one-third of all respondents had private health insurance and were able to answer questions about preexisting-condition exclusions. Despite these problems, this approach represents an important contribution to assessing adequacy of coverage and should be replicated with a more rigorous methodology. The survey results indicate that almost one-half of all respondents were fully covered for diagnostic services (45.5 percent), case management (45.3 percent), medical rehabilitation facilities (45.2 percent), dietary counseling (45.1 percent), and prescription drugs (45.3 percent).[91] Health insurance provided full coverage to 38.3 percent of persons using durable medical equipment, 37.5 percent of persons using orthotics, 38.8 percent of persons using physical therapy, 41.7 percent of persons using occupational therapy, and 33.8 percent of persons using medical supplies. Among the services most likely not to be covered at all are nonprescription drugs (47.4 percent), medical transportation (37.0 percent), dietary counseling (25.5 percent), medical supplies (24.6 percent), dental care (23.2 percent), speech therapy (23.1 percent), inpatient psychiatric services (18.2 percent), experimental drugs (17.9 percent), durable medical equipment (16.7 percent), and outpatient mental health services (15.3 percent). The survey also found that one-fourth of respondents had been rejected when they had applied for private health insurance because of their chronic condition. Among the groups most vulnerable to rejection by private health insurance were persons with epilepsy (42.4 percent), ileitis and colitis (32.0 percent), diabetes (26.9 percent), cerebral palsy (26.7 percent), and spinal cord injury (25.0 percent). About 6.3 percent of respondents had been dropped by a past health insurance policy because of their condition. Individuals with spinal cord injury and head injury were most likely to have their health insurance plans canceled as their claims mounted. b. Public insurance coverage of needed services Many gaps also remain in the scope of Medicare and Medicaid coverage. As an acute care program, Medicare does not cover preventive or wellness care, such as routine physical exams and tests, eye or ear care to prescribe or fit eyeglasses or hearing aids, routine foot care, or immunizations, and will often not pay for ongoing maintenance services. Medicare does not cover outpatient prescription drugs or biologicals that could be self-administered, including insulin. Neither does it cover most forms of preventive care, and it limits hospital and physician services. The Medicare Catastrophic Coverage Act of 1988 would have required Medicare to pay 50 percent of the cost of prescription drugs after out-of-pocket expenses of $600. This cost-sharing amount would have increased to 80 percent in later years. Congress, however, repealed this part of the Act before it was implemented. Medicare covers certain durable medical equipment and supplies, as specified under the HCFA fee schedule. Prosthetic devices including pacemakers; colostomy and ileostomy bags; artificial limbs and eyes; and braces for an arm, leg, back, or neck may be covered. Medicare will also pay for durable medical equipment, such as wheelchairs for use in the home. While some assistive devices are considered durable medical equipment, some that have come into existence since 1965 through advances in medical technology are not covered. Uncovered assistive devices include communication and sensory aids, handrails, and grab bars. Medicaid potentially offers one of the most comprehensive benefit packages for persons with disabilities because it covers services outside the traditional acute care model. However, states can restrict the amount, duration, and scope of coverage of virtually all allowable services, thus curtailing the program's effectiveness at meeting the needs of recipients with disabilities. Furthermore, state fiscal crises have caused several states to reduce the scope and amount of provided services, particularly among the optional services. States are not required to offer any optional services (i.e., physical therapy, occupational therapy, prosthetic devices, etc.) except under the provisions of EPSDT, which mandates coverage of any services needed by a child to treat a condition discovered in an EPSDT screen. As states cut back their Medicaid programs, coverage for these optional services may be eliminated or curtailed. Therapies, if covered, are often limited in terms of type available and who may provide them. Maintenance therapy is typically not covered. Coverage of rehabilitative/assistive technology is also limited and varies widely across states. For example, a survey of Medicaid coverage of rehabilitation equipment found that 34 of 35 states responding covered prosthetics and orthotics; 43 states covered hearing aids, although 40 percent of these states limit hearing aids to beneficiaries under 21.[92] At least one state's Medicaid program did not cover rehabilitation or durable medical equipment at the time of survey. Medicaid has an inherent institutional bias that limits access to certain services to those provided in an institution or hospital. Federal waivers have opened new venues for provision of home- and community-based services, but some states have been reluctant to support these services for fear of dramatically increasing program costs. Furthermore, applications to HCFA for waivers to provide services tend to be tedious and require proof of cost-effectiveness. Still, some states have welcomed the home- and community-based service option precisely because they believe the alternative service will be cost-saving. Personal care is an optional Medicaid benefit. HCFA rules define personal care services as "medically-oriented tasks having to do with a patient's physical requirements which enable a patient to be treated by a physician on an out-patient, rather than on an in-patient or institutionalized basis." The regulations specify that personal care must be authorized by a physician, provided in accordance with a plan of care, rendered by a person who is qualified and is not a family member, and supervised by a registered nurse. As of 1989, 29 states offered personal care as one of the benefits available to Medicaid recipients. The Medicaid personal care benefit is only one of several ways in which states can fund personal care services. States also provide these services under Home and Community-based Services Waivers (Section 2176), under the Social Services Block Grant and Older Americans Act (Title III), and with state general revenues.[93] The extent to which private health insurance covers personal care is limited. The consumer survey conducted by Griss found that almost 12 percent of respondents were fully covered for personal care through a private plan, while about 65 percent were not covered at all. It has been argued that as demand for these services increases, financing and coverage mechanisms will follow. Large numbers of persons need health-related services. Approximately 8 million persons need personal assistance provided by personal attendants, home care workers, or assistive technology for activities such as getting around inside or outside the home, doing housework or preparing meals, and taking care of personal needs. Another nearly 400,000 people are totally deaf and require information in visual form, such as can be provided by interpreters and assistive technology; and 120,000-400,000 people are totally blind and require information in an auditory or tactile form, such as can be provided by readers or assistive technology.[94] Despite these numbers, the needed services tend not to be covered by insurance. 2. Are There Specific Conditions That Must be Met in Order for Services to be Covered/Reimbursed? Even when health-related services or needed medical services are covered under an insurance plan, they often are covered only under certain conditions. The constraints typically include that the service be medically necessary, that waiting periods be met before the service will be covered, and that the service be administered in certain settings or by certain providers. a. Medical necessity Medical necessity criteria refer to requirements that a practitioner (usually a physician) testify as to the medical value and purpose of providing a certain service to a patient. Many health-related services, such as some assistive technology and personal assistance, may not be defined as primarily medical in nature. Medical necessity is generally interpreted by Medicare, Blue Cross, and commercial insurance as applicable to acute conditions and is not usually applied to custodial, preventive, or maintenance care. Medicare Part B covers health-related services only when they are deemed medically necessary and only when skilled care is "reasonable and necessary to the treatment of the beneficiary's illness or injury or to the restoration of maintenance of function affected by the illness." Federal Medicaid law leaves the specification of medical necessity criteria for particular services to the state. However, there are few services, including ancillary therapies, for which physician referrals or prescriptions are federally required as evidence of medical necessity.[95] For instance, prescriptions are required for physical and occupational therapy services and a referral is necessary for speech pathology and audiology services. This guideline has left the decision about whether a service is covered open to a lot of discretion, and the ability of a physician or other practitioner to prescribe one of these services as medically necessary may be curtailed. In addition, most managed-care plans operate with primary care "gatekeepers" who, as primary care physicians, may be less familiar with the need for and utility of certain health-related services for persons with disabilities. b. Waiting periods Some insurance policies require waiting periods of six months to two years before reimbursement will begin. Waiting periods are also a manifestation of preexisting-condition exclusions, requiring individuals to be "treatment free" for preexisting conditions for a designated period before coverage of care related to those conditions will be authorized. While the purpose of waiting periods is to permit an insurer to limit or predict potential expenses, the impact on persons with disabilities may be regression or deterioration in functioning if they are unable to receive needed services while waiting for coverage to begin. c. Limits to certain settings or providers Medicaid, Medicare, and some health insurance plans restrict benefit coverage to services provided in specific settings or under specific circumstances. For example, under Medicare, home health care is covered only if skilled services (e.g., provided by a nurse, social worker, or therapist) are required. Program rules limiting the types of providers eligible for reimbursement also affect adequacy of coverage. Until mid-1987, physical therapists were the only therapists permitted to bill Medicare independently. Occupational therapists were granted billing authority in mid-1987, but speech-language pathologists still cannot bill Medicare as independent practitioners. Beneficiary access to services thus may be effectively curtailed by this restriction because their choice of service provider is limited.[96] Medicaid offers the most comprehensive package of benefits for persons with disabilities. However, federal regulations permitting state determination of the amount, duration, and scope of services available give states the ability to limit the types of providers who can be reimbursed for providing specific services. For example, while states must cover physical therapy administered in hospital settings, physical therapy provided on an outpatient basis by independent practitioners is optional. Other benefits are also covered only if delivered in an inpatient or institutional setting; home health services may not be available unless expected to be less costly than inpatient hospital or institutional care. Medicaid often is criticized for its institutional bias, whereby services are covered in inpatient or institutional settings only. Alternatives to institutional care are being covered more frequently by state Medicaid programs under home- and community-based waivers, but these waivers are only granted if the proposed care is demonstrated to be cost-effective when compared with institutional care. At the same time, persons may be eligible for home- and community-based care only if they meet level-of-care requirements for institutional care.[97] Waivers are further restrictive in that states apply for a specific number of waiver slots under which they can serve only that specified number of recipients. These provisions thus limit the availability of certain services for Medicaid recipients with disabilities. Services may also be limited by number of physician visits, therapy sessions, or hospital days, or in terms of the dollar amount of coverage available. A particular problem has developed for parents of children with chronic conditions who may find that they meet lifetime payment maximums within a few months or after several treatments. Under Medicare, some services, such as home health and durable medical equipment, are restricted by payment caps. To the extent that beneficiaries require services in excess of these limits, these plans do not adequately meet their needs. Managed-care plans also restrict coverage to services provided in a certain setting or by a certain set, or network, of providers. The most restrictive networks tend to be organized delivery systems centered around one or more group practices of physicians. Many managed-care plans penalize beneficiaries if they go outside the network for care. Such plans have been criticized for forcing beneficiaries to sever established ties with physicians in order to receive health care services. For persons with disabilities, in particular, the inability to chose a provider can be a major barrier to receiving appropriate care. 3. Are Cost-Sharing Provisions Reasonable? The third determinant of adequacy is related to the financial conditions of insurance. If an insurance plan includes needed services but requires first that a high deductible be met and then that coinsurance requirements be fulfilled, persons may find that the services continue to be inaccessible because of cost. In addition, the extent to which stop-loss coverage or limits on out-of-pocket costs are available is also important, as are annual or lifetime maximum payment provisions. These ceilings are a particular problem for persons with certain types of disabilities or chronic conditions who require continual care and who may reach the lifetime cap in a matter of months or years. As health insurance costs have risen, a growing number of employers are requiring employees to pay a percentage of medical charges. Employers are becoming less likely to pay 100 percent of health insurance premiums. In 1989, one survey found that about 72 percent of employers had some coinsurance provision on hospital charges, up from 66 percent in 1988.