Residents in this low- to middle-income neighborhood likely don’t realize how lucky they are. The majority of Americans have to travel miles to see a dentist who takes their insurance, particularly if they’re covered by Medicaid. Many dental patients with private insurance cannot afford to pay their share of the bill.

Federal law requires state Medicaid programs to include dental care for children, and the Affordable Care Act extended that requirement to private insurers. But the federal health law did little for adults: While premium tax credits were made available to help low-income people purchase health insurance, the subsidies cannot be used to purchase dental coverage except as an add-on to health coverage. No new dental benefit requirements were included for adults covered by Medicaid.

“The ACA was a big flop when it comes to adult dental coverage,” said Dr. Jonathan Shenkin, vice president of the American Dental Association (ADA).

Even so, some states have stepped up coverage for at least some adults on Medicaid. Virginia added a dental benefit for pregnant women in March. Colorado introduced limited adult dental coverage for the first time last year. Also last year, California, Illinois, Massachusetts and South Carolina reinstated benefits that had been cut in the years since the recession began in 2007. Indiana began offering expanded adult dental benefits this year.

Shenkin acknowledged the federal health law’s provision allowing young adults to stay covered by their parents’ insurance until age 26 has helped. Fewer young adults are showing up in emergency rooms with dental pain, according to an April ADA . About 1.4 million Americans have purchased dental coverage on health insurance exchanges since January 2014 when the law took full effect. “But overall, we’ve seen no real improvement in the quality of adult dental coverage for decades,” he said.

It’s not just a Medicaid problem. Employer-sponsored insurance typically caps coverage at $1,500 per year, the same level as 30 years ago when dental insurance was first offered.Ìý Medicaid dental coverage has had even lower spending caps in most places. States vary widely when it comes to adult dental benefits, but on average, Medicaid dental coverage has declined since the recession.

“Adult dental benefits are caught in a pendulum swing of contraction in fiscal downturns and expansion when fiscal pressures go away,” said Andrew Snyder, dental expert at the National Academy of State Health Policy. “That’s been the story for a long time. I don’t know that there was ever a time when adult dental was really great.”

Although the ACA does not make Medicaid dental coverage mandatory for adults, it gives states that have chosen to expand Medicaid a potential financial incentive to include dental benefits.

Under the ACA, the federal government pays the entire health care bill for all newly enrolled adults with incomes below 138 percent of the federal poverty level ($16,243 for an individual) through 2016. After that, the federal share gradually decreases to 90 percent in 2020 and beyond. As a result, officials in a few states are considering dental coverage for the first time or reinstating coverage cut during the last recession.

New York and 14 other states have nearly comprehensive coverage, 16 states and the District of Columbia offer limited coverage, and 14 states cover only emergency dental care. Alabama, Arizona, Delaware, Maryland and Tennessee offer no adult dental coverage.

Another barrier to dental care for low-income adults is the relatively low reimbursement rates offered by state Medicaid programs. Extensive paperwork and oversight also limit the number of dentists willing to take Medicaid patients. (The ACA calls for even more intensive oversight and audits.) The result is poor access to preventive care for low-income people on Medicaid in much of the country, ultimately resulting in higher overall costs.

The problem is not limited to Medicaid. Most employer-sponsored insurance pays for only a portion of the cost of an annual checkup and a few fillings. For moderate-income people who need more extensive restorative work, out-of-pocket expenses can be unaffordable. In a recent , nearly four out of 10 respondents said they or a family member had put off seeing a dentist because of concerns about out-of-pocket expenses.

Americans spend as much to treat dental disease — almost all of it preventable — as on the treatment of all cancers combined, according to DentaQuest, a research and advocacy organization and administrator of dental insurance plans, including Medicaid.

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Community Access is not a bed and breakfast, although it feels that way when you walk through its unmarked door off Second Avenue on Manhattan’s Lower East Side. Also known as Parachute NYC, this quiet seven-bedroom facility is one of four publicly funded mental health centers in New York City (located in Manhattan, Brooklyn, Queens and the Bronx) that provide an alternative to hospital stays for people on the verge of a mental health crisis.

Parachute’s respite centers have no medical staff, no medications, no locks or curfews and no mandatory activities. They are secure, welcoming places where people willingly go to escape pressure in their lives and talk to trained “peer professionals” who can relate to what guests are going through because they are recovering from mental illness themselves.

Without places like this, New Yorkers who suffer from serious mental illness would have little choice but to check into a hospital or a hospital-like crisis center when their lives spin out of control. Some people need to be hospitalized for severe psychosis and depression, but many others end up in the hospital because they have no other options.

Relatively rare in the U.S., respite centers like this one cost a fraction of the price of a hospital stay, and can be far more effective at helping people avoid a psychotic break, severe mood swing or suicidal episode.

Community-based mental health services are particularly vital at a time when the number of beds in state psychiatric hospitals has declined sharply. Nationwide, beds from 2009 to 2012 amid recession-related budget cuts, and the number has continued to decline even as the economy has improved. According to the U.S. , 55 percent of U.S. counties have no practicing behavioral health workers and 77 percent have reported an unmet need.

Launched in 2013 by the city’s public health department, Parachute NYC includes mobile treatment units and phone counseling in addition to the four brick-and-mortar respite centers. A collaboration of city and state mental health agencies, the project received a three-year $17.6 million from the U.S. Department of Health and Human Services. Its financial goal is to save $50 million in hospital expenses.

In addition, New York state’s Medicaid agency plans to use a federal waiver to pay for respite services and other community mental health services for 140,000 state residents under a managed care program for people with behavioral health needs. Separately, New York state’s mental health office has invested $60 million since last year on the creation and expansion of community-based services throughout the state, including child and adult respite programs.

