Health Care Costs and Access

Disparities in Appalachia

Prepared for:

Appalachian Regional Commission 

1666 Connecticut Avenue NW

Suite 700

Washington, DC 20009-1068

January 2012

Contract #CO-16835-2010

Prepared by:

PDA, Inc. 

Nancy M. Lane, MA

Andrew Y. Lutz, BS

Kimberly Baker, BS

The Cecil B. Sheps Center for Health Services Research 

University of North Carolina – Chapel Hill 

Thomas R. (Bob) Konrad, PhD

Thomas R. Ricketts, PhD

Randy Randolph, MRP

Charles Tran, BS

Christopher A. Beadles, MD

APPALACHIAN

REGIONAL

COMMISSION

HEALTH CARE COSTS AND ACCESS DISPARITIES IN APPALACHIA

January 2012

ACKNOWLEDGEMENTS

This report was prepared by PDA, Inc. in Raleigh, North Carolina in collaboration with The Cecil G. Sheps 

Center for Health Services Research at the University of North Carolina Chapel Hill. It was developed for the 

Appalachian Regional Commission under contract CO-16835-2010. The principal authors of this report and 

the related research study include: Nancy M. Lane, PDA, Inc.; Thomas R. (Bob) Konrad, PhD, Tomas C. 

Ricketts, III, PhD, Randy Randolph, MRP, Charles Tran, BS, and Christopher A. Beadles, MD from The 

UNC Sheps Center; Andrew Y. Lutz, BS and Kimberly Baker, BS at PDA, Inc. In addition, this report has 

been reviewed by David Carrier, PhD of the Appalachian Regional Commission. 

The authors wish to thank our program officer David Carrier for his insights and review comments on various 

technical aspects of the report. In addition, we are indebted Paulette Pack, Administrative Assistant, PDA, 

Inc., for countless hours of assistance editing the report and to Laurie Leadbetter and Christiane Voisin at The 

UNC Sheps Center for assistance with the literature search. 

APPALACHIAN REGIONAL COMMISSION

Funding for this project was provided by the Appalachian Regional Commission (ARC) to PDA Inc. through 

a competitive solicitation led by David Carrier, PhD and John Cartwright, PhD. 
ABOUT THE AUTHORS

PDA, INC.

Nancy M. Lane, MA. Ms. Lane serves as the President of PDA, Inc. and has led health care program 

development efforts for more than 30 years. With nine years’ experience with the Appalachian 

Regional Commission, she has developed skills in regional health care system design and policy 

development. Ms. Lane helped to develop the Rural Health Clinics Act, PL 95-210. She has 

completed health care delivery system research on the Veterans Health Administration and private 

health care providers. 

Andrew Lutz, BS. Mr. Lutz received his Bachelors of Science in Finance from the University of 

North Carolina at Chapel Hill. He conducts health industry, market and company-specific research, 

processes documentation and works with space programming and policy review. 

Kimberly Baker, BS. Ms. Baker received her Bachelor of Science in Business and Marketing from 

Western Carolina in Cullowhee, North Carolina. She provides assistance with market analysis, 

preparing maps describing target populations, and quality control checks. 

THE CECIL B. SHEPS CENTER FOR HEALTH SERVICES RESEARCH 

UNIVERSITY OF NORTH CAROLINA – CHAPEL HILL

Thomas C. Ricketts, Ph.D. Dr. Ricketts is a Professor of Health Policy and Administration and 

Social Medicine, and the Director of the Health Policy Analysis Unit in the Cecil G. Sheps Center for 

Health Services Research at the University of North Carolina at Chapel Hill. The focus of his research 

has been on policy making for the health care workforce and access to care for rural and underserved 

populations. He was the founding director of the North Carolina Rural Health Research and Policy 

Analysis Center. Dr. Ricketts is a member of the Institute of Medicine Task Force on the Geographic 

Wage Index.

Thomas R. (Bob) Konrad, Ph. D. Dr. Konrad is a Senior Fellow at the North Carolina Institute on 

Aging and served as Co-Director of the Program for Health Services Research at the University of 

North Carolina at Chapel Hill on Health Professions and Primary Care, with Donald Pathman 

(PHP&PC) at the Cecil G. Sheps Center. He holds academic appointments as Professor of Social 

Medicine (School of Medicine), Professor of Health Policy and Administration (School of Public 

Health), and Research Professor in the Division of Pharmaceutical Policy and Evaluative Sciences 

(School of Pharmacy). Dr. Konrad is familiar with a variety of health professions databases and data 

collection strategies, measurements and modeling issues. 

Randy Randolph, MRP. Mr. Randolph is an Applications Analyst Programmer for the Cecil G. 

Sheps Center for Health Services Research at the University of North Carolina at Chapel Hill. As a 

programmer, he has been an essential team member on various database projects involving the 

development of metrics and geo-coded data sets and mapping. 

Christopher Beadles, MD and Charles Tran, BS were graduate students associated with the Sheps 

Center. Dr. Beadles is pursuing his Ph.D. in health services research. Mr. Tran is pursuing his MPH.
PDA, Inc. & Cecil. G. Sheps Center/UNC-Chapel Hill 

ARC Contract No.: CO-16835-2010 iii

GLOSSARY OF ACRONYMS

ACA Affordable Care Act

AFDC Aid to Families with Dependent Children

AHA American Hospital Association

AHRQ Agency for Healthcare Research and Quality 

AHW Average Hourly Wage

AMMS Advanced Maintenance Management System

ARC Appalachian Regional Commission 

ARC_EDI Appalachian Regional Commission Economic Distress Index

ARF Area Resource File

ARRA American Resource Recovery Act

ASEC Annual Social and Economic 

BLS Bureau of Labor Statistics 

BRFSS Behavioral Risk Factor Surveillance System

CBO Congressional Budget Office 

CBP County Business Patterns 

CBSA Core-Based Statistical Areas 

CDC Center for Disease Control 

CHAI Combined Health Access Index

CHIP Child Health Insurance Program 

CHSI Community Health Status Indicator 

CMF Compressed Mortality File 

CMMI CMS Center for Innovations

CMS Centers for Medicare and Medicaid Services 

COBRA Consolidated Omnibus Budget Reconciliation Act

CPS Census Population Studies 

DDS Doctor of Dental Surgery

DHHS Department of Health and Human Services

DSH Medicaid disproportionate share 

ECI Employment Cost Index

EDI Economic Distress Index

EMUP Exceptional Medically Underserved Population

ESRD End Stage Renal Disease
Health Care Costs and Access Disparities in Appalachia

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iv ARC Contract No.: CO-16835-2010

ESRI Environmental Systems Research Institute

FDA U.S. Food and Drug Administration

FMAP Federal Medical Assistance Percentage 

FPL Federal Poverty Level 

FQHC Federally Qualified Health Centers

FT Federal Trade Commission

FY Fiscal Year

GAF Geographic Adjustment Factor

GDP Gross Domestic Product 

GDSC Governor's Designation Secretary Certified

GPCI Geographic Practice Cost Index

GPO Government Printing Office

GSP Gross State Product

HCCA Healthcare Costs, Coverage, and Access Index

HCC Health Care Cost

HCRA Health Care Resource Availability

HCUP Healthcare Costs and Utilization Project 

HI Hospital Insurance

HIC Health Insurance Coverage

HOSPBEDS Acute Hospital Beds

HRSA Health Resource and Service Administration 

HSA Health Savings Account

HWI Hospital Wage Index

IOM Institute of Medicine

IPPS Inpatient Prospective Payment System

IRS Internal Revenue Source

J-1 Visa Non-immigrant visa issued by the U.S., esp. for medical or business training within the U.S.

JAMA Journal of the American Medical Association

KCMU Kaiser Commission on Medicaid and the Uninsured

KFF Kaiser Family Foundation

MAX Medicaid Analytic Extract

MEPS Medical Expenditure Panel Survey

MSA Metropolitan Statistical Areas

MUA Medically Underserved Areas
Glossary of Acronyms

PDA, Inc. & Cecil. G. Sheps Center/UNC-Chapel Hill 

ARC Contract No.: CO-16835-2010 v

MUA/P Medical Underserved Areas & Populations

MUP Medically Underserved Population

NASBO National Association of State Budget Officers 

NCHS National Center for Health Statistics

nda No data available

NHE National Health Expenditures

NHSC National Health Service Corps

NIS National Immunization Survey

NPCP Non-Primary Care Physicians

NPRM3 Notice of Proposed Rule Making 

nrf No report, survey sample size fewer than 50

OA Old Age

OCC Occupational Mix

OHRM Office of the Actuary Health Reform Model 

OMB Office of Management and Budget

OSCAR Online Survey, Certification and Reporting 

PCP Primary Care Physicians

PCSA Primary Care Service Area

PHC Personal health care 

PHCE Personal Health Care Expenditures

PPACA Patient Protection and Affordable Care Act

ResDAC Research Data Assistant Center

RHC Rural Health Clinic

RIMS II Regional Input-Output Modeling System 

RN Registered Nurse

RSA Rural Service Area

RTP Research Triangle Park

SAHIE Small Area Health Insurance Estimates 

SAMSA Substance Abuse and Mental Health Administration

SCHIP State’s Children’s Health Insurance Program 

SES Socioeconomic status

SGR Sustainable Growth Rate

SHADAC State Health Access Data Assistance Center 

SID State Inpatient Databases 
Health Care Costs and Access Disparities in Appalachia

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vi ARC Contract No.: CO-16835-2010

SMI Supplementary Medical Insurance

SSA Social Security Administration

SSI Supplemental Security Income 

TRH Tennessee Rural Health 

TRICARE VA and Department of Defense health insurance plan

UNC University of North Carolina at Chapel Hill

VA Veterans Administration

VHA Veterans Health Administration

VISN Veterans Integrated Service Networks

VISTA Veterans Health Information Systems and Technology Architecture

WIC Woman, Infants, and Children Program

YPLL Years of Potential Life Lost 

YPLL_75 Years of Potential Life Lost under age 75 per 100,000 population

ZBP Zip Code Business Patterns
PDA, Inc. & Cecil. G. Sheps Center/UNC-Chapel Hill 

ARC Contract No.: CO-16835-2010 vii

TABLE OF CONTENTS

GLOSSARY OF ACRONYMS ...................................................................................................................................................III

LIST OF FIGURES ..........................................................................................................................................................XI

LIST OF TABLES ........................................................................................................................................................XIII

EXECUTIVE SUMMARY AND KEY FINDINGS.................................................................................................................XV

HEALTH COST AND ACCESS INDEX .......................................................................................................................................XV

KEY FINDINGS .......................................................................................................................................................XVII

Healthcare Cost, Coverage, and Access Index..................................................................................................xvii

Tests of Relationships between the HCCA and Health and Economic Status...................................................xvii

Influence of Socioeconomic Status on Relationships between HCCA and Health Status in Appalachia ...........xix

Other Healthcare Use Measures........................................................................................................................xx

HEALTH REFORM POLICY ISSUES .........................................................................................................................................XX

CHAPTER 1 INTRODUCTION .......................................................................................................................................... 1

1.1. CONTEXT FOR ARC HEALTHCARE ACCESS INDEX ............................................................................................................ 1

1. 2 LITERATURE REVIEW................................................................................................................................................. 1

1.2.1 Healthcare Access.................................................................................................................................... 1

1.2.2 Costs of Care and Bankruptcy .................................................................................................................. 3

1.2.3 Federal Funding For Healthcare............................................................................................................... 4

1.2.4 State and Local Spending on Healthcare.................................................................................................. 6

1.2.5 Impact of Medicaid on State Economic Activity....................................................................................... 8

1.3 INDEX CONSTRUCTION.............................................................................................................................................. 9

1.4 EXISTING MEASURES OF HEALTHCARE ACCESS AND DISPARITIES .....................................................................................10

1.4.1 Healthcare Disparities Scorecards..........................................................................................................10

1.4.2 Health Cost Measures............................................................................................................................13

1.4.3 Insurance Coverage Measures...............................................................................................................14

1.4.4 Healthcare resource Measures ..............................................................................................................14

1.4.5 Health Status Measures.........................................................................................................................15

1.5 STRUCTURE OF THE REPORT.....................................................................................................................................16

CHAPTER 2 HEALTHCARE COST, COVERAGE, AND ACCESS INDEX................................................................................ 17

2.1 INDEX CRITERIA .....................................................................................................................................................17

2.2 INDEX COMPONENTS..............................................................................................................................................17

2.3 HEALTH CARE COST (HCC) COMPONENT ...................................................................................................................17

2.4 HEALTH INSURANCE COVERAGE (HIC) COMPONENT.....................................................................................................18

2.5 HEALTH CARE RESOURCES AVAILABILITY (HCRA) COMPONENT......................................................................................18
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CHAPTER 3 APPALACHIAN HEALTHCARE ACCESS ........................................................................................................ 19

3.1 APPLICATION OF INDEX ...........................................................................................................................................19

3.2 MAPS OF HEALTHCARE COST, COVERAGE AND ACCESS INDEX (HCCA) AND COMPONENTS..................................................21

3.2.1 Healthcare Cost, Coverage and Access (HCCA) Index.............................................................................22

3.2.2 Health Care Cost (HCC) Component.......................................................................................................24

3.2.3 Health Insurance Coverage (HIC) Component........................................................................................26

3.2.4 Health Care Resource Availability (HCRA) Component ..........................................................................28

3.3 SUMMARY OF FINDINGS FOR HEALTHCARE COST, COVERAGE, AND ACCESS (HCCA) INDEX IN APPALACHIAN REGION ...............30

3.4 RESULTS IN APPALACHIAN STATES.............................................................................................................................32

3.4.1 Healthcare Cost, Coverage, and Access (HCCA) Index............................................................................32

3.4.2 Health Care Cost (HCC) Component.......................................................................................................33

3.4.3 Health Insurance Coverage (HIC) Component........................................................................................34

3.4.4 Health Care Resource Availability (HCRA) Component ..........................................................................35

3.5 HEALTHCARE COST, COVERAGE, AND ACCESS (HCCA) INDEX AND DISTRESSED APPALACHIAN COUNTIES................................36

3.6 OTHER MEASURES OF HEALTH CARE ACCESS ..............................................................................................................39

3.6.1 Independent Measures...........................................................................................................................39

3.6.2 Children Insured .....................................................................................................................................40

3.6.3 Disability Coverage.................................................................................................................................44

3.6.4 Health Outcomes....................................................................................................................................46

3.6.5 Veterans Health Affairs Utilization.........................................................................................................49

CHAPTER 4 CORRELATION OF HEALTHCARE COST, COVERAGE, AND ACESS (HCCA) INDEX WITH HEALTH STATUS, 

ECONOMY AND PERSISTENT POVERTY..................................................................................................... 53

4.1 APPALACHIA ........................................................................................................................................................53

4.2 RURAL AND ECONOMICALLY DISTRESSED AREAS ..........................................................................................................53

4.3 RELATIONSHIPS BETWEEN HEALTHCARE COST, COVERAGE, AND ACCESS (HCCA) INDEX AND COUNTY SOCIOECONOMICS .........54

4.3.1. Analytic Approach..................................................................................................................................54

4.3.2 Correlations of Healthcare Cost, Coverage, and Access (HCCA) Index and Its Components with 

YPLL_75, the ARC Economic Distress Index, and Prevalence of Disability..............................................55

4.3.3 Controlling for the Economic Distress Index...........................................................................................58

4.3.4 Testing the Relationships of Components of Healthcare Cost, Coverage, and Access (HCCA) Index to 

Health Status and Economic Distress.....................................................................................................59

4.3.5 Controlling for Persistent Poverty ..........................................................................................................59

4.4 SUMMARY OF STATISTICAL CORRELATIONS: ACCESS AND HEALTH STATUS.........................................................................61
Table of Content

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ARC Contract No.: CO-16835-2010 ix

CHAPTER 5 POLICY ISSUES FOR ARC............................................................................................................................ 63

5.1 SUPPLY OF HEALTH CARE PROVIDERS.........................................................................................................................63

5.2 HEALTH SYSTEM DESIGN.........................................................................................................................................64

5.3 HEALTH CARE COST ISSUES......................................................................................................................................65

5.4. COST-ACCESS RELATIONSHIP....................................................................................................................................67

5.5 INDIRECT ECONOMIC IMPACT OF HEALTHCARE COST ....................................................................................................68

5.5.1 Loss of Disposable Income .....................................................................................................................68

5.5.2 Medical Bankruptcy ...............................................................................................................................68

5.5.3 Per Capita Spending...............................................................................................................................70

5.6 CMS GEOGRAPHIC WAGE INDEX..............................................................................................................................73

5.7 SOCIAL COST OF HEALTHCARE ACCESS BARRIERS .........................................................................................................76

5.8 HEALTH REFORM AND STATE MEDICAID BURDENS .......................................................................................................77

CHAPTER 6 BEST PRACTICES IN PROVIDING BETTER HEALTH INSURANCE................................................................... 81

6.1 RURAL RESIDENTS .................................................................................................................................................81

6.2 POTENTIAL FOR APPALACHIAN REGION ......................................................................................................................82

6.3 IMPACT OF HEALTH REFORM LEGISLATION..................................................................................................................83

6.3.1 Insurance Exchanges................................................................................................................................83

6.3.2 Innovation Opportunities.........................................................................................................................84

6.3.3 Delivery System........................................................................................................................................84

6.3.4 Estimated Changes In Medicaid State Spending......................................................................................86

CHAPTER 7 SUMMARY FINDINGS AND RECOMMENDATIONS..................................................................................... 91

7.1 CONCLUSIONS AND FINDINGS FROM THE HEALTHCARE COST, COVERAGE AND ACCESS INDEX (HCCA)...................................91

7.2 IMPLICATIONS OF HEALTH REFORM...........................................................................................................................91

7.3 RECOMMENDATIONS..............................................................................................................................................92

7.3.1 Policy Issues .............................................................................................................................................92

7.3.2 Participate with Institute of Medicine Committee to Modify CMS Geographic Wage Index.................93

7.3.3. Support Regional And Local Healthcare Labor force Reforms And Technology ....................................95

7.3.4 Advocate for Low Resource Areas..........................................................................................................96

7.3.5 Actively Engage with CMS Center for Medicare and Medicaid Innovations..........................................97

7.4 AREAS FOR FURTHER STUDY ....................................................................................................................................98

CHAPTER 8 REFERENCES ............................................................................................................................................. 99
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x ARC Contract No.: CO-16835-2010

APPENDICES.............................................................................................................................................................. 105

APPENDIX A: CMS WAGE INDEX ............................................................................................................................105

APPENDIX B: SHEPS CENTER MEDICALLY UNDERSERVED MAP ......................................................................................109

APPENDIX C: FEDERAL MEDICAL ASSISTANCE PERCENTAGE RATES BY STATE 2011...........................................................111

APPENDIX D: NATIONAL HEALTH SPENDING PROJECTIONS THROUGH 2020 ....................................................................113

APPENDIX E: OVERVIEW OF MEDICAID ECONOMIC IMPACT..........................................................................................115

APPENDIX F: MEDICAID COVERAGE AND SPENDING: HEALTH REFORM...........................................................................119

APPENDIX G: MEDICAID COVERAGE AND SPENDING: HEALTH REFORM...........................................................................121

APPENDIX H: CDC COMMUNITY HEALTH STATUS INDICATORS SAMPLE: COOSA COUNTY, ALABAMA....................................123

APPENDIX I: DEFINITION OF ELIGIBLE LOCATION FOR RURAL HEALTH CLINIC...................................................................125

APPENDIX J: NEGOTIATED RULEMAKING COMMITTEE: DRAFT EXCEPTIONAL MEDICALLY UNDERSERVED POPULATION (EMUP),

OCTOBER 12, 2011...........................................................................................................................127

APPENDIX K: METHODOLOGY FOR ARC HEALTH CARE COST AND ACCESS INDEX .............................................................129

APPENDIX L: USE OF VETERANS HEALTH ADMINISTRATION SERVICES IN APPALACHIAN COUNTIES, 2009 .............................153

APPENDIX M: MULTIVARIATE REGRESSION ANALYSIS OF HCCA INDEX ............................................................................155

APPENDIX N: COUNTY ECONOMIC STATUS IN APPALACHIA, FY 2012.............................................................................179
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ARC Contract No.: CO-16835-2010 xi

LIST OF FIGURES

FIGURE 1 – COUNTY HEALTHCARE COST, COVERAGE AND ACCESS INDEX IN APPALACHIA, 2011.............................................................XVI

FIGURE 2 – AVERAGE OF HCCA INDEX AND COMPONENTS BY GEOGRAPHIC GROUP...........................................................................XVII

FIGURE 3 –COMPARISON OF ESTIMATED PREVENTABLE MORTALITY RATES IN 2005-2007................................................................. XVIII

FIGURE 4 – HEALTH CARE ACCESS EARLY DEFINITIONS ..................................................................................................................... 2

FIGURE 5- EMERGING MODEL OF HEALTH CARE ACCESS ................................................................................................................... 2

FIGURE 6 – FORECAST OF STATE AND LOCAL TOTAL HEALTH EXPENDITURES, 2009 -2019...................................................................... 7

FIGURE 7 – PERCENT CHANGE IN TOTAL MEDICAID SPENDING AND ENROLLMENT, FY 1998 - FY 2011 .................................................... 9

FIGURE 8 – TOTAL PER CAPITA MEDICARE ESRD PAYMENTS, WHOLE STATE ALABAMA (2003)............................................................12

FIGURE 9 – TOTAL PER CAPITA ESRD PAYMENTS APPALACHIAN COUNTIES, ALABAMA (2003)..............................................................12

FIGURE 10 – COUNTY HCCA INDEX IN THE U.S., 2011..................................................................................................................22

FIGURE 11 - COUNTY HEALTHCARE COST, COVERAGE AND ACCESS (HCCA) INDEX IN APPALACHIA, 2011 ...............................................23

FIGURE 12 – COUNTY HCC COMPONENT IN THE U.S., 2011 ..........................................................................................................24

FIGURE 13 – COUNTY HEALTH CARE COST (HCC) COMPONENT IN APPALACHIA, 2011........................................................................25

FIGURE 14 - COUNTY HIC COMPONENT IN THE U.S., 2011 ............................................................................................................26

FIGURE 15 – COUNTY HEALTH INSURANCE COVERAGE (HIC) COMPONENT IN APPALACHIA, 2011 .........................................................27

FIGURE 16 - COUNTY HCRA COMPONENT IN THE U.S., 2011.........................................................................................................28

FIGURE 17 - COUNTY HEALTH CARE RESOURCE AVAILABILITY (HCRA) COMPONENT IN APPALACHIA, 2011.............................................29

FIGURE 18 - DISTRIBUTION OF COUNTIES IN ARC STATES BY INDEX AND COMPONENT (N=1070 COUNTIES)............................................30

FIGURE 19 - DISTRIBUTION OF ARC COUNTIES BY INDEX AND COMPONENT (N=420) ..........................................................................30

FIGURE 20 - HCCA INDEX OF COUNTIES IN APPALACHIAN STATES ....................................................................................................32

FIGURE 21 - HCC PERCENTILE DISTRIBUTION OF COUNTIES IN THE APPALACHIAN STATES .....................................................................33

FIGURE 22 – HIC DISTRIBUTION OF COUNTIES IN APPALACHIAN STATES ............................................................................................34

FIGURE 23 - HCRA DISTRIBUTION OF COUNTIES IN APPALACHIAN STATES .........................................................................................35

FIGURE 24 – COMPARISON OF HCCA PERCENTILE RANKING TO DISTRESS LEVEL FOR ALL COUNTIES IN U.S. .............................................36

FIGURE 25 – COMPARISON OF HCCA PERCENTILE RANKING TO DISTRESS LEVEL FOR ALL COUNTIES IN APPALACHIAN STATES ......................37

FIGURE 26 - COMPARISON OF HCCA PERCENTILE RANKING TO DISTRESS LEVEL FOR APPALACHIAN COUNTIES ..........................................38

FIGURE 27 – COUNTY PERCENTILE OF CHILDREN UNDER 18 INSURED BY MEDICAID / CHIP IN THE U.S., 2009.........................................40

FIGURE 28 – COUNTY PERCENTILE RANK OF PERCENT CHILDREN UNDER 18 INSURED BY MEDICAID / CHILDREN’S HEALTH INSURANCE 

PROGRAM (CHIP) IN APPALACHIA, 2009 ..................................................................................................................41

FIGURE 29 – COUNTY PERCENTILE OF CHILDREN UNDER 20 INSURED IN THE U.S., 2007 ......................................................................42

FIGURE 30 - COUNTY PERCENTILE RANK OF PERCENT OF CHILDREN UNDER 20 INSURED IN APPALACHIA, 2009.........................................43

FIGURE 31 - COUNTY MEDICARE DISABILITY ENROLLMENT IN THE U.S., 2007....................................................................................44

FIGURE 32 - COUNTY PERCENTILE RANK OF PERCENT MEDICARE DISABILITY ENROLLMENT IN APPALACHIA, 2007.....................................45