[98] Increased cost sharing presents a particular problem for persons with disabilities; for example, under a plan with an 80/20 cost-sharing provision, assistive technology remains a significant expense. Similarly, the percentage of employers covering 100 percent of outpatient surgical provisions fell from 50 percent in 1988 to 41 percent in 1989.[99] Most HMO/PPO managed-care arrangements require some level of coinsurance, especially for services supplied by providers not within the physician network. While coinsurance percentages under managed care on average appear to be lower than those required under indemnity plans, the adequacy of coverage afforded by this difference may not be substantial since managed-care organizations also have an incentive to restrict or curtail access to long-term maintenance and expensive therapies. At the same time, more employers are offering plans that include limits on out-of-pocket expenses, although the average level of these limits appears to be rising. In 1989, an estimated 90 percent of employer plans included out-of-pocket caps, up from 79 percent in 1986.[100] An increasing number of employers have plans with out-of-pocket maximums of $1,500 or more, and the percent of employers offering plans with maximums under $1,000 has declined. These provisions are important given findings that families with individuals having activity limitations experience catastrophic out-of-pocket health care expenses almost twice as often as the general population.[101] Medicare also has cost-sharing requirements and payment limits that affect the extent of services available to beneficiaries as well as the continuity and quality of care. Under Medicare there is an annual payment limit of $750 for services provided by independent physical and occupational therapists. However, because of the 20 percent cost-sharing requirement on Part B services, Medicare coverage is actually $600. A 1988 survey by the American Physical Therapy Association found that about one-third of the beneficiaries who reached the reimbursement limit went on to receive outpatient physical therapy from another provider, usually a hospital outpatient department. The impact of the payment limit causes concern about the potential interruption of care and the possibility that beneficiaries may discontinue care prematurely. B. Other Factors Affecting Access to and Adequacy of Care For persons with disabilities who have financial access (e.g., insurance) to health care services, other deterrents may render these services inaccessible. Several factors outside of the health care financing system impede access and affect the adequacy of care for this population, including the availability of appropriate resources and the accessibility of health care services and facilities. 1. Availability of Appropriate Resources Persons with disabilities have certain health care needs that may remain unmet because appropriate resources are not available. Because of supply shortages and prohibitive costs, they often have difficulty obtaining appropriate assistance, both professional and technological. The availability of appropriate providers limits access to care for persons with disabilities. Currently, there is a shortage of health professionals in many sectors of the health delivery system. This shortage is due to a combination of increasing demand for certain professionals as a result of an aging population and improved survival of persons with disabilities, and a diminishing supply of some professionals as a result of, in part, rising education costs and decreased funding for training. Persons with disabilities are particularly affected by the lack of physical and occupational therapists, nurses, and support personnel such as personal care attendants and home health aides who provide care in home and community settings. Other personnel who provide services to persons with disabilities are scarce as well, such as orientation and mobility trainers for visually impaired individuals. In addition to an adequate supply of providers, persons with disabilities require professionals familiar with their special needs. Persons with major physical impairments report that primary care physicians tend to perceive their disability rather than their presenting complaint and send them to a specialist, further delaying necessary primary treatment.[102] The magnitude of this problem is unknown. Assistive technology is critical to enable persons with disabilities to live independently. Add-on speech synthesizers, augmentative communication devices, braille printers, and other relatively new technology have dramatically changed the lifestyle of this population. Much of the technology, however, is not covered by private health insurance or public programs. It is very expensive and therefore inaccessible to many persons with disabilities. A speech system connected to a computer, for example, can increase the computer's price from $600 to $4,500. Many funding sources will not pay for such equipment, and cost is a serious barrier to the dissemination and use of assistive devices. 2. Accessibility of Health Care Services and Facilities Although the Americans with Disabilities Act attempts to bring many persons with disabilities into the workplace, other components of disability policy must be addressed. Deterrents to accessible health services include the following: ù Structural barriers. Stairs, narrow doorways, and cramped toilet facilities are only a few of the architectural barriers encountered by persons with disabilities. These obstacles may be found at health care facilities and physician offices, just as they are in public facilities and places of employment. ù Lack of transportation. Many persons with disabilities are unable to get to a health care provider or facility because mass transportation remains inaccessible. In addition, most individual insurance plans (nongroup) do not cover transportation, even when recommended by a physician. ù Communication barriers. Because of hearing, speech, and sight impairments, many persons are limited in their ability to communicate. In a health care setting, communication problems may result in the needs of patients being ignored or misunderstood. VI. EXPANDING COVERAGE FOR INDIVIDUALS WITH DISABILITIES General agreement exists among government, business, providers, and consumers that the American health care system is in need of major reform. An increasing number of Americans have either eroding health care coverage or no coverage at all. Health care costs are increasing at more than twice the rate of inflation, and questions are being raised about the outcomes of these large expenditures in terms of reduced morbidity and mortality. Despite consensus about the problems with the health care system and the need for reform, no agreement has been reached on how or to what extent to restructure the system. In recent years, the health care debate has led to a myriad of proposals designed to expand access to care and contain rising costs. Although proposals have been advanced for major health care reform at both the national and state levels, most of the implemented expansions in insurance coverage have been incremental reforms that build on existing programs and are aimed at specific populations. The debate over reform thus far has not incorporated the perspective of the disability community. As this debate intensifies in the coming years and the country considers options for reform, the disability community will need information about the likely impact of each option on its members. The critical strategy question for the disability community is whether to support broad-based system reform or separate initiatives targeted to the specific needs of those with disabilities. At the same time, however, it is important to consider the current economic situation of the states and the country overall. Many states are now finding it difficult to meet their commitments to current programs and are reluctant to undertake new reform efforts.[103] As a result, cost containment is reemerging as a central issue in the debate over health care reform. States do not believe they can expand access to care--universally or to specific groups--without first controlling spiraling health care cost. The issues facing the disability community mirror the issues being confronted in the national debate. A number of disability groups have advanced proposals for major restructuring of the health care system, including national health insurance that would ensure access to care for persons with disabilities. At the same time, a number of specific national and state plans have been adopted that expand coverage for some segments of the population with disabilities, such as those with low incomes. This section discusses the targeted policy options that affect persons with disabilities and selected universal reform options that states have adopted or proposed to improve access to care for all state residents. It also assesses the major health care reform proposals on the national agenda from the perspective of persons with disabilities. A. Targeted Options for Expanding Coverage Most expansions in coverage in the past decade have been limited initiatives targeted to specific populations. These efforts typically have involved expansions of existing programs, although several have included the creation of new programs. As states and the federal government debate how to address the overall problems of the uninsured and rising health care costs, consensus has been reached on limited efforts to address the access barriers faced by specific populations. These efforts are viewed as opportunities for testing approaches that could be adopted on a broader scale. The debate has led several states and the federal government to implement expansion efforts and has generated numerous proposals targeted at the access problems faced by specific populations, including persons with disabilities. The following pages review the initiatives that have been proposed or adopted specifically to expand coverage among persons with disabilities. 1. Medicare Expansions In part because Medicare already provides health insurance for a large number of persons with disabilities, this program has been the focus of several efforts that would expand access to eligibility and benefits and would reduce some of the gaps in coverage cited in Sections III and IV of this report. a. Medicare buy-in In OBRA 1989, Congress created a Medicare buy-in option to reduce disincentives to work for SSDI beneficiaries. The buy-in option gives SSDI beneficiaries continued access to Medicare after they have returned to work and exhausted their eligibility for both SSDI and Medicare. Without the buy-in, disabled workers who return to work would lose their eligibility for Medicare three years after their SSDI cash benefits cease, even if they are still severely impaired. Originally, disabled Medicare beneficiaries who returned to work could retain SSDI benefits and Medicare eligibility through a nine-month trial work period and for an additional three-month "grace period" after the trial period ended.[104] The period of Medicare eligibility was extended to 18 months and subsequently to 39 months beyond the end of the trial work period, even though SSDI cash benefits might cease. The extension results in a total of 48 months of Medicare coverage, ensuring that health insurance benefits are still available when an individual is no longer eligible for cash benefits because of work. The Medicare buy-in allows working former SSDI beneficiaries to purchase Medicare coverage (i.e., pay the annual premiums for both Part A and Part B) after the 48 months of continued coverage are over, as long as their impairment persists. The Medicare premiums are paid entirely by state Medicaid programs for individuals with incomes less than 200 percent of the poverty level and with resources no greater than twice the SSI standard. These measures can potentially reduce the work disincentive for persons with disabilities; however, gaps in Medicare benefits persist. b. Eliminate 24-month waiting period As mentioned earlier, a major barrier to Medicare coverage for persons with disabilities under age 65 is the requirement that they must receive SSDI cash benefits for 24 months in order to receive Medicare benefits. About 27 percent of SSDI recipients have no insurance during months 18-24 of the waiting period.[105] This delay is a particular problem for persons with cancer, AIDS, and other conditions, whose health may deteriorate or who may not survive the two-year period. The Social Security Administration reported that 11 percent of persons who became entitled to SSDI in 1975 died during the two-year waiting period for Medicare benefits. More recently, many persons with AIDS are denied access to Medicare because of the waiting period. Eliminating the waiting period has been proposed, but the major argument against its reduction or elimination is cost. Bye and Riley (1991) estimate that removing the waiting period would increase Medicare costs by about 45 percent over ten years.