Sunday, September 30, 2012

State of Pennsylvania Imposes 5% Autism Income Tax

Families who have children with autism and live in the state of Pennsylvania have had a pretty good deal for a while now.  That's because Pennsylvania is one of the few states that has provided free medical coverage called Medical Assistance (MA) to children with severe disabilities, such as autism, regardless of parental income.  The really nice thing about MA is that it not only covered normal medical expenses but also paid for evidence-based autism specific treatments such as speech therapy, occupational therapy, and (most importantly) ABA.

The MA program isn't perfect by any means.  It involves a lot of paper work, a lot of red tape, and the only real way to navigate the system is by talking to families that have been in the system longer.  And when it comes to the autism specific therapies, another related group gets involved in managing your child's treatment down to having to approve each goal and method on your child's treatment plan.  So it isn't like MA is some sort of all you can eat buffet - each and every autism specific treatment has to be medically necessary, completely supported by the available evidence, and you have to be a strong advocate for your child's needs.

Then, each and every year, you have to reapply for  the benefits and most years you have to provide a new medical evaluation proving that your child still has autism.  Even though managed care side requires periodic evaluations and treatment plans and is almost involved in the day to day treatment of your child.  So once a year you have to spend several weeks trying to get a hold of the person assigned to your case (who changes constantly and is virtually impossible to get a hold of) and making sure that they have all of the paper work they need, haven't misplaced anything, and will process it all before the date when the services will be cut.

Or, in other words, the MA program is exactly like most other bureaucratic government run programs. But by and large the system generally works.  It can be a little bit of a pain to navigate, but once you learn what you need to do it works decently well.  After dotting each i and crossing each t, jumping through multiple hoops, and standing on your head while rubbing your stomach, you can access some rather decent services for your child and the only cost is your sanity.

Seriously, I don't have any major complaints with the system besides the bureaucracy and I am extremely grateful that it exists.  We would not have been able to afford even a fraction of the life-changing therapy that my children have received over the years without this system.  And just to be perfectly clear here, we have good private health insurance that covers a lot of my children's medical needs and I make a decent living.  So it isn't like we simply lack the means to provide these therapies but rather that these therapies are so expensive (40k+ per year per child) that even fairly well off families have no chance.

But now, in an effort to save a couple of bucks, the State of Pennsylvania has decided to impose a copayment on certain services provided by MA to families that earn more than 200% of the federal poverty level.  This copayment will be up to 20% of the cost of the services and capped at 5% of a families gross monthly income.  Since the base price of autism specific services is so expensive, all but the wealthiest families are going to hit that 5% cap.

At first glance this copayment might seem perfectly fair.  After all, no one really has the right to expect certain services from the government and most families whose children have autism receive far more benefits from the state than they pay in taxes.  But in reality what this copayment is going to do is mean that many children with autism are going to lose services because many families are not going to be able to afford the copayments.

Lets consider a few examples.

A single mother who has one child with autism will be hit with the copayment if she makes more than 30,260 per year.  At that level of income, she would be expected to pay about 1,500 per year in copayments or about 120 per month.  A family of five that earns more than 54,020 would be expected to pay 2,700 per year or about 225 per month.

I don't think I need to explain to other autism families about the financial burden that having a child with autism can cause.  Even if basic medical costs and the core autism specific treatments are covered (as is currently the case in PA), there are still very substantial out of pocket expenses that directly relate to autism each and every month.

And that doesn't even begin to take into account the financial opportunities that are lost to autism.  There are many families where one of the parents has to forgo working to take care of the children and there are many parents who are unable to take advantage of professional opportunities because of the limits that autism imposes.

I don't want to sound like I am complaining but this is reality of having children with autism.  I wouldn't trade my children for anything (except maybe versions of them that could talk and slept at night) but providing appropriate treatments and supports is very expensive to begin with.

So when the State of Pennsylvania comes in and tells me that they want 5% of my annual gross income because that's my "fair share", I just have to laugh.  My family, like most other autism families that I know, is already spending more than we can afford in an effort to give our children the best possible future.

No, what this new copayment is is basically a new income tax on families that can't really afford it.  To put this new tax into perspective, the existing state income tax stands at 3.07%.  This new income tax is going to more than double the effective state income tax, raising it to 8.07%.

If this new charge was really meant to be a copayment rather than a new tax then, it should work like other copayments work.  If any other insurance company came in and charged a premium for the plan and then, when asked about copayments, said  "it depends,  how much do you make" then they would likely loose most of their customers.