“A hospital is the last place you want to be if your life is unraveling,” said Community Access CEO Steve Coe. “They put you in a room, check your blood pressure and walk away and leave you for hours. You need to put your life back together, not be held in a place where you can’t do anything or talk to anyone,” he said.

Nevertheless, there is broad agreement that nonmedical services such as Community Access are not for everyone.

“The caution is that while this approach is good for some people, others really need medication and structure, so it has to be a good match for the person who is coming into it,” said Sita Diehl, director of state policy at the National Alliance on Mental Illness. “The advantage is that you get an expert listener working with you, really delving into who you are, rather than someone slapping a diagnosis on you and handing you a prescription.”

Averting Crisis

Parachute NYC provides a non-threatening environment where people who are coming undone can take a break from their turbulent lives and think through their problems before they reach a crisis point. Many who shun hospitals and crisis stabilization units will voluntarily seek help at respite centers.

In fact, Community Access insists that all prospective guests check in on their own, without coercion from a doctor, friend or family member. They also screen applicants to ensure that respite is their best option.Ìý Some may need medication and more intensive treatment from medical professionals.

“We’re not against medication,” assistant director Keith Aguiar explained. “If they come in with their own medications and they want to take them, that’s fine. But we do not tell them they have to.”

Many guests have full-time jobs and continue working and seeing friends during their stay. They can come and go any time of day or night. Unlike a hospital, Coe stressed, respite centers allow people to maintain their lives and relationships instead of putting everything on hold. Guests can also continue seeing their regular mental health providers during their stay.

The maximum length of stay at Parachute NYC respite centers is 10 days, soon to be shortened to one week under new Medicaid rules.Ìý But guests can return up to three times per year as needed. They also can visit weekly and monthly as “alumni” and take part in group activities and talk to staff.

To qualify for any of Parachute’s respite centers, guests must be New York City residents who are 18 or older.Ìý They must also have a clinical evaluation (within the last 48 hours) and a referral from a mental health provider stating they are not an imminent risk to themselves or others and would benefit from respite care. ÌýGuests also must have stable housing to go back to.

The Guest List

“We have a wide diversity of guests, from a Columbia University professor and an art critic to people who have been chronically homeless much of their lives,” Aguiar said. “We see men and women of all ages and all walks of life.”

In the last month, the guest list at Community Access included a 28-year-old woman who was living in mental health support housing and believed her roommates were practicing witchcraft on her. She was referred by her housing counselor. Another 24-year-old woman with a diagnosis of schizoaffective disorder needed to escape mounting conflicts at home with her brother, who had a diagnosis of schizophrenia. She was referred by a community psychiatric team.

A 70-year-old jazz musician who suffered from drug and alcohol addiction came to get away from his chaotic living situation.Ìý He talked to peers about his struggle with addiction, played his trumpet and napped a lot during his stay. “It was the best sleep I’ve had in years,” he told the center’s director Lauren D’Isselt, who is a psychologist.

Another woman, 25, applied to become a guest without a referral (the center arranged for Parachute’s mobile unit of clinical professionals to provide an assessment.) She’d heard about Community Access from a friend. A native New Yorker who left college because of severe depression, Maggie (not her real name) spoke calmly about her history of mental illness while sitting on a bench on the center’s sunny back courtyard.

“I wanted to finish college,” she said, “but I kept ending up on the tops of buildings.” Diagnosed with depression when she was seven, Maggie has been in psychiatric care most of her life.Ìý She spent the better part of the last six months in hospitals.

Now that she’s back in New York temporarily living with her parents, she said she wants to find the right kind of treatment and get on her feet so she can return to school.Ìý “Living at home is not very comfortable because my parents are the source of my problem. They abused me when I was a child,” Maggie said.Ìý She said she could stay with friends, but they don’t understand what she’s going through.

Five days into her stay, Maggie said it’s been good for her. She’s been able to make plans for future treatment. “It makes a lot of sense,” she said.Ìý “At a typical hospital, they take depressed people and lock them up and away from everyone and expect them to get better. Here you can go out and have coffee with a friend and no one has to go through double-locked doors to see you.”

“When I feel really anxious or sad, I can talk to a peer. Places like this are rare,” Maggie said. “But they shouldn’t be.”

A National Need

One in four adults, about 62 million Americans, experiences some form of mental illness during the course of a year. Of those, about 14 million live with a serious mental illness such as schizophrenia, major depression or bipolar disorder, according to from the National Alliance on Mental Illness. More than half of them do not seek treatment, in many cases because they don’t know where to find help.

For those who do seek treatment, the direct medical costs total more than $100 billion per year, according to from the National Institute of Mental Health. Community mental health services such as respite centers may make it possible to reduce those costs and relieve the demand for psychiatric hospital beds, which are in short supply in most communities.

Parachute NYC has so far served about 700 people at its respite centers, 600 through its mobile treatment teams and more than 20,000 through its peer-operated telephone support service. The city’s health department intends to analyze the program to determine whether it has resulted in a reduction in the city’s 100,000 annual psychiatric emergency room visits.

“We don’t perform miracles here,” D’Isselt said. “But we do help people find joy in their lives.” Most guests forge new friendships and leave with a new life plan, she said. “A lot can happen in a week.”

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Until now, there’s been no data on just how severe the shortage is and where it’s most dire.Ìý Jeff Zornitsky of the health care consulting firm Advocates for Human Potential (AHP) has developed the first measurement of how many behavioral health professionals are available to treat millions of adults with a substance use disorder, or SUD, in all 50 states.

Zornitsky’s “provider availability index” – the number of psychiatrists, psychologists, counselors and social workers available to treat every 1,000 people with SUD – ranges from a high of 70 in Vermont to a low of 11 in Nevada. Nationally, the average is 32 behavioral health specialists for every 1,000 people afflicted with the disorder.Ìý No one has determined what the ideal number of providers should be, but experts agree the current workforce is inadequate in most parts of the country.