[106] In OBRA 1989, Congress lengthened the continuation period for Consolidated Omnibus Budget Reconciliation Act (COBRA) from 18 months to 29 months for employment-related health insurance to correspond with the waiting period for Medicare coverage. Under COBRA, individuals can purchase insurance at group rates from their employer after they become unemployed. This option applies to firms with 20 or more employees who choose to provide group health coverage, and it applies only to employees who meet the disability requirements for SSDI or SSI on the basis of a disability which they had when their employment terminated. The COBRA extension provides some continuity of coverage until persons receive Medicare, but its impact is likely to be limited. Recent evidence suggests that few people opt to continue coverage, largely because of the high cost. In 1990, group premiums for private health insurance averaged about $3,000 annually per employee. An employer survey on the experience with continuation of coverage during 1988 found that of those eligible, only 10.6 percent elected to continue coverage.[107] Approximately 16 percent of the surveyed employers did not charge the full 102 percent of premium allowed by law, but instead subsidized an average 21 percent of the premium for their former employees.[108] Although few persons are taking advantage of this coverage, it has provided health insurance for 14,620 persons who may have been uninsured in the absence of the continuing coverage provision. 2. Medicaid Expansion Like Medicare, Medicaid has been targeted for expansion and reform because it already covers a significant portion of the populations of concern. In recent years, Congress has passed a number of amendments to Medicaid that expand eligibility for pregnant women and children. Initiatives have also included extending the Medicaid buy-in to the SSI population on Medicare and establishing an option for states to extend Medicare coverage to persons with disabilities and the elderly whose incomes are under 100 percent of the poverty level. Medicaid expansions generally include extending eligibility to new groups or increasing the income eligibility level. A discussion of various Medicaid expansion efforts follows. a. Expand eligibility to the elderly and disabled with incomes up to the poverty level OBRA 86 gave states the option of providing Medicaid coverage without cash assistance to the elderly and persons with disabilities whose incomes meet a state-established level not exceeding 100 percent of the federal poverty level. States choosing this option are required to cover some newly eligible pregnant women and children. Only a few states have taken advantage of this option. States may be reluctant to adopt the expansion since these categorical groups are associated with high Medicaid expenditures. OBRA 86 also mandated that states (through Medicaid) pay Medicare premiums, copayments, and deductibles for Medicare beneficiaries with incomes up to the poverty level who are elderly or who have disabilities. b. Medicaid buy-in programs In addition to expanding eligibility categories, states may establish Medicaid buy-in programs. Under a Medicaid buy-in, low-income persons otherwise ineligible for Medicaid are permitted to enroll in the program by paying a premium that may be subsidized by the state. Alternatively, a state could enact a Medicaid buy-out program, whereby the state could subsidize the purchase of private employment-based insurance when it is less costly than Medicaid. Federal match is now available to states to help finance premiums and cost sharing incurred through a buy-out if the Medicaid coverage is deemed cost-effective. Massachusetts became the first state to implement a Medicaid buy-in plan for children and working-age persons with disabilities as part of the state's commitment to universal access. Persons who can meet the Social Security Administration's definition of disability may be eligible to buy into the state's Medicaid program under a component called CommonHealth (Extra) regardless of their income. This buy-in program covers working adults with disabilities who are not eligible for disability benefits because of their employment and children with disabilities who have been denied SSI and Medicaid because of their parent's income or assets. The state of Maine also has passed legislation establishing a Medicaid buy-in program. In 1989, the recommendations of the Maine Special Select Commission on Access to Care were enacted in the Act to Improve Access to Health Care and Relieve Hospital Costs Due to Charity and Bad Debt Care. All Maine adults with incomes below 95 percent of the poverty level and children living in households with incomes below 125 percent of poverty are eligible for the buy-in program. The advantages of a Medicaid buy-in for persons with disabilities is that it gives them access to a comprehensive benefit package that includes many of the services required for maintaining health and independence. In addition, persons who are employed but have been excluded from private coverage are permitted to purchase Medicaid. c. Expansion of services One of the most significant Medicaid expansions has been the EPSDT mandate for Medicaid-eligible children. EPSDT was enacted in 1967 to ensure that low-income children under age 21 receive comprehensive preventive and remedial care for physical or mental health problems or other conditions as early as possible.[109] States have restricted children's access to EPSDT services by limiting the frequency of screening schedules, the providers eligible for reimbursement, and the level of treatment. In 1989, Congress expanded a state's obligation under EPSDT to provide all services medically necessary to treat a condition detected in an EPSDT screening, whether or not such services are included in the state's Medicaid plan. The EPSDT mandate also requires states to expand screening services and to adopt screening schedules that meet reasonable practice standards. These provisions may help improve identification of children with potentially disabling conditions and ensure treatment services for Medicaid-eligible children with conditions identified in an EPSDT screen. 3. Assist Individuals in Obtaining Coverage Another approach for expanding access to health insurance helps individuals who are currently uninsured or underinsured to obtain coverage themselves. This approach is important for persons with disabilities who may be excluded from health insurance plans because of their disability. Individual-based approaches tend to involve the establishment of new programs--such as risk pools, catastrophic programs, and special insurance products--rather than the extension of existing ones. a. High-risk pools High-risk pools are entities created by states to support special private insurance plans targeted to persons who are deemed uninsurable. Risk pools have been established in 26 states to provide health insurance to individuals who are at high risk for large health care expenses and who also may be excluded from available health insurance plans because of their high risk. Eligibility for risk pools usually depends on being denied coverage by two private insurers or on receiving a notice of a benefit reduction or other restrictions because of preexisting conditions. Premiums for risk-pool coverage tend to be substantially higher than average premiums for nongroup coverage because high-risk pools group high health care users together. To prevent premiums from being set at unaffordable levels, state legislation usually caps the premium rates at 150 percent of the standard individual health insurance premium for comparable coverage. Since individual premium rates are significantly higher than group rates, the actual cost of risk-pool premiums can be twice as high as standard group rates. Connecticut is the only state that bases the premiums for its high-risk pool on the average group premium rate offered by insurers in the state. The cost of claims tend to exceed premium contributions to the pools, so expenses in excess of premium income are generally funded by assessments on all insurers in the state and subsidized through state general revenues. The high premium and cost-sharing requirements of high-risk pools often render them unaffordable to these persons they were designed to assist. Only two states--Wisconsin and Maine--subsidize premiums for low-income persons. Even with the subsidy, many persons report that the cost of the risk pool is still too high. The benefits available under a high-risk pool resemble the benefits in standard private insurance plans. Risk-pool coverage usually does not cover home health care, medical equipment, physical therapy, occupational therapy, and personal assistance. These exclusions represent significant limitations for a plan that is targeted toward persons with disabilities. While high-risk pools have made health insurance available to some persons who have been excluded from coverage because of preexisting conditions, they have had limited success. Some studies have estimated that between 1 million and 2 million persons are uninsurable; yet only 23,000 persons were enrolled in high-risk pools in 1987. Almost one-half of these persons were enrolled in the Minnesota high-risk pool, which has the lowest premium. A study of high-risk pools by Bovbjerg and Koller (1986) found that risk pools enrolled only 1.7 percent of the target population in Florida, 2.8 percent in Nebraska, 5.4 percent in Indiana, 5.9 percent in Wisconsin, 24.5 percent in North Dakota, and 33.5 percent in Minnesota.[110] The struggle of high-risk pools may have provided a rationale for further erosion of the private health insurance market. Some critics of high-risk pools argue that their existence justifies expanding the definition of uninsurable in order to shift high-cost users out of private insurance plans. The pools are also criticized as being inequitable in two respects: (1) public funds are used to subsidize coverage for only those who can afford the high cost of the pool, and (2) self-insured plans are excluded from contributing to the pool. It is also questionable whether high-risk pools can be sustained over time. High-risk pools have required increasingly large contributions from private insurers because of growing enrollment and claims. By not requiring contributions from self-insured plans, risk pools create an additional incentive for firms to self-insure. The more firms that self-insure, the fewer that remain to share the pool's cost. As more firms self-insure, the cost to private insurers may eventually be too high to continue support for the pool. b. Catastrophic programs Catastrophic programs have also been created in some states as a mechanism to protect individuals and their families from being financially devastated by large medical expenses. During the 1970s, four states (Alaska, Maine, Minnesota, and Rhode Island) created catastrophic programs. Only the Rhode Island program is still operational. Recently, New York and New Jersey have established catastrophic programs. These programs are insurance plans designed to supplement an individual's or family's existing policy or to help individuals or families who have already incurred catastrophic health expenses. State-financed catastrophic programs are similar. Each program reimburses eligible individuals or families who have incurred large medical bills. They are the payors of last resort and are intended to be secondary to all other public and private insurance programs. By design, these plans are targeted toward a small group of people. The early programs were discontinued largely because they served few people, and monies were targeted elsewhere. For example, the Maine Catastrophic Illness Program reported 66.8 percent decrease in eligibles between January 1982 and January 1983, from 280 eligibles down to 93. This decline followed an 87.7 percent drop in eligibles between 1981 and 1982, largely as a result of the implementation of a $7,000 deductible and more restrictive eligibility criteria. The Maine catastrophic program was discontinued and the money transferred to the Robert Wood Johnson Foundation, which subsidizes insurance for small employers. In Minnesota, the program lost funding as part of a general cutback in spending. While not the only program affected by these cuts, it was vulnerable because of the limited population it served. Rhode Island established a Catastrophic Health Insurance Program in 1975 that made the state the payor of last resort for comprehensive medical expenses for permanent state residents.[111] The plan reimburses medical expenses once a deductible has been satisfied. The deductible is based on the percent of a person's income spent on eligible health services that are not covered under a health insurance plan. To encourage the continuation of private coverage, the deductibles are lower as the quality of insurance an individual has increases. Deductibles for the plan range from $1,212 for a person with comprehensive insurance to $12,124 for an uninsured person. The program provided benefits to 526 persons in 1988, the majority of whom had Medicare coverage (70 percent). Only 4 percent of program participants were uninsured. Participants have an average income of $15,083, and the major diseases paid for through the program have been heart disease and mental disorders. The plan also has a large number of claims for drugs for the elderly. The state of New Jersey recently established a program targeted at families facing catastrophic medical expenses for children 18 years or younger. Called the Catastrophic Illness in Children Relief Fund, the state finances the fund through a $1 annual surcharge per employee for all employers subject to the state's unemployment compensation tax. Children who have medical expenses exceeding 30 percent of a family's income up to $100,000 or 40 percent of income over $100,000, and are not covered by another insurance policy are eligible for reimbursement. The amount of reimbursement is based on a sliding-fee scale according to the family's ability to pay, with an annual cap per child of $25,000. Health services eligible for reimbursement include primary care, home health care, pharmaceuticals, disposable medical supplies, and durable medical equipment. While catastrophic insurance can protect against extraordinary medical expenses, it does not provide any payment until a specified level of out-of-pocket expenditures has been made by the recipient. This program can meet the needs of a small number of people, but it does not address the major barriers to health insurance for persons with disabilities. c. Special insurance products Some states have created special subsidized insurance products for certain populations, such as persons with disabilities and pregnant women and children. Connecticut recently established a subsidized nongroup insurance product for persons with disabilities. A 1989 Connecticut bill to expand access to health care and health insurance, includes provisions for a subsidized nongroup insurance product for persons with disabilities under 200 percent of the poverty level. The bill has not yet been implemented, but the product it creates will be available to any person with one or more daily activity limitations whose income is between the SSI eligibility level and 200 percent of the poverty level. The program will rely on a sliding-fee schedule to cover 20 percent of costs. While awaiting the program's implementation, persons with disabilities can enroll in a subsidized special health care plan open to the general population. The benefit package in this plan, however, is not as inclusive of the needs of persons with disabilities as is the special disability product. 