Lets not forget that the purpose of health insurance is to spread the cost around to everyone that participates in the insurance pool.  Everybody pays a premium, everybody has the same copayments, and the pooled premiums are used to pay for the health expenses.  Some people will have very few expenses and will pay in premiums than they get back in coverage and some people will have extreme expenses and will get far more back than they put in.

As a tax payer, I already pay my premiums on both the state and federal level (the MA program receives money from the federal government) in the form of income tax.  I am not against copayments as long as the amounts are reasonable and applied fairly.  But the way that this copayment is being implemented (more on that in a bit) makes it clear that it is a targeted charge on a very narrow group of people.

Of course the counter argument here is that I always have a choice and don't have to pay the copayment.  I could choose to not have the services for my children, I could choose to go with less expensive services, or I could choose to go with a different type of health insurance.

But all of these options are just illusionary and there is no real choice.

As a parent, I would be negligent if I did not do everything in my power to provide medically necessary services for my children.  As a consumer, I have extremely little ability to change the cost of services or to pick less costly services.  When you have to spend your time fighting to get any services let alone appropriate services, you have no ability to haggle over the price.  And as for a choice of health insurance, there is no choice.  The choice is between no services or Medical Assistance.

So basically the "choice" comes down to not having medically appropriate services for my children or paying an extra 5% of my gross income to the state every year.

The end result here is going to be one of two things.  Either a family will be able to afford this extra tax and continue services for their children or they will be forced to cut services for their children.  My family may be able to cut enough other things that we will be able afford this new tax and continue services but I suspect that many other families won't be able to do so.

I am sure that the State would disagree with me characterizing this copayment as a new tax.  In fact, they say that "targeting co-payments based on ability to pay will ultimately protect the safety net and allow us to continue to effectively serve Pennsylvanians now and well into the future."

The problem is that the State's own numbers belie their own assertion.

According to the numbers that they provide, providing these disability specific services costs taxpayers "approximately $700 million a year".  But the potential savings from this copayment are approximately $4.3 million per year or about 0.6% of the total spent.

When you put these numbers in terms of the entire yearly MA budget, the result is even more absurd.  The MA program cost $16 billion for fiscal year 2012-13, of which roughly $8 billion was spend on people with disabilities (all disabilities, not just autism).  So terms of the amount spent on all disabled people we are talking about 0.05% of the budget.  In terms of the entire budget we are talking about 0.03%.

I don't see how pushing 0.03% of the total expenditures back onto families will "ultimately" protect the system.  If the goal is to protect the system you might need to start were you actually are spending a noticeable amount of your budget.

But I can see how pushing that amount back onto families who are already financially struggling will result in a loss of services to disabled children.

And then there is the matter of how this copayment was announced (see if you can find it in there), how public comments on the copayment were basically ignored, the extremely short time period between announcing the copayments and them taking effect (about a month), and the fact that other ways that the State could better offset the costs that are already active.  For example, PA Act 62 requires certain private insurance to pay up to 36,000 per child per year for ABA services.  If that act were actually implemented and fully enforced that could save the State over $30 million a year.

There is also the little matter of implementation.  This copayment is supposed to become active on Monday, October 1st (yes, tomorrow)  for new families and a month later on Nov 1st for existing families but there is almost no information a family can use to figure out how much of a copayment that they will be hit with.  Under the new system, each provider will be responsible for independently collecting the copayment for their services and there is some magical and yet to be determined method for coordinating charges across providers to make sure that a family isn't overcharged.

My children have services spread out across three or four providers and I have absolutely no information about how they bill for services, how much of a copayment will be charged for each service, nor is there any system in place for me to question the charges.  So when (not if, when) I receive bills that total more than the 5% of our monthly income, do I pay the bills and try and get the money returned in the future or do I try to dispute the charge and constantly risk service disruptions and my credit rating?

In theory I could contact the state department that is responsible for the program but since they can't even get their phone system working well enough for me to be able to reach them via phone and the chance of an email or regular letter being answered  is about a million to one, I am not going to hold my breath.

And even when you do get a hold them their idea of customer service is somewhat lacking.  I once had the person assigned to my children's case tell me that she gives priority to children who have "real problems" and since my children just have autism they would just have to wait for her to get around to their case.

In other words, the actual implementation of this new copayment is likely to be a complete and utter mess and it is going to take a substantial amount to keep track of it all.  And that's just want families whose children have autism need, one more large problem to deal with.

1 comment:

  1. Everything in here sounds fair for the government and the parents. Although I think that 5% is a little too high. The main purpose here is cut expenses and not to generate income so I think it is better to enforce this measure at a lower percentage.

    Clemencia Summers