“Right now we’re in a severe workforce crisis,” said Becky Vaughn, addictions director for the industry organization National Council for Behavioral Health. ÌýThe shortage has consequences, she said. “When people need help for addictions, they need it right away. There’s no such thing as a waiting list. If you put someone on a waiting list, you won’t be able to find them the next day.”

The shortage of specialists threatens to stall a national movement to bring the prevention and treatment of SUD into the mainstream of American medicine at a time when millions of people with addictions have a greater ability to pay for treatment thanks to insurance.

Two Federal Laws

The Affordable Care Act for the first time requires all insurers, including Medicaid, to cover the treatment of drug and alcohol addiction.Ìý In the past, Medicaid covered only pregnant women and adolescents in most states. Private insurance either didn’t pay for treatments or paid so little that most people could not afford to make up the difference.

For anyone with insurance coverage, the Mental Health Parity and Addiction Equity Act ensures that the duration and dollar amount of coverage for substance use disorders is comparable to coverage for medical and surgical care. Together, the two federal laws are expected to make billions of dollars available to the behavioral health care market.

Of the estimated 18 million adults potentially eligible for Medicaid in all 50 states, at least 2.5 million have substance use disorders. Of the 19 million uninsured adults with slightly higher incomes who are eligible for subsidized exchange insurance, an estimated 2.8 million struggle with substance abuse, according to the most recent national survey by the U.S. Substance Abuse and Mental Health Services Administration.

Although the federal government has acknowledged the scarcity of treatment specialists, it has failed to quantify and assess it. Other fields of health care, including mental health and primary care, are tracked by the U.S. Health Resources and Services Administration to determine which communities are “underserved.”Ìý Without this information, it is hard to know where more behavioral health specialists are needed and when the supply of providers is expanding or shrinking in any given region.

That’s where AHP’s Zornitsky steps in. Using data from the U.S. Department of Labor’s Bureau of Labor Statistics on the current size of the labor force and its projected growth, plus Department of Health and Human Services data on the prevalence of SUD among adults, he approximates the relative adequacy of the addiction treatment workforce in each state.

“It is not perfect,” Zornitsky said of the index, “but it’s a consistent, state-based measure that allows for comparisons and tracking over time.”

Poor Pay

According to a 2013ÌýÌýto Congress from the Substance Abuse and Mental Health Services Administration, the “growing workforce crisis in the addictions field” is due to a variety of factors, including stigma, an aging workforce and inadequate compensation.

The U.S. spent $24 billion on treatment of drug and alcohol disorders in 2009, the most recent year for which comprehensive data are available, according to a newÌýÌýby the Pew Charitable Trusts (Pew also fundsÌýStateline).Ìý Sixty-nine percent of the spending came from public sources such as state and local governments, Medicaid, Medicare and federal grants. Private sources, including commercial insurance and out-of-pocket spending, made up the balance, according to the report.

Historically, reimbursement rates and consequently salaries for physicians, psychologists, social workers and counselors in the addiction field have been well below salaries for comparable professionals in other health care specialties that require the same level of education and training.

For example, the average salary for social workers in the addiction field is $38,600, compared to $47,230 in the rest of the health care industry, according to the Bureau of Labor Statistics.

As a result, too few health care workers are going into the field and too many are switching to more lucrative specialties. And because the average age of addiction specialists is higher than in other professions, demographers predict a behavioral health retirement boom in the next five years.

Between now and 2020, the addiction services field will need to fill more than 330,000 jobs to keep pace with demand, of which more than half are the result of people retiring and switching to other occupations.

Low Treatment Rates

Of the roughly 23 million Americans who suffer from drug and alcohol disorders, only 11 percent receive treatment at a specialty facility, according to the most recentÌý.

That compares to U.S. treatment rates as high as 80 percent for diseases such as diabetes and hypertension. Part of the reason for lack of treatment has been inability to pay. With billions in private insurance and Medicaid dollars becoming available, that is expected to change.

But questions remain about how the existing addiction services industry will manage the expansion, whether new businesses will enter the market and how many providers will take Medicaid patients. Today, only 55 percent of addiction practitioners accept Medicaid reimbursements, which tend to be lower than private insurance.

Another reason many substance abusers go without treatment is the social stigma connected with addictions and mental illness. To avoid being labeled, many hide their drug or alcohol use, and refuse to admit they have a problem. With more money available for treatment and increased public concern over the nation’s rising death toll from drug addictions, experts are hopeful the stigma will dissipate and more health care professionals will be drawn to the field.

The Affordable Care Act eventually should spur more competitive salaries for behavioral health professionals. But for now, it is complicating matters, Vaughn said. Both Medicaid and private insurers require levels of professional licensing and credentialing that were not needed when addiction services were funded primarily by federal grants. In addition, many of the mostly small providers in the industry have no business experience negotiating contracts with Medicaid managed care organizations or filing claims for Medicaid and private insurance.

It will be largely up to states to make the changes needed to develop an adequate addiction treatment workforce. The federal government has offered model licensing guidelines that define a so-called “scope of practice” for each job title in the behavioral health profession, but states will have to create licensing laws and regulations. States could also encourage more people to go into the profession by offering to repay student loans and funding local colleges.

In addition, state Medicaid agencies will need to reach out to the existing addiction industry and provide business training to enable them to file claims for the billions in new funding for drug and alcohol treatments. Most important, Vaughn said, Medicaid rates for addiction services need to be raised to provide a reimbursement benchmark that is closer to the fees paid to practitioners in other health care professions.

