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Relief in Sight? Correctional Healthcare Costs and the ACA
By Robert Winters, JD, Professor, School of Criminal Justice, Kaplan University
Published: 05/02/2016

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It is no secret that correctional budgets at all levels—local, state, and federal—are strained. It is no secret that healthcare costs across the entire economy but particularly within the corrections realm are skyrocketing. And it is no secret that the Affordable Care Act (ACA), often known affectionately or not as “Obamacare,” is hardly the most popular piece of legislation ever to cross the president’s desk. Yet surprisingly, ACA reforms could provide a partial solution to the correctional healthcare quandary.

First, the budgetary challenges: According to a July 2014 study by the Pew Charitable Trusts in cooperation with the John D. and Catherine T. MacArthur Foundation, correctional spending on healthcare finally slowed in the period from 2007 to 2011 after rising dramatically from 2001 to 2008. However, even this slower rate of growth was still a median rate of 13 percent adjusted for inflation, and per-inmate spending increased at a median rate of 10 percent. A total of 41 states saw increased overall spending during this period, and 39 experienced increased per-inmate spending.

The total national cost was $7.7 billion in 2011, a significant decline from the peak of $8.2 billion in 2009, but much of this savings resulted from smaller prison populations. In fact, $441 million of the decrease—that is, nearly all of it—is attributable to reduced spending by California as a result of its federally mandated reduction of its inmate population. Moreover, as prison populations age—and 40 of 42 states reported larger proportions of older inmates in 2011 versus 2007—per-inmate costs rise substantially. Looking at overall budgets, healthcare accounted for about 20 percent of total corrections spending at the state level.

Many states have considered such solutions as medical and geriatric parole programs, releasing those who are frankly too old or too ill to present any practical danger to the community. Of course, while this helps relieve strain on correctional healthcare budgets, care is still required, so those costs are merely shifted elsewhere. The same is true for those receiving medication for chronic conditions. A 2015 Bureau of Justice Statistics study using 2011 and 2012 data showed that half of all prison inmates reported having a chronic health condition at some point, and 40 percent reported a current chronic condition. Two-thirds of those offenders were taking a prescription medication for treatment.

While many of these conditions are fairly pedestrian—hypertension and diabetes, for example—about one-fifth reported a history of tuberculosis, hepatitis B or C, or an STD other than HIV/AIDS. Not surprisingly, state agencies spent as much of their correctional healthcare budgets on pharmaceuticals—14 percent—as they did on mental health, and almost three times the 5 percent spent on substance abuse. Medications to treat chronic conditions, therefore, represent another significant cost that will follow the offender once he or she is released into the community.

In the past, not surprisingly most offenders (almost 80 percent) had no health insurance upon release, having no access to employer-sponsored coverage and no ability to pay out of pocket in the marketplace, yet also failing to qualify for Medicaid. Enter now the Affordable Care Act (ACA). The law gave states the option to expand their existing Medicaid programs by relaxing eligibility criteria in return for additional federal funding. Although federal law prohibits states from seeking reimbursement for healthcare provided to inmates (with one significant exception discussed hereafter), the Centers for Medicare and Medicaid Services has long permitted states to suspend Medicaid coverage for offenders rather than terminating it while they are incarcerated, which allows faster reinstatement of benefits upon release.

Many states are now taking steps to provide offenders with coverage once they leave prison. Massachusetts, which had extensively revamped its healthcare system well before the ACA, extended Medicaid coverage to some non-disabled adults without dependent children. This was permissible prior to the ACA under a Section 1115 waiver, although federal funding levels were less generous than under ACA-based Medicaid expansion. Starting in 2008, the state enrolled inmates six months prior to release (though to clarify enrollment does not equate to receipt of benefits) and assigned a primary care physician who participated in Medicaid. The program has since been expanded to provide enhanced assistance for those with mental health, substance abuse, or serious chronic conditions.

Under ACA Medicaid expansion provisions, 30 states and the District of Columbia extended Medicaid to non-disabled adults without dependent children earning up 138 percent of the federal poverty level, which as of 2015 was $16,242 for an individual. The federal government reimburses the states for 100 percent of covered services for those newly eligible (a pool which includes inmates), although the reimbursement rate will step down over time to 90 percent in 2020. Much like Massachusetts, Ohio now enrolls offenders 90 days prior to release, and New Mexico has begun a similar program, in addition to passing statutes that require suspension of Medicaid benefits rather than termination in the event of incarceration.

The remaining 20 states that did not choose to expand Medicaid under the ACA still have options as well. Wisconsin, for example, received a Section 1115 waiver to expand Medicaid eligibility to non-disabled adults without children up to 100 percent of the federal poverty level. While it does not receive the enhanced support available under the ACA, it does receive federal funding at the same level that it does for other program participants.

Finally, the important exception to the prohibition on federal reimbursement of healthcare costs for inmates is care provided outside the prison, most commonly an inpatient stay at a hospital or nursing home care. If the offender is eligible for Medicaid, the state will be reimbursed at least half of the inpatient cost beginning 24 hours after admission, as well as benefiting from billing at the reduced Medicaid rates.

As healthcare costs continue to increase and tax dollars become more scarce, states will have to become creative in finding solutions. The options described here are an approach that provides continued support for the offender after release and through better outcomes hopefully reduces recidivism as well.

Corrections.com author, Robert Winters, holds a Juris Doctorate degree and is a Professor with Kaplan University. He is also a member of the National Criminal Justice Association and serves as a Western Regional Representative, a member of the National Advisory Board and their National Elections Committee.

Other articles by Winters



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