4. Health Insurance Market Reforms A number of health insurance expansion options focus on improving the availability and affordability of employment-based insurance. These options include employer mandates and health insurance reform particularly in the small-group market. While not specifically designed to address access problems encountered by persons with disabilities, many of these efforts can potentially increase their access to insurance. a. Mandated benefits State-mandated benefit requirements have been used to expand access to services for persons with private health insurance. A number of states have passed mandated-benefit laws to ensure that health insurance policies cover certain types of services. Reflecting the growing interest in preventive care, for instance, many states have recently required insurers to cover cancer screening (e.g., mammography and pap smears) and preventive care for young children. Some state mandates also specify a minimum level of service that must be covered. For example, Wisconsin specifies that the services an insurer must reimburse for diabetes include insulin, installation and use of insulin infusion pumps, and a diabetic self-management education program. California requires that, if an insurance policy covers prescription drugs, it cannot exclude coverage for AZT--a drug used by some persons with AIDS. Other state mandates specify the types of providers who are eligible to receive reimbursement. Finally, some states require that the protocols developed by professional associations be followed for certain benefits, such as guidelines established by the American Academy of Pediatrics for well-child care and recommendations of the American Cancer Society for cancer screening. The most common health insurance mandates are for coverage of psychologists, optometrists, chiropractors, alcoholism treatment, newborn care, mentally and physically handicapped persons as dependents, mammography screening, and conversion privileges (exhibit 6 ). The majority of states require coverage for alcoholism treatment and mental health services, but coverage of orthotic and prosthetic devices are required in only five states, and prescription drugs and long-term care in only three. Some states mandate home health care only for persons who have been discharged from a hospital, while at least one state has mandated home health care as an alternative to hospitalization. No states have mandated home care on a maintenance basis. These benefit laws are important for persons with disabilities because they guarantee that health insurance policies cover certain services important to these groups. Without these laws, insurers may exclude those services as a way of discouraging persons with disabilities from applying for coverage. Mandated benefits pose a number of problems, however. They increase the cost of insurance because insurers must provide coverage. They also restrict insurer options to develop cost-limited benefit plans because insurers are required to comply with the mandates. Critics of mandated benefits argue that the mandates create incentives for employers to self-insure since the number and type of benefits affect the price of insurance, and ERISA exempts self-insured plans from state mandates. Thus, those persons with disabilitiewho are employed in firms with self-insured plans do not have access to the services included under the mandate unless they are voluntarily provided by the employer. The Health Insurance Association of America found that mandated benefits contribute 15 percent to 20 percent to the cost of health insurance premiums. This estimate is likely to be high given that insurers would cover many of these benefits in some form in the absence of state mandates. b. Small group market reforms Insurance market reforms are another option for improving the availability and affordability of insurance. These reforms include provisions for limitations on preexisting-condition exclusions and limits on premium rate increases for small employers. These types of reforms have been proposed by the Health Insurance Association of America, the U.S. Chamber of Commerce, the Blue Cross and Blue Shield Association, and the National Association of Insurance Commissioners (NAIC), and are incorporated in numerous congressional health care reform proposals. They have been adopted in several states. Exhibit 6 COMMON STATE MANDATED BENEFITS MANDATE NUMBER OF STATES Newborns Chiropractors Alcoholism Psychologists Mental/Physical Handicap Conversion Privilege Mammography Screening Optometrists Continuation for Dependents Dentists Mental Health 48 40 39 38 34 33 33 32 28 28 28 Source: Blue Cross and Blue Shield Association, 1990. ù Limitations on preexisting condition exclusions. It has been suggested that insurers be limited in their use of preexisting-condition clauses. In 1989, the state of Connecticut enacted legislation expanding access to and increasing the availability of health care services and insurance coverage to people without insurance or with inadequate coverage. As one part of Connecticut's small-group market reform, coverage for preexisting conditions may not be excluded for more than 12 months following the effective date of coverage. The state of Maine has also implemented legislation limiting the use of preexisting-condition clauses when changing from one health plan to another. The law affects all insurers in the state who sell group insurance, and has two major components. The first concerns employers with a group plan and specifies that as long as the group is not without coverage for more than 90 days, no one in the group can be denied coverage under the new plan. This policy applies to groups of all sizes. The second component of the legislation involves individuals who change from either an individual plan to a group plan or from one group plan to another. As long as the person is not without coverage for more than 90 days, an insurer cannot deny coverage to the individual or any dependents. Minnesota also recently advanced a proposal to expand access to care. The plan included specific provisions to prohibit preexisting-condition exclusions and implement statewide community rating. These regulations could have effectively improved access to health insurance for persons with disabilities. However, the governor of Minnesota vetoed the entire proposal despite its passage by the state legislature. ù Renewability of coverage. Under these proposals, employer groups and individuals in these groups are assured that at renewal time, their coverage will not be canceled because of deteriorating health. Under Connecticut's 1989 bill, eligible employees or dependents must have the option of renewing plans, except for the following reasons: - Failure to pay premiums. - Fraud or misrepresentation. - Noncompliance with plan provisions. - The number covered is less than the number or percentage of insured required by the plan. - The policy or contract holder is no longer in business. ù Limitations on premium rate increases. For small businesses in particular, premium rates often increase dramatically from one year to the next. In response to this practice, limitations on premium rate increases have been proposed. Connecticut's bill prohibits premium rates greater than 200 percent of the base premium rate. The base premium rate is the lowest premium an insurer charges for the same or similar benefits in plans covering small employers with similar characteristics. The bill also limits the amount by which premium rates may increase. ù Limits on medical underwriting. It has been suggested that coverage would be made available to entire employer groups; neither an employer nor an insurer would be able to exclude from the group's coverage individuals who present high medical risks. ù Reinsurance. Reinsurance mechanisms have been proposed to create an incentive for private insurers to charge affordable premiums. The reinsurance mechanism would compensate insurers for losses above a specified level. The Health Insurance Association of America has proposed creating a private reinsurance mechanism for employers who have been deemed uninsurable because of their size or the presence of high-risk employees. Losses incurred by the reinsurance mechanism could be financed by the private sector with costs shared among Blue Cross and Blue Shield, commercial insurers, HMOs, and self-insured groups. Reinsurance mechanisms could reduce the economic disincentives for private insurers to cover persons with higher risks. A private reinsurance mechanism is likely to reduce barriers to coverage, but it will not address the adequacy of that coverage in meeting the needs of persons with disabilities. These incremental approaches taken together expand coverage for a portion of the population with disabilities. None of the approaches, however, reduces the problem significantly, but each is important for testing options that can be adopted on a larger scale and for the benefits provided to those covered. B. Universal Options for Expanding Access to Care While the majority of reform proposals have been targeted initiatives, universal health insurance proposals are being considered by the federal government and numerous states. Commissions and task forces have been established to study universal health plans. Three states have enacted programs to achieve universal coverage, although one's effort (Massachusetts) has been effectively shelved as a result of economic and political pressures in the state. The universal health care proposals all share a commitment to ensuring that all state residents obtain access to health care. They depart, however, in the means of achieving coverage. Several states are considering proposals for a single-payor system similar to that in Canada, while others integrate a series of complementary initiatives, such as Medicaid expansion, insurance market reforms, and requirements for the provision of employment-based insurance, which together cover the entire state population. While the special needs of persons with disabilities may not be specifically addressed under these proposals, it appears that a basic level of care can be ensured. This section discusses the universal health plans adopted in two states--Hawaii and Oregon. 1. Hawaii Prepaid Health Act of 1974 Hawaii was the first state to require all employers to provide health insurance for eligible employees. Under the state's plan, employers must offer coverage to employees working more than 20 hours per week for at least four consecutive weeks. Coverage for dependents is optional. The law requires both employers and employees to contribute to health insurance premiums, with the employer paying at least one-half, and the employees limited to paying 1.5 percent of their monthly gross earnings. Employers are required to provide at least 120 days of hospitalization, medical and surgical care, and maternity care as minimum benefits. Persons who receive public assistance or are covered as dependents on other plans and those who receive federally established health insurance are exempt from eligibility.[112] The potential for other states to enact similar legislation is limited, given the passage of ERISA in 1974. In 1980, Hawaii's plan was challenged in light of the ERISA provisions exempting self-insured firms from state mandates. The U.S. Supreme Court ruled against Hawaii, sustaining a lower court ruling that found that Congress intended broad preemption of state regulation and did not provide an exemption for employer-mandated state laws.[113] Hawaii's response to this ruling was to seek a change in federal legislation. Congress granted Hawaii an exemption from ERISA as it related to the Prepaid Health Care Act. The exemption is limited to the Hawaii program as it existed on September 2, 1974 (except for changes in administration). It further stipulates that the amendment shall not be considered a precedent that might be extended to any other state law.[114] These limitations were enacted to ensure that other states did not follow Hawaii's lead. Prior to the enactment of the Prepaid Health Care Act, 5 percent of Hawaii's population was estimated to be uninsured. This rate dropped to under 2 percent in the years following the enactment but has increased recently. Despite the employer mandate, an estimated 5 percent to 9 percent of the population still lacks health insurance. These individuals are unattached to the work force or are excluded from coverage because they are part-time or seasonal employees or dependents of workers. In 1990, Hawaii enacted the State Health Insurance Program (SHIP) to extend coverage to the "gap groups" not covered through employment or by Medicaid or Medicare. SHIP is administered by the state. Eligibility is restricted to state residents with incomes below 300 percent of the poverty level who have not been covered by health insurance in the last three months and who are ineligible for public insurance. The program is state subsidized, and individuals contribute to the premium on an income-based sliding scale. The plan emphasizes preventive and primary care, and provides limited coverage for hospital care. While the benefit package is not comprehensive and excludes health-related services that might be required by persons with disabilities, it does make available some basic services to a population that might otherwise forego care. In SHIP's first year, almost 9,000 people enrolled. At the same time, Medicaid enrollment increased as SHIP referred those eligible for Medicaid to that program for coverage. The result has been an unexpected deficit in the state's Medicaid budget. It will be important to follow how Hawaii responds to these growing costs as it attempts to balance them with a commitment to expanding access. 