FIGURE 33 – COUNTY YEARS OF PREVENTABLE POTENTIAL LIFE LOST UNDER AGE 75 IN THE U.S., 2007 ................................................46
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FIGURE 34 – COUNTY PERCENTILE RANK OF YEARS OF PREVENTABLE POTENTIAL LIFE LOST PER 100,000 POPULATION UNDER AGE 75 IN 

APPALACHIA, 2005-2007 ......................................................................................................................................47

FIGURE 35 – COMPARISON OF ESTIMATED PREVENTABLE MORTALITY IN 2005-2007 .........................................................................48

FIGURE 36 – COUNTY VETERAN USE OF VHA SERVICES IN THE U.S., 2009........................................................................................50

FIGURE 37 – COUNTY VETERAN USE OF VETERANS HEALTH ADMINISTRATION (VHA) SERVICES IN APPALACHIA, 2009..............................51

FIGURE 38 – PERCENTILE DISTRIBUTION OF UNIQUE USERS AS A PERCENTAGE OF VA ELIGIBLES, APPALACHIAN COUNTIES, 2009................52

FIGURE 39 –UNIQUE USERS AS A PERCENTAGE OF VA ELIGIBLES, APPALACHIAN COUNTIES, 2009 .........................................................52

FIGURE 40 – PERSISTENT POVERTY COUNTIES, 1970-2000............................................................................................................60

FIGURE 41 – 2009 NATIONAL HEALTHCARE EXPENDITURES ............................................................................................................66

FIGURE 42 - PRICE-ADJUSTED MEDICARE EXPENDITURES PER BENEFICIARY BY HOSPITAL, 2008 .............................................................71

FIGURE 3 – COUNTY CMS HOSPITAL GEOGRAPHIC WAGE INDEX ADJUSTED FOR GAF IN THE U.S., 2011 ...............................................74

FIGURE 4 – COUNTY PERCENTILE RANK OF CMS HOSPITAL GEOGRAPHIC WAGE INDEX IN APPALACHIA, 2011 .........................................75

FIGURE 45 – APPALACHIAN REGION UNINSURED BY AGE GROUP, 2009............................................................................................83

FIGURE 46 - MEDICALLY UNDERSERVED AREAS & POPULATIONS IN THE UNITED STATES .....................................................................109

FIGURE 47 - CORE BASED STATISTICAL AREAS PER OMB ..............................................................................................................133

FIGURE 48 - SCATTER PLOT REGRESSION MODEL: PREDICTIVE VALUE OF YPLL_75 BY ARC_EDI AND HCCA INDEX FOR ALL COUNTIES IN 

THE U.S. (N=3007 COUNTIES)..............................................................................................................................156

FIGURE 49 - SCATTERPLOT OF REGRESSION MODEL: PREDICTIVE VALUE OF YPLL_75 BY ARC_EDI AND HCCA INDEX, FOR ALL COUNTIES 

IN THE 13 APPALACHIAN STATES (N=1069 COUNTIES) ..............................................................................................157

FIGURE 50 - REGRESSION MODEL: PREDICTIVE VALUE OF YPLL_75 BY ARC_EDI AND HCCA INDEX FOR ALL COUNTIES IN THE 

APPALACHIAN REGION (N=419 COUNTIES)..............................................................................................................158

FIGURE 51 - REGRESSION MODEL: YPLL_75 BY PERSISTENT POVERTY OF THE COUNTY AND HCCA INDEX, FOR ALL COUNTIES IN THE 

U.S. (N=3007 COUNTIES)....................................................................................................................................163

FIGURE 52 - REGRESSION MODEL: YPLL_75 BY PERSISTENT POVERTY OF THE COUNTY AND HCCA INDEX FOR ALL COUNTIES IN THE 13

APPALACHIAN STATES (N=1069 COUNTIES).............................................................................................................164

FIGURE 53 - REGRESSION MODEL: YPLL_75 BY PERSISTENT POVERTY OF THE COUNTY AND HCCA, FOR ALL COUNTIES IN THE 

APPALACHIAN REGION (N=419 COUNTIES)..............................................................................................................165

FIGURE 54 - LOGRITHMIC TRANFORMATION OF YEARS OF POTENTIAL LIFE LOST PER 10,000 POPULATION UNDER AGE 75 ......................169

FIGURE 55 - COMPARISON OF ESTIMATED PREVENTABLE MORTALITY RATES IN 2005-2007...............................................................170

FIGURE 56 - CORRESPONDENCE BETWEEN ARC_EDI AND YPLL_75 PER 10,000 POPULATION IN ALL U.S. COUNTIES, 2005-2007.........171

FIGURE 57 - CORRESPONDENCE BETWEEN HCCA INDEX AND YPLL_75, ALL U.S. COUNTIES, 2005-2007 ...........................................172

FIGURE 58 – YPLL_75, ALL U.S. COUNTIES, 2005-2007 – ARRAYED BY ARC_EDI (5LEVELS) AND HCCA INDEX................................. 173

FIGURE 59 – YPLL_75, ALL U.S. COUNTIES, 2005-2007 – ARRAYED BY ARC_EDI (3LEVELS) AND HCCA INDEX................................. 174

FIGURE 60 – YPLL_75, APPALACHIAN COUNTIES, 2005-2007 – ARRAYED BY ARC_EDI (3LEVELS) AND HCCA INDEX..........................175

FIGURE 61 –YPLL_75, APPALACHIAN COUNTIES, 2005-2007ARRAYED BY ARC_EDI (3 LEVELS) AND HCC COMPONENT ......................176

FIGURE 62– YPLL_75, APPALACHIAN COUNTIES, 2005-2007 ARRAYED BY ARC_EDI (3 LEVELS) AND HIC COMPONENT.......................177

FIGURE 63 – YPLL_75, APPALACHIAN COUNTIES, 2005-2007 ARRAYED BY ARC_EDI (3 LEVELS) AND HCRA COMPONENT...................178

FIGURE 64 – COUNTY ECONOMIC STATUS IN APPALACHIA, FY 2012 ..............................................................................................179
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LIST OF TABLES

TABLE 1 - HEALTHCARE COST, COVERAGE AND ACCESS INDEX COMPONENTS ..................................................................................... XV

TABLE 2- CORRELATION OF HCCA AND ITS COMPONENTS, THE ARC ECONOMIC DISTRESS INDEX, AND MEDICARE DISABILITY ENROLLMENT 

WITH PREMATURE MORTALITY...................................................................................................................................XIX

TABLE 3 – HCRA INPUT DATABASE ............................................................................................................................................18

TABLE 4 - HEALTHCARE COST, COVERAGE AND ACCESS (HCCA) INDEX CALCULATION..........................................................................19

TABLE 5 – HEALTH CARE COSTS (HCC) COMPONENT CALCULATION..................................................................................................19

TABLE 6 - HEALTH INSURANCE COVERAGE (HIC) COMPONENT CALCULATION .....................................................................................19

TABLE 7 – HEALTH CARE RESOURCE AVAILABILITY (HCRA) COMPONENT CALCULATION .......................................................................20

TABLE 8 - RAW VALUES FOR HCCA AND SUBCOMPONENTS – ALL U.S. COUNTIES (N=3110 COUNTIES).................................................31

TABLE 9 - RAW VALUES FOR HCCA AND SUBCOMPONENTS –APPALACHIAN STATES (N=1070 COUNTIES) ..............................................31

TABLE 10 - RAW VALUES FOR HCCA AND SUBCOMPONENTS – APPALACHIAN COUNTIES (N=420 COUNTIES) ..........................................31

TABLE 11 – COUNT OF ARC COUNTIES BY HCCA PERCENTILE GROUP...............................................................................................32

TABLE 12 – COUNT OF ARC COUNTIES BY HCC PERCENTILE GROUP................................................................................................. 33

TABLE 13 – COUNT OF ARC COUNTIES BY HIC PERCENTILE GROUP ..................................................................................................34

TABLE 14 – COUNT OF ARC COUNTIES BY HCRA PERCENTILE GROUPS .............................................................................................35

TABLE 15 – NATIONAL EXPENDITURES HCCA BY ARC ECONOMIC DISTRESS INDEX 2011 (N=3110)......................................................36

TABLE 16 – APPALACHIAN STATES HCCA BY ARC ECONOMIC DISTRESS INDEX (N=1070 COUNTIES)......................................................37

TABLE 17 – APPALACHIAN COUNTIES HCCA BY ARC ECONOMIC DISTRESS INDEX (N=420 COUNTIES)....................................................38

TABLE 18 – INDEPENDENT MEASURES CALCULATION .....................................................................................................................39

TABLE 19 - CORRELATIONS BETWEEN MEASURES OF HEALTH STATUS, ECONOMIC DISTRESS, AND PROPOSED HCCA AND ITS COMPONENTS, 

FOR ALL COUNTIES IN THE U.S. (N=3110 COUNTIES)* ..................................................................................................57

TABLE 20 - CORRELATIONS BETWEEN MEASURES OF HEALTH STATUS, ECONOMIC DISTRESS, AND PROPOSED HCCA INDEX AND ITS 

COMPONENTS, FOR ALL COUNTIES IN THE 13 APPALACHIAN STATES (N=1070 COUNTIES)*..................................................57

TABLE 21 - CORRELATIONS BETWEEN MEASURES OF HEALTH STATUS, ECONOMIC DISTRESS, AND PROPOSED HCCA INDEX AND ITS 

COMPONENTS, FOR ALL COUNTIES IN THE APPALACHIAN REGION (N=420COUNTIES)* ........................................................58

TABLE 22 – ACA IMPACT ON APPALACHIAN STATE MEDICAID ENROLLMENT AND SPENDING ................................................................. 78

TABLE 23 – APPALACHIAN STATES SHARE OF U.S. POPULATION AND U.S. MEDICAID ENROLLMENT .......................................................79

TABLE 24 – FEDERAL MATCHING PERCENTAGE (FMAP) FOR MEDICAID IN APPALACHIAN STATES ..........................................................79

TABLE 25 – MEDICAID ENROLLMENT AND SPENDING IN APPALACHIAN STATES, 2009..........................................................................80

TABLE 26 - SUMMARY OF MEDICAID EXPANSION EFFECT ON STATE BUDGETS.....................................................................................88

TABLE 27- CMS WAGE INDEX APPROVED FOR USE IN 2010 MEDICARE PAYMENTS..........................................................................105

TABLE 28 - FEDERAL ASSISTANCE PERCENTAGES AND ENHANCED FEDERAL MEDICAL ASSISTANCE PERCENTAGES .....................................111

TABLE 29- PROJECTED NATIONAL HEALTH EXPENDITURES: THE ESTIMATED IMPACT OF REFORM - AGGREGATE AMOUNTS.......................113

TABLE 30 – MEDICAID ECONOMIC IMPACT FOR ARC STATES ........................................................................................................115
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xiv ARC Contract No.: CO-16835-2010

TABLE 31 - NATIONAL AND STATE-BY-STATE RESULTS FOR ADULTS AT OR BELOW 133 PERCENT FPL (STANDARD PARTICIPATION SCENARIO)119

TABLE 32 - NATIONAL AND STATE-BY-STATE RESULTS FOR ADULTS AT OR BELOW 133 PERCENT FPL ....................................................121

TABLE 33 - APPALACHIAN STATE HEALTH CARE SPENDING BY STATE OF RESIDENCE RANK ORDERED* ...................................................132

TABLE 34 - NUMBER AND PERCENT OF COUNTIES WITHOUT PHYSICIANS, 2008 (U.S. AND ARC COUNTIES) ..........................................140

TABLE 35 - MEAN VALUES OF PHYSICIANS TO POPULATION RATIOS OF VARIOUS TYPES ......................................................................141

TABLE 36 - PHYSICIANS PER 100,000 POPULATION, APPALACHIAN AND NON-APPALACHIAN COUNTIES, ARRAYED BY PERCENTILE.............142

TABLE 37 - HEALTH INSURANCE ACCESS COMPONENT CONSTRUCTION............................................................................................144

TABLE 38 - SUMMARY OF SUBCOMPONENT INDICES.....................................................................................................................146

TABLE 39 – HCC COMPONENT CONSTRUCTION AND FOR CONSTRUCTING THE FINAL HCCA INDEX INDICATOR .......................................147

TABLE 40 - STEPS IN HIC COMPONENT CONSTRUCTION................................................................................................................148

TABLE 41 - STEPS IN HCRA COMPONENT CONSTRUCTION ............................................................................................................149

TABLE 42 – SAHIE EXTRACTED DATA FROM ARF........................................................................................................................151

TABLE 43 – UNIQUE USERS AS A PERCENTAGE OF VA ELIGIBLE’S BY NATIONAL PERCENTILE GROUP......................................................153

TABLE 44 – UNIQUE USERS AS A PERCENTAGE OF VA ELIGIBLE’S....................................................................................................153

TABLE 45 - REGRESSION MODEL: PREDICTIVE VALUE OF YEARS OF POTENTIAL LIFE LOST_751 BY ARC ECONOMIC DISTRESS INDEX AND 

HCCA, FOR ALL COUNTIES IN THE U.S. (N=3007 COUNTIES)........................................................................................156

TABLE 46 - REGRESSION MODEL: PREDICTIVE VALUE OF YPLL_751 BY ARC_EDI AND HCCA INDEX FOR ALL COUNTIES IN THE 13

APPALACHIAN STATES (N=1069 COUNTIES) ............................................................................................................157

TABLE 47 - REGRESSION MODEL: PREDICTIVE VALUE OF YPLL_751 BY ARC_EDI AND HCCA INDEX FOR ALL COUNTIES IN THE 

APPALACHIAN REGION (N=419 COUNTIES) ...............................................................................................................158

TABLE 48 - REGRESSION MODEL: YPLL_751 BY ARC_EDI AND COMPONENTS OF HCCA INDEX FOR ALL COUNTIES IN THE U.S. 

(N=3007 COUNTIES).............................................................................................................................................160

TABLE 49 - REGRESSION MODEL: YPLL_751 BY ARC_EDI AND COMPONENTS OF HCCA INDEX FOR ALL COUNTIES IN THE 13 

APPALACHIAN STATES (N=1069 COUNTIES) ..............................................................................................................161

TABLE 50 - REGRESSION MODEL: YPLL_751 BY ARC_EDI AND COMPONENTS OF HCCA INDEX FOR ALL COUNTIES IN THE 

APPALACHIAN REGION (N=419 COUNTIES) ...............................................................................................................162

TABLE 51 - REGRESSION MODEL: YPLL_751 BY PERSISTENT POVERTY OF THE COUNTY AND HCCA INDEX, FOR ALL COUNTIES IN THE 

U.S. (N=3007 COUNTIES)......................................................................................................................................163

TABLE 52 - REGRESSION MODEL: YPLL_751 PERSISTENT POVERTY OF THE COUNTY AND HCCA INDEX FOR ..........................................164

TABLE 53 - REGRESSION MODEL: YPLL_751 BY PERSISTENT POVERTY OF THE COUNTY AND HCCA FOR ALL COUNTIES IN THE 

APPALACHIAN REGION (N=419 COUNTIES) ...............................................................................................................165

TABLE 54 - REGRESSION MODEL: YPLL_751 BY PERSISTENT POVERTY OF THE COUNTY AND COMPONENTS OF HCCA INDEX FOR 

ALL COUNTIES IN THE U.S. (N=3007 COUNTIES) ........................................................................................................166

TABLE 55 - REGRESSION MODEL: YPLL_751 BY PERSISTENT POVERTY OF THE COUNTY AND COMPONENTS OF HCCA INDEX FOR 

ALL COUNTIES IN THE 13 APPALACHIAN STATES (N=1069 COUNTIES) ............................................................................167

TABLE 56 - REGRESSION MODEL: YPLL_751 BY PERSISTENT POVERTY OF THE COUNTY AND COMPONENTS OF HCCA INDEX, FOR ALL 

COUNTIES IN THE APPALACHIAN REGION (N=419 COUNTIES)........................................................................................168
PDA, Inc. & Cecil. G. Sheps Center/UNC-Chapel Hill 

ARC Contract No.: CO-16835-2010 xv

EXECUTIVE SUMMARY AND KEY FINDINGS

HEALTH COST AND ACCESS INDEX

The Appalachian Regional Commission (ARC) contracted for development of an index that would 

consistently measure healthcare access and cost disparities of the Appalachian Region compared with the rest 

of the United States. The goal was a metric of comparable depth and scope to the ARC Economic Status 

Index that ARC uses to measure Economic Distress levels in the Appalachian Region. PDA, Inc. and the 

Cecil G. Sheps Center for Health Services Research of the University of North Carolina at Chapel Hill 

developed the Healthcare Cost Coverage and Access Index (HCCA), which includes components describing 

relative availability of health care resources, level of health insurance coverage and cost of providing health 

services. Sources of data for the index are publicly available and updated annually. 

TABLE 1 - HEALTHCARE COST, COVERAGE AND ACCESS INDEX COMPONENTS

Component Name Measures Currency of Data

Health Care Cost (HCC) CMS Medicare Hospital Geographic Wage Index 2005

Health Insurance Coverage (HIC) Percentage of Persons Under 65 who report having 

health insurance 2007

Health Resource Availability (HCRA) Acute short term hospital beds, primary and 

specialty physician and dentist supply 2007

The index is designed to show the status of Appalachian counties relative to one another, to other counties in 

Appalachian states, and to the rest of the counties in the United States. This report describes these county 

comparisons at the level of the HCCA summary index and each individual component index. All index data 

are scaled as percentiles of all counties in the U.S. 

The report tests relationships of the index and its components to county health status, economic status, and 

persistent poverty. It also explores medical bankruptcy and the impact of health reform on state budgets. 

Figure 1 maps the HCCA Index in the Appalachian Region. The blue to red scale separates counties in 

quintiles where blue represents good access, coverage, and payment compared to the national average, white 

indicates the county is close to the national average and red, that its index or measure is well below the 

national average. 
Health Care Costs and Access Disparities in Appalachia

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xvi ARC Contract No.: CO-16835-2010

FIGURE 1 – COUNTY HEALTHCARE COST, COVERAGE AND ACCESS INDEX IN APPALACHIA, 2011

On average, counties in Appalachia ranked slightly below the national norm on HCCA, but pockets of good 

and poor access occur in Appalachain counties in every state except Maryland and South Carolina. 

Formula: Percentile of ((Health Cost Percentile + Health Insurance Percentile + 

Health Resource Percentile)/3) 

Prepared by: Cecil G. Sheps Center for Health Services Research. 

The University of North Carolina at Chapel Hill in cooperation with 

PDA, Inc., Raleigh, North Carolina, 2011. 
Executive Summary and Key Findings

PDA, Inc. & Cecil. G. Sheps Center/UNC-Chapel Hill 

ARC Contract No.: CO-16835-2010 xvii

KEY FINDINGS

HEALTHCARE COST, COVERAGE, AND ACCESS INDEX

The HCCA shows Appalachian counties have, in the aggregate, more healthcare cost, coverage, and access 

disparities than their respective states’ or the United States’ average. For the health care payment and health 

care resources components of the HCCA, the average values for counties in the Appalachian Region are 

worse than all counties in the United States. Insurance coverage in the region is slightly better than the U.S. 

average; this is helped by high Medicare Disability enrollment and high Medicaid participation. 

FIGURE 2 – AVERAGE OF HCCA INDEX AND COMPONENTS BY GEOGRAPHIC GROUP

Values are national percentiles with highest representing least desirable score

Close to half of ARC counties (48 percent) ranked in the lowest quintile of healthcare reimbursement

summarized by the cost component (HCC). The mean percentile for Appalachian counties was 31.87 

compared to 49.54 for the U.S. The HCC is based on the Centers for Medicare and Medicaid (CMS) Hospital 

Geographic Wage Index, which, in turn sets the baseline for payment by most other payers, government and 

private. The Appalachian Region’s rates on the index are among the lowest in the U.S. 

TESTS OF RELATIONSHIPS BETWEEN THE HCCA AND HEALTH AND ECONOMIC STATUS

Preventable mortality rates, measured in age-adjusted Years of Potential Life Lost from preventable causes 

for people younger than 75, per 100,000 people (YPLL_75), is often used to compare health status among 

different groups. The County Health Rankings project (www.countyhealthrankings.org) publishes these by 

county. This index, though controversial, is recognizable by a lay audience, and its use as a measure of health 

outcomes is supported by the National Center for Health Statistics in its summaries and discussions of 

comparative health outcomes. This project benchmarked YPLL rates for the three groups: 1,070 counties in 

the Appalachian states, 420 counties in the Appalachian Region, and all US counties and county equivalents. 

Rates for the Appalachian Region county group were about 19 percent higher than for all U.S counties, 

indicating that residents of Appalachian counties die younger from preventable causes. 
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xviii ARC Contract No.: CO-16835-2010

FIGURE 3 –COMPARISON OF ESTIMATED PREVENTABLE MORTALITY RATES IN 2005-2007

AVERAGE OF YEARS OF POTENTIAL LIFE LOST UNDER AGE 75 PER 100,000 POPULATION

Source: University of Wisconsin County Health Rankings, Premature mortality was

estimated with the equation: County YPLL_75 / 100K x county population 2008 / 

100,000. Mortality was summed for all counties and divided by the total population 

times 100,000

The research team looked at relationships of this health status measure to the ARC Economic Distress Index 

(ARC_EDI) and to measures of healthcare cost and access, (HCCA and its components). Because of the high 

rate of enrollment in Medicare Disability support in the Appalachian Region, the research team also examined 

relationship between YPLL_75 rates and Medicare Disability enrollment. 

Regardless of geography, there is high correlation between premature mortality and both the ARC_EDI and 

the level of county population enrolled in Medicare Disability. Table 2 shows a relative preventable mortality 

score for the geographic groups for 2005 through 2007. As would be expected, the U.S. has a mean of 49.5 on 

a 99 percentile scale. The Appalachian mean score is 19 percent lower than the U.S. 

When we examined groups of counties, we found that preventable mortality rates were highly correlated with 

the HCCA and the health cost component, HCC. High preventable mortality was associated with low HCCA 

and low healthcare cost. There was no correlation between YPLL _75 rates and the health insurance 

component (HIC) in the Appalachian counties, and some correlation between the health resources component 

(HCRA) and YPLL_75 in the three comparison geographies. However, there is high correlation between low 

reimbursement (HCC) and poor health outcomes (YPLL_75). At the county level, some areas with high 

insurance had low resource access and cost scores, indicating that health insurance coverage alone is not the 

key to good care access, but access to healthcare resources may affect preventable mortality. 

We found that for all counties in the United States and for counties in Appalachian states, there were positive 

relationships among the YPLL_75, the ARC_EDI, the HCCA, and components (HCC, HIC, and HCRA). 

This means that where there is economic distress, there is poor health and factors that are associated with less 

access to healthcare. Conversely, where there is a better economy there are better health outcomes.
Executive Summary and Key Findings

PDA, Inc. & Cecil. G. Sheps Center/UNC-Chapel Hill 

ARC Contract No.: CO-16835-2010 xix

TABLE 2- CORRELATION OF HCCA AND ITS COMPONENTS, THE ARC_EDI, AND MEDICARE DISABILITY ENROLLMENT WITH 

PREMATURE MORTALITY

Location 

(number of 

counties)

Mean

YPLL-75

(std. dev.)

Community Health 

Status:

Medicare Disability 

Enrollment

Economic 

Distress:

ARC EDI

Proposed Index and components 

HCCA HCC HIC HCRA

United States 

(n=3110)

49.5

(28.9) .669 .669 .490 .465 .284 .288

Appalachian states 

(n=1070)

60.74

(26.8) .755 .735 .487 .492 .188 .301

Appalachian 

Region (N=420)

63.9

(21.0) .728 .560 .301 .368 -.040 NS -.209

Correlations between YPLL_75: per 100,000 Population--Averaged over 2005-2007 and expressed as a percentile

Disability expressed as enrollees per population. All other indices and components scaled such that 1 is best and 100 is 

worst.

These associations are strong; in technical terms, they are highly statistically significant. The probability that 

they are due to chance is less than one in a thousand (p<.001). Taken together this pattern is very consistent 

with the notion that there is an underlying relationship between general socioeconomic factors, the robustness 

of the healthcare system, and overall population health status when measured at the county level. Moderately 

strong relationships (above 0.45) exist between the HCCA and both the established measure of economic 

distress (ARC_EDI) and the measure of population health status (YPPL_75). Further, the relationships 

between the HCCA and the YPPL_75 and ARC_EDI are greater than the relationships between any of the 

HCCA components and the two validating measures. For detail of this analysis, please see Appendix M. The 

HCCA Index is validated statistically by the correlations among each of the HCCA components. Statistical 

correlations are low, but positive, suggesting that the components are tapping related, but distinct aspects of 

the healthcare system. 