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But Askew is in a tiny minority. Only 2 percent of all eligible businesses have checked out so-called SHOP (Small Business Health Options Program) exchanges in the 15 states where they have been available since last October under the Affordable Care Act. Even fewer purchased policies.

In November, three more state-run SHOP exchanges are slated to open, and the federal government will unveil exchanges for the 32 states that chose not to run their own.

SHOP exchanges were supposed to open nationwide on Oct. 1, the same day as exchanges offering health insurance for individuals. But the Obama administration postponed the SHOP launch, citing the need to fix serious technical problems with the exchanges for individuals, which it said were a higher priority.

So far, only the District of Columbia and 15 states – California, Colorado, Connecticut, Hawaii, Idaho, Kentucky, Massachusetts, Minnesota, Nevada, New Mexico, New York, Rhode Island, Utah, Vermont and Washington – have launched small business exchanges. Three more – Maryland, Mississippi and Oregon – will also start their own exchanges.

“It’s easy to explain why (small business exchanges) have gotten off to a slow start,” said Linda Blumberg, a researcher with the Urban Institute who is their development with support from health care advocates, the Robert Wood Johnson Foundation. The delay of small business exchanges in most states confused business owners in the few states that actually offered exchanges, she said.

Also, insurance companies encouraged business owners to renew their plans before the October 2013 deadline to avoid having to sign up for a new policy during the first year of the controversial ACA rollout. The Obama administration allowed even noncomplying plans to be renewed, after complaints from individuals and business owners who had received cancellation notices.

As a result, not as many businesses needed to look for new policies for their employees as was originally projected. To be successful, SHOP exchanges must attract a large pool of businesses that can exert market pressure on insurance carriers and ultimately bring down prices. Whether that will happen remains to be seen.

How It Works

The ACA offers businesses with fewer than 50 employees the opportunity to purchase health insurance coverage for their workers through a SHOP, but it does not require them to do so.

These firms comprise 5.8 million of the 6 million firms in the U.S. and employ at least 37 million Americans. More than 96 percent of larger corporations cover their employees, while only 59 percent of very small companies provide insurance for their workers. As a result, nearly half of the nation’s 47 million uninsured people are self-employed or work for a small company, according to 2012 data from the Kaiser Family Foundation.

Under the health law, a federal tax credit that can cover up to half the cost of an employer’s share of premiums is available to businesses that have fewer than 25 employees and average annual wages of less than $50,000. The federal government estimates 4 million small businesses will qualify, resulting in $40 billion in subsidies over the next 10 years.

But so far, not many companies have taken advantage of the offer, according to a by the Government Accountability Office. In the 2010 tax year, only 170,300 businesses received a credit, amounting to just $428 million, according to the report.

“A lot of folks complained that they needed to hire an accountant to figure it out,” Blumberg said. “You couldn’t even get a rough idea whether you qualified.” Insurance brokers have also complained about how difficult it is to determine eligibility for a credit, and suggest the federal government should create some kind of easy-to-use calculator.

In Colorado, the percentage of people employed by small businesses is even higher than in much of the rest of the country. “There aren’t exactly a lot of corporate headquarters here,” said the state exchange’s chief strategy officer, Marcia Benshoof.Ìý “Colorado is a state of small business. We have some very passionate folks here who care about this market,” she said.

A few other states have entered partnerships with the federal government to use the federal website but plan to provide their own marketing and outreach. All states regulate the insurance companies that offer their policies on and off the exchange.

Over the past decade, insurance premiums for small firms have increased 123 percent. Currently, small businesses pay up to 18 percent more than larger businesses for health insurance, according to the .

The health law requires SHOP exchanges to include a feature known as “employee choice,” in which individual workers can pick from a variety of policies offered by different insurance companies, similar to the menu of health benefit options larger companies offer employees.Ìý

“When we talk about why they should use the exchange, choice is the meaningful part of that conversation. That’s the moment of truth with employers,” Benshoof said. Besides creating goodwill, studies show that offering employees a choice of health plans often results in lower overall health care costs, because employees tend to choose the lowest-priced plans that offer the most value for their individual needs, according to the .

Employee ChoiceÌý

In Askew’s case, allowing her employees to choose a health plan resulted in an overall decrease in her monthly premium bill. Two of them had chronic conditions and needed more expensive policies that covered the doctors they had been seeing for years. The rest were relatively young and healthy.

“I set a contribution limit (from the company) based on the cost of the most expensive policy and let the staff choose the policy they wanted,” Askew said.Ìý Out of 47 choices on the exchange, she said 10 of her employees chose a plan that was cheaper than the $300 per month per person limit she set. Overall, she will pay a total of about $400 per month less than she did last year.

Before Colorado opened its exchange, Askew, like most small employers, could qualify only for one insurance policy for all of her employees. That’s because commercial carriers set a threshold number of employees that must sign up to get a plan. As a result, companies with fewer than 50 employees usually qualify for only one plan.

In June, the Obama administration allowed 18 mostly Republican-led states using the federal exchange to temporarily opt out of employee choice, because they argued it could cause overall insurance rates to rise. Alabama, Alaska, Arizona, Delaware, Illinois, Kansas, Louisiana, Maine, Michigan, Montana, New Hampshire, New Jersey, North Carolina, Oklahoma, Pennsylvania, South Carolina, South Dakota and West Virginia will not offer the feature until 2016 at the earliest.

A small business advocacy group, the liberal-leaning Small Business Majority, criticized the administration for putting off employee choice, which they say is critical to the exchanges’ success. Without it, state and federal small business exchanges may not offer businesses any distinguishing advantages over self-insuring or purchasing a policy outside of the exchange, said David Chase, the group’s health policy analyst.

With employee choice, he explained, carriers are selling directly to employees, giving small insurance companies a chance to compete with established carriers. That alone, Chase said, could contribute to eventually dragging down prices on the exchange.

