Center for Health Policy

Could Social Impact Bonds Help Finance Public Health Innovation?

Social impact bonds are emerging in many state governments and local municipalities as a new way to finance public health interventions. SIBs can be a way to launch an innovation without bearing the cost for years to come. So how do they work? Here is an example from South Carolina. SC is using SIB to finance an intervention to reduce premature births. If the program succeeds in reducing the premature birth rate among Medicaid beneficiaries, and reduces state spending as a result, the state will repay the principal plus a yet-to-be determined rate of return. If the program doesn’t meet expectations, the state will owe the investors less or even nothing at all. SIBs are also referred to as a pay-for-success contract. They have been used for multiyear projects pertaining to education, homelessness and prisoner recidivism. In most cases, the money goes to a nonprofit that provides the services. Because SIBs extend for many years, there is time for those savings to emerge and be measured and they often promise double-digit returns. Although enthusiasm is high for SIBs, they have only been around since 2010 so critics point out that SIBs are yet unproven and that calculating the return for investors can be complicated given the complexity of the contracts. Yet, given the climate of austerity in government financing of public health, SIBs are a glimmer of hope for public health organizations wanting to improve the health of their community.

Website Relaunched for UNMC Center for Health Policy

We made substantial improvements to the look and function of our website. It officially relaunched today. You can find us here. On the site, you can learn about the composition of the center, our educational offerings, and our research findings. The Blog has also been revised and improved. The blog will be a faster way for us to disseminate important policy information to the public. The vision is to have multiple authors (not just me) contribute to this blog to provide the most up to date and reliable information about policy that matters to the health of Nebraskans.

Impact in Nebraska of the Supreme Court Decision on Health Law

Public Health in the National News – On June 28, 2012, the Supreme Court upheld the Affordable Care Act, with the majority opinion that Congress has the authority to use the taxing power endowed by the Constitution to impose the individual mandate. Another key ruling from the Court was that a provision of the ACA to expand the Medicaid program for individuals from 100% of the federal poverty level to 133% of the federal poverty level is optional, rather than required of state governments. You can read the Supreme Court’s decision here.

The Supreme Court’s ruling clears the way for the law’s implementation (Timeline of the ACA implementation). States, like Nebraska, that have been waiting for a decision from the Supreme Court before acting on implementation of key pieces of the legislation will now need to hurry to meet federal deadlines. For example, states need to submit a “readiness review” for a state-run health insurance exchange by January 2013. States that fail to submit a readiness plan will either have a health insurance exchange run entirely by the federal government or in partnership with the state government. Governor Heineman recently stated that Nebraska should wait on further planning efforts on implementing health insurance exchanges.

A recent report profiling health insurance in Nebraska by the UNMC Center for Health Policy (Health Insurance Coverage in Nebraska) found that there are more than 217,000 uninsured Nebraskans. Several key provisions in the Affordable Care Act will help many uninsured Nebraskans find and be able to afford health insurance coverage, including establishment of health insurance exchanges, guaranteed issue of insurance regardless of pre-existing conditions, and allowing children to stay on their parent’s health insurance up to age 26, and expansion of Medicaid coverage.

Even though the law has been upheld, the outcome of the November elections could impact the implementation of the law. For example, Congress could pass legislation to repeal the law or attempt to defund it through the budget reconciliation process before major provisions take effect in 2014. The following are some selected benefits of the Affordable Care Act for Nebraska after two years of implementation. More details are available at HealthCare.gov.

  • 18,000 young adults in Nebraska gained insurance coverage.
  • 359,000 Nebraskans with private health insurance gained preventive service coverage with no cost-sharing.
  • Nebraska has received $7.3 million in grants from the Prevention and Public Health Fund created by the Affordable Care Act.
  • Health centers in Nebraska have received $19.4 million to create new health center sites in medically underserved areas and expand preventive and primary health care services.

This article was written by Jim Stimpson, PhD, associate professor in the UNMC COPH Department of Health Services Research and Administration.