INFLUENCE OF SOCIOECONOMIC STATUS ON RELATIONSHIPS BETWEEN HCCA AND HEALTH 

STATUS IN APPALACHIA

The research team explored the overall influence of socioeconomic status on the relationship between the 

HCCA and preventable mortality rates. Using multivariate regression analyses, the team measured the extent 

to which either the ARC Economic Distress Index or the U.S. Department of Agriculture Persistent Poverty 

County status was associated with the HCCA or its components and the premature mortality rates 

(YPLL_75). At the national level, the HCCA Index exhibits an independent relationship to preventable 

mortality rates, that is, the HCCA Index varies along with premature mortality no matter how other variables 

change. This is important because, in all three geographies, all U.S., Appalachian state and Appalachian 

Region counties, the socioeconomic status of counties, as reflected in the ARC Economic Distress Index, also 

has a substantial relationship to preventable mortality rates but there appears to be an independent effect 

related to costs of care and access to care at the national level. In Appalachian counties this pattern of 

association was not significant and suggests that something other than economic distress, healthcare cost and

access are influencing health outcomes in the Appalachian states. The HCCA components, for insurance 

(HIC) and cost access (HCC), explained almost half the variance in preventable mortality (46.2 percent), 

which is very significant. When equations included a variable to test the influence of a county’s location in 

the Appalachian Region on preventable mortality, rates of preventable mortality in Appalachian counties 
Health Care Costs and Access Disparities in Appalachia

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xx ARC Contract No.: CO-16835-2010

compared to other counties in Appalachian states were higher than would be predicted on the basis of their 

scores on ARC_EDI and HCCA alone, suggesting that there may be another factor beyond the combined 

impact of socioeconomic status and health system characteristics access, cost and coverage, that accounts for 

variations in preventable mortality in Appalachia.

OTHER HEALTHCARE USE MEASURES

The study also reviewed other measures of healthcare use and expenditures in the Appalachian Region as 

reported by the CMS and the Veterans Health Administration (VHA). Most of the Appalachian Region had 

high Medicare expenditures per capita in 2009. This may be affected by a combination of the region’s 

particularly high per capita enrollment in Medicare Disability programs and its lower health status. Parts of 

Central and Southern Appalachia rank in the highest national quintile of per capita enrollment in Medicare 

Disability in 2007, and Disability enrollees are heavy healthcare users. In central and southern Appalachia, as 

much as 15.6 percent of the population received Medicare Disability payments. Information from 2007 VHA 

use files showed military veterans in the Appalachian Region, particularly the central sub-region and western 

Pennsylvania were among the highest users of VHA services in the U.S. 

The research team also reviewed the scientific literature on relationships between personal healthcare 

expenditures and bankruptcy, finding that healthcare costs are associated with bankruptcy, though the extent 

is not clear. Several studies noted that social policy design flaws in many government safety net health 

insurance programs not only discourage individual economic pursuits; they also leave many people at risk of 

bankruptcy from expensive, uncovered medical care costs if they are not treated in clinics and hospitals with 

safety net programs. 

HEALTH REFORM POLICY ISSUES

Health reform will change health insurance coverage and the structure of the healthcare delivery system. 

Among the issues under study is the CMS Medicare Hospital Geographic Wage Index, the HCC component 

of the HCCA. This index establishes a baseline rate for 60 percent of Medicare payments and, by reference, 

for other payers as well. Presently the average county in the Appalachian Region receives lower payments 

than the U.S. average. Moreover, in general, Appalachian counties have not benefited as much from the workarounds that have helped other rural communities to side-step low rates. A “Frontier” adjustment, for 

example, brings communities in several states in the west to the lower of their own or the national average 

index. ARC may wish to consider advocacy to give rural Appalachian counties parity with Frontier counties 

when policy makers consider adjustments to the index.

Federal health reform will increase insurance coverage. A review of the scientific and policy literature 

indicates that the Affordable Care Act’s coverage initiatives will have a direct impact on state Medicaid 

budgets. Most reports indicate that Appalachian states’ total Medicaid costs will increase, although the 

amounts are a function of a state’s current coverage policies. Individual Appalachian states may see costs 

increase 1.4 to 15.4 percent1 to cover six to 41 percent more people2

. This will occur when health reform is 

fully implemented in 2014. In that year, each state Medicaid program must cover all persons with incomes 

under 133 percent of the national poverty level. Because HCCA results show low correlation between health 

insurance coverage and preventable mortality rates, more coverage alone may not result in health status 

improvements. The study’s demonstrated relationships between payment and resource availability suggest 

that without payment changes many people with new coverage may have trouble getting service. 

 

1 Table 26 of this report. 2 Table 22 of this report, Kaiser Commission on Medicaid and the Uninsured, on line, 2010.
Executive Summary and Key Findings

PDA, Inc. & Cecil. G. Sheps Center/UNC-Chapel Hill 

ARC Contract No.: CO-16835-2010 xxi

Health reform initiatives will clearly require more healthcare resources in Appalachia. Two programs 

championed by ARC, the Rural Health Clinics Act and the J-1 visa waiver program for foreign medical 

graduates can improve resource availability. For different reasons, both merit renewed attention in the health 

reform environment. The former addresses payment for primary healthcare providers and the latter addresses 

supply of healthcare providers to underserved areas.

ARC encouragement of broadband communications to rural areas will also help with the technology needed 

to support contemporary health care delivery, thus expand resource access. Finally, encouragement of 

expanded roles for entry workers in health care labor force will be similarly beneficial.
Health Care Costs and Access Disparities in Appalachia

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xxii ARC Contract No.: CO-16835-2010
PDA, Inc. & Cecil. G. Sheps Center/UNC-Chapel Hill 

ARC Contract No.: CO-16835-2010 1

CHAPTER 1 INTRODUCTION

1.1. CONTEXT FOR ARC HEALTHCARE ACCESS INDEX

In 2010, federal health reform statutes, PL 111-148 and PL 111-152, (ACA) changed the landscape of 

healthcare delivery. More people will be covered; new delivery systems will be required, demonstrations will 

be funded, and staffing requirements will change. Because much of the coverage reform involves the 

Medicaid program, states’ healthcare cost burden will increase. Reform changes will work within the 

framework of existing programs, many of which favor areas outside of the Appalachian Region. 

The Appalachian Regional Commission (ARC) has a rich history of improving healthcare access. Initiatives 

supported by the Commission’s Section 202 program include development of regional infrastructure with an 

emphasis on primary care, workforce development, development of the framework for Medicare and 

Medicaid programs to recognize and reimburse for services in Rural Health Clinics, strengthening the J-1 

Visa program for physicians who agree to serve in underserved Appalachian communities, calling attention to 

health status disparities in the region, and leveraging Center for Disease Control (CDC) funding for an 

Appalachian cancer disparity program. Health reform calls for a new look at an old problem. 

A literature review explored several dimensions of healthcare cost and access including: 

• Access to health resources,

• Medical bankruptcy,

• Medicare/Medicaid participation rates,

• Impact of healthcare reform on state budgets, and

• Measures of healthcare disparity.

1. 2 LITERATURE REVIEW

1.2.1 HEALTHCARE ACCESS

Sources for the review include policy briefs, annual expenditure reports, policy analyses, government 

projections, and actuarial reports. Given the timing of passage of ACA, when this report was compiled, few 

useful articles dealing with healthcare reform impact on state budgets were available in the peer-reviewed 

journals. 

Odin Anderson explored the definition of healthcare access in a classic paper first published in the late 1960’s 

and the concept has been revisited in the context of appropriate care versus quantity of care.3

 Healthcare 

social research has asked repeatedly, “Is it better to measure realized access, or utilization, rather than 

supply?” 

 

3 Anderson, Ronald M., Revisiting the Behavioral Model and Access to Medical Care: Does it Matter, Health and Social Behavior 

Vol. 36 (March): 1-10, 1995.
Health Care Costs and Access Disparities in Appalachia

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2 ARC Contract No.: CO-16835-2010

Figure 4 displays the evolution of healthcare access definitions from simple supply measures to an

understanding that other barriers may prevent use of services and, that need for services may not be uniform 

across all populations.

FIGURE 4 – HEALTH CARE ACCESS EARLY DEFINITIONS

Source: Odin Anderson 1967, modified by PDA

Four decades later, as illustrated in Figure 5, we realize that access to health care is determined by many more 

complex factors involving behavior, cost, and system organization as well as resource availability. We have 

also learned that equal access may not produce equal outcomes. 

FIGURE 5- EMERGING MODEL OF HEALTH CARE ACCESS

Source: Ronald Anderson 1995, modified by PDA

Environment

Health Care 

System

External 

Environment

Costs

Demograhics

Predisposing 

Characteristics

Enabling 

Resources

Health 

Behavior

Personal Health 

Practices 

Use of Health 

Services 

Outcomes

Perceived 

Health Status

Evaluated 

Health Status

Consumer 

Satisfaction

Years of Life
Chapter 1: Introduction

PDA, Inc. & Cecil. G. Sheps Center/UNC-Chapel Hill 

ARC Contract No.: CO-16835-2010 3

In this report, we examined sources suggested in the ARC solicitation and supplemented these with literature 

and resources in which geographic health disparities were the substantive or methodological focus. The U.S 

Agency for Healthcare Research and Quality (AHRQ) disparities report cites extensive prior research that 

indicated people who are uninsured experience negative health effects.

The uninsured are less likely to receive medical care, more likely to have higher mortality rates, and more 

likely to experience adverse health outcomes. Lack of adequate insurance can also lead to greater financial 

burdens for families and individuals faced with health crises.4

In An Analysis of Disparities in Health Status and Access to Medical Care in the Appalachian Region, an 

examination of the health disparities in the Appalachian Region indicated an uneven distribution of health 

resources across counties in the region.5 Although counties in metropolitan regions have greater access to 

medical services, many counties do not have access to critical medical specialty resources such as those for 

cardiovascular care, cancer treatment, and rehabilitation. The lack of cardiovascular resources could help to 

explain the high mortality rate from heart disease, lung cancer, and chronic obstructive pulmonary disease that 

have been found in the central Appalachian Region. 

The report also looked at various socioeconomic factors in the Appalachian Region to determine the impact 

on health disparities. Underlying Socioeconomic Factors Influencing Health Disparities in the Appalachian 

Region selected five factors to focus on as potential determinants of health disparities: Percent Urban 

Population, Median Family Income, Unemployment Rate, Percent of Persons Living in Poverty, and the 

Percent of Persons without Health Insurance. The two factors that “consistently define localized areas that 

suffer the highest rates of premature mortality” were the percent of persons living in poverty and persons 

without health insurance.6

This report challenges some of those earlier findings about insurance and socioeconomic influences on 

healthcare access.

1.2.2 COSTS OF CARE AND BANKRUPTCY

At one time, cost was a minor issue and supply issues dominated. Now, healthcare costs are escalating, and 

are a more critical access factor, representing 17.3 percent of the Gross Domestic Product (GDP) in 2009. Of 

greatest concern is the rate of increase, with Medicaid costs increasing almost 10 percent over the prior year, 

and Medicare growing 8 percent. Private costs grew only 3 percent. These increases occurred during a major 

national recession. In 2009, the economy grew less than one percent; yet, private insurance rates increased 13 

to 40+ percent that year. This is unsustainable and presents economic challenges at the individual, corporate 

and government level. The 2010 health reform statutes, ACA, contain hundreds of initiatives aimed at 

reducing the cost and increasing the effectiveness of the nation’s healthcare system. ACA also mandated 

study of ways to measure national health status.

 

4 Ibid.

5 Joel Halverson, Lina Ma, and E. James Harner, “An Analysis of Disparities in Health Status and Access to Medical Care in the 

Appalachian Region,” Appalachian Regional Commission, November 2004.

6 Joel Halverson and Greg Bischak, “Underlying Socioeconomic Factors Influencing Health Disparities in the Appalachian Region,” 

Appalachian Regional Commission, March 2008.
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4 ARC Contract No.: CO-16835-2010

Cost of services drives up the burden of healthcare access. Taking the societal viewpoint, AHRQ cites costs of 

$65 billion to $130 billion as the result of early death and poor health outcomes for the uninsured. Yet costs 

can also become a burden through increasing individual and family debt, especially in rural areas or among 

farming communities.7 A survey produced by the Access Project shows that while 95 percent of family 

members who were farmers were insured, 29 percent of the non-elderly respondents had medical debt. 

Several studies show that medical debt can lead to “housing problems, increased credit card debt, ruined 

credit records, and in the worst cases, bankruptcy.”8

 

One survey of 2007 bankruptcy filers shows that 62 percent of all bankruptcy filings in 2007 were due to 

medical problems. The percentage of bankruptcies that reported medical problems rose 50 percent between 

2001 and 2007.9

 

A review of the research literature and consultation with the Health Law and Policy staff of the University of 

North Carolina and the Sanford Policy Research Center at Duke University produced no information about 

medically related bankruptcies for smaller geographic areas and the national sample was of insufficient size to 

generate even state level estimates. The Himmelstein study referenced by the ARC request for proposals was 

based on a national survey of bankruptcy filers related to their perception of medical debt. There is no 

national database or synthetic estimate of medical bankruptcy. This issue is discussed in more detail in 

Chapter 5. 

1.2.3 FEDERAL FUNDING FOR HEALTHCARE 

Understanding the source of funding for healthcare is important to building an index of Healthcare Access 

and Cost. The federal government supports healthcare directly in the form of insurance coverage for 

Medicare, Department of Defense and Veterans Administration beneficiaries, and indirectly for Medicaid 

beneficiaries. It also supports healthcare services in the way of grants that are used to offset costs of serving 

uninsured persons. Grants from the National Institutes of Health, largely to academic medical centers, and 

from the Bureau of Community Health Services/ Health Resources and Services Administration (HRSA), 

largely to Community Health Centers, National Health Service Corps, and Substance Abuse and Mental 

Health Administration (SAMSA) represent the majority of these payments.

The major insurance programs include: Medicare for persons over 65 and for disabled persons, Medicaid for 

certain low income, elderly, blind and disabled persons and private health insurance. 

The lack of affordable healthcare carries tremendous social and economic costs for the insured and uninsured 

alike. Uninsured persons are less likely to access treatment for preventable illnesses, and when they require 

treatment, their health condition is often worse than others. When uninsured people access emergency 

services, the cost is often passed on to hospitals and insured patients in the form of higher healthcare costs and 

insurance premiums.

 

7 “National Healthcare Disparities Report, 2009”. Agency for Healthcare Research and Quality. Rockville, MD. 2009. Accessed 

December 2010. www.ahrq.gov/qual/nhdr09/nhdr09.pdf

8 The Access Project, “2007 Health Insurance Survey of Farm and Ranch Operators”, September 2007. 9 David U. Himmelstein, Deborah Thorne, Elizabeth Warren, and Steffie Woolhandler. Medical Bankruptcy in the United States, 

2007: Results of a National Study. American Journal of Medicine, Volume 122, Issue 8 (August 2009). 
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The latest data from the Census Bureau has the percentage of U.S. population without health insurance at 16.7 

percent in 2009, which is an increase from 15.4 percent in 2008.10 This is equal to 50.7 million uninsured 

individuals in 2009. There were a total of 253.6 million insured individuals, but this is a decrease from 255.1 

million in the prior year, the first time since 1987 – the first year where comparable insurance data was 

collected – where the number of people with health insurance has decreased. 

Full-time workers had an uninsured rate of 15.2 percent versus non-workers, who had an uninsured rate of 

29.1 percent. This was up 4.7 percent from 2007. For full-time workers, the change in uninsured was not 

statistically significant from 2007. The rate of employment-based coverage is 63.9 percent and is the lowest 

rate since 1987, the latest year for which statistics are available.11

The number of individuals covered by government health programs increased in 2009, with 30.6 percent of 

insured people covered under a government program. This is the highest government coverage rate since 

1987. In 2009, 93.2 million individuals under a government health program with 47.8 million under 

Medicaid and 43.4 million were covered under Medicare. While the Medicaid coverage rate is the highest 

since 1987, the change in Medicare coverage rate was not statistically different from 2008.12

Geographic location had some impact on uninsured rates; individuals living in metropolitan statistical areas 

had an uninsured rate of 16.8 percent. Those living outside of metropolitan areas had an uninsured rate of 

16.0 percent.13

Medicaid is a state/ federal insurance program for low income persons who are also old, blind, disabled, or 

dependent children. It also includes a State Children’s Health Insurance Program option (SCHIP or CHIP) 

that expands coverage for low income families. Medicaid is mandated by Title XIX of the Social Security 

Act and the federal government matches the state investment, but the state provides coverage to the 

beneficiary. The federal match, called the Federal Medicaid Assistance Percentage (FMAP) is based on 

relative economic wealth of the state. It is highest in states with the lowest socioeconomic status (SES), but is 

never less than 50 percent. Appendix C contains the current FMAP rates. 

To encourage states to expand Medicaid coverage, with programs like SCHIP and the expanded benefits in 

health reform, as part of the 2009 stimulus legislation, American Recovery and Reinvestment Act, ARRA, the 

FMAP was temporarily subsidized by a federal contribution that increased all states base federal participation 

by 6.2 percent in through 2010. Congress later extended the FMAP increase through 2011. Once this expires, 

states will return to their prior level of federal match. The highest federal match in 2011 is 82.31 percent, 

available to the Appalachian state of Mississippi. West Virginia and Kentucky have the next highest match 

rate in Appalachia with 81.27 percent and 80.04 percent, respectively. See Appendix C. In addition to ARRA, 

health reform, ACA significantly changed the landscape of Medicaid expenses for states. There are new 

FMAP rates that apply just to the expected Medicaid expansion. 

 

10 US Census Bureau, “Income, Poverty, and Health Insurance Coverage in the United States: 2009.” US Census Bureau, September 

2010. http://www.census.gov/prod/2010pubs/p60-238.pdf. Accessed January 3, 2011. 11 Ibid, p. 27. 12 Ibid, p. 24. 13 Ibid, p.28.
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1.2.4 STATE AND LOCAL SPENDING ON HEALTHCARE

States bear a significant portion of healthcare cost. State payments occur in public health programs, state 

employee health insurance and Medicaid. Many state health department programs are partially or wholly 

funded by federal grants. State employee programs are largely contracted to private insurers, but paid by the 

states. Medicaid is the largest state health cost. State Medicaid burden is shared with the federal government, 

based on a distributive formula that includes both state average income and the number of options offered in a 

state’s Medicaid program.

It is often reported that states spend, on average, almost 22 percent of their state budgets on Medicaid, but this 

figure can be misleading because it considers federal as well as state funds. On average, federal funds account 

for 56.2 percent of all Medicaid spending. Average state spending on Medicaid as a share of state general 

fund budgets is actually 16.8 percent, and just 13.4 percent as a share of spending from all state funds. 

(2007) 14

In some states with more favorable federal Medicaid matching rates, the different measures can result in 

dramatically different stories because federal funds can account for as much as two-thirds to three-quarters of 

total Medicaid spending. For example, using the measure commonly cited, Medicaid accounts for 22.4 

percent of total spending in Mississippi, but when only state general funds are counted and federal funds are 

excluded, Medicaid’s share of the Mississippi budget drops to just 7.8 percent.15

Some argue that rather than preventing states from spending on other priorities, federal funds coming into a 

state to pay for Medicaid services actually help states finance other priorities. For example, Medicaid often 

pays for the medical services associated with special education services for children and covers the cost of 

services, such as community mental healthcare, that states or localities would pay for in the absence of 

Medicaid; this helps stretch their state and local dollars. In addition, federal dollars to states for Medicaid 

services free up state dollars for other priorities that would otherwise have been spent on healthcare.16

These distinctions are critical in reviewing reports like National Association of State Budget Officers 

(NASBO) recent State Expenditure Report that Medicaid made up 20.7 percent of total state expenditures in 

2008.17 Other state health programs and CHIP were included in a separate “other” category, which included 

non-health expenditures. Medicaid expenditures were the second largest state spending category behind 

elementary and secondary education. NASBO estimates $310.9 billion was spent on Medicaid in 2008 and 

this was a 4.4 percent increase over 2007.18

A Kaiser Family Foundation policy brief on the Medicaid financing responsibilities of federal and state 

government cites Congressional Budget Office (CBO) estimates that the federal government will be financing 

the “vast majority” of Medicaid expansion costs that come from health reform mandates. Prior to health 

reform, expansion would cover an additional 16 million individuals under Medicaid and CHIP by 2019. After 

health reform, CBO projected the federal government will spend $434 billion on Medicaid and CHIP 

expansion from 2010 through 2019 and states will provide an additional $20 billion in the same time span. 

 

14 Georgetown Center for Health Policy, Medicaid and State Budgets, Looking at the Facts, May 1, 2008. 

http://ccf.georgetown.edu/index/cms-filesystem-action? file=ccf+publications%2Fabout+ medicaid%2Fnasbo+final+5-1-08.pdf. 

Accessed document 2010.

15 Ibid. 

16 Ibid. 17 National Association of State Budget Officers, “Fiscal Year 2008 State Expenditure Report,” December 2009. 

http://www.nasbo.org/LinkClick.aspx?fileticket=%2fZWfTvJG8j0%3d&tabid=107&mid=570. Accessed January 3, 2011. 18 Ibid, p. 44. 
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The federal government will be financing 96 percent of all Medicaid and CHIP costs associated with 

healthcare reform according to these estimates; states will be financing the remaining 4 percent.19 The brief 

notes that “states that have the furthest to climb in terms of meeting the new eligibility requirements will see 

the largest increases in federal financing.”20 CBO estimates for state-level costs were at an aggregate level 

and not reported on a state-by-state basis.

Andrea Sisko, et al. reported on revised projections of the national health expenditures through 2019. The 

projections are based on the CMS Office of the Actuary Health Reform Model and actuarial cost estimates. 

These state and local estimates include Medicaid, Child Health Insurance Program (CHIP), and other 

spending combined. Based on legislative and regulatory impact from the passage of ACA, CMS is projecting 

public state and local funds will account for $284.8 billion of the total $2.5 trillion in national health 

expenditures in 2009.21 Of this amount, $134.2 billion is for Medicaid and CHIP while the remaining $150.7 

billion is for other public spending at the state and local level. See Appendix E. 

FIGURE 6 – FORECAST OF STATE AND LOCAL TOTAL HEALTH EXPENDITURES, 2009 -2019

Source: Truffer, et al.

All expenditures will grow. State and local share will rise to 14 percent of total, then level off after 2013 to 12 

percent total. By 2019, public state and local spending will increase to $610.4 billion, representing a projected 

annual growth rate of 7.0 percent between 2009 and 2019. 

The state and local growth rate is similar to federal funds, which are projected to grow at 7.1 percent in the 

same time period, but are higher than total national health expenditures growth of 6.3 percent and private fund 

growth at 6.0 percent. An annual breakout of the forecast health expenditures is in Appendix A. 

 

19 Kaiser Family Foundation, “Financing New Medicaid Coverage under Health Reform: The Role of the Federal Government and 

States,” May 2010. http://www.kff.org/healthreform/upload/8072.pdf. Accessed January 3, 2011. 20 Ibid, p. 1. 21 Truffer CJ, et al. Health spending projections through 2019: the recession's impact continues. Health Aff (Millwood). 2010; 

29(3):522-529. http://content.healthaffairs.org/ cgi/content/abstract/hlthaff.2009.1074. Accessed November 29, 2010.
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A review by Sisko and others noted potential new state costs associated with the setup and administration of 

Health Insurance Exchanges. The study projects $4.4 billion in startup costs associated with the exchanges 

from 2011 through 2013. These costs would total $37.7 billion in administrative costs through 2019 and 

would be approximately 0.2 percent of the national health expenditures. The assumptions used for the 

exchange costs had some empirical basis as they were drawn upon administration costs for Massachusetts’s 

health insurance exchanges.22

1.2.5 IMPACT OF MEDICAID ON STATE ECONOMIC ACTIVITY

The Federal Medical Assistance Percentage (FMAP) for Medicaid has four benefits for states, according to a 

Kaiser Family Foundation policy brief by Wachino, et al. Medicaid would help states pay for the healthcare 

costs of low-income citizens, ensure federal matching funds are automatically directed to state budgets, 

support state administration of the program, and provide fiscal support for both state budget and economies.23 

Research produced for the Kaiser Family Foundation claims that Medicaid spending generates economic 

activity at a state level and has a positive economic effect. 

The economic impact on a state is proportionate to the state’s FMAP level. For example, a state with a 60 

percent matching rate must cut overall Medicaid spending by $2.40 to save $1 in state Medicaid spending. At 

a 70 percent matching rate, the required cut in spending increases to $3.33 to save $1 in state funding. The 

Wachino brief included a review on the state level impact (if available), which is recreated in Appendix D for 

states in the Appalachian Region. Calculation from Families U.S.A. determined that state spending in 

Medicaid produced almost a three-fold return on new business activity.24 According to the group’s 

calculation, state Medicaid spending, in 2001, generated 3 million jobs across the nation. The calculations 

were based on state Medicaid spending in 2001, and economic multiplier rates were determined from the 

Regional Input-Output Modeling System (RIMS II) economic model created by the U.S. Department of 

Commerce.

The economic downturn in 2009 and 2010 created budget shortfalls in many states. Increased unemployment, 

lower tax revenue, and rising demand for government programs have put states under fiscal pressure.

An analysis by the Kaiser Commission found almost all states forecast a budget gap from 2009 through 2011; 

46 states will continue that gap into 2011.25 Medicaid spending is counter-cyclical, with rising costs and 

enrollments during weak economic periods. Spending for Medicaid increased by 8.8 percent in 2010, which is 

the highest growth rate since the prior recession in 2001 and 2002. 

