Impact Feature Issue on Enhancing Quality and Coordination of Health Care for Persons with Chronic Illness and/or Disabilities

Costs, Options, and Inclusion: Issues in Health Care for People with Disabilities


John Tschida is Vice President of Public Affairs and Research with Courage Center, Golden Valley, Minnesota.

Health care costs are rising at a ridiculous pace, and the impact of this growth is hitting most American families hard. Increased monthly premiums are taking a bigger bite out of worker paychecks. Higher prescription drug co-payments and $10-20 surcharges for a trip to the doctor are not uncommon. Worker strikes and protracted contract negotiations bogged down by health care costs are popping like popcorn all across the country. And policymakers at every level of government are looking for the magic bullet that will cure what ails the nation’s health care system.

People with disabilities and those who advocate on their behalf are nervous about the current situation, and rightly so. Why? Because both the public and private health care insurance systems are struggling with how to control costs. A growing number of government-controlled health care dollars are spent on individuals with disabilities, and the greatest potential for cost savings comes from exploring how services are delivered and paid for when it comes to this often-vulnerable population. Rising private market or employer-based health insurance costs have many small businesses on the ropes. People with disabilities in the competitive workforce have seen premiums go up, while benefits to cover more expensive items like wheelchairs and orthopedic devices have declined in recent years. The future remains very uncertain for this group of Americans.

Cost and Quality Issues

Just how bad is the growth rate of health care spending? A report released in November by the Minnesota Department of Health says total spending on health care rose 10.1% in 2002, surpassing the national growth rate of 9.2%. Twenty-three billion dollars was spent in Minnesota alone, with just over half of those dollars paying for hospital and physician services (Minnesota Department of Health, 2004). The fastest growing part of state budgets nationwide is the health care budget. As lawmakers and policy analysts parse where the dollars are spent, it is clear that persons with disabilities consume a disproportionate amount of the spending. Most are enrolled in Medicaid, the health care program jointly funded by state and federal government that serves the nation’s poorest citizens and those with disabilities. Nationwide, people with disabilities comprise 17% of the Medicaid population, but account for 40% of program expenditures (Kaiser Commission on Medicaid and the Underinsured, 2003). In Minnesota alone, 92,000 individuals with disabilities rely on Medicaid for their health insurance (Minnesota Department of Human Services, 2004).

Policymakers nationwide have three fundamental choices in recognizing Medicaid cost savings:

  • Eligibility: Who qualifies for publicly funded services and what are the rules governing access to health care programs? Each state sets the bar a little differently. Some allow for better access than others.
  • Benefits: What services is government willing to pay for (and how)? The federal government has a required minimum benefits package, but many states offer additional services above and beyond these.
  • Provider payments: How much are medical professionals and those who assist people with disabilities in navigating the health care system paid? States decide how much doctors, home health aides, and nursing homes get paid under the Medicaid program. And while the cost of providing services continues to increase with inflation, reimbursement rates rarely keep pace.

Across the nation, lawmakers have tinkered with each of these three options to help keep costs down. In many cases, victory has been declared if the rate of growth in health care budgets has been held to single digits. Again, Minnesota is no different. Most providers saw their rates dip during the last budget process, and some individuals who previously qualified for services found themselves without health insurance. Those who remained eligible saw new cost-sharing co-payments enacted for prescription drugs and doctor visits.

But, addressing only the cost side of the ledger with the options outlined above doesn’t create better health outcomes for persons with disabilities enrolled in Medicaid. Instead, they often limit access to services rather than provide creative options for achieving better results. While the cost trends have been easy to identify, components of a better, more efficient health care delivery system have been tougher to formulate and implement.

Former U.S. Senator Dave Durenberger, tapped by Minnesota’s Governor Tim Pawlenty to lead a blue ribbon panel on the state of Minnesota’s health care system, has said that we reward volume of service rather than value. Instead of paying for services based on what works and what makes a positive difference in the lives of health care customers, we’re paying for procedures based on cost, not necessarily on effectiveness. While this may be true today, there are exciting options being created and model programs now in existence at the state and federal levels that address both cost and quality of health care services for those with disabilities. Among the options being explored are consumer control, care coordination, and managed care.

