Marketplace enrollment has been one of the few measures available thus far to gauge the early success of the Affordable Care Act (ACA) in expanding access to health insurance. The latest figures released by the Department of Health and Human Services put the number of people who have selected a plan on the Marketplace at about 8 million as of the end of the open enrollment period (which extended through mid-April in most states).

But this measure is incomplete. Although it is often referred to as the Marketplace “enrollment” number, we do not know how many of the 8 million have paid their premium and effectuated their coverage.  Also, an unknown number of people selected plans in the individual market outside of the Marketplaces (directly through an insurance company or broker, instead of going through healthcare.gov or their state’s Marketplace) and other enrollees have left the market.

New data became available last week that, while still incomplete, provide information about the growth in individual market insurance coverage during the early part of 2014. Insurers recently submitted filings with insurance regulators (compiled by Mark Farrah Associates), that provide totals of the number of people enrolled in their individual market products.  Because these filings only represent the number of people whose coverage began by March 31, they do not capture new enrollees who signed up toward the end of open enrollment with coverage beginning in April or May. While not complete for a variety of reasons discussed in more detail below, these filings provide some initial indications of how the ACA has affected enrollment in the individual market overall, which includes people purchasing their own coverage both on and off of the exchange Marketplaces.

What this new information shows is that, for individual market insurers with available data, the number of people with coverage in effect at the end of March was about 29 percent higher than at the end of December. (As there was a slight dip in December, comparing March enrollment to the end of September would yield a net increase of 26 percent).  Roughly one fourth of this growth was from new plans, including new insurers and CO-OP plans as well as insurers that had previously operated in other markets or states.  Overall, this suggests that the individual insurance market grew substantially during the first part of 2014, although many questions remain and we will need to wait for the next round of filings to get a more complete picture of overall enrollment, including capturing the late March enrollment surge.

There are some challenges with using these initial data to measure the impact of the ACA on enrollment. The first is that several important insurers are not represented in these filings, largely because they have different filing requirements or different deadlines.  Because some sizable insurers that reported in 2013 have not yet filed their 2014 data, the overall totals from the two periods are not comparable.  To address this, we looked only at insurers that submitted first quarter filings, and excluded insurers that only report annually or have not yet submitted their first quarter filings.  The plans included in this analysis represent about two thirds of the overall market and it is possible that the insurers not included saw higher or lower growth rates in their enrollment.

A second limitation is that these filings measure the number of people whose coverage began by March 31,  and therefore are not likely to include enrollees who signed up after mid-February (because their coverage would have taken effect in April or May).  Coverage begins on the first of each month, so generally speaking a person would need to sign up by February 15 for coverage to begin March 1, and therefore be in place at the end of March when enrollment was measured for these filings. Even some earlier applicants may have had later effective dates if they did not pay their initial premium right away.  The majority of marketplace signups occurred after mid-February, which means that these initial filings likely underrepresent the ultimate number of individual market enrollees.  We will need to wait for the second round of 2014 data to get a clearer picture of enrollment as of the end of the open enrollment period.

Given these limitations, a complete count of people purchasing their own coverage is still unavailable.  However, if the insurers that were not included in these initial filings experienced similar growth rates to the insurers with available data, this would yield a net increase of roughly 3 to 3.5 million people for a total of about 15 million people in the individual market with coverage in effect by March, 2014.

As these are aggregate numbers, it is not clear how much of this growth is attributable to Marketplace enrollment. To put this in perspective, between 3.3 and 4.2 million people had signed up for Marketplace coverage by mid-February, but we do not know how many paid their premium in time to begin coverage in March and be included in these filings.

With the surge in enrollment that occurred through the Marketplaces at the end of open enrollment (with plan effective dates in April and May), the number of new enrollees in 2014 could conceivably double when these later enrollment data become available. However, we do not yet know whether off-exchange insurers experienced the same growth, nor do we know whether the people who signed up toward the end of open enrollment paid their premiums at the same rates as earlier enrollees.  Again, we will need to wait until the second round of enrollment data become available later this year.

What makes these initial filings interesting is that they provide our first look at net enrollment: not only counting the people who signed up for coverage through the Marketplace, but also accounting for people signing up off of the exchange, and those who left the market altogether. And what these numbers suggest is that enrollment in the individual market grew rapidly in early 2014, and most likely continued to grow through April and May as many plans took effect in those months.

Methods

This analysis is based on filings that insurers submit to state regulators.  The source of the data was the Health Coverage Portal ^TM, a market database maintained by Mark Farrah Associates, which includes information from the National Association of Insurance Commissioners and California’s Department of Managed Health Care.  First quarter 2014 data are still preliminary and several insurers have yet to file their first quarter data.  We excluded plans that have not yet filed their first quarter enrollment data and also excluded plans that file on an annual basis (i.e. plans that file as life insurance companies, as well as two plans in New Jersey).  New plans (those that filed for the first time in first quarter 2014, including new companies, new subsidiaries, and existing insurers that previously had operated in other states or markets) were included in the analysis.

The analysis is limited to the 50 states and the District of Columbia, and does not include the territories. Enrollment is measured by the number of covered lives in major medical coverage on March 31, 2014, and does not include specialty coverage.  The percent change in enrollment represents the change in total enrollment of all plans included in the analysis in a given quarter, from the total enrollment of all plans included in the previous quarter.

Despite not having health insurance, millions of uninsured Americans use health care services every year.  Since health care is costly and the vast majority of uninsured have limited financial means, many uninsured often cannot pay their medical bills.¹  Recognizing the need for and importance of health care providers that care for those without insurance, the federal government, states and localities have long provided support—financial and otherwise—to help defray providers’ the costs of caring for uninsured individuals.

With the enactment of the Affordable Care Act (ACA), millions of previously uninsured individuals will gain insurance coverage through either Medicaid or private plans purchased through the health care marketplaces.  As people gain coverage, providers’ costs associated with caring for uninsured individuals that previously went uncompensated will decline, as more people have a direct source of payment (insurance) for their care.  In this paper, we take a close look at uncompensated care in 2013, just before implementation of health reform’s major coverage provisions. These estimates provide an important baseline against which to measure major changes that are occurring under the ACA. Key findings from the analysis include:

• On average, a person who is uninsured for the entire year will incur considerably lower medical expenses than someone who is insured for the full year. In 2013, the average uninsured person had half the amount of medical expenditures as the average insured person ($2,443 versus $4,876).
• In 2013, the cost of “uncompensated care” provided to uninsured individuals was $84.9 billion. Uncompensated care includes health care services without a direct source of payment. In addition, people who are uninsured paid an additional $25.8 billion out-of-pocket for their care.
• The majority of uncompensated care (60%) is provided in hospitals. Community based providers (including clinics and health centers) and office-based physicians provide the rest, providing 26% and 14% of uncompensated care, respectively.
• In 2013, $53.3 billion was paid to help providers offset uncompensated care costs. Most of these funds ($32.8 billion) came from the federal government through a variety of programs including Medicaid and Medicare, the Veterans Health Administration, and other programs. States and localities provided $19.8 billion, and the private sector provided $0.7 billion.

The Cost of Uncompensated Care

Over 72 million nonelderly people were without insurance coverage for either the full year (40.8 million people) or for part of the year (31.4 million people) in 2013. On average, a person who is uninsured had considerably lower annual health care expenses than a person who is insured. This difference reflects the uninsured population’s lower health services utilization rate and lower intensity of service use compared to the insured population. Compared to nonelderly people who had insurance for a full year, for whom average per capita medical expenditures were $4,876, nonelderly people who were without insurance for a full year used health care services valued at about half that amount, or just $2,443 per capita per year (see Figure 1). Nonelderly people who were uninsured for part of the year had annual medical expenditures about 30% lower than people who were insured for the full year, spending an average of $3,439 annually per capita. Part-year uninsured individuals spent more per capita than full-year uninsured individuals largely due to higher spending in the months that they had coverage.

Despite lower overall spending, people without insurance pay nearly as much as insured people out-of-pocket for their care. Nonelderly people without coverage for the full year spent an average of $500 out-of-pocket per year, while part-year uninsured people spent an average of $476 per year and full-year insured people spent an average of $610 per year. Because uninsured individuals have much lower total spending per capita, these out-of-pocket amounts translate to very different shares of total expenses: full-year uninsured pay for 20% of their care out-of-pocket, compared to 14% for part-year uninsured and 12% for full-year insured.

While full-year uninsured individuals have a small amount of their care covered by a direct payment source ($240 per year, which likely represents retroactive Medicaid payments), most of their care ($1,702 per year, or 70% of their total annual expenses) is “uncompensated,” or not linked to a direct payment source tied to an individual (such as insurance coverage). Not surprisingly, nonelderly people who are part-year uninsured have a higher amount of their annual medical expenses covered by a direct payment source (specifically, their insurance coverage for the period they were insured, which covers $2,286 per capita), but on average, $677 of medical expenses (about 20% of total per capita expenses) for part-year uninsured people are uncompensated. For people who were insured for the full year, the majority of their care ($4,034, or 83%) is covered through direct payments by their insurance. Full-year insured people have a small amount ($232) of uncompensated care covered by payments from sources other than insurance.

In aggregate, medical care spending for the uninsured population—that is, for the full-year uninsured and for the periods that the part-year uninsured population lacked coverage—totaled $121 billion in 2013 (Figure 2). Of these expenses, 21%, or $25.8 billion, were paid out-of-pocket by the uninsured. The majority of expenses (70%), however, were uncompensated, totaling $84.9 billion in uncompensated care costs in 2013. Thirty percent ($35.9 billion) was uncompensated care indirectly paid for by other private, public, or unclassified sources, and 40 percent ($49.0 billion) was implicitly subsidized care not linked to a specific funding source.

Uncompensated Care Provided by Site of Service

Using a second source of data to estimate uncompensated care yields a very similar estimate of the aggregate value of uncompensated care used by the uninsured: $74.9 billion in 2013. This second estimate is lower than the $84.9 billion reported above because the underlying data do not capture all services. In addition, the second estimate relies on conservative assumptions about how much program spending for different programs went towards services for the uninsured. Despite these limitations, the second estimate is useful because the underlying data enable us to estimate uncompensated care spending by provider type.

Hospitals, community providers (such as clinics and health centers), and office-based physicians all provide care to the uninsured. Using the second estimate of total uncompensated care provided to the uninsured population ($74.9 billion), we estimate what share was provided in hospitals versus community-based settings. Not surprisingly given the high cost of hospital-based care, the majority (60%) of uncompensated care is provided by hospitals. Community-based providers that receive public funds provide a little over a quarter (26%) of uncompensated care.  The remainder of uncompensated care, 14%, is provided by office-based physicians.

Sources of Funding for Uncompensated Care

Providers do not bear the full cost of their uncompensated care. Rather, funding is available through a wide variety of sources to help providers defray the costs associated with uncompensated care. This funding may be linked to an individual patient’s care or may be paid as a lump sum or grant to a provider.

We estimate that in 2013, $53.3 billion was paid to help providers offset uncompensated care costs. Most of these funds ($32.8 billion) came from the federal government through a variety of programs including Medicaid and Medicare, the Veterans Health Administration, the Indian Health Service, Community Health Centers block grant, and Ryan White CARE Act (Figure 4). States and localities provided $19.8 billion, and the private sector provided $0.7 billion.

Looking at specific programs, Medicaid was the single largest source of funds to pay for uncompensated care (Figure 5). In 2013, we estimate Medicaid contributed $13.5 billion to help pay for care for the uninsured, accounting for 25.3 percent of funding, through its disproportionate share hospital (DSH) and upper payment limit (UPL) mechanisms. Through a separate DSH program and its indirect medical education spending, Medicare provided 15% of funds available for uncompensated care. At $9.8 billion, state and local appropriations for indigent care programs were the second largest funder (18%), followed by the Veterans Administration ($8.1 billion, or 15% of funding). Close behind was state and local public assistance funding at $7.3 billion, or 14%. At a much lower level, community health centers funding totaled $3 billion (6%), followed by the Indian Health Service ($2.1 billion, or 4%), Ryan White Care Act ($1.5 billion, or 3%) and Maternal and Child Health Title V Block Grant ($0.1 billion, or <1%).

In total, these sources of government funding offset about two-thirds of the cost of providing uncompensated care to the uninsured population ($53.3 billion available in funds to cover $84.9 billion in uncompensated care). With an additional $10.5 billion in charity care that was provided by office-based physicians, there remains $21.1 billion in uncompensated care that is not covered by government funding or physician charity care. Some argue that providers in fact cover the cost associated with providing this uncompensated care by charging higher rates to private payers, who in turn may charge enrollees higher premiums. However, there is no evidence that providers have charged private payers higher rates to offset rising uncompensated care costs. Further, the value of this uncompensated care is very small relative to total spending by private payers. In 2013, private health insurance expenditures were $925.2 billion, which means that even if all remaining uncompensated care costs were shifted to private insurers, it would represent only 2.3 percent of total private expenditures.

Discussion

While providers incur significant costs in caring for the uninsured, the bulk of their costs (about two-thirds) are compensated through a web of complex funding streams that are financed largely with public dollars. While these funding streams may offset the cost of uncompensated care in the aggregate, these funds may not be targeted to the individual providers who provide the most uncompensated care. As a result, some providers likely incur costs caring for the uninsured for which they receive little to no compensation. Thus, the system may be inefficiently making funds available to help pay for care for the uninsured.

The ACA includes a major expansion of insurance coverage, and millions have already enrolled in new plans. Based on the premise that coverage expansions under the ACA will result in fewer individuals receiving uncompensated care, the ACA also includes important provisions related to uncompensated care. Changes to DSH aim to better target Medicaid and Medicare DSH payments to hospitals; in addition, overall DSH funds will be reduced, reflecting the fact that there will be fewer uninsured individuals. However, with some states opting not to expand their Medicaid programs, and with some people remaining ineligible for coverage, it will be important to monitor how the DSH changes affect providers’ uncompensated care costs. This analysis estimated that hospitals provide the majority of uncompensated care to the uninsured, and federal payments under DSH provide a substantial amount of funding to help offset those costs. Thus, it is possible that changes to DSH will lead hospitals to reduce the level of uncompensated care they provide or to pursue aggressive billing against uninsured patients.

States and localities, which also provide a substantial amount of funding for uncompensated care, could change their spending under the ACA. Relying on the same logic that the federal government used to reduce Medicare and Medicaid DSH payments, states and localities could argue that providers will need less uncompensated care funding because more of the uninsured will have coverage through Medicaid, health insurance marketplaces or other coverage.  The benefits from the coverage expansion, however, will vary widely across states and even within areas within a state.

While the ACA holds great promise to substantially expand coverage and thus reduce the amount of uncompensated care in the system, many people will remain uninsured even after full implementation. These remaining uninsured include those left out of Medicaid expansions because their state chose not to expand; people who are ineligible for assistance because they are undocumented immigrants; and others who either do not have an affordable offer of coverage or choose to remain uninsured. As the ACA continues to roll out across the nation and as payment and delivery systems adapt to the changing policy environment, it will be important to monitor how levels of uncompensated care and funding for that care affect specific health care providers and the provision of uncompensated care for uninsured individuals.

Despite not having health insurance, millions of uninsured Americans use health care services every year.  Since health care is costly and the vast majority of uninsured have limited financial means, many uninsured often cannot pay their medical bills.²  Recognizing the need for and importance of health care providers that care for those without insurance, the federal government, states and localities have long provided support—financial and otherwise—to help defray providers’ the costs of caring for uninsured individuals.

The federal government, for instance, heavily invests in the roughly 1,200 community health centers located across the country.  It also helps to cover providers’ uncompensated care costs through Medicare and Medicaid disproportionate share hospital (DSH) payments, which are targeted to hospitals to partially offset costs associated with caring for the uninsured and other vulnerable populations. Providers that render care to the uninsured vary widely across the country, ranging from teaching hospitals and community health centers to office-based physicians and school-based clinics.With the enactment of the Affordable Care Act (ACA), signed into law on March 23, 2010, the nation’s health care landscape will be fundamentally reshaped, particularly for how care is delivered to the low-income uninsured and how that care is financed.  Chief among the ACA’s many provisions is the Medicaid expansion in which states, at their option, can cover individuals up to 138 percent of the federal poverty line (FPL). The ACA also provides subsidies for people with incomes below 400 percent of the FPL to purchase health insurance and tax credits to help small businesses provide coverage to their employees. In addition, the law establishes health insurance Marketplaces for individuals and businesses to obtain health coverage and requires individuals to have coverage if affordable insurance offers are available. Over the next decade an estimated 25 million people will gain health insurance through the ACA.³ 

To help cover the costs of this significant expansion of insurance coverage afforded by the ACA, the federal government is providing considerable financial support.  For example, for states choosing to expand Medicaid, the federal government will pay all of the costs between 2014 and 2016; the federal share will gradually decline until 2019 when it will be permanently set at 90 percent. The federal government is also paying 100 percent of the cost of premium tax credits for Marketplace coverage.  All totaled, the cost of the ACA to the federal government is estimated to be around $1.3 trillion over the first ten years (2013-2023).⁴ 

Some of the costs associated with the ACA, however, will be offset by reductions in health care providers’ uncompensated care costs: providers’ costs associated with caring for uninsured individuals that previously went uncompensated will decline because many of these individuals will have insurance coverage once the ACA is fully implemented.  Anticipating fewer uninsured and lower levels of uncompensated care, the ACA reduces federal Medicare DSH payments beginning in 2014 through 2020 and Medicaid DSH beginning in 2016 through 2020.  With the expansion of coverage under the ACA, state governments and localities could also realize savings. Many states and local areas support health care services and programs for the uninsured. With higher levels of insurance coverage provided by the ACA, the need for such support may decline.

In this report, we build on earlier work and take a close look at uncompensated care in 2013, just before implementation of health reform.⁵  As detailed below, we use two alternative approaches to estimate the cost associated with uncompensated care that was provided to the nonelderly uninsured in 2013. We also examine how uncompensated care was distributed across health care providers as well as the sources of funding currently in the health care system to help defray providers’ uncompensated care costs.  Finally, we explore the long-standing issue of whether and to what extent private health insurance dollars were used to cover health care costs of the uninsured.

Study findings offer a comprehensive picture of uncompensated care for the uninsured prior to coverage expansions under the ACA, including the level of spending, which providers render it, and the funding sources available to help pay for it. Apart from providing this basic information, study findings identify potential federal, state and local funds currently used to finance uncompensated care that under health reform could be saved and redirected for other purposes or to help pay for care received by the newly insured.

The paper is organized in several sections. In the first two sections, we present estimates of uncompensated care in 2013 using two alternative approaches.  In the third section, we examine the different sources of funding currently available in the health care system to help pay for uncompensated care. Then we examine the extent to which private health insurance dollars are used to help cover uncompensated care.  We conclude with a discussion of the study findings and their policy implications.

In this section we present 2013 estimates of uncompensated care costs for the uninsured based on data from the Medical Expenditure Panel Survey (MEPS).  We begin with a brief description of the survey and the methods; a detailed discussion is provided in the statistical appendix.    

Data and Methods for MEPS Analysis

MEPS Survey

The MEPS is a household survey nationally representative of the U.S. civilian non-institutionalized population.⁶   It has a rotating panel design, where each panel covers two complete calendar years. The Household Component (HC) collects detailed information on health insurance status and medical care use by month, as well as medical expenditures by source.  To improve measurement of individuals’ responses to questions about health care use and cost, the MEPS includes the Medical Provider Component (MPC), which links select respondents’ information on medical use with provider information on and expenditures for health care services by payer (e.g., private insurance, public sources).  We use both the HC and MPC data in our analysis.

To obtain more precise uncompensated care estimates, we pool three years of MEPS data, representing calendar years 2008, 2009, and 2010. ⁷   Given that most elderly have Medicare coverage, we limit our analysis sample to respondents aged 0 to 64. Our final study sample is 86,047 respondent-year observations.

Adjustments to the MEPS Data

Several adjustments were made to the MEPS data that are detailed in the statistical appendix. The first is a reconciliation adjustment for the acknowledged level of expenditure differences between the MEPS and the National Health Expenditure Accounts (NHEA) data, which are widely viewed as a full accounting of national health care expenditures.⁸  Based on previous work by Sing et al., observed expenditures in the MEPS were inflated by payer (private insurance, Medicare, Medicaid, other) to more accurately represent aggregate medical expenditures in the U.S. as presented in the NHEA.⁹ 

We use MEPS data for 2008 to 2010 for the analysis.  To project uncompensated care for the 2013 population, two additional adjustments were imposed on the MEPS: The first was a population growth adjustment made to target the 2013 population; the second was to adjust for the change in per capita medical expenditures, which accounts for price and quantity changes per person that occurred between 2008 and 2013. These adjustments are based on the projections of Personal Health Care Expenditures from the NHEA.¹⁰ 

Estimating Uncompensated Care Using the MEPS

One important distinction between the NHEA and the MEPS is that the MEPS data do not include “implicitly subsidized care,” defined here as care received by the uninsured but not paid for by a directly identifiable source that can be linked to the patient. Implicitly subsidized care may be covered through indirect payments made to providers (from either private or public sources) that decrease the cost of medical care provided to the uninsured. Examples of implicitly subsidized care include Medicaid DSH payments and private grant programs.

We estimate the amount of implicitly subsidized care using the MEPS data. This calculation, detailed in the statistical appendix, compares the level of payment providers would have expected, on average, from the uninsured if they had had insurance to what they actually received from the uninsured. The difference is our estimate of implicitly subsidized care.

We define total “uncompensated care” as the costs associated with implicitly subsidized care (described above) plus expenditures from indirect sources made on behalf of the uninsured. These indirect sources, which we refer to as “other private, public, and unclassified sources,” include a wide range of payers such as the Veterans Administration, the Indian Health Service, local and state health departments, as well as automobile and homeowner’s insurance.¹¹  We did not include spending from the MEPS expenditure category “other public” that is sometimes linked to uninsured individuals.¹²  This “other public” category is actually Medicaid expenditures, for which in theory there should be none for our study sample of individuals during the period in which they report being uninsured. That we find some Medicaid expenditures in periods in which an individual reported being uninsured may reflect a presumptive Medicaid eligibility decision and/or reporting error made by respondents.

Results for MEPS Analysis

Health Care Spending and Uncompensated Care Costs per Uninsured Person

Using the MEPS data, Table 1 reports projected estimates of per capita medical spending among nonelderly respondents, by insurance status and source of payment in 2013.¹³   We show spending estimates by four insurance statuses: all uninsured (full-and part-year uninsured), full-year uninsured only, part-year uninsured only, and, for comparison, full-year insured. For the part-year uninsured, we further break out spending and show spending while individuals are insured and while they are uninsured. We broke out sources of payment by direct payment sources (out-of-pocket, private insurance, Medicare, Medicaid, and other public) and indirect sources, including other private, public, and unclassified sources, and an estimate of implicitly subsidized care.

Across all uninsured (both those uninsured for the full year and those uninsured for only part of the year), medical spending per capita totaled a projected $2,876 in 2013 (Column 1).  The single largest source of payment for the uninsured is implicitly subsidized care, which equals $653 per person.  Indirect payments made by other private, public and unclassified sources were the second highest ($604 per person). Taken together, uncompensated care spending for the full-year uninsured is estimated at $1,257 per person in 2013, which represents approximately 44 percent of total per capita medical spending ($2,876) for the uninsured overall.

For the full-year uninsured (column 2), by far the largest single source of payment for health is implicitly subsidized care, which equals $1,005 per person.  Indirect payments made by other private, public and unclassified sources were the second highest ($697 per person). Taken together, uncompensated care spending for the full-year uninsured are estimated at $1,702 per person in 2013, which represents approximately 70 percent of total per capita medical spending ($2,443) for the full-year uninsured. Remaining spending are payments made out-of-pocket by the uninsured ($500 per person) and spending by other public sources ($240 per person).

As expected, medical spending for those covered by health insurance for the entire year are much higher than that that of uninsured. Per person spending among the full-year insured equals $4,876 per person (column 6), about 70 percent higher than that for all uninsured ($2,876; column1).Medical spending for the part-year uninsured was estimated at $3,439 per person (column 3). Not surprisingly, most health care costs for part-year uninsured (84 percent, or$2,878 per person, column 4) occurred during periods in which they had insurance. Private insurance and Medicaid contributed approximately 77 percent of per capita spending during the time respondents reported being insured ($1,286 and $944 per person, respectively). For the period during which these individuals were uninsured (column 5), medical spending was just $561 per person. Implicitly subsidized care was $195 per person, while expenditures from other private, public, and unclassified sources were $204 per person.

Aggregate Uncompensated Care Spending for the Uninsured Population

Table 2 reports projected aggregate medical expenditures for 2013 for the entire uninsured nonelderly population for the months that they were uninsured.¹⁴  Column 1 shows aggregate medical expenditures for individuals who were uninsured at any time during the year; columns 2 and 3 show this information for full-year uninsured only and part-year uninsured only, respectively.  Total uncompensated care for all uninsured in 2013 is estimated at $84.9 billion (column 1). Nearly two-thirds of that uncompensated care ($49.0 billion) is implicitly subsidized care with the balance ($35.9 billion) paid by other private, public, and unclassified sources.  Uncompensated care for the uninsured accounts for approximately 70 percent of their total medical expenditures while uninsured ($121.0 billion) in 2013. Remaining expenditures for the uninsured were $25.8 billion in out-of-pocket payments and $10.3 billion in Medicaid spending (i.e., “other public”), which likely represent retroactive payments.¹⁵   The vast majority of uncompensated care (85 percent; $72.0 billion) spent on the uninsured is for those who are without insurance the full year (column 2).

 

In this section, we present a second estimate of 2013 uncompensated care costs. Given the many assumptions required to generate the estimates, we made two estimates to crosscheck our work. The data we use for the second estimate also enables us to assess how the burden of uncompensated care is divided among health care providers and what are the different sources of funding currently in the health care system to help pay for uncompensated care.

Aggregate Uncompensated Care for Uninsured Using Second Approach

Under the second approach, we estimate that uncompensated care totaled $74.9 billion in 2013 (Table 3). This is about 12 percent lower than the $84.9 billion in uncompensated care we estimate using MEPS data (Table 2).  The lower estimate generated under the second approach likely reflects the lack of data for some known sources of uncompensated care. For example, using the second approach, we do not have information on the free drugs provided by pharmaceutical companies. Similarly, we do not have data on uncompensated care that is recognized as being provided by a wide range of health providers such as pharmacists, dentists, optometrists, therapists, and providers of medical devices and supplies.¹⁶ 

The difference between our two estimates could also reflect the conservative assumptions we made about uncompensated care provided by publicly supported providers such as the Veterans Administration and the Indian Health Service (see below). For uncompensated care supported by these public programs, we assume that that the uninsured use care proportionate to their share of the overall population. In reality, however, the insured have access to other providers and probably only occasionally use publicly-supported providers like the Veterans Administration. We are thus likely underestimating the level of uncompensated care these publicly-supported providers render to the uninsured.

Uncompensated Care Costs by Place of Service (Hospital versus Community)

Of the $74.9 billion in uncompensated care for the uninsured (the estimate from the published data from government sources and provider data), we further estimate that about 60 percent ($44.6 billion) is provided by hospitals, with the balance ($30.3 billion) rendered by community-based providers, including those who receive public funds and office-based physicians (Table 3).  Of the uncompensated care rendered in the community, $14.8 billion was provided by a collection of community-based providers that are at least in part sponsored by the federal government such as the Veterans Administration.  Another $5.0 billion was provided by community-based health care programs and services supported with funds provided by states and local governments. Office-based physicians provided an estimated $10.5 billion in uncompensated care to the uninsured.  Below we describe the various data sources and assumptions we used to arrive at these estimates.

Data and Assumptions Used for Uncompensated Care by Place of Services Analysis

Hospital Uncompensated Care Costs

Uncompensated care is defined by the American Hospital Association (AHA) as care for which no payment is ever received from the patient or an insurer.¹⁷  The AHA’s estimate of hospitals’ total unreimbursed costs includes both bad debt and charity care but excludes underpayment from Medicaid and Medicare. The AHA defines charity care as unreimbursed services for which hospitals did not expect to receive payment because the patient’s inability to pay had been predetermined; bad debt is unreimbursed services for which hospitals had expected to receive a payment but ultimately did not receive payment.  Despite the differences in how they are defined, in practice hospitals often struggle to draw a distinction between charity care and bad debt.¹⁸ 

The AHA calculates the cost of uncompensated care by multiplying hospitals’ charges for uncompensated care by their cost-to-charge ratios. Using data from its 2011 annual survey, the AHA reported that, nationally, uncompensated care comprised 5.9 percent of total hospital expenses, costing hospitals approximately $41.1 billion.¹⁹   We inflate this estimate to report that hospitals delivered $44.6 billion in uncompensated care in 2013 (Table 3).