 

22 Truffer, Christopher J., Sean Keehan, Sheila Smith, Jonathan Cylus, Andrea Sisko, John A. Poisal, Joseph Lizonitz and M. Kent

Cleme. “Health Spending Projections Through 2019: The Recession’s Impact Continues”. Health Affairs (Millwood) 2010, 29. No. 3. 

Office of the Actuary, CMS. (2010): 522-529. Accessed November 29, 2010. 

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.2009.1074). 23 Wachino, Victoria, Andy Schneider and David Rousseau. “Financing the Medicaid Program: The Many Roles of Federal and State 

Matching Funds”. Kaiser Family Foundation, January 2004. http://www.kff.org/medicaid/upload/Financing-the-Medicaid-ProgramThe-Many-Roles-of-Federal-and-State-Matching-Funds-Policy-Brief.pdf. Accessed January 3, 2011. 24 “Medicaid: Good Medicine for State Economies”. Families USA. January 2003. 

http://www.familiesusa.org/assets/pdfs/Good_Medicine_2004_update93b7.pdf. Accessed January 3, 2011. 25 Vernon K. Smith, et al. “Hoping for Economic Recovery, Preparing for Health Reform: A Look at Medicaid Spending, Coverage 

and Policy Trends -- Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2010 and 2011”. Kaiser Family 

Foundation. September 2010. http://www.kff.org/medicaid/upload/8105.pdf. Accessed January 3, 2011.
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For 2011, the adopted growth rate for Medicaid is expected to be 7.4 percent, a decrease from the prior 

year.26. The largest factor driving spending growth remains increasing enrollment. Figure 7 from the Kaiser 

Commission shows the relationship between spending and enrollment growth since 1998. The two periods 

with high Medicaid spending and enrollment reflect the weak economic situation at those respective points.27

FIGURE 7 – PERCENT CHANGE IN TOTAL MEDICAID SPENDING AND ENROLLMENT, KAISER COMMISSION ON STATE MEDICAID,

FY 1998 - FY 2011

Chapter 6 in this report looks at the Appalachian states’ burden for Medicaid coverage and how that would 

change under ACA requirements. 

1.3 INDEX CONSTRUCTION

To benchmark success of reform and impact on the Appalachian Region, ARC solicited a research study to

develop an index to show healthcare access and cost disparities in the region, and to present an overview of 

the economic challenges and opportunities represented by healthcare expenditures.

This study examines whether the lack of access to medical care is a greater problem in Appalachia, than in the 

rest of the United States, not only in the way of fewer medical professionals and hospitals, but also reflected 

in lower rates of health insurance coverage, lower labor force participation rates, a higher proportion of lowwage and part-time jobs, and higher rates of unemployment and underemployment. Alone or together, these 

factors might reduce access to healthcare.

 

26 Ibid. p. 6. 27 Ibid. p. 6. 

Note: Enrollment percentage changes from June to June of each year. Spending growth 

percentages in state fiscal year.

Source: Enrollment Data for 1998-2009: Medicaid Enrollment in 50 States, KCMU. Spending Data 

from KCMU Analysis of CMS Form 64 Data for Historic Medicaid Growth Rates. FY 2010 and FY 

2011 data based on KCMU survey of Medicaid officials in 50 states and DC conducted by Health 

Management Associates, September 2010.
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As mandated by Congress to assure that ARC investments are targeted to the communities most in need, ARC 

publishes the ARC Distressed County Index annually. Based on the ARC economic status index, the 

Distressed County Index is prepared from national data and includes three measures of economic health: 

unemployment, per capita market income and poverty rate. All of these data are available at the county level 

and are published by federal sources. For inter-census population data, ARC uses Census estimates. 

In this report, PDA and UNC Sheps Center developed an ARC healthcare cost / access index in a manner 

similar to the ARC Distressed County Index and measured correlations between the two. Scalability, 

uniformity of definition and longitudinal availability are important aspects of a good index. This report has 

concentrated on building the index from databases that are available to the general public at reasonable cost. 

ARC sets policy and allocates resources at the county level. Working within this context, this report also 

focuses on measures that are available, consistent and reliable at the county level.

Adequate access to healthcare requires the ability to gain entry into the system, gain access to sites of care, 

and find providers who can meet the needs of patients.28 Successful accomplishment of such activities 

presumes that an adequate number and type of health providers are geographically accessible to a potential 

patient base, and that some form of health insurance coverage or other payment mechanism exists to enhance 

the probability that an appropriate transaction actually take place. The proposed healthcare cost / access index 

measures all of these.

1.4 EXISTING MEASURES OF HEALTHCARE ACCESS AND DISPARITIES

1.4.1 HEALTHCARE DISPARITIES SCORECARDS

A quantitative source of information on health related disparities comes from summary measures of health 

resources which have been constructed by several national health policy groups for purposes of uniformly 

comparing state-level information. Three state-based health scorecards in particular, i.e., State Health Access 

Data Assistance Center (SHADAC), America’s Health Rankings, and the Commonwealth Fund State 

Scorecard, measure health insurance access through the insurance component of the Medical Expenditure 

Panel Survey. These reports provide estimates at a state or metropolitan level only and are not estimated at a 

county-level. However, two county-based health scorecards, i.e., the County Health Rankings and the Center 

for Disease Control’s (CDC) annually published Community Health Status Indicator (CHSI)29 use the Small 

Area Health Insurance Estimates (SAHIE) to obtain insured and uninsured numbers at the county-level. These 

estimates are constructed to cover only people who are below the ages of 64 and would not be eligible for 

Medicare. These county-level estimates are also available on the Health Resource and Service Administration 

(HRSA’s) Area Resource File (ARF). See Appendix H for a sample county. 

Health outcome disparities in Appalachia are only partially consistent with conventional wisdom regarding 

the supply of health resources. Not surprisingly, the earlier report, An Analysis of the Financial Conditions of 

Health Care Institutions in the Appalachian Region and their Economic Impacts describes provider supply as 

more concentrated in higher income areas, with correspondingly more pronounced shortages in rural areas.30 

 

28 National Healthcare Disparities Report, 2010. Chapter 9. Access to Health Care Agency for Healthcare Research and Quality. 

Rockville, MD. http://www.ahrq.gov/qual/nhdr10/Chap9.htm 29 “Community Health Status Indicators (CHSI) Report”. U.S. Department of Health and Human Services. 2009. 

http://www.communityhealth.hhs.gov/. Accessed January 3, 2011. 30 Jeffrey Stensland, Curt Mueller and Janet Sutton. “An Analysis of the Financial Conditions of Health Care Institutions in the 

Appalachian Region and their Economic Impacts”. Appalachian Regional Commission. December 2002.
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The analysis shows that certain services including home health, mental health, and drug/alcohol treatment are 

less available in rural areas. 

All of the previously described scorecards have also measured the supply of health professionals using a 

simple per capita calculation as the basis for comparison. These scorecards predominantly use the number of 

primary care physician per 100,000 population as a means of calculating access to supply because the 

measure repeatedly tests well as a good index of appropriate access. The number of dentists per 100,000 

population was also included in the CHSI scorecard. Dental care is directly related to positive health status. 

None of the state- or county-based scorecards have examined the extent of geographic variation in the 

distribution of more specialized medical resources.

Finally, although synthetic estimates produced from the CDC’s Behavioral Risk Factor Surveillance System 

(BRFSS) data, could be, and have been, constructed and might yield interesting and valuable information, 

doing so would require extensive statistical modeling that is clearly beyond the scope of this project. A review 

of the various scorecard documentation sources and other quantitative literature revealed that relatively few 

quantitative indicators can be obtained at the county-level. Many prior studies used survey based measures 

obtained from BRFSS-based questions. Such items describe health risks or health behaviors or involve reports 

of actual experiences of patients and potential healthcare consumers about their own access and cost barriers. 

Unfortunately, as useful as such data might be for assessing barriers to care, BFRSS samples are typically 

designed to yield valid and reliable estimates only at state or national levels. As a consequence, the sample 

sizes are so small that direct estimates cannot be made at most sub-state levels, particularly at the level of a 

typical rural county. Further, because the content of BRFSS questions frequently changes over time, future 

comparability of estimates generated from BRFSS questions cannot be guaranteed. To address the rural 

county issue, we recommend that ARC request CDC and BRFSS staff to oversample surveys in the rural 

areas of the nation. 

National county-level healthcare expenditure data are not available on a timely basis. The Centers for 

Medicare and Medicaid Services (CMS) maintain files on Medicare expenditures per capita at the county 

level. Medicare has three programs: Old Age, Disabled and End State Renal Disease. 

Each has a skew that makes it less than fully representative of the population as a whole. Renal disease 

coverage is the only truly national health insurance program in the U.S. and services can be well distributed 

even at very rural levels. These data could be normalized to a national per capita average in construction of an 

index. Figure 8 shows, as an example, the wide county-to-county variation in one state, Alabama. In Figure 9, 

the average Alabama Appalachian county spends more Medicare dollars than the average state county, $1,117 

compared to $1,054. Unfortunately, by the time the CMS data are aggregated for public use, they are many 

years old. Data in Figures 8 and 9 are the most currently available in 2011, and those data are for the Year 

2003. 
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FIGURE 8 – TOTAL PER CAPITA MEDICARE ESRD PAYMENTS, WHOLE STATE ALABAMA (2003)

Source: CMS ESRD 2003 Total Part A Per Capita by State and County

FIGURE 9 – TOTAL PER CAPITA ESRD PAYMENTS APPALACHIAN COUNTIES, ALABAMA (2003)

Source: CMS ESRD 2003 Total Part A Per Capita by State and County

Generally, expenditure data have several built in issues. They include utilization patterns and allowable 

charge structures, as well as the availability of services. Utilization may also reflect practice patterns of 

providers, rather than specific care requirements of the population served. 
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The Dartmouth Atlas Working Group of the Dartmouth Institute for Health Care Policy and Clinical Practice 

have extensively documented variations in Medicare utilization by hospital referral regions, hospital service 

areas and primary care service areas, across the United States.31 Their results are drawn from the five percent 

sample of Medicare data made available for public research. Because their research reflects the behavior of 

only people who are over 65, disabled or have end stage renal disease, their conclusions about patterns of use 

must be extended with caution to other parts of the population. 

Chapter 4 of this report demonstrates that the patterns are not the result of high unit payments. Lead 

researcher for the Dartmouth Atlas project, Elliot Fisher, has noted that utilization may be proportional to 

physician practice patterns including physician expectations of number of times he or she will see a patient for 

the same condition. He has also observed that this varies by geography. 32 He further notes that 30 percent of 

unnecessary health spending is supply sensitive; more supply generating more unnecessary spending.

Appendix K details measures of access, insurance and health cost that were explored in the course of 

preparing this report. Key measures are reviewed in the following sections.

1.4.2 HEALTH COST MEASURES

National data on healthcare cost (largely measured in payments for services) are collected uniformly for only 

Medicare and Veterans Administration beneficiaries. Medicare data, primarily concerning persons over 65, 

are maintained at the county level by the Centers for Medicare and Medicaid Services (CMS).

Data for Medicaid, a state-federal program for low-income dependent children and their mothers, elderly, 

blind and disabled persons are collected by CMS but only for a few states.33 Two private entities, the Kaiser 

Family Foundation and the UNC Sheps Center, Rural Health Resource Center maintain payment and 

utilization data on all states.

Insurance payment data for persons under age 65 and not on Medicaid are less uniform, because claims are 

paid by multiple private entities that guard their proprietary databases. A few companies like Milliman and 

Mercer receive these data in return for providing actuarial forecasts to the insurance industry. Even Medicare 

claims data take years to assemble. In 2010, the most current data on payments are from the year 2007. 

However, because many reimbursement programs are based on Medicare’s payment schedule and expressed 

as a multiple of Medicare, Medicare has been considered a relatively good proxy for payment by others. A 

recent comparison of Dartmouth Atlas Medicare data with claims data from private insurers, suggests that the 

parallels may not be as strong as once thought.34

Medicare also employs a Geographic Wage Index to adjust its national base payment to the local economy. 

The wage index is assembled from cost reports filed by entities that receive facility fees from Medicare and is 

organized by the Office of Management and Budget Core-Based Statistical Areas (CBSAs) boundaries for 

metropolitan, micropolitan, and other non-core geographic designations within each state. Counties are 

assigned to areas and indices are established for each. Recently, a new Index, the Frontier Index was 

introduced to override the Geographic Wage Index and give very rural counties an index of at least 1.0. The 

 

31 The Dartmouth Atlas of Health Care http://www.dartmouthatlas.org/data/region/. 32 Fisher, Elliot. Keynote Presentation. Meeting of Patient Centered Primary Care Collaborative. March 30, 2011. Washington, D.C. 33 “Medicaid Data Sources, Medicaid Analytic Extract (MAX) General Information”. Centers for Medicare and Medicaid Services.

December 2010. https://www.cms.gov/MedicaidDataSourcesGenInfo/07_MAXGeneral Information.asp. 34 Ginsburg, Paul, Wide Variation in Hospital and Physician Payment Rates Evidence of Provider Market Power. Center for Studying 

Health System Change. Research Brief No. 16. November 2010.
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Frontier index heavily favors states like Minnesota, South Dakota and North Dakota. No Appalachian 

counties qualify for his population density based status. Other than the Medicare Geographic Wage Index, no 

uniform national measures of cost to provide services exist. See Appendix A for the Year 2010 Medicare 

Hospital Geographic Wage Index.

1.4.3 INSURANCE COVERAGE MEASURES

Medical access can be measured in resource availability and in number of persons who have insurance 

coverage to pay for resource use. Data on insurance coverage including all private insurance and 

Medicare/Medicaid coverage for persons over 65 are collected uniformly at the county level. Individual data 

elements lag the calendar year by two to five years. These are maintained in the Area Resource File (ARF) by 

the U.S. Department of Health and Human Services / Health Resources and Services Administration (HRSA). 

HRSA charges an annual fee of $50 for use of the files, which takes a significant amount of time to assemble.

UNC Sheps center acquires the HRSA files annually and assembles them into usable files. Most recent data in 

the file are from 2008. Insurance coverage data are drawn from long form Census Population Studies (CPS). 

These sample data are synthetically manipulated to get county-level estimates. The most recent of these 

insurance coverage data are for the year 2006. They are also included in the ARF.

Any estimates of insurance coverage must be treated as point in time snapshots, because health insurance 

coverage changes quickly. Private insurance coverage changes month to month. Medicaid eligibility can 

change in 30 days. Even Veterans Affairs (VA) and Department of Defense TRICARE coverage provided to 

military and dependents have limited durations of coverage. Only Medicare Part A is stable, because that 

federal program covers individuals continuously from age 65 on, without charge. Any other measure of 

insurance coverage has built-in error. 

Anticipating that the Health Insurance Exchanges mandated by the health reform act will require more 

uniform information on health insurance coverage, The Robert Woods Johnson Foundation is sponsoring an 

initiative to assemble an All-Payer Claims Database. The foundation offers a website with information on 

what is available in each state.35 In fall 2010, the initiative is in start-up mode and shows the inconsistency of 

data availability for non-Medicare expenditures across states. Until this database matures, or Health Insurance 

Exchanges become a reality, there will be no standardized measures of total healthcare coverage across states. 

Every index will be based on a proxy measure.

1.4.4 HEALTHCARE RESOURCE MEASURES

Measures of access to healthcare resources are typically calculated on a per capita basis. The resource 

measured (e.g., primary care physicians, beds, etc.) is the numerator, and the denominator is the population 

size for the region measured. Beds per 1,000 population is one such measurement of access with the 

nationwide average of 2.7 hospital beds per 1,000 population in 2008.36.

This is a decrease from prior years 

with the ratio steadily declining from 3.0 beds per population in 1999. In 2008, Mississippi had the highest 

number of beds with 4.5 per 1,000 population, while Maryland had the lowest ratio at 2.1, among the 

Appalachian states. As the nation shifts from inpatient-based care to outpatient, hospitals are de-emphasizing 

beds. However, no comparable measure of outpatient capacity has emerged. 

 

35 http://www.statecoverage.org. 36 Kaiser Family Foundation. “Beds per 1,000 Population, 2008”. March 2010. 

http://www.statehealthfacts.org/comparemaptable.jsp?ind=384&cat=8. Accessed January 3, 2011. 
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An additional resource access measure is the number of physicians or dentists per 1,000 population.37 The 

nationwide average of primary care physicians per 1,000 population was 1.4 in 2009. Among the Appalachian 

states, Mississippi had the lowest ratio of 0.9, while New York had the highest rate at 1.8 per 1,000 

population. Among dentists, the ratio per 1,000 population was 0.8 nationwide in 2009.

38

The ARF also contains county-level data for healthcare facilities (hospitals, nursing homes and clinics), and 

for healthcare professionals (specialty and non-specialty physicians and physician assistants, Osteopaths and 

dentists). Counts of nurses are available from ARF, but the most current estimates of nurse supply are from

the year 2000.

Appalachian counties are tagged in this ESRI-based database. Data in the Sheps Center database have also 

been used in North Carolina for more than 35 years in the identification of underserved communities, for the 

purpose of targeting medical and mental health investments. The Sheps index of under-service is updated 

annually. This index is based on actual service use compared to expected use by a middle income household. 

Please see Appendix B for a national map of the index. Elements of the index can function as a foundation for 

reflecting the intensity of cost and facility access at the county level, because it can accept other county-level 

variables.

CMS has a file called OSCAR, for Online Survey, Certification and Reporting, that contains addresses of 

every provider certified to bill Medicare. The OSCAR file includes all hospitals and healthcare facilities that 

participate in Medicare. 

VA has begun to code the locations and service areas of all of its hospitals and satellite facilities. These are 

catalogued at the county level, and maintained in the VA’s extensive national VISTA medical record system 

and VA AMMS billing system. Data are assembled by the VA Health Economic Research Center and 

maintained on a website.39 

1.4.5 HEALTH STATUS MEASURES

Traditional measures of health status focus on a single issue like infant mortality, death rates overall or 

associated with a particular disease. Recent attention to the nation’s chronic problem with obesity and the 

high cost of care for persons with diabetes has called attention to these two measures. In healthcare, there is 

no equivalent of the Gross Domestic Product. Many health researchers rely on variations of the measure, 

Years of Potential Life Lost (YPLL). 

During the course of this study, the National Institute of Medicine, in cooperation with the Robert Wood 

Johnson Foundation, has convened a Committee to develop a Health Adjusted Life Expectancy index to track 

trends, mark progress and encapsulate an overall picture of health of communities and of the nation. This 

committee should file three reports by the end of calendar year 2011. Already, the committee has 

recommended restructuring of the National Center for Health Statistics, which is the repository of the nation’s 

data on disease and health service utilization.40

 

37 Kaiser Family Foundation, “Nonfederal Primary Care Physicians per 1,000 Population, 2009”. December 2009. 

http://www.statehealthfacts.org /comparemaptable.jsp?ind=690&cat=8. Accessed January 3, 2011. 38 Kaiser Family Foundation, “Dentists per 1,000 Population, 2009”. December 2009. 

http://www.statehealthfacts.org/comparemaptable.jsp?ind=691&cat=8. Accessed January 3, 2011. 39 VA Health Economic Resource Center. www.herc.research.med.va.gov. 40 “The Role of Measurement in Action and Accountability Report”. Institute of Medicine for the Public’s Health. Brief 10. December 

2010.
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1.5 STRUCTURE OF THE REPORT 

This report is organized into eight chapters followed by appendices. Following this Introduction, Chapter 2 

discusses the elements of the proposed index of healthcare cost and access. Chapter 3 describes how 

Appalachian counties compare in the region and with the United States on the index and its three components: 

healthcare cost, health insurance coverage, and healthcare resources. Chapter 4 explores how the index 

correlates with economic distress and persistent poverty. Chapter 5 addresses ARC policy issues raised by the 

index. Chapter 6 addresses best practices in providing health insurance and describes the impact of ACA 

health reform on Appalachian state Medicaid programs. Chapter 7 provides a summary of the report. And, 

Chapter 8 provides a bibliography of references used. Appendices provide supporting materials. Specifically, 

Appendices K through M provide details of the HCCA structure and the statistical tests of its relationships. 
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CHAPTER 2 HEALTHCARE COST, COVERAGE, AND ACCESS 

INDEX 

2.1 INDEX CRITERIA

The Healthcare Cost, Coverage and Access Index (HCCA) includes a small number of core indicators 

selected in a way that provides comparable values among counties throughout the United States. The 

properties of the HCCA are based on ARC’s Economic Status Index. These properties include: First, the 

HCCA is simple and straightforward in its composition and highly intuitive in interpretation. Second, the 

HCCA makes use of data sources that are reliable, publicly available, and periodically constructed and 

validated by federal government sources using nationally uniform data collection and data manipulation 

strategies. This characteristic increases confidence that the index can be updated and replicated with a 

minimum of effort and expense. Third, the HCCA makes use of sources that are transparent and rely upon 

justifiable and generally well accepted and well validated small area analysis techniques in those instances 

where county-level estimates, as opposed to actual population measures, are required. Fourth, the HCCA 

values consistency and reliability over currency or recentness in choosing among different potential 

measurement items to be used to construct the index. This approach helps to assess local or regional trends 

relative to similar trends at a state or national level.

2.2 INDEX COMPONENTS 

The HCCA reflects three distinct but related dimensions: (1) access to health professionals and facilities, (2) 

health insurance coverage among all individuals, and (3), healthcare cost. As noted above, these three 

dimensions were used to create three components. All data were converted to percentiles. The components 

were then combined to form the final HCCA. 

2.3 HEALTH CARE COST (HCC) COMPONENT

Costs are often measured by the expenditures of public and private parties in per capita terms. The healthcare 

cost component (HCC) measures relative cost to provide services. Generally this means aggregate 

expenditures over an annual period divided by the number of “participants” (users and nonusers who were 

eligible to use the service over the time period observed). In some cases, particularly where relatively few 

eligibles actually make use of the service, the appropriate denominator might be the number of actual users, 

rather than the eligibles. For each payer, the population covered must be carefully specified (e.g., Private 

Insurance, Uninsured, Medicaid, Medicare, and Veterans Administration (VA)) to assure denominators are 

available and consistently applied for the same years as is numerator data. Because of the lack of uniform 

public data sources for all covered and not covered populations, the HCC component has only one input; the 

CMS Hospital Geographic Wage Index. The Geographic Wage Index was used in its raw form. Each county 

has an Index based on a 1.0 national average. Because the data are aggregated into three clusters in each state: 

metropolitan, micropolitan, and other non-core, distinctions of true cost differences within states are blurred. 

Some argue that the aggregation misrepresents the actual cost of care at the county level.

Nonetheless, this component is the basic foundation on which Medicare bases its payments; and most 

insurance companies base their payments on a multiple of Medicare. Medicaid varies from state to state.
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Although it has only one input, the HCC component has equal weight with the other subcomponents. The 

HCC itself is comprised of multiple elements of salary payments reported by hospitals on their cost reports.

Salary data are aggregated for hospitals in a specific Core Based Statistical Area (CBSA), which can be an 

aggregation of counties, and an index is assigned to each hospital. Hospitals were assigned to counties to 

produce county indices. Counties without hospitals were assigned the value of the nearest county. 

Data for the HCC component were drawn from raw Medicare hospital wage index data files by state and 

assigned to the counties associated with the Medicare area. Counties with no hospital were assigned to the 

nearest county associated with a hospital.

2.4 HEALTH INSURANCE COVERAGE (HIC) COMPONENT 

HRSA’s Area Resource File (ARF) routinely assembles Small Area Health Insurance Expenditures (SAHIE) 

for persons under 65. This was used for the health insurance coverage component (HIC). 

Insurance coverage data on persons age 65 and older was excluded from the HIC component. Analysis of 

county-level data from the 2009 American Community Survey showed that the percent of persons over 65 

insured varies very little from county to county in Appalachia and the United States. Approximately 98 

percent to 100 percent of this population has some coverage because of the virtually universal coverage of this 

age group by the Medicare program. A significant differentiation occurs only in the groups under age 65. 

Therefore, data on persons 65 and over was excluded from the HIC. The HIC makes no distinction about the 

quality or comprehensiveness of the coverage. It measures only the existence of coverage, whether private or 

public insurance. 

2.5 HEALTH CARE RESOURCES AVAILABILITY (HCRA) COMPONENT 

Resource availability refers to the physical presence of certain resources within a local community (e.g., short 

term general hospital beds, physicians of various types and specialties). The following four inputs were 

included in the HCRA:

TABLE 3 – HCRA INPUT DATABASE

Input Per 

Population

Data 

Source Time Period

Primary Care Physicians (PCP) 100,000 ARF 2006, 2007, 2008

(Average of 3 most recent years available)

Non-Primary Care Physicians (NPCP) 100,000 ARF 2006, 2007, 2008

(Average of 3 most recent years available)

Dentists (DDS) 100,000 ARF 2007

(Most recent year available)

Acute Hospital Beds (HOSPBEDS) 10,000 ARF 2005, 2006, 2007

(Average of 3 most recent years available)

Source: ARF is compiled from multiple national databases by the HRSA of the U.S. DHHS.
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CHAPTER 3 APPALACHIAN HEALTHCARE ACCESS 

3.1 APPLICATION OF INDEX

Data for each component for each county in the United States were rank ordered and assigned a percentile. 