2. Oregon Basic Health Services Act In an effort to address the growing number of uninsured and underinsured as well as the problems they face, the Oregon legislature enacted five laws in 1989 and 1991 known collectively as the Oregon Basic Health Services Act. The Act is designed to provide a comprehensive strategy for improving access to health insurance. The state's approach relies not only on expanding public programs but also on private sector participation, particularly by employers and insurers. Senate Bill 27 (Oregon Medicaid Demonstration) extends Medicaid to all persons in families with incomes below 100 percent of the poverty level, regardless of categorical eligibility, through a system of managed care. This bill also mandates the development of a prioritized health service list from which a set of basic benefits can be determined and used as the Medicaid benefit package as well as the basic benefit package employers will be required to offer under Senate Bill 935. Senate Bill 935 requires all employers to offer a basic health insurance package by 1994 to their employees or pay a tax. Senate Bill 534 establishes a state-subsidized risk pool for uninsurable persons. Senate Bill 1076 establishes insurance market reforms--such as guaranteed issue, limits on preexisting-condition exclusions, and modified community rating--designed to make health insurance more available and affordable to small employers. Senate Bill 1077 establishes a data and cost review commission designed to contain health care costs as insurance expansions occur. The Oregon Medicaid Demonstration has received much attention recently. As mentioned, it extends Medicaid to all persons with incomes below 100 percent of the federal poverty line and establishes a prioritized list of health services. The process of prioritizing and the development of the services list have been the subject of controversy. Many have argued that the eligibility expansion appears possible only in conjunction with an unprecedented reduction in benefits from what the state currently offers to a low-income population composed primarily of women and children. However, the state's initial request to HCFA for a waiver of federal regulations, which would permit implementation of the proposed expansion, was rejected on the grounds that the prioritization process violated provisions of ADA. The federal government argued that because of the inclusion of subjective quality-of-life measures in determining the prioritized service list, the lives of persons with disabilities would be considered of lesser value than those without disabilities. In November, the state resubmitted its application, having reranked services based on medical effectiveness alone. Oregon contends that the demonstration design reflects a recognition that comprehensive coverage of the uninsured cannot realistically occur in an environment of unmanaged care and rising expenditures. The debate over the Oregon Medicaid Demonstration highlights the difficulties faced by states and the national as they seek to expand access in the face of rising health care costs and constrained budgets. The potential approval of the state's waiver request is being watched closely. The future of the Oregon Medicaid Demonstration is likely to provide important lessons for others at the state and the federal government level who are considering comprehensive approaches to extending access and contemplating the trade-offs between expanding access and containing costs. C. Health Care Reform Proposals To date, the health care reform debate and proposals for change have focused primarily on expanding access to coverage for those who are uninsured. But persons with disabilities are more likely to be underinsured, and none of the proposals explicitly addresses that issue. However, eliminating the uninsured would expand coverage for those persons with disabilities who are in that category, and depending on the plan, may reduce employment disincentives. Proposals have been advanced for major health care reform, but the initiatives that have been enacted are incremental and targeted toward specific populations. In the short term, incremental expansions in coverage are likely until a political and social consensus can be reached about the appropriate direction for the health care system. This section presents a discussion of the major health care reform proposals and of how each proposal would address the needs of persons with disabilities. About 60 health care reform bills are currently before Congress, and dozens of others have been proposed by interest groups (e.g., provider and insurer associations and consumer groups). Most of these proposals focus on two problems: (1) the growing number of persons who lack health insurance, and (2) the rising cost of health care. Thus, they include mechanisms for expanding insurance coverage and controlling costs. The reform debate has not focused much on issues of adequacy, appropriateness, and efficiency in the delivery of health care, although delivery system reform appears to be an emerging policy issue. The current proposals for health care reform have not been fashioned from the perspective of persons with disabilities. While the proposals address some problems of access to health insurance for persons with disabilities, they do not address the most pressing problems of adequacy and appropriateness of services. The National Council on Disability believes that the disability community can offer a broader perspective on health care reform by encouraging policymakers to focus on changes in the delivery system in addition to reforming financing mechanisms. A review of the three most common approaches for health care reform follows. The three approaches are (1) tax credits and vouchers, (2) employment-based insurance, and (3) public health insurance. 1. Tax Credits and Vouchers A number of proposals for health care reform have been based on increasing the individual's responsibility for health care decisions. These proposals are addressing the insensitivity to health care purchases that has been created by the availability of third-party insurance. Proponents of these proposals believe that, given greater responsibility for purchasing health care, individuals would only purchase the amount of coverage they feel they need. Tax credits or vouchers would be available for use in purchasing health insurance. The tax credit or voucher would be equal to the cost of a basic benefit package; additional insurance could be purchased out-of-pocket. Tax credits and vouchers were at the heart of the Bush Administration's health care reform proposal. For individuals with incomes below the poverty line, the plan provided a refundable tax credit (i.e., voucher) equal to $3,750 for purchasing health insurance. Persons with incomes above the poverty level would receive a tax credit, which varied by income, for the cost of health insurance up to a maximum of $3,750. The plan had both positive and negative consequences for persons with disabilities. It was beneficial in that all persons with incomes below poverty would receive a voucher equal to $3,750 of health insurance. The approach separated access to health insurance from employment and eliminated the employment disincentive for persons with disabilities. Despite these advantages, the plan would have had limited impact on persons with disabilities and might even have eroded existing coverage. The value of the voucher approximated the average cost of insurance for an average individual. The amount of the voucher was not adjusted by age, health status, or geographic location. Thus, the amount of health insurance that could be purchased for $3,750 would have varied substantially by individual. Persons with disabilities are likely to face premiums well above $3,750 and may have found insurance unaffordable and inadequate under this plan. Moreover, states may have decided to eliminate their Medicaid programs and shift eligible people onto the vouchers. Such a shift would have adversely affected persons with disabilities since Medicaid benefits are more comprehensive than the benefits likely to be available for the voucher value. The Heritage Foundation has also proposed a health care reform plan that places responsibility for obtaining health insurance on the individual. This proposal is a consumer-based system that shifts responsibility for obtaining insurance from employers to individuals. Individuals would be required to obtain tax-deductible insurance. They could elect to obtain coverage singly or within a group of their own choosing. For those high-risk persons who cannot afford insurance, risk pools subsidized by the government would be created. Otherwise, traditional risk segmentation is maintained. The major advantage of the Heritage Foundation proposal for individuals with disabilities is that health insurance would no longer be linked to employment. Persons would obtain health insurance regardless of the type or size of their employer. This approach would benefit persons with disabilities who have refused employment because of concerns about health insurance. The plan, however, contains two major drawbacks for persons with disabilities. The first drawback is that the basic coverage is unlikely to include the full range of benefits required by those with disabilities. While persons may purchase these services separately, they will face high out-of-pocket expenses. A second disadvantage is that the plan segregates high-risk persons into government-subsidized high-risk pools, which further segments the health insurance market. 2. Employment-Based Approaches Building on the existing employment based system is another common approach to expanding access to insurance. Many policymakers argue that since current insurance mechanisms provide coverage for over 85 percent of the population nationwide, reform options should rely on established public and private sector programs as the basis for further insurance expansion. The employment-based approach that has received widespread attention is the "play or pay" approach, enacted by the states of Massachusetts and Oregon. Under this method employers are required to provide health insurance to employees and their dependents or pay a tax penalty. Typically the tax approximates the average cost of the employer share of the health insurance premium. Taxes may be per capita (e.g., $1,200 per employee) or a proportion of payroll up to a ceiling (e.g., 6 percent up to the Social Security wage ceiling). The tax revenues are used to fund public coverage for persons who are not insured by employers. In addition to its use in Massachusetts and Oregon, this approach has been proposed by the Pepper Commission and by the Senate Democratic leadership (the Mitchell Bill). How the taxes are structured substantially impacts the extent to which employers pay the tax or provide insurance. In general, a head tax set at the projected average cost of insurance creates a strong incentive for many employers to pay because about one-half of them will face insurance premiums higher than the average. Employers with higher risk groups who are currently providing insurance may find it to their advantage to pay the tax. If a payroll tax is used, the incentive to provide insurance or pay the tax depends on the tax rate and ceiling. In general, it will be to the advantage of employers of low-income workers to pay the tax rather than provide insurance, since the tax on lower wage workers will be less than the premium. Most of the play-or-pay proposals include a public plan for those who do not obtain employment-based insurance. This plan is funded by the tax revenue from employers. Depending on how the tax is structured, the public plan will usually have a disproportionate number of low-wage and high-risk persons. Employer contributions may not be adequate to cover the cost of the public plan, so depending on the composition of its recipients, additional subsidies may be needed. Each of the play-or-pay approaches specifies a minimum benefit package that would be provided by employers and the public plan. None of the benefit plans include health-related services that persons with disabilities may need. Often excluded from these packages are prescription drugs, rehabilitation services, durable medical equipment and other assistive devices, and extended psychiatric care. Employment-based approaches represent a method of financing expansions in coverage that can potentially expand private health insurance for persons with disabilities. Most of these proposals prohibit medical underwriting and eliminate preexisting-condition exclusions, which would significantly benefit persons with disabilities. However, these proposals do not remove all barriers to access to care. They establish a minimum benefit package that excludes many of the services most needed by persons with disabilities. Employment-based approaches have the potential to ensure universal insurance coverage, but other initiatives are required to ensure universal access to health care. Employment-based plans maintain the link between employment and insurance, but the comprehensiveness of insurance coverage will vary by employer, with larger and more profitable employers providing more comprehensive benefits. For employment-based plans to more fully meet the needs of persons with disabilities, they must be coupled with delivery system reform initiatives designed to ensure access to adequate and appropriate services. 