US Health Policy in the Aftermath of Hurricane Katrina

In a season that experienced an onslaught of major hurricanes, Hurricane Katrina nonetheless stands apart as a seminal social event. Katrina did not merely lay waste to a geographic region; it also exposed every public policy failure essential to community and population health. Nicholas Lemann wrote that, “after the levees broke, we watched every single system associated with the life of a city fail: the electric grid, the water system, the sewer system, the transportation system, the telephone system, the police force, the fire department, the hospitals, even the system for disposing of corpses.”¹ The US Department of Homeland Security reported that as of September 15, 2005, 90 000 square miles had been declared disaster areas, and over 122 000 persons were housed in shelters throughout the nation.² Three months later, in December 2005, more than a million people are still reported to be homeless.³

Hurricane Katrina exposed a health care system incapable of withstanding the long-term impact of a major disaster. Through destruction and permanent displacement, Katrina illuminated the fundamental weaknesses inherent in the national approach to health care financing, as well as the extent to which these weaknesses can threaten recovery. Yet almost from the moment that health care emerged as a major issue, a battle rapidly ensued over the appropriate scope of the response.⁴ Now, several months after this disaster, prospects are increasingly dim that this catastrophic event will yield at least modest improvements in the national policy arsenal for effectively responding to disasters, manmade or national.

Katrina has received extensive attention over its impact on health care; indeed, a mid-December 2005 Google search joining the terms “Hurricane Katrina” and “health care” turned up 12.2 million hits. Devastating news accounts regarding the terrible health conditions endured by survivors, particularly the poor,⁵ have given way to more far-reaching assessments regarding Katrina's long-term implications for health care in the Gulf Coast region. The consequences for low-income populations have been particularly severe. In the affected states, an estimated 106 federally funded community health centers with 166 service sites were destroyed, damaged, or overwhelmed by patient surges, with surrounding states experiencing up to 100 000-person patient surges.⁶ New Orleans' Charity Hospital, a principal source of health care and the only level I trauma center for the entire Gulf Coast region,⁷ was left devastated and dysfunctional, furloughing nearly 2600 employees as of November 7, 2005.⁸

To rebuild the region means rebuilding health care services, since accessible and affordable health care is essential to basic population health and safety. However, the rebuilding task faces particularly great challenges; even if capital can be found, the population is so pervasively uninsured that its ability to sustain reclaimed facilities is open to question. For decades the Gulf Coast population has lived daily with the consequences of the nation's gap-ridden approach to health care financing. The lack of coverage is unnerving: in 2004, only 47% of Louisiana's nonelderly residents and 48% of Mississippi residents had employer-sponsored benefits, and the nonelderly uninsured population in each state stood at 21% and 20%, respectively.⁹ Only in Alabama did the proportion of the population with employer coverage exceed the national average,⁹ but privately insured residents were concentrated in the state's industrial regions, not the towns that dot the coastline. All in all, the region's depressed health insurance statistics reflect what Reinhardt has termed the crumbling of the employer-based health insurance system for the bottom third of all wage earners.¹⁰ Experts now estimate that displaced workers left without health insurance in Katrina's wake represent one of the largest groups ever to lose coverage in a single event in the nation's history.¹¹

Early assessments of displaced survivors suggest that this population faces an even graver situation. A mid-September poll of survivors sheltered in Houston found that 60% had annual family incomes of less than $20 000; “fully half” were without any form of health insurance; and 40% had diabetes, high blood pressure, or physical disabilities.¹² Interviewees reported heavy dependence on Charity Hospital, a dependence “that now will be transferred to hospitals in the Houston area or wherever these evacuees eventually settle.”¹² As the region struggles to recover, and as temporary dislocation becomes permanent relocation for many, health insurance coverage most likely will continue to be seriously lacking. Employee health benefits—the “mainstream” system of coverage—were never strong to begin with, and the population, along with regional public and private health care providers, including physicians, face a heightened risk of noncoverage.