Community-Based Uncompensated Care

We break out community-based uncompensated care into two categories: (1) uncompensated care provided by community-based providers that received financial support from the federal government, states and localities, and (2) uncompensated care provided by office-based physicians.  Overall, we estimated that community-based uncompensated care totaled $30.3 billion in 2013.

Publicly-Supported. Of community-based uncompensated care, $19.8 billion is sponsored with public funds, either through the federal government or states and localities. Federal programs that support such community-based care include the Veterans Health Administration, the Indian Health Service, and HRSA’s Community Health Centers.  State and local governments also support community-based programs that provide health care services to the uninsured.

To develop the estimate of federal funds for community-based uncompensated care, we rely on program and budget data published by six federal programs that support care delivered by clinics and other direct care providers. Specifically, we include spending on six federal programs: the Veterans Administration, the Indian Health Service, the Community Health Centers, the Maternal and Child Health Bureau, and the HIV/AIDS Bureau (Ryan White Care Act).²⁰  Many of these providers also render care to insured low-income individuals. To the extent possible, we exclude from our estimates of uncompensated care the share of costs attributable to patients with insurance. We also exclude, to the extent possible, costs associated with long-term care services. In particular, our estimates of uncompensated care spending by federal programs use published program expenditure data for acute care medical services and the share of program costs (or users) identified as being provided to uninsured or self-pay patients. The proportion of uninsured users were either estimated directly from program-specific data or computed from health insurance coverage data collected by the Current Population Survey.

For the estimate of uncompensated care supported by state and local governments, we used information on public assistance programs for which data are available from the Office of the Actuary at the Centers for Medicare and Medicaid Services).²¹   We estimate that state and local governments’ indigent care and public assistance programs also spend a large amount on care for the uninsured—$5.0 billion in services delivered to the uninsured rendered by a variety of providers.

Office-Based Physicians’ Uncompensated Care

Office-based physicians were estimated to provide $10.5 billion in uncompensated care to the uninsured in 2013. To derive this estimate, we figured number of hours of care physicians provide to the uninsured and then multiplied that by the average gross hourly income of physicians.  We used two data sources for this calculation. The first was the 2008 Health Tracking Physician Survey conducted by The Center for Studying Health System Change which reported that in 2008, 59.1 percent of physicians provided some charity care, providing an average of 9.5 hours per month delivering that care.²²  Using a 2007 estimate of physicians’ average gross earnings per hour of $281.50,²³  and inflating to 2013 prices, we arrive at an estimate of $9.4 billion in uncompensated care delivered by physicians.²⁴ 

The second data source we use to estimate the level of physicians’ uncompensated care was the 2009 American Medical Association’s Physician Practice Information Survey which found that 53.5 percent of physicians spent an average of three hours per week (or 12 hours per month) delivering uncompensated care.²⁵  Using the weighted number of physicians from the CSHC survey, this would amount to $11.6 billion in uncompensated care from physicians. Since these estimates were fairly close, we split the difference and estimate that the amount of uncompensated care provided by physicians is $10.5 billion in 2013.

As mentioned, we acknowledge that our estimate of uncompensated care provided in the community is understated because we do not include uncompensated care known to be rendered by a host of other providers, including pharmacists and dentists.

 

Relying on secondary data sources, we estimate that uncompensated care for the uninsured to be $74.9 billion in 2013 (Table 3).  Providers, however, often do not bear the full cost of their uncompensated care. Through various, complicated ways, funding is available from a wide variety of sources (e.g., the federal government as well as private entities) to help providers defray the costs associated with uncompensated care. Sometimes this funding is directly linked to an individual patient’s care, but often it is paid out in a lump sum such as Medicaid DSH payments or state or local grants dedicated to fund community indigent health programs or services.

Uncompensated care funding sources are diverse, ranging from the Medicaid program, to the Veterans Administration, to community health centers. In this section, we estimate the level of funds provided by major funders of uncompensated care in 2013, including the federal government, states and local governments, and private entities. To do this, we rely on several data sources, including program and budget data we used in the previous sections.

Table 4 summarizes our results on sources of uncompensated care funding in 2013.  We estimate that across the various funding streams, $53.3 billion was paid in 2013 to help providers offset uncompensated care costs.  As shown, the federal government is by far the largest funder of uncompensated care. In 2013, we estimate across a range of programs, the federal government provides $32.8 billion (61.5 percent) to help providers cover costs associated with caring for the uninsured. State and localities are the second largest, providing another $19.8 billion; the private sector is estimated to contribute $0.7 billion.

In terms of programs, Medicaid is the single largest funder of uncompensated care. In 2013, we estimate Medicaid contributed $13.5 billion to help pay for care for the uninsured, accounting for 25.3 percent of funding.  At $9.8 billion, state and local appropriations for indigent care programs were the second largest funder, followed by the Veterans Administration ($8.1 billion) and Medicare ($8.0 billion). Close behind was state and local public assistance funding at $7.3 billion. At a much lower level, community health centers funding totaled $3 billion, followed by the Indian Health Service ($2.1 billion), Ryan White Care Act ($1.5 billion) and Maternal and Child Health Title V Block Grant ($0.1 billion).

We report aggregate Medicaid, Medicare and state and local government payments made to providers, mostly hospitals. At the individual provider level, these payments may overcompensate some providers for their uncompensated care but undercompensate others.  To the extent that funding for uncompensated care does not match a given provider’s rendering of that care, the funding reported in Table 4 may not defray providers’ uncompensated care as much as indicated.

Data Sources and Assumptions Used for Sources of Funding Analysis

In this section we describe the data sources and the assumptions used to generate the estimates presented in Table 4 by each of the funding sources.  As part of this discussion, where appropriate, we break out what share of each funding source is directed to hospitals. This information is used in the following section that looks at the extent to which uncompensated care funding covers providers’ costs.

The Medicaid Program

Medicaid has two major payments that help fund the cost of hospital uncompensated care: DSH payments and upper payment limit (UPL) payments. DSH payments, for which there is a capped federal allotment, are a required Medicaid payment targeted to hospitals that treat large numbers of low-income patients.²⁶   UPL payments are optional Medicaid payments that states can make under the Medicare upper payment limit to a range of providers including hospitals. Since state Medicaid reimbursement levels are often less than those of Medicare’s, states can make additional Medicaid payments that are above their regular Medicaid rates, yet within the Medicare UPL.  Both DSH and UPL payments can help defray hospitals’ uncompensated care costs associated with caring for the uninsured as well as help make up for the so-called “Medicaid underpayment” or “Medicaid shortfall” due to Medicaid hospital rates often being less than costs of providing the service.

DSH Payments

To estimate funds available to help pay for hospitals uncompensated care through Medicaid DSH payments we used a several step process. The preliminary 2013 federal Medicaid DSH allotment is $11.5 billion.²⁷  Some share of the allotment (roughly $1.9 billion) is allocated to mental hospitals, so the federal DSH allotment available to acute care hospitals is estimated at $9.6 billion.  Assuming that states fully spent out their DSH allotments (which is frequently the case) and applying an average federal match of 59.6 percent in 2013, total federal and state DSH payments to inpatient acute care hospitals in 2013 are estimated to be $16.0 billion, of which $9.6 billion is federal and $6.4 billion is state funds (before adjustments below).²⁸ 

The state share of DSH payments, however, is often financed with provider taxes (PTs), inter-governmental transfers (IGTs), certified public expenditures (CPEs) and the like. As a result, states’ shares of DSH payments often do not represent new funds to hospitals.²⁹  Based on a 2009 survey of state financing of DSH payments, an estimated 77.2 percent of states’ share of DSH payments to acute care hospitals was financed with revenues gained from PTs, IGTs or CPEs.³⁰   For our study, we assumed that the balance, 22.8 percent, was financed with state general funds (SGFs). We further assumed that the states’ share raised by PTs and the like do not represent “new” funds to the hospitals but SGFs do. Last, we assumed that the share of SGF used to finance inpatient DSH payments has remained constant between 2009 and 2013.  Assuming that only 22.8 percent of the state share of DSH payments represent real new dollars to hospitals, we estimate that $1.5 billion ($6.4 billion x 22.8%) in state funds are available to help fund hospitals’ uncompensated care through Medicaid DSH programs. Adding our estimate of the state DSH ($1.5 billion)  to our estimate of the full federal DSH allotment for acute care hospitals ($9.6 billion), we estimate a total of $11.1 billion in Medicaid DSH payments were available to acute care hospitals to help cover their uncompensated care costs in 2013 (Table 5).

UPL Payments

According to the CMS-64, in 2011, 34 states made an estimated $17.7 billion (federal and state) in inpatient hospital UPL payments, and 21 states made $4.4 billion (federal and state) in outpatient hospital UPL payments, for combined total UPL payments of $22.1 billion.³¹  Assuming an average (not-ARRA enhanced) federal match of 59.9 percent in 2011,³²  the federal share of UPL payments is $13.2 billion; the state share $8.9 billion in 2011.

Akin to DSH payments, states often use IGT, CPEs and the like to fund UPL payments.  A 2009 survey found that 82.0 percent of state’s hospital UPL payments was financed with revenues from provider taxes, IGTs or CPEs.  We assume that the balance, 18.0 percent, was financed with SGFs. Consistent with our assumptions for DSH payments, we assumed that the state share raised by PTs, IGTs and CPEs for UPL payments do not represent “new” funds to the hospitals but SGFs do.  We also assumed that the share of SGF used to finance inpatient UPL payments has remained constant between 2009 and 2013, and that the same financing ratio applies to both inpatient and outpatient UPL payments.

Applying the 18.0 percent SGF to the estimated state share of UPL payments ($8.9 billion) in 2011, we estimate $1.6 billion of states’ share of UPL were available to fund hospitals’ uncompensated care in 2011.  We then used the National Health Expenditures hospital data to inflate the supplemental provider payments from 2013, estimating that UPL payments potentially available to fund hospitals’ uncompensated care for uninsured totaled $16.1 billion, of which $14.3 billion was federal funds and $1.7 billion was state funds (Table 5).

Adjusting for Medicaid Underpayment

In a final step to estimate the level of Medicaid funding potentially available to hospitals for uncompensated care, we subtract a portion of Medicaid DSH and UPL payments as an offset that implicitly compensates some hospitals for low Medicaid payment rates, sometimes referred to as the “Medicaid underpayment.” The AHA defines the Medicaid underpayment as the difference between hospitals’ incurred costs of providing care to Medicaid patients and the reimbursement hospitals receive from state Medicaid programs for that care. The AHA  estimated Medicaid underpayments in 2012 at $13.7 billion.³³  Distributing this between the federal and state shares, we estimate $12.1 billion in federal payments and $1.6 billion in state payments. We then subtract these underpayments from our estimates of DSH and UPL payments.  After adjusting for underpayments,  estimate that total Medicaid payments available to cover hospital uncompensated care were $13.5 billion in 2013. ³⁴ 

The Medicare Program

Medicare provides support for uncompensated care through Medicare DSH payments and its indirect medical education (IME) program. All Medicare payments for uncompensated care are from federal funds.

Medicare DSH payments

Medicare’s DSH adjustment to payment rates, included in the Prospective Payment Systems (PPS) for hospital inpatient services, is an attempt to provide additional funding to hospitals that treat a large number of poor patients. Hospitals qualify for Medicare DSH payments if their ratio of low-income patients (called the disproportionate patient percentage or DPP) is above 15 percent. The DPP is calculated using the proportion of Medicare inpatient days accounted for by Medicare beneficiaries who are eligible for Supplemental Security Income and the proportion of all inpatient days by people covered by Medicaid.

Medicare DSH payments are justified by the assumption that hospitals that treat a large proportion of low-income patients have higher costs and thus need to be reimbursed at higher rates. In recent years, however, there has been some dispute over whether a hospital’s share of low-income patients is actually correlated with higher costs. Medicare Payment Advisory Commission (MedPac) studies have found that the DPP, the low-income patient share, is only loosely tied to higher Medicare costs per case.³⁵  The distribution of DSH payments also calls into question whether they solely support indigent care, as their distribution across hospitals often does not align with where the concentration of uncompensated care is the highest.³⁶  Consequently, we assume that only half of Medicare DSH payments actually support uncompensated care. Given the Congressional Budget Office’s 2013 forecast of $11.4 billion³⁷  in Medicare DSH payments, we attribute $5.7 billion as potentially available to pay for hospitals’ uncompensated care for the uninsured (Table 5).

Medicare IME payments

An adjustment for IME, based on the hospital’s ratio of residents per bed, is also incorporated into Medicare hospital payments in an effort to recognize the higher patient costs incurred by hospitals with graduate medical programs. A major justification for this adjustment rests on the claim that teaching hospitals take on the responsibility of treating the uninsured, among other important social missions. Recent MedPac studies, however, also questioned the strength of this relationship. IME payments appear to support many functions in addition to supporting uncompensated care. For this reason, we attribute only one-third of total IME payments, $2.3 billion, to care for the uninsured.³⁸   We combine the portion of Medicare’s DSH and IME program payments, which are potentially available to support uncompensated care, and calculate that $8.0 billion in federal dollars are available to support uncompensated care through the Medicare program in 2013 (Table 5).

State and Local Governments

Medical care for the uninsured is funded by payments from state and local governments in the form of tax appropriations and support to public assistance and indigent care programs for which data are published by the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS).³⁹  Although there is no information to indicate exactly how these tax appropriations are used, they are largely directed to public hospitals to support a variety of functions.⁴⁰   So while these funds are not specifically earmarked to support uncompensated care to the uninsured, the hospitals to which they are targeted suggest they are available for that purpose.

In 2011, CMS reported that the total state and local medical care spending was $20.9 billion, with $18.1 billion going to hospitals and $2.8 billion going towards supporting home health care and other personal services. We only include those funds going towards hospitals; we assume that the funds directed towards home health care and other personal services likely support long-term care services, which we excluded.  We assume that half of public payments to hospitals support uncompensated care, (with the remaining half going to other hospital functions), which produces an estimate of $9.1 billion in 2011. After inflating to 2013, our estimate of state and local appropriations dedicated to indigent health care programs is $9.8 billion (Table 4).

The CMS data also report that state and local government public assistance programs or indigent care programs spent $6.7 billion on medical care in 2011, with $2.1 billion going to hospitals; the balance ($4.6 billion) went to physicians and clinic services, prescription drugs, and other providers. After inflating to 2013 dollars, we estimate that these state and local public assistance programs support $7.3 billion in uncompensated care (Table 4).

Veterans Health Administration

The Veterans Health Administration (VHA) spent $45.5 billion on medical care for veterans in 2012 (Table 6).⁴¹  Using the President’s Budget for the Department of Affairs Medical programs, we calculated that $32.4 billion, 71 percent of total VHA medical care spending, funded direct acute hospital care, outpatient care, and related operating expenses.⁴²  According to a study conducted on veteran’s health insurance coverage, 24 percent of VHA users lack health coverage.⁴³   Applying the proportion of VHA users who are uninsured, 24 percent, to the estimate of acute hospital and outpatient care spending, $32.4 billion, we estimate that the VHA spent approximately $7.8 billion on care to the uninsured in 2012. Inflating this figure to the projected 2013 budget level produces an estimate of $8.1 billion in VHA spending on the uninsured in 2013, all of which is federal funds (Table 4).⁴⁴  VHA is a federal program, so all these funds are attributed to federal sources.

Indian Health Service

Approximately 2.1 million of the nation’s estimated 3.3 million American Indians and Alaskan natives receive health care from the Indian Health Service (IHS). The extensive Federal IHS delivery system is comprised of 28 hospitals, 61 health centers, and 33 health stations, with additional services purchased from private providers outside the IHS delivery system.⁴⁵   The IHS is a significant source of care for those without another source of health coverage, as 32 percent of American Indians and Alaska Natives are uninsured.⁴⁶ 

The IHS was budgeted to receive $3.1 billion in Federal appropriations for acute care services in 2013 (Table 7).⁴⁷   We subtract third-party collections for acute care services from total expenditures on these services and calculate what share of this funding is devoted to care for the uninsured. With third-party payers paying for approximately one-third of acute care services, we estimate that the IHS will spend $2.1 billion in federal funds on the uninsured in 2013 (Table 4).⁴⁸ 

Community Health Centers

In 2011, the Community Health Centers (CHC) program delivered care to over 20 million patients, including 7 million uninsured, about 36 percent of total patients CHCs served.⁴⁹  We calculate total CHC spending on medical and clinical care services by summing direct care costs and related facility/administrative costs and estimate a total of $12.3 billion in direct medical spending in 2011 (Table 8).⁵⁰   We exclude costs associated with enabling services such as case management and outreach. To estimate CHC spending on the uninsured, we apply the proportion of charges attributable to uninsured patients, 27.2 percent, to the total costs for direct care ($12.3 billion) to estimate $3.3 billion spent on care for the uninsured. We also subtract out-of-pocket payments by the uninsured ($0.8 billion) to estimate that CHCs provided $2.5 billion in uncompensated care for the uninsured in 2011.⁵¹   Inflating this figure to the projected 2013 budget level produces an estimate of $3.0 billion in CHC spending on the uninsured.

To support their operations, CHCs receive financial support from the federal government, states and localities as well as private funds. To break down the total amount spent by the CHC on the uninsured into that funded by the federal government, state/local, and private sources, we assume that the proportion in which they support uncompensated care is the same as the proportion in which they contribute to CHCs’ grant revenues. By applying these ratios to the total CHC uncompensated care costs, we calculate that federal spending, which is responsible for 63.0 percent of CHC grant revenue, accounts for $1.9 billion of CHCs’ uncompensated care. State/local spending, which is responsible for 27.5 percent of CHC grant revenue, pays for $830.5 million, and private spending, 9.4 percent of CHC grant revenue, pays for $283.9 million in 2013 (Table 4).⁵² 

Ryan White CARE Act

The Ryan White Comprehensive AIDS Resources Emergency Act (CARE) provides HIV-related services to over half a million people each year who are low-income, uninsured, or underinsured persons living with HIV and AIDS. CARE funds are directed to supporting primary medical care, including outpatient and inpatient services, as well as providing medications and support services.⁵³  The majorityof direct medical care delivered via the CARE Act is funded through Part A (emergency assistance to the metropolitan areas most affected by the HIV/AIDS epidemic) and Part B, including the AIDS Drugs Assistance Program (ADAP).⁵⁴  We only include the funds directed through these two parts of the program in our estimate of uncompensated care to the uninsured.

To calculate the share of CARE spending that is attributable to care for the uninsured (Table 9), we first calculate the share of funds spent on direct medical care in each of three categories: Part A spending (83 percent), Part B non-ADAP spending (77 percent), and Part B ADAP spending (100 percent).⁵⁵  We then multiply the total medical care spending in each category by the share of charges attributable to the uninsured based on the uninsured rate among that part of the program’s users. Sixty percent of ADAP users are uninsured,⁵⁶  and 33 percent of all CARE Act recipients are uninsured.⁵⁷  Applying these proportions of the uninsured patients to their respective total costs attributable to direct medical care, we estimate $1.4 billion was spent on the uninsured in 2012. After inflating this figure to anticipated 2013 budget levels, we estimate that the CARE Act Program spent $1.5 billion in spending on the uninsured.⁵⁸ 

To calculate the distribution of CARE Act program’s total spending among federal, state/local, and private sources we add the federal share of ADAP spending (50.2 percent) to Part A and Part B non-ADAP spending, both of which are entirely federally funded. This produces an estimated $904.8 million in federal funding. State and local governments contribute 16.5 percent of ADAP funding, resulting in an estimated $197 million in spending on the uninsured. Private sources provided $398 million (Table 4).⁵⁹ 

Maternal and Child Health Bureau

The Title V Maternal and Child Health (MCH) Block Grant program supports a broad range of enabling, population-based, and direct health care services for over 44 million pregnant women and children, including children with special health needs.⁶⁰   The program’s primary aim is to improve the health of all mothers and children in the U.S., focusing on low-income, uninsured, and underinsured persons. On average, 7.5 percent of those served by the program are uninsured.⁶¹ 

To estimate the share of MCH Block Grant spending that goes toward care for the uninsured, we calculate the share of total spending for each category of program recipient (pregnant women, infants, etc.) that is attributable to direct care services, 65.5 percent, and add a proportionate share of infrastructure expenditures. We then multiply this spending by the share of program recipients in each category who are uninsured, which produces an estimated $213 million in MCH spending (Table 10). Because some MCH spending comes from program income, we reduce estimated total spending on the uninsured by 33 percent and calculate an estimate of $142.7 million in uncompensated care for the MCH Block Grant.

We allocate MCH’s total spending on the uninsured among state/local, federal, and private funding sources by multiplying the MCH spending on the uninsured by the share of total program spending attributable to each source. The bulk of the funding, 69.5 percent is attributable to state/local governments, which accounts for $99.2 million. The federal government is responsible for 14 percent, $20.0 million, and private sources fund the remaining 15.7 percent, $22.4 million (Table 4).⁶² 

 

Some observers maintain that some uncompensated care is financed by private insurance through cost-shifting—that is, health care providers, particularly hospitals, make up for losses they incur in treating uninsured patients by charging higher prices to and collecting higher payments from privately insured patients. This is a long-standing, complicated and controversial issue. Recent data suggest that private insurance payments exceed hospitals’ costs by over 30 percent.⁶³  In contrast, payments by both Medicare and Medicaid are less than hospital costs.⁶⁴  That private insurance payments exceed hospitals’ costs by a considerable amount enables hospitals to finance Medicare and Medicaid underpayments, as well as other expenditure items hospitals determined to be part of their missions.

However, there is limited evidence to indicate that rising numbers of uninsured people (and thus increases in uncompensated care) have caused hospitals to increase their charges to the privately insured. Even as the uninsured rate grew over the past two decades, hospitals’ uncompensated care as a share of overall cost has remained steady. Further, the private payment to cost ratio has steadily increased since 2001, suggesting that the rise in private surpluses is related to other forces, not caring for the uninsured.

Some hospitals with substantial market power in a local area may be able to negotiate higher charges in response to an increase in uncompensated care or a growth in Medicare and Medicaid underpayments. A prime example of such a hospital is major teaching hospitals. MedPac data, however, have shown that major teaching hospitals typically have lower private payment to cost ratios, high ratios of uncompensated care costs as a percentage of overall cost, and low total margins compared with other hospitals.⁶⁵  MedPac work has also demonstrated that while some teaching hospitals may be able to increase charges when necessary, this does not seem to be the dominant pattern for hospitals overall.⁶⁶   Specifically, MedPac found that in markets where private payments were high, hospital costs were also high. The presence of high private payments meant financial pressure was weak and hospitals incurred greater costs. Hospitals in these markets often lost money on Medicare because Medicare payments are set exogenously based on diagnoses and geographic cost indices, not the actual cost experience of the hospitals. This study also reported that in areas where there was more financial pressure because of a more competitive market, hospitals could not demand higher private payments, thus their costs were lower but their Medicare margins higher.

Based on the data generated in this study, we estimate the potential scope of cost shifting to private payers is relatively small. The value of uncompensated care in 2013 was $84.9 billion, and government sources provided $53.3 billion in payments to providers to help offset these costs. Of the remaining $31.6 billion in uncompensated care, $10.5 billion is charity care provided by office-based physicians (Table 3), which leaves $21.1 billion in uncompensated care costs that arguably could be financed by private insurance in the form of higher payments and ultimately higher insurance premiums in 2013. Total private health insurance expenditures in 2013 are estimated to be $925.2 billion (based on NHE projections). Using our estimate of $21.1 billion in providers’ uncompensated care costs that does not represent physician charity or is not covered by government funds, the amount potentially associated with uncompensated care cost shifting is only 2.3 percent of private health insurance costs in 2013. Even if our $21.1 billion estimate of the level of providers’ uncompensated care costs that is potentially financed by private insurance is off by as much as 100 percent (due to government funds overpaying some hospitals and undercompensating others, for example) and is instead $42.2 billion, the potential cost shift of caring for the uninsured to private insurance would only account for 4.6 percent of private health insurance costs in 2013.

In this study, using MEPS data, we estimated providers’ uncompensated care for the uninsured in the U.S. health system at $84.9 billion in 2013. Relying on secondary data from government and provider sources, we produced a second 2013 estimate of uncompensated care of $74.9 billion.  We believe that the latter understates uncompensated care: For one, the second estimate does not include acknowledged uncompensated care provided by office-based non-physician health care providers such as dentists, optometrists and chiropractors. Further, owing to data limitations, we made some admittedly crude assumptions about the shares of government-sponsored community-based providers’ budgets (such as the Veterans Administration) that went to pay for care for the uninsured. For many of these providers, we assumed this share was equal to the level of uninsurance in the overall population.  Given that insured individuals generally have more options on where to get health care than the uninsured, we recognize that this assumption underestimates how much of these providers’ budgets is spent on the uninsured.  For these reasons, we believe that the $84.9 billion estimate is closer to the actual level of uncompensated care in 2013.

While providers incur significant costs in caring for the uninsured, the bulk of their costs are compensated through a web of complex funding streams that are financed largely with public dollars.  Only a small share, at the most 4.6 percent, of uncompensated care is estimated to be paid for through cost-shifting to those with private insurance.

We estimate that in the aggregate nearly two-thirds of providers’ uncompensated care costs are offset with government payments designed to cover these costs.  Importantly, however, our analysis examines providers’ uncompensated care costs and sources of funding overall, not at the individual provider level. It has long been recognized that funding for uncompensated care is not perfectly allocated to match each provider’s uncompensated care.  As a result, some providers likely incur costs caring for the uninsured for which they receive little to no compensation for. Indeed, important provisions in the ACA calls for improved targeting of Medicaid and Medicare DSH payments to hospitals.

Consistent with earlier work, our analysis shows that the federal government is the largest funder of uncompensated care, providing more than three-fifths of the available funding.  Through DSH and UPL payments, we estimate that Medicaid provided 25.3 percent of total available public funds to cover uncompensated care costs, far surpassing the level of other funding streams. The Medicare program, through both DSH and IME payments, is also a major funder of uncompensated care. Combined these Medicaid and Medicare payments comprised an estimated 40.3 percent of uncompensated care funding in 2013.

Given the importance of these Medicare and Medicaid payments in helping to defray providers’ uncompensated care costs, it will be critical to monitor how the ACA cutbacks in DSH payments affect hospitals, which we estimate provided about 60 percent of uncompensated care in 2013. Based on the premise that the ACA reforms will result in fewer individuals receiving uncompensated care, the law reduces Medicare and Medicaid DSH payments. While as of this writing DHHS has yet to release final rules on the reductions, by 2019 Medicaid DSH payments are to be cut about 50 percent over baseline projections and Medicare DSH payments 28 percent.⁶⁷  DSH payment cuts will affect some individual hospitals more than others, since hospitals vary in the amount of uncompensated care they provide and the amount of DSH funding they receive.

Additional concerns have surfaced about how the cutbacks will affect hospitals, particularly considering that the 2012 Supreme Court decision making the Medicaid expansion optional under the ACA and several states deciding not to expand their Medicaid programs. Given this, the coverage gains from the ACA Medicaid will be less than initially projected, and hospitals will likely have a higher level of uncompensated care than had been projected in the post-reform world. General concerns about general ACA rollout (e.g., low public awareness and limited outreach and enrollment) have raised further concerns about the reduction in uncompensated care. All in all, this could potentially lead some hospitals to reduce the level of uncompensated care they provide or pursue aggressive billing against the uninsured.

More broadly, states and localities could similarly reduce their considerable funding of uncompensated care for the indigent, which we estimated to account for nearly a third of overall funding for uncompensated care.  Relying on the same logic that the federal government used to reduce Medicare and Medicaid DSH payments, states and localities could argue that providers will need less uncompensated care funding because more of the uninsured will have coverage through Medicaid, health insurance marketplaces or other coverage.  The benefits from the coverage expansion, however, will vary widely across states and even within areas within a state.

The nation is currently in a highly dynamic health care environment. We have recently implemented dramatic policy changes that will affect the overall level of public and private insurance coverage, as well as uncompensated care funding. How levels of uncompensated care and funding for that care will affect specific health care providers is unclear at this juncture.  It will be essential for federal, state and local policymakers, providers, and consumer advocates to monitor how these many changes affect the provision of uncompensated care for uninsured individuals, of whom there still will be an estimated 29 million in 2017.⁶⁸ 

MEPS Design, Analysis Sample, and Definitions

The MEPS is a household survey that is nationally representative of the U.S. civilian non-institutionalized population.⁶⁹  Consequently, it does not include individuals staying in nursing homes or long-term hospitals, those with long stays in acute-care hospitals, those in the military or people in correctional facilities. It has a rotating panel design, where each panel covers two complete calendar years with five rounds of data collection. Each panel is selected from a subsample of households participating in the National Health Interview Survey (NHIS).