Business Opposition

The National Federation of Independent Business (NFIB), one of the groups that sued the administration over the federal health law’s so-called individual mandate requiring nearly everyone to purchase health insurance or pay a tax fine, currently its member companies to consider canceling their group health policies and instead help employees apply for insurance subsidies on the individual exchange.Ìý According to the NFIB, the total cost to business owners who are now offering workers’ coverage may be lower if they simply give employees a salary boost to purchase insurance on their own.

If a company’s average wages are low enough to qualify for the small business tax credit, chances are its workers would have incomes low enough to qualify for substantial subsidies on the individual exchange. If workers have an employer offer of affordable insurance, however, they lose their eligibility for premium tax credits.

When it comes to health insurance, the biggest issue for small businesses is cost, according to a recent published in the journal Health Affairs. More than 92 percent of small firms that don’t offer employee coverage said that costs would need to be lower than they are today for them to do so. The catch for SHOP exchanges is that until a large number of businesses start purchasing policies on them, they likely will not create enough new competition to push down prices. Other features and extensive marketing will have to drive businesses there in the meantime.

In general, insurance agents and brokers, who have an equal financial incentive to help businesses purchase policies on the exchange as from the outside market, say exchanges have required nearly twice as much of their time. Colorado exchange officials admitted they were surprised that Askew had successfully navigated the exchange without the help of a broker.

“Granted I’m a lawyer,” Askew said. “But it seemed to me to be a much easier way to manage it all.”

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Of the 2.3 million adults in state and federal prisons, about 246,000 are 50 or older, according to the National Institute of Corrections. The U.S. currently spends more than $16 billion annually caring for these aging inmates, and their numbers are projected to grow dramatically in the next 15 years.

“In a couple of years,” said Donna Strugar-Fritsch, a consultant with Health Management Associates, “this is the only thing people are going to be talking about.Ìý It’s getting worse by the minute.”

In the last five years, a handful of states have tried to contract with private nursing homes to care for some of their elderly and disabled inmates under so-called “medical parole” programs that allow prisoners to receive care outside of a prison while remaining in state custody. But few private facilities have been willing to accept them. Likewise, courts and communities have tended to resist so-called “compassionate release,” which cuts short the sentences of elderly or dying inmates so they can spend their last days on the outside.

Two years ago, Connecticut tried a different approach. Instead of attempting to place prisoners in nursing home beds next to someone’s elderly parent, the state asked the commercial nursing home industry to provide a facility that would accept a steady stream of prison inmates and patients from the state mental hospital who required long-term nursing care.

A handful of states are interested in following Connecticut’s lead; Michigan is seeking industry proposals for a similar arrangement, and Kentucky and Wisconsin are considering doing the same. But in other states, officials may lack the political will to take on residents who don’t want convicts in their midst. And even in Connecticut, it remains to be seen how far the state can take its plan, given the public backlash it already has experienced.

Technically, the winning bidder for Connecticut’s corrections business, 60 West, is just like any other nursing home. ÌýIt is not locked down, does not employ guards and it accepts applications from anyone. Located in Rocky Hill, the 95-bed nursing facility opened in May 2013 and is already half-full. Its only residents are patients transferred from state prisons and Connecticut Valley Hospital, the state’s only residential mental institution.

Besides providing more humane and less expensive care than Connecticut’s prisons can offer, 60 West is certified to receive federal Medicaid payments. As a result, the state’s taxpayers will save more than $5 million in corrections health care costs annually, once 60 West is filled.

Medicaid on the Outside

Under the 1965 law that created Medicaid, anybody entering a state prison forfeited Medicaid eligibility. The same went for those entering local jails, juvenile lock-ups and state mental institutions.

But an exception to that general rule opened up in 1997 when the U.S. Department of Health and Human Services wrote to state Medicaid directors saying inmates who leave state or local facilities for care in hospitals or nursing homes can get their bills paid by Medicaid. The exact federal contribution varies by state. But in all of them, Washington covers at least half the costs of the federal-state health care program for the poor.

In addition to the incarcerated, those on probation or parole or under house arrest can participate. Even in states that have not expanded Medicaid to low-income adults under the Affordable Care Act, most elderly or disabled prison inmates qualify under existing Medicaid rules, as long as they receive care outside.

That means some portion of the nation’s elderly and disabled inmates could receive federally-subsidized long-term care outside of prison walls, potentially saving states millions of dollars in health care costs.

Aging Quickly

The prison population in Connecticut is aging faster than in most other states and its growth is not expected to subside any time soon.Ìý Between 2007 and 2011, the proportion of inmates age 55 and older increased 45 percent, according to a survey by the Pew Charitable Trusts and the Association of State Correctional Administrators. Nationwide, the number of elderly inmates is projected to more than triple in the next 15 years, according to data compiled by theÌý.

The rise in older prisoners is partly a result of tough-on-crime laws in the 1980s and 1990s, including mandatory minimum sentences and “three strikes” rules. It also reflects the aging of the U.S. population generally. Prisoners, like everyone else, are living longer. Many elderly inmates came into the prison system late in life, some after serving previous sentences. Others are serving lengthy sentences because of the nature of their crimes.

Bedridden, in wheel chairs, and often suffering from dementia, elderly prisoners cost more than twice as much to care for as their younger counterparts, and most pose little threat to society. ÌýIn prison infirmaries, they are often preyed upon by healthier inmates.

“Prisons aren’t equipped philosophically, legally, or personnel-wise to deal with the elderly in any way,” Strugar-Fritsch said.Ìý“It’s already a failed experiment for prisons to be serving as mental institutions. It will be another failed experiment if prisons try to serve as nursing homes.”