Medicaid is the nation's most important program for addressing deficiencies in the voluntary, employer-sponsored system. Medicaid has been expanded repeatedly to compensate for shortcomings in the private system¹³ ; by 2004 Medicaid was the nation's largest insurer, covering more than 50 million vulnerable persons—two thirds of whom are low-income children, pregnant women, and parents, children, and adults whose serious disabilities require long-term institutional and community care—and low-income Medicare beneficiaries.¹⁴ For over 40 years, Medicaid has made well-documented contributions to health care access and is the central source of support for the health care safety net.¹⁵

Despite Medicaid's achievements, the program excludes most poor adults because of its historical ties to cash welfare assistance.⁹ Louisiana Medicaid program data from October 2005 showed that more than half of all applicants were turned away, not because they were not poor, but because they did not fall within one of Medicaid's traditional adult categories.¹⁶ Those who are eligible face enrollment hurdles.¹⁷ Furthermore, because Medicaid is state-based, interstate movement means the effective loss of coverage; relocated persons either must attempt to navigate the health care system with out-of-state Medicaid cards or else reenroll in another state. Both alternatives can be very difficult, as illustrated by decades of efforts to make Medicaid more accessible to impoverished migrant farmworker families.¹⁸ Despite Medicaid's strengths, it lacks Medicare's nationwide, uniform coverage potential and interstate portability.

In its devastation, Katrina thus served to reinforce an already exhaustive amount of evidence regarding the population and public health consequences that flow from the nation's approach to financing health care.¹⁹ Thousands lost their jobs, and already limited prospects for employer coverage declined further. Exceedingly poor evacuated survivors, a large proportion of whom were in poor health, found themselves cut off from Medicaid. Community health systems in the shelter states showed the strain of struggling with the added burden of thousands of persons unable to pay for health care. Emergency medical personnel—both volunteers as well as those deployed under the authority of the 2002 Public Health Security and Bioterrorism Preparedness and Response Act²⁰ —could offer short-term assistance, but volunteer clinicians on emergency deployment clearly were in no position to address evacuees' long-term health care needs. The emerging picture by mid-September was one of devastated state economies and community health infrastructures, long-term joblessness and deepening poverty and dislocation, and a lasting disconnect from health insurance.

Federal emergency legislation envisions short-term emergencies and a health care system that, even if seriously affected in the short run, remains relatively stable and capable of recovery through quick, time-limited infusions of funds. For example, the Public Health Security and Bioterrorism Preparedness and Response Act of 2002²⁰ authorizes the expenditure of emergency funds to deal with short-term surge needs, the deployment of emergency personnel, and additional, temporary supports to hospitals and community systems. But federal emergency health policy is not structured to address a disaster of such magnitude that a total population is displaced and an entire health care system leveled. In this type of situation, aid must be longer term and structured to replace or act as health insurance.

The need for a health insurance replacement program for an entire population, over a longer time period, should hardly have been a surprise to policy makers. Indeed, the nation had only recently lived through just such an event and had responded with just this type of structural assistance. In the aftermath of the 2001 World Trade Center attacks, New York established a “Disaster Relief Medicaid” program for all low-income residents.²¹ In the 4 months following September 11, the program reached almost 350 000 persons using a highly simplified single-page application, oral attestation of need rather than extensive verification, and on-the-spot eligibility determinations and enrollment.²¹ The program was temporary, and at the end many persons reverted to their previous uninsured status. But the program was considered highly successful, especially for the estimated half of all beneficiaries who had health problems at the time of enrollment.²¹