The MEPS Household Component (HC) collects information on medical expenditures directly related to a respondent from a specific source. As a result, indirect payments not related to respondents’ specific medical events are not included in the MEPS. Examples of indirect payments include disproportionate share payments, grants, and tax appropriations. MEPS also does not collect expenditures on over-the-counter items or phone contacts with providers.

In addition to the HC, the Medical Provider Component (MPC) is a follow-up survey, which links select respondents’ information on medical use with medical providers. It collects information such as dates of visit, type of use, charges and expenditures for health care services by payer. It is used as a source from which to impute data in the HC, in order to improve self-reported data as well as estimate service expenditures for individuals covered by plans with capitation payments.

Medical expenditures in the MEPS are disaggregated by source of payment. Standard sources include private insurance companies, Medicare, Medicaid, and payments made by the respondent (out-of-pocket expenditures). Additional categories, referred to here as “other private, public and unclassified sources,” include the other private sources, Veterans Health Administration, Tricare, other federal sources, other state and local sources, workers compensation, other unclassified sources.

To obtain more precise uncompensated care estimates using the MEPS, the three most recent years of survey data available were pooled representing calendar years 2008, 2009, and 2010, which includes 102,767 respondent-year observations. This work is limited to respondents aged 0 to 64, with positive sample weights, resulting in a final subsample of 86,047 respondent-year observations.

MEPS/National Health Expenditure Accounts Reconciliation Adjustment

The MEPS captures less aggregate medical expenditures than the National Health Expenditure Accounts (NHEA) data, which is considered the standard for aggregate medical expenditure estimates for the entire U.S. This discrepancy between the MEPS and the NHEA persists even after accounting for differences in populations across sources, as well as differences in medical expenditure categories collected.⁷⁰  For example, the MEPS is limited to the civilian non-institutionalized population, whereas the NHEA data covers all individuals—including those in nursing homes, correctional facilities, and the military that are excluded from the MEPS.⁷¹  Examples of expenditure categories in the NHEA that are not in the MEPS include non-durable medical products (i.e., “over-the-counter” items), nursing home care, public administration, and research. After accounting for these differences, previous work estimates that the MEPS collects between 13.8 percent (Sing et al., 2006) and 17.6 percent (Bernard et al., 2013) less expenditures than the NHEA data.

We apply a reconciliation adjustment to the pooled MEPS expenditure data in order to more closely reflect the NHEA aggregate expenditure totals. Using information reported in Sing et al. (2006), we calculate adjustment factors for payments by private insurance, Medicaid, Medicare, and all other sources (defense, Veterans’ Affairs, workers’ compensation, other public, and other sources) and apply them to the corresponding expenditure categories in the MEPS. These factors are reported in Table A1. Note that there is no adjustment for out-of-pocket expenditures. This is because the NHEA does not directly measure this category of expenditures—it is a residual—whereas the MEPS collects this information directly from respondents. That is, we assume the out-of-pocket expenditures collected in the MEPS are more accurate.

The decision to use adjustment factors from Sing et al. (2006), and not Sing et al. (2013), was a result of how the factors change between studies, notably “all other sources.” Using Sing et al. (2006) it is equal to 0.977 (see Table A1) compared with 1.294 using Sing et al. (2013). This large increase stems from a disproportionate decrease in workers compensation expenditures collected in the MEPS compared with the NHEA data between these two studies.⁷²  Furthermore, the contribution of workers’ compensation to the uncompensated care estimate (calculation defined below) is relatively small, while the contribution of the collective group “all other sources” to the uncompensated care estimate is large. Consequently, the “all other sources” adjustment factor equal to 0.977 results in a more conservative estimate of uncompensated care. Finally, the remaining adjustment factors changed relatively little between studies.

Population Growth and Medical Expenditures per Person Adjustments

Two additional adjustments were imposed on the MEPS in order to project uncompensated care for the 2013 population. This is because the data used in this study represents the populations corresponding to calendar years 2008, 2009 and 2010, pooled together, which were the most recent MEPS data available at the time of the analysis. The first adjustment targets the 2013 population total, and the adjustment factors are reported in Table A2. The second adjustment attempts to account for changes in both the price and quantity of medical use per person between 2008 through 2010 and 2013. These factors also are reported in Table A2 and are calculated from the NHEA per capita personal health care expenditures, historical data and projections.⁷³ 

While the adjustments described above account for population growth and increases in per capita medical expenditures, they do not account for changes in broader underlying economic relationships. In particular, the reference period for our data (2008-2010) in part covers the great recession (December 2007 to June 2009), and the initial recovery. Should there be significant differences in 2013 population compared with that of 2008-2010—e.g., unemployment, poverty/family income, rate of uninsured—they will not be accounted for in the 2013 uncompensated care projections reported here.

Estimating Uncompensated Care

Medical Expenditures Among Individuals with Part Year Coverage

In this work, medical expenditures during months respondents report that they were uninsured are distinguished from months while insured. We combine the monthly self-reported health insurance data in the MEPS-HC with monthly expenditure data (by service and payer) located in the MEPS events files to make this distinction. In a small number of cases, respondents’ reported they were uninsured in a given month, but  have corresponding expenditures from private insurance, Medicaid, or Medicare. This may occur due to reporting error on insurance coverage. We reclassify such expenditures as those while insured.

Defining Implicitly Subsidized Care

“Implicitly subsidized care” is defined here as care received when a person is uninsured but not paid for by a directly identifiable source linked to the patient. Such payments include indirect payments to providers, from private or public sources, that partially offset the cost of medical care provided to the uninsured. Examples of implicitly subsidized care include public and private grant programs and Medicare and Medicaid disproportionate share (DSH) payments. As these payments are not tied to a particular individual, they are not measured in the MEPS.

Intuitively, the estimate of implicitly subsidized care using the MEPS equals the difference between total expected payments for medical services while the respondent is uninsured, as if they were insured, and any payments from private sources. To calculate the value of implicitly subsidized care, we multiply the aggregate payment to charge ratio for privately insured individuals with total charges for while uninsured, then subtract from that amount the actual payment received by private sources. More formally, implicitly subsidized care is defined for each MEPS respondent as follows:

Defining Uncompensated Care

We define total “uncompensated care” as the costs associated with implicitly subsidized care (described above) plus expenditures from indirect sources made on behalf of the uninsured. These indirect sources, which we refer to as “other private, public, and unclassified sources,” include a wide range of payers such as the Veterans Administration, the Indian Health Service, local and state health departments, as well as automobile and homeowner’s insurance.⁷⁴  Specifically, the MEPS expenditure categories included are VA, workers’ compensation, other federal, other state and local, other private, and other unclassified sources.  These payments are included in the calculation of uncompensated care as they are indirect sources, which would most likely have been paid by a health insurance plan, private or public, had the individual been insured. The calculation of uncompensated care assumes that payments from other sources are paid at 100 percent, and any discrepancy between charges corresponding to these sources and expected private payments represent a contractual discount accepted by the provider.

The sources of payment  included in “other private, public, and unclassified sources” excludes payments from private insurance, the respondent (i.e., out-of-pocket), Medicare, and Medicaid.⁷⁵  Payments corresponding to the MEPS expenditure category “other public” are also excluded, which is sometimes linked to uninsured individuals.⁷⁶  This “other public” category is actually Medicaid expenditures, for which in theory there should be none for our study sample of individuals who report being uninsured.⁷⁷  That we find some Medicaid expenditures (defined by MEPS as “other public” expenditures) for periods in which an individual reported being uninsured may reflect a presumptive Medicaid eligibility decision on behalf of medical providers and/or reporting error made by respondents.⁷⁸ 

1. ASPE Research Brief, “The Value of Health Insurance: Few of the Uninsured Have Adequate Resources to Pay Potential Hospital Bills,” U.S. Department of Health and Human Services, 2011. ↩︎
2. ASPE Research Brief, “The Value of Health Insurance: Few of the Uninsured Have Adequate Resources to Pay Potential Hospital Bills,” U.S. Department of Health and Human Services, 2011. ↩︎
3. Congressional Budget Office, “Table 1: CBO’s May 2013 Estimate of the Effects of the Affordable Care Act on Health Insurance Coverage,” 2013. http://www.cbo.gov/publication/44176 ↩︎
4. Congressional Budget Office, “Table 2: CBO’s May 2013 Estimate of the Budgetary Effects of the Insurance Coverage Provisions Contained in the Affordable Care Act,” 2013. http://www.cbo.gov/publication/44176 ↩︎
5. Hadley J, Holahan J, Coughlin TA, Miller D. “Covering the Uninsured in 2008: Current Costs, Sources of Payment, and Incremental Costs,” Health Affairs 27 (5): w399-w415, 2008. http://content.healthaffairs.org/content/27/5/w399.full ↩︎
6. For more details see “MEPS HC-138, 2010 Full Year Consolidated Data File” available at http://meps.ahrq.gov/mepsweb/data_stats/download_data/pufs/h138/h138doc.pdf. ↩︎
7. The 2008, 2009, and 2010 MEPS files were the most current data available at the time this research was completed. ↩︎
8. Sing M, Banthin JS, Selden TM, Cowan CA, Keehan SP. “Reconciling Medical Expenditure Estimates from the MEPS and NHEA, 2002,” Health Care Financing and Review 28 (1): 25-40, Fall 2006; Bernard D, Cowan C, Selden T, Cai L, Catlin A, Heffler S. “Reconciling Medical Expenditure Estimates from the MEPS and NHEA, 2007.” Medicare & Medicaid Research Review 2 (4): E1-E20. ↩︎
9. Ibid. ↩︎
10. See National Health Expenditure Projections 2011-2021. Baltimore, MD: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/Proj2011PDF.pdf. ↩︎
11. More specifically, indirect sources of uncompensated care include the following MEPS expenditure categories: other private, the Veterans Administration, Tricare, other federal, other state and local, workers compensation, and other unclassified sources.  Other federal includes expenditures on behalf of the Indian Health Service and military treatment facilities. Other state and local includes expenditures on behalf of community clinics, local and state health departments, and other state programs than Medicaid. Other unclassified sources may include automobile or homeowner’s insurance, or other unknown sources. Other private includes expenditures from private insurance companies among individuals that report no private coverage, which may arise due to non-comprehensive health insurance and/or reporting error. ↩︎
12. Among the 15,919 respondents that did not report any health insurance during the year, 1,584 have positive “other public” expenditures. For more documentation on “other public” expenditures, see page C-101 of “MEPS HC-138, 2010 Full Year Consolidated Data File” available at http://meps.ahrq.gov/mepsweb/data_stats/download_data/pufs/h138/h138doc.pdf. ↩︎
13. To accurately capture annual costs, Table 1 is limited to respondents with 12 months of health insurance data. Those with less than 12 months of health insurance data are mostly infants, but may also include those who die during the year and individuals in a particular household who moved out. ↩︎
14. The estimates reported in Table 2 are larger than the corresponding per person amount multiplied by their respective population size reported in Table 1. This is because Table 1 is restricted to nonelderly respondents with 12 months of available health insurance coverage data, while Table 2 includes all nonelderly respondents both those with full insurance information and those with only partial information. In addition, aggregate spending estimates are calculated only for periods of time that people lack coverage. Months during which the part-year uninsured had insurance coverage are not counted. ↩︎
15. As discussed in the methods section and statistical appendix, the MEPS medical expenditure category “other public” equals Medicaid payments among individuals that report zero months of Medicaid coverage. ↩︎
16. GPO. “Congratulating American Dental Association on its 150th Anniversary.” May 2009. http://www.gpo.gov/fdsys/pkg/CREC-2009-05-12/html/CREC-2009-05-12-pt1-PgH5420.htm ↩︎
17. Uncompensated Hospital Care Cost Fact Sheet. Washington, DC: American Hospital Association, January 2013. Patients who are insured may also contribute to a hospital’s bad debt, which would result in an over estimation of the value of uncompensated care for the uninsured. We believe, however, any overestimate that may result from this is offset by other sources of uncompensated care that we were unable to measure. ↩︎
18. Ibid. ↩︎
19. Ibid. ↩︎
20. Despite that much of the care provided by the Veterans Health Administration and the Indian Health Service is through hospitals, we include their spending on uncompensated care in the community-based providers’ category because the AHA excludes federal hospitals such as the VA from its estimate of hospitals’ uncompensated care. ↩︎
21. Table 19: National Health Expenditures by type of Expenditure and Program, Calendar Year 2011. Washington, DC: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group. ↩︎
22. Boukus ER, Cassil A, O’Malley AS. “A Snapshot of U.S. Physicians: Key Findings from the 2008 Health Tracking Physician Survey.” Data Bulletin No. 35. Washington, DC: Center for Studying Health System Change, September 2009. http://www.hschange.com/CONTENT/1078/. ↩︎
23. Berenson R, Zuckerman S, Stockley K, Nath R, Gans D, Hammons T. What If All Physician Services Were Paid Under the Medicare Fee Schedule? An Analysis Using Medical Group Management Association Data. Washington, DC: Urban Institute, March 2010.  http://www.urban.org/UploadedPDF/412051_physcian_service.pdf. ↩︎
24. Inflation based on projected physician expenses from the NHE. This does not exclude the amount of uncompensated care provided by salaried physicians employed by hospitals and clinics. ↩︎
25. Report I: Summary Data from the Physician Practice Information Survey: All Specialties Combined. Chicago, IL: American Medical Association, March 2009, http://www.ama-assn.org/resources/doc/rbrvs/ppi-survey-data-summary.pdf. ↩︎
26. Some states also provide Medicaid graduate medical education payments, which are not accounted for in our analysis. ↩︎
27. Medicaid Program; Disproportionate Share Hospital Allotments and Institutions for Mental Diseases Disproportionate Share Hospital Limits for FY 2012, and Preliminary FY 2013 Disproportionate Share Hospital Allotments and Limits.  Federal RegisterNotices 78(144 ) Friday, July 26, 2013 http://www.gpo.gov/fdsys/pkg/FR-2013-07-26/pdf/2013-17965.pdf ↩︎
28. An Overview of Changes in the Federal Medical Assistance Percentages (FMAPs) for Medicaid. Kaiser Commission for Medicaid and the Uninsured, July 2013, https://modern.kff.org/wp-content/uploads/2013/01/8210.pdf ↩︎
29. Data from unpublished 2011 Urban Institute survey. ↩︎
30.   Ibid. ↩︎
31. CMS-64 Quarterly Expense Report. “Financial Management Report for FY 2011.” http://medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Data-and-Systems/MBES/CMS-64-Quarterly-Expense-Report.html. ↩︎
32. An Overview of Changes in the Federal Medical Assistance Percentages (FMAPs) for Medicaid. ↩︎
33. American Hospital Association. Underpayment by Medicare and Medicaid: fact sheet, 2014. Chicago (IL). Available from: http://www.aha.org/content/14/2012-medicare-med-underpay.pdf. ↩︎
34. To be conservative we did not inflate Medicaid underpayments to 2013 because of the uncertainty around Medicaid reimbursement levels and hospital costs. ↩︎
35. Medicare Payment Advisory Commission, Report to the Congress: Medicare Payment Policy,  March 2007, p. 77. ↩︎
36. Report to the Congress: Medicare Payment Policy. Washington, DC: Medicare Payment Advisory Commission, March 2007, p.77. ↩︎
37. March 2012 Medicare Baseline. Washington, DC: Congressional Budget Office, Match 13, 2012, http://www.cbo.gov/sites/default/files/cbofiles/attachments/43060_Medicare.pdf. ↩︎
38. Ibid. ↩︎
39. Centers for Medicare and Medicaid Services. Table 19: National Health Expenditures by type of Expenditure and Program, Calendar Year 2011. ↩︎
40. Center for Medicare and Medicaid Services. “The Nation’s Health Dollar ($2.7 Trillion), Calendar Year 2011: Where It Went.” http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/PieChartSourcesExpenditures2011.pdf ↩︎
41. Expenditures: Veteran Data and Information 2012. Washington, DC: US Dept. of Veterans Affairs, National Center for Veterans Analysis and Statistics, http://www.va.gov/vetdata/Expenditures.asp. ↩︎
42. FY 2013 President’s Budget for the Department of Veterans Affairs Medical Programs. Washington, DC: White House, http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/vet.pdf. ↩︎
43. Estimate from Shen Y, Lee A, Hendricks A, Kazis L. “Veterans’ Health Insurance and Demand for VA Care.” http://gateway.nlm.nih.gov/MeetingAbstracts/102272533.html ↩︎
44. Inflation factor derived from 2013 spending estimate in the Department of Veterans Affairs FY 213 Budget Estimate. ↩︎
45. Indian Health Service Fact Sheet. Rockville MD: US Department of Health and Human Services, Indian Health Service, 2013, http://www.ihs.gov/factsheets/index.cfm?module=dsp_fact_quicklook ↩︎
46. 2012 March Supplement to the Current Population Survey. ↩︎
47. This amount also includes a proportionate share of support costs.  Indian Health Service Budget Request FY 2014. Rockville MD: US Department of Health and Human Services, Indian Health Service, March 12, 2013.  http://www.ihs.gov/BudgetFormulation/documents/FY2014BudgetJustification.pdf ↩︎
48. Indian Health Service Budget Request FY 2014. ↩︎
49. National Rollup Report. FY 2011. Rockville MD: US Department of Health and Human Services, Bureau of Primary Health Care, HRSA Community Health Center Uniform Data System, http://bphc.hrsa.gov/uds/doc/2011/National_Universal.pdf ↩︎
50. Ibid. ↩︎
51. Ibid. ↩︎
52. Ibid. pg. 63 ↩︎
53. Ahead of the Curve: The Ryan White HIV/AIDS Program Progress Report 2012. Rockville, MD: US Department of Health and Human Services,  November 2012, http://hab.hrsa.gov/data/reports/progressreport2012.pdf ↩︎
54. Used to be called titles. Systems switched in 2007. This also prevents double counting of funds because Part C and Part D are directed to other various community health programs, including CHCs and the MCHB program. ↩︎
55. Part A Allocations Report for Total Part A Grantees (http://hab.hrsa.gov/data/reports/files/fy12partaallocations.pdf) and FY 2012 Allocation Report for All Grantees (http://hab.hrsa.gov/data/reports/files/fy12partballocations.pdf). Rockville, MD: US Department of Health and Human Services, Health Resources and Services Administration. ↩︎
56. Insurance Status of AIDS Drug Assistance Program (ADAP) Clients, 2011.  Kaiser State Health Facts Online, www.statehealthfacts.org. ↩︎
57. Johnson AJ. The Ryan White HIV/AIDS Program. Washington, DC: Congressional Research Service,  2011, http://www.fas.org/sgp/crs/misc/RL33279.pdf ↩︎
58. Ryan White Program by Part, Funding & Grantees, FY 2012. Kaiser State Health Facts Online,  https://modern.kff.org/hivaids/fact-sheet/the-ryan-white-program/ ↩︎
59. Distribution of AIDS Drug Assistance Program (ADAP) Budget by Source, FY 2011. Kaiser State Health Facts Online,  https://modern.kff.org/hivaids/state-indicator/adap-budget-by-source/ ↩︎
60. Federal-State Title V Block Grant Partnership Budget, by Category of Service FY 2013. Rockville, MD: US Department of Health and Human Services, Maternal and Child Health Bureau, HRSA Title V Information System (TVIS), FY 2013, https://mchdata.hrsa.gov/tvisreports/FinancialData/; Number of Individuals Served by Title V, by Class of Individuals. Rockville, MD: US Department of Health and Human Services, Maternal and Child Health Bureau, HRSA, Title V Information System (TVIS), FY 2011, https://mchdata.hrsa.gov/tvisreports/ProgramData/ ↩︎
61. Percentage of Individuals Served by Title V, by Source of Coverage. Rockville, MD: US Department of Health and Human Services, Maternal and Child Health Bureau, HRSA, Title V Information System (TVIS), FY 2011, https://mchdata.hrsa.gov/tvisreports/ProgramData/ ↩︎
62. Federal-State Title V Block Grant Partnership Budget, FY 2013. Rockville, MD: US Department of Health and Human Services, Maternal and Child Health Bureau, HRSA Title V Information System (TVIS), FY 2013, https://mchdata.hrsa.gov/tvisreports/FinancialData/ ↩︎
63. Medpac. Chart 6-22. Change in Medicare hospital inpatient costs per discharge and private payer payment-to-cost ratio, 1987-2010.” p. 82. Medpac: Health Care Spending and the Medicare Program. June 2012. ↩︎
64. Underpayment by Medicare and Medicaid Fact Sheet. Washington, DC: American Hospital Association, December 2010. ↩︎
65. Report to the Congress: Medicare Payment Policy. Washington, DC: Medicare Payment Advisory Commission, March 2001, p.182-186; A Data Book: Health Care Spending and the Medicare Program. Washington, DC: Medicare Payment Advisory Commission, June 2013, p.80-82. ↩︎
66. Report to the Congress, Washington, DC: Medicare Payment Advisory Commission, March 2009, p.57-66. ↩︎
67. See Memorandum from Richard S. Foster, Chief Actuary, Centers for Medicare & Medicaid Services, April 22, 2010, available at http://graphics8.nytimes.com/packages/pdf/health/oactmemo1.pdf.  See Letter from Douglas W. Elmendorf, Director of the Congressional Budget Office, to Nancy Pelosi, Speaker, U.S. House of Representatives, Table 5, March 20, 2010. ↩︎
68. Congressional Budget Office. “CBO’s February 2013 Estimate of the Effects of the Affordable Care Act on Health Insurance Coverage.” February 2013.   http://www.cbo.gov/sites/default/files/cbofiles/attachments/43900_ACAInsuranceCoverageEffects.pdf ↩︎
69. For details see “MEPS HC-138, 2010 Full Year Consolidated Data File” available at http://meps.ahrq.gov/mepsweb/data_stats/download_data/pufs/h138/h138doc.pdf. ↩︎
70. M. Sing et al., “Reconciling Medical Expenditure Estimates from the MEPS and NHEA, 2002,” Health Care Financing and Review 28 (1): pp. 25-40, Fall 2006.; D. Bernard et al., “Reconciling Medical Expenditure Estimates from the MEPS and NHEA, 2007.” Medicare & Medicaid Research Review 2 (4): pp. E1-E20. ↩︎
71. For documentation on the NHEA data, see “National Health Expenditures Accounts: Methodology Paper, 2011. Definitions, Sources, and Methods.” available at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/dsm-11.pdf. ↩︎
72. This is apparent from the source of payment totals for workers’ compensation in Sing et al. (2006, table 2 and table 5) and Bernard et al. (2013, exhibit 2 and exhibit 5). ↩︎
73. See “National Health Expenditure Projections 2011-2021” available at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/Proj2011PDF.pdf. ↩︎
74. More specifically, indirect sources of uncompensated care include the following MEPS expenditure categories: other private, the Veterans Administration, Tricare, other federal, other state and local, workers compensation, and other unclassified sources.  Other federal includes expenditures on behalf of the Indian Health Service and military treatment facilities. Other state and local includes expenditures on behalf of community clinics, local and state health departments, and other state programs than Medicaid. Other unclassified sources may include automobile or homeowner’s insurance, or other unknown sources. Other private includes expenditures from private insurance companies among individuals that report no private coverage, which may arise due to non-comprehensive health insurance and/or reporting error. ↩︎
75. See page C-101 of “MEPS HC-138, 2010 Full Year Consolidated Data File” available at http://meps.ahrq.gov/mepsweb/data_stats/download_data/pufs/h138/h138doc.pdf. ↩︎
76. Among the 15,919 respondents that did not report any health insurance during the year, 1,584 have positive “other public” expenditures. For more documentation on “other public” expenditures, see page C-101 of “MEPS HC-138, 2010 Full Year Consolidated Data File” available at http://meps.ahrq.gov/mepsweb/data_stats/download_data/pufs/h138/h138doc.pdf. ↩︎
77. This is a slight deviation from previous work (Hadley et al, 2008), which included the “other public” category. Excluding “other public” in this part of the calculation results in a more conservative estimate of uncompensated care. ↩︎
78. See page C-101 of “MEPS HC-138, 2010 Full Year Consolidated Data File” available at http://meps.ahrq.gov/mepsweb/data_stats/download_data/pufs/h138/h138doc.pdf. ↩︎

The latest Kaiser Health Tracking Poll finds that more than four years after the passage of the Affordable Care Act (ACA) and several months into the first year of its coverage expansions, most Americans do not feel personally impacted by the law. Among the minority who say they have felt an impact, more feel they have been harmed than helped by the law, with Republicans more likely to say they have been hurt and Democrats more likely to say they have been helped. More continue to want Congress to work on improving the law than repealing it, with those who want improvements calling for lower health care costs, expanded access, and more help for specific populations. Six months out from the 2014 midterm election and in the midst of primary battles in many states, the ACA is already a frequent topic of political conversation and the subject of an abundance of campaign advertising. Even at this early stage, about half of registered voters say they are tired of hearing candidates for Congress talk about the health care law and want them to focus more on other issues like jobs, while just over four in ten want candidates to continue debating the law. Views on this question track the familiar ACA partisan divide. A majority of voters say they’ll consider a candidate’s position on the health care law as one of many factors in their vote, while three in ten say they would only vote for a candidate who shares their views on the health care law. This is about the same as the share who say their vote would be similarly dependent on a candidate’s views on government spending and somewhat higher than the share who say their votes depend on a candidate’s views on job creation and immigration. With the election still six months away, just over half of voters say they haven’t paid much attention to the campaign so far.

Majority Says They Haven’t Been Impacted By ACA; Partisan Divide In Who Reports Being Helped And Hurt

With open enrollment closed and the first year of the ACA’s coverage expansions underway, six in ten Americans continue to say they have felt no direct personal impact of the law yet. Among those who say they have felt an impact, a larger share reports being directly hurt than directly helped by the law (24 percent versus 14 percent). However, just as overall opinion of the law has divided along party lines from the start, reported personal impact appears to do the same, with Democrats more likely to say the law has helped them (26 percent) and Republicans more likely to report being hurt by the ACA (37 percent). Even when controlling for other demographic factors that might be related to ACA impact, such as income, race/ethnicity, and insurance status, party identification remains a significant predictor of whether an individual reports being helped or hurt by the law.

When those who report being helped or hurt by the law are asked for further detail on how they’ve been impacted, most of those who report being hurt say it has increased their health care costs (14 percent of the public overall), while fewer say it has made it more difficult for them to access care (3 percent) or caused someone in their family to lose insurance (2 percent). Among those who feel they’ve been helped by the law, the largest share (5 percent of the public overall) say it has allowed someone in their family to get or keep coverage, while others say the law has made it easier for them to get needed care (4 percent) or that it has lowered their health care costs (3 percent).

Overall Opinion Holds Steady, Tilting Unfavorable

This month, 45 percent of the public reports having an unfavorable view of the health care law and 38 percent report a favorable one. This 7-percentage point gap has held fairly steady since March, but is smaller than the 14- to 16-point unfavorable tilt in opinion measured in Kaiser tracking polls from November through January following the botched rollout of the health insurance exchanges.

Sharp political polarization continues to exist, with about two-thirds (64 percent) of Democrats having a favorable opinion of the law and three- quarters (75 percent) of Republicans expressing an unfavorable view. The intensity gap in opinion also continues, with nearly twice as many Republicans expressing a “very” unfavorable view as Democrats having a “very” favorable one (61 percent versus 36 percent).

Three In Ten Report Knowing Someone Who Gained Coverage

Roughly three in ten Americans (31 percent) say they personally know someone who was able to get health insurance because of the ACA, while somewhat smaller shares report knowing someone who lost their health insurance (23 percent) or lost their job or had their hours cut due to the law (19 percent). A partisan gap exists here as well: more than twice as many Democrats as Republicans say they know someone who gained coverage as a result of the law (46 percent versus 19 percent), while Republicans are far more likely than Democrats to believe they know someone who lost coverage (34 percent versus 15 percent) or had a job-related impact (34 percent versus 10 percent).

Majority Wants Congress To Improve ACA, Mainly By Lowering Costs and Increasing Access

As previous Kaiser tracking polls have found, despite the negative tilt in opinion of the law overall, the public would rather Congress work to improve the ACA than throw it out and start over. About six in ten (59 percent) say they would prefer their representative in Congress work to improve the law, while about a third (34 percent) want their representative to work to repeal the law and replace it with something else.

