At the Intersection of Health, Health Care and Policy

Cite this article as:

Mark A. Hall, Wenke Hwang and Alison Snow Jones
Model Safety-Net Programs Could Care For The Uninsured At One-Half The Cost Of
Medicaid Or Private Insurance
Health Affairs, 30, no.9 (2011):1698-1707
doi: 10.1377/hlthaff.2010.0946

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Strategies To Cut Costs

By Mark A. Hall, Wenke Hwang, and Alison Snow Jones
10.1377/hlthaff.2010.0946
HEALTH AFFAIRS 30,
NO. 9 (2011): 16981707
2011 Project HOPE
The People-to-People Health
Foundation, Inc.

doi:

Mark A. Hall (mhall@wfubmc

.edu) is the Fred D. and
Elizabeth L. Turnage Professor
of Law and Public Health at
Wake Forest University, in
Winston-Salem, North
Carolina.
Wenke Hwang is an associate
professor in the Division of
Health Services Research,
Penn State College of
Medicine, in Hershey,
Pennsylvania.
Alison Snow Jones was an
associate professor in the
Department of Health Policy
and Management at Drexel
University, in Philadelphia,
Pennsylvania.

Model Safety-Net Programs Could

Care For The Uninsured At
One-Half The Cost Of Medicaid
Or Private Insurance
ABSTRACT Because the reforms under the Affordable Care Act of 2010 will
leave an estimated twenty million or more people still uninsured, some
Americans will continue to seek care at low or no cost through existing
safety-net systems. To identify appropriate care models, this comparative
case study assessed the costs of care provided by four large, wellstructured, comprehensive safety-net programs for the uninsured in
Colorado, Michigan, North Carolina, and Texas. The average monthly
resource costincluding the value of referred, donated, and in-kind
servicesin these model programs was $141$209 per adult in 2008. This
was 2550 percent less than the estimated cost of care for comparison
groups covered by local Medicaid programs or by private insurance that
provided similar services. Although these programs services are
somewhat less comprehensive than those of generous insurance plans,
the findings suggest that these model safety-net programs could be
adapted to provide an alternative type of coverage for the uninsured,
including both low-income and middle-class people.

espite the comprehensive reforms in the Affordable Care Act

of 2010, it is estimated that more
than twenty million Americans
will remain uninsured after
2014, when the acts major provisions begin to
take effect. This number includes roughly five
million children, three million adults without
affordable coverage options, and five million
undocumented immigrants.1 Therefore, access
to affordable care for the uninsured will remain
a critical issue for states and communities, as
well as for the federal government.
The changing landscape for the uninsured
calls for a renewed focus on model safety-net
programs. If the best programs can be sustained
and others improved, perhaps an acceptable
form of near-universal access could be crafted
by supplementing insurance expansions with
enhanced safety-net access for those who will
unavoidably remain uninsured.
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Considering such possibilities, however, requires better estimates than we now have of
the likely per person costs of care under wellstructured safety-net systems. Previous studies
of safety-net costs have looked mainly at the aggregate funding directed to specific types of facilities, such as hospitals or community health
centers, that serve both insured and uninsured
patients. Few studies have carefully measured
the per person resource costsincluding the
value of referred, donated, and in-kind services
for care received by uninsured patients only.
This study provides such estimates for selected, well-structured safety-net programs that
coordinate access to a fairly complete range of
medical services. An annual per person cost measure that includes the value of donated services
could provide a sound basis for estimating how
best to continue or increase support for those
Americans who will remain uninsured after
2014. It could also help federal and state govern-

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ments and local communities determine

whether or not they can afford more comprehensive safety-net programs.

Study Data And Methods

To identify sites for our study, in 2009 we
searched published and unpublished survey literature since 2000 that described a range of different safety-net programs for the uninsured.26
A review of this literature identified fourteen
candidate programs for study, which in turn
led us to additional programs. With advice from
a national panel of safety-net experts, we selected model safety-net programs for uninsured
people with incomes of up to 250 percent of the
federal poverty level in four communities
Asheville, North Carolina; Denver, Colorado;
Flint, Michigan; and San Antonio, Texas. The
key inclusion criteria were having at least several
thousand patients; operating for at least four
years; being comprehensive, which means covering primary care providers, specialists, hospitals, and prescription drugs; and the availability
of data about patients and their use and costs of
care. To produce a greater diversity of study candidates, when two programs were very similar in
structure, size, and patient demographics, we
retained only the one that best fit our inclusion
criteria.
Program Descriptions Each program served
an entire county and covered the essential medical services described above. Thus, the programs coverage was similar to that of a conventional insurance program. Most of the safety-net
programs excluded certain services, such as routine dental and vision care, long-term care, and
specialized behavioral health servicessuch as
nonacute inpatient mental health services.