The rank ordered percentiles are assigned an extension “_R.” The following tables document the metrics, 

method, source, variable name and date for the data elements in each component of the HCCA. Following 

publication, raw data for these analyses will be available from www.ARC.gov/research. Maps in Section 3.2 

of this report reflect choroplethic ratings of the percentile distribution of values in the HCCA and its 

subcomponent indices. All maps are scaled in quintiles and adjusted so that red represents low percentiles 

and blue represents high percentiles. White is average.

TABLE 4 - HEALTHCARE COST, COVERAGE AND ACCESS (HCCA) INDEX CALCULATION

Equation Basic Scaling Method Input Item Final Rescaled 

Variable Name

HCCA = (HCRA_R + HIC_R + 

HCC_R) /3

Percentile Value Rank ordered then converted 

to a percentile

HCCA_R

TABLE 5 – HEALTH CARE COSTS (HCC) COMPONENT CALCULATION

Input Item Definition Data 

Source Time Periods

Basic 

Scaling 

Method

Input Item Final Rescaled 

Variable Name

HCC = CMS Hospital 

Wage Index Rescaled

CMS FY 2009 Wage 

Index – calculated 

from 2005 Wage 

Data

Percentile 

Value

The CMS labor cost Index 

Rank ordered then converted 

to a percentile. Tied 

counties are given tied ranks 

for percentile ranking

HCC_R

TABLE 6 - HEALTH INSURANCE COVERAGE (HIC) COMPONENT CALCULATION

Input Item Definition Data 

Source Time Periods

Basic 

Scaling 

Method

Input Item Final Rescaled 

Variable Name

HIC = Percent of 

residents 0 to 64 

years old insured by 

public or private 

sources Rescaled

SAHIE 2007 Percentile 

Value

Insured residents 0 -64 years 

old as percent of 0-64 yearolds from SAHIE. Rank 

ordered then converted to a 

percentile

HIC_R
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TABLE 7 – HEALTH CARE RESOURCE AVAILABILITY (HCRA) COMPONENT CALCULATION

Input 

Item Input Item Definition Data Source Time Periods

Basic 

Scaling 

Method

Computation 

Refinements

Final Rescaled 

Variable 

Name 

PCP Primary Care 

Physicians per 

Census Bureau 100K 

pop

ARF Averaged 

across the 3 

most recent 

years (2006, 

2007, 2008)

Percentile 

value

Counties without 

physicians (tied at zero) 

will be arrayed so most 

populated counties have 

a greatest degree of 

physician shortage

PCP_R

NPCP Non-primary care 

Physicians per 

Census Bureau 100K 

pop

ARF Averaged 

across the 3 

most recent 

years (2006, 

2007, 2008)

Percentile 

Value

Counties without 

physicians (tied at zero) 

will be arrayed so most 

populated counties have 

a greatest degree of 

physician shortage

NPCP_R

DDS Dentists per Census 

Bureau 100K pop

ARF 2007 (latest 

available 

data)

Percentile 

Value

Counties without dentists 

(tied at zero) will be 

arrayed so most 

populated counties have 

a greatest degree of 

physician shortage

DDS_R

HOSP

BEDS

Short term general 

hospital beds per 

Census Bureau 10K 

population

ARF Averaged 

across the3 

most recent 

years (2005, 

2006, 2007)

Percentile 

value

Counties without 

hospitals (tied at zero)

will be arrayed so most 

populated counties have 

a greatest degree of 

physician shortage.

HOSBEDS_R

HCRA= (PCP_R + NPCP_R + DDS_R + HOSPBEDS_R)/4 Average 

of the 4 

percentile 

values 

The average of the 4-

item summed percentile 

scores is then again rank 

ordered and converted 

to a percentile across all 

U.S. counties

HCRA_R
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Throughout the rest of the report, for ease of reading, we have dropped the “_R” extension. Tables above are 

useful only for persons using the data tables that accompany this report. Maps in the following section 

compare the United States and the Appalachian Region for the HCCA Index and its subcomponents. Note that 

Lafayette County, Mississippi is outside the Appalachian Region; so it appears blank on the ARC maps.

3.2 MAPS OF HEALTHCARE COST, COVERAGE AND ACCESS INDEX (HCCA) AND 

COMPONENTS 

The following pages contain maps of counties in the United States and the Appalachian Region showing 

geographic differences for the Health Care Cost, Coverage and Access Index (HCCA) and its components.

All maps are scaled in five quintiles with red the least desirable and blue the most desirable score. 
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3.2.1 HEALTHCARE COST, COVERAGE AND ACCESS (HCCA) INDEX 

FIGURE 10 – COUNTY HCCA INDEX IN THE U.S., 2011
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FIGURE 11 - COUNTY HEALTHCARE COST, COVERAGE AND ACCESS (HCCA) INDEX IN APPALACHIA, 2011

The HCCA does not follow traditional patterns of distress in Appalachia, or elsewhere. Extremely low scores

in broad areas of Texas and Louisiana are consistent with immigrant patterns. Those same extremely low 

scores in Appalachia occur in very rural areas. Every Appalachian state, except South Carolina and Maryland, 

has a pocket of extremely low HCCA score. Generally, northern states fare better than those in central 

Appalachia and the south. These maps show percentiles; the whole nation is compared to itself. Top 

performers are in the 80th percentile and above.
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3.2.2 HEALTH CARE COST (HCC) COMPONENT 

FIGURE 12 – COUNTY HCC COMPONENT IN THE U.S., 2011
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FIGURE 13 – COUNTY HEALTH CARE COST (HCC) COMPONENT IN APPALACHIA, 2011

HCC reflects and reinforces severe disparities in Central and Southern Appalachia and the southern United 

States in general. This means that wages paid by hospitals are lowest here. This low wage sets the benchmark 

for 60 percent of the Medicare payment rate for hospitals and by reference for most other Medicare healthcare 

services. Other payers set payments on a percent of Medicare, thus low wages beget low payments, as other 

insurers benchmark to Medicare. 
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3.2.3 HEALTH INSURANCE COVERAGE (HIC) COMPONENT 

FIGURE 14 - COUNTY HIC COMPONENT IN THE U.S., 2011
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FIGURE 15 – COUNTY HEALTH INSURANCE COVERAGE (HIC) COMPONENT IN APPALACHIA, 2011

As reflected in the HIC component, health insurance coverage in the Appalachian Region is actually better 

than many parts of the country. Nationally, the health insurance coverage patterns are closely aligned with 

union presence and with the philosophy of state Medicaid programs. Very rural, non-mining areas, 

particularly in states that focus on depth rather than breadth of Medicaid eligibility, tend to have less 

coverage. Severe disparities in Florida, Texas and New Mexico are consistent with high levels of immigrant 

populations in those areas.
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3.2.4 HEALTH CARE RESOURCE AVAILABILITY (HCRA) COMPONENT

FIGURE 16 - COUNTY HCRA COMPONENT IN THE U.S., 2011
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FIGURE 17 - COUNTY HEALTH CARE RESOURCE AVAILABILITY (HCRA) COMPONENT IN APPALACHIA, 2011

As reflected in the HCRA, resource disparities occur throughout the region and are more severe in very 

remote counties of Appalachia, the northern midwest and southwest Texas. Most of the high disparity 

communities have no hospital, or the hospital is very small. In cases where a high resource county is adjacent 

to a severe shortage county, residents may have better access than in areas in central and southern Appalachia, 

which have clusters of severe to high resource disparity.

The Dartmouth Atlas staff has tried to address this issue by defining the United States in terms of hospital 

service areas. Implicit in such analyses is the assumption that, in rural areas, traveling across county lines to 

get hospital care is inevitable. By contrast the HCRA component is a simple statement of fact about a 

county’s relative resources.
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3.3 SUMMARY OF FINDINGS FOR HEALTHCARE COST, COVERAGE, AND ACCESS 

(HCCA) INDEX IN APPALACHIAN REGION

Counties in Appalachian states and in the Appalachian Region favor the lower percentiles of the HCCA and 

most of its components. 

FIGURE 18 - DISTRIBUTION OF COUNTIES IN ARC STATES BY INDEX AND COMPONENT (N=1070 COUNTIES) 

FIGURE 19 - DISTRIBUTION OF ARC COUNTIES BY INDEX AND COMPONENT (N=420)
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To understand these distributions, it helps to understand that taken together, the 3,110 counties in the U.S. 

distribute evenly among the percentile groupings, as would be expected. 

To put the percentiles in context, it is important to understand the variance between the values of highest and 

lowest percentiles. The spread of raw values in the HCRA and HCCA is very wide. The spread in HCC is 

smaller, because the value itself is indexed. HIC, insurance coverage, differences are the smallest nationwide. 

TABLE 8 - RAW VALUES FOR HCCA AND SUBCOMPONENTS – ALL U.S. COUNTIES (N=3110 COUNTIES) 

 HCCA HCC HIC HCRA

Max 98.3 1.58 93.4 97.5

Min 3.3 0.73 50.4 2.5

Variance 95.0 0.84 43.0 95.0

Variance % 2850% 115% 85% 3800%

TABLE 9 - RAW VALUES FOR HCCA AND SUBCOMPONENTS –APPALACHIAN STATES (N=1070 COUNTIES) 

 HCCA HCC HIC HCRA

Max 96.0 1.30 91.0 97.5

Min 4.7 0.76 62.4 2.5

Variance 91.3 0.54 28.6 95.0

Variance % 1957% 71% 46% 3800%

TABLE 10 - RAW VALUES FOR HCCA AND SUBCOMPONENTS – APPALACHIAN COUNTIES (N=420 COUNTIES) 

 HCCA HCC HIC HCRA

Max 82.3 1.16 91.0 97.0

Min 8.0 0.76 71.2 3.5

Variance 74.3 0.39 19.8 93.5

Variance % 929% 52% 28% 2671%

According to the HCCA index, ARC counties have lower than average healthcare resources, insurance 

coverage, and reimbursement when compared to the nation as a whole. In the vocabulary of the ARC 

Economic Distress Index, if the lowest two quintiles are Distressed and At Risk, of the 420 ARC Counties, 

202 (48.1 percent) are either Distressed or At-Risk while only 115 (27.4 percent) are either Competitive or at 

Attainment. This means that, compared to the nation as a whole, ARC counties are 20.2 percent more likely to 

have a lower than normal HCCA (48.1 percent / 40.0 percent – 1 = 20.2 percent). It also means ARC Counties 

are 31.5 percent less likely to have a higher than normal HCCA ((27.4 percent / 40.0 percent) – 1 = -31.5 

percent). Patterns for individual states vary substantially. 
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3.4 RESULTS IN APPALACHIAN STATES

3.4.1 HEALTHCARE COST, COVERAGE, AND ACCESS (HCCA) INDEX

Individual states that skewed towards Attainment (high percentile) on the HCCA had low scoring counties or 

scored low on one of the components. South Carolina and Maryland counties in Appalachia have the best 

healthcare access, cost and coverage. 

TABLE 11 – COUNT OF ARC COUNTIES BY HCCA PERCENTILE GROUP

Percentile Group

Appalachian State 00 to 20 20 to 39 40 to 59 60 to 79 80 to 99 Total

Alabama 7 14 9 4 3 37

Georgia 10 11 11 4 1 37

Kentucky 22 16 7 8 1 54

Maryland 0 0 1 0 2 3

Mississippi 15 8 1 0 0 24

New York 0 2 5 6 1 14

North Carolina 1 10 12 4 2 29

Ohio 0 6 7 11 8 32

Pennsylvania 1 2 14 22 13 52

South Carolina 0 0 2 3 1 6

Tennessee 11 21 13 6 1 52

Virginia 2 9 7 7 0 25

West Virginia 18 16 14 6 1 55

Total 87 115 103 81 34 420

FIGURE 20 - HCCA INDEX OF COUNTIES IN APPALACHIAN STATES 
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3.4.2 HEALTH CARE COST (HCC) COMPONENT

Overall, ARC counties have extremely poor reimbursement when compared to the nation. Of the 420 ARC 

counties, 198 (47.1 percent) could be called Distressed while only 24 (5.7 percent) would be at Attainment. In 

Kentucky and Mississippi, nearly all ARC counties are “Distressed”. It appears that only the greater Atlanta 

area and ARC counties in South Carolina reached consistent Attainment reimbursement. 

TABLE 12 – COUNT OF ARC COUNTIES BY HCC PERCENTILE GROUP

Percentile Group

Appalachian State 00 to 20 20 to 39 40 to 59 60 to 79 80 to 99 Total

Alabama 25 1 2 9 0 37

Georgia 17 0 2 4 14 37

Kentucky 50 1 0 3 0 54

Maryland 0 0 0 3 0 3

Mississippi 23 0 0 1 0 24

New York 0 9 3 1 1 14

North Carolina 0 0 18 11 0 29

Ohio 0 0 26 4 2 32

Pennsylvania 0 39 8 3 2 52

South Carolina 0 0 2 1 3 6

Tennessee 44 2 0 6 0 52

Virginia 0 23 0 2 0 25

West Virginia 39 8 2 4 2 55

Total 198 83 63 52 24 420

FIGURE 21 - HCC PERCENTILE DISTRIBUTION OF COUNTIES IN THE APPALACHIAN STATES
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3.4.3 HEALTH INSURANCE COVERAGE (HIC) COMPONENT

When all types of health insurance are considered (public and private), ARC counties have higher than 

average coverage when compared to the nation. This may reflect the higher rates of Medicaid and Medicare 

Disability insurance coverage in ARC counties. The national average is affected by large populations in nonAppalachian states such as Texas, Florida and California, which have an abnormally high percentage of 

uninsured residents. These states also have large numbers of migrant and immigrant populations who would 

not qualify for federal programs.

TABLE 13 – COUNT OF ARC COUNTIES BY HIC PERCENTILE GROUP

Percentile Group

Appalachian State 00 to 20 20 to 39 40 to 59 60 to 79 80 to 99 Total

Alabama 0 0 14 18 5 37

Georgia 13 11 10 3 0 37

Kentucky 0 13 17 18 6 54

Maryland 0 1 0 2 0 3

Mississippi 6 15 3 0 0 24

New York 1 0 5 6 2 14

North Carolina 9 11 6 3 0 29

Ohio 0 2 0 9 21 32

Pennsylvania 1 1 2 14 34 52

South Carolina 0 3 2 1 0 6

Tennessee 0 11 20 17 4 52

Virginia 2 2 4 13 4 25

West Virginia 6 15 20 11 3 55

Total 38 85 103 115 79 420

FIGURE 22 – HIC DISTRIBUTION OF COUNTIES IN APPALACHIAN STATES
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3.4.4 HEALTH CARE RESOURCE AVAILABILITY (HCRA) COMPONENT

Overall, ARC counties have slightly lower than normal access to healthcare resources when compared to the 

nation as a whole. Of the 420 ARC counties, 177 (42.1 percent) are either Distressed or At-Risk while only 

154 (36.7 percent) are Competitive or at Attainment. 

TABLE 14 – COUNT OF ARC COUNTIES BY HCRA PERCENTILE GROUPS

Percentile Group

Appalachian State 00 to 20 20 to 39 40 to 59 60 to 79 80 to 99 Total

Alabama 9 10 8 4 6 37

Georgia 10 8 10 7 2 37

Kentucky 20 10 8 9 7 54

Maryland 0 0 1 1 1 3

Mississippi 5 6 10 1 2 24

New York 1 3 2 4 4 14

North Carolina 5 4 7 7 6 29

Ohio 8 7 6 7 4 32

Pennsylvania 5 5 10 17 15 52

South Carolina 0 1 1 3 1 6

Tennessee 13 12 13 6 8 52

Virginia 3 9 3 7 3 25

West Virginia 10 13 10 11 11 55

Total 89 88 89 84 70 420

FIGURE 23 - HCRA DISTRIBUTION OF COUNTIES IN APPALACHIAN STATES
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3.5 HEALTHCARE COST, COVERAGE, AND ACCESS (HCCA) INDEX AND 

DISTRESSED APPALACHIAN COUNTIES

We examined relationships among the HCCA Index components individually, and between the HCCA and 

ARC’s 2011 Economic Status Index expressed in terms of Economic Distress. The following tables show that 

within the sub-indices, poor scores on one are generally associated with poor scores on another index. The 

exception is HIC, the insurance component index. Areas of high insurance coverage have low access and cost 

scores, indicating that people are covered but they do not have access to resources equivalent to the national 

average. In reading these tables, note that the Economic Distress Index is ranked such that 99 is most 

distressed. The HCCA and components are in normal percentiles, where the 99th percentile reflects a more 

desirable situation.

TABLE 15 –HCCA BY ARC ECONOMIC DISTRESS INDEX 2011 FOR THE UNITED STATES (N=3110)

HCCA

(Combined Healthcare 

Cost, Coverage and 

Access Index - 

percentile)

ARC Economic Distress Index

(ArcEconSTATUS2011)

0 - 10 

(Attainment)

15 - 24 

(Competitive)

25 to 74 

(Transitional)

75 to 89 

(At-Risk)

90 to 99 

(Distressed) Total

Less than 20 (low) 13 37 269 172 132 623

20 to 39 12 57 325 123 101 620

40 to 59 36 96 362 83 45 624

60 to 79 72 113 345 59 26 618

80 to 99 (high) 177 162 251 29 6 625

Total 310 465 1552 466 310 3110

FIGURE 24 – COMPARISON OF HCCA PERCENTILE RANKING TO DISTRESS LEVEL FOR ALL COUNTIES IN U.S.
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All percentiles in these charts are national rankings. Thus, in the national distribution of the HCCA, there is 

approximately the same number of counties in each percentile. Table 15 and Figure 24 show that even some 

high attainment counties scored low on the HCCA index. The dissociation of economic status and HCCA is 

more notable among competitive and transitional counties, the red and green bars in Figure 24. These counties 

have better economic status, but one in five (688 total) rank below the 40th percentile on the HCCA. These 

locations may have low Medicare hospital wage indices, be too small to have significant health resources or 

many of their workers may not have health insurance. Generally, however, the better economic counties (blue, 

red and green) dominate the top HCCA percentile. 

TABLE 16 – HCCA BY ARC ECONOMIC DISTRESS INDEX 2011 FOR APPALACHIAN STATES (N=1070 COUNTIES) 

HCCA

(Combined Healthcare 

Cost, Coverage and 

Access Index - 

percentile)

ARC Economic Distress Index

0 - 10 

(Attainment)

15 - 24 

(Competitive)

25 to 74 

(Transitional)

75 to 89 

(At-Risk)

90 to 99 

(Distressed) Total

Less than 20 (low) 1 2 53 80 76 212

20 to 39 2 10 113 68 68 261

40 to 59 8 20 147 49 22 246

60 to 79 14 19 132 16 9 190

80 to 99 (high) 52 33 69 6 1 161

Total 77 84 514 219 176 1070

FIGURE 25 – COMPARISON OF HCCA PERCENTILE RANKING TO DISTRESS LEVEL FOR ALL COUNTIES IN APPALACHIAN STATES

Table 16 and Figure 25 show that counties in Appalachian states tend to have lower HCCA scores. In 

Appalachia, only 17 percent (178) of the transitional and competitive counties ranked below the 40th

percentile nationally. Nonetheless, they represent a third (37%) of the Appalachian states’ low HCCA 

counties. 
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TABLE 17 – – HCCA BY ARC ECONOMIC DISTRESS INDEX 2011 FOR APPALACHIAN COUNTIES (N=420 COUNTIES) 

HCCA

(Combined Healthcare 

Cost, Coverage and 

Access Index - 

percentile)

ARC Economic Distress Index

0 - 10 

(Attainment)

15 - 24 

(Competitive)

25 to 74 

(Transitional)

75 to 89 

(At-Risk)

90 to 99 

(Distressed) Total

Less than 20 (low) 0 0 21 33 33 87

20 to 39 0 1 54 24 36 115

40 to 59 2 6 67 20 8 103

60 to 79 2 3 64 7 5 81

80 to 99 (high) 2 8 22 2 0 34

Total 6 18 228 86 82 420

FIGURE 26 - COMPARISON OF HCCA PERCENTILE RANKING TO DISTRESS LEVEL FOR APPALACHIAN COUNTIES

Table 17 and Figure 26 show almost half of the Appalachian counties (202 or 48%) are below the 40th

percentile, with Distressed and At-Risk counties dominating the lower percentiles. Transitional counties in 

Appalachia distribute in a normal bell curve on the HCCA. Two distressed counties and two at risk counties 

defy the trend and rank in the highest HCCA percentile. Understanding why requires looking closer at how 

those counties ranked on the individual indices. 

Relationships between ARC Economic measures and the HCCA and its sub-indices are explored in more 

depth in Appendix M. 
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3.6 OTHER MEASURES OF HEALTH CARE ACCESS

3.6.1 INDEPENDENT MEASURES

Independent of the HCCA, the research team compared Appalachian and non-Appalachian counties on five 

other measures of healthcare access and found some unexpected results.

TABLE 18 – INDEPENDENT MEASURES CALCULATION

Item Summary Input Item 

Definition Data Source Time Periods

Basic Scaling 

Method

Computation 

Refinement

National 

Percentile of 

Percent of 

Children under 18 

Insured by 

Medicaid

State-level 

estimates of 

Children under 18 

Enrolled in 

Medicaid/Children’s 

Health Insurance 

Program (CHIP)

Kaiser Family 

Foundation (KFF)

2009 Percentile 

Value

Percent Children Enrolled 

calculated with KFF child 

enrollment and child 

population data. Rank 

ordered then converted 

to a percentile.

National 

Percentile of 

Percent of 

Children Under 20 

Insured

Percent of children 

0 -19 years old 

insured by public or 

private coverage.

SAHIE 2007 Percentile 

Value

Percent Enrolled 

calculated with SAHIE 

data. Rank ordered then 

converted to a percentile

National 

Percentile of 

Percent of 

Population 

Insured by

Medicare 

Disability

Percent of Census 

Population on 

Enrolled for 

Medicare Disability 

Coverage (Parts A 

and/or B)

CMS and Census 

Bureau

2007 Percentile 

Value

Percent Medicare 

Disability Enrollment 

calculated as percent of 

same-year Census 

population estimates. 

Rank ordered then 

converted to a percentile

National 

Percentile of 

Years of Potential 

Life Lost from 

Preventable 

Causes under 75 

per 100,000 

population

(YPLL_75)

Calculated by 

source: premature 

deaths compared to 

standard population 

patterns

University of 

Wisconsin 

Population Health 

Institute. County 

Health Rankings

2005-

2007

Percentile 

Value

Values in source data 

rank ordered then 

converted to a percentile

National 

Percentile of VA 

Utilization

Unique Patients in 

the VA system in 

reference to

number of Veterans

Department of 

Veterans Affairs

2009 Percentile 

Value

Number of Individuals 

listed by Veterans Affairs 

living in county accessing 

VA health system as 

percent of Veterans living 

in county. Rank ordered 

then converted to a 

percentile
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3.6.2 CHILDREN INSURED

FIGURE 27 – COUNTY PERCENTILE OF CHILDREN UNDER 18 INSURED BY MEDICAID / CHIP IN THE U.S., 2009
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FIGURE 28 – COUNTY PERCENTILE RANK OF PERCENT CHILDREN UNDER 18 INSURED BY MEDICAID /

CHILDREN’S HEALTH INSURANCE PROGRAM (CHIP) IN APPALACHIA, 2009

Medicaid is funded by the state and federal governments, but, with the exception of minimum requirements, 

coverage and entitlement policies are set by the states. Most (ten of 13) Appalachian states rank at or above 

the national median in Medicaid coverage of children. An Appalachian map thus serves only to compare 

adjacent regions in the mountain area. It does highlight extreme differences for children in border areas, for 

example, where West Virginia, Kentucky and Virginia come together.
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FIGURE 29 – COUNTY PERCENTILE OF CHILDREN UNDER 20 INSURED IN THE U.S., 2007
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FIGURE 30 - COUNTY PERCENTILE RANK OF PERCENT OF CHILDREN UNDER 20 INSURED IN APPALACHIA, 2009 

The SAHIE data shed very favorable light on access to some form of health insurance coverage for children 

in most of the Appalachian Region. The index makes no distinction about the extent of coverage, only that 

some form of insurance exists. The Index is missing data for one county in Mississippi. Coverage gaps occur 

in every state, but more in Georgia, North Carolina and Mississippi parts of the Appalachian Region. 