When asked to say in their own words how they would like to see the law improved, those who want improvements primarily want Congress to do more to make health care and insurance more affordable (20 percent), followed by increasing help for specific groups such as seniors or the poor (11 percent) and expanding access and availability more generally (11 percent). A variety of other improvements were suggested by small shares of the public. It’s notable that roughly a quarter of those who want their Congressional representative to work on improvements to the law either didn’t know or declined to state any specific way in which they’d like to see the law improved.

One factor in the public’s preference for improving over repealing and replacing the law may be their sense of whether a viable replacement exists. At this point, a majority of the public (61 percent) says Republicans in Congress do not have an agreed-upon alternative to replace the ACA, while 13 percent believe they do and a quarter don’t know. Even among those who favor the repeal and replace option, just two in ten (20 percent) believe Republicans have settled on an alternative.

Partisans Divide Over Whether Candidates Should Continue ACA Debate

Six months out from the 2014 midterm election and in the midst of primary battles in many states, the ACA is already a frequent topic of political conversation and the subject of an abundance of campaign advertising. Even at this early stage, about half of registered voters (51 percent) say they are tired of hearing candidates for Congress talk about the health care law and want them to focus more on other issues like jobs, while a smaller share (43 percent) want candidates to continue debating the law.

A familiar partisan divide is evident, with about seven in ten Democratic voters saying they’d rather hear candidates discuss other issues and six in ten Republican voters saying it’s important to keep up the debate. Independents are more split, with half saying they’re tired of hearing about it and 44 percent wanting the debate to go on. Looked at another way, two-thirds of voters who view the ACA favorably say they want candidates to focus on other issues, while almost six in ten of those who have an unfavorable view of the law want debate to continue.

 ACA Ranks Second Behind Economy/Jobs As Issue Voters Most Want To Hear About From Candidates

The health care law may be one of the most politicized issues heading into the election season; however, when asked to name the top issues they would most like to hear Congressional candidates talk about, voters’ top mention is the economy and jobs (34 percent). Second on their list is health care (25 percent), followed by a list of issues in the single digits including education (8 percent), energy and environmental issues (8 percent), the federal budget deficit (8 percent), and immigration (7 percent).

The ranking of the economy/jobs and health care as the top two issues that voters want to hear about from candidates is consistent across those who identify as Democrats, Republicans and independents. Further down the list, partisans differ on other issues, with more Democrats saying they want to hear candidates talk about energy and environmental issues (12 percent), and more Republicans mentioning government spending and the federal deficit (12 percent).

 Health Care Law One Among Many Issues Voters Say They Will Consider

Among registered voters, most (52 percent) say that they will consider a candidate’s stance on the health care law as just one of many important factors in their voting decision, while three in ten (31 percent) say they would only vote for a candidate who shares their views on the law. Just 11 percent say the ACA won’t be a major factor in their vote. The share saying they would only vote for a candidate who shares their views on the health care law is similar to the share who say the same about government spending (33 percent), and slightly higher than the share who would only vote for a candidate who shares their views on job creation and immigration reform (22 percent each).

Reflecting the intensity gap mentioned above, voters with an unfavorable view of the ACA are more likely to say they would only vote for a candidate who shares their views on the law than those whose view of the law is favorable (38 percent versus 28 percent). However, when analyzed by party identification, the share who say they would only vote for a like-minded candidate on the ACA is similar among Democrats (33 percent) and Republicans (36 percent), but somewhat lower among independents (26 percent).

A caveat to this early read on the role of the ACA in the midterms is that with the general election still six months away, most voters say they are not yet paying close attention to the campaign. Just 17 percent of registered voters say they have been able to pay “a lot” of attention to the campaign so far, while roughly half (51 percent) say they have paid “not much” or “no attention” so far.

This Kaiser Health Tracking Poll was designed and analyzed by public opinion researchers at the Kaiser Family Foundation (KFF) led by Mollyann Brodie, Ph.D., including Liz Hamel, Bianca DiJulio, and Jamie Firth. The survey was conducted May 13-19, 2014, among a nationally representative random digit dial telephone sample of 1,505 adults ages 18 and older, living in the United States, including Alaska and Hawaii (note: persons without a telephone could not be included in the random selection process). Computer-assisted telephone interviews conducted by landline (750) and cell phone (755, including 381 who had no landline telephone) were carried out in English and Spanish by Princeton Data Source under the direction of Princeton Survey Research Associates International (PSRAI). Both the random digit dial landline and cell phone samples were provided by Survey Sampling International, LLC. For the landline sample, respondents were selected by asking for the youngest adult male or female currently at home based on a random rotation. If no one of that gender was available, interviewers asked to speak with the youngest adult of the opposite gender. For the cell phone sample, interviews were conducted with the person who answered the phone. KFF paid for all costs associated with the survey.

The combined landline and cell phone sample was weighted to balance the sample demographics to match estimates for the national population using data from the Census Bureau’s 2012 American Community Survey (ACS) on sex, age, education, race, Hispanic origin, nativity (for Hispanics only), and region along with data from the 2010 Census on population density. The sample was also weighted to match current patterns of telephone use using data from the January-June 2013 National Health Interview Survey. The weight takes into account the fact that respondents with both a landline and cell phone have a higher probability of selection in the combined sample and also adjusts for the household size for the landline sample. All statistical tests of significance account for the effect of weighting.

The margin of sampling error including the design effect for the full sample is plus or minus 3 percentage points. Numbers of respondents and margin of sampling error for key subgroups are shown in the table below. For results based on other subgroups, the margin of sampling error may be higher. Sample sizes and margin of sampling errors for other subgroups are available by request. Note that sampling error is only one of many potential sources of error in this or any other public opinion poll.

Introduction

Almost 50 million people, or about 16 percent of the population of the United States, live in rural areas. These rural areas are defined as those outside of Metropolitan Statistical Areas (MSAs). MSAs are urban areas with more than 50,000 residents and surrounding suburbs. The populations of rural areas have different demographics, health needs and insurance coverage profiles than their urban counterparts, which means that Medicaid and Marketplace coverage reforms in the Affordable Care Act (ACA) may affect the two populations differently. In particular, rural populations tend to have high shares of low-to-moderate-income individuals, those who are in the target population for ACA coverage reforms. However, nearly two-thirds of uninsured people in rural areas live in a state that is not currently implementing the Medicaid expansion, meaning they are disproportionally affected by state decisions about ACA implementation. As a result, uninsured rural individuals may have fewer affordable coverage options moving forward. This brief examines these differences in populations and coverage patterns and assesses how ACA coverage reforms will affect rural and metropolitan areas in different ways.

The Challenge of Extending Health Insurance Coverage in Rural Areas

Compared to populations in metropolitan areas, the rural population has lower income (Figure 1). One-quarter of the nonelderly rural population has family income below the federal poverty level (FPL, about $19,790 for a family of 3 in 2014) compared to about one-fifth of the nonelderly population in metropolitan areas. Conversely, a greater share of the nonelderly population in metropolitan areas is in families with incomes over 400% FPL than rural families. Lower incomes make it difficult for people to afford coverage on their own, since health insurance coverage is expensive.

In addition, individuals in rural areas are less likely than their urban counterparts to have access to coverage through a job. The nonelderly population in rural areas is more likely than metropolitan counterparts to live in family without either a full-or part-time worker (17% versus 14%). Further, among workers, those in rural areas are more likely to work in blue collar jobs (jobs outside of managerial, business, and financial occupations) than workers in metropolitan areas (71% versus 63%). Blue-collar workers tend to earn less and have fewer overall benefits than white-collar workers.¹ Half of all rural workers work in “Low ESI industries,” or industries in which less than 80% of workers are covered by employer-sponsored insurance coverage.

These differences in income and access to coverage through a job are reflected in different coverage patterns in rural and urban areas. Only slightly more than half (51%)  of the rural population was enrolled in employer-sponsored coverage between 2012 and 2013 a significantly lower proportion than the 57% of the metropolitan population with employer coverage. However, before ACA implementation, the rural population was significantly more likely to be covered by Medicaid (21%) or other public insurance (4%) than the metropolitan population (16 and 3 percent, respectively). Because Medicaid made up some of the gap in employer-sponsored coverage in rural areas, the uninsured rate was similar across rural and metropolitan populations prior to the ACA (Figure 2).

Like the uninsured population nationally, uninsured individuals in rural areas are likely to live in low-income working families, are primarily adults (who were historically ineligible for public coverage), and are generally unable to afford coverage on their own. Compared to their urban counterparts, however, rural uninsured may face particular challenges in accessing health care services when needed due to more limited supply of providers who can provide low-cost or charity care. Thus, there is a particular need to extend coverage in rural areas.

The Impact of ACA Coverage Expansions in Rural Areas

The ACA offers the opportunity to expand health coverage among the rural population through the expansion of Medicaid for people with incomes at or below 138% of poverty and the availability of premium tax credits for the purchase of private insurance through the Health Insurance Marketplaces for moderate income families (those with incomes between 100% and 400% of poverty). Among the rural uninsured population, about three in four are in the income range (and meet the immigration requirements) for these coverage provisions.

However, with the Supreme Court ruling in June 2012, the Medicaid expansion became essentially optional for states, and as of May 2014, 24 states were not implementing the Medicaid expansion. In states that do not expand Medicaid, some individuals with incomes between 100% FPL and 138% FPL will be eligible for premium tax credits in the Marketplace.  However, many uninsured individuals under poverty will be left in a “coverage gap” in which their incomes are above Medicaid eligibility levels but below eligibility levels for tax credits.²  As a result, many will be left without an affordable insurance option. State decisions about expanding Medicaid have a disproportionate effect on coverage options for uninsured individuals in rural areas. Almost two-thirds of the rural uninsured population lives in states that are not expanding Medicaid at this time (Figure 3).

As a result of state decisions, rural individuals are much more likely than their urban counterparts to fall into the “coverage gap.” Among uninsured rural individuals, about 15% – over a million people – are estimated to fall into the coverage gap compared to 9% of the uninsured in metropolitan areas (Figure 4). About equal shares of rural and urban (30%) uninsured individuals may be eligible for Medicaid or CHIP, but a greater share (37%) of uninsured rural individuals than metropolitan uninsured (32%) are within the income range to be eligible for premium tax credits in the marketplaces than are metropolitan individuals.³  Immigration status for the uninsured is less a factor barring coverage in rural areas compared to metropolitan areas, with only 6% vs 14% ineligible due to immigration status. Adequate outreach and consumer assistance are key to reaching individuals who are eligible for coverage under the ACA, particularly in rural areas where resources to help with enrollment may require traveling long distances.

 

Conclusion

The rural population is poorer and less likely to be covered by employer-based insurance than the metropolitan population. Prior to the ACA, rural individuals were more likely to receive coverage through public insurance than metropolitan individuals. Many uninsured people in rural areas will be eligible for Medicaid coverage or tax credits to purchase coverage under the ACA. While the uninsured population in rural areas is less likely than their metropolitan counterparts to be ineligible for coverage due to their immigration status or incomes, they are more likely to fall into the “coverage gap” due to state decisions not to expand Medicaid coverage. People in rural areas may face particularly high barriers to accessing coverage, such as transportation barriers or limited provider availability and may also continue to face financial barriers to accessing needed care.

 

 

1. Duckett, Philethea, and Samantha Artiga. “Health Coverage for the Black Population Today and Under the Affordable Care Act.” Kaiser Family Foundation. https://modern.kff.org/disparities-policy/fact-sheet/health-coverage-for-the-black-population-today-and-under-the-affordable-care-act/. ↩︎
2. Kaiser Family Foundation. “The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid.” https://modern.kff.org/health-reform/issue-brief/the-coverage-gap-uninsured-poor-adults-in-states-that-do-not-expand-medicaid/. ↩︎
3. See Methods section ↩︎
4. State Health Access Data Assistance Center. 2013. “State Estimates of the Low-income Uninsured Not Eligible for the ACA Medicaid Expansion.” Issue Brief #35. Minneapolis, MN: University of Minnesota. Available at: http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2013/rwjf404825. ↩︎
5. Kaiser Commission on Medicaid and the Uninsured. Fact Sheet: Medicaid Eligibility for Adults as of January 1, 2014.  (Washington, DC: Kaiser Family Foundation), October 1, 2014. Available at: http://modern.kff.org/medicaid/fact-sheet/medicaid-eligibility-for-adults-as-of-january-1-2014/. ↩︎
6. Non-MAGI pathways for nonelderly adults include disability-related pathways, such as SSI beneficiary; Qualified Severely Impaired Individuals; Working Disabled; and Medically Needy. We are unable to assess disability status in the CPS sufficiently to model eligibility under these pathways. However, previous research indicates high current participation rates among individuals with disabilities (largely due to the automatic link between SSI and Medicaid in most states, see Kenney GM, V Lynch, J Haley, and M Huntress. “Variation in Medicaid Eligibility and Participation among Adults: Implications for the Affordable Care Act.” Inquiry. 49:231-53 (Fall 2012)), indicating that there may be a small number of eligible uninsured individuals in this group. Further, many of these pathways (with the exception of SSI, which automatically links an individual to Medicaid in most states) are optional for states, and eligibility in states not implementing the ACA expansion is limited. For example, the median income eligibility level for coverage through the Medically Needy pathway is 15% of poverty in states that are not expanding Medicaid, and most states not expanding Medicaid do not provide coverage above SSI levels for individuals with disabilities. (See: O’Mally-Watts, M and K Young.  The Medicaid Medically Needy Program: Spending and Enrollment Update.  (Washington, DC: Kaiser Family Foundation), December 2012. Available at: http://modern.kff.org/medicaid/issue-brief/the-medicaid-medically-needy-program-spending-and/. And Kaiser Commission on Medicaid and the Uninsured, “Medicaid Financial Eligibility: Primary Pathways for the Elderly and People with Disabilities,” February 2010. Available at: http://modern.kff.org/medicaid/issue-brief/medicaid-financial-eligibility-primary-pathways-for-the-elderly-and-people-with-disabilities/. ↩︎

In recent years, the U.S. government has paid increasing attention to the health and human rights of lesbian, gay, bisexual and transgender (LGBT) individuals around the world, utilizing both multilateral and bilateral channels, including through a 2011 Presidential Memorandum on “International Initiatives to Advance the Human Rights of Lesbian, Gay, Bisexual, and Transgender Persons” and diplomatic engagement at the United Nations (UN) and World Health Organization (WHO). Most of these efforts have been broadly cast as part of the U.S. government’s human rights policy, rather than through its global health strategies and programs, although they have included health elements. Still, however, many LGBT individuals continue to face stigma, discrimination, and violence, both within and outside of the health sector, which compromise their ability to access needed health services and can adversely affect health status. Moreover, in many countries, the barriers faced by LGBT individuals include discriminatory laws and policies. Indeed, in 81 countries, same sex behavior is criminalized; 7 of those countries impose the death penalty. Many of these countries receive U.S. global health assistance and/or are key strategic partners of the U.S., raising complex questions about how best to address the health needs of LGBT individuals within them. Recent actions to further criminalize same sex behavior and/or restrict the rights of LGBT persons and their supporters by the governments of Nigeria, Uganda, India, and Russia (and worries that other countries may soon follow suit), have heightened concerns about the safety of LGBT individuals as well as those who work to provide them services, raising the stakes in the conversation and introducing a greater sense of urgency. While the U.S. government has begun to respond to some of these recent cases, many questions and challenges remain about how it should chart a course forward, both in the short and long term.

To explore opportunities and challenges facing the U.S. government in this arena, the Kaiser Family Foundation convened two roundtable discussions (in October 2013 and March 2014) of high-level experts working on global LGBT health and rights as well as those working more broadly on global health. Participants included representatives from the U.S. government, multilateral institutions, non-governmental organizations, think tanks, and academia. This issue brief summarizes the main points of discussion raised by roundtable participants, focusing on opportunities, challenges, and potential next steps for the U.S. government to consider in addressing the health needs of LGBT individuals around the world (see Table 1). It also provides an overview of global LGBT health issues, and reviews U.S. government efforts to address global LGBT health to date.

LGBT individuals around the world face considerable challenges and barriers to accessing needed health services, and as a result, may experience poorer health outcomes.^{1 ,2 ,3 ,4 ,5 ,6 ,7 ,8 ,9 ,10}  Barriers can range from stigma, discrimination, rejection by families and communities, receipt of substandard care or outright denial of care, to violence, even killings, because of one’s sexual orientation, gender identity, and/or gender expression.^{11 ,12 ,13 ,14 ,15 ,16}  Moreover, in many countries, the barriers faced by LGBT individuals include discriminatory laws and policies.¹⁷  Indeed, as of April 2014, 81 countries (77 countries and 4 entities/territories¹⁸ ) criminalized¹⁹  same sex behavior. Seven of these countries impose the death penalty (2 of which do so in parts of the country).^20 ,21  While such laws are not necessarily enforced in every country, their presence can serve to reinforce stigma and legitimize violence and police brutality.^22 ,23  And, in addition to the direct health consequences of violence towards LGBT people, there is a growing body of evidence documenting the health effects of criminalization laws, discrimination, and stigma.^{24 ,25 ,26 ,27 ,28 ,29 ,30 ,31 ,32 ,33}  These include increased stress and depression, fear to seek care, increased risk behaviors, and greater prevalence of some diseases, perhaps most notably HIV, which continues to have a significant and disproportionate impact on men who have sex with men (MSM) and transgender individuals around the world.^{34 ,35 ,36 ,37}  In addition to the negative effects on the health and health-care seeking behavior of LGBT individuals, such laws can impact health care providers and NGOs as well, as they can become targets or experience discrimination themselves for working with and providing services to LGBT populations.^38 ,39 

In recent years, the U.S. government has paid increasing attention to the health and human rights of LGBT individuals around the world, through both multilateral and bilateral channels. Of note, in 2011, President Obama issued a Presidential Memorandum on “International Initiatives to Advance the Human Rights of Lesbian, Gay, Bisexual, and Transgender Persons”⁴⁰  in U.S. diplomatic and foreign assistance efforts, and the U.S. helped lead an effort resulting in the passage of the first-ever UN resolution on sexual orientation and gender identity.^41 ,42 

At the same time, many of the countries that criminalize same sex behavior receive U.S. global health assistance and/or are key strategic partners of the U.S., raising complex questions about how best to address the health needs of LGBT individuals within them. Recent actions by the governments of Nigeria, Uganda, India, and Russia, have brought new scrutiny to these issues, and have heightened concern about the safety and well-being of LGBT individuals and the organizations that serve or employ them. There are also worries that other countries may soon follow suit.^{43 ,44 ,45 ,46 ,47}  While the U.S. government has begun to lay the groundwork to enhance a focus on LGBT human rights and health in its foreign assistance programs, many questions and challenges remain about how it should chart a course forward in both the short and long term.

 

Most U.S. government efforts to address the health and human rights of LGBT individuals have been broadly cast as part of the U.S. government’s human rights policy and approach^48 ,49 ,50  rather than through its global health strategies and programs, although they have included health elements. A few have been health-specific, primarily in the context of HIV, particularly related to addressing the impact of the epidemic among men who have sex with men (MSM) and transgender individuals. An overview of these developments and activities follows.

Broader Human Rights & Foreign Policy Efforts

Early on during President Obama’s first term, then-Secretary of State Hillary Clinton signaled the Administration’s intent to include LGBT issues as part of its human rights agenda, working to address violence and discrimination against people based on sexual orientation or gender identity.^51 ,52  Advancing LGBT human rights has since been identified as a State Department foreign policy priority.⁵³  This has included U.S. engagement at the UN, such as a June 2011 effort at the UN Human Rights Council, led by the U.S. and several other governments, that resulted in the passage of the first-ever UN resolution on sexual orientation and gender identity.^54 ,55  Shortly thereafter, in his annual speech to the UN General Assembly, President Obama spoke of the need to include LGBT individuals in global efforts to protect rights.⁵⁶ 

Perhaps most notably, in December of 2011, the White House issued a Presidential Memorandum on International Initiatives to Advance the Human Rights of Lesbian, Gay, Bisexual, and Transgender Persons, calling for “all agencies engaged abroad to ensure that U.S. diplomacy and foreign assistance promote and protect the human rights of LGBT persons.”^57 ,58  These themes were reinforced that same day in a speech by Secretary Clinton in Geneva.⁵⁹  The Presidential Memorandum directs agencies to:

• Combat the criminalization of LGBT status or conduct abroad;
• Protect vulnerable LGBT refugees and asylum seekers;
• Leverage foreign assistance to protect human rights and advance non-discrimination;
• Ensure swift and meaningful U.S. responses to human rights abuses of LGBT persons abroad; and
• Engage international organizations in the fight against LGBT discrimination.

Among the main agencies and programs carrying out efforts to address LGBT human rights broadly are:

DRL

The State Department’s Bureau of Democracy, Human Rights, and Labor (DRL) leads U.S. efforts to protect human rights globally, working to protect populations at risk, including LGBT individuals. DRL is responsible for preparing the State Department’s annual Country Reports on Human Rights Practices, as required by Congress. Discussion of LGBT human rights issues in these reports has been significantly expanded by the Obama Administration, and they now include a specific section on LGBT rights by country. In addition to these ongoing activities, and timed with the President’s Memorandum, the Administration announced the creation of the Global Equality Fund (GEF), a public-private partnership,⁶⁰  to be managed by DRL. The GEF is intended to advance LGBT human rights by providing emergency and long term assistance to civil society organizations around the world.⁶¹  To date, the GEF has allocated over $7.5 million to more than 50 countries.⁶² 

PRM

The State Department’s Bureau of Population, Refugees, and Migration (PRM) works to address the needs of refugees, migrants, and victims of conflict, including those who are LGBT, through its efforts with the UN High Commissioner for Refugees (UNHCR) as well as through the provision of assistance to individuals.⁶³  In addition, PRM has worked with the Department of Homeland Security (DHS) to expedite refugee processing for LGBT individuals and developed guidance for adjudicating LGBT refugee and asylum claims.⁶⁴ 

USAID

The U.S. Agency for International Development (USAID), the main development assistance arm of the U.S. government, has moved to include LGBT issues within its broader development agenda. Specifically, the Agency has created an LGBT Senior Coordinator position to coordinate implementation of the 2011 Presidential Memorandum. It has also included reference to the importance of addressing the rights of LGBT individuals in many of its main policy and guidance documents, including its Policy Framework for 2011-2015,⁶⁵  Strategy on Democracy, Human Rights and Governance,⁶⁶  Youth in Development Policy,⁶⁷  and Country Development Cooperative Strategy (CDCS) Guidance,⁶⁸  and Global Health Strategic Framework for FY 2012-2016.⁶⁹  USAID has also added language to its award provisions encouraging, but not requiring, all implementing partners to add non-discrimination provisions that include sexual orientation and gender identity.⁷⁰  Beyond incorporating LGBT rights into its broader development frameworks, USAID recently released a draft document, the USAID Vision for Action: Promoting and Supporting the Inclusion of Lesbian, Gay, Bisexual, And Transgender Individuals,⁷¹ to more directly articulate its work in this area, and includes reference to health barriers as a key challenge facing LGBT people worldwide. Other efforts include the launch of the LGBT Global Development Partnership in April 2013, a public-private partnership⁷²  designed to strengthen capacity of LGBT organizations, provide training, and conduct research on the economic impact of discrimination on LGBT individuals, with health access included as one of the areas to be assessed and monitored. The agency has also begun undertaking an internal effort to raise awareness of LGBT human rights at the agency and field levels, including through the provision of sensitivity training and technical assistance at country missions and by instructing embassies and missions to meet with the LGBT community in their host countries.^73 ,74  Where USAID has undertaken health-specific efforts focused on LGBT individuals and civil society, they have been part of its HIV response under PEPFAR (see discussion below).

MCC

The Millennium Challenge Corporation (MCC) is an independent U.S. agency that provides development assistance in order to promote economic growth and reduce poverty through country-compacts in eligible low- and middle-income countries. As part of its assessment of country eligibility for compacts, MCC selection criteria include measures related to civil liberties and human rights.⁷⁵  In recent years, the MCC has moved to include LGBT rights in its broader assessment of human rights protections when considering country eligibility for assistance as well as continuation of assistance during a compact. For example, the MCC suspended a compact to Malawi due to a “a pattern of actions inconsistent with good policy performance in the areas measured by the Political Rights, Civil Liberties, and Rule of Law indicators,” actions that included “legal changes affecting media freedom, lesbian, gay, bisexual and transgender human rights, and citizens’ access to justice” (the compact has since been reinstated).⁷⁶ 

Global Health-Specific Efforts

While efforts to address LGBT rights within the broader foreign policy and development work of the U.S. government have included health in some cases, they have generally not been health-specific or an explicit part of the U.S. global health agenda. Rather, health-specific activities that address LGBT individuals have primarily been undertaken as part of the U.S. global HIV response, through the President’s Emergency Plan for AIDS Relief (PEPFAR). Beyond HIV, U.S. government engagement on global LGBT health issues has largely been carried out through diplomatic engagement at the World Health Organization (WHO) and Pan American Health Organization (PAHO).

PEPFAR

PEPFAR is the largest component of the U.S. global health portfolio, overseen by the Office of the Global AIDS Coordinator at the State Department and implemented by several U.S. agencies including USAID, the Centers for Disease Control and Prevention (CDC), and the Department of Defense (DoD). While PEPFAR has included efforts to address the impact of HIV among MSM since it was launched,⁷⁷  it has only more recently begun to increase its programmatic focus on LGBT individuals, primarily MSM and, to a lesser extent, transgender individuals, in its bilateral HIV work. In May 2011, PEPFAR released its first programmatic guidance on addressing the HIV prevention needs of MSM.⁷⁸  The guidance is intended to address “the urgent need to strengthen and expand HIV prevention for MSM and their partners and to improve MSM’s ability to access HIV care and treatment”⁷⁹  and to inform the development of Country Operational Plans (COPs), which document annual U.S. government investments and anticipated results in HIV by country. PEPFAR’s 2014 Gender Strategy discusses how gender norms concerning sexual behavior, sexual orientation, and gender identity can place individuals at increased risk for HIV and/or present barriers to care, and includes LGBT individuals as vulnerable populations to be considered in PEPFAR’s gender programming. More generally, PEPFAR’s Blueprint, its roadmap for achieving an AIDS-Free Generation released in November 2012, includes the importance of improving access to and uptake of HIV services by key populations, including MSM and transgender individuals.”⁸⁰ 

Three, smaller-scale PEPFAR initiatives are focused on creating more civil society capacity to help scale up access to PEPFAR’s HIV programs among key populations, including LGBT individuals:

• The “Key Populations Challenge Fund”, a $20 million fund launched in June 2012 to support the expansion of interventions and services for key populations, including MSM, at the country level, focusing in 6 countries and two regions;^81 ,82 
• The “Robert Carr Civil Society Network Fund,” also launched in June 2012⁸³  by the U.S. along with the United Kingdom, Norway, and the Gates Foundation⁸⁴  to support civil society organizations in scaling up access for key populations including LBGT individuals. The U.S. is providing $2 million to this effort; and
• The “Local Capacity Initiative Fund,” which provides funding to PEPFAR country and regional teams to support local civil society organizations that advocate for key populations to work to reduce legal and policy structural barriers and stigma and discrimination.⁸⁵ 

USAID, PEFPAR’s largest implementing agency, has been addressing the impact of HIV among MSM since it first began carrying out international HIV activities in the 1980s.⁸⁶  USAID efforts, funded under PEPFAR, to address the health of key populations have included its AIDSTAR2 and Health Policy Projects, both of which have supported MSM civil society capacity building, as well as its Research to Prevention (R2P) project, which included research to document and measure stigma and discrimination. Most recently, in December 2013, to support PEPFAR’s Blueprint, USAID put out a Request for Application (RFA) for a new five year, $72 million cooperative agreement to address key populations.⁸⁷  This RFA, Linkages Across the Continuum of HIV Services for Key Populations Affected by HIV, marks the first PEPFAR central procurement dedicated to addressing the needs of key populations. It is intended to strengthen the capacity of governments and civil society in PEPFAR partner countries to “implement high quality, sustainable, evidence-based and comprehensive HIV and AIDS prevention, care and treatment services with key populations at scale,” including gay men and other MSM and transgender individuals.