Each program screened people for eligibility,

assigned them a place where they could receive
primary care, provided some form of care coordination, and gave those who were eligible
an identification card that entitled them to receive a range of services. As a result, people enrolled in a program as they would have done in
an insurance program. In fact, some people did
not realize they were actually uninsured.7 Enrollment expired after six or twelve months unless
the patient renewed it. The average length of
time a patient was enrolled in a program during
2008 was seven to eight months.
The average use of physician services in each
program was generally similar to local or national norms for insured populations (Exhibit 1).
There were also indications from two programs
that some members viewed their enrollment as
equivalent to insurance.3,4 In addition, a variety
of program-specific indicators of adequacy, discussed in more detail elsewhere,7 were reported.
Exhibit 2 shows key characteristics of the
counties that are home to the four programs
in our study. The programs had different structures and included a range of demographic, economic, and delivery-system features (Exhibit 3),
which are described in more detail elsewhere.8
The programs in San Antonio and Denver were
affiliated with public hospitals and state medical
schools. The programs in Flint and Asheville
used community hospitals, physicians, and clinics throughout their area.
The two public hospital programs used sliding
fee scales. For patients whose incomes were
above 100 percent or 150 percent of the federal
poverty level, these programs charged substantial fees for most medical services (Exhibit 3).
The two community provider programs provided
much of their care at no charge or for only nomi-

Exhibit 1
Use Of Health Care Services In Four Model Safety-Net Programs Compared To National Norms, 200508
Average number of annual visits per person to
Source and year of data
National survey of adults, 2007a
National medical records, 2006b
Private insurance
Medicaid
All adults
Entire population
Study safety-net programs in
Asheville, NC, 2008
Denver, CO, 2008
Flint, MI, 200708
San Antonio, TX, 2005

Any doctor
3.2

Primary care provider

1.8

Emergency department
0.4

3.9
3.6
2.9
3.1

1.7
2.7
1.5
1.8

0.3
0.5
0.4
0.4

5.4
4.7
3.0
7.4

3.9
2.6
2.5
c

0.5
0.4
0.4
0.4

SOURCE Note 7 in text. aNational Health Interview Survey. bNational Ambulatory Medical Care Survey. cNot available.

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Strategies To Cut Costs

Exhibit 2
Characteristics Of The Counties Of Four Model Safety-Net Programs, 2008
Community hospital
programs

Public hospital programs

County characteristic
Name

Asheville, NC
Buncombe

Flint, MI
Genesee

Denver, CO
Denver

San Antonio, TX
Bexar

Population
Total
Percent nonwhite or Hispanica
Income

229,047
14

428,790
25

598,707
49

1,622,899
68

Median household income divided by US median household income ($50,000)

Percent of population with income below 200% of poverty levelb

0.84
34

0.86
35

0.89
39

0.88
38

18.6
16,171

11.1
16,086

24.7
46,432

24.5
162,591

Uninsured
Percent of adultsc
Number of adults with incomes below 200% of poverty leveld

SOURCE Authors analysis. NOTE Statistics are from 2008, unless otherwise noted. aNonwhites and Hispanics make up 35 percent of the total US population. bPeople with
household incomes of less than 200 percent of the federal poverty level make up 31 percent of the total US population. cUninsured adults make up 17 percent of the total
US population. d2006.