Thus, in Katrina's wake, federal policy makers once again turned to Medicaid. This time, however, the pathway to assistance has proven to be bitterly contentious, reflecting a deep philosophical divide rather than party differences. The central issue rapidly became whether, at least in a time of disaster with massive public health implications, the nation should do what it otherwise does not, namely, provide health insurance to all affected low-income persons. A bipartisan group of senators, led by Sen Charles Grassley, the chairman of the Senate Finance Committee and Sen Max Baucus, its ranking minority member, answered this question in the affirmative, introducing the Emergency Health Care Relief Act of 2005²² on September 15, 2005. Modeled on the New York City demonstration, the legislation would have reformed Medicaid in 3 fundamental ways. First, it would have extended Medicaid coverage for up to 10 months for low-income persons affected by the disaster, regardless of categorical status. Second, the bill would have established this special benefit as a form of national coverage (similar to Medicare), with full state-to-state portability. Third, the legislation would have provided 100% federal financing for disaster coverage, eliminating the need for crippled state economies to contribute their normal state share. The most remarkable aspects of the proposal are its simplicity, its practicality in building on an existing program, and the swiftness with which it was developed.

The legislation met with immediate and fierce resistance on the part of the Bush Administration and its supporters, who sought to halt structural Medicaid improvements, at the very time that Congress, as part of the fiscal year 2006 budget process, was preparing to enact Medicaid spending reductions. Even though the Senate succeeded in passing budget legislation that retained the basic provisions of the Grassley-Baucus legislation while still reducing overall Medicaid outlays,²³ the Bush Administration's opposition remains strong. Seeking to avert legislative establishment of a Medicaid disaster relief program, the Bush Administration devised an alternative that lacked the central elements of the Grassley-Baucus legislation. Predicated on the Health and Human Services Secretary's powers under the demonstration provisions of the Social Security Act,²⁴ the Bush Administration's plan limited aid to 5 months, retained Medicaid's exclusion of more than half of all poor adults (relying instead on establishing an uncompensated care fund for use by designated states, who in turn would be under no obligation to pay any specific physician or other health care provider), eliminated national coverage portability, and assumed continued financial contribution from affected states.²⁴ The House budget legislation followed the structural contours of the Bush plan in terms of coverage, while furnishing additional financial relief. The Conference Agreement, which awaits final enactment in 2006, rejects the concept of emergency health insurance for displaced populations. Instead, the agreement adopts the Bush Administration's demonstration approach but with additional funding. As a result, the agreement leaves uninsured persons without recourse to individual coverage and dependent on the willingness of health care institutions and health professionals to furnish uncompensated care for which they may or may not ever be paid.²⁵

Whether the deficit reduction legislation ultimately is enacted into law is expected to be determined in the weeks following the commencement of the second session of the 109th Congress, which begins on January 31, 2006. For the time being, despite evidence of crushing need, the president and Congress appear to have rejected the concept of emergency Medicaid coverage to address the extraordinary health care demands that flow from public health disasters, electing instead a short-term bailout that leaves thousands of individuals affected by Katrina without health insurance and health care systems without any assurance of payment.

A unified national approach to coverage for low-income persons during emergencies is hardly a sweeping reform of the US health care system, but it would appear to be an important addition to the national policy armament in times of crisis. Even as the crisis of Katrina is transformed into a slow and painful recovery, the nation already is—at least rhetorically—in preparation mode for an influenza pandemic. The time for overcoming the ideological divide over public entitlements for the low-income population in the name of public health preparedness would seem to be at hand.

The lessons from Katrina should extend well beyond disasters. Katrina clarified the fact that, at its core, the US system of health care finance is as fragile as the homes swept away by the hurricane. In their important article exploring the ethical underpinnings of the health care system in a time of public health emergencies, Wynia and Gostin identified universal access to health care as a basic tenet of preparedness, not merely an emergency response.²⁶ At first blush it might seem odd to rest the ethics of national health reform on a base of public health preparedness. After all, dozens of other nations far less wealthy than the United States have not justified reform as a matter of “preparedness.” However, if the concept of preparedness will bring the nation to meaningful and lasting reform, then by all means, policy makers and health care leaders should proceed in that vein. The notion that the world's most powerful nation would continue to lurch from disaster to disaster, jury-rigging inadequate and temporary solutions, is simply untenable. Is it really necessary to wait for the next disaster to strike before taking the modest step of establishing a fallback public health insurance system in times of national crisis?