3. Public Health Insurance Public health insurance would establish the federal government as the single payor and sponsor of a national health plan similar to the Canadian national health insurance system. Under this plan, all individuals would be entitled to a standard set of benefits--including preventive, acute, and long-term care--with no premiums, coinsurance, or deductibles expected. A public health insurance approach would be largely beneficial for persons with disabilities. It provides for universal access to a single standard of insurance coverage. All persons are entitled to the health care services that are in the national insurance plan. It separates access to health insurance from employment, and thus eliminates employment disincentives for persons with disabilities. Although public health insurance would guarantee all persons with disabilities a basic level of insurance coverage, access barriers would still remain unless the plan was coupled with other initiatives. Some essential services would remain uncovered and the fragmentation and inefficiency in the delivery system would remain. In conclusion, assessing the predominant health care reform approaches from the perspective of persons with disabilities reveals that none of the approaches is entirely sufficient from a disability perspective because each emphasizes expanding the financing of health insurance rather than issues of adequacy and appropriateness. Proposals to expand coverage can benefit the disability community by ensuring that all persons have insurance and by reducing employment disincentives. They need to be broadened, however, to focus on issues of adequate and appropriate health care and delivery system reform. D. Health Care Systems in Other Countries The health care reform debate has led to a renewed interest in and scrutiny of the health care insurance and delivery systems in other countries. Critics of the U.S. system consistently remind policymakers that the United States is the only country without a universal/unified system of health care. Proponents argue that the U.S. enjoys far greater quality of care and benefits from available technology, and that Americans value the freedom of choice this system provides. Yet as illustrated in the foregoing discussion, some change is needed to address decreasing access and rising costs; and states, providers, employers, consumers, and special interest groups are actively seeking viable alternatives or reforms. In this light, it is useful to examine how other countries manage their health care systems and particularly how these countries meet the medical and health-related needs of persons with disabilities. This section provides an overview of the health care systems in three countries often referred to as examples of universal health plans at work--Canada, Germany, and the Netherlands. 1. Canada Interest in the Canadian health care system has increased as advocates seek a prototype for a universal health system and as comparative studies continue to show that Canada spends a lower portion of its Gross National Product (GNP) on health care than the U.S. The level of interest may also reflect the geographical and cultural proximity of the country and the relative youth of the system. a. Overview of the system[115] Canada's health care delivery system is essentially a universal health insurance plan. All Canadian citizens are entitled to a basic set of benefits under federal law. However, similar to the U.S. Medicaid program, the system comprises independent provincial insurance plans operating within federal guidelines and supported by federal cost sharing. The Canadian system was established by the Hospital Insurance and Diagnostic Services Act of 1957 and the Medical Care Insurance Act of 1966. The Hospital Insurance Act set guidelines that provided federal subsidies for hospital services paid for by the provinces and specified the services to be provided. The subsequent Medical Care Insurance Act created physician insurance programs and required the provision of comprehensive "medically necessary benefits, including services provided by both general practitioners and specialists."[116] By 1972, all provinces had enacted both acts. Originally, the Canadian government agreed to share about half the cost of each provincial health insurance plan that met federal guidelines, including that the plan be publicly administered, accessible to all residents, and free of financial barriers to covered services.[117] However, rapidly increasing health care spending led the government to modify this cost-sharing arrangement, replacing it in 1977 with a system of block grants and a transfer of personal and corporate income tax points to the provinces. The 1977 Federal-Parliament Fiscal Arrangements and Established Programs Financing Act also capped federal health care contributions to the provinces by tying these contributions to growth in the Canadian Gross Domestic Product (GDP). This arrangement effectively limited federal spending and gave the provinces the burden of financial responsibility for any increase in the rate of health care spending above the rate of increase in the GDP. Most provinces use general tax revenues to finance their share, although Alberta and British Columbia also charge health insurance premiums.[118] Individuals from these two provinces who are unable to pay are eligible for full or partial assistance from the province, and persons 65 or older do not pay premiums. The federal share is financed by a progressive income tax. Cost sharing for individuals is not a component of the Canada system. The Canada Health Act of 1984 banned physician balance billing. However, as a result of the federal government's efforts to control its rate of health care spending, the provinces have responded to their growing burden by limiting physician fee increases and hospital operating and capital budget expenditures. Physicians, who are paid on a fee-for-service basis under provincewide negotiated fee schedules, subsequently increased the volume of services provided in order to maintain their incomes. Hospitals are reimbursed via global budgets for operating expenses; capital costs are controlled separately and require approval by the provincial Ministry of Health. The process for obtaining funds for capital expenditures, such as new technology, limits hospital acquisition of new, expensive equipment. The combination of physicians providing more services, limited hospital-based resources, and a concentration of high-tech medical resources in certain facilities has increased patient queuing for many tests and procedures. b. Benefits The national system covers all necessary medical and hospital services, including physician services at home, in the office, and in the hospital or other facilities. These services include diagnosis and treatment of illness and injury, prenatal and postnatal obstetrical care, and laboratory and clinical pathology services. Inpatient and outpatient services include ward accommodations, nursing services, laboratory and radiology diagnostic procedures, inpatient drugs, the use of operating and delivery rooms and radiology facilities, anesthetic and surgical supplies, home renal dialysis equipment, home hyperalimentation equipment, and dental surgery.[119] Although these services are essentially federally mandated, the provinces may choose to provide coverage for additional services. For example, although prescription drugs are excluded from covered services, most provinces cover prescription drugs to some extent, often to special populations such as the elderly. As a result, the scope of available benefits varies. Typically, the more economically stable provinces offer a wider range of services or supplemental health insurance programs than those provinces with more limited resources. Ontario, the largest province, offers several additional services, including a free prescription drug program for senior citizens, recipients of social assistance, home care patients, and residents of extended-care facilities; and an assistive devices program, which covers 75 percent of the costs of devices such as wheelchairs, prostheses, artificial eyes, hearing aids, and nursing homes. Ontario also includes psychiatric care as an insured hospital service; and optometric, chiropractic, osteopathic, chiropody, and physiotherapy among insured professional services benefits. The national system is supplemented by a limited private insurance market. Private insurers are prohibited from offering benefits financed through the provincial plans and are limited to services such as private and semiprivate hospital rooms, long-term care, adult dental care, and various types of prescription drugs.[120] Approximately 90 percent of Canadians have some supplemental insurance coverage.[121] c. Provisions for persons with disabilities For persons with disabilities, several supplemental programs exist at the federal and provincial level that provide support services and other aids not covered under the health insurance system. In particular, the Canada Assistance Plan (CAP), enacted in 1966, offers a combination of social assistance benefits and welfare services to "persons in need." Persons in need include the elderly, children who require protection because of abuse or neglect, persons with disabilities, single-parent families, the unemployed or low-income workers, families or individuals in crisis, and battered women. Financial assistance in particular must be provided to persons in need who meet a financial needs test. For persons with disabilities, CAP may provide assistance for basic needs, such as food and shelter; noninsured health care, including prescription drugs; special needs, including wheelchairs, hearing aids, glasses, and essential home repairs or adaptations; homemaker/home support services; and residential care costs for nursing homes, and community residences, and other situations.[122] The federal government specifies guidelines for CAP that must be met by the provinces in order to obtain the 50 percent federal cost sharing, but the provinces are solely responsible for administering their assistance and social service programs, including the design, comprehensiveness, eligibility requirements, and method of delivery.[123] As a result, the definition of need and the services available vary across the provinces. Under the Vocational Rehabilitation for Disabled Persons (VRDP) Act, the federal government shares 50 percent of certain costs incurred by provinces and territories in providing vocational rehabilitation services that help people with physical and mental disabilities pursue gainful employment.[124] Persons with physical or mental disabilities are eligible if they are considered capable of functioning at a level that allows them to obtain gainful employment. Recent changes to the Vocational Rehabilitation for Disabled Persons Agreement established new federal support for technical aids and devices provided on a universal basis, and also recognized individualized funding for services such as attendant care and interpreters. Changes to CAP were also implemented to include persons receiving disability-specific services. While the Canadian health system has been lauded for achieving universal access to a basic benefit package, it has been criticized for constraining the purchase of new technology and consequently restricting access to some services. In New Foundland, for example, a two-month wait for a CAT scan was reported because there was only one functioning CAT scanner team in the province.[125] Canadian Health and Welfare officials acknowledge that there is less technology in the country, but also argue that the relative uses and benefits of technology must be examined when considering expanding its availability. Hospital global budgeting has also been blamed for decreasing access to hospital services because it creates an incentive to admit low-cost, long-term patients. These patients, known as "bed blockers," prevent physicians from using acute-care beds to treat short-term patients.[126] This situation has been aggravated by a general shortage of nursing-home beds. Canada is also experiencing a nursing shortage. A few years ago, this shortage contributed to longer queues for some services. Although it appears that a wide range of services are available to the population with disabilities, the extent to which these services are available and accessible depends on the amount of money allocated to specific programs by the federal government and the provinces. Funding for these programs is limited by federal and provincial budgets. Also, because of the patchwork of programs that cover services for persons with disabilities, effectively accessing these services may require some persistence and networking on the part of the individual. Despite these difficulties, consumer satisfaction surveys have shown consistently that Canadians are satisfied overall with their current health care delivery system. Two polls, conducted jointly by the Harvard School of Public Health and Louis Harris and Associates in 1988 and 1990, found that 56 percent of Canadians believe that their system works "pretty well" and only needs minor changes. Ninety-five percent of respondents indicated that they would prefer their own system to that of the United States, despite the fact that only 42 percent of those surveyed were "very satisfied" with the level of technology available in Canada, and slightly less than one-third were satisfied with accessibility to elective surgery. 2. Germany The German health care system has an integrated insurance structure that relies on federal/state and public/private commitment. In many ways, the German system resembles that of the United States in its use of multiple private payers and providers, the role of employers, and the mix of public-private financing.[127] The system referred to in the following section is that of the former West Germany. Germany is struggling to achieve health care reform and cost containment as it confronts the challenges of reunification. The system is likely to undergo some major changes in the near future. a. Overview of the system The German health system dates back to 1883 when Chancellor Otto von Bismarck enacted the 1883 Sickness Insurance Act, which required all workers below a certain income to be insured by a "sickness fund" or mutual aid society. The law required both employers and employees to contribute to the costs of the fund and defined a minimum level of benefits. Today, the sickness fund continues to be the basis of the German health system, and basic tenets of the 1883 law have been upheld and expanded upon. Sickness funds are quasi-public insurance organizations. They are autonomous bodies that tend to be employment based and organized by profession or geographic area, or through independent businesses. Financing is provided through a dedicated payroll tax with equal contributions from both employers and employees. Persons who are unemployed join area sickness funds. In addition, employees may rely on area funds if they are in transition from one employer to another, if their employer is going out of business and its sickness fund is dissolving, if their employer is too small to sponsor a sickness fund, or if they are self-employed. People earning below a specific income are required to enroll in an appropriate sickness fund, while civil servants and higher paid professionals may opt out of these funds as long as they join a "substitute" fund. These substitute funds typically offer members better benefits than the sickness funds and tend to require a lower contribution.