nal fees. In Asheville, a sliding scale applied to

primary care only; Flint charged patients only
minimal copayments for all services.
The two community provider programs operated in communities with populations of less
than 500,000 people (Exhibit 2). These programs relied on substantial amounts of charity
care. In both programs, most hospital care was
unreimbursed. In Asheville, specialist physicians also donated office-based services.
For patients who needed expensive brandname medications, all four programs devoted
substantial staff time to enrolling members in
the free prescription access programs maintained by major pharmaceutical companies. Otherwise, the programs paid for most supplies and
services, either by paying claims or by using
physicians paid and facilities supported by public funds. The programs that paid providers
claims did so at the lower end of market rates
(Exhibit 3).
Analytic Approach We structured our analysis to evaluate the per person costs of services
received by uninsured nonelderly adult members
of the four safety-net programs in 2008. Data
sources were the programs claims, use, enrollment, and other administrative data systems.
The variety of data sources required us to vary
our analytic approach to a degree for each program, but we were able to maintain a good degree
of consistency by selecting study sites that had
adequate data and by using consistent valuation
measures for similar components.
In Asheville, for instance, data were available
only for patients seen at the county clinic, where
about two-thirds of the total safety-net program
services were delivered, so we studied only that
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portion of the programs services. However, utilization data were available for all of the programs members, even for donated services, because the program tracked these services
through shadow claims from providers, as if
they were reimbursable, in order to record their
value.9
In each analysis, the covered population of
uninsured nonelderly adults was determined
by each programs particular criteria for eligibility and enrollment length. The costs of services
were estimated by calculating or imputing costs
of resources needed to deliver care. The basic
approach to measuring costs was consistent
across the four study sites, but the particular cost
imputation measures necessarily differed somewhat by type of service and payment method.
Our goal was to approximate the resources
needed to replicate similar programs elsewhere.
Thus, donated services were assigned an estimated cost or market value, and purchased services were valued at the prices actually paid for
them.10 The Asheville and Flint programs relied
heavily on both compensated and donated services, whereas the Denver and San Antonio programs purchased or paid for all of their physician
and hospital services at rates approximating
market value (Exhibit 4). Administration and
pharmacy costs were valued using the individual
programs financial reports.
Donated services were valued in different
ways, depending on the type of service. For example, expensive prescription drugs that were
provided to patients at no cost were valued according only to the large staffing costs required
to keep patients enrolled in prescription access
programs. We did not assign a greater value be-

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Exhibit 3
Characteristics Of Four Model Safety-Net Programs, 2008
Community hospital programs

Public hospital programs

Program characteristic
Name

Asheville, NC
Project Access

Flint, MI
Genesee Health
Plan

Denver, CO
Denver Health

San Antonio, TX
CareLink

Size
Number of adults enrolled
Percent of county low-income adults enrolled
Care source and payment

6,000a
35a

21,669
100a

26,118
56

41,252
25

Primary care providers

County clinic employees

County clinic
employees

Both salaried clinic

employees and
community doctors
paid at Medicare
rates

Specialists

Community doctors
donating their
services

Medical school
employees

Medical school
employees and
community doctors
paid at Medicare
rates

Hospital

Community,
donating its
services

Community
doctors
paid at 14%
above
Medicaid
rates
Community
doctors
paid at 4%
above
Medicaid
rates
Community,
donating
its services

Public, donating its

services

Public, paid at
Medicaid rates

175

175

250

200

Yes
7.9

No
7.5

Yes
7.5

Yes
7.1

Risk relative to:

Nondisabled Medicaid population
Local population with private insurance
Cost sharing

0.87
b

b
0.89

1.45
b

1.41
1.32

Physician
Hospital

$0$50 per visit

None

$3$5 per visit

Varies by facility

$7$35 per visit

$22$900 per
admission

2.56.7% of annual
income

Members
Maximum household income (percent of federal
poverty level)
Noncitizens included
Mean number of months enrolled

SOURCE Authors analysis. NOTE Relative risk is based on demographic and health status risk adjusters described in text, using either the Chronic Illness and Disability
Payment System or the Diagnostic Cost Grouper. aNumber is approximate. bNot available.

Exhibit 4
Monthly Costs Of Care For Uninsured Nonelderly Adults In Four Model Safety-Net Programs, 2008
Community hospital
programs ($)

Public hospital programs ($)

Type of cost

Asheville, NC

Denver, CO

San Antonio, TX

Paid services
Donated services

36
109

51
80

221
0

176
0

2
5

a
10

12
b

34
5

149

141

209

147

Average patient cost sharing per month

Administrative costs
Total

Flint, MI

SOURCE Authors analysis. NOTES Costs are based on actual payments for paid services, cost-to-charge ratios for donated hospital
services, and Medicare rates for donated physician services. Categories may not sum to totals because of rounding. aCost sharing is
paid to the provider, not the program. bNot calculated separately; built into service cost.