In addition, over the next year, PEPFAR is planning on rolling out workshops for PEPFAR country staff focused on: U.S. policies regarding sexual orientation and gender identity; workplace expectations regarding diversity; facilitating engagement with civil society and community organizations working with LGBT populations; and implementation of emergency response guidelines and protocols during hostile situations that directly involve LGBT populations.⁸⁸ 

In addition to PEPFAR’s bilateral HIV programming, the U.S. is the largest donor to the Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund) which itself first approved a strategy to address sexual orientation and gender identity several years prior (in 2009),⁸⁹  and recently strengthened its focus on promoting human rights for key populations by integrating human rights concerns into its grant-making process⁹⁰  and launching a pilot initiative to help increase the participation of and “create “safe spaces” for key affected populations, especially those who are criminalized and marginalized.⁹¹ 

WHO and PAHO

Beyond its HIV-focused programming, U.S. government engagement on global LGBT health issues more broadly has taken place in the international, diplomatic arena. Specifically, the U.S. has led efforts to raise LGBT health at the WHO, the directing and coordinating authority for health within the United Nations system.⁹²  In May 2012, the U.S. convened a panel discussion on LGBT health at the sidelines of the World Health Assembly, the annual meeting of the WHO attended by all WHO Member States. The U.S., with a handful of other countries, subsequently petitioned to have the topic of LGBT health included on the agenda of the WHO Executive Board (which determines the broader WHA agenda). The WHO staff prepared a summary report on LGBT health⁹³  to be considered at the May 2013 Executive Board meeting, but several countries petitioned to remove the agenda item for future consideration; it was again not adopted at a January 2014 Executive Board meeting and, while the WHO Director-General has been personally involved in trying to get it back on the agenda, it is unclear when it will be reconsidered. Importantly, this is the first time in the history of WHO that an agenda item has been removed, a fact that reflects the incredible political sensitivity of this issue at the health body.

Despite the continued uncertainty about the inclusion of LGBT health on the WHO agenda, in October 2013, PAHO, the regional body of the WHO representing the Americas, unanimously passed a resolution that had been presented by the U.S. addressing LGBT health including discrimination in the health sector, marking the first time any UN body had adopted a resolution specifically addressing these issues.^94 ,95 ,96 

U.S. Global Health Assistance & the Presence of Anti-LGBT Laws by Country

As a backdrop for understanding the legal climate regarding LGBT individuals in countries in which the U.S. government provides global health assistance, the Kaiser Family Foundation analyzed U.S. funding data for FY 2013 and information on criminalization laws by country. This analysis finds that in FY 2013, of the 67 countries that received U.S. global health assistance (totaling $5.7 billion):

• Thirty-four criminalize same-sex behavior, including 3 which impose the death penalty.
• These 34 countries accounted for 71% of U.S. global health assistance ($4.1 billion); eight are among the top 10 recipients of U.S. global health assistance.⁹⁷ 
• Most (23) are in Africa; 9 are in Asia and one, each, is in the Oceanic and Latin American/Caribbean regions, respectively. None are in the European/Eurasia region.
• They range in in the number of U.S.-supported global health programs (of 7 major program areas).⁹⁸  Eleven receive funding from just a single program area while 8 receive funding from all 7 programs; nineteen countries receive funding from 4 or more program areas.
• Twenty-six receive PEPFAR (HIV bilateral) funding, accounting for 71% of PEPFAR funding.
• Countries receiving U.S. global health assistance include India, Nigeria and Uganda, which have recently moved to further criminalize same sex behavior, and several others where such steps are being considered.

Also see Figure 1. Table 2 provides a detailed breakdown of these data and sources (additional information is provided in an appendix).

U.S. RESPONSE TO RECENT ACTIONS IN NIGERIA, UGANDA, AND ELSEWHERE

The U.S. has had varying responses to the recent actions to further criminalize homosexuality and/or restrict LGBT rights taken by the governments of Russia, India, Nigeria and Uganda. These responses have ranged from statements of concern by Administration officials and Members of Congress, to diplomatic meetings, requests for assurances about protections of individuals seeking health services and, in the case of Uganda, the review and even suspension of some U.S. health and other development assistance. The range in responses reflects several factors including U.S. bilateral relations more broadly with each of these countries, the unique context of each country, the nature of the recent change in the law and any related enforcement, and the extent to which the country receives health and other development assistance from the United States. Russia, for example, receives no development assistance from the U.S. government and the USAID mission has been closed, and current U.S.-Russia bilateral relations are primarily focused on addressing the crisis in Ukraine. India receives health (and some other development) assistance from the U.S., although this has diminished over time as the country has moved into middle income status; in addition, as described below, the recent change to Indian law was made by the Indian Supreme Court and is still being challenged by several parties including the central Indian government. Nigeria and Uganda, on the other hand, have been seen as important partners in responding to HIV and other health challenges. Both are among the top 10 recipients of health assistance from the U.S. government and were among the original 15 PEPFAR focus countries, and still are top PEPFAR recipients.⁹⁹  They are also focus countries under the President’s Malaria Initiative (PMI) and priority countries for USAID’s family planning, maternal and child health, and TB programs. In addition, while each has long had laws criminalizing same sex behavior, they had, until recently, rarely been enforced.

An overview of U.S. responses to recent developments in these four countries is provided below.

Russia

While Russia decriminalized same sex behavior in 1993,¹⁰⁰  President Putin, in June 2013, signed into law an amendment to an existing federal law On Protecting Children from Information Harmful to Their Health and Development, extending it to include the propaganda of “nontraditional sexual relations to minors”.¹⁰¹  The law includes administrative fines for individuals, organizations, and foreigners for such propaganda, and further subjects foreigners to prison and deportation from Russia. The law was met by international criticism,¹⁰²  including by the U.S. government, in part because it was passed just months before the Winter Olympics was to be held in Sochi, Russia and most of the international response centered on concerns about Sochi. The U.S. government issued a travel warning for LGBT travelers, which remains in effect today.¹⁰³  More than 80 Members of Congress sent a letter to Secretary Kerry expressing their concern about the implications of the law for the safety and well-being of LGBT and LGBT-supporting individuals involved in or attending the Olympics and requesting information about diplomatic and other actions the State Department intended to take.¹⁰⁴  President Obama and other administration officials have criticized the law^105 ,106  and the State Department’s Human Rights Country Report on Russia describes the law as limiting the rights of free expression and assembly for citizens who wish to publicly advocate for LGBT rights or express the opinion that homosexuality is normal including materials that “directly or indirectly approve of people who are in nontraditional sexual relationships.”¹⁰⁷ 

India

In December 2013, a two-person bench of the Indian Supreme Court reinstated a colonial-era law (Section 377 of the Penal Code) that described homosexual acts as ��against the order of nature” and punishable by up to life in prison. The ruling overturned a 2009 ruling by the Delhi High Court, which had found the law unconstitutional, with the Supreme Court stating that only Parliament could make such changes.¹⁰⁸  Many have spoken out^109 ,110  against this ruling including the Indian government, which filed a petition challenging the ruling that has since been rejected.^111 ,112  Other avenues for addressing the ruling are being pursued, including requesting a curative petition (for the Court to hear the case even after a petition has been dismissed) and legislative action.¹¹³  The State Department has expressed its “deep concern” about the ruling.¹¹⁴  The ruling is noted in the State Department’s Human Rights Country Report on India and in its travel advisory.¹¹⁵ 

Nigeria

Nigeria has long criminalized same sex behavior (including penalty of death in some northern states of the country) but a recent bill signed into law by President Jonathan further criminalizes LGBT people and groups. The law mandates a 14-year prison sentence for anyone entering a same-sex union and a 10-year term for “a person or group of persons who supports the registration, operation and sustenance of gay clubs, societies, organizations, processions or meetings”. The law also states that “a person or group of persons who … supports the registration, operation and sustenance of gay clubs, societies, organizations, processions or meetings in Nigeria commits an offence and is liable on conviction to a term of 10 years imprisonment.”^116 ,117  Incidents of violence and criminalization following the passage of the law have been documented.^118 ,119  Many in the international community have spoken out about this law including the UN Secretary General;¹²⁰  the UN Human Rights Council;¹²¹  UNAIDS¹²²  and the Global Fund, which issued a joint statement of concern;¹²³  President Obama, Secretary Kerry, and the U.S. Ambassador to Nigeria. Secretary Kerry has said, for example, that “Beyond even prohibiting same sex marriage, this law dangerously restricts freedom of assembly, association, and expression for all Nigerians.”¹²⁴  The State Department’s Human Rights Country Report on Nigeria critiques the law¹²⁵  and the State Department’s travel advisory for Nigeria warns LGBT travelers about its potential implications.¹²⁶  While some have called for a review of the U.S. government’s development assistance portfolio in Nigeria, particularly through PEPFAR, such a review has not yet been announced.

Uganda

Like Nigeria, Uganda has also long had a law criminalizing homosexuality. However, in February 2014, Uganda’s President Museveni signed a bill, originally proposed in 2009 (the original version included the death penalty), that imposes further criminal sanctions on LGBT individuals and those who support them.¹²⁷  Since the signing of the bill, increased incidents of targeting and criminalization have been reported.^{128 ,129 ,130} The signing of the bill was largely unexpected, particularly due to earlier successful attempts to prevent passage and some indications by President Museveni that he would not sign it. The response by the U.S. and others to Uganda has been the most pronounced. Several donors, including the United Kingdom, Norway, Denmark,¹³¹  and the World Bank¹³²  have stated that they are examining, redirecting, and/or suspending aid to the country, or indicated that their aid does not go to directly to the Ugandan government. UNAIDS^133 ,134  and the Global Fund¹³⁵  have expressed their strong concern. President Obama,¹³⁶  Secretary Kerry,¹³⁷  other Administration officials, and Members of Congress¹³⁸  have issued strong statements and the Administration announced it would undertake a review of its portfolio (health and non-health) in Uganda. The USAID Mission Director in Uganda issued a memo to inform implementing partners that all external events, ribbon cuttings, workshops, launches, and/or program close-outs would require prior-approval.¹³⁹  Recently, the Administration announced several additional steps it was taking to respond to the situation, including: shifting some funding away from the Inter-Religious Council of Uganda (IRCU), an organization that receives PEPFAR support but one that has also spoken out in favor of the law ($2.3 million in treatment funding will continue to be provided to the IRCU but $6.4 million will be redirected to other organizations); suspension of a CDC study of MSM due to concern about staff and survey respondents’ safety; redirection of U.S. funding to Uganda for tourism; and relocation of several Department of Defense events that were scheduled to take place in Uganda.¹⁴⁰  The State Department’s travel advisory to LGBT travelers states that the “Embassy advises all U.S. citizens who are resident and those visiting Uganda to carefully consider their plans in light of this new law” ¹⁴¹  (the State Department’s Human Rights Country Report was published before the passage of the new law).

Despite these actions, and assurances by the Ugandan government that health services for LGBT individuals would not be affected, on April 3, a U.S.-funded health clinic and medical research facility, the Makerere University Walter Reed Project (MUWRP), was raided by Ugandan authorities and an employee arrested for conducting “unethical research” and “recruiting homosexuals.” In its response, the State Department wrote, “[w]hile that individual was subsequently released, this incident significantly heightens our concerns about respect for civil society and the rule of law in Uganda, and for the safety of LGBT individuals” and has temporarily suspended the MUWRP operations to ensure the “safety of staff and beneficiaries, and the integrity of the program”.¹⁴²  A recent statement by the new U.S. Global AIDS Coordinator, Ambassador Deborah Birx, underscored PEPFAR’s intention to continue serving those in need in countries in which they faced violence or other legal action due to their sexual orientation, gender identity or other factors, recognizing the PEPFAR has long operated in such environments and will “not back down” now.¹⁴³ 

 

While collectively, U.S. efforts to date have served to bring new attention to the human rights and health needs of LGBT individuals, they are still relatively nascent, and operate within a larger context that includes complex discussions about the appropriate role of foreign aid and U.S. diplomacy in promoting health in other countries and multi-faceted bilateral relationships beyond health. Recent actions by the governments of Nigeria and Uganda, as well as others, and concerns that other countries may soon follow suit, have raised the stakes in the conversation and introduced a greater sense of urgency. Participants at two KFF roundtables discussed these topics and identified several key opportunities, challenges, and potential next steps for consideration by the U.S. in addressing the health needs of LGBT populations in the short and long terms. While there was considerable discussion of the difficulty in and sensitivity around identifying the most appropriate steps and leverage points to use at this time – in part because some of the changes at country-level are still being debated and interpreted – there was general agreement that the U.S. government should take action. Ultimately, participants felt that an overriding principle guiding any U.S. response should be to “do no harm” to LGBT individuals, that health services supported by the U.S. should be continued, and that there should be a focus on public health outcomes and program effectiveness. There was also recognition of the importance of considering the specific context and culture of each country and that growing acceptance of LGBT individuals in the U.S. took a long time, with rapid change only coming more recently. The key points from those discussions are summarized below.

Challenges

Roundtable participants raised and discussed several challenges to addressing global LGBT health in the short and long term. Specific challenges raised include:

• Lack of a proactive and/or coordinated U.S. strategy. While participants recognized that the U.S. government had generally bolstered the importance of addressing LGBT human rights in its foreign policy efforts, they felt that the developments in Nigeria and Uganda were not met with a proactive or coordinated response. Without an organized response, participants were concerned about the potential for adverse health outcomes for individuals and the compromising of the effectiveness of U.S. health investments. Such a response was identified as particularly important given growing concerns that several other countries are moving in the direction of increased criminalization of same sex behavior and/or LGBT rights.
• Reaching LGBT individuals with health interventions when they are criminalized by their State. A fundamental challenge that underscored much of the discussion was how best to ensure the effectiveness of U.S. supported health programs and reach LGBT individuals with essential health interventions, including for HIV, when they are criminalized by their State. Such situations pose challenges for recipients of services and program implementers, both of whom may be at risk for seeking and providing health services (as raised by the recent raid of the MUWRP by the Ugandan police), which could have adverse effects on health outcomes. Participants felt that there was an immediate need in Uganda and Nigeria, as well as a longer term need more generally, for the U.S. government to develop policies and protocols for addressing such situations. Some suggested that there were lessons to be learned from other countries where such laws have been in effect and even enforced^144 ,145  but services have been successfully provided, as well as in cases where U.S.-supported health interventions have been provided to other populations who may be criminalized by their State, such as sex workers and injecting drug users.
• Addressing the immediate needs of those in danger. While the U.S. and others have developed mechanisms for helping LGBT individuals facing violence and other threats in their countries, including the GEF, participants felt that many still faced numerous challenges to accessing such services, and would benefit from a more organized effort by the U.S. government and its missions in-country to provide assistance, including asylum where needed. They pointed to complex cases where LGBT individuals were leaving their country of origin to escape violence or arrest due to their sexual orientation or gender identity only to arrive in neighboring countries where similar challenges were encountered or assistance was not available.
• Limited capacity of LGBT civil society. Despite some U.S. government and other efforts to build LGBT civil society capacity, it still remains minimal in many parts of the world, in part due to the presence of criminalization laws and laws restricting LGBT organizing. As such, civil society organizations have not always been equipped to respond to changes in local laws or enforcement of those laws. Participants stated that this represented a key challenge to dealing with the immediate situation in some countries and an important long term challenge ahead, and that bolstering LGBT civil society was critically needed.
• Addressing claims of Western imperialism. A key challenge raised by participants was how to address and be sensitive to claims that the U.S. and other donors are imposing western values on other countries when they critique criminalization laws. This point was recognized as being a thorny and complicated issue for the U.S. and other Western governments, as well as NGOs, to address. Discussants felt that the U.S. and others would be well served by remaining sensitive to such claims, but also firm in expressing its position. Overcoming this perception could be helped through several approaches, such as: ensuring that any U.S./Western responses make the case for a broad vision of human rights and not focus on LGBT rights alone; emphasizing concerns about the health and safety of individuals and the success of U.S. health investments; fostering local and regional voices of authority to make statements against such discrimination; and engaging other sectors, including the private sector and faith community.
• Managing the move toward increased “country ownership” of U.S. global health programs. Beyond the immediate concerns about the health and safety of LGBT individuals in countries that are further criminalizing same sex behavior, participants discussed the challenges related to the longer term move by the U.S. government toward greater country ownership of U.S. health and development programs. As described by the U.S. government, the ultimate goal of country ownership is to support “host country partners (including local stakeholders) in planning, overseeing, managing, delivering and eventually financing a health program responsive to the needs of their people to achieve and sustain health goals.”¹⁴⁶  As such, concerns have been raised about how the rights and health needs of those who are most marginalized will be assured and monitored during and after transitions to more country-led programs, particularly in countries that criminalize their behavior and otherwise discriminate against them in the provision of health services; this is an especially acute concern now given what has is occurring in Nigeria and Uganda.¹⁴⁷  Roundtable participants talked about the need to be cognizant of the trade-offs that accompany decreased U.S. government involvement in such settings and discussed the importance of ensuring the health status and human rights of LGBT individuals, as well as identifying metrics for measuring their health, during such transitions. A key theme stressed was the need to include civil society in the definition of country ownership and to further build capacity of LGBT civil society organizations going forward. The recent statement by the U.S. Global AIDS Coordinator addressed this issue, stating, “PEPFAR will not transition responsibility for its assistance to host governments without a well-defined and mutually-negotiated plan in place regardless of the context.”¹⁴⁸ 
• Ongoing data gaps and research needs. Despite increased awareness of and studies on LGBT health (including a growing evidence base documenting the links between criminalization, discrimination, stigma and health), more data on the extent of the health needs and barriers faced by the LGBT population in low and middle income countries are needed. This includes a need for better metrics on MSM and transgender services and epidemiology by PEPFAR, as a way to help identify needs and calibrate the response. As has been pointed out by experts on LGBT health and human rights, there is a paradox at work where we often know the least those who are most hidden and stigmatized.¹⁴⁹  Additional research and analysis would be important for informing U.S. and broader global efforts. Indeed, roundtable participants noted that where data and evidence have been available, there has been movement to resolve challenges and create programs. At the same time, while emphasizing the importance of data, participants also stressed the need to ensure that the way in which data are collected and used does not undermine the rights and safety of LGBT individuals and those who support them.

Opportunities

Despite these challenges, roundtable participants pointed to several opportunities for the U.S. government to further engage on global LGBT, including:

• More conducive U.S. policy environment for addressing LGBT human rights around the world. Participants discussed how the increased attention to the human rights of LGBT individuals by the U.S. government in recent years – particularly the Presidential Memorandum and related agency efforts – and growing support for LGBT rights among the American public, provide a much more conducive policy environment for addressing the current, more urgent situations facing LGBT individuals in some countries, and for building a longer term, sustainable response. The response to date provides an important base from which to grow and build efforts that are still in their infancy. Participants underscored the need for ongoing leadership on LGBT human rights by U.S. government officials.
• Potential to augment a focus on global LGBT health within U.S. global health policy. While there has been increased attention to LGBT human rights by the Administration and other global actors, there has been less explicit focus on LGBT health in U.S. global health strategies and agency plans. Where there has been inclusion of LGBT health, it has primarily been through the HIV-lens and could be expanded. Participants noted that the current discussions and concern about increased criminalization provided new opportunities to enhance the focus on LGBT health by emphasizing the real and growing concerns both for the effectiveness of U.S. health programs and the health of LGBT individuals. Moreover, several participants felt that a focus on the public health impacts of criminalization laws, discrimination, and stigma, provided a needed and important way in which to frame the U.S. response and concern.
• Increasing coordination between broader human rights, LGBT, and health groups on LGBT health issues. One development noted by participants is increasing coordination and collaboration between constituencies that have not always worked together including human rights, LGBT, HIV, and broader global health groups. This presents new opportunities to build synergies and inform the U.S. response on LGBT health and address complex challenges on the ground. Human rights experts spoke, for example, about how the recent trends towards further criminalization of LGBT individuals often took place in the context of other violations of human rights. Global health groups with large footprints around the world also spoke about their ability to more directly engage on LGBT health issues.
• Elevating LGBT voices in-country to help inform the U.S. policy response. Many participants talked about the critical importance of elevating in-country LGBT voices, particularly from the global south, in informing U.S. policy and responses and speaking about the impacts of criminalization laws and health needs they face. There are positive examples of this already happening – for example, LGBT communities in Nigeria and Uganda, respectively, have provided guidance on how other governments and organizations can respond to the recent criminalization in their countries^150 ,151  and more opportunities could be sought by the U.S. government and NGOs for such engagement, opportunities that would also help to build civil society and ensure that responses are grounded in the realities facing LGBT individuals on the ground. This could include funding for civil society advocacy and other work. At the same, time, participants spoke about the risks associated with this visibility and the need to ensure safety of individuals and groups willing to speak out.
• Using the post-2015 framework. As the global community approaches the 2015 deadline set to achieve the Millennium Development Goals (MDGs), agreed to by all Member States of the United Nations, it is moving toward finalizing a new, “post-2015” global development framework and attendant goals. Because of its significance in setting global goals and direction, participants saw the post-2015 framework as an important opportunity for addressing LGBT development and health needs. Discussions about the post-2015 framework have included human rights, inequality, and, more recently, non-discrimination, although discussion of LGBT rights has been minimal and primarily introduced by NGOs through external consultations. While it is unclear if LGBT health and rights will be explicitly addressed in the new framework, participants felt that it was an important process to monitor and be part of going forward.
• Growing evidence base. Despite data gaps that remain, there is a growing evidence base regarding barriers to accessing health services, health disparities, and the health effects of these barriers, including criminalization laws, on LGBT individuals. These data underscore the importance of the need to support health access in order to achieve key global goals, including achieving universal access and reaching an AIDS-free Generation. As noted above, where data and evidence have been available, there has been movement to resolve challenges and create programs. There are some recent examples of efforts to support more data collection, including the recent approval by the Global Fund’s Board of funding to support research on size estimation and surveys of key populations.¹⁵² 

Looking Forward: Potential Next Steps

Participants outlined a number of concrete steps that could be taken in the short and long term to facilitate the U.S. response to current, urgent situations and bolster a longer term effort to address global LGTB health. All felt that additional actions by the U.S. government were needed. These included:

• Review U.S. health and development portfolios. Several NGOs and Members of Congress have called on the State Department to review its health and development portfolios in countries that criminalize same sex behavior, beyond Uganda. While most participants echoed this view, they recognized that a more realistic, short term effort could at least be focused on those countries that have already taken steps to further criminalize same sex behavior or restrict LGBT rights (whether through law or enforcement) and others that appear to be moving in this direction now. Such efforts should include a strong emphasis on the health implications of these laws, including where they could compromise access and safety and whether they were consistent with U.S. programmatic goals.
• Develop proactive strategy for moving forward. In addition to a current review of U.S. government portfolios in select countries, participants felt strongly that a proactive strategy and greater coordination internally were needed, particularly given concerns that several other countries are moving to further criminalize same sex behavior. A proactive strategy could include development of clear protocols, guidelines and procedures and training of U.S. personnel and implementers (building on what is already starting through PEPFAR for example). The U.S. could look to other countries and organizations for best practices in this regard.
• Consider appointing a U.S. “Special Envoy” or other high-level point person on LGBT issues. Several participants spoke about the importance of having a high-level USG point person, such as a Special Envoy, on LGBT issues who could lead the government’s response in this area. Such an individual could help to ensure coordination and ongoing attention to LGBT issues in foreign policy, particularly when there was a situation that needed more urgent attention and required multi-agency responses, but also for longer term progress. It was noted that a new position of this sort would need to have sufficient seniority and authority to be successful.
• Expand efforts to help LGBT individuals facing violence, arrest, and threats due to their sexual orientation or gender identity. While it was noted that the U.S. has more broadly worked to address the needs of LGBT individuals facing violence, arrest, and other threats, many felt that the current situation in Uganda, Nigeria, and elsewhere required a stepped-up response and plan. Concerns were raised that it was still not clear where LGBT individuals in such situations could go for assistance and how quickly such assistance could be provided.
• Articulate importance of continuing U.S.-funded health services. Participants felt that it was critically urgent for the U.S. government to articulate its support for and the importance of continuing health services in countries where increased discrimination and criminalization might be occurring. They raised concern that some signals have been sent suggesting that health services support could be suspended and noted that even such a suggestion could negatively affect the health-seeking behavior of individuals needing services and was unlikely to have any effect on government laws and actions. In the wake of the recent raid by the Ugandan police on the MUWRP, the new U.S. Global AIDS Coordinator reaffirmed PEPFAR’s intention to continue services, stating that PEPFAR would not “ take actions that harm the very individuals for whom we have a responsibility to serve – such as curtailing their access to core HIV services solely because the political, cultural, or security space in which we operate gets rough.”¹⁵³ 
• Bolster PEFPAR’s focus on LGBT health access and safety. Because PEPFAR is the largest component of the U.S. global health response and HIV has such a disproportionate impact on MSM and transgender individuals, many felt that while PEPFAR has increased its efforts to help key populations, such efforts could be expanded. In particular, participants felt that among all USG programs, the review of PEPFAR’s in-country portfolio was most urgent and that guidance from the Office of the Global AIDS Coordinator on how best to address the current situation and potential future challenges was needed, in addition to broader USG guidance.
• Use Global Health Diplomacy. In addition to foreign assistance, roundtable participants discussed the importance of using bilateral and multilateral global health diplomacy – which the U.S. has recently emphasized more generally^154 ,155  – to address LGBT  issues with country leaders, both in the short term but also longer term, given the recognition that changing views toward LGBT individuals and protections will take time. This could include a more explicit role for U.S. Ambassadors, some of whom have already been outspoken about protecting LGBT rights and health. One potential new asset that the USG has to promote health through diplomatic channels is the recently created Office of Global Health Diplomacy at the State Department which “guides diplomatic efforts to advance the United States’ global health mission to improve and save lives and foster sustainability through a shared global responsibility.”¹⁵⁶    A key aspect of the work of this office is to support the role of U.S. Ambassadors in promoting and discussing the importance of health. This office could play a more prominent role in raising the health challenges faced by LGBT people and how violence, discrimination, and stigma affect their health and compromise the potential to reach agreed upon global health goals. Beyond bilateral diplomacy, participants underscored the important and ongoing work the U.S. government has done to raise LGBT health issues at the WHO.
• Coordinate with other donor governments and multilateral organizations. Coordinating the U.S. response with that of other donors, including governments and multilateral actors was seen as very important in this work, both to address short term needs of LGBT individuals seeking health services but also for longer term efforts. The World Bank, the Global Fund, and UNAIDS in particular were identified by participants as key organizations for the U.S. to work with more explicitly on LGBT rights, given that each has been directly involved in responding to the situation in Uganda and Nigeria as well as other countries. Some of this coordination is already underway but participants felt it could be increased and should clearly be part of any response going forward.
• Engage the private sector. The role of the private sector in responding to HIV, and other global health challenges, has been significant¹⁵⁷  and was seen as a potential untapped resource for addressing LGBT rights and health globally (as it has also been in the U.S. domestic context¹⁵⁸  and in response to Russia’s recent law).¹⁵⁹  Participants discussed the possibility of finding ways to engage the private sector with business assets in countries that have been moving to further criminalize same sex behavior or restrict LGBT rights to discuss why such laws can be harmful to their employees, customers, and the broader climate for business.
• Engage the faith community. The faith community has long provided HIV and other global health services in low and middle income countries,¹⁶⁰  including with support from the U.S. government. At the same time, some faith organizations have been directly linked to the introduction of criminalization laws and anti-gay sentiment in some countries.¹⁶¹  Others have spoken out against discrimination and such laws. Given the importance of the faith community in providing health services and dialoguing with country leaders, participants felt it was critically important to engage them on LGBT issues, focusing on health needs and services.
• Build LGBT Civil Society. Given the critical role played by civil society in both providing services to and advocating for individuals, and for monitoring government programs and policies, participants felt that an important next step was for the U.S. government to find new ways to build LGBT civil society capacity in low and middle income countries, beyond its current efforts. This would include additional support from PEPFAR but also from the State Department and USAID.
• Support data collection, research, and analysis on global LGBT health. Participants felt that the U.S. government was uniquely situated to support further data collection and analysis on LGBT health in low and middle income countries, including developing short term systems for documenting what is happening on the ground in countries where further criminalization is occurring and more systematically cataloguing the evidence, particularly related to the relationship between stigma, discrimination, and criminalization and health outcomes.

This is an important and challenging time for addressing the health and human rights of LGBT individuals around the world. While there have been tremendous gains in some countries, there is a rising trend in others to further criminalize same sex behavior and/or discriminate against LGBT people, activities which have been shown to have an adverse effect on health. The U.S. government has already begun to enhance its focus on LGBT rights and health through its foreign policy work, and to address recent cases in some countries, yet these efforts are nascent and most are not health-specific. Participants in two roundtables convened by the Kaiser Family Foundation felt that more could be done in both the short and long term. Key aspects of any response should include a guiding principle of “do no harm” to LGBT individuals; the continuation of U.S. supported health services; a focus on public health outcomes and program effectiveness; and a recognition of the specific context of countries where the U.S. supports health programs. Beyond identifying opportunities for addressing the immediate needs of LGBT individuals in countries where they may face harm, there are also opportunities for the U.S. to further enhance its efforts to address the health needs – in addition to the human rights – of LGBT individuals, and to build the capacity of civil society organizations on LGBT health.