[128] Under the sickness fund, employees contribute a fixed percentage of gross income, a rate that is independent of the health risk presented by the employee or dependents.[129] Employers contribute a like amount for each employee. The total contributions are eventually turned over to hospitals (for operating costs only), and to regional associations of physicians that disburse the money to doctors based on a negotiated fee schedule.[130] Hospital capital funding comes principally from state government contributions. About 8 percent of the German population purchases private insurance. Unlike the U.S. private insurance system, premiums are based on age in five-year cohorts and do not increase as the individual ages; rather, persons in younger cohorts pay a higher premium essentially creating a reserve of funds for care in later life. Reimbursement for services under private plans tends to be about twice that provided through sickness funds. As a result, persons with private insurance may receive preferential treatment. However, once individuals opt out of the statutory sickness-fund system to purchase private insurance, they may not rejoin a sickness fund.[131] Private insurance is also available for supplemental coverage of benefits not covered under sickness funds, such as private or semi-private hospital rooms. Purchasing supplemental coverage does not exclude an individual from the statutory system. b. Benefits Benefits under the German system are considered among the most comprehensive of any health system. Benefits include medical, dental, and inpatient hospital care in addition to home care and rehabilitative treatment at spas. Prescription drugs, preventive care, rehabilitation, inpatient rehabilitation, eyeglasses, and medical appliances are also covered according to the German Health Insurance Law. However, limitations on the amount or duration of coverage for these services are unclear. Presumably, availability of funding--particularly public monies--affects the extent to which services are limited. c. Provisions for persons with disabilities Several barriers to access to care for persons with disabilities exist because the German system is fundamentally based on employment. Like the United States, there appears to be a several-tiered system of care, allowing persons who can afford to purchase private and supplemental insurance to have better access to services than those who are unemployed or low income. Because the unemployed and persons with low incomes must enroll in sickness funds, the insurance market suffers from risk segmentation. However, for persons who experience a disabling condition, the German health and social assistance system has a primary objective of returning an individual to work as soon as possible. The 1974 Rehabilitation Act (and subsequent amendments) called for coordinating benefits and services for persons with disabilities. The Act covers health insurance, accident insurance, income maintenance, and old age assistance. Benefits include medical and dental care, care in hospital convalescent homes and special establishments, prescriptions, aids and appliances, education and vocational training, and cash to help obtain some of these benefits.[132] The German health insurance system is committed to identifying disabling conditions early on. Physicians are encouraged to help individuals obtain rehabilitative services as soon as possible to discourage the onset of more severe disability. For persons with severe disabilities that prohibit employment, the country's social assistance legislation provides for both cash and inkind benefits. These inkind benefits may include home adaptations and personal assistance services. Services may vary by region. 3. The Netherlands Like the German and U.S. systems, the Dutch health care system is based on a combination of public-private financing and delivery of care. It is also a system in transition as the Netherlands contemplates health care reform to improve system efficiency and equity.[133] This section describes the Netherlands' current health care system and provisions for persons with disabilities and then examines proposed reforms and their potential implications for persons with disabilities. a. Overview of the system The Dutch system comprises both public and private insurance components. A compulsory system of sickness funds, like the German model, exists for persons with incomes below a certain level. Sickness funds are linked to employment and are financed by a payroll tax on both employers and employees. Employees also pay an annual premium. Persons with incomes above the specified level are not permitted to join sickness funds but must instead purchase private coverage. Employers contribute the same percentage of gross wages to this coverage as they would for the sickness fund. Others excluded from sickness funds are civil servants who are covered under employment-specific statutory insurance plans, for which income-related premiums are charged. Finally, there is a mandatory national catastrophic medical program that covers the entire population. Under the Exceptional Medical Expenses Act, all Dutch citizens have coverage for long-term care, nursing home care, and institutional care for disability and mental illness.[134] The Exceptional Medical Expenses Fund, from which monies are drawn to pay for care under the Act, is financed through an income tax collected as general tax revenues. Physician payment varies depending on whether the provider is private or affiliated with a sickness fund, and on whether the provider is a general practitioner (GP) or a specialist. Sickness funds typically contract with providers and pay them on a capitation basis, while private physicians unaffiliated with funds are paid on a fee-for-service basis. Specialists are paid on a fee-for-service basis regardless of affiliation. Sickness funds and private insurers negotiate rates with physician associations, such as the Dutch Medical Association to which most practitioners belong. Separate negotiations are conducted to determine the standard payment for individual physicians and reimbursement for practice expenses, including operating expenses. However, the calculation for determining payment for general practitioners paid by sickness funds differs from that for general practitioners paid by private insurers, since sickness fund GPs are paid on a capitated basis. Private insurers pay GPs according to a fee schedule that fixes prices by the general category of service provided, such as routine office visit or telephone consultation.[135] Specialists set their own fees and receive these fees from both sickness funds and private insurers. However, if specialists exceed an agreed upon "norm physician income" set by the government and the National Specialists Association, they are required to pay back a percentage of income above a prescribed level. This ceiling on income effectively limits the incentives for providers to increase volume of services as a way of improving income within a set fee schedule. A prospective budgeting system for hospital payment has been used since 1983. Hospitals must also obtain federal permission to purchase equipment or undertake any expansion activities. b. Benefits Sickness funds cover a range of services, including medical and paramedical care; pharmaceuticals; dental, hospital, and nursing care.[136] Long-term hospital stays (up to one year) are also covered, after which they are paid for by the General Exceptional Medical Expenses Act. The Act covers institutional care, community nursing care, certain assistive devices (including wheelchairs and crutches provided to institutionalized individuals), family assistance, and psychiatric care. The Dutch delivery system uses an organized, integrated set of health care providers.[137] Care is coordinated by primary care physicians known as "huisarts," who act as gatekeepers to specialist secondary and tertiary care. There is a mandatory referral system that essentially limits specialist and hospital care to that prescribed by a huisart, except in emergencies. This system could create some difficulties for persons with disabilities needing to access specialist care in a timely manner. Services covered under private insurance vary by policy, and premiums vary accordingly. Some plans impose cost sharing, typically in the form of copayments and deductibles. c. Provisions for persons with disabilities Specialist care may be covered by both sickness funds and private insurance, and the General Exceptional Medical Expenses Act assures coverage for some community-based and institutional care. However, other services required by persons with disabilities tend to be covered under the country's social security system rather than the health system. The General Disability Benefits Act provides the majority of funding for services needed by the population with disabilities. The General Disability Benefits Act provides for both cash payments to persons with disabilities who have some incapacity to work and payment for supportive services. The services covered include assistive devices (such as wheelchairs and adapted vehicles), rehabilitation, and improvement of a living situation.[138] The Act's primary objective is to cover services that maintain, restore, or facilitate an individual's ability to work. With respect to long-term care, there is a shortage of nursing-home beds in the Netherlands, and while there is a preference for home care among the Dutch, persons who need intensive custodial care often must rely on institution-based care.[139] Home care is provided by community nurses to persons who require only a few hours of help per day. The Netherlands does have an established system of residential facilities to augment the nursing home system in providing long-term care for persons with disabilities. A system of residential centers exists that provides attendant care to residents who each have their own dwellings. This model gives persons with disabilities more autonomy than a nursing home, but it is nevertheless segregated from the general community, and care is administered according to staff protocols and schedules. The primary alternative to these institutional settings is the Fokus Project, which provides accessible housing and personal assistance services to persons age 18-65 with disabilities. This program is sponsored by the Fokus Foundation.[140] Housing adaptations are funded through the government's housing department; attendant services are financed through the General Disability Benefits Act. However, personal assistance services are available only to those living in a Fokus Project and are limited to 30 hours per week. Home help services are also available through home help agencies. However, these agencies exist in only a few localities where they have legislative authority to provide full-time personal assistance services to persons with disabilities.[141] Home health agencies also attempt to coordinate primary health care services provided by huisarts, nurses, and social workers. Finally, there is a pilot program known as the Client Budget Experiment, which permits a few persons with disabilities to use government funds to hire their own personal attendants. This alternative provides the most autonomy and control to an individual with a disability. However, the program is small, and what its impact will be is not yet clear. d. Proposed reforms In 1987, the Dekker Committee, an advisory group convened by the government to assess the structure of the health care system, released a report calling for the development of a more competitive health insurance system. The Committee concluded that the government's increased involvement in health care in the 1970s had little effect on controlling rising costs and inefficiency. The Committee recommended major changes--including eliminating the "two-track" system of care, which had effectively segregated risk such that private insurers were covering lower risk individuals while the public plan was covering higher risks.[142] The proposed system would include a specified basic benefit package available to all citizens. The package would provide medical, nursing, and hospital care; long-term care; midwifery; psychosocial care; rehabilitation; dental care (up to age 18); and some health-related social services. Both the sickness funds and private insurers would be required to offer this standard package, rendering the two indistinguishable and competitive. Supplemental insurance would be available through private insurers. Basic benefits would be paid for through income-based insurance premiums collected as a tax and contributed to a central fund, and a flat-rate premium not based on income that individuals would pay directly to the insurer. Insurers would be encouraged to compete on the basis of the flat-rate premium. The amount of money paid to insurers from the central fund would be dependent on their mix of subscribers. Insurers would not be able to discriminate against high-risk individuals, and insurers with a disproportionate number of high-risk individuals would receive compensation from the central fund to cover costs. This system is intended to reduce the incentives for insurers to limit coverage for high-risk persons. The proposed reforms are scheduled to take effect gradually. In January 1989, preliminary adjustments to the premium structure were implemented when a flat-rate premium was introduced for those covered under the compulsory health insurance plan.