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Strategies To Cut Costs

cause pharmaceutical companies appear willing,
at least for now, to offer their free-access programs to eligible patients in any community.11
To establish the value of unreimbursed hospital care, we applied Medicare cost-to-charge ratios (inpatient and outpatient, respectively,
whenever possible) to the hospitals billed
amounts. In Asheville, unreimbursed physician
services were valued at Medicaid rates plus 5 percent, in order to approximate Medicare rates and
the physician rates that the other programs paid.
In Flint, visit data were not available for inpatient
physician services, so we imputed this element as
a proportion of facility costs, based on the ratio
of physician-to-hospital costs locally under
Medicaid. Other provider services, as noted
above and in Exhibit 3, were paid for at rates
similar to what providers received from some
other payers.
The mean cost per person was weighted by
length of enrollment, in order to correspond
to the per member per month metric that
insurers commonly use. In each location, we selected a comparison group with insurance from
either a Medicaid program or a private insurance
plan in the same county that used the same set of
providers. Our goal was to determine the estimated cost to that local insurer of covering the
studied safety-net population in 2008, the same
year that those patients were actually cared for
through the safety-net program.
To compare costs, we adjusted each local insurers mean premium rate for single coverage to
match the demographic and health status characteristics of the uninsured programs nonelderly adult population. Medicaid comparisons
were based on the portion of Medicaid covering
nondisabled adults.
Insurance premiums were also adjusted to exclude any major categories of service not covered
by the comparison safety-net program, such as
specialized behavioral health or long-term care
services. These accounted for about 5 percent of
total costs in Asheville and Denver and 13 percent
in Flint, because of variations in the scope of
services that the programs offered. No adjustment was needed for the San Antonio program
because its services were very similar to those
offered by Medicaid.
Adjustments were based on claims or encounter data from each safety-net program and the
comparison insurer.We used the Chronic Illness
and Disability Payment System to calculate risk
adjustments for Ashville, Denver, and San
Antonio, and the Diagnostic Cost Grouper system for Flint. Both risk adjustment systems are
well validated and widely used for these purposes.1214 These systems generated risk scores
based on demographics and diagnoses for both
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the uninsured and the comparison insured populations (Exhibit 3).

We used the difference in risk scores to adjust
the comparison insurance premium. In San
Antonio, the risk adjustment was based on
2005 claims data, but the 2008 populations risk
profiles were not substantially different from
those of the 2005 population. The adjustments
for the other three programs used 2008 data. In
Flint, the risk adjustment was based only on
office-based physician encounters, owing to
the absence of hospital clinical data.

Study Results
Costs Of Care The estimated cost of care per
adult in 2008, net of patient copayments, was
remarkably similar across three of the four
safety-net programs, at $141$149 per member
per month (Exhibit 4). The estimated cost of
the Denver program$209 per member per
monthwas the exception, but the benefits provided in Denver were more comprehensive than
those in the other programs, including routine
dental care and a full range of behavioral health
services.
Over half of the costs of care in the Asheville
and Flint programs were borne by community
providers who donated their services. Most donated care was for hospital services, amounting
to roughly $70$80 per member per month. In
Denver and San Antonio, members made substantial copayments (Exhibit 4). The minor copayments in Flint of $1$5 were not reported
since they were paid only to participating providers and not to the program itself. Also, administrative costs were not separately calculated in
Denver. A component of administration was already built into the institutions overall cost-tocharge ratio that we used to determine program
costs, and there was no separate accounting for
the program-specific administration available.
We estimated that to cover the same uninsured
patients by either private or public insurers locally for a similar range of services would cost
$217$347 per member per month, with an average among comparison programs of $281
(Exhibit 5). This amount is 82 percent more than
the average costs for the uninsured in the safetynet programs, with the difference ranging from
37 percent to 124 percent across the four locations.
Comparison Groups We targeted the comparisons to the most comparable population for
which data were available in each location. For
example, in Flint the comparison group was the
local population in a large commercial health
maintenance organization. The other three comparison groups were nondisabled adults in the

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Exhibit 5
Actual And Comparison Monthly Costs Of Care For Uninsured Nonelderly Adults, By Model Safety-Net Program, 2008
Risk-adjusted comparison ($)

Program
Asheville, NC, 2008
Flint, MI, 2008
Denver, CO, 2008

Actual safetynet program

costs ($)
149
141
200

Estimated Medicaid
costs
302
a
273

Estimated
private insurance
costs
a
217
a

Ratio of insurance
to safety-net
program costs
2.03
1.54
1.37

San Antonio, TX, 2005

Adults under 65
Adults under 51

155
129

a
267

347
a

2.24
2.07

SOURCE Authors analysis. NOTES Risk-adjusted comparisons are based on local insurers using the same providers. Risk adjustment is
based on age, sex, and health status, as described in text. aNot available.