U.S. Global Health Assistance, FY 2013, by Program Area & Presence of Anti-LGBT Laws by Country

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5. Institute of Medicine, The Health of Lesbian, Gay, Bisexual, and Transgender People: Building a Foundation for Better Understanding. Washington, DC: National Academies Press, 2011. http://www.iom.edu/Reports/2011/The-Health-of-Lesbian-Gay-Bisexual-and-Transgender-People.aspx. ↩︎
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9. UNAIDS, “Overcoming Discriminatory Barriers to Health Services”, March 14, 2014. http://www.unaids.org/en/resources/presscentre/featurestories/2014/march/20140314discriminationbarriers/. ↩︎
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11. Sexual orientation is defined as “an enduring pattern of or disposition to experience sexual or romantic desires for, and relationships with, people of one’s same sex, the other sex, or both sexes” (see, Institute of Medicine, 2011).  This definition incorporates elements of attraction, behavior, and identity. Gender Identity refers to “an individual’s internal sense of being male, female, or something else.  Since gender identity is internal, one’s gender identity is not necessarily visible to others” (see, National Center for Transgender Equality. Transgender Terminology, 2014). Gender expression refers to how “a person represents or expresses one’s gender identity to others, often through behavior, clothing, hairstyles, voice or body characteristics” see, National Center for Transgender Equality. Transgender Terminology, 2014). Transgender refers to individuals whose “gender identity, expression or behavior is different from those typically associated with their assigned sex at birth” see, National Center for Transgender Equality. Transgender Terminology, 2014). ↩︎
12. UN General Assembly, Human Rights Council, “Discriminatory Laws and Practices and Acts of Violence against Individuals Based on their Sexual Orientation and Gender Identity”, A/HRC/19/41 (2011). http://www2.ohchr.org/english/bodies/hrcouncil/docs/19session/A.HRC.19.41_English.pdf. ↩︎
13. UNAIDS, “Homophobia and Punitive Laws Continue to Threaten HIV Responses and Human Rights,” August, 28, 2012. http://www.unaids.org/en/resources/presscentre/featurestories/2012/august/20120828punitivelaws/. ↩︎
14. Pew Research Center, A Survey of LGBT Americans Attitudes, Experiences and Values in Changing Times, June 13, 2013. http://www.pewsocialtrends.org/2013/06/13/a-survey-of-lgbt-americans/. ↩︎
15. Mikel L. Walters, Jieru Chen, and Matthew J. Breiding, The National Intimate Partner and Sexual Violence Survey (NISVS): 2010 Findings on Victimization by Sexual Orientation. Atlanta, GA: National Center for Injury Prevention and Control, Centers for Disease Control and Prevention, 2013. http://www.cdc.gov/violenceprevention/pdf/nisvs_sofindings.pdf. ↩︎
16. State Department, Country Reports on Human Rights Practices for 2013, (2014). http://www.state.gov/j/drl/rls/hrrpt/humanrightsreport/index.htm#wrapper. ↩︎
17. ILGA, State-Sponsored Homophobia-A World Survey of Laws: Criminalisation, Protection and Recognition of Same-Sex Love, 8th Edition (2013). http://ilga.org/ilga/en/article/o5VlRM41Oq. ↩︎
18. This includes the 76 countries identified by ILGA, as of May 2013 (see, ILGA, State-Sponsored Homophobia,2013), as well as India, whose Supreme Court reinstated a law criminalizing consensual same sex behavior between adults in December 2013. Not included in the total is Russia which decriminalized same sex behavior between consenting adults in 1993, but criminalized “the propaganda of nontraditional sexual relations to minors” in June 2013. (See, State Department, Country Reports on Human Rights Practices for 2013 for additional information on India and Russia). ↩︎
19. Defined as laws which criminalize same-sex activity between consenting adults. ↩︎
20. These laws vary by country, ranging in terms of the severity of sentence (e.g., length of imprisonment), whether they are part of the penal code or common law, whether regularly enforced, and other factors. For more information see, IGLA, State-Sponsored Homophobia (2013). ↩︎
21. ILGA, State-Sponsored Homophobia-A World Survey of Laws: Criminalisation, Protection and Recognition of Same-Sex Love, 8th Edition (2013). http://ilga.org/ilga/en/article/o5VlRM41Oq. ↩︎
22. UN General Assembly, Human Rights Council, “Discriminatory Laws and Practices and Acts of Violence against Individuals Based on their Sexual Orientation and Gender Identity”, A/HRC/19/41 (2011). http://www2.ohchr.org/english/bodies/hrcouncil/docs/19session/A.HRC.19.41_English.pdf. ↩︎
23. Council for Global Equality and Human Rights First, How to Protect LGBTI Persons around the World from Violence: Blueprint For the Next Administration, (2012).  http://www.globalequality.org/storage/documents/pdf/hrf_lgbti_blueprint.pdf. ↩︎
24. Institute of Medicine, The Health of Lesbian, Gay, Bisexual, and Transgender People: Building a Foundation for Better Understanding. Washington, DC: National Academies Press, 2011. http://www.iom.edu/Reports/2011/The-Health-of-Lesbian-Gay-Bisexual-and-Transgender-People.aspx. ↩︎
25. Gregorio A Millett, William L Jeffries 4th, John L Peterson, David J Malebranche, Tim Lane, Stephen A Flores, Kevin A Fenton, Patrick A Wilson, Riley Steiner, and Charles M Heilig, “Common Roots: A Contextual Review of HIV Epidemics in Black Men who have Sex with Men Across the African Diaspora,” Lancet 380(2012):411-23. ↩︎
26. Stefan Baral, Gift Trapence, Felistus Motimed, Eric Umar, Scholastika Iipinge, Friedel Dausab, and Chris Beyrer, “HIV Prevalence, Risks for HIV Infection, and Human Rights among Men Who Have Sex with Men (MSM) in Malawi, Namibia, and Botswana,” PLoS ONE 4(2009): e4997. ↩︎
27. Stefan Baral, Darrin Adams, Judith Lebona, Bafokeng Kaibe, Puleng Letsie, Relebohile Tshehlo, Andrea Wirtz and Chris Beyrer, “A Cross-sectional Assessment of Population Demographics, HIV Risks and Human Rights Contexts Among Men who have Sex with Men in Lesotho,” Journal of the International AIDS Society 14 (2011):36. ↩︎
28. Heather Fay, Stefan D. Baral, Gift Trapence, Felistus Motimedi, Eric Umar, Scholastika Iipinge, Friedel Dausab, Andrea Wirtz, and Chris Beyrer, “Stigma, Health Care Access, and HIV Knowledge Among Men Who Have Sex With Men in Malawi, Namibia, and Botswana,” AIDS and Behavior 15 (2011):1088–1097. ↩︎
29. Tonia Poteat, Daouda Diouf, Fatou Maria Drame, Marieme Ndaw, Cheikh Traore, Mandeep Dhaliwal, Chris Beyrer, and Stefan Baral, “HIV Risk among MSM in Senegal: A Qualitative Rapid Assessment of the Impact of Enforcing Laws That Criminalize Same Sex Practices,” PLoS ONE 6(2011): e28760. ↩︎
30. Stefan Baral Paul Semugoma, Daouda Diouf, Gift Trapence, Tonia Poteat, Marieme Ndaw, Fatou Maria Drame, Mandeep Dhaliwal, C. Traore, N Diop, S. Bhattacharya, T. Sellers, Andrea Wirtz, and Chris Beyrer, “Criminalization of same sex practices as a structural driver of HIV risk among men who have sex with men (MSM): The cases of Senegal, Malawi, and Uganda,” Paper presented at the International AIDS Conference, Vienna, Austria, July 18-23, 2010. ↩︎
31. Wolfgang Hladik, Joseph Barker, John M. Ssenkusu, Alex Opio, Jordan W. Tappero, Avi Hakim, and David Serwadda, “HIV Infection among Men Who Have Sex with Men in Kampala, Uganda–A Respondent Driven Sampling Survey among Men who have Sex with Men in Kampala, Uganda–A Respondent Driven Sampling Survey,”  PLoS ONE 7(2012), e38143. ↩︎
32. UNAIDS, Global Report: UNAIDS Report on the Global AIDS Epidemic 2013, Geneva: UNAIDS, 2013. ↩︎
33. Chris Beyrer, Stefan D Baral, Frits van Griensven, Steven M Goodreau, Suwat Chariyalertsak, Andrea L Wirtz, and Ron Brookmeyer, “Global Epidemiology of HIV Infection in Men who have Sex with Men”, Lancet 380 (2012): 367-377. ↩︎
34. Chris Beyrer, Stefan D Baral, Frits van Griensven, Steven M Goodreau, Suwat Chariyalertsak, Andrea L Wirtz, and Ron Brookmeyer, “Global Epidemiology of HIV Infection in Men who have Sex with Men”, Lancet 380 (2012): 367-377. ↩︎
35. Chris Beyrer, Patrick Sullivan, Jorge Sanchez, Stefan D. Baral, Chris Collins, Andrea L. Wirtz, Dennis Altman, Gift Trapence and Kenneth Mayer, “Global Epidemiology of HIV Infection in Men who have Sex with Men, AIDS 27 (2013): 2665–2678. ↩︎
36. Stefan D Baral, Ashley Grosso, Claire Holland, and Erin Papworth, “The Epidemiology of HIV among Men who have Sex with Men in Countries with Generalized HIV Epidemics,” Current Opinion in HIV and AIDS 9 (2014): 156–167. ↩︎
37. UNAIDS, Global Report: UNAIDS Report on the Global AIDS Epidemic 2013, Geneva: UNAIDS, 2013. ↩︎
38. Tonia Poteat, Daouda Diouf, Fatou Maria Drame, Marieme Ndaw, Cheikh Traore, MandeepDhaliwal, Chris Beyrer, and Stefan Baral, “HIV Risk among MSM in Senegal: A Qualitative Rapid Assessment of the Impact of Enforcing Laws That Criminalize Same Sex Practices,” PLoS ONE 6(2011): e28760. ↩︎
39. State Department, Press Statement by Marie Harf, “Raid on the Makerere University Walter Reed Project by Ugandan Authorities”, April 4, 2014. http://www.state.gov/r/pa/prs/ps/2014/04/224431.htm. ↩︎
40. White House, Office of the Press Secretary, Presidential Memorandum, “International Initiatives to Advance the Human Rights of Lesbian, Gay, Bisexual, and Transgender Persons,” December 6, 2011. http://www.whitehouse.gov/the-press-office/2011/12/06/presidential-memorandum-international-initiatives-advance-human-rights-l. ↩︎
41. UN General Assembly, Human Rights Council, “Human Rights, Sexual Orientation and Gender Identity”, A/HRC/RES/17/19 (2011). http://daccess-dds-ny.un.org/doc/UNDOC/GEN/G11/148/76/PDF/G1114876.pdf?OpenElement. ↩︎
42. State Department, Fact Sheet, “The Department of State’s Accomplishments Promoting the Human Rights of Lesbian, Gay, Bisexual and Transgender People,” December 6, 2011. http://www.state.gov/r/pa/prs/ps/2011/12/178341.htm. ↩︎
43. Tristan McConnell, “Uganda’s New Anti-Gay Law: Part of a Broader Trend in Africa,” National Geographic, February 28, 2014. http://news.nationalgeographic.com/news/2014/02/140228-uganda-anti-gay-law-smug-homophobia-africa-world/. ↩︎
44. Gabe Joselow, “After Uganda, Kenya Gears up for Gay Rights Debate,” Voice of America, March 5, 2014. http://www.voanews.com/content/after-uganda-kenya-gears-up-for-gay-rights-debate/1864600.html. ↩︎
45.  Valérie Bah, “Congo-Kinshasa: DRC Looks to Follow in Uganda’s Footsteps With Anti-Gay Bill,” Think Africa Press, March 11, 2014. http://allafrica.com/stories/201403111646.html?viewall=1. ↩︎
46. Emmanuel Muga, “Dar plans to introduce tougher anti-gay Bill,” East African, March 29, 2014. http://www.theeastafrican.co.ke/news/Dar-plans-to-introduce-tougher-anti-gay-Bill–/-/2558/2262374/-/iq7xix/-/index.html. ↩︎
47. J. Lester Feder, “Russian-Style “Gay Propaganda” Law Introduced In Kyrgyzstan,” Buzzfeed, March 27, 2014. http://www.buzzfeed.com/lesterfeder/russian-style-gay-propaganda-law-introduced-in-kyrgyzstan. ↩︎
48. White House, Office of the Press Secretary, Presidential Memorandum, “International Initiatives to Advance the Human Rights of Lesbian, Gay, Bisexual, and Transgender Persons,” December 6, 2011. http://www.whitehouse.gov/the-press-office/2011/12/06/presidential-memorandum-international-initiatives-advance-human-rights-l. ↩︎
49. State Department, Bureau of Public Affairs, Fact Sheet, “Advancing the Human Rights of Lesbian, Gay, Bisexual and Transgender Persons Worldwide: A State Department Priority,” June 28, 2013. http://www.state.gov/r/pa/pl/2013/211478.htm. ↩︎
50. USAID, Press Office, “USAID Announces New Partnership to Promote LGBT Human Rights Abroad,” April 8, 2013. http://www.usaid.gov/news-information/press-releases/usaid-announces-new-partnership-promote-lgbt-human-rights-abroad ↩︎
51. State Department, Press Statement, Hillary Rodham Clinton, “In Recognition of Gay and Lesbian Pride Month 2009,” June 1, 2009. http://www.state.gov/secretary/20092013clinton/rm/2009a/06/124176.htm. ↩︎
52. State Department, Remarks by Hillary Rodham Clinton, “Remarks on the Human Rights Agenda for the 21st Century,” December 14, 2009. http://www.state.gov/secretary/20092013clinton/rm/2009a/12/133544.htm. ↩︎
53. State Department, Bureau of Public Affairs, Fact Sheet, “Advancing the Human Rights of Lesbian, Gay, Bisexual and Transgender Persons Worldwide: A State Department Priority,” June 28, 2013. http://www.state.gov/r/pa/pl/2013/211478.htm. ↩︎
54. UN General Assembly, Human Rights Council, “Human rights, sexual orientation and gender identity,” A/HRC/RES/17/19, July 14, 2011. http://daccess-dds-ny.un.org/doc/UNDOC/GEN/G11/148/76/PDF/G1114876.pdf?OpenElement. ↩︎
55. State Department, “The Department of State’s Accomplishments Promoting the Human Rights of Lesbian, Gay, Bisexual and Transgender People,” December 6, 2011. http://www.state.gov/r/pa/prs/ps/2011/12/178341.htm. ↩︎
56. White House, Office of the Press Secretary, “Remarks by President Obama in Address to the United Nations General Assembly”, September 21, 2011. http://www.whitehouse.gov/the-press-office/2011/09/21/remarks-president-obama-address-united-nations-general-assembly. ↩︎
57. White House, Office of the Press Secretary, Presidential Memorandum, “International Initiatives to Advance the Human Rights of Lesbian, Gay, Bisexual, and Transgender Persons,” December 6, 2011. http://www.whitehouse.gov/the-press-office/2011/12/06/presidential-memorandum-international-initiatives-advance-human-rights-l. ↩︎
58. White House, Office of the Press Secretary, Fact Sheet, “Working to Advance the Human Rights of Lesbian, Gay, Bisexual, and Transgender (LGBT) Persons Globally,” December 6, 2011. http://www.whitehouse.gov/the-press-office/2011/12/06/fact-sheet-working-advance-human-rights-lesbian-gay-bisexual-and-transge. ↩︎
59. State Department, Remarks by Hillary Rodham Clinton, “Free and Equal in Dignity and Rights”, December 6, 2012. http://www.humanrights.gov/2011/12/06/remarks-in-recognition-of-international-human-rights-day/. ↩︎
60. Current GEF partners, in addition to the U.S. government, include the governments of Denmark, Finland, France, Germany, Iceland, the Netherlands, Norway, and Sweden; the Arcus Foundation, the John D. Evans Foundation, LLH: the Norwegian LGBT Organization, the M∙A∙C AIDS Fund, and Deloitte. See, http://www.state.gov/globalequality/about/index.htm. ↩︎
61. State Department, Global Equality Fund. http://www.state.gov/globalequality/. ↩︎
62. State Department, Media Note, “The State Department Welcomes New Private Sector Support for the Global Equality Fund,” December 10, 2013. http://www.state.gov/r/pa/prs/ps/2013/218569.htm. ↩︎
63. State Department, Remarks by Anne C. Richard, “Strengthening Protection for LGBT Refugees,” May 17, 2012. http://www.state.gov/j/prm/releases/remarks/2012/190280.htm. ↩︎
64. U.S. Customs and Immigration Services, “Guidance For Adjudicating Lesbian, Gay, Bisexual, Transgender, And Intersex (LGBTI) Refugee And Asylum Claims,” Training Module, December 28, 2011. http://www.uscis.gov/sites/default/files/USCIS/Humanitarian/Refugees%20%26%20Asylum/Asylum ↩︎
65. USAID, USAID Policy Framework 2011-2015 (2011). http://www.usaid.gov/sites/default/files/documents/1870/USAID%20Policy%20Framework%202011-2015.PDF. ↩︎
66. USAID, Strategy on Democracy, Human Rights and Governance (2013). http://www.usaid.gov/sites/default/files/documents/1866/USAID%20DRG_%20final%20final%206-24%203%20(1).pdf. ↩︎
67. USAID, Youth in Development Policy (2012). http://www.usaid.gov/sites/default/files/documents/1870/Youth_in_Development_Policy_0.pdf. ↩︎
68. USAID, Country Development Cooperative Strategy (CDCS) Guidance Version 3 (2013). http://www.usaid.gov/sites/default/files/documents/1870/CDCS_Guidance_V3.pdf. ↩︎
69. USAID, Global Health Strategic Framework for FY 2012-2016 (2012). http://www.usaid.gov/sites/default/files/documents/1864/gh_framework2012.pdf. ↩︎
70. USAID, “Award Provisions Encouraging More Comprehensive Nondiscrimination Policies by USAID Contractors and Recipients: A Mandatory Reference for ADS Chapter 302.” June 19, 2012. http://www.usaid.gov/sites/default/files/documents/1868/302mbf.pdf. ↩︎
71. USAID, The USAID Vision for Action: Promoting and Supporting the Inclusion of Lesbian, Gay, Bisexual, and Transgender Individuals, Draft (2013). http://www.usaid.gov/sites/default/files/Draft_USAID_LGBT_Vision_for_Public_Comment.pdf. ↩︎
72. USAID, Press Office, “USAID Announces New Partnership To Promote LGBT Human Rights Abroad”. Partners include the Swedish International Development Cooperation Agency, Astraea Lesbian Foundation for Justice, the Gay & Lesbian Victory Institute, the Williams Institute, and Olivia Companies,” April 8, 2013. http://www.usaid.gov/news-information/press-releases/usaid-announces-new-partnership-promote-lgbt-human-rights-abroad ↩︎
73. USAID, The USAID Vision for Action: Promoting and Supporting the Inclusion of Lesbian, Gay, Bisexual, and Transgender Individuals, Draft (2013). http://www.usaid.gov/sites/default/files/Draft_USAID_LGBT_Vision_for_Public_Comment.pdf. ↩︎
74. White House, Blog Post by Samantha Power, “US Leadership to Advance Equality for LGBT People Abroad”, December 13, 2012. http://www.whitehouse.gov/blog/2012/12/13/us-leadership-advance-equality-lgbt-people-abroad. ↩︎
75. Millennium Challenge Corporation, Selection Indicators. http://www.mcc.gov/pages/selection/indicators. ↩︎
76. See, for example: Millennium Challenge Corporation, Press Release, “MCC Finalizes $350 Million Compact with Malawi”, April 1, 2011, http://www.mcc.gov/pages/press/release/mcc-finalizes-350-million-compact-with-malawi; Millennium Challenge Corporation, Congressional Notification, “Report on the Determination by the Chief Executive Officer that the Government of Malawi has Engaged in a Pattern of Actions Inconsistent with the Eligibility Criteria of the Millennium Challenge Corporation”, March 26, 2012, http://www.mcc.gov/documents/cn/cn-03262012-malawi.pdf; Millennium Challenge Corporation, “Report on the Determination by the Chief Executive Officer that the Government of Malawi has Taken Sufficient Corrective Action to Address Each Condition for Which Assistance Was Suspended,” June 26, 2012, http://www.mcc.gov/documents/cn/cn-062712-malawi.pdf. ↩︎
77. Institute of Medicine. Evaluation of PEPFAR. Washington, DC: The National Academies Press, 2013. http://www.nap.edu/catalog.php?record_id=18256. ↩︎
78. PEPFAR, Technical Guidance: Prevention for Men Who Have Sex With Men (2011). http://www.pepfar.gov/reports/guidance/combinationprevention/combprevmsm/index.htm. ↩︎
79. Ibid, p. 4. ↩︎
80. PEPFAR, PEPFAR Blueprint: Creating an AIDS-free Generation (2012). http://www.pepfar.gov/documents/organization/201386.pdf ↩︎
81. State Department, Remarks by Hillary Rodham Clinton, “Remarks at the 2012 International AIDS Conference,” July 23, 2012. http://www.state.gov/secretary/20092013clinton/rm/2012/07/195355.htm. ↩︎
82. State Department, DipNote by Eric Goosby, “Reaching Key Populations: Essential to Achieving an AIDS-Free Generation”, June 20, 2013. http://blogs.state.gov/stories/2013/06/20/reaching-key-populations-essential-achieving-aids-free-generation. The countries and regions are: Cambodia, Ghana, Nepal, Senegal, Swaziland, and Zimbabwe – and Asia and Central America. ↩︎
83. State Department, Remarks by Hillary Rodham Clinton, “Remarks at the 2012 International AIDS Conference,” July 23, 2012. http://www.state.gov/secretary/20092013clinton/rm/2012/07/195355.htm. ↩︎
84. Robert Carr Fund, http://www.robertcarrfund.org/donors/donors/. ↩︎
85. PEPFAR, PEPFAR Blueprint: Creating an AIDS-free Generation (2012). http://www.pepfar.gov/documents/organization/201386.pdf. ↩︎
86. USAID, “Linkages Across the Continuum of HIV Services For Key Populations Affected By HIV (“Linkages”)”, Request For Application (RFA), RFA Solicitation Number: Sol-Oaa-14-000013, November 5, 2013. ↩︎
87. Ibid. ↩︎
88. Personal communication with Ron MacInnis, Futures Group, March 27, 2014. ↩︎
89. Global Fund to Fight AIDS, Tuberculosis and Malaria, The Global Fund Strategy in Relation to Sexual Orientation and Gender Identities (2009). http://www.theglobalfund.org/documents/core/strategies/Core_SexualOrientationAndGenderIdentities_Strategy_en/. ↩︎
90. Global Fund to Fight AIDS, Tuberculosis and Malaria, The Global Fund Strategy 2012-2016: Investing for Impact (2011). http://www.theglobalfund.org/en/about/strategy/. ↩︎
91. Global Fund to Fight AIDS, Tuberculosis and Malaria, Newsflash, Issue 23, 2013. http://www.theglobalfund.org/en/blog/33316/. ↩︎
92. Nils Daulaire, “Bringing LGBT Health Care to the World Health Organization,” Huffington Post, June 13, 2013. http://www.huffingtonpost.com/nils-daulaire/world-health-organization-lgbt_b_3430849.html. ↩︎
93. World Health Organization, “Improving the Health and Well-being of Lesbian, Gay, Bisexual and Transgender Persons,” EB133/6, May 14, 2013. ↩︎
94. PAHO, “Addressing the Causes of Disparities in Health Service Access and Utilization for Lesbian, Gay, Bisexual and Trans (LGBT) Persons,” September 30, 2012. http://www.paho.org/hq/index.php?option=com_docman&task=doc_download&gid=23145&Itemid=270&lang=en. ↩︎
95. PAHO, “Health authorities pledge to improve access to health care for LGBT People,” October 3, 2013. http://www.paho.org/hq/index.php?option=com_content&view=article&id=9056&Itemid=1926. ↩︎
96. Nils Daulaire, “A Victory for LGBT Health in the Americas,” Huffington Post, November 12, 2013. http://www.huffingtonpost.com/nils-daulaire/a-victory-for-lgbt-health_b_4262367.html. ↩︎
97. It is important to note that preliminary analysis of USAID transaction data indicates that in most of these countries, a very small share of funding is provided directly to recipient country governments (KFF analysis of data from www.foreignassistance.gov). ↩︎
98. The seven major program areas include: PEPFAR (HIV); malaria; TB; maternal and child health; family planning and reproductive health; nutrition; and water. ↩︎
99. Kaiser Family Foundation analysis of data from www.foreignassistance.gov. ↩︎
100. ILGA, State-Sponsored Homophobia-A World Survey of Laws: Criminalisation, Protection and Recognition of Same-Sex Love, 8th Edition (2013). http://ilga.org/ilga/en/article/o5VlRM41Oq. ↩︎
101. Council on Global Equality, “The Facts on LGBT Rights in Russia,” http://www.globalequality.org/newsroom/latest-news/1-in-the-news/186-the-facts-on-lgbt-rights-in-russia. ↩︎
102. UNAIDS, Press Release, “On the Eve of Zero Discrimination Day, UNAIDS Calls for the Protection for the Health and Human Rights of Vulnerable Populations,” February 28, 2014. http://www.unaids.org/en/resources/presscentre/pressreleaseandstatementarchive/2014/february/20140228zerodiscrimination/. ↩︎
103. State Department, Travel Alerts & Warnings, Russia, http://travel.state.gov/content/passports/english/country/russia.html. ↩︎
104. Office of Congressman Jerrold Nadler, Press Release. “Rep. Nadler Leads Bipartisan Letter to Protect LGBT Rights at 2014 Olympic Games in Russia,” August 2, 2013. http://nadler.house.gov/press-release/rep-nadler-leads-bipartisan-letter-protect-lgbt-rights-2014-olympic-games-russia. ↩︎
105. White House, Office of the Press Secretary, “Remarks by the President in a Press Conference,” August 9, 2013, http://www.whitehouse.gov/the-press-office/2013/08/09/remarks-president-press-conference. ↩︎
106. State Department, “Remarks by Ambassador Samantha Power, U.S. Permanent Representative to the United Nations, at a Roundtable Strategy Session on International LGBT Rights,” December 10, 2013. http://usun.state.gov/briefing/statements/218567.htm. ↩︎
107. State Department, Country Reports on Human Rights Practices for 2013, (2014). http://www.state.gov/j/drl/rls/hrrpt/humanrightsreport/index.htm#wrapper. ↩︎
108. State Department, Country Reports on Human Rights Practices for 2013, (2014). http://www.state.gov/j/drl/rls/hrrpt/humanrightsreport/index.htm#wrapper. ↩︎
109. UNAIDS, Press Release, “UNAIDS Calls on India and all Countries to Repeal Laws that Criminalize Adult Consensual Same Sex Sexual Conduct,” December 12, 2013. http://www.unaids.org/en/resources/presscentre/pressreleaseandstatementarchive/2013/december/20131212psindia/. ↩︎
110. UNAIDS, Press Release, “On the Eve of Zero Discrimination Day, UNAIDS Calls for the Protection for the Health and Human Rights of Vulnerable Populations,” February 28, 2014. http://www.unaids.org/en/resources/presscentre/pressreleaseandstatementarchive/2014/february/20140228zerodiscrimination/. ↩︎
111. Faine Greenwood, “Indian government asks Supreme Court to review anti-gay law,” Global Post, December 20, 2013. http://www.globalpost.com/dispatch/news/regions/asia-pacific/india/131220/indian-government-asks-supreme-court-review-anti-g-0. ↩︎
112. “Supreme Court Refuses Overruling its Verdict on Section 377 and Homosexuality,” IANS Biharprabha News, January 28, 2014, http://news.biharprabha.com/2014/01/supreme-court-refuses-overruling-its-verdict-on-article-377-and-homosexuality/. ↩︎
113. Akila R. S, “Section 377: The way forward,” The Hindu, March 1, 2014. http://www.thehindu.com/features/magazine/section-377-the-way-forward/article5740242.ece. ↩︎
114. State Department, Daily Press Briefing, Jen Psaki, Spokesperson, December 11, 2013. http://www.state.gov/r/pa/prs/dpb/2013/12/218597.htm#INDIA. ↩︎
115. State Department, Travel Alerts & Warning, India, http://travel.state.gov/content/passports/english/country/india.html. ↩︎
116. Nigerian Government, Same Sex Marriage (Prohibition) Act, 2013. ↩︎
117. State Department, Travel Alerts & Warning, Nigeria, http://travel.state.gov/content/passports/english/country/nigeria.html. ↩︎
118. Adam Nossiter, “Nigeria Tries to ‘Sanitize’ Itself of Gays”, New York Times, February 8, 2014. http://www.nytimes.com/2014/02/09/world/africa/nigeria-uses-law-and-whip-to-sanitize-gays.html. ↩︎
119. Erika Eichelberger, “You Thought It Was Tough Being Gay in Uganda. ‘It’s Hell in Nigeria,’” Mother Jones, March 13, 2014. http://www.motherjones.com/politics/2014/03/nigeria-anti-gay-law-hiv. ↩︎
120. UN News Center, “Nigeria: Ban Voices Concern as New Anti-homosexuality Law Takes Effect,” January 15, 2014. http://www.un.org/apps/news/story.asp?NewsID=46935&Cr=lesbian&Cr1=#.U11VVvldX4s. ↩︎
121. United Nations, Press Office, “UN Human Rights Chief Denounces New Anti-homosexuality Law in Nigeria,” January 14, 2014. http://www.ohchr.org/FR/NewsEvents/Pages/DisplayNews.aspx?NewsID=14169&LangID=E. ↩︎
122. UNAIDS, Press Release, “On the Eve of Zero Discrimination Day, UNAIDS Calls for the Protection for the Health and Human Rights of Vulnerable Populations,” February 28, 2014. http://www.unaids.org/en/resources/presscentre/pressreleaseandstatementarchive/2014/february/20140228zerodiscrimination/. ↩︎
123. UNAIDS & the Global Fund, Press Release, “UNAIDS and the Global Fund Express Deep Concern about the Impact of a New Law Affecting the AIDS Response and Human Rights of LGBT People in Nigeria,” January 14, 2014. http://www.unaids.org/en/resources/presscentre/pressreleaseandstatementarchive/2014/january/20140114nigeria. ↩︎
124. State Department, Remarks by John Kerry, “Deep Concern with Nigeria’s Enactment of the Same Sex Marriage Prohibition Act,” January 13, 2014. http://www.state.gov/secretary/remarks/2014/01/219587.htm. ↩︎
125. State Department, Country Reports on Human Rights Practices for 2013, (2014). http://www.state.gov/j/drl/rls/hrrpt/humanrightsreport/index.htm#wrapper. ↩︎
126. State Department, Travel Alerts & Warning, Nigeria, http://travel.state.gov/content/passports/english/country/nigeria.html. ↩︎
127. State Department, Travel Alerts & Warning, Uganda, http://travel.state.gov/content/passports/english/country/uganda.html. ↩︎
128. Amnesty International, Press Release, “Global Day of Action against Uganda’s Anti-Homosexuality Bill,” February 10, 2014. http://www.amnestyusa.org/news/news-item/global-day-of-action-against-uganda-s-anti-homosexuality-bill. ↩︎
129. “Ugandan Tabloid Prints List of ‘Top 200 Homosexuals’,” The Guardian, February 25, 2014. http://www.theguardian.com/world/2014/feb/25/ugandan-tabloid-prints-list-top-200-homosexuals. ↩︎
130. State Department, Press Statement by Marie Harf, “Raid on the Makerere University Walter Reed Project by Ugandan Authorities”, April 4, 2014. http://www.state.gov/r/pa/prs/ps/2014/04/224431.htm. ↩︎
131. Martin Plaut, “Uganda Donors Cut Aid after President Passes Anti-gay Law,” The Guardian, February 25, 2014, http://www.theguardian.com/global-development/2014/feb/25/uganda-donors-cut-aid-anti-gay-law. ↩︎
132. J. Lester Feder, “World Bank Delays $90 Million Loan To Uganda As Bank President Blasts Anti-Gay Laws,” Buzzfeed, February 27, 2014, http://www.buzzfeed.com/lesterfeder/world-bank-delays-90-million-loan-to-uganda-as-bank-presiden. ↩︎
133. UNAIDS, Press Release, “UNAIDS Expresses Deep Concern Over Impact of Ugandan Bill on the Rights of Gay men,” February 18, 2014, http://www.unaids.org/en/resources/presscentre/pressreleaseandstatementarchive/2014/february/20140218psuganda/. ↩︎
134. UNAIDS, Press Release, “On the Eve of Zero Discrimination Day, UNAIDS Calls for the Protection for the Health and Human Rights of Vulnerable Populations,” February 28, 2014. http://www.unaids.org/en/resources/presscentre/pressreleaseandstatementarchive/2014/february/20140228zerodiscrimination/. ↩︎
135. Global Fund to Fight AIDS, Tuberculosis and Malaria, Announcement, “Global Fund Deeply Concerned over Anti-Gay Law in Uganda,” February 24, 2014. http://www.theglobalfund.org/en/mediacenter/announcements/2014-02-24_Global_Fund_Deeply_Concerned_over_Anti-Gay_Law_in_Uganda/. ↩︎
136. White House, Office of the Press Secretary, “Statement by the President on the Anti-Homosexuality Bill in Uganda,” February 16, 2014, http://www.whitehouse.gov/the-press-office/2014/02/16/statement-president-anti-homosexuality-bill-ugandaObama. ↩︎
137. State Department, Remarks by John Kerry, “Enactment of Ugandan Anti-Homosexuality Bill,” February 24, 2014, http://www.state.gov/secretary/remarks/2014/02/221987.htm. ↩︎
138. See, for example: “Comments Of Senator Patrick Leahy (D-Vt., President Pro Tempore, Chairman Of The State Department And Foreign Operations Appropriations Subcommittee) On Uganda President Museveni’s Signing Of The Anti-Homosexuality Bill, February 25, 2014, http://www.leahy.senate.gov/press/comments-of-senator-patrick-leahy-d-vt-president-pro-tempore-chairman-of-the-state-department-and-foreign-operations-appropriations-subcommittee-on-uganda-president-musevenis-signing-of-the-anti-homosexuality-bill; “Senator Coons Condemns Enactment of Anti-Homosexuality Bill in Uganda,” February 24, 2014, http://www.coons.senate.gov/newsroom/releases/release/senator-coons-condemns-enactment-of-anti-homosexuality-bill-in-uganda; Congressional Black Caucus, March 18, 2014, http://lee.house.gov/sites/lee.house.gov/files/Rep.%20Lee%20CBC%20letter%20re%20Uganda%20LGBT%20law%203.18.14.pdf. ↩︎
139. USAID Uganda, “USAID Response to Enactment of Anti-Homosexuality Bill,” Memo to USAID/Uganda Implementing Partners, February 28, 2014. ↩︎
140. White House, Blog by Grant Harris and Stephen Pomper, “Promoting Regional Security and Protecting Human Rights in Uganda,” March 24, 2014. http://www.whitehouse.gov/blog/2014/03/24/promoting-regional-security-and-protecting-human-rights-uganda. ↩︎
141. State Department, Travel Alerts & Warning, Uganda, http://travel.state.gov/content/passports/english/country/uganda.html. ↩︎
142. State Department, Press Statement by Marie Harf, “Raid on the Makerere University Walter Reed Project by Ugandan Authorities”, April 4, 2014. http://www.state.gov/r/pa/prs/ps/2014/04/224431.htm. ↩︎
143. State Department, Press Release, “Statement from Ambassador Deborah Birx, M.D., U.S. Global AIDS Coordinator, on the Principles of PEPFAR’s Public Health Approach”, April 11, 2014. http://www.pepfar.gov/press/releases/2014/224738.htm. ↩︎
144. Tonia Poteat, Daouda Diouf, Fatou Maria Drame, Marieme Ndaw, Cheikh Traore, MandeepDhaliwal, Chris Beyrer, and Stefan Baral, “HIV Risk among MSM in Senegal: A Qualitative Rapid Assessment of the Impact of Enforcing Laws That Criminalize Same Sex Practices,” PLoS ONE 6(2011): e28760. ↩︎
145. Michael Gerson, “Making the AIDS Crisis Worse,” Washington Post, March 13, 2014. http://www.washingtonpost.com/opinions/michael-gerson-africa-is-making-the-aids-crisis-worse/2014/03/13/274578e2-aae4-11e3-adbc-888c8010c799_story.html. ↩︎
146. U.S. Global Health Initiative, U.S. Government Interagency Paper on Country Ownership. 2012. http://www.ghi.gov/principles/docs/ownershipInteragencyPaper.pdf. ↩︎
147. Meeting Report, Advancing Country Ownership: Civil Society’s Role in Sustaining Public Health. 2013. http://www.amfar.org/uploadedFiles/_amfarorg/On_the_Hill/Country-Ownership-Meeting-Report-June-2013.pdf. ↩︎
148. State Department, Press Release, “Statement from Ambassador Deborah Birx, M.D., U.S. Global AIDS Coordinator, on the Principles of PEPFAR’s Public Health Approach”, April 11, 2014. http://www.pepfar.gov/press/releases/2014/224738.htm. ↩︎
149. Chris Beyrer and Stefan D Baral, “MSM, HIV and the Law: The Case of Gay, Bisexual and other men who have sex with men (MSM)”, Working Paper for the Third Meeting of the Technical Advisory Group of the Global Commission on HIV and the Law, 7-9 July 2011. ↩︎
150. Civil Society Coalition on Human Rights and Constitutional Law, “Guidelines to National, Regional, and International Partners on how to Offer Support Now that the Anti-Homosexuality Law has been Assented To,” March 3, 2014. ↩︎
151. Solidarity Alliance for Human Rights, “Advisory to Allies and Partners on Providing Support to Nigeria’s Sexual/Gender Minorities in the Aftermath of the Same-Sex Marriage [Prohibition] Act 2013,” March 28, 2014. ↩︎
152. The Global Fund to Fight AIDS, Tuberculosis and Malaria, “Special Initiatives,” Board Decision GF/B31/08A, March 6-7, 2014. http://www.theglobalfund.org/documents/board/31/BM31_08-SpecialInitiatives_Paper_en/. ↩︎
153. State Department, Press Release, “Statement from Ambassador Deborah Birx, M.D., U.S. Global AIDS Coordinator, on the Principles of PEPFAR’s Public Health Approach”, April 11, 2014. http://www.pepfar.gov/press/releases/2014/224738.htm. ↩︎
154. Josh Michaud and Jen Kates, Raising the Profile of Diplomacy in the U.S. Global Health Response: A Backgrounder on Global Health Diplomacy, Menlo Park: Kaiser Family Foundation, 2012. ↩︎
155. Josh Michaud and Jen Kates, “Global Health Diplomacy: Advancing Foreign Policy and Global Health Interests,” Global Health: Science and Practice 1 (2013):24-28. ↩︎
156. State Department, Office of Global Health Diplomacy, http://www.state.gov/s/ghd/. ↩︎
157. See, for example, GBC Health, http://www.businessfightsaids.org/. ↩︎
158. See, for example: David Schwartz, “Arizona Governor Vetoes Bill Widely Criticized as Anti-gay,” Reuters, February 27, 2014, http://www.reuters.com/article/2014/02/27/us-usa-gays-arizona-idUSBREA1Q02420140227. ↩︎
159. See, for example: Thomas Gryta, “AT&T Criticizes Russia’s Antigay Law on Eve of Olympics,” Wall Street Journal, February 4, 2014, http://online.wsj.com/news/articles/SB10001424052702303442704579363190709990288. ↩︎
160. See, for example: Georgetown University, “HIV/AIDS Summit Draws International Faith Leaders,” July 25, 2012, http://www.georgetown.edu/news/aids-summit-faith-leaders.html; Christian Medical Fellowship, “Faith Matters – The Contribution of Faith to Health and Healthcare in the Post 2015 agenda”; CSIS, “The American Faith Community’s Contributions to Global Health,” January 31, 2012, http://www.smartglobalhealth.org/blog/entry/the-american-faith-communitys-contributions-to-global-health; The Global Fund to Fight AIDS, Tuberculosis and Malaria, Report on the Involvement of Faith-Based Organizations in the Global Fund: 2010 Update. Geneva: Global Fund, 2011, http://www.theglobalfund.org/documents/civil_society/CivilSociety_InvolvemenOfFaithBasedOrganizationsInTheGlobalFund_Report_en/ ↩︎
161. See, for example: Fredrick Nzwili, “Uganda’s anti-gay bill refocuses attention on US evangelical influence,” Christian Science Monitor, February 25, 2014, http://www.csmonitor.com/World/2014/0225/Uganda-s-anti-gay-bill-refocuses-attention-on-US-evangelical-influence-video; Christiane Amanpour, “How American Evangelicals may be Responsible for Uganda’s Anti-gay Law,” CNN, February 24, 2014, http://amanpour.blogs.cnn.com/2014/02/24/how-american-evangelicals-may-be-responsible-for-ugandas-anti-gay-law/; Sarah Pulliam Bailey, “U.S. evangelicals on the defense over Uganda’s new Anti-Homosexuality Act,” Washington Post, March 4, 2014, http://www.washingtonpost.com/national/religion/us-evangelicals-on-the-defense-over-ugandas-new-anti-homosexuality-act/2014/03/04/e91c3b56-a3e9-11e3-b865-38b254d92063_story.html; United States District Court for the District of Massachusetts, “Sexual Minorities Uganda v. Scott Lively”, Memorandum and Order Regarding Defendant’s Motions to Dismiss, C.A. No. 12-cv-30051-MAP, August 14, 2013; Inter-Religious Council of Uganda, “ICRU Press Statement on Anti-Gay Bill”, February 19, 2014. ↩︎