[143] The new premium structure and benefits will be established over time, and any differences between the public and private plans will be eliminated. The implications of the Dekker Committee reforms for persons with disabilities are uncertain and will probably only become clear as the recommendations are implemented. The intended limitations on insurance discrimination, if effective, may improve the availability and choice of coverage for persons with disabilities. Of concern, however, is the lack of specific provisions for coverage of certain services and equipment likely to be needed by persons with disabilities, such as outpatient therapy services and durable medical equipment. Many of these services are currently covered through other programs, but the extent to which they will continue to be covered is not clear. The health systems in these three countries are a sampling of the programs and services available outside of the United States for persons with disabilities. What is evident from this overview is that while the problems with access to health insurance for persons with disabilities are largely alleviated in countries with universal health insurance systems, access to health-related services and the adequacy of health insurance coverage continue to be an issue. Access to long-term care in particular appears at times difficult for persons with disabilities in Canada, Germany, and the Netherlands. Because many of these programs rely on public funding, it is also likely that their availability is constrained by fixed budgets. In addition to their health insurance systems, these countries have broad social assistance systems that form a safety net of coverage for many health-related services that might be unaffordable for some person with disabilities. Moreover, their orientation toward disability is different. Programs for persons with disabilities in Canada, Germany, and the Netherlands focus on providing assistance with the goal of returning these persons to work. In contrast, eligibility for disability-related services in the U.S. is contingent upon an inability to work; thus, the American system lacks the farsighted vision of its foreign counterparts. These foreign systems appear to be effective at facilitating employment while ensuring that those who cannot work have access to a basic level of health care and other assistance. 1. Throughout this document, the term health-related services is used to describe services that are not considered medical in nature, although they may have therapeutic value and improve an individual's ability to live independently. 2. Mathematica Policy Research, Inc. (February 1990). "Design for a National Survey of Persons with Developmental Disabilities." p. 5. 3. Mathematica Policy Research, Inc. (1989). "Task I: Population Profile of Disability." p. 5. 4. Mathematica Policy Research, Inc. (February 1990). p. 6. 5. U.S. Congress, Americans with Disabilities Act. (1990). Section 3(2). 6. U.S. Congress, H.R. 101-485 (1990). p. 51. 7. P.F. Adams and V. Benson. (1990). "Current Estimates from the National Health Interview Survey, 1989." National Center for Health Statistics. Vital Health Statistics 10 (176). 8. Adams and Benson. (1990). 9. Mitchell P. LaPlante. (1988). "Data on Disability from the National Health Interview Survey 1983-1985." p. 4. 10. Adams and Benson. (1990). 11. Mathematica Policy Research, Inc. (1989). p. 1. 12. Mathematica Policy Research, Inc. (1989). 13. Mathematica Policy Research, Inc. (1989). 14. Mathematica Policy Research, Inc. (1989). 15. The National Council on the Handicapped was the predecessor of the National Council on Disability. 16. Louis Harris and Associates. (1986). The ICD Survey of Disabled Americans: Bringing Disabled Americans into the Mainstream. 17. Adams and Benson. (1990). 18. U.S. Bureau of the Census. (1986). "Disability, Functional Limitation, and Health Insurance Coverage: 1984/85." Household Economic Studies. p. 3. 19. Americans with Disabilities Act. 20. Mitchell P. LaPlante. (1991). "The Demographics of Disability." In The Americans with Disabilities Act: From Policy to Practice. p. 64. 21. LaPlante. (1991). 22. Adams and Benson. (1990). 23. LaPlante. (1988). p. 46. 24. LaPlante. (1988). 25. U.S. Bureau of the Census. (1986). p. 3. 26. U.S. Bureau of the Census. (1986). p. 6. 27. U.S. Bureau of the Census. (1986). p. 7. 28. Adams and Benson. (1990). 29. Adams and Benson. (1990). 30. Adams and Benson. (1990). 31. LaPlante. (1988). 32. LaPlante. (1988). 33. Adams and Benson. (1990). 34. Adams and Benson. (1990). 35. Griss. (September 1988). 36. U.S. Bureau of the Census. (1986). 37. Mathematica Policy Research, Inc. (January 1990). "Characteristics of Persons with Developmental Disabilities: Evidence from the Survey of Income and Program Participation." 38. Mathematica Policy Research, Inc. (1989). 39. Mathematica Policy Research, Inc. (1989). 40. U.S. Bureau of the Census. (1986). 41. U.S. Bureau of the Census. (1986). 42. Mathematica Policy Research, Inc. (1989). 43. U.S. Bureau of the Census. (1986). 44. Mathematica Policy Research, Inc. (June 1984). Digest of Data on Persons with Disabilities. 45. Barbara M. Altman. (November 1990). "Availability of Health Insurance and Use of Medical Care Among Individuals with a Disability Under Age 65." 46. D.P. Rice and M.P. LaPlante. (1988). "Chronic Illness, Disability and Increasing Longevity." In The Economics and Ethics of Long-Term Care and Disability. 47. Mitchell P. LaPlante. (1991). "Persons Disabled and Uninsured in the United States." Paper presented at the Public Health Conference on Records and Statistics. 48. Mathematica Policy Research, Inc. (1989). 49. LaPlante. (1991). 50. LaPlante. (1991). 51. Altman. (1990). Mathematica Policy Research, Inc. (1989). 52. Mathematica Policy Research, Inc. (1989). 53. Mathematica Policy Research, Inc. (1990). "A Labor Force Profile of Persons with Disabilities." 54. Mathematica Policy Research, Inc. (1990). 55. Cynthia B. Sullivan and Thomas Rice. (Summer 1991). "The Health Insurance Picture in 1990." Health Affairs 10(2):105-115. 56. Foster Higgins. (1991). Foster Higgins Health Care Benefit Survey: Report 1, Indemnity Plans: Cost, Design and Funding. 57. U.S. General Accounting Office. (August 1988). Health Insurance: A Profile of the Uninsured. 58. American Diabetes Association. (1989). "A Study of Health Insurance Industry Practices Regarding the Underwriting of Persons with Diabetes and Methods of Intervention Towards Providing Care." 59. Chai Feldblum. (1991). Employment Protection in The Americans with Disabilities Act: From Policy to Practice. 60. U.S. Congress. Senate Committee on Labor and Human Resources Report 101-116. (1990). pp. 84-5. 61. This testimony was provided by Robert Augustine of the Health Care Financing Administration at one of three public forums conducted as part of this study. His testimony was given at the June 1991 forum in Hartford, Connecticut. 62. Testimony of Robert Augustine. (June 1991). 63. B. Bye and G. Riley. (May 1989). "Eliminating the Medicare Waiting Period for Social Security Disabled-Worker Beneficiaries." Social Security Bulletin 52 no. 5. 64. L. Scott Muller. (1989). "Health Insurance Coverage Among Recently Entitled Disability Insurance Beneficiaries: Findings from the New Beneficiary Survey." Social Security Bulletin 52:2-17. 65. James Lubitz and Penelope Pine. (Summer 1986). "Health Care Use by Medicare's Disabled Enrollees." Health Care Financing Review 7:19-31. 66. Health Care Financing Administration. (July 1991). A Statistical Report on Medicaid. 67. M.R. Ellwood and B. Burwell. (1990). "Access to Medicaid and Medicare by the Low-Income Disabled." Health Care Financing Review. 1990 Annual Supplement. pp. 133-148. 68. Allen C. Jensen. (June 1990). Consumers' Experiences with Work Incentive Policies in the Supplemental Security Income and Social Security Disability Insurance Programs. 69. American Public Welfare Association. (1992). Reforms and Expansions in the Medicaid Program for FY 1992, Survey Reports. 70. Lewin-ICF and James Bell Associates. (August 1990). "Characteristics of General Assistance Programs 1989." 71. Lewin-ICF. (April 1990). "The Health Care Financing System and the Uninsured." 72. F. Wilson and D. Neuhauser. (August 1987). Health Services in the United States: Second Edition with 1987 Revisions. 73. SysteMetrics/McGraw-Hill. (January 1990). "Task II: Federal Programs for Persons with Disabilities." 74. SysteMetrics/McGraw-Hill. (January 1990). 75. SysteMetrics/McGraw-Hill. (January 1990). 76. Lewin-ICF. (April 1990). 77. F. Wilson and D. Neuhauser. (August 1987). 78. Pamela J. Farley. (1985). "Who Are the Underinsured?" Milbank Memorial Fund Quarterly 63(3):476-503. 79. U.S. Department of Health and Human Services (DHHS). (1988). "Insuring Catastrophic Illness for the General Population: Technical Report." 80. DHHS. (1988). 81. Griss. (1988). 82. S. Litvak, H. Zukas and J. Heumann. (April 1987). Attending to America: Personal Assistance for Independent Living. 83. Griss. (1988). 84. National Association of Developmental Disability Councils. (May 1990). "The Report on the 1990 National Consumer Survey: Summary Findings." 85. Griss. (1988). 86. A.M. Pope and A.R. Tarlov, eds. (1991). Disability in America: Toward a National Agenda for Prevention. 87. G. DeJong, A. Batavia, and R. Griss. (1989). "America's Neglected Health Minority: Working-Age Persons with Disabilities." The Milbank Quarterly, vol. 67, suppl. 2, pt. 2. 88. Harriette B. Fox and Paul W. Newacheck. (1990). "Private Health Insurance of Chronically Ill Children." Pediatrics 85:50-57. 89. Foster Higgins. (1990). Health Care Benefits Survey, 1989: Report 2, Indemnity Plans: Cost, Design and Funding. 90. The results of this survey were presented at the annual meetings of the American Public Health Association (October 1991) and the Society for Disability Studies (July 1991). 91. A service is considered fully covered if health insurance does not limit the amount of service and does not impose a copayment greater than 20 percent. 92. A. Markowicz and K.G. Reeb, Jr. (1988). An Overview of Medicaid Reimbursement for Rehabilitation Equipment in the United States. 93. Deborah Lewis-Idema, Susanna Ginsburg, and Marilyn Falik. (January 1990). "Descriptive Study of Medicaid Personal Care Programs." A background paper prepared for The Commonwealth Fund Commission on Elderly People Living Alone. 94. LaPlante. (1988). 95. Lewin-ICF and Fox Health Policy Consultants. (November 1991). "Medicaid Coverage of Health-Related Services for Children Receiving Special Education: An Examination of Federal Policies." 96. Lewin-ICF. (July 1991). "Medicare Beneficiaries' Access to Rehabilitation Services: An Analysis of Service Use, Care Patterns, and Charges." 97. M.R. Ellwood and B. Burwell. (1990). "Access to Medicaid and Medicare by the Low-Income Disabled." Health Care Financing Review. Annual Supplement. 98. Foster Higgins. (1990). 99. Foster Higgins. (1990). 100. Foster Higgins. (1990). 101. U.S. Department of Health and Human Services. (1988). 102. DeJong, Batavia, and Griss. (1989). 103. Advisory Council on Social Security. (1991). "State Initiatives to Expand Access to Care." In Critical Issues in American Health Care Delivery and Financing Policies. 104. DHHS, Social Security Administration. (June 1991). Red Book on Work Incentives. 105. Barry Bye and Gerald F. Riley. (May 1989). 106. Bye and Riley. (May 1989). 107. Charles D. Spencer and Associates, Inc. (July 1989). "Employer Subsidies Exceed 40% of Total Cost for Continued Health Coverage, Says 1989 Survey." Spencer's Research Reports. 108. Charles D. Spencer and Associates, Inc. (July 1989). 109. Children's Defense Fund. (January 1990). Medicaid Preventive Services for Children--The Early Periodic Screening, Diagnosis, and Treatment Program: Analysis of Federal Legislation. 110. Randall R. Bovbjerg and Christopher F. Koller. (Summer 1986). "State Health Insurance Pools: Current Performance, Future Prospects." Inquiry 23 (Summer 1986):111-121. 111. T. Vann Ellet. (October 1981). State Comprehensive and Catastrophic Health Insurance Programs: An Overview. 112. Lewin-ICF. (April 1990). 113. Lewin and Associates. (April 1983). "State Options for Addressing Catastrophic Health Expense." 114. Lewin and Associates. (April 1983). 115. This section is based on several documents (cited as appropriate) and interviews with individuals from the following organizations: Health Insurance Directorate, Health and Welfare Canada; Disabled Persons Unit, Health and Welfare Canada; Office for Disability Issues; and Statistics Canada. 116. Malcolm G. Taylor. (1990). Insuring National Health Care: The Canadian Experience. 117. Uwe E. Reinhardt. (1981). "Health Insurance and Cost Containment Policies: The Experience Abroad." In A New Approach to the Economics of Health Care. 118. Congressional Budget Office. (April 1991). Rising Health Care Costs: Causes, Implications and Strategies. 119. John K. Iglehart. (September 1986). "Canada's Health Care System." Part 2. New England Journal of Medicine 315:778-84. 120. John K. Iglehart. (July 1986). "Canada's Health Care System." Part 1. New England Journal of Medicine 315:202-8. 121. Harvard Community Health Plan. 1990 Annual Report. 122. Health and Welfare Canada. Fact Sheets on the Canada Assistance Plan (CAP). 123. Canada Assistance Plan: Annual Reports for 1986-87, 1987-88, 1988-89. (1990). Health and Welfare Canada. 124. Taylor. (1990). 125. Michael A. Walker. (1989). "From Canada: A Different Viewpoint." Health Care Management Quarterly (First Quarter):11-14. 126. Advisory Council on Social Security. (1991). "Health Care Delivery in Other Countries." In Critical Issues in American Health Care Delivery and Financing Policy. 127. Laurene A. Graig. (1991). Health of Nations: an International Perspective on U.S. Health Care Reform. 128. Graig. (1991). 129. John Iglehart. (February 1991). "Germany's Health Care System." Part 1. New England Journal of Medicine 324(7):503-508. 130. Iglehart. (February 1991). 131. Graig. (1991). p. 134. 132. Rosalind Brooke-Ross. (Summer 1984). "The Disabled in the Federal Republic of Germany." Social Policy and Administration 18(2):174. 133. Graig. (1991). p. 192. 134. Graig. (1991). p. 194. 135. Graig. (1991). p. 196. 136. Andrew I. Batavia. (September 1990). "Meeting the Health Care Needs of Physically Disabled Persons in the Netherlands." International Disability Exchanges and Studies Project. p. 26. 137. Batavia. (1990). 138. Batavia. (1990). p. 10. 139. Batavia. (1990). p. 19. 140. Batavia. (1990). p. 21. 141. Batavia. (1990). p. 22. 142. Graig. (1990). p. 199. 143. Graig. (1990). p. 201.