same counties who were enrolled in Medicaid. In

San Antonio and Denver, the comparison Medicaid group was a managed care plan owned by the
same system that ran the safety-net program and
used the same providers. We used a second comparison group with private insurance in San
Antonio.
To perform the best possible comparison in
each location, we used somewhat different comparison strategies. In Asheville the Medicaid
population included childless adults, while in
Denver and San Antonio it included only parents. In Denver pregnant women were covered
by a separate component of Medicaid. For these
reasons, the Denver comparison excluded pregnant women from the uninsured group, and the
San Antonio Medicaid comparison included only
adults under age fifty-one.
As stated earlier, the San Antonio comparison
was based on 2005 data, but updating results to
2008 produced similar findings (analysis not
shown). In Denver we made a further adjustment
to account for the fact that the portion of the
safety-net program that covered undocumented
immigrants incurred 12 percent lower costs than
their risk score would have predicted, compared
to other program members. Because similar data
comparing the costs incurred by subgroups of
program members were not available in the
other three sites, we did not make equivalent
adjustments there, despite the fact that all but
one of the other programs also covered at least
some undocumented immigrants.

Discussion
Studies of safety-net systems usually focus on
their more glaring shortcomings.15,16 This study
focused instead on model programs that give the
uninsured access to services that are roughly
similar to what basic health insurance covers.

Studies of safety-net costs usually measure aggregate funding streams. Instead, we estimated
costs based on provider and program resources
per uninsured enrollee (including donated services) and weighted by the average period of
enrollment to obtain a per member per month
estimate.
We recognize that it is not conventional to
measure uncompensated care this way. By definition, the uninsured are not enrolled in an insurance plan. Nevertheless, an adequate safety
netwith a system structured like those of the
four we examinedcan be thought of as providing a form of coordinated access to care for a
defined population.7 Each program gave eligible
people an enrollment card; provided them with a
primary care medical home that coordinated
their care; and arranged for prescription drugs,
specialist referrals, and hospitalization when
needed.
We estimated that the cost of care provided by
these well-structured safety-net programs in
2008 was roughly one-quarter to one-half less
than what it would have cost to give the same
populations similar coverage from Medicaid or
private insurance. If the value of donated prescription drugs were included, the cost of the
safety-net programs might be 510 percent
greater than our estimates, but it would still be
substantially less than the cost of similar coverage from Medicaid or private insurance.11
Estimated Costs From Massachusetts
Ours is the first study to evaluate safety-net costs
in this manner, and we profiled only four programs. Nevertheless, the plausibility of our findings can be gauged by comparing them to a more
general estimate from Massachusetts, which had
a superior safety net prior to the states comprehensive insurance reforms.4
In 2004 Urban Institute researchers estimated
that private insurance coverage in MassachuS ep t e m b e r 20 1 1

