Healthify Blog

Poverty and the Social Determinants of Poor Health

“Healthcare crisis,” “disparity,” and “poverty” are popular words these days in American journalism and the blogosphere despite the economic recovery and the prolonged settling-in period for the 2010 Patient Protection and Affordable Care Act (ACA). A return to growth and expanded coverage for millions of Americans should be good news. Poverty should be alleviated and health outcomes improving under such auspicious circumstances. What’s gone so wrong that it still gets the pundits so hot and bothered?

medicaid_enrollment_data(Medicaid Enrollment Data. Source: medicaid.gov)

More Americans are enrolled in Medicaid than in any other point since its creation over forty years ago. Forty-two million have enrolled in managed care plans, 74.22% of beneficiaries–the highest percentage it has ever been (Medicaid Managed Care Enrollment Report). The increase in Medicaid beneficiaries is due to two main reasons:

  1. The expansion of Medicaid services in 26 states to 138% of the federal poverty level; and
  2. The dramatic increase in poverty and wage stagnation following the crippling financial crisis that started in 2007.

These patients range from the country’s most impoverished who are struggling to get by to lower-middle income earners who are fighting to stave off poverty as they float between qualifying for Medicaid, purchasing private insurance, or going uninsured.  

The increase of poverty and enrollment in Medicaid managed care is both boon and bane for Managed Care Organizations. Revenues will increase steadily as more beneficiaries join managed care plans. Unfortunately, the influx of new members, many of whom suffer disproportionately from issues related to the social determinants of health, will put pressure on existing healthcare infrastructure and care costs could outstrip capitation as previously uninsured populations make use of healthcare services that were previously unavailable to them when they were either uninsured or underinsured. The 2008 Oregon Medicaid "lottery" expansion provides some evidence for this trend. Furthermore, these patient populations are more likely to suffer from insufficient food, substance abuse, and housing instability than other members and are less likely to have support when attempting to resolve these issues. This leads to an overutilization of services like emergency care at high cost with little gain. 

Health insurance is a good financial instrument for helping people make healthcare decisions. It helps take some of the financial risk out of choices around managing health. If, however, the expansion of coverage promotes greater use of emergency services among the low-income and struggling, then the ACA will not be so affordable to Medicaid. These managed care organizations will have to innovate to keep costs down while making sure care providers receive enough to keep treating Medicaid beneficiaries.

To improve health outcomes in Medicaid, managed care will have to address social determinants. The adoption of the medical home model has shown some promise in helping manage patients' social determinants. To see improved health outcomes and (importantly) cost savings, managed care will have to go beyond the medical home and invest in making the medical neighborhood a reality. Managed care will have to include community-based organizations, faith-based support groups, and social services agencies in their care delivery models. Without this collaborative approach to care, Medicaid insurance companies will see in a few years' time that they have spent billions on healthcare without having addressed the any of the social determinants driving the costs associated with those healthcare needs. 

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Topics: healthcare delivery social determinants of health Medicaid health disparities