Nevertheless, some states have resorted to building new nursing facilities within prison walls, a costly undertaking that excludes the possibility of Medicaid payments.Ìý With prison infirmaries filled to capacity and few outside facilities willing to accept their elderly and infirm inmates, they saw no other choice.

In California, for example, where about 136,000 Ìýpeople are incarcerated, efforts to find nursing home beds or community–based care on the outside has so far yielded only about 60 placements, according to the system’s legislative director, Joyce Hayhoe.Ìý To fulfill its health care requirements under a federal court order, the state last year built a 2,950 bed long-term and intermediate care facility in Stockton – the largest in the country – at a cost of $900 million. ÌýAccording to Hayhoe, the state intentionally did not take Connecticut’s approach because of concerns about community reaction.

Unhappy Neighbors

Even if California and other states could find enough beds in private nursing homes to care for their elderly and disabled inmates, not all of them would be eligible. Those with recent disciplinary actions, for example, are generally not considered candidates for medical parole. Sex offenders can be difficult to place because of state laws restricting where they can live. A large proportion of elderly inmates are serving lengthy sentences for crimes such as rape or murder. Many will die in prison because communities are unwilling to accept them.

Rocky Hill is no exception. Residents of the town of 20,000, just south of Hartford, protested on the steps of the Connecticut State Capitol, filed a court injunction and lobbied lawmakers to pass a law allowing them to overrule the state’s decision to contract with 60 West.

They were unsuccessful, but so far, there have been no incidents. Two inmates were transferred back to prison because of minor behavioral problems, but no employees have been injured and local residents have not complained.Ìý “We have over a year in the bank now without incident,” said Mike Lawlor, Connecticut’s undersecretary for criminal justice. “The permanent solution is not one nursing home. If the current trend holds there may be more dedicated nursing facilities in the future.”

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By all accounts, the previous administration was desperate to bring down double-digit health care cost growth that threatened to destroy the entire budget.

That partially explains whyÌý, which spends nearly $200 million per year to insure 14,000 workers and their families, who mostly live and work here in the county seat, was willing to risk millions more on a wellness program that would prove to break the traditional mold.

It may also explain why labor unions took the unusual step of joining management in a plan that would ultimately shift more health care costs to workers.

But it doesn’t explain why this employee wellness program, which received an innovationÌýÌýthis year from Harvard University, has far surpassed all others in employee participation, health improvement and health care savings.

The program’s unusually high financial incentives for participation and an extensive outreach program to promote it are credited in large part for the program’s success.

In its first five years (2007 to 2011), the county’s “Healthy Incentives” program invested $15 million and saved $46 million in health care spending with sustained participation by more than 90 percent of its employees. Two years ago, $61 million in surplus health care funds were returned to county coffers because cost growth was lower than actuaries had projected. Seattle, the state’s largest city, is the county seat.

Employee health improved dramatically, raising King County employees’ health status above the national average and keeping it there. Smoking rates dropped from 12 percent of employees to less than 5 percent, and more than 2,000 employees classified as overweight or obese at the start of the program lost at least 5 percent of their weight, more than halving their risk of diabetes.

With an average age of 48.5 years and practically no turnover, the county’s worker population is getting healthier even as it’s growing older.

Outsized Performance

These results, documented in a 2012 internal report by former staff economist John Scoggins, are remarkable when compared to the generally lackluster performance of other wellness programs run by large U.S. organizations, including state and local governments. According to a 2013ÌýÌýfrom the Rand Corporation, about half of all U.S. large employers offer some type of wellness program and the number is growing. But few end up saving any money and employee participation has been limited. Many fizzle out after a year or two.

On average, only 47 percent of employees participate nationwide, and only 2 percent of organizations that offer the plans report any reduction in health care costs, according to the study, which was funded by the U.S. Departments of Labor and Health and Human Services. Overall savings from wellness plans offered by the organizations Rand surveyed were too small to be statistically valid.

Still,ÌýÌýshows that workplace health programs have the potential to promote habit-forming healthy behavior, improve employees’ health knowledge and help workers get necessary screenings, immunizations and follow-up care. The Affordable Care Act encourages employers to expand wellness programs by loosening federalÌýÌýthat limit the financial rewards employers can offer workers for reaching certain health goals such as quitting tobacco use.

King County’s intensive education and outreach effort cost the county nearly $7 million in the first two years. Since then, the effort has tapered, but six full-time employees still work to maintain the county’s high participation rate. “We want to make sure that no one is left out because of lack of knowledge,” said Brooke Bascom, who runs the program.

The biggest draw, Bascom said, has been the financial incentives King County offers its employees for participating.Ìý Other wellness programs offer much less substantial rewards, according to the Rand report.

Among the 10 percent of employees who don’t participate in Healthy Incentives, most say it’s because they don’t want to share private information about themselves. A small number are given exceptions because of health conditions or family issues that prevent them from participating.

More Than a Wellness Plan

Healthy Incentives offers a model that state and local governments should replicate, said Stephen Goldsmith, director of the innovations award program at Harvard’s Kennedy School of Government. Washington state is already emulating parts of King County’s wellness plan and Oregon is trying to start a similar program.

Here’s how the financial incentive part of the program works:

In the past, county employees didn’t pay a share of insurance premiums, but they did pay deductibles, co-insurance and co-pays. Healthy Incentives allowed workers to shave $200 off of their $500 deductible simply by filling out a health assessment form. They could get another $200 knocked off if they completed an “individual action plan,” such as attending six Weight Watchers meetings at work, completing five phone sessions with a tobacco cessation coach or learning how to better manage diabetes. Four years into the program, nonparticipants’ deductibles went up to $800.

In addition, employees who did not participate in the program had to pay a 10 percent higher co-insurance share of the cost of medical care after their deductibles were exhausted.Ìý When you put those two incentives together, the individual savings could come to more than $1,000 per year.