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Strategies To Cut Costs

setts would cost 36 percent more per person than
was being spent statewide on uninsured adults.17
Confirming this projection, a subsequent
studydone by one of the authors of this article
(Hall) focused more directly on Boston, whose
two major safety-net hospitals offered a structured enrollment system for the low-income uninsured like the programs described here.18 This
safety-net population also formed the core enrollment for Massachusetts new subsidized
health insurance plan. Therefore, the Boston
study compared the costs of care for this population between 2006 and 2007, just prior to and
following enrollment in the new insurance plan.
Adjusting for changes in demographics, but not
health status, the study found that safety-net care
cost the state about 15 percent less than its subsidized insurance plan.18
Estimates From Other Programs Similarly,
the safety-net program for the uninsured in
Washington, D.C., which has been described
as possibly the nations most comprehensive
low-income coverage program,19 had much
lower costs in 2004 than Medicare or Medicaid
would have paid to cover the same population,
according to an actuarial analysis.20 San Franciscos comprehensive safety-net program, which
in 2008 enrolled uninsured people with household incomes of up to 300 percent of the federal
poverty level, cost about 3050 percent less than
private insurance with similar coverage, according to an unadjusted comparison.21
An additional perspective is suggested by the
two federal programs that, despite their differences, both fund direct care, one for members of
Indian tribes and one for uninsured veterans.
The Indian Health Service provides access to care
that is similar to insurance, according to one
study.22 And according to the federal governments actuarial estimates, the Indian Health
Service spends roughly half of what it would cost
to cover its core population through private insurance for federal employees, adjusting for differences in demographics, health characteristics, and covered services.23
This level of funding is widely regarded as
inadequate for patients who require referrals
for advanced hospital and specialist services that
are not immediately available from Indian
Health Service providers. But if funding for such
outside referrals were increased to levels that
program advocates have testified are needed,24
the cost difference between this coverage and
private insurance would be reduced by roughly
ten percentage points, leaving the total Indian
Health Service cost still substantially less than
the cost of private coverage.
The Department of Veterans Affairs (VA) is
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tem.25 The most thorough study to date concluded that it would have cost about 20 percent
more had Medicare paid for the services that the
VA provided in 1999.26 This estimate was based
on Medicares billing rates for services that the
VA actually provided, with the greatest savings
being for prescription drugs and specialized
inpatient facilities.
A more recent study covering 200107 appears
to provide conflicting evidence: It concluded that
the VAs actual costs were 33 percent more than
what insurers would have paid had the services
been purchased at market rates.27 However, this
estimate is based on treatment costs reported by
roughly 500 veterans in the Medical Expenditure
Panel Survey, which may be too few to generate
reliable estimates, particularly because that survey underrepresents higher-cost institutionalized or homeless VA patients.28
Remaining Uncertainties In the present
study, the data that were available for most of
the safety-net programs did not permit a detailed
causal analysis of why the programs had lower
costs than insurance. However, several findings
provide insights.
Differences in benefits were not the main
driver, because we adjusted for major benefits
differences. Still, the comparison plans had
some elements of coverage that were more generous than safety-net coverage. Safety-net administrative costs were lower than those reported by or attributed to public and private
insurance plans. In addition, private insurers
and Medicaid managed care plans may have paid
somewhat higher rates to some providers than
the average unit costs we used to value these
safety-net services.
Some differences also result from the fact that
most safety-net programs provided only generic
and inexpensive medications, relying on donated medications for the more expensive
brand-name drugs. However, we valued most
donated services at their actual costs or market value.
Program members use of services may have
been dampened either by the cost-sharing elements in Denver and San Antonio or by the need
to seek charity care from hospitals in Asheville
and Flint. Hospital use in Asheville and Flint was
roughly one-third to one-half less than might
have been expected for a population with the
same general demographics, which suggests that
some members might not have received the hospital care that they needed.
Finally, other factors than those we measured
may have contributed to lower safety-net costs,
such as longer waiting times or stricter medical
criteria for more expensive services than in insurance programs.

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Despite these key uncertainties, this is the first

study to demonstrate that the aggregate resource
costs of model safety-net programs may be substantially lower than those of conventional insurance, even after adjustment for major differences in the populations and covered benefits.
Additional studies are required to further understand the main drivers of cost differences.
Our results are also limited by the following
caveats about data sources and analyses. First,
we measured only general indicators of access,
not the actual quality and outcomes of care. Second, we estimated the cost of care provided only
by these specific safety-net programs. Our analyses did not capture the costs of any care from
other local safety-net providers, where members
might also have sought treatment.
Third, the constructed enrollment that we
used to calculate the months that members were
in a program depended on each programs
screening criteria, which may not accurately reflect the population actually covered by the
safety-net program. Because eligibility did not
require a payment, except in San Antonio, some
people were recorded as enrolled for a time
even after they had moved away from the area
or stopped using the programs providers. On
the other hand, because eligibility can be determined at any time that services are needed, some
people might continue to rely on the program for
service even after their enrollment formally
lapsed, in between periods of service need.29 Despite this variability, the mean length of enrollment was fairly consistent across programs
(Exhibit 3).
These findings were presented at the
annual meeting of AcademyHealth in
Boston, Massachusetts, June 28, 2010.
This study was supported by a grant
from the Robert Wood Johnson
Foundation. Deborah Bae, Josh Durfee,
Tom Fraser, Robert C. Kundich, Janice

Another caveat is that the methods we used to

measure and adjust for health status are imprecise and so might fail to account for some unobserved risk or overstate the degree of actual difference in risk. However, we used the best
available risk adjusters, equivalent to those used
by private insurers and Medicaid plans.