Nationally, the most severe gaps occur in Florida, Louisiana, Texas, Arizona, southern California and the 

Dakotas. Much of this reflects the influence of non-citizens and migrant workers.
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3.6.3 DISABILITY COVERAGE

FIGURE 31 - COUNTY MEDICARE DISABILITY ENROLLMENT IN THE U.S., 2007
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FIGURE 32 - COUNTY PERCENTILE RANK OF PERCENT MEDICARE DISABILITY ENROLLMENT IN APPALACHIA, 2007

In addition to persons over 65, Medicare covers persons who are certified by the Social Security 

Administration as Disabled. Though counted in the HIC component, to the extent they are under 65, they are

examined here as a stand-alone group. In Appalachian counties, Disability enrollment ranged from 0.9 to 15.6 

percent of the population, with the average at 4.7 percent. Generally speaking central and southern 

Appalachia and the Delta counties of Arkansas, Louisiana, Alabama and Georgia have the highest proportion 

of their populations on Medicare Disability. Counties in Central and Southern Appalachia are in the top 

quintile of U.S. counties in this regard. In Figures 31 and 32, the blue colors indicate high Medicare Disability 

enrollment in 2007. The high concentration of Medicare Disability coverage in central Appalachia has 

significant economic implications. The process of qualifying can take years. This naturally makes a person 

reluctant to lose the coverage. Yet, people with Medicare Disability coverage must remain unemployed to 

retain the coverage. The very safety net that provides health coverage and income security also discourages 

return to the workforce. This may partially explain the low labor force participation in counties with high 

Medicare Disability enrollment. 
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3.6.4 HEALTH OUTCOMES

FIGURE 33 – COUNTY YEARS OF PREVENTABLE POTENTIAL LIFE LOST UNDER AGE 75 IN THE U.S., 2007
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FIGURE 34 – COUNTY PERCENTILE RANK OF YEARS OF PREVENTABLE POTENTIAL LIFE LOST PER 

100,000 POPULATION UNDER AGE 75 IN APPALACHIA, 2005-2007

The health outcomes measure Years of Potential Life Lost from preventable causes, per 100,000 population 

under age 75. YPLL_75 is a standard used in public health to evaluate health outcomes. The YPLL index 

measures premature death at any age. These maps show that in Central Appalachia, the Delta and the south, 

people do not live as long as average Americans; northern Appalachians, the upper midwesterners and upper 

westerners live longer than average. Yet, these statements are not uniformly true. Every Appalachian state has 

at least a few counties at the national average. A few counties in central and southern Appalachia actually 

have longer than expected life spans relative to the nation as a whole (blue counties in Figure 34). 

Figures 33 and 34 show areas in which the Appalachian Region might work in cooperation with other 

regional groups to address health status. 
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Wisconsin County Health Rankings publishes these by county, cautioning about aggregating them across 

states. Nevertheless, there is strong acceptance of the YPLL_75 estimates as a measure of health outcomes 

and their use is supported by the Wisconsin group in published reports and by the National Center for Health 

Statistics in their summaries and discussions. With caution, the project deconstructed and benchmarked rates 

for counties in the three comparison geographies. Rates for the Appalachian Region were about 19 percent 

higher than those for the U.S.

FIGURE 35 – COMPARISON OF ESTIMATED PREVENTABLE MORTALITY IN 2005-2007

AVERAGE OF YEARS OF POTENTIAL LIFE LOST UNDER AGE 75 PER 100,000 POPULATION

Source: University of Wisconsin County Health Rankings, Premature mortality for each 

county in the three geographies were estimated with the equation: County YPLL_75 / 

100K x county population 2008 / 100,000. Mortality was summed for all counties and 

divided by the total population times 100,000
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3.6.5 VETERANS HEALTH AFFAIRS UTILIZATION 

Veterans Health Administration (VHA) services are distributed nationally in 23 Veteran Integrated Services 

Networks (VISNs). They represent an element of healthcare cost, coverage, and access that is excluded from 

the HCCA. 

Until the last decade, Veterans Administration healthcare resources were concentrated in VA hospitals, most 

of which were located adjacent or close to academic medical centers. A policy shift that began in the midnineties caused the VA to invest in outpatient facilities closer to where veterans live. Budgets and decisions 

are controlled at the VISN level. Veteran eligibility requirements are uniform throughout the country. A 

veteran may, however, elect to use private rather than VA services, if he/she has other coverage and choice.

Data and maps on the following pages illustrate the extent to which eligible veterans use this federallysubsidized healthcare system.
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FIGURE 36 – COUNTY VETERAN USE OF VHA SERVICES IN THE U.S., 2009
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FIGURE 37 – COUNTY VETERAN USE OF VETERANS HEALTH ADMINISTRATION (VHA)

SERVICES IN APPALACHIA, 2009

In 2009, VHA users, as a proportion of eligible Veterans, were very high relative to the nation in central and 

northern Appalachia. Access in northeastern and southwestern Pennsylvania and the western counties of 

Appalachian New York is more like that in Alabama, Georgia, South Carolina and very west Tennessee. 

However, VHA use by veterans was relatively low. 
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Nationally, 26.6 percent of eligible veterans used VHA services, in 2009. At the county level, VHA services 

were used by as few as 0.6 percent and as much as 95.7 percent of veterans. In the Appalachian Region, 

veteran use of VHA services, calculated as unique users per eligible veteran in 2009, was 28.2 percent, with a 

county high of 65.2 percent and a county low of 8.6 percent. 

FIGURE 38 – PERCENTILE DISTRIBUTION OF UNIQUE USERS AS A PERCENTAGE OF VA ELIGIBLES,

APPALACHIAN COUNTIES, 2009

Source data: VA Health Economics Resource Center Second Q, 2010

FIGURE 39 –UNIQUE USERS AS A PERCENTAGE OF VA ELIGIBLES, APPALACHIAN COUNTIES, 2009

Source data: VA Health Economics Resource Center Second Q, 2010

Appendix L contains state summaries for the Appalachian Region. 
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CHAPTER 4 CORRELATION OF HEALTHCARE COST, 

COVERAGE, AND ACESS (HCCA) INDEX with

HEALTH STATUS, ECONOMY AND PERSISTENT 

POVERTY 

4.1 APPALACHIA

This chapter explores the relationship of economic disparity to the HCCA, and the relationship of both to the 

outcome measure, Years of Productive Life Lost under age 75 per 100,000 population. It also looks at the 

variation in HCCA when data are filtered for persistent poverty. As noted in Chapter 3, one or more of the 

health access components register low for counties in every Appalachian state. Although both Appalachian 

South Carolina and Appalachian Maryland rank average to above average on the HCCA, some Appalachian 

counties in both states rank below average on health insurance coverage (HIC). ARC counties that rank 

lowest on the HCCA concentrate in rural areas:

• Northern West Virginia

• Western Appalachian Kentucky

• Western-most Appalachian North Carolina 

• Western Appalachian Tennessee

• Northern Georgia 

• Appalachian Mississippi 

• Appalachian Alabama outside the Birmingham metro area 

In nine states, Appalachian counties fall below average on healthcare cost (HCC); and in four states, 

Maryland, North and South Carolina and Ohio, Appalachian counties fall in the average or higher percentiles 

on the HCC. This component describes the most dramatic of the disparities, and one that becomes selfperpetuating. Low payment limits provider capacity to pay wages, and low wages cause low payment rates. 

Figure 14 in Chapter 3 shows the pervasive low wage rates from the CMS Geographic Wage Index in most of 

the Appalachian Region. 

4.2 RURAL AND ECONOMICALLY DISTRESSED AREAS

Other parts of the U.S. have patterns similar to the Appalachian Region, or worse. Low health insurance 

coverage (HIC) in Texas, Louisiana and Florida are consistent with high concentrations of undocumented 

migrants in those states. Non-citizens rarely qualify for federal assistance programs. Lower HCC scores are 

primarily in the rural south.

The HCRA component indicates that basic health resources are distributed in a consistent pattern across the 

country. The HCRA component does not measure intensity of the resources. So, a small rural hospital in a 

small population county could score a percentile ranking as high as a tertiary medical center in a high 

population metropolitan county. 
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4.3 RELATIONSHIPS BETWEEN HEALTHCARE COST, COVERAGE, AND ACCESS 

(HCCA) INDEX AND COUNTY SOCIOECONOMICS 

4.3.1. ANALYTIC APPROACH

In a first test of the extent to which the HCCA variance is explained by a county’s economic and/ or health 

status, we examined the characteristics of the proposed HCCA Index by comparing its performance to three 

external characteristics that served as validating concepts: 

1. Years of Potential Life Lost before age 75 due to preventable causes per 100,000 population 

(YPLL_75). 

2. The ARC Economic Distress Index (ARC_EDI), which served as a generalized proxy for the 

overall socio-economic status of a community. 

3. Enrollment in Medicare Disability, because it is so pervasive in the Appalachian Region.

To accomplish this objective, we calculated correlation coefficients that describe the statistical relationships 

between the YPLL_75 rate, the ARC_EDI, and our new composite index, HCCA. The logic we employed to 

assess the sturdiness of the HCCA Index is as follows.

• First, YPLL_75 rate represents a reasonable summary health measure that could be used to assess 

overall health status of a community. 

• Second, we expect to observe a significant positive relationship between YPLL_75 rates and the 

ARC_EDI. Such a finding would be consistent with the well-established positive relationship 

among community level socioeconomic factors, general health status, and lower premature 

mortality of populations. Such relationships have been observed consistently and repeatedly with 

county-level data in the United States.

• Third, we expect to see a positive relationship between the ARC_EDI and the HCCA Index, as well 

as a positive relationship between the HCCA Index and the YPLL_75 rate. 

• Because of the pervasive nature of disability in the Appalachian Region, we included in the 

correlation analysis a measure of the relationship of cost and access disability at the county level.

• Finally, we filtered the HCCA, the ARC_EDI and the YPLL_75 rate for persistent poverty to 

determine the extent to which that factor explained variations.

Details of the construction and mathematical transformations of these indices are described in Appendix M 

and summarized below. We employed multivariate linear regression to describe the combined effects on 

community health status of ARC_EDI, persistent poverty, the HCCA Index, and designation as an 

Appalachian county. 
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4.3.2 CORRELATIONS OF HEALTHCARE COST, COVERAGE, AND ACCESS (HCCA) INDEX AND 

ITS COMPONENTS WITH YPLL_75, THE ARC ECONOMIC DISTRESS INDEX, AND 

PREVALENCE OF DISABILITY 

Tables 19 through Table 21 display the key variables in this analysis. Means and standard deviations are 

displayed in the first column, while the pattern of relationships between the variables is displayed in the form 

of correlation coefficients in subsequent columns. These three tables have the same format, but describe 

different sets of counties. Table 19 describes all counties in the United States; Table 20 describes all 1,070 

counties in the 13 Appalachian states; and Table 21 describes the 420 counties within the ARC region. 

In these tables, Years of Preventable Life Lost under age 75 per 100,000 population, as a result of preventable 

causes, ratio of Medicare Disabled in the population and the ARC Economic Development Index, are tested 

for correlation with one another and with the new HCCA Index and its three components. All data are 

centered on the year 2007. All variables have been scaled so that higher values whether numerical, percentiles 

or ranks represent less desirable situations. Most of the correlations are significant. For ease of reading, we 

have used blue shading to highlight correlation values above 0.25. 

The health insurance coverage (HIC) component is the least correlated in all three geographies. The 

healthcare cost (HCC) component also behaves independently of health insurance coverage (HIC) in these 

geographies. 

We chose YPLL_75, which was obtained from Wisconsin’s County Health Rankings, to represent a 

reasonable summary global health measure that could be used to assess overall health status and preventable 

premature mortality of a community. The first two measures of community health transformed the YPLL_75 

in two distinct ways. First, the quantity was ranked and converted to a percentile in such a way that a lower 

percentile would reflect less premature mortality. This transformation enables the reader to understand where 

a given county would rank in terms of its premature mortality experience when compared with all the other 

counties in the nation. However, in order to statistically examine the relationships between health status and 

the ARC Economic Distress Index (ARC_EDI), as well as our proposed index and its components, we also 

performed another mathematical transformation on the YPLL_75 rate. Because values of these data were 

highly skewed, we transformed the variable by taking the natural logarithm. Further, we rescaled this value by 

multiplying it by 100,000, so that the regression coefficients would be more easily interpreted. Details of 

these transformations are in Appendix M. 

A third measure of health status, disability, is included in the tables for comparative purposes. This measure 

consists of the ratio of the number of disabled persons on Medicare to the estimated population for the same 

year (2007). The next column contains the correlation to the individually ranked ARC_EDI, in which higher 

values represented better status. The remaining four columns contain the correlations for the summary HCCA 

index and its three components. All four health index measures are treated as percentiles. For purposes of 

making values in this regression analysis consistent, HCCA and component percentiles were re-ordered, such 

that lower values reflect more favorable conditions and higher values reflect less desirable situations. 

In Table 19, the national county average and standard deviations of the counties ranked on the ARC_EDI are 

consistent with what would be expected in a national ranking, in the range of 1500. Similarly, the average 

YPLL_75 rate percentile, the HCCA, and its three component indices typically average around 50, with a 

standard deviation around 29. These values are consistent with expectations, given the mathematical 

transformations performed on the data. Not surprisingly, comparative examination of the values for the ARC 

states (Table 20) and ARC counties (Table 21) suggest that these counties have poorer health status and more 

distressed economic conditions than U.S. counties as a whole. The percentile of YPLL_75 rate in ARC 
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counties is 63.9, well above the national mean ranking. Similarly, the disability index in Appalachian counties 

(76.2) reflects the fact that the typical Appalachian county has a relatively high proportion of its population on 

Medicare Disability. The composite HCCA Index in Appalachian counties also suggests that ARC counties 

face a somewhat more challenging healthcare access situation than U.S. counties as a whole.

In the aggregate, healthcare resource availability (HCRA) in ARC states and counties is comparable to U.S. 

counties, at 51.3, and health insurance coverage is also comparable (48.1 percentile), due in part to extensive 

Medicaid coverage. However, ARC counties experience a widespread pattern of lower insurance 

reimbursement, the healthcare cost (HCC) component. At the value 69.1, the HCC is markedly below the 

average of all U.S. counties. 

An examination of the relationships between these various indices reveals the expected positive interrelationship between the community health status variables (YPLL_75), the ARC_EDI, and our proposed 

HCCA Index and its components. However, the individual components of the HCCA, especially measures of 

health insurance coverage (HIC) and levels of reimbursement HCC, do not always exhibit consistent patterns 

of correlation with each other or with measures of community health status. 

Key to abbreviations in Tables 19 to 21 

• YPLL_75: Years of Potential Life Lost under age 75 per 100,000 

Population, averaged over 2005-2007 and expressed as a percentile 

• Disabled: Ratio of Disabled (on Medicare SMI and HI) to Total 

Population in 2007, expressed as a percentile

• ARC_EDI: ARC Economic Distress Index Value Rank 

(1 = Best; 3,110 = Worst)

• HCCA: Healthcare Cost, Coverage and Access Index, expressed as 

a percentile (1 = Best; 100 = Worst)

• HCRA: Health Care Resource Availability, component expressed as 

a percentile (1 = Best; 100 = Worst)

• HIC: Health Insurance Coverage, component expressed as a percentile 

(1 = Best; 100 = Worst)

• HCC: Health Care Cost, component expressed as a percentile 

(1 = Best; 100 = worst)
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TABLE 19 - CORRELATIONS BETWEEN MEASURES OF HEALTH STATUS, ECONOMIC DISTRESS, AND PROPOSED HCCA AND ITS 

COMPONENTS, FOR ALL COUNTIES IN THE U.S. (N=3110 COUNTIES)*

Variable

Community Health Status Economic 

Distress Proposed Index and components

Mean

(std. dev.) YPLL_75 Disabled EDI HCCA HCRA HIC HCC

YPLL_75 49.5

(28.9) 1.000 .669 .669 .490 .288 .284 .465

Disabled 50.5

(28.9) 1.000 .672 .275 .183 -.031 NS .426

EDI 1552.0

(895.9) 1.000 .487 .360 .257 .424

HCCA 50.5

(28.9) 1.000 .710 .702 .703

HCRA 50.5

(28.9) 1.000 .264 .254

HIC 50.5

(28.9) 1.000 .244

HCC 50.5

(28.9) 1.000

*Numbers of counties employed in above correlations range from 3008 to 3110, depending on availability of YPLL_75 

estimates for the counties. Estimates for YPLL_75 were missing in 95 cases, and judged to be unreliable in an additional 

196 cases. All correlations are significant at the p <. 01 level, except for those marked “NS”

TABLE 20 - CORRELATIONS BETWEEN MEASURES OF HEALTH STATUS, ECONOMIC DISTRESS, AND PROPOSED HCCA INDEX 

AND ITS COMPONENTS, FOR ALL COUNTIES IN THE 13 APPALACHIAN STATES (N=1070 COUNTIES)*

Variable

Community Health Status Economic 

Distress Proposed Index and components

Mean

(std. dev.) YPLL_75 Disabled EDI HCCA HCRA HIC HCC

YPLL_75 60.74

(26.8) 1.000 .755 .735 .487 .301 .188 .492

Disabled 65.9

(26.4) 1.000 .785 .515 .308 .088 .619

EDI 1842.7

(880.1) 1.000 .611 .394 .223 .612

HCCA 53.9

26.9 1.000 .731 .635 .688

HCRA 51.3

(29.5) 1.000 .262 .193

HIC 48.1

(23.1) 1.000 .190

HCC 59.5

(28.8) 1.000

*Number of counties employed in above correlations is 1070. Only 10 counties in ARC states were judged to have 

unreliable estimates of YPLL_75. All correlations are significant at the p < .01 level.
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TABLE 21 - CORRELATIONS BETWEEN MEASURES OF HEALTH STATUS, ECONOMIC DISTRESS, AND PROPOSED HCCA INDEX 

AND ITS COMPONENTS, FOR ALL COUNTIES IN THE APPALACHIAN REGION (N=420COUNTIES)*

Variable

Community Health Status Economic 

Distress Proposed Index and components

Mean

(std. dev.) YPLL_75 Disabled EDI HCCA HCRA HIC HCC

YPLL_75 63.9

(21.0) 1.000 .728 .560 .301 -.209 -.040NS .368

Disabled 76.2

(21.0) 1.000 .688 .337 .203 -.140 -0.548

EDI 2035

(730.3) 1.000 .503 .359 -.032NS .534

HCCA 57.1

(28.7) 1.000 .713 .598 .564

HCRA 51.9

(23.4) 1.000 .172 .072NS

HIC 44.9

(23.4) 1.000 .036NS

HCC 69.1

(24.3) 1.000

*Number of counties employed in above correlations is 420. Only 3 counties within the ARC region were judged to 

have unreliable estimates of YPLL_75. All correlations are significant at the p <. 01 level, except for those marked “NS”

4.3.3 CONTROLLING FOR THE ECONOMIC DISTRESS INDEX

We tested the hypothesis that the HCCA and its components have a direct, independent relationship to the rate 

of premature mortality (YPLL_75). Multiple regression models were employed to examine the joint 

relationships of YPLL_75 rates with the socio-economic variable (ARC_EDI), as well as health system 

variables reflected by the new HCCA index. In addition, at the national level, we included a variable 

reflecting whether or not a county was in the ARC region. Appendix M contains these results for all counties

in the nation, the 13 Appalachian states and the Appalachian Region. In all three analyses, the socioeconomic 

status of counties, as reflected in the ARC_EDI, seems to have a substantial relationship to premature 

mortality rates. However, at the national level, the HCCA Index exhibits an independent relationship to 

premature mortality rates, as well. 

Relationships between the HCCA, ARC_EDI and the YPLL_75 rates are significant nationally, but not in 

Appalachian states or counties. This suggests that something other than economic distress could be affecting 

the Appalachian states’ premature mortality rates. Further, Appalachian counties’ rates of premature mortality

(YPLL_75) were higher than would be predicted on the basis of their scores on ARC_EDI and HCCA alone, 

suggesting that there may also be an unmeasured factor at work in counties located in the Appalachian 

Region, over and beyond the combined impact of socioeconomic status and health system characteristics. All 

of these relationships were highly statistically significant (p < .001) at the national level. Please see Appendix 

M, Tables 45 through 47, for the complete statistical analysis and commentary. 
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4.3.4 TESTING THE RELATIONSHIPS OF COMPONENTS OF HEALTHCARE COST, COVERAGE, AND 

ACCESS (HCCA) INDEX TO HEALTH STATUS AND ECONOMIC DISTRESS

Tables 48 through 50 in Appendix M show linear regressions of the components of the HCCA and the 

ARC_EDI against YPLL_75 rates for United States, Appalachian states and Appalachian counties. Blue 

shading shows highly significant relationships.

The county ARC_EDI has the strongest relationship with premature mortality rates of any of the variables in 

the equations at all levels: United States, Appalachian states and Appalachian Region. Even though the 

healthcare resource component (HCRA) has a relatively high correlation with county health status (YPLL_75 

rate), HCRA has little relationship to county YPLL_75 rates, once the ARC_EDI has been statistically 

controlled. This is true at the national, Appalachian state and Appalachian Region levels. The other two 

components of the HCCA index have complex relationships with health status depending on the geographic 

focus of the analysis:

• At the national level, with ARC_EDI controlled, less health insurance coverage and lower 

reimbursements continue to be significantly correlated with health status. Similarly, being an ARC 

county has a small, but still statistically significant, relationship with poorer YPLL_75 rate, the 

measure of health status (p < .05). Please see Table 48 in Appendix M. 

• At the 13-state level, with ARC _EDI controlled, less health insurance coverage is not related to 

health status, but lower reimbursements continue to be significantly correlated with poorer health 

status. Similarly, being an ARC county has a statistically significant relationship with health status 

(p < .001). Please see Table 49 in Appendix M. 

• When examining only the Appalachian counties, with ARC_EDI controlled, more health insurance 

coverage and lower payments for health services are associated with poorer health status, but these 

relationships do not achieve the same level of statistical significance (i.e., p < .05). This 

phenomenon may be related to intersection of a relatively high proportion of insurance coverage 

consisting of Medicaid and Medicare Disability, along with a relatively low level of reimbursement 

to providers by these programs in Appalachian counties. Please see Table 50 in Appendix M. 

4.3.5 CONTROLLING FOR PERSISTENT POVERTY 

The U.S. Department of Agriculture tracks persistent poverty in non-metropolitan counties. Among the list of 

388 counties, those in the Appalachian Region are predominantly in Kentucky, West Virginia and 

Mississippi. A few are in Tennessee and Alabama. The pattern in Figure 40 shows some relationship between 

persistent poverty designation and a county’s HCCA’s, but the relationship is not consistent. In the 

Appalachian Region, eastern Kentucky and Mississippi counties that have high persistent poverty also rank 

low on the HCCA and high on YPLL_75 rates. 

Tables 51 through 56, in Appendix M, explore the extent to which a filter for persistent poverty explains the 

variations in HCCA and YPLL_75 rates, nationally and in the Appalachian Region. A test of the hypothesis 

that persistent poverty is highly correlated with the HCCA showed less relationship between the HCCA and 

persistent poverty than between the ARC Economic Distress Index and HCCA.
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FIGURE 40 – PERSISTENT POVERTY COUNTIES, 1970-2000

• In general, these six models do not explain as much variance in health status as do the 

corresponding models involving the ARC_EDI. Not surprisingly, persistent poverty is a consistent 

predictor of poor health status in all six models, whether using the combined HCCA index or the 

separate components of the combined index. 

• The HCCA index is consistently statistically significantly related to health status at the national, 13-

state and ARC region (Table 51, Table 52 and Table 53 in Appendix M).

• Further, when all three components of the HCCA index are put in the equation as individual 

variables, their relationships to health status are significant at the national level, as is designation as 

an ARC county (Table 54 in Appendix M).

• The situation is less clear at the 13-state level where resources (HCRA) and cost (HCC) are related 

to health status, but coverage (HIC) is not (Table 55 in Appendix M).

• Finally, at the Appalachian Region level, all three components of the HCCA index are significantly 

related to health status, with higher levels of health insurance coverage being associated with poorer 

health status (Table 56 in Appendix M), as was the case in the national comparison (Table 54 in 

Appendix M). Though counter intuitive, this may reflect national policy that provides coverage for 

poor, aged and disabled persons. 
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4.4 SUMMARY OF STATISTICAL CORRELATIONS: ACCESS AND HEALTH STATUS

In summary, the proposed Healthcare Cost, Coverage and Access Index (HCCA) performs reasonably well in 

explaining variation in a surrogate indicator of community health status, preventable premature mortality

rates. Furthermore, the HCCA is associated with overall community economic status and with preventable 

premature mortality rates in the expected positive manner. 

We tested the hypothesis that there would be a positive relationship between the HCCA and preventable 

mortality, after we controlled for the relationship of economic distress to premature mortality rates. A 

multivariate linear regression statistical model of the relationship between the HCCA and preventable 

premature mortality showed a positive statistical relationship between premature mortality rates and

socioeconomic status of counties, as reflected in the ARC_EDI. However, our proposed HCCA index also 

exhibited an independent relationship to premature mortality rates. Further, rates of premature mortality in 

Appalachian counties exceeded what would be predicted on the basis of their combined predicted scores on 

ARC_EDI and HCCA alone (p < .01). This suggests that factors other than socioeconomic status and 

healthcare cost, coverage and access are related to premature mortality.

Although the HCCA did not perform as well as a predictor of YPLL_75 rates at the regional level, where 

sample sizes were smaller, we can conclude the proposed HCCA Index is a useful measure for comparing the 

performance of community healthcare systems in Appalachian counties in relation to national patterns of 

healthcare.

ARC Economic Distress (ARC_EDI) status and persistent poverty scores are so highly correlated that either 

one swamps the relationship with the other, a problem of multi-co linearity. However, a comparison of the 

scatter plots at the national level shows that the ARC_EDI status is a better predictor of poor health outcomes 

than is persistent poverty. Scatter plots and supporting statistics are contained in Appendix M of this report. 