The program also encourages the use of less expensive generic drugs by increasing the co-pay for name-brand drugs from $15 to $30, while decreasing the co-pay for generic drugs from $10 to $7. These changes, put in place in 2010, resulted in $2.4 million savings to the county and a $1 million savings to employees by 2011.

Higher Value Providers

The wellness program began when former County Executive Ron Sims, credited with the big idea, donated $1.3 million in county dollars to help a fledgling health care organization, the Puget Sound Health Alliance, develop aÌýÌýto help identify doctors and hospitals in the county that offered the highest quality services at the lowest prices. He also recruited large local employers including Alaska Airlines, Boeing and Starbucks to contribute money to the effort.

By analyzing claims data, the group found that one provider organization, Group Health Cooperative, was costing the county an average of $4,000 less per person per year while providing higher quality services than all other providers in the area. Group Health already served 20 percent of the county’s employees through its Seattle-based accountable care organization.

To encourage more employees to use Group Health, the county eliminated the deductible and added a graduated co-payment of $20 to $50 based on employees’ Healthy Incentives participation levels. Regence BlueShield patients remained subject to existing deductibles of up to $800. As a result, an additional 2,274 employees switched to Group Health, bringing its share of coverage to 30 percent. Between 2010 and 2011, the shift to Group Health reduced county expenditures by $6.5 million and saved employees $2.2 million.

“They needed a third party to do the research,” said Mary McWilliams who now runs the Alliance. “The unions would never have trusted the research if it had come from the county or the providers,” she said. The alliance since expanded to include the state of Washington.

Now called the Washington Health Alliance, the group plans to determine the highest-value services by physician groups and hospitals within the Regence network. Once those providers are identified, employees will once again be steered in their direction through reduced out-of-pocket expenses.

Too Much Rigmarole

Not everyone loved the program in the beginning. In its first two years, county employees objected to the time spent filling out forms and documenting their action plans. Some lodged formal complaints. Kathy Pompeo was one of them.

A supervisor in the Sheriff’s Office, Pompeo runs a 24-hour crew of data-entry workers who have little time to fill out online forms detailing their daily wellness activities. “My staff was very frustrated and very negative,” she said. They were spending more time reporting on their activities than working on their healthy behaviors. They participated, “kicking and screaming.”

Bascom said the county took complaints to heart and made the process easier.Ìý With such a diverse workforce — from bus drivers, road workers and custodians to law enforcement officers, doctors, attorneys and administrative workers — the county had to make accommodations so that everyone could participate. Bus drivers, for example, didn’t have access to computers, so the county developed a paper process.

Even the county executive complained that the process was cumbersome.Ìý “You’d get up in the morning and exercise and then have to sit down and log on to a computer. It didn’t make sense,” Constantine said.

Now employees can text their activity to the program: “I’m walking my dog,” for example. And the county applies points toward their full participation status.

Has the county made it too easy to comply? Bascom doesn’t think so.Ìý Research shows that healthy habits can be formed in just four weeks. As for employees gaming the system by not really performing the activities they say they are, Bascom and others said they doubted much, if any, of that was going on.

“We’re a pretty ethical group,” Pompeo said, and there’s peer pressure to do the right thing. “It’s like having a running buddy or a diet buddy, only lots of them,” she said.

When Constantine took office in 2009, he was asked whether he wanted to continue the program. His response was immediate. “There was no question about continuing it,” he said.Ìý “Every employee was doing it, so it got internalized…. My question is why this hasn’t been done a thousand times before.”

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Five years ago, rural hospitals in South Carolina illustrated the problem. On a typical morning, more than 60 people were waiting in the state’s emergency rooms for psychiatric exams so they could either be discharged or admitted for treatment.ÌýÌý

Today the scene is quite different, thanks to a “telepsychiatry” program that allows psychiatrists to examine South Carolina patients through videoconferencing, reducing the average wait time from four days to less than 10 hours.Ìý In 2010, North Carolina began rolling out a similar program, and a dozen other states, including Alabama, Kentucky and Wisconsin, plan to follow suit.

Five years after it was launched, more than 20 South Carolina hospitals are participating in the program, and psychiatrists have performed about 19,700 video examinations. According to a study by the University of South Carolina School of Medicine, the program has reduced the frequency of hospital readmissions and involuntary commitments. It also has improved compliance with follow-up treatments, and patient participation in drug and alcohol rehabilitation has doubled.

Overall, the study found, the program has reduced costs by about $1,400 per consult, or a total of nearly $28 million.

“Some hospital administrators are understandably skeptical at first,” said Ed Spencer, director of South Carolina’s telepsychiatry program. “But when they see the cost savings and patient and physician satisfaction rates, they usually change their minds.”

, a philanthropic organization that funds non-profit hospitals, contributed $3.7 million in start-up funding to help South Carolina hospitals purchase hardware for the program. To protect patients’ privacy, the participating hospitals paid to install secure telecommunications lines. Since 2011, South Carolina lawmakers have allocated $4 million for the project.

In North Carolina, which began its own program in the northeast section of the state in 2010, the Duke Endowment (which is based in Charlotte) kicked in an initial $800,000. ÌýAnd last year that state’s legislature appropriated a total of $4 million to expand the program statewide starting January 2014.

When South Carolina embarked on its telepsychiatry program, most states already were using telemedicine in rural areas, but mostly for physical conditions such as heart disease and strokes. “We had heard about some isolated uses of telepsychiatry,” said Lin Hollowell, the Duke Endowment’s associate health director, “but not on the same scale we were thinking about. We wanted to build a statewide network.”