Conclusion
The finding that better safety-net programs appear to cost less than conventional coverage
should not be viewed as an indication that public
or private insurance is wasteful or inefficient.
The access to care provided by generous insurance is superior to that provided by even wellstructured safety-net programs such as the ones
we studied, whose coverage is limited to small
geographic areas. Also, model programs may be
difficult to replicate elsewhere. However, there is
much to be learned from such programs about
the cost of services required to meet the basic
health needs of the uninsured.
As a whole, the model programs we studied
provided an adaptable range of possible structures for other situations. For example, although
all four programs targeted the low-income uninsured, the programs in Denver and San
Antonio, which required substantial copayments
as income rises, could be adapted for the middleincome uninsured. Learning from these models
as health reform unfolds could help policy makers and community leaders elsewhere to develop
sustainable organizational structures for the uninsured throughout the country.

Lawlor, Gerardo Maradiaga, Parsa Sajid,

and John VanSteenwyk provided helpful
information, analysis, or advice.
Analytical or data assistance was
provided by each of the studied
programs and by the Buncombe County
Medical Society, the Center for

Healthcare Research and

Transformation, Mission Hospital,
Denver Health, Health Economics, and
Health Management Associates. These
organizations do not necessarily endorse
the findings or analyses presented here.

NOTES
1 Buettgens M, Hall MA. Who will be
uninsured after health insurance
reform? [Internet]. Princeton (NJ):
Robert Wood Johnson Foundation;
2011 Mar [cited 2011 Aug 10].
Available from: http://www
.rwjf.org/files/research/71998.pdf
2 Weinick RM, Billings JD, editors.
Tools for monitoring the health care
safety net [Internet]. Rockville
(MD): Agency for Healthcare Research and Quality; 2003 Sep [cited
2011 Aug 10]. Available from: http://
archive.ahrq.gov/data/safetynet/
tools.htm
3 Andrulis D, Gusmano M. Community initiatives for the uninsured:

how far can innovative partnerships

take us? New York (NY): New York
Academy of Medicine; 2000.
4 Regenstein M, Nolan L, Wilson M,
Mead H, Siegel B (Department of
Health Policy, School of Public
Health and Health Services, George
Washington University Medical
Center). Walking a tightrope: the
state of the safety net in ten U.S.
communities [Internet]. Princeton
(NJ): Robert Wood Johnson Foundation; 2004 May [cited 2011
Aug 10]. Available for download
from: http://urgentmatters.org/
reports
5 Lutzky AW, Holahan J, Wiener JM.

Health policy for low-income people:

profiles of 13 states [Internet].
Washington (DC): Urban Institute;
2002 May [cited 2011 Aug 10]. (Occasional Paper No. 57). Available
from: http://www.urban.org/
UploadedPDF/310490_ANF_
OP57.pdf
6 Marquis MS, Rogowski JA, Escarce
JJ. Recent trends and geographic
variation in the safety net. Med Care.
2004;42:40815.
7 Hall MA. Access to care provided by
better safety net systems for the
uninsured: measuring and conceptualizing adequacy. Med Care Res
Rev. 2011;68(4):44161.

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Strategies To Cut Costs

8 Hall MA, Snow Jones A, Sajid PS.
Health care safety nets [Internet].
Princeton (NJ): Robert Wood
Johnson Foundation; 2010 Jun
[cited 2011 Aug 11]. Available from:
http://www.rwjf.org/healthpolicy/
product.jsp?id=49869
9 The analyses of Denver Health were
done by in-house health services research staff, those of the Genesee
Health Plan by staff at Health Management Associates and the University of Michigan, and those of CareLink by the systems principal
actuarial consultant. We did the
analyses of Project Access.
10 The fact that some services were
purchased at a discount does not
negate the use of purchase price as a
fair indicator of market or resource
value, especially for provider serviceswhose pricing typically varies
over a very wide range even within a
single market, according to payment
source. Also, certain discounts below
market value, such as those received
by community health centers, can be
replicated in other communities.
11 If we had given these drugs an imputed market price, then total safetynet program costs would be somewhat higher than estimated here, but
there would also be offsetting savings because the programs would
not need the substantial staffing
capacity devoted to enrolling patients in these pharmaceutical access
programs. Based on general averages for insurers prescription drug
costs, we believe that the net increase in imputed costs from this
alternative measure would be no
more than 10 percent of total safetynet program costs.
12 Kronick R, Gilmer T, Dreyfus T,
Lee L. Improving health-based payment for Medicaid beneficiaries:
CDPS. Health Care Financ Rev.
2000;21:2964.
13 Meenan RT, Goodman MJ, Fishman
PA, Hornbrook MC, O KeeffeRosetti MC, Bachman DJ. Using riskadjustment models to identify highcost risks. Med Care. 2003;41:
130112.
14 Petersen LA, Pietz K, Woodard LD,