In the regression analysis, the insurance coverage component, HIC, had no significant relationship to 

preventable mortality rates and had a weak relationship to the resource component, HCRA. Contextually, this 

suggests that health reform initiatives to increase the number of people who have healthcare coverage may not 

result in improved health status. Without other complementary interventions, coverage costs may increase 

without an offsetting improvement in access or health outcomes. 
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CHAPTER 5 POLICY ISSUES FOR ARC 

5.1 SUPPLY OF HEALTH CARE PROVIDERS 

In the aggregate, supply of physicians and other healthcare providers in Appalachian counties resembles the 

national profile, skewing towards slightly fewer providers in Appalachian counties, but the skew is not 

statistically significant. Careful examination of the Heath Care Resources Availability (HCRA) component 

maps in Figure 16 and Figure 17 show individual counties that are under-resourced in virtually every state. 

There are more central and southern Appalachian counties than northern Appalachian counties in the lower 

percentiles. Contributing factors are geographic and historical: 

• Mountainous terrains impede physical access to existing health resources for routine care, and lack 

of year round passable roads in some areas make it difficult to sustain economic operations of 

healthcare facilities. Costs to maintain supplies are higher and patient use patterns vary significantly 

between seasons.41 

• Dispersion of populations into numerous small isolated communities makes appropriate 

deployment of health personnel difficult. Some logical geographic service areas may be too small 

to sustain the presence of a practitioner.

• Historic location of hospitals and other facilities may not match current road networks, 

transportation patterns, and settlement patterns. Rural parts of the region and some urban 

communities are experiencing hospital closure and consolidation of healthcare providers as a result 

of this phenomenon and other delivery system nationwide changes. Change brings efficiency to the 

system, but often results in labor force reductions. Not infrequently, consolidations/closures are 

prompted when aging infrastructure requires more capital investment than the owners can afford.

• Healthcare providers increasingly rely on daily internet downloads; for example, pharmaceutical 

indicators and alerts, and evidence based medicine protocols for routine care delivery. Although the 

problem is gradually disappearing as the nation’s wireless footprint expands, in rural and sparsely 

settled parts of the Appalachian Region, physical terrain or limited size of the market makes 

deployment of wireless technology and internet access difficult, spotty, and unreliable. Labor force 

will favor places with broadband access. 

Healthcare professional and facility licensure is state regulated, and local barriers to entry still exist. Licenserelated barriers are higher in dental than medical care, because national board certification makes physician, 

nurse, and mid-level and technologist licenses more portable. However, each state has different credentialing 

requirements. On top of that, individual facilities have entry limiting requirements. For example, more and 

more hospitals require board certification for membership on the medical staff. 

Independent non-physician, non-dentist health practitioners can extend the reach of traditional professionals. 

Mid-level practitioners, like nurse midwives, nurse practitioners, physician assistants and dental hygienists 

are subject to state licensure jurisdiction and differ even between adjacent states. Scope of practice legislation 

defines what each practitioner can do. Restrictions apply to: capacity to work in a location where physicians 

are not present, extent to which they can work in a retail clinic, capacity to prescribe medications, ratio of 

 

41 PDA unpublished data files.
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practitioners to physicians or dentists, and other issues. Most of the independent practitioner clinics start out 

funded by grants and addressing care for underserved populations. An exception is the investor-funded retail 

clinic movement that is focused on a low-cost, limited scope service that is not covered by insurance. National 

pharmacy and food companies are encouraging growth of this model and working with states to remove 

barriers.

Generally, state-specific issues are not unique to the Appalachian Region. State-specific barriers include:

• Laws and/or traditional style of practice may unduly limit the scope of practice of physician 

extenders in primary care and specialty areas (e.g., physician assistants, nurse practitioners, 

certified nurse midwives, mental health practitioners, and dental hygienists). Some states limit these 

providers to working only in places where a licensed physician, psychiatrist or dentist is physically 

present. 

• To control budgets, Medicaid and other insurance programs may discourage direct access to allied 

health professionals (e. g., physical therapy, occupational therapy ), requiring physician visits for 

referral, thus lengthening treatment times, increasing cost of care and making it harder for patients 

to complete treatment regimens in the outpatient setting. Restricted access makes low population 

areas less attractive.

ARC led a national effort that produced Medicare and Medicaid and, eventually, private insurance payment 

for Rural Health Clinics. In 1977, the effort produced the Rural Health Clinics Act, PL 95-210. By 2011, 

there were 3,846 certified Rural Health Clinics.42 All are required to have a nurse practitioner, physician 

assistant, or certified nurse mid-wife at least 50 percent of the time the clinic is in operation. Moreover, new 

research is showing that primary care providers who follow the Rural Health Clinics model are reducing cost 

of healthcare while improving health of populations. 

Unfortunately, other restrictions, like location in a “Health Professional Shortage Area “or “Medically 

Underserved Area,” as designated by HRSA regulations, has severely restricted development of new clinics. 

For example, a community that has a primary care provider may no longer qualify, even if the provider is 

located in a rural area with limited resources. This is contrary to ACA health reform directives that encourage 

an increase in primary care. In this context, with PL 95-210 in its fourth decade, ARC could serve the 

Appalachian Region and the country by encouraging HRSA to loosen geographic restraints on Rural Health 

Clinic designation.

5.2 HEALTH SYSTEM DESIGN 

The HCRA component does not focus on design issues in the healthcare delivery system. The low correlation 

between the component and lost years of productive life suggests that system design flaws may exist. Some 

are national in scope, like the transaction-based payment system that rewards activity over outcomes. Some 

are regional, like the uneven distribution of vertically integrated, technologically connected healthcare 

delivery systems.

The latter is more opportunistic than geographic. For example, Geisinger Health System in rural Pennsylvania 

is nationally recognized for excellent, patient-focused integrated healthcare. Academic medical centers 

nationwide are struggling to make integration happen. Yet, Guthrie Clinic in Sayre, Pennsylvania, 

Appalachian Regional Hospital System in Kentucky and West Virginia, Cabin Creek Health Systems in West 

 

42 Kaiser Family Foundation. www.statehealthfacts.org. Providers and Service Use. October 24, 2011.
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Virginia, Carillion Health System in Virginia, Greenville Health System and Spartanburg Regional Medical 

Center in South Carolina, University of Alabama Birmingham and Baptist Medical Center, Birmingham, 

along with Northeast Mississippi Health System, Novant and Wake Forest Baptist University Health System 

in North Carolina and North Georgia Health District are some examples of highly developed excellent 

integrated healthcare delivery systems in the Appalachian Region. 

The Appalachian Region has benefited from development of new medical schools, such as Marshall in West 

Virginia and Pikeville Osteopathic in Kentucky. The schools are attracting faculty and training local residents 

in the healthcare professions. Area Health Education Centers are also extending metropolitan medical schools 

into Appalachian counties in some states. Neither the HCCA nor its components measured technology, which 

is increasingly critical for integrated healthcare delivery system. Challenges for the healthcare professional 

supply and system design remain:

• The skill mix of health professionals in some communities may not match the emerging needs of 

the communities (e.g., migrant populations, aging population). 

• Aging populations require increased volume of services and careful attention to an appropriate style 

of service delivery, e.g., geriatric specialists, interdisciplinary teams, education of and attention to 

the needs of family caregivers, and a focus on risks and opportunities occurring during transitions 

in site of care.

• Dispersed extended families make it difficult for kin to provide long term care services and 

supports to elders at home, thus increasing the cost of care for older residents who, in turn, endure 

otherwise preventable institutionalization.

• Quality of long term care facilities like skilled and domiciliary care varies from state to state and 

community to community. 

• Some states may be having difficulty meeting their Olmsted obligations to care for disabled in least 

restrictive settings because of lack of well-designed community alternatives.

• Mental health services are a challenge in every state, because payment for services is restricted by 

public and private payers.

5.3 HEALTH CARE COST ISSUES

Cost to provide healthcare is often distantly related to what the consumer pays. The consumer cost, includes 

the cost of return on investment to providers and often an additional offset to cover unpaid mandates for free 

care and costs that are not reimbursed by insurers or government. Full charge can be significantly more than 

what an insurer “allows.” Third party purchasers, like insurance companies and government (Medicare, 

Medicaid, TriCare, VA, etc.) negotiate or set “allowable” payment rates for a unit of service. Uninsured 

consumers are often charged full price, unless they qualify for a discount, or live in a jurisdiction that limits 

charges to self-paid consumers to the maximum paid by insurers. Recent Congressional hearings, new IRS 

reporting requirements for tax-exempt providers and press coverage have resulted in more hospitals offering 

discount programs or matching self-paid with insurer rates. However, each provider can and does establish a 

unique charge structure and payment policy. The difference between full charge and paid charges was, at one 

time, reported on healthcare provider financial statements as “bad debt,” “charity,” or “contractual 

adjustment.” Increasingly they are appearing as “charity care.”

According to CMS 2009 National Health Care Expenditures report, consumers’ direct purchases represent 

only 12 percent of the amount spent on U.S. healthcare. Together, Medicare and Medicaid paid just slightly 

more than private insurance (35 versus 32 percent). Other sources, government and other grants for operations 
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and research made up the remaining 21 percent of expenditures. When these are reassembled, the CMS report 

highlights the role of the local economy in decisions about healthcare spending. Together, out-of-pocket and 

private insurance represented 44 percent of expenditures. In some states, the state part of Medicaid is shared 

between the state and local counties. In those states, with the Medicaid included, local economic capacity can 

affect up to 59 percent (44 plus 15) of health care expenditures. 

FIGURE 41 – 2009 NATIONAL HEALTHCARE EXPENDITURES

Source: CMS.gov NHE Fact sheet 2009

In fact, when an out-of-pocket expenditure like a copayment or deductible is required first, tolerance for outof-pocket payments can control expenditures by the Medicare and Private Insurance sectors. To limit 

expenditures, all third parties, including state Medicaid programs, are adding these consumer-driven controls. 

Hence, out-of-pocket cost will play an increasingly larger role in total healthcare expenditures. 

Nationally, CMS reports that increases in expenditures for healthcare decelerated to 4.0 percent in 2009, but 

the amount still represented $8,086 per person or 17.6 percent of the national Gross Domestic Product.43 The 

recession was in full play at that time, but many unemployed were still covered by safety net programs, like 

COBRA and Unemployment Insurance. Data for 2010 and 2011, when available, may show further 

deceleration. COBRA is a provision in the 1985 Budget Reconciliation Act, that lets employees purchase 

health insurance benefits from prior employers at cost.

 

43 National Health Expenditure Fact Sheet. CMS website 

https://www.cms.gov/NationalHealthExpendData/25_NHE_Fact_Sheet.asp#TopOfPage. Accessed October 13, 2011.
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The Commonwealth Fund report notes that lowincome persons need more than the services 

traditionally covered by health insurance:

“Vulnerable patients may disproportionately 

benefit from greater clinical integration among 

providers and from a focus on team-based 

primary care and population-based strategies to 

improve health. The Affordable Care Act has 

several provisions to stimulate delivery system 

reform across the entire healthcare system, but 

further steps will likely be necessary. 

The health of low-income and minority 

populations is heavily dependent on resources 

outside the traditional healthcare system. These 

include not only services that enable them to fully 

access healthcare, such as transportation and 

language interpretation, but also environmental 

factors, such as access to healthy food, a safe 

home and workplace, and accessible places for 

exercise. In addition, traditional public health 

activities, such as infectious disease control and 

community vaccination programs, are often 

critical for the health of vulnerable populations.” 

5.4. COST-ACCESS RELATIONSHIP

Health expenditures absorb approximately 20 percent of median personal income in the United States. 

Personal health expenditures were $8,086 in 2009 and median personal income was $40,584 in 201044. In the 

Appalachian states, the median income was closer to $34,000, moving the health expenditures closer to one 

quarter of personal income. As costs escalate, consumers are forced to choose between healthcare and core 

needs for shelter and food; consequently, for those who choose healthcare, discretionary spending on 

education, culture and infrastructure fades.

The health policy journal, Health Affairs, dedicated its 

September 2011 issue to “The New Urgency to Lower 

Costs.” Writing in the issue, Auerbach and Kellerman note 

that, in the past decade, increases in healthcare costs have 

eliminated all of the gains in family income45. They note 

that increased intensity of care during this time was 

associated with only a one-year increase in average life 

expectancy. 

A recent Commonwealth Fund report on access to care for 

vulnerable populations46, notes that insurance alone does 

not guarantee access to high-quality care. It further notes 

that healthcare delivery systems serving vulnerable 

populations are and will continue to be challenged to serve 

insured patients who cannot meet out-of-pocket costs. 

Presently, some hospitals can offset some of these costs 

with Medicare Disproportionate Share (DSH) payments. 

But these are not available to all hospitals and are restricted 

for rural hospitals. DSH payments are also scheduled to 

terminate under health reform. Health reform will use 

saved DSH funds to offset some of the federal share of 

reform cost increases. Some non-profit community health 

centers receive federal FQHC grants to cover charity care, 

but most clinics do not qualify for these funds. 

The wide differential in the CMS Geographic Wage Index, which is demonstrated by the HCC in Chapter 3, 

also makes certain geographies less attractive to healthcare providers. Without an incentive to compensate for 

the payment disparity, two graduates from the same health professional school with the same debt will rapidly 

separate with regard to lifetime earning potential, if one locates in a high HCC area and the other locates in an 

area with low HCC. 

 

44 US Census Bureau. The 2012 Statistical Abstract, Income, Expenditures, Poverty & Wealth, Table 681. Personal Income per 

Capita, http://www.census.gov/compendia/statab/cats/income_expenditures_poverty_wealth.html. Accessed October 14, 2011. Data 

were not estimated for 2009.

45 Auerback, David L. and Arthur L. Kellerman. “A Decade of Health Care Cost Growth has Wiped out Real Income Gains for an 

Average US Family”. Health Affairs, 30 (9) 2011, 1630-1636. 46 Schorr, Edward L., M.D., Julia Berenson, M.Sc., Anthony Shih, M.D., M.P.H., Sara R. Collins, Ph.D., Cathy Schoen, M.S., Pamela 

Riley, M.D., M.P.H. and Cara Dermody. “Ensuring Equity: A Post-Reform Framework to Achieve High Performance Health Care for 

Vulnerable Populations” Commonwealth Fund Report, October 7, 2011. 
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Areas with high concentrations of poverty and low wage indices are particularly unattractive to providers for 

other reasons. In addition to being paid less by Medicare and Medicaid than their colleagues in more affluent 

areas, they will encounter patients who cannot afford private insurance copayments and deductibles. 

Moreover, providers in these areas will face bigger hurdles in achieving patient compliance with care 

regimens that depend on pharmaceuticals, nutrition, and even transportation, because these items are not 

covered fully by health insurance. 

5.5 INDIRECT ECONOMIC IMPACT OF HEALTHCARE COST

5.5.1 LOSS OF DISPOSABLE INCOME

Healthcare expenditures are competing for an increasing share of personal and national income; and, as 

average per capita medical spending begins to reach $10,000, it will be out of the reach of persons who are 

not insured, or whose insurance requires high deductibles and copayment. For them, the choice is to do 

without or incur debt. Recent care patterns indicate that most eventually do without47. 

Economists differ on whether healthcare spending is good or bad for the economic health of the country. 

Optimists like Uwe Reinhart and Lowell Catlett argue in favor of the service industry job creation and 

personal development associated with healthcare jobs. Pessimists argue that more spending on healthcare 

means less disposable income for consumption of value-added products on which the economy of the country 

was built. Both agree that middle income workers cannot afford to carry the burden without help and both 

agree that the best hopes for a more effective and broadly accessible system require changing the current 

transaction-based system of paying for healthcare services to a value/outcome system. 

5.5.2 MEDICAL BANKRUPTCY

Medical bankruptcy is a critical issue in the debate on healthcare access, reflecting the results of multiple 

factors: health status, economics and insurance coverage. Consequently, we are treating it separately in this 

report. Data on medial bankruptcy are scarce and inconsistent. Two classic studies and one 

commentary48, 49 50 reviewed causes of bankruptcy as listed on U.S. Bankruptcy Court filings. Though one 

2005 study by Himmelstein reported that as many as 62 percent of bankruptcies were medical related, the 

American Enterprise Institute challenged the study noting the relatively low level of medical debt reported in 

bankruptcy filings. The relationships are murky, because medical costs pile up over time, may be charged to 

credit cards and may be written off or forgiven by providers, as the individual’s financial status declines. 

A better measure of risk of medical bankruptcy may be the charity care and bad debt reported on the 990 

Forms filed by tax-exempt hospitals with the IRS. Unfortunately, AHA reports that, in 2009, only 58 percent 

of U.S. community hospitals were non-profit. That means that charity reports for the other 42 percent of 

hospitals that are government and for profit will not be uniformly available. 

 

47 PDA Files. 48 Himmelstein, David U., M.D., Deborah Thorne, Ph.D., Elizabeth Warren, J.D. and Steffie Woolandler, M.D., M.P.H. Medical 

Bankruptcy in the United States, 2007: Results of a National Study. The American Journal of Medicine. 2009.04.012. 49 Skinner, Brett J. The Medical Bankruptcy Myth. The American. The Journal of the American Enterprise Institute. August 19, 2009. 50 Jacoby, Melissa B. and Mira Holman. Managing Medical Bills on the Brink of Bankruptcy. Yale Journal of Health Policy Law & 

Ethics. Vol. 10. No. 2. p. 239 (2010).
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A 2008 California study found that, in the prior year, 34 percent of adults ages 19 to 64 had medical bill 

problems, such as medical debt, inability to pay medical bills, or being contacted by a collection agency. 

Although the uninsured are most at risk of having medical bill problems and medical debt, the survey found 

that more than 25 percent of people continuously insured over the previous year had medical bill problems or 

medical debt.51

A 2007 nationwide sample survey found that 62 percent of all bankruptcies were medical; 92 percent of these 

medical debtors had medical debts over $5,000, or 10 percent of pretax family income.52 The rest met criteria 

for medical bankruptcy because they had lost significant income due to illness, or mortgaged a home to pay 

medical bills. Most medical debtors were well educated, owned homes, and had middle-class occupations. 

Three-quarters had health insurance. 

Using identical definitions in 2001 and 2007, the report suggests that share of bankruptcies attributable to 

medical problems rose by 49.6 percent. Regrettably, no one monitors this consistently. This report can only 

summarize one-time standards. 

A recent careful study by Jacoby and Hollman53 explored relationships of medical costs and bankruptcy. They 

note that court records of medical debt in bankruptcy cases do not reflect the history that preceded the 

bankruptcy. Yet the Himmelstein study54 reported that 62 percent of bankruptcy was medical related. The 

Department of Justice challenged the Himmelstein report noting that data from bankruptcy courts did not 

support the claim. Jacoby and Holloman combined surveys with a review of court records and found that 

persons who reported medical bills as the cause of bankruptcy had mortgaged their homes to pay medical bills 

at a rate nearly four times that of other filers. They were also a third more likely to have used credit cards to 

pay medical bills. Jacoby also reported that many persons in bankruptcy did not identify their medical bills as 

debt, or may have been making payments in order to sustain care. 

On the Jacoby and Holloman surveys, only three out of ten reported medical bills as a reason for bankruptcy.

However, credit cards were a choice of bill management for medical as well as other bills among those filing 

for bankruptcy. In fact their study showed those most affected by medical debt are less likely to show up in a 

court records study. 

Few medical providers require cash payment at the time of service, so patients can easily accumulate medical 

debt without being aware of the total amount until after the fact. Medical debt on credit cards is not formally 

reported, but providers increasingly accept that form of payment. Health Savings Account plans (HSA’s) are 

now coupled with credit and debit cards that can increase debt beyond the amount in an individual’s account. 

Together, these factors and high medical costs coupled with the capacity to strain employment in the face of a 

chronic or acute healthcare problem to sustain personal and family budgets. 

Clearly, the consumer cost of medical care is a factor in some bankruptcy cases. 

 

51 Carol Pryor, J. Prottas, B. Lottero and M. Rukavina. The Access Project. Issue Brief No 1. May 2008. 

www.accessproject.org/adobe/ca_brief_no_1.pdf. 52 Himmelstein, op. cit. 53 Jacoby, Melissa B. and Mirya Holman. Managing Medical Bills on the Brink of Bankruptcy. Yale Journal of Health Policy Law & 

Ethics, p. 239 (2010). 54 David Himmelstein, et al., Illness and Injury as Contributors to Bankruptcy, Health Affairs. W5-67 (Web Exclusive February 2, 2005).
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5.5.3 PER CAPITA SPENDING

Recent geographic studies of healthcare expenditure patterns, including those done by the Dartmouth Atlas 

research team, show patterns of sustained high resource use by residents of certain areas of the country. The 

Dartmouth studies show high rates of age-adjusted hospital readmission rates among Medicare beneficiaries 

in parts of Appalachian Ohio, western Pennsylvania, eastern Kentucky, northern West Virginia and northeast 

Mississippi.55 Data for these studies were age and sex adjusted, allocated to hospital service areas, and include 

only the 20 percent of 2008 Medicare claims sample that CMS made available to researchers.

Dartmouth researchers found the highest rates of Appalachian Medicare expenditures in three hospital market 

areas:

• Western Pennsylvania and adjacent counties in Ohio, West Virginia and Maryland; 

• Eastern Kentucky; and

• North central Alabama.56

In the Dartmouth Atlas study, few Appalachian market areas showed low total Medicare payments per 

beneficiary. In fact, as illustrated in Figure 42, outside Appalachian New York, most Appalachian markets 

had high per beneficiary expenditures. 

 

55 Percent of patients readmitted within 30 days following discharge, on line map www.dartmouthatlas.org/ Accessed October 21, 2011. 56 Skinner, JS, DJ Gottleib, D Carmichael, KK Bronner. A New Series of Medicare Expenditure Measures by Hospital Referral 

Region: 2003-2008, Dartmouth Atlas on line. http://www.dartmouthatlas.org/downloads/reports/PA_Spending_Report_0611.pdf. 

Accessed October 24, 2011.
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FIGURE 42 - PRICE-ADJUSTED MEDICARE EXPENDITURES PER BENEFICIARY BY HOSPITAL, 2008

Source: Dartmouth Atlas Project, The Dartmouth Institute for Health Policy& Clinical Practice, JS 

Skinner, et al, June 21, 2011
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5.6 CMS GEOGRAPHIC WAGE INDEX

The Medicare Hospital Geographic Wage Index has traditionally been based on 441 areas (365 metropolitan 

statistical areas (MSAs) and 76 non-MSAs)57. These are meant to reflect labor market areas on the 

assumption that healthcare employers within these areas are drawing upon a pool of potential workers from 

these communities. The structure disregards the fact that healthcare workers travel across MSA, county, and 

even state boundaries to go to work. Further, the Geographic Index generally applies distinct rates to each of a 

state’s metro areas, but only one, same rate to all other non-metropolitan areas of a state. The nonmetropolitan areas may be quite distant from one another and the single uniform non-metro rate may be 

applied to multiple labor markets. 

Medicare uses a separate wage index for physician payment. Geographic areas for the physician payment 

wage index vary by state; some states have a single uniform statewide physician wage index and other states 

have multiple indices that apply to combinations of metropolitan and non-metropolitan areas.

As noted in Chapter 3, many parts of central and southern Appalachia have very low Medicare Hospital 

Geographic Wage Indices; and local providers have been unsuccessful in attempts to increase them. By 

contrast, rural hospitals in Frontier states (North Dakota, South Dakota, Montana, Wyoming and Nevada) 

argued that their wages are depressed because their Geographic Wage index is too low. As a result, the health 

reform statute, ACA, accords all facilities in Frontier states a minimum index of 1.0 or their actual index. 

Many areas of Appalachia face similar wage depression. However, they have not benefited from the 

consistent and sustained advocacy for change. 

 

57 See Appendix A for Hospital Wage Index by Wage Area, FY 2011, as presented by the Institute of Medicine in Report on 

Geographic Wage Index. June 1, 2011, pps. 1-10 uncorrected proofs. 
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FIGURE 43 – COUNTY CMS HOSPITAL GEOGRAPHIC WAGE INDEX ADJUSTED FOR GAF IN THE U.S., 2011
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FIGURE 44 – COUNTY PERCENTILE RANK OF CMS HOSPITAL GEOGRAPHIC WAGE INDEX FOR 

GEOGRAPHIC ADJUSTMENT FACTOR (GAF) IN APPALACHIA, 2011

The CMS hospital Geographic Wage Index, the basis for cost component (HCC) in the HCCA Index, reflects 

the labor variation in care delivery cost. Medicare and others assume that the other 40 percent of care delivery 

costs, supplies, facilities, equipment, for example, are relatively uniform across the nation. This assumption 

alone overlooks extra transportation costs associated with supplying rural mountainous areas. 