Since the early 2000s, state Medicaid programs have made concerted efforts to control the cost of prescription drug spending. One crucial aspect in doing so is using a pharmacy reimbursement methodology that best reflects actual drug costs. Currently, states set pharmacy reimbursement policy within broad federal guidelines, resulting in a complex mix of reimbursement rules. Many states use list prices to set reimbursement levels, and these list prices increasingly have been criticized as not accurately reflecting the cost of the drug. Specifically, there are concerns that some benchmarks lead to inflated reimbursement levels. As a result, the federal government has proposed new rules that aim to make reimbursement policies more closely match the cost of obtaining and filling prescriptions. However, the change in policy may have varying effects on reimbursement, depending on the state’s current approach and the type of drug in question. This paper explains current Medicaid pharmacy reimbursement methodology and examines the potential effect of the proposed rule changes.

Medicaid Drug Reimbursement Policy

State Medicaid programs reimburse pharmacies for prescription drugs based on the ingredient costs for the drug and a dispensing fee for filling the prescription. States use a variety of benchmarks to set reimbursement for the ingredient costs.  Concerns about the accuracy of drug pricing benchmarks commonly used, particularly average wholesale price (AWP) and wholesale acquisition cost (WAC), have led states and the federal government to look for new ways to determine payment levels. In February 2012, the Centers for Medicare & Medicaid Services (CMS), released a draft rule that would change the basis of payment for Medicaid-covered drugs from an “estimated acquisition cost” (EAC) to an “actual acquisition cost” (AAC).  CMS proposed this change, because it feels that AAC will more accurately reflect the actual prices that pharmacies pay to acquire drugs.¹  In addition to modifying the language of drug reimbursement, the draft rule suggested ways that states could determine AAC; a final rule is anticipated this year.

This paper explains current pharmacy reimbursement methodology; examines proposed and final rule changes that CMS has issued; reviews outside studies on drug pricing benchmarks and how they compare to each other; and provides independent analysis on how one possible AAC measure, the National Average Drug Acquisition Cost (NADAC), compares to previously used EAC measures.

Key Findings

• While CMS has proposed to move from EAC to AAC, EAC is still currently used as the basis of payment for Medicaid-covered drugs in most states.  Most states calculate EAC by applying a percentage reduction to Average Wholesale Price (AWP) or a percentage increase to Wholesale Acquisition Cost (WAC).  In September 2013, 12 states used AWP as their primary reimbursement metric, 16 states used WAC, and only 6 states used AAC. 17 states used a combination of benchmarks in setting reimbursement levels.
• To better understand the prices that pharmacies pay to acquire drugs, the US government and outside groups have conducted numerous studies comparing drug pricing benchmarks to each other, as well as measures of acquisition costs.  These studies have shown that the relationships among list prices (WACs and AWPs) and average prices paid (Average Manufacturer Prices, or AMPs) depends on whether a drug is a single-source brand, multiple-source brand, or generic.  They have also shown that AMPs were consistently less than AWPs and generic WACs, but much closer to brand WACs.
• Independent analysis in this brief finds that one proposed AAC measure, the NADAC, is below currently-used benchmarks for single-source drugs. For single-source drugs, NADACs are well below AWPs and just slightly less than WACs.  We found that the difference between generic NADACs and generic benchmarks became more exaggerated.  We also found that actual Medicaid payments to retail pharmacies for prescribed drugs are much closer to WAC and NADAC prices than to AWP.
• Any reimbursement formula that uses fixed percentages, such as AWP minus 16 percent or WAC plus 4 percent, results in pharmacy profits that vary based on the price of the drug.
• Dispensing fees are an important factor in overall pharmacy reimbursement. Today, dispensing fees range from $2 to $10, with an average of $5 or less per prescription. Changes in ingredient costs could have implications for dispensing fees; as states switch to using AACs for drug reimbursement, dispensing fees are likely to rise.
• Although reimbursement policy is important, there are other factors that also affect Medicaid spending on prescription drugs, such as the demand for extremely expensive specialty drugs.

At nearly $16 billion in FY 2010, prescription drug spending is a significant component of Medicaid total spending.²  Although in recent years, Medicaid prescription drug spending has been growing more slowly than in the early 2000s, it remains an area of concern. Medicaid prescription drug spending is driven by many factors, including utilization and reimbursement. Medicaid programs reimburse pharmacies for outpatient drugs based upon a drug ingredient cost and a dispensing fee. Revising drug ingredient cost reimbursement methodology continues to be an area for potential cost savings. In 2011, U.S. Department of Health and Human Services Secretary Kathleen Sebelius wrote to the state governments to inform them that the federal government would help states identify cost drivers and provide states with new ways to achieve cost savings. More effective drug ingredient costs were one of many items relating to pharmaceutical services in a long list.³ 

Reimbursement methodology is just one factor that determines how much states and the federal government spend on Medicaid outpatient prescription drugs. Rebates at the federal and state levels offset some of this spending; in FY 2010, rebates accounted for over 40 percent of the $27 billion in pre-rebate Medicaid drug spending.⁴  Since 1991, federal law has required manufacturers wishing to have their products covered by any Medicaid program to participate in the Federal Medicaid Drug Rebate Program. In 2010, Congress raised the minimum required rebate level as part of the Affordable Care Act, and expanded the rebate requirement to include drugs paid for by Medicaid managed care plans.⁵ 

When managed care plans cover drugs as part of the package of services for which they receive capitated payments from the state Medicaid agency, the plans establish the reimbursement levels paid to pharmacies. Prior to passage of the Affordable Care Act, several states with comprehensive Medicaid managed care plans carved out their prescription drug benefits—i.e., paid for drugs on a fee-for-service basis rather than including them in the package of services for which plans received capitated payments—in order to collect manufacturers’ rebates, because these discounts were not required when managed care plans paid for the prescription. The Affordable Care Act required manufacturers to provide rebates on all Medicaid-covered drugs purchased by managed care plans for their Medicaid clients, effective March 23, 2010. Proponents of incorporating drug benefits into the package of managed care services tend to highlight potential advantages from better coordination of pharmacy services with other medical care and administrative tasks handled by managed care plans. Arguments for carving out drugs generally focus on potential differences in formularies, prior authorization, benefit management processes among health plans, and concerns that plans may not have the same incentives to maximize federal or state rebates. ⁶  Although this paper primarily focuses drug reimbursement, it is important to keep in mind that there are other policies that affect Medicaid drug spending.

In this paper, we examine current Medicaid pharmaceutical reimbursement policy and explain how and why the policy is changing.  We then consider research on how Medicaid drug pricing metrics compare. Finally, we conduct our own analysis on how the recently created NADAC compares to other pricing metrics.

 

Medicaid payments to retail pharmacies for prescription drugs are determined by a complex set of policies developed at both the federal and state levels.  Reimbursement is a factor of ingredient cost, dispensing fees, and any cost sharing paid by the beneficiary. States set policies on dispensing fees and, within federal guidelines, beneficiary cost-sharing. With respect to ingredient costs, with the exception of some multiple-source drugs⁷  for which there are specific federal or state limits, federal regulations require Medicaid programs to reimburse pharmacies based on the lesser of the (1) estimated acquisition cost (EAC) plus a reasonable dispensing fee; or (2) the pharmacy’s “usual and customary charge” to the public. ⁸ 

Ingredient Cost

Estimated Acquisition Cost (EAC)

EAC is intended to reflect the price that providers and retail pharmacies generally and currently pay to procure a particular drug from its supplier. Most states determine EAC using formulas that apply either a percentage reduction from the average wholesale price (AWP) for the drug or a percentage increase to the wholesale acquisition cost (WAC) for the drug. (See Figure 1).

AWPs and WACs are prices published in commercially available drug pricing compendia. Although its name suggests that it is the actual price that wholesalers charge for a drug, critics and experts alike have noted that AWP is more akin to the sticker price on a car: it represents a starting point for negotiations. It does not include any discounts or rebates that would typically be incorporated in the actual price that the wholesaler charges. It is not defined in federal regulations. Similarly, WAC is not based on actual sales data. However, unlike AWP, WAC is defined in federal regulations.⁹ 

Federal Upper Limits (FUL)

Multiple-source drugs are drugs that are available from more than one manufacturer. The Federal Upper Limit (FUL) program caps reimbursement for certain multiple-source drugs, with the intent of making the government a prudent buyer – and reducing Medicaid expenditures – by basing payments on market prices for these drugs. CMS calculates a FUL amount for specific forms and strengths for each multiple-source drug that meets the established criteria. The federal government establishes maximum payment amounts for about 700 multiple-source drugs, which include both generics and originator brands for which generic versions are available.  According to CMS, FUL drugs accounted for $2.4 billion in Medicaid expenditures in 2010,¹⁰  9% of Medicaid spending on prescription drugs. ¹¹ 

Traditionally, the FUL for a multiple-source drug was set at 150% of the lowest price published in national drug pricing compendia. The Deficit Reduction Act (DRA) of 2005 included provisions to substantially reduce FULs, based in part on findings from a federal study that indicated that FULs based on published prices (AWP or WAC) were significantly higher than pharmacies’ acquisition costs.¹²  CMS did not implement these rules because of an injunction and subsequent changes to federal law. The Affordable Care Act and subsequent proposed rules limit reimbursement to no less than 175% of the weighted average of the most recently reported average manufacturer prices (AMP) for that drug. Federal law defines AMP as the average price paid to the manufacturer for the drug in the United States by (1) wholesalers for drugs distributed to retail community pharmacies and by (2) retail community pharmacies that purchase drugs directly from the manufacturer.¹³  CMS began publishing draft FULs based on these rules in September 2011 and continues to release updates for review and comment,¹⁴  but as of the date of this publication, FUL amounts continue to be based on published prices.

State Maximum Allowable Costs

Nearly all states apply maximum allowable cost (state MAC, or SMAC) limits to multiple-source drugs, which establish ceilings on reimbursement for the drug products included on state MAC lists. These state MAC amounts generally are part of a complex “lesser of” formula, where the state agency sets reimbursement for multiple-source drugs at the lowest amount for each drug based on (1) the state’s EAC formula, (2) the FUL (if applicable), (3) the state MAC or (4) the pharmacy’s usual and customary charge to the public. State MAC programs frequently include other drugs that do not have established FULs: a 2013 analysis by the U.S. Department of Health and Human Services’ Office of Inspector General (OIG) found that state MAC programs include 50-60 percent more drugs than FULs. Of 41 states that identified a pricing benchmark for their state MAC programs, 29 used pharmacy acquisition costs as part of the benchmark to set state MAC prices.¹⁵ 

Dispensing Fees

The dispensing fee is intended to cover reasonable costs associated with providing the drug to a Medicaid beneficiary, including the pharmacist’s services and overhead associated with maintaining the facility and equipment necessary to operate the pharmacy. States establish dispensing fees for the pharmacies that fill prescriptions for Medicaid beneficiaries. In late 2013, these fees range from $2 or less per prescription in Arizona, Connecticut, New Hampshire, Ohio, and Pennsylvania to more than $10 in Alabama, Alaska, Colorado, Idaho, Iowa, Louisiana, and Oregon; most other states pay dispensing fees that average around $5 or less per prescription.¹⁶  In setting their fees, states look to the fees paid by other state Medicaid programs, as well as fees paid in private insurance programs and Medicare Part D plans. Although exact pricing for most plans is proprietary information, surveys from groups such as the Pharmacy Benefit Management Institute and the Kaiser Family Foundation, and drug benefit trend reports from pharmacy benefit managers (PBMs) such as CVS/Caremark and Express Scripts, offer insight into typical benefit designs including general pricing trends and dispensing fees.^{17 ,18 ,19 ,20} Variation in fees also reflect differences in states’ approaches to EAC: except for Alaska, the states with the highest fees also use AAC-based reimbursement.

Pharmacies often argue that dispensing fees do not adequately cover their “cost of dispensing”. Estimates from a study supported by retail pharmacies indicate that retail pharmacies’ average cost of dispensing nationwide was $10.50 per prescription (each pharmacy’s average cost weighted by prescription volume) or $12.10 per pharmacy (each pharmacy’s average cost counted once) in 2006.²¹  State-specific averages per pharmacy ranged from $10.36 to $15.91 in that study. Subsequent state-funded studies estimated an average cost of dispensing of $12.97 per pharmacy in Alabama in 2009²²  and an unweighted average cost of dispensing of $11.15 per pharmacy in Oregon that same year.²³  These states use AAC-based reimbursement with dispensing fees of $10.64 (Alabama) and $9.68 to $14.01, varying by volume (Oregon).²⁴  Alabama pays additional fees to pharmacists for special services such as pill-splitting or long-term drug maintenance.²⁵ 

Beneficiary Cost Sharing

A final component of Medicaid reimbursement for prescription drugs is cost sharing paid by the beneficiary. Medicaid has traditionally imposed limits on cost sharing. Until the enactment of the Deficit Reduction Act (DRA) of 2005, prescription drug copayments were limited to “nominal” levels, usually $3 per prescription except under Medicaid waiver, although some groups of enrollees, including children and pregnant women, could not be charged. In addition, under Medicaid policy, even if copayments were imposed and beneficiaries could not pay, pharmacies were supposed to dispense the drug anyway. The DRA modified these policies, allowing states to increase nominal cost-sharing levels based on the Consumer Price Index for Medical Care and permitting higher cost-sharing levels for beneficiaries with incomes over 100 percent of poverty as well as alternative cost-sharing policies. Today, almost all state Medicaid programs and Medicaid managed care plans charge nominal copayments for prescription drugs for adults, although they sometimes have variations in the copayment level based on whether a medication is generic or branded, or whether it is designated a “preferred” drug in the state’s Medicaid program.