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Stanley A, Cantor JC, Guarnaccia P.
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Holahan J, Bovbjerg R, Hadley J
(Urban Institute). Caring for the
uninsured in Massachusetts: what
does it cost, who pays and what
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spending? Boston (MA): Blue Cross
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Hall MA. The costs and adequacy of
safety net access for the uninsured:
Boston, Massachusetts [Internet].
Princeton (NJ): Robert Wood Johnson Foundation; 2010 Jun [cited
2011 Aug 23]. Available from: http://
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netmass201006.pdf
Cook A, Ormond BA. Who has insurance and who does not in the
District of Columbia? [Internet].
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Available from: http://www.urban
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Health; 2006.
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HSF_Services_and_Costs.pdf
Zuckerman S, Haley J, Roubideaux
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23 Walke R. Indian health service:
health care delivery, status, funding,
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(DC): Congressional Research Service; 2008.
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Access to contract health services in
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25 Longman P. Best care anywhere: why
VA health care is better than yours.
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Render ML. Value for taxpayers
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watch.com/2009/12/10/does-theva-cost-less-than-privatehealth-care/
29 This variability in measuring enrollment may account for the different risk levels we observed across
programs, compared to local insured
populations. These are average risk
measures constructed from utilization data and are therefore sensitive
to how many members do not use the
program. The percentage of nonusers varied across programs, in part
based on program assumptions
about the length of continuing enrollment. Therefore, although the
risk adjusters are reasonably accurate between local programs, they do
not necessarily indicate relative risk
between a program in one location
and a second program in another
location.

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ABOUT THE AUTHORS: MARK A. HALL, WENKE HWANG

ALISON SNOW JONES

&

and public policy for Oxford

University Press, the American
Enterprise Institute, and HarperCollins. He earned his law degree
from the University of Chicago.
Mark A. Hall is a
professor of law
and public health at
Wake Forest
University.

In this months Health Affairs,

Mark Hall and colleagues examine
how four comprehensive safety-net
programs for the uninsured in
Colorado, Michigan, North
Carolina, and Texas provided
services at a cost that was 25
50 percent below that of local
Medicaid programs or private
insurance. They argue that such
systems could be models for
covering the estimated twenty
million Americans who will remain
uninsured after the Affordable Care
Act is fully implemented.
Hall is the Fred D. and Elizabeth
L. Turnage Professor of Law and
Public Health at Wake Forest
University, where he codirects the
Master of Arts in Bioethics
program and has appointments in
the Schools of Law, Medicine, and
Business. He specializes in health
care law and public policy, with a
focus on economic, regulatory, and
organizational issues.
Hall is the lead editor of the
original textbook in the field,
Health Care Law and Ethics, whose
seventh edition was published in
2007. He has written books on
various aspects of health care law

Alison Snow Jones

was an associate
professor at Drexel
University.

Wenke Hwang is an
associate professor
at the Penn State
College of
Medicine.

Wenke Hwang is an associate

professor in the Division of Health
Services Research, Penn State
College of Medicine. He specializes
in risk adjustment methodology
and the measurement of
individuals comorbidity and
disease burden in the context of
evaluating treatment effects,
quality of care, and health care cost
and reimbursement. He also
focuses on care coordination and
the functional division between
medical specialties across practice
settings in care for people with
multiple conditions.
Hwang serves as coinvestigator
on a National Institutes of Health
randomized controlled trial study
on diabetes. He earned a masters
degree in public policy from
National Taipei University, in
Taiwan, and a doctorate in health
economics from the University of
Maryland, Baltimore.

Alison Snow Jones, an economist

and associate professor in the
Department of Health Policy and
Management at Drexel University
at the time of this work, directed
research concerning alcohol use
and health and led joint programs
between the Schools of Business
and Public Health. She suffered a
heart attack and died in
January 2011.
Jones wrote a widely read blog
under the alias of Maxine Udall
(Girl Economist). Her research
focused on alcohol use and abuse
and its impact on labor-force
outcomes and childrens health;
domestic violence and its impacts
on familial and womens health;
and tobacco control. She also
taught courses about ethics and the
economics of social justice to
theologians and business school
students. She received her
doctorate in health economics from
the Johns Hopkins Bloomberg
School of Public Health. A
memorial fund has been
established in her name at Drexel
University.

September 2011

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