A Geographic Adjustment Factor (GAF), which CMS added to smooth variations in adjacent markets, does 

little to change regional disparities. Most of the Appalachian Region remains below the 40th percentile, even 

after the GAF is applied. As a result, payments for a comparable unit of healthcare in central and southern 

Appalachia, for the most part, are much lower than for the same service in the northeast and west. The spread 

between the highest and lowest is a 215 percent difference, 1.5766 to 0.7336. The median is 0.866.
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76 ARC Contract No.: CO-16835-2010 

In June 2011, the IOM issued its Draft 

Report on improvements to the Medicare 

Geographic Wage Index, noting:

Because Medicare is a national program, 

policy makers and researchers working to 

develop and implement its payment systems 

have long recognized the need to adjust 

payment amounts to reflect input price 

differences across geographic areas of the 

United States. The geographic adjustments 

to Medicare fee-for-service payments are 

the hospital wage index (HWI) and the three 

geographic practice cost indexes (GPCIs)2

. 

Although there is widespread agreement 

about the importance of providing accurate 

payments to providers, there is considerable 

and long-standing disagreement in the 

provider community and among policy 

makers about how best to adjust payments 

based on geographic location. In two public 

sessions, the committee heard testimony 

from critics of the existing geographic 

adjusters who identified a number of 

questions and concerns and who believe 

that the current adjusters are not treating

them fairly. Among their stated concerns 

are problems and inconsistencies with the 

definitions of payment areas and labor 

markets, concerns about the relevance and 

accuracy of the source data for determining 

area wages and other input prices, 

questions about the occupational mix used 

to create the hospital wage and physician 

practice expense adjustments, and criticisms 

about the lack of transparency of index 

construction.

From Geographic Adjustment in Medicare 

Payment Phase I: Improving Accuracy, 

Institute of Medicine, Washington, DC, and 

Prepublication Copy June 2011

Congress mandated a report on the Geographic Wage Index and 

the Institute of Medicine (IOM) convened a Task Force to 

review it. The IOM’s June 2011 Draft Report presents several 

policy opportunities for ARC. 

• ARC could consider advocating with the Institute of 

Medicine and CMS for applying the Frontier Index to 

facilities located more than one hour from a 

Metropolitan Statistical Area.

• ARC could advocate for adoption of the IOM 

recommendation to use BLS wage data. This would 

reflect the actual price of attracting labor to healthcare 

facilities in the region. However, presently, BLS does 

not collect a robust set of healthcare wage data.

• ARC should carefully watch changes in the physician 

wage index. Most of the Appalachian states, have 

maintained a single statewide physician index that 

prevents disparities in physicians’ payments between 

rural and urban locations. 

• ARC should watch carefully any border smoothing 

initiatives associated with the Geographic Wage 

Index. The formulas could continue the disparities in 

rural payments. 

5.7 SOCIAL COST OF HEALTHCARE ACCESS 

BARRIERS

As healthcare costs, including the costs for health insurance 

increase, more persons are forced outside the care system. For 

those in need of services, incentives to seek publicly funded 

alternatives, like Medicare Disability and Medicaid Aid for 

Dependent Children (AFDC) or Old Age (OA) increase. 

Healthcare coverage for low-income and disabled persons 

provides an essential safety net. However, it has become 

expensive and unsustainable. In 2008, disability payments to 

working age people alone accounted for 12 percent of federal 

expenditures. The healthcare component represented 6.6 

percent of combined state and federal expenditures; and 

inflation-adjusted health cost components of disability 

increased 35 percent between 2002 and 2008. Average 

spending per working age disabled person was $22,561.58 

 

58 Livermore, G.L., D.C. Stapleton, M. O’Toole. Health Care Costs are a Key Driver of Growth in Federal and State Assistance to 

Working-age People with Disabilities.
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ARC Contract No.: CO-16835-2010 77

The Accountable Care Act will shift many who are currently supported by Medicare Disability to statesupported Medicaid, increasing the state burden. The social impact of healthcare coverage and cost also 

shows up in many areas; including the current national pregnancy statistics. In 2009, according to the CDC 

National Vital Statistics reports, 41 percent of births involved unmarried women, up from 40.6 the year 

before.59 Until very recently, low income single women who were pregnant or with children could obtain 

Medicaid coverage for themselves and their children; no coverage was available for married women at the 

same income level. No coverage is available for fathers. ACA expanded Medicaid to cover all members of 

homes below 133 percent poverty, after 2014. 

Among elderly persons facing need for nursing home care, the practice of spending down and transferring 

assets to others in order to qualify for Medicaid is common. Once the assets are transferred, individuals want 

to stay in the nursing homes, because they have no other alternatives. 

Together, the safety net has become an entrapment, keeping many people who might be on the margin from 

gradually moving towards independence. There is no safety net program for low-middle income working 

adults and their families. 

With these adverse incentives, people who become dependent on these safety nets because of their health 

conditions are discouraged from advancing their income to levels that would make them ineligible for 

Medicaid or Medicare Disability. The gap between temporary safety net and long term multi-generational 

dependence on safety nets is a small one. 

Multiple studies have demonstrated an association between low income, poor health and low healthcare 

access.60 As reported in Section 4.3.2, the high correlation between HCCA and ARC_EDI and the significant 

relationship between HCRA and ARC_EDI (p < .01), affirm such a relationship. However, studies reported 

here are insufficient to determine causative impact of one on the other. At best, the evidence shows 

contributory influence. Regardless of cause, the evidence illustrates some of the high hurdles faced by health 

professionals and organizations who choose to offer services in high poverty counties. 

The studies also highlight the economic disincentives that persons and families whose incomes qualify them 

for disability or Medicaid coverage face when they consider seeking better incomes. They may lose more than 

they gain by earning more or diversifying their skill set to compensate for their disability. This may explain 

some of the low participation in the Appalachia labor force.

5.8 HEALTH REFORM AND STATE MEDICAID BURDENS

As part of healthcare reform, ACA expands the group of mandated persons eligible for Medicaid coverage 

beginning in 2014.61 Medicaid is state administered, though funded by both state and federal governments. 

Free to offer the basic minimum or the full possible range of services and to cover only the minimum required 

group or an expanded one, each state sets its own guidelines regarding eligibility and services. Because their 

programs are different, Appalachian states’ experience with ACA will be very different. 

Nonetheless, data from Kaiser Family Foundation show that by 2019, Medicaid enrollment and spending in 

Appalachian states will increase dramatically under ACA. 

 

59 Hamilton, B.E., J.A. Martin, S.J. Ventura. Births: Preliminary Data for 2009. National Vital Statistics Reports, (59)3, December 21, 

2010.

60 Halverson, et al, 2004 op. cit, and Halverson et al, 2008, op.cit. 61 Green, Cheri D. “Medicaid Expansion Under PPACA”. Brunni Update. June 4, 2010. Accessed October 24, 2011. 

http://www.brunini.com/newsletter-17.html
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The “newly eligible” Medicaid recipient is an individual 19 years or older, but under the age of 65, not 

entitled to, or enrolled for, benefits under Medicare Part A or Part B, and otherwise not eligible for Medicaid 

under any other category. The eligible income is raised from 100 to 133 percent of the Federal Poverty Level 

(FPL). Income will be measured using a modified adjusted gross income calculation and asset testing as a 

means of determining eligibility is prohibited. In 2011, 133 percent of FPL for a single person is $14,403.90 

and for a family of four is $29,326.50. 

TABLE 22 – ACA IMPACT ON APPALACHIAN STATE MEDICAID ENROLLMENT AND SPENDING 

State % Increase in Medicaid 

Enrollment by 2019

% Increase in Medicaid 

Spending by 2019

New York 6.0% 1.7%

Pennsylvania 21.7% 10.5%

Ohio 31.9% 12.8%

Maryland 32.4% 15.6%

West Virginia 29.5% 15.6%

Virginia 41.8% 18.4%

Kentucky 37.3% 24.0%

Tennessee 20.9% 14.3%

North Carolina 38.2% 19.7%

South Carolina 38.4% 26.3%

Georgia 40.4% 19.8%

Alabama 36.9% 25.7%

Mississippi 41.2% 28.9%

United States 27.4% 13.2%

Source: Kaiser Commission on Medicaid and the Uninsured

Ten Appalachian states could see Medicaid enrollment increase more than the United States average of 27.4 

percent. They are: Ohio, Maryland, West Virginia, Virginia, Kentucky, North Carolina, South Carolina, 

Georgia, Alabama, and Mississippi. 

Ten Appalachian states could experience a larger percent increase in Medicaid spending than the United 

States average of 13.2 percent: Maryland, West Virginia, Virginia, Kentucky, Tennessee, North Carolina, 

South Carolina, Georgia, Alabama, and Mississippi. 

Factors driving these cost increases are not consistent. Although in 2009 Appalachian states had 33 percent of 

both the U.S. population and the Medicaid population, as demonstrated in Table 23 below, only Kentucky and 

South Carolina have an equal percentage of both United States population and Medicaid population. Five 

Appalachian states have a disproportionate share of the nation’s Medicaid population. These include New 

York, West Virginia, Tennessee, Alabama, and Mississippi.

Six Appalachian states have a smaller percentage of the national Medicaid population than of the total United 

States population. These include Pennsylvania, Ohio, Maryland, Virginia, North Carolina, and Georgia.
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ARC Contract No.: CO-16835-2010 79

TABLE 23 – APPALACHIAN STATES SHARE OF U.S. POPULATION AND U.S. MEDICAID ENROLLMENT

State 2010 Population % of U.S. 

Population

2009 Medicaid 

Enrollment

% of U.S.

Medicaid 

Enrollment

New York 19,378,102 6.3% 4,954,600 8.5%

Pennsylvania 12,702,379 4.1% 2,090,200 3.6%

Ohio 11,536,504 3.7% 2,067,300 3.6%

Maryland 5,773,552 1.9% 753,100 1.3%

West Virginia 1,852,994 0.6% 392,300 0.7%

Virginia 8,001,024 2.6% 863,300 1.5%

Kentucky 4,339,367 1.4% 833,900 1.4%

Tennessee 6,346,105 2.1% 1,447,100 2.5%

North Carolina 9,535,483 3.1% 1,645,900 2.8%

South Carolina 4,625,364 1.5% 891,600 1.5%

Georgia 9,687,653 3.1% 1,685,000 2.9%

Alabama 4,779,736 1.5% 918,800 1.6%

Mississippi 2,967,297 1.0% 750,400 1.3%

United States 308,745,538 58,106,000

Source: U.S. Census-Population, Kaiser-Medicaid Enrollment

The Federal Medical Assistance Percentage (FMAP) is the percentage of total Medicaid spending in each 

state that is funded by the federal government. FMAP’s in Appalachian states range from some of the highest 

to some of the lowest in the United States. A low FMAP and a high share of the nation’s Medicaid 

population, places a higher burden on the individual taxpayers in a state. The 2009 federal Stimulus Act, 

ARRA, boosted the FMAP for every state temporarily. 

TABLE 24 – FEDERAL MATCHING PERCENTAGE (FMAP) FOR MEDICAID IN APPALACHIAN STATES

State 2011 Standard FMAP 2011 Enhanced FMAP

New York 50.00 61.6%

Pennsylvania 55.64 66.6%

Ohio 63.69 73.7%

Maryland 50.00 61.6%

West Virginia 73.24 83.1%

Virginia 50.00 61.6%

Kentucky 71.49 80.6%

Tennessee 65.85 75.6%

North Carolina 64.71 75.0%

South Carolina 70.04 79.6%

Georgia 65.33 75.2%

Alabama 68.54 78.0%

Mississippi 74.73 84.9%

United States Average 59.03 70.9%

Source: Federal Register: November 27, 2009 (Volume 74, Number 227) [Page 62315-62317]

From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID: E9–28438] 
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As shown in Table 24, nine Appalachian states are benefiting from 2011 Enhanced FMAP’s above the 

national average of 70.9 percent: Ohio, West Virginia, Kentucky, Tennessee, North Carolina, South Carolina, 

Georgia, Alabama, and Mississippi. At 84.9 percent, Mississippi has the highest FMAP in the United States. 

The remaining four Appalachian states have FMAP’s below the national average. These include New York, 

Pennsylvania, Maryland, and Virginia. At 61.6, New York, Maryland, and Virginia are tied with seven other 

non-Appalachian states for the lowest Enhanced FMAP in the United States. Enhanced rates may expire when 

ARRA stimulus funds end in 2012, then states will face program restrictions or increased budget demands to 

sustain their Medicaid programs. In 2009, New York spent the most per Medicaid enrollee and Georgia spent

the least. 

TABLE 25 – MEDICAID ENROLLMENT AND SPENDING IN APPALACHIAN STATES, 2009

State

2009 

Medicaid 

Enrollment

% of U.S 

Population 

of Medicaid 

Enrolled

2009 Total Medicaid 

Spending

% of U.S.

Medicaid 

Spending

Medicaid 

Spending per 

Enrollee

West Virginia 392,300 0.70% $2,434,058,051 0.70% $6,205 

Mississippi 750,400 1.30% $3,947,805,053 1.10% $5,261 

Alabama 918,800 1.60% $4,415,810,844 1.20% $4,806 

South Carolina 891,600 1.50% $5,098,527,910 1.40% $5,718 

Kentucky 833,900 1.40% $5,400,899,512 1.50% $6,477 

Virginia 863,300 1.50% $5,774,994,043 1.60% $6,689 

Maryland 753,100 1.30% $6,523,939,093 1.80% $8,663 

Tennessee 1,447,100 2.50% $7,290,231,215 2.00% $5,038 

Georgia 1,685,000 2.90% $7,693,345,212 2.10% $4,566 

North Carolina 1,645,900 2.80% $11,506,119,180 3.10% $6,991 

Ohio 2,067,300 3.60% $14,056,788,223 3.80% $6,800 

Pennsylvania 2,090,200 3.60% $17,231,560,151 4.70% $8,244 

New York 4,954,600 8.50% $49,368,510,253 13.50% $9,964 

United States 58,106,000 $366,471,017,061 $6,307

Source: Kaiser Commission on Medicaid and the Uninsured

Table 25 shows that seven Appalachian states absorb a larger percentage of the U.S. Medicaid spending 

budget than their share of the total U.S. Medicaid population: New York, Pennsylvania, Ohio, Maryland, 

Virginia, Kentucky, and North Carolina. These states spend more than the U.S. average on each Medicaid 

beneficiary, and offer more services, have higher unit costs, or use more services per beneficiary than the 

other states.

Six Appalachian states have a smaller percentage of the total Medicaid spending budget than the total 

Medicaid population: West Virginia, Tennessee, South Carolina, Georgia, Alabama, and Mississippi; and 

they spend less than the U.S. average on each beneficiary

Such differences will limit ARC’s Medicaid policy response. The only clear policy that will benefit all states 

is advocating for an extension of the expiration date for Enhanced FMAP.
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ARC Contract No.: CO-16835-2010 81

CHAPTER 6 BEST PRACTICES IN PROVIDING BETTER HEALTH 

INSURANCE

6.1 RURAL RESIDENTS 

Appalachian counties rank high on health insurance coverage when compared to the U.S. However, having 

coverage does not assure protection from medical costs. Benefits vary from policy to policy and state to state. 

Moreover, insurers set prices and organize benefits packages on the basis of their expected payouts. This is 

described as their “medical loss ratio.” To price their policies competitively, insurers need a large group of 

healthy people who have low medical loss ratios. Low population and older ages in rural areas reduce the 

number of available healthy people. To serve rural residents, insurers must aggregate groups large enough to 

balance high with low users. Presently, all health insurance plans are state regulated; and insurance companies 

cannot market across state lines. To some extent, large companies and large membership organizations can 

aggregate rural areas within a state, thus attaining some purchasing leverage with insurance companies, but 

state boundary hurdles remain. 

Professional groups, Farm Bureaus and Rural Electric Cooperatives have historically formed membership 

groups and brokered private health insurance plans. Tennessee Rural Health (TRH), a Farm Bureau membership 

organization, for example, covers 95 Tennessee counties and offers a variety of plans.62 Many large employers 

bypass insurance companies and self-insure, working across state lines to meet local requirements. Small 

companies cannot form good risk pools alone. For them, membership organizations, large insurer sponsored 

small group plans and state risk pools are common solutions. Individuals traditionally turn to membership 

groups and large insurer’s individual plans. Individual plans are age- and location-risk rated and may price out 

of the reach of many. Health reform will not change this. A report by United Health observes that rural adults 

and particularly those in the rural south are more likely than urban ones to have a range of chronic conditions. 

This makes their geographic risk higher and their healthcare more expensive. 

The last option for small companies and individuals is state high-risk pools. These pools focus on persons 

who have pre-existing, often chronic conditions that make them ineligible for individual or group plans. 

Chronic disease tends to associate with pre-existing conditions that preclude qualification from private 

insurance programs. For these people, government programs, employment by a large company or access to 

risk pools are the only options. Many state-wide high risk pools require subsidies.63 Even then, many rural 

and urban residents find them unaffordable. The difference between rural and urban levels of uninsurance is 

only two percent.64 Federal health insurance programs provide uniform accessibility to rural and urban 

residents and a higher proportion of rural than urban residents are covered by CHIP, Medicare and/or 

Medicaid (31 compared to 25 percent). 

 

62 TRH Health Coverage, http://www.trh.com. Accessed October 27, 2011. 63 S. Khimm. Why are High-risk Pools Having So Much Trouble? Health Insurance Resource Center, Health Insurance Risk Pool 

News, 06/01/2011 http://www.washingtonpost.com/blogs/ezra-klein/post/why-are-high-risk-pools-having-so-muchtrouble/2011/06/01/AGbBVZGH_blog.html. Accessed October 25, 2011. 64 Modernizing Rural Health Care: Coverage, Quality and Innovation. Working Paper 6. July 2011. 

http://www.unitedhealthgroup.com/hrm/UNH_WorkingPaper6.pdf. Accessed October 25, 2011.
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As noted in Chapter 4 of this report, health insurance coverage is not necessarily associated with good health 

outcomes. By contrast, a recent survey of literature and statistics by United Health Center for Health Reform 

& Modernization (United Health) and data from the Patient Centered Primary Care Collaborative consistently 

indicate that integrated healthcare delivery systems built around a primary care medical home, customer 

engagement and multidisciplinary teams that use independent practitioners to the full scope of their practices 

and not subject to older licensing constraints do produce good clinical outcomes and use fewer health 

resources in both urban and rural settings. 

United Health reports that a majority of rural primary care doctors agree with this approach.65 On the positive 

side, United Health authors note that a higher proportion of rural than urban primary care providers accept 

new Medicaid patients. 

Three-quarters of rural residents live in the south and the west, and 60 percent of people living in rural 

counties live close to an urban area.66 Nonetheless, data from a United Health/ Harris Interactive survey note 

that more than half of rural patients travel an average of 60 miles for specialty care. Primary access and health 

insurance coverage are not the only barriers to full care. What the insurer pays the provider is also important; 

and some private and government insurers have traditionally paid less than cost for services. Medicare is the 

benchmark payer, and tends to pay below cost in most markets. TRICARE, the program for military retirees 

and families pays significantly less than Medicare. Medicaid may pay as little as 55 percent of Medicare. 

However, Medicaid payments in rural areas are closer to Medicare payments, averaging 82 percent of 

Medicare.67 As demonstrated by the HCC component of the HCCA, Medicare payments in the Appalachian 

Region are, for the most part, substantially lower than in the rest of the country. 

Medicaid is the primary coverage for institutional long term care; and spending on the 30 percent elderly 

Medicaid beneficiaries who also have Medicare coverage uses 77 percent of Medicare and Medicaid funds 

spent. This group of “dual eligibles” represents an opportunity and a challenge for the Appalachian Region, 

where a significant portion of the population is older, lower income and has chronic disease. Efforts to control 

costs and outcomes for this group are just emerging and represent significant opportunity for regional 

information sharing. Judy Feder argues that Medicare must take the lead because the federal share of spending 

exceeds the state share.68 Others argue that the smaller state unit can innovate faster. Still others argue for 

privatized contracts with national managed care companies. 

6.2 POTENTIAL FOR APPALACHIAN REGION

As noted in Chapter 3, poor health insurance coverage is concentrated in four states in the Appalachian 

Region. Most Appalachian counties in Mississippi, Georgia, North Carolina and eastern West Virginia, rank

below the HIC 39th percentile. Please see Figure 15 of this report. These low coverage statistics reflect state 

Medicaid eligibility limits, absence of major employers, limited individual purchasing capacity, and other 

barriers not explored in this report. 

 

65 Ibid. 66 Ibid. 67 Ibid. 

68 Feder, J. Refocusing Responsibility for Dual Eligibles: Why Medicare Should Take the Lead. Georgetown University Urban 

Institute for Alliance for Health Reform Briefing. Washington, D.C., October 28, 2011.
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Nationwide, and in the Appalachian Region, most of the people who have no health insurance are between the 

ages of 18 and 64. In 2009, they represented 87 percent of the uninsured, but only 63 percent of the total 

population of the Appalachian Region. About twice as many 18 to 34 year olds as 34 to 64 year olds were 

uninsured. Ineligible for public programs, this group depends on private health insurance. Individual plans, 

pools and insurance exchanges are the options available to them.69

FIGURE 45 – APPALACHIAN REGION UNINSURED BY AGE GROUP, 2009

Source: American Community Survey Data Set 2009 prepared for the Appalachian 

Regional Commission 9/1/2011

Membership cooperatives have historically played a major role in health insurance improvement in the 

Appalachian Region. They face new challenges as health reform’s health exchanges permit marketing across 

state lines. Strong ones may become a valuable resource. It is too early to tell.

6.3 IMPACT OF HEALTH REFORM LEGISLATION

6.3.1 INSURANCE EXCHANGES

Health insurance exchanges are mandated by health reform, but some already exist. They sell direct to the 

consumer. Early reports indicate that their premium price will be critical to attract enrollment. Pennsylvania, a 

state that ranks high on the HIC index of health insurance coverage, posts insurance plan rates on a website70, 

and supports a low cost state health insurance plan for people with pre-existing conditions. The Pennsylvania 

health risk exchange pool appears to have done the best job of making care affordable. 

 

69 Data from B27010. Types of Health Insurance Coverage By Age - Universe: Civilian Non-institutionalized Population Data Set:

2009 American Community Survey 1-Year Estimates, Survey: American Community Survey, Puerto Rico Community Survey Table 

compiled by ARC 9/1/2011.

70 www.Pahealthinsurancecoverage.com. 
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Its low price has attracted a significant subscriber base. Monthly premiums for PA Fair Care are only $283 

and enrollment is strong.71 Unknown is whether the pool size and subsequent organization of delivery system 

response to management of care for this high-risk group can offset the higher cost of their care. A pilot North 

Carolina high-risk plan priced closer to market rates experienced slow enrollment.72 

Health reform’s mandates for expanded Medicaid eligibility and health insurance exchanges will require 

creative cost management to keep costs under control. Newly eligible people, after 2014, will have incomes 

below 133 percent poverty, a group at high risk of poor health and related high healthcare costs. 

6.3.2 INNOVATION OPPORTUNITIES

Health reform launched CMS Center for Medicare and Medicaid Innovations (CMMI) with $10 billion in 

funding for the 10-years ending in 2021. Projects and programs are emerging in three- to five-year rapid cycle 

improvements intended to test and implement delivery system changes that will: improve health, reduce cost 

and improve customer satisfaction. First funding will begin in January 2012. ARC is uniquely positioned to 

facilitate an understanding of the region’s needs and opportunities among the highly motivated staff at 

CMMI. Understanding regional variations is important to the work of CMMI, and they are continually 

soliciting new ideas in advance of releasing innovation cycles. Recent patterns indicate that each cycle will 

produce limited awards involving five to 40 participants nationwide. Cycle announcements generally precede 

letters of intent due by only 45 days. Hence, advance planning is critical to success.

Authorization for the CMMI permits CMS to use rapid cycle improvement approaches to bring success from 

pilots to mainstream quickly. This break-through program is led by Richard Gilfillan, MD. Prior to taking the 

position, Dr. Gilfillan was a member of the Danville, Pennsylvania leadership team at Geisinger Health 

System that piloted some of the early health reform programs.

One improvement project that will be funded in 2012, involves multi-year grants of $1.0 million to $30 

million to “a broad set of innovation partners to identify and test new care delivery and payment models that 

originate in the field and that produce better care, better health, and reduced cost through improvement for 

identified target populations.” 

This project is ideally suited to the Appalachian Region; it requires state and healthcare provider participation 

and would put ARC and participating states front and center with some of the program’s strategic goals. In 

announcing this initiative, CMS emphasized the project’s potential to develop and sustain employment for 

extended practice providers and entry-level workers like community health workers. Although applications 

for that batch of innovation projects were due in January 2012, the nature of the CMMI projects and its focus 

on population health offers a good platform for ARC to encourage similar projects that could specifically 

benefit the Appalachian Region. 

6.3.3 DELIVERY SYSTEM

Most health insurers, federal and private, are starting to design their coverage around integrated care delivery 

systems. In these, patient information is shared among providers who agree to common goals and common 

use of evidence based medicine. As these take hold, formal connections between healthcare specialty centers 

and remote communities should improve. 

 

71 Bracken, D. State’s uninsured about to get new options, News and Observer, Raleigh, NC June 30, 2010. 

http://www.portal.state.pa.us/portal/server.pt/community/health_insurance/9189/pa_fair_care/666