Final rules issued by CMS in July 2013 allow states to require cost-sharing of up to $4 for preferred drugs and $8 for non-preferred drugs for all Medicaid-covered individuals, including individuals with incomes at or below 150% of the federal poverty level (FPL). For individuals with incomes above 150% of the FPL, the new rules allow states to establish higher cost sharing, including coinsurance of up to 20% of the cost of the drug, for non-preferred drugs.^26 ,27 

In making decisions about imposing cost-sharing, states will need to weigh a large body of evidence about the effects of beneficiary cost sharing. A systematic review of cost sharing literature by Goldman et al. found that increases in cost sharing are associated with decreased use, poorer adherence, and more frequent discontinuation of prescription medicines.²⁸  The literature also suggests that when higher cost sharing for prescription medications leads to reduced utilization and adherence, it can engender increases in other medical costs if patients become sicker as a result.^{29 ,30 ,31 , 32 ,33} 

Calls to Revise Drug Ingredient Cost Methodology

In the early 1990s, the Health Care Financing Administration³⁴  pressured states to improve their estimates of acquisition costs based on evidence that AWP was higher than pharmacies’ actual costs of acquiring drugs from a wholesaler or manufacturer.³⁵  Over the next two decades, federal investigations continued to show that AWP-based payments exceeded pharmacies’ acquisition costs, despite states’ efforts to bring reimbursement in line with costs.^{36 ,37 ,38 ,39} Regardless, until recently, the majority of states used AWP to determine reimbursement amounts; for example, at the end of 2010, 34 states still based their EAC on AWP.⁴⁰ 

In 2009, First DataBank and Medi-Span, publishers of the most widely used drug price compendia, settled lawsuits that alleged they had inflated AWPs to benefit pharmacies and wholesalers with higher payments, at the expense of purchasers (including state and federal governments). These lawsuits supported claims that AWP does not reflect actual transaction cost and confirmed suspicions that it may be subject to manipulation. In 2009, First DataBank announced they would cease publishing AWPs within two years. Medi-Span made a similar announcement at that time, but later reversed the decision, and as a result, they continue to publish AWPs today. However, the announcements that widely used sources would no longer list AWP, combined with the attention to the subject resulting from and abundance of studies and litigation on the topic caused many states and industry groups to discuss alternatives to the AWP. WAC seems to suffer much criticism because of its close relationship to AWP. However, there is evidence that WAC is actually a relatively accurate pricing measure for many single-source drugs (brand-name medications with market exclusivity) but it is less accurate, if even reported, for many multiple-source drugs (generic versions of brand-name drugs).⁴¹ 

The Move to AAC

In this atmosphere, and in direct response to the OIG’s extensive research on the actual acquisition cost and AWP, in February 2012, CMS issued proposed rules that would require states to pay pharmacies based on actual acquisition cost (AAC) plus a “professional” dispensing fee, instead of the current EAC plus a reasonable dispensing fee.⁴²  In the proposed rule,CMS defines AAC as the state Medicaid agency’s determination of pharmacy providers’ actual prices paid to acquire drug products marketed or sold by a specific manufacturer. To determine AAC, CMS suggests in the proposed rule that states may survey pharmacies, as is currently done by every state using AAC-based reimbursement, or use the AMP data that manufacturers already are required to report to enable calculations of federal rebates and FUL pricing. The Office of Management and Budget has indicated the final rule is scheduled to come out in mid-2014.⁴³ 

A 2011 survey by the Department of Health and Human Services’ Office of the Inspector General (OIG) found that most states want CMS to create a national benchmark for Medicaid reimbursement of prescription drugs.⁴⁴  The proposed rule from February 2012 also mentioned that a national survey could be used to develop an AAC metric. To this end, CMS contracts with a public accounting firm to perform a survey of invoices from independent and chain retail pharmacies, which it uses to calculate National Average Drug Acquisition Costs (NADAC) values.⁴⁵  CMS began to post draft NADAC data to a public website in October 2012. Effective November 27, 2013, CMS is posting final NADAC data, updated on a weekly and monthly basis.⁴⁶  CMS views these data as a way of providing Medicaid agencies with information concerning acquisition costs, which state agencies can use to compare pricing methodologies and payments. If a state agency chooses to use NADAC as its metric to determine reimbursement, it would have to submit a state plan amendment to CMS for approval.

Commercial entities have also developed alternative measures to estimate actual acquisition costs. For example, Elsevier/Gold Standard, a drug database and drug reference provider, promotes use of a new pricing metric it calls Predictive Acquisition Cost (PAC). This metric comes from a predictive analytic model that estimates drug acquisition cost based on factors such as industry maximum allowable cost benchmarks, published prices, existing price benchmarks, drug dispensation metrics, supply-demand measures, and survey-based acquisition costs.⁴⁷ 

Existing Evidence

The U.S. Department of Health and Human Services’ Office of Inspector General (OIG) and the U.S. Government Accountability Office (GAO) have issued several studies that indicate how drug pricing benchmarks relate to each other and to measures of acquisition costs, FULs, and state MACs. These studies emphasize that relationships between list prices (AWPs and WACs) and average prices (AMPs) differ based on whether a drug is a single-source brand, multiple-source brand, or generic. They show AMPs were consistently less than AWPs and generic WACs, but AMPs were relatively close to brand WACs. They also show AMPs were close to single-source brand invoice prices, but the relationship was much more variable for multiple-source brands and generics without FULs. Additionally, they showed that AMP values vary considerably from month to month. See Appendix Table 1 for a more complete review of OIG, GAO, and other existing research on the comparison of drug pricing metrics.

Comparing EACs and NADACs

Because the NADAC is a new measure, there is little current research on its relationship to other pricing metrics.  Our goal was to understand how the NADAC, an AAC measure, compares with the EAC measures and ultimately how they compare with the current amounts that Medicaid pays. To do this, we compared AWPs, WACs, NADACs, and amounts paid for different drugs.  We merged several sources of data at the National Drug Code (NDC)⁴⁸  level. We grouped the NDCs by brand, generic, therapeutic class, and therapeutic subclass. Finally, we calculated the weighted averages of AWPs, WACs, NADACs, and amounts paid for the top 25 brand, top 25 generic, top 100 generic, and therapeutic class. The calculation of current payment levels takes into account each state’s EAC computations and the effects of FULs, state MACs and usual and customary charges.  Further details on our methodology are provided in the Methods section at the end of this report.

Brand-Name Drugs

Figure 2 shows that among the top 25 single source brands and top 25 multiple source brands, the average NADAC ($8.03) is about 18 percent less than the average AWP ($9.78), but just slightly less than the average WAC ($8.14).  Average WACs and NADACs for brand drugs are less than the amount that Medicaid pays ($8.33).  However, it is important to note that the actual paid amounts include dispensing fees, and are reduced by patient cost sharing and amounts paid by third parties, which are not accounted for in the AWP, WAC, or NADAC. To get a sense for this, if we assume that the average prescription for the top 25 single source brand drugs used to compute the values shown in Figure 2 contains 35 units (based on calculations using our source data), that the average dispensing fee is $5 per prescription ($0.14 per unit), and that there are negligible amounts of third party payment and cost sharing (reasonable assumptions at the national level), then the weighted average total amount paid per unit absent these amounts would be about $8.19.  We then approximate that for the top 25 single-source brand drugs, NADACs are just slightly less than actual Medicaid payments for the drug ingredient cost.

Table 1 shows the prescription-weighted, per-unit average AWP, WAC, NADAC and total amount paid for single source brand drugs grouped into therapeutic drug classes. Across therapeutic classes, NADAC is usually very close to WAC— 1 % to 2% higher or lower— although there are larger differences in a few classes. Table 1 also reaffirms that the acquisition costs are well below AWPs.

The analysis by therapeutic drug class also highlights the significant challenges in developing reimbursement formulas caused by great variation in drug prices. Any formula using a fixed percentage increase or decrease from a benchmark, such as AWP minus 16% or WAC plus 4%, results in markups (or markdowns) that vary in actual dollar amounts based on the price of the drug. The data in Table 1 illustrate this result: for example, the difference between the weighted average actual amount paid and the weighted average NADAC, per unit, is $0.20 for drugs the Cardiovascular Drugs class but $1.40 for the generally more expensive Anti-infective Agents class.

Generic Drugs

For generic drugs, the differences between the benchmarks and actual amounts paid become more exaggerated. Although there are AWPs for generic drugs, the values are high and generally not reflective of actual transaction prices. Due to substantial discounts from AWP, aggressive state MAC rates established by states to pay for generic drugs, and usual and customary amounts, generics are more likely to be reimbursed at rates far below AWP values. As with brand-name drugs, WAC values tend to be much closer to actual paid amounts and relatively close to NADAC values.

Because generic drugs have much lower per-unit prices, the dispensing fee is a more important factor in the difference between paid amounts and benchmarks. The average prescription for the top 25 generic drugs used to compute the values shown in Figure 3 contains 46 units. If one assumes an average dispensing fee of $5 per prescription ($0.11 per unit) and negligible amounts of third party payment and cost sharing, which again are reasonable assumptions at a national level, the weighted average total amount paid per unit absent these amounts would be about $0.24 per unit, which falls between the weighted average WAC ($0.39) and NADAC amounts ($0.14).

As with brand-name drugs, generic drug prices differ considerably. Table 2 illustrates the variation in average benchmarks and actual amounts paid for generic drugs, across drug classes. The lowest prices tend to be in classes with multiple older, established products that compete with each other for market share, while the higher prices tend to be in classes with greater concentrations of newer products or fewer competing therapies. Unlike with the brand drugs, NADACs vary in their relation to WACs by therapeutic class, ranging from 11% less than WAC for the eye, ear, nose, and throat preparations class to 73% less than WAC for the gastrointestinal drugs class.

FY 2015 HHS Budget

The federal government is making efforts to provide more transparent Medicaid drug pricing data, with Health and Human Services proposing to “increase access to and transparency of Medicaid drug pricing data” in its 2015 budget.⁴⁹  HHS specifically proposes funding a nationwide survey of pharmacy drug prices to consumers, and collecting wholesale acquisition costs for all Medicaid-covered drugs. These proposals come amongst many to reform Medicaid outpatient drug reimbursement in the 2015 HHS budget.

State AAC Initiatives

State Medicaid programs use a variety of benchmarks to determine their reimbursements to pharmacies for prescribed drugs. Due to concerns about the accuracy and availability of commercially available benchmarks such as AWP, many states have changed the methods they use to determine reimbursement in recent years and more continue to explore new options. As of December 2013, Alabama, Colorado, Idaho, Iowa, Louisiana, and Oregon all use surveys of pharmacy invoices in an effort to bring more transparency to drug acquisition costs, as does CMS’s NADAC measure.  Five of these states use the same firm, Myers and Stauffer, LC, to conduct the state-wide pharmacy surveys as the federal government does.  Alabama was the leader in implementing these survey-based AACs, having used the AAC model since September 2010.  Oregon implemented the model in January 2011.⁵⁰ 

The state AAC and NADAC survey approaches rely on invoices to evaluate the costs that retail pharmacies pay to acquire prescription drugs from manufacturers or wholesalers; these costs do not account for rebates or discounts if they are not included on the invoice. Other states have switched from AWP-based formulas to WAC-based formulas, in part due to studies indicating WAC has a reasonably consistent relationship to invoice prices. State MACs typically determine reimbursements for the most common multiple-source brand-name drugs and generics.

The Relationship Between NADACs, EACs, and Actual Paid Amounts

The OIG’s analyses indicate that AWP, WAC, and AMP all have relatively consistent relationships with invoice prices for brands (including single- and multiple-source brands), but larger and more variable relationships with invoice prices for generic drugs. Our own analysis indicates that actual Medicaid payment amounts to retail pharmacies for prescribed drugs are much closer to WAC and NADAC prices than to AWP, primarily because of complex “lesser of” payment formulae and large percentage reductions from AWP used in EAC calculations. Differences between WAC or NADAC and the actual paid amounts are relatively modest because states have refined their reimbursement schemes over the past several years in response to concerns about excessive payment rates and as a way of controlling cost growth. For generic drugs, differences remain relatively large in percentage terms but are generally modest in terms of actual dollar amounts. Benchmarks and paid amounts vary considerably by drug class, in part due to the mix of brand name and generic medications in each class. It is important to note, however, that our analysis only looks at one point in time.  Further, we were examining NADACs from the first month they were issued. It would be worthwhile to continue looking at these trends using NADACs from other time periods, as well as studying the volatility of NADACs over time.

How Switching to AAC Affects Dispensing Fees

Regardless of whether one believes that any benchmark accurately captures final transaction prices at which retail pharmacies purchase the drugs that they dispense to Medicaid beneficiaries, the right benchmark for acquisition costs still does not resolve the issue of what constitutes “appropriate” reimbursement under Medicaid. Retail pharmacies incur costs to build and maintain infrastructure that is convenient for patients and to employ the staff and technology necessary to safely and accurately dispense medications to patients. To stay in business, the total compensation they receive, including reimbursement for the cost of the drug and the dispensing fee, needs to be sufficient to support ongoing operations profitability. Many states have increased their dispensing fees as they have ratcheted down the acquisition cost component of reimbursement.  In a 2011 Kaiser Family Foundation study of Medicaid pharmacy directors, some stated they would spend more money if they were to base their reimbursements on Alabama AACs, due to the accompanying increased dispensing fee.⁵¹  It should be noted that the pharmacy directors made these comments with regard to Alabama AACs, not NADACs. The potential savings from using NADACs or any other AAC measure are dependent on the current and future dispensing fees in each state and the state’s mix of brand and generic prescriptions. Policy-makers should not assume that the prescription trends of the past will remain the same in the future. Further, CMS and numerous experts have expressed the value of basing reimbursement on actual pricing data.⁵² 

Specialty Drugs

Concerns over drug costs are increasingly falling outside the purview of traditional pharmacy reimbursement amounts and related benchmarks. Many new drugs and biologics are “specialty” medications, which may be dispensed through specialty pharmacies because of unusual distribution or handling requirements. These products may also require consultation with or monitoring of patients prior to or after administration of the medication, entailing administration by physicians or other health care providers, and coverage through medical benefits. Provider involvement adds a layer of complexity because of the necessary coordination of benefits, payments and rebate collections. Specialty products also tend to be much more expensive than traditional drugs, so accurate reimbursement is important, regardless of whether the state pays for them through pharmacies or through medical providers or health care facilities. With their high costs and rapid growth of utilization, managing specialty drugs will be crucial to limiting state and federal Medicaid expenditures for prescribed drugs in the near future.

To compare actual drug payments to AWPs, WACs, and NADACs, we combined at the National Drug Code (NDC) level the CMS drug utilization data, the CMS list of NADACs for October 4, 2012, and the March 1, 2013 version of Wolters Kluwer Master Drug Database (MDDB) Version 2.5. We set the state drug utilization data to the most recent quarter available. At the time of this analysis, 2012 quarter three drug utilization was available for 40 states and the District of Columbia, 2012 quarter two for six states, 2012 quarter one for one state, and 2011 quarter 4 for two states.  We restricted the sample of interest to all NDCs with NADACs, AWPs, WACs, and utilization data. NADACs reported on October 2012 are reflective of data from at least a few weeks earlier. In this analysis we compared the NADACs to AWPs and WACs as of August 1, 2012.

NADAC data are available for drug products grouped by active ingredient(s), strength, dosage form, and route of administration. Drugs are further classified according to drug category as single-source, innovator multiple-source, or non-innovator multiple-source. Many people refer to drugs in the first two categories using the colloquial terms “brand-name” or “branded” drugs, and drugs in the latter category as “generic” drugs. Using the MDDB, we similarly classified single-source, single-source co-licensed, and multi-source originator products as brand drugs, and all others as generics. We identified the top 25 brand, top 25 generic, and top 100 generic drugs by the total number of paid prescriptions for each drug. We used the MDDB to identify the drug name, American Hospital Formulary System (AHFS) therapeutic class, and AHFS therapeutic subclass for each product. We then calculated the weighted average AWP, WAC, NADAC, and actual amount paid by state Medicaid agencies, for the top 25 brand, top 25 generic, top 100 generic, therapeutic class, and therapeutic subclass. We weighted each drug at the NDC level using the total number of prescriptions dispensed to Medicaid beneficiaries.

1. “Medicaid Program; Covered Outpatient Drugs; Proposed Rule.” 72 Federal Register 22 (2 February 2012).  pp. 5317-5367. ↩︎
2. This figure includes rebates.  See Urban Institute estimates based on data from Medicaid Financial Management Reports (HCFA/CMS Form 64). Published in Young K, Garfield R, Clemans-Cope L, Lawton E, and Holahan J. Enrollment-Driven Expenditure Growth: Medicaid Spending during the Economic Downturn, FY 2007-2011. Washington DC: Kaiser Family Foundation.  April 2013.  Available at https://modern.kff.org/medicaid/report/enrollment-driven-expenditure-growth-medicaid-spending-during/.   Note that more recent data is available, but because managed care organizations now currently handle much of Medicaid prescription drug services, publicly available data on prescription drug spending (i.e. fee-for-service prescription drug spending) only reflects a fraction of actual prescription drug spending. ↩︎
3. Smith V, Kramer S, and Rudowitz R.  Managing Medicaid Pharmacy Benefits: Current Issues and Options. Washington DC: Kaiser Family Foundation.  September 2011.  Available at https://modern.kff.org/medicaid/report/managing-medicaid-pharmacy-benefits-current-issues-and-options/. ↩︎
4. Young, Garfield, Clemans-Cope, Lawton, and Holahan, 2013. ↩︎
5. For each covered drug that Medicaid programs pay for today, manufacturers must pay a rebate that at a minimum is equal to roughly 23 percent of the AMP for single-source drugs and 13 percent of the AMP for multiple source non-originator (generic) drugs.  Actual rebates paid for single-source drugs often exceed the minimum due to provisions in federal law that increase the rebates to account for price increases that exceed inflation, or to ensure that Medicaid gets the best price available to any private payer, including hospitals, nursing homes, and insurance plans. Most states also have supplemental rebate agreements with drug manufacturers. ↩︎
6. For a thorough background on issues pertaining to Medicaid pharmacy benefits, see Smith, Kramer, and Rudowitz, 2011. ↩︎
7. Multiple-source drugs are products available from two or more manufacturers; most are generic versions of older brand name drugs and the originator brand name drugs themselves. Most widely used multiple-source drugs have a federal upper limit (FUL) or a state maximum allowable cost (state MAC) that caps reimbursement below the estimated acquisition cost (EAC). ↩︎
8. 42 CFR 447.512(b); note that the EAC is applied as an aggregate limit on payments, and need not apply to each prescription. Separate EAC certifications are required for single source and multiple-source drugs. ↩︎
9. Section 1847A(c)(6)(B) of the Social Security Act defines WAC as the “manufacturer’s list pricefor the drug or biological to wholesalers or direct purchasers in the United States, not including prompt pay or other discounts, rebates or reductions in price […] as reported in wholesale price guides or other publications of drug or biological pricing data.” ↩︎
10. U.S. Department of Health and Human Services – Office of Inspector General. Analyzing Changes to Medicaid Federal Upper Limit Amounts. October 2012.  Available at http://oig.hhs.gov/oei/reports/oei-03-11-00650.pdf. ↩︎
11. Neither the total drug spending nor the spending on FUL drugs includes rebates. ↩︎
12. U.S. Department of Health and Human Services – Office of Inspector General. Comparison of Medicaid Federal Upper Limit Amounts to Average Manufacturer Prices. June 2005. Available at https://oig.hhs.gov/oei/reports/oei-03-05-00110.pdf. ↩︎
13. The “average” used to compute the FUL is a utilization-weighted average of the AMPs reported by each manufacturer of the drug. See Section 1927(k)(1) of the Social Security Act, as amended by §2503 of the Affordable Care Act, P.L. 111-148. ↩︎
14. Draft Affordable Care Act Federal Upper Limit, March 2013. Available at http://www.medicaid.gov/ Medicaid-CHIP-Program-Information/By-Topics/Benefits/Prescription-Drugs/Federal-Upper-Limits.html. ↩︎
15. U.S. Department of Health and Human Services – Office of Inspector General. Medicaid Drug Pricing in State Maximum Allowable Cost Programs. 2013. Available at http://oig.hhs.gov/oei/reports/oei-03-11-00640.pdf. ↩︎
16. Centers for Medicare and Medicaid Services. Medicaid Prescription Reimbursement Information by State – Quarter Ending December 2013. [revised 01/31/2014; cited 4/9/2014]; Available at http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Benefits/Prescription-Drugs/Downloads/Revised-Reimbursement-chart-.pdf. ↩︎
17. Claxton G, Rae M, Panchal N, Damico A, Bostick N, Kenward K, and Whitmore H. Employer Health Benefits: 2012 Annual Survey. Washington DC: Kaiser Family Foundation and Health Research & Educational Trust. September 2012. Available at https://modern.kff.org/private-insurance/report/employer-health-benefits-2012-annual-survey/. ↩︎
18. Pharmaceutical Benefit Management Institute. 2012-2013 Prescription Drug Benefit Cost and Plan Design Report. 2012. ↩︎
19. CVS/Caremark. Insights. 2012. ↩︎
20. Express Scripts. 2012 Drug Trend Report. March 2013. Available at http://www.drugtrendreport.com/. ↩︎
21. Grant Thornton LLP. An Independent Comparative Analysis of U.S. Prescription Dispensing Costs. 2007. ↩︎
22. Health Information Designs. Cost of Dispensing Prescription Drugs in Alabama. 2010. Available at http://medicaid.alabama.gov/documents/4.0_Programs/4.5_Pharmacy_Services/4.5.1_AAC/4.5.1_COD_FINAL_Report_1.06.10.pdf ↩︎
23. Myers and Stauffer LC. Survey of Dispensing Costs of Pharmaceuticals in the State of Oregon. 2010. ↩︎
24. Centers for Medicare and Medicaid Services. Medicaid Prescription Reimbursement Information by State – Quarter Ending December 2013. [revised 01/31/2014; cited 4/9/2014]; Available at http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Benefits/Prescription-Drugs/Downloads/Revised-Reimbursement-chart-.pdf. ↩︎
25. “Long-term drug maintenance” is dispensing 90-day supplies of preferred maintenance medications, as specified by the Alabama Medicaid Agency. ↩︎
26. Medicaid and Children’s Health Insurance Programs: Essential Health Benefits in Alternative Benefit Plans, Eligibility Notices, Fair Hearing and Appeal Processes, and Premiums and Cost-sharing; Exchanges: Eligibility and Enrollment; Final Rule. 78 Federal Register 135 (15 July 2013) , pp. 42160-42322. ↩︎
27. Rudowitz R and Snyder L. Premiums and Cost-Sharing in Medicaid. Washington DC: Kaiser Family Foundation. February 2013. Available at https://modern.kff.org/medicaid/issue-brief/premiums-and-cost-sharing-in-medicaid/. ↩︎
28. Goldman D, Joyce G, Zheng Y. Prescription Drug Cost-sharing – Associations with Medication and Medical Utilization and Spending and Health. JAMA 2007;298(1):61-9. ↩︎
29. Dor A, Lage MJ, Tarrants M, Castelli-Halley J. Cost-sharing, Benefit Design and Adherence: the Case of Multiple Sclerosis. Adv Health Econ Health Serv Res 2010;22:175-93. ↩︎
30. Davidoff A, Lopert R, Stuart B, Shaffer T et al. Simulated Value-Based Insurance Design Applied to Statin Use by Medicare Beneficiaries with Diabetes. Value in Health 2012;15(3):404-11. ↩︎
31. Bae SJ, Paltiel AD, Fuhlbrigge AL, Weiss ST, Kuntz KM. Modeling the Potential Impact of a Prescription Drug Copayment Increase on the Adult Asthmatic Medicaid Population. Value in Health 2008;11(1):110-8. ↩︎
32. Gaynor M, Li J, Vogt WB. Is Drug Coverage a Free Lunch? Cross-Price Elasticities and the Design of Prescription Drug Benefits. No. w12758. National Bureau of Economic Research. 2006. ↩︎
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34. The Health Care Financing Administration became CMS in 2001. ↩︎
35. Pracht EE, Moore WJ. Interest Groups and State Medicaid Drug Programs. Journal of Health Politics, Policy and Law. 2003;28(1):9-39. ↩︎
36. U.S. Department of Health and Human Services – Office of Inspector General. Medicaid Pharmacy: Actual Acquisition Cost of Prescription Drug Products for Brand Name Drugs. 1997. Available at https://oig.hhs.gov/oas/reports/region6/69600030.pdf. ↩︎
37. U.S. Department of Health and Human Services – Office of Inspector General. Medicaid Pharmacy: Actual Acquisition Cost of Brand Name Prescription Drug Products. 2001. Available at http://oig.hhs.gov/oas/reports/region6/60000023.pdf. ↩︎
38. U.S. Department of Health and Human Services – Office of Inspector General. Medicaid Pharmacy: Additional Analyses of the Actual Acquisition Cost of Prescription Drug Products. 2002. Available at http://oig.hhs.gov/oas/reports/region6/60200041.pdf. ↩︎
39. U.S. Department of Health and Human Services – Office of Inspector General. Medicaid Pharmacy: Actual Acquisition Cost of Generic Prescription Drug Products. 2002. Available at https://oig.hhs.gov/oas/reports/region6/60100053.pdf. ↩︎
40. Centers for Medicare and Medicaid Services. Medicaid Prescription Reimbursement Information by State – Quarter Ending December 2010. Available at http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Benefits/Prescription-Drugs/State-Prescription-Drug-Resources.html. ↩︎
41. U.S. Department of Health and Human Services – Office of Inspector General. Medicaid Drug Price Comparisons: Average Manufacturer Price to Published Prices. 2005. Available at http://oig.hhs.gov/oei/reports/oei-05-05-00240.pdf. ↩︎
42. Medicaid Program; Covered Outpatient Drugs, CMS–2345–P (2012). ↩︎
43. Office of Management and Budget, Office of Information and Regulatory Affairs. RIN 0938-AQ41. Available at http://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201310&RIN=0938-AQ41 ↩︎
44. U.S. Department of Health and Human Services – Office of Inspector General, Replacing Average Wholesale Price: Medicaid Drug Payment Policy (OEI-03-11-00060). July 2011. Available at http://oig.hhs.gov/oei/reports/oei-03-11-00060.pdf. ↩︎
45. Due to funding issues, as of July 2013, CMS suspended the portion of this survey focusing on consumer purchase prices, which provided estimated National Average Retail Prices (NARP) for selected outpatient drugs based on actual transaction prices. ↩︎
46. CMS posts draft and final NADAC data, along with methods and answers to questions, on the agency’s website: http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Benefits/Prescription-Drugs/Survey-of-Retail-Prices.html ↩︎
47. Morgan K. NADAC or PAC; Examining Options for a Better Drug Price Standard. Elsevier. 2012. Available at http://www.goldstandard.com/2012/04/nadac-or-pac-examining-options-for-a-better-drug-price-standard.  ↩︎
48. The NDC is a unique code that identifies each drug according to its labeler, strength, dosage form, package form, and package size. ↩︎
49. Department of Health and Human Services. Fiscal Year 2015 Budget in Brief: Strengthening Health and Opportunity for All American.  Available at http://www.hhs.gov/budget/fy2015/fy-2015-budget-in-brief.pdf. ↩︎
50. Smith, Kramer, and Rudowitz, 2011. ↩︎
51. Smith, Kramer, and Rudowitz, 2011. ↩︎
52. “Medicaid Program; Covered Outpatient Drugs; Proposed Rule.” 72 Federal Register 22 (2 February 2012).  pp. 5317-5367. ↩︎
53. U.S. Department of Health and Human Services – Office of Inspector General. Medicaid Drug Price Comparisons: Average Manufacturer Price to Published Prices. 2005. Available at http://oig.hhs.gov/oei/reports/oei-05-05-00240.pdf. ↩︎
54. U.S. Department of Health and Human Services – Office of Inspector General. Review of Drug Costs to Pharmacies and Their Relation to Benchmark Prices.  2011. Available at http://oig.hhs.gov/oas/reports/region6/61100002.pdf. ↩︎
55. U.S. Government Accountability Office. CMS Should Implement Revised Federal Upper Limits and Monitor Their Relationship to Retail Pharmacy Acquisition Costs. 2013. Available at http://www.gao.gov/assets/660/659833.pdf. ↩︎
56. U.S. Government Accountability Office. Medicaid Outpatient Prescription Drugs: Second Quarter 2008 Federal Upper Limits for Reimbursement Compared with Average Retail Pharmacy Acquisition Costs. 2009. Available at http://www.gao.gov/assets/100/96490.pdf. ↩︎
57. U.S. Government Accountability Office. Medicaid Outpatient Prescription Drugs: Estimated Changes to Federal Upper Limits Using the Formula under the Patient Protection and Affordable Care Act. 2010. Available at http://www.gao.gov/assets/100/97232.pdf. ↩︎
58. U.S. Department of Health and Human Services – Office of Inspector General. Analyzing Changes to Medicaid Federal Upper Limit Amounts. 2012. Available at http://oig.hhs.gov/oei/reports/oei-03-11-00650.asp. ↩︎
59. Fein AJ. The Pharmacy Reimbursement Hit from AMP-Based FULs. Drug Channels. September 27, 2011. ↩︎
60. Fein AJ. Generic Drug Prices are Rising, According to Latest AMP Data. Drug Channels. December 13, 2011. ↩︎
61. U.S. Department of Health and Human Services – Office of Inspector General. Examining Fluctuations in Average Manufacturer Prices. 2007. Available at http://oig.hhs.gov/oei/reports/oei-03-06-00350.pdf. ↩︎
62. U.S. Department of Health and Human Services – Office of Inspector General. Outlier Average Manufacturer Prices in the Federal Upper Limit Program. 2009. Available at http://www.healthlawyers.org/News/Health%20Lawyers%20Weekly/Documents/01%2022%2010/oei-03-07-00740.pdf. ↩︎
63. U.S. Department of Health and Human Services – Office of Inspector General. Drug Manufacturers’ Noncompliance with Average Manufacturer Price Reporting Requirements. 2010. Available at http://oig.hhs.gov/oei/reports/oei-03-09-00060.pdf. ↩︎
64. U.S. Department of Health and Human Services – Office of Inspector General. Medicaid Drug Pricing in State Maximum Allowable Cost Programs. 2013. Available at http://oig.hhs.gov/oei/reports/oei-03-11-00640.pdf. ↩︎