Consumer Control

Some believe that by removing the disconnect between what consumers pay for health care in insurance premiums and the true cost of those services, individuals will make more prudent choices about when and where to seek health care. The phrase consumer-driven health care – as defined primarily by proponents of medical or health savings accounts – is getting a lot of attention these days, and is an attempt to link consumer health care purchasing decisions with a limited pool of dollars to pay for them. These personal savings accounts, which often provide catastrophic coverage after a significant cost-sharing contribution by the individual once the account has been exhausted, are being used by a number of private employers as a way to give employees more control over how they get their health care services, on the theory that they will be wise and frugal purchasers and make an informed decision based on price and quality. The challenge in the health care market is that shopping for a neurosurgeon or physiatrist is not like a trip to the grocery store. There are no clearly marked packages displaying the price and no list of ingredients to be found. There exists no consumer guide or equivalent to give us the information we need to determine where the best buy for the dollar is or where the “high end” providers are if we’re willing to spend a little extra. While some research has been done on these programs, this emerging option needs further analysis, especially to understand the effects on the people with chronic illness and disabilities.

Within the Medicaid program, individuals with disabilities and their advocates have long desired greater freedom from regulations governing how and from whom they can purchase needed health services. A growing number of states, with approval from the federal government, have secured waivers in recent years that allow consumers to do just that. Programs like Cash and Counseling and Independence Plus are now operating in at least 15 states and give people the freedom to purchase their long-term care services within an allocated budget. These differ from private market medical savings accounts in that personal budgets are often based on the need for services, and rely on a “risk-adjusted” system based on previous health expenditures. With these programs, people with disabilities can, for example, decide how many hours of home health care they need or raise the wage rates for their aides, if needed, and rely on fewer hours of service or purchase services not traditionally covered by Medicaid. Minnesota has just implemented a consumer-directed community supports program for all individuals with disabilities, which trades this greater freedom in purchasing decisions for a discounted personal budget determined by the state.

Care Coordination and Managed Care

The traditional fee-for-service Medicaid program provides no assistance to a person with a disability to navigate the Byzantine system of doctors, specialists, and ancillary providers of medical supplies and equipment. Those Medicaid recipients who are eligible for waiver programs do get a care coordinator or case manager, but these people often only assist with the long-term care services that individuals need to remain in the community. They don’t manage acute care services or the complex array of providers. As budgets have been tightened, access to this benefit is increasingly being limited.

A few programs nationally – in Minnesota, Wisconsin, Massachusetts – have successfully integrated both care coordination strategies and the financing of care across the continuum, from hospital to the home, in a way that addresses the person’s complete health and social support needs. There is hope in these examples that care coordination can work if planned and implemented effectively for a high-needs, high-cost population.

While an increasing number of states are including individuals with disabilities in Medicaid managed care plans, the success of these efforts is mixed at best. Very few states have programs specifically designed to meet the needs of this often medically complex population. Most include those with disabilities in programs designed for the general Medicaid population. In addition, Indiana and Ohio have crafted programs to better address the multiple needs of the Medicaid population with disabilities. The centerpiece of these programs is care coordination, or assistance in navigating the array of specialists, medical equipment providers, and pharmacy needs of these consumers.

Short of managed care, states also are looking increasingly at incorporating persons with disabilities into altered disease management programs or at least focusing on a medical home or designated primary care doctor for each Medicaid recipient. The challenge is often in securing the effective provider relationships with insurers who view Medicaid as a poor payment source and its enrollees as challenging and time-consuming to serve.

Olmstead v. The Budget

In 1999, the U.S. Supreme Court, in its landmark Olmstead decision, established a standard that individuals with disabilities should receive their government-funded services in the most integrated setting. Hailed universally as a strong statement in favor of community integration and against the institutionalization of people with disabilities, policy and legal advocates across the country have used this to influence the decisions of those allocating scarce budget resources. In many states it has led to a more comprehensive approach to disability services planning and implementation, recognizing that in order for those with complex health needs to succeed, there need to be supportive, integrated policies that link housing, transportation, employment, and health care services. Forty-eight states have filed plans with the federal government describing how they are addressing the Olmstead standard. In some cases, additional resources have been dedicated to this effort. In others, Minnesota included, new problems have been addressed, including an effort to move the state’s 3,000 non-elderly persons with disabilities from nursing homes to more integrated community living settings.


There is hope in these examples and reason to believe that there will continue to be emerging options for individuals with disabilities and the providers who serve them. In the near-term, cost will continue to be a primary driver of decision making. And policymakers and those in the health and rehabilitation industry will continue to struggle with how to measure successful outcomes to help drive change that will both control costs and produce better health and quality of life results for those seeking to preserve – or improve – their level of independence and participation in community life. People with disabilities deserve nothing less.


  • Kaiser Commission on Medicaid and the Underinsured. (2003). Medicaid’s role for people with disabilities. Washington, D.C.: Author.

  • Minnesota Department of Health, Health Economics Program. (2004). Minnesota health care spending in 2002. St. Paul, MN: Author.

  • Minnesota Department of Human Services. (2004). Medical programs monthly report. St. Paul, MN: Author.