Pupil Dilation and Facial Tics

The system kicks in when an emergency room physician determines a patient needs a psychiatric exam. A call goes out to one of seven psychiatrists who are on duty between 8 a.m. and midnight, seven days a week, including holidays.Ìý Once a psychiatrist takes the case, the patient’s medical records are made available and clinical notes are transmitted from the attending physician in the emergency department.

A cart equipped with a large television screen, a microphone and camera is wheeled into the patient’s room for the exam. During the session, which typically lasts 30 minutes, the psychiatrist can zoom in on the patient and tilt the camera at different angles to observe important physical indicators of mental illness and substance abuse, such as pupil dilation, facial tics and flushing and overall body movements.

Once the exam is completed, the remote psychiatrist reports back to the emergency room physician and if needed, an outpatient mental health facility designated for follow-up treatment. The report is also retained by the state telepsychiatry team in case they are called in again to examine the same patient.

In South Carolina, the psychiatrists who provide the service are full-time employees of the state mental health agency. In North Carolina, with more than double the population of South Carolina, they are private practice doctors who are reimbursed by Medicaid, other insurers and the state.

South Carolina’s $2.7 million program is now partially paid for through an annual hospital fee. Small hospitals with fewer than 75 beds pay $6,000 per year for 150 consultations; larger hospitals pay $20,000 per year for an unlimited number of consultations. Hospitals are in turn reimbursed primarily by Medicaid. The state legislature and the Duke Endowment continue to provide additional funding, although the total amount is declining.

This month, the Duke Endowment awarded South Carolina $750,000 and North Carolina $1.5 million to take its fledgling program statewide. North Carolina plans to offer the service to all of its 108 hospitals. Even in urban areas where more psychiatrists are available, the service has significantly decreased wait times in emergency rooms, said Mebane Rash, legal director at the North Carolina Center for Public Policy Research, which hasÌýÌýthe telepsychiatry program.

South Carolina has targeted rural hospitals. By the end of this year, Spencer expects six new hospitals to sign up, bringing the total to 26, out of the state’s 67 hospitals. More will be added next year, he said.Ìý

Doctor Shortage

Nationally, the expansion of telepsychiatry and telemedicine in general has been slow, in part because ofÌý. Medical licensing and malpractice laws vary across the states, making it difficult for doctors to practice across state lines.Ìý In addition, Medicaid, Medicare and private insurers do not uniformly pay the same fees for services delivered remotely as they do for in-person services.

But of all the medical professions, psychiatrists are in the shortest supply – and most practice in urban areas. South Dakota, where only 15 percent of the need for mental health services is met, has the most severe shortage of mental health workers. Wisconsin is second worst with less than 21 percent of its need met, followed by Alaska (23 percent), Arizona (24 percent), Oklahoma (25 percent), Montana and Delaware (26 percent), New Mexico (30 percent), Connecticut (32 percent) and Maine (36 percent), according to federal data compiled by theÌý. (KHN is an editorially independent program of the foundation.)

Only Rhode Island has enough mental health workers for its population. South Carolina and North Carolina rank somewhere in the middle, with only 55 percent and 52 percent of mental health needs met, respectively.

The supply of psychiatrists is expected to shrink in the future, because more are retiring than are entering the field.Ìý “It takes a long time to mint a new psychiatrist,” said Kenneth Duckworth, medical director for the National Alliance on Mental Illness.

“Access to psychiatric input remains a crisis across the country,” he said. “Telepsychiatry represents an opportunity to extend the reach of psychiatrists.” Duckworth and other physicians say there are few downsides to telepsychiatry, although the field has not yet been thoroughly vetted.

“The major professional societies have not yet opined that this is identical to seeing the person in the room,” he said. But South Carolina’s Spencer, a mental health clinician himself, points out that psychiatry generally does not involve physical contact.

In the North Carolina study, Dr. Jody Osborne, emergency department director at Randolph Hospital in Asheboro, said, “It can be difficult to build trust,” when examining a patient remotely.Ìý “Overall, though, I would say that the utilization of telepsychiatry has been an asset,” he said. “My hope for the future of telepsychiatry is that it can be expanded to local clinics, not just emergency departments.”

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In the last three years, the number of states investing in these painstaking data collection projects has accelerated.Ìý Nineteen states have APCDs in varying stages of development and at least 21 states are considering laws to create them, according to theÌý, which assists states in setting up claims databases.

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Designed to shed light on the disparate prices doctors and hospitals charge for the same procedures, APCDs have been used by consumers deciding where to go for arthroscopic knee surgery, for example.ÌýThe pricing and quality data has also been used by insurance companies and large employers to design cost-effective benefit plans.ÌýState officials have used APCDs to inform health policy development and measure results.

Critics question whether these complex state databases are worth the effort. Consumer advocates, large employers and most economists argue they are.

“They take a lot of time,” said Christopher Koller, former insurance commissioner for Rhode Island, and president of the Milbank Memorial Fund, a health policy research group. But they have been invaluable to some states in measuring the performance of their health care systems, he said.

Following is a primer on the proliferation of state APCDs and how they are used:

What are all-payer claims databases?

APCDs typically include nearly all medical, mental health, pharmacy and dental claims from all providers in the state. The information is provided by all major payers, including commercial insurers, Medicaid and Medicare.Ìý Some states also require large employers to provide claims data for their self-funded health plans.

Consumer privacy is protected by using codes rather than the names and addresses of patients, and confidential business information is protected by providing the median of prices paid to providers for specific services, rather than the individual prices negotiated by each insurance company for each type of insurance plan they offer.

Some states use the data to create cost comparison websites for consumers. Maine’sÌý, for example, allows residents to search for providers for specific procedures by zip code and compare prices and the number of procedures performed. ÌýUtah and New Hampshire have similar sites, and Colorado plans to launch one this month. Others offer the data to researchers and use it internally to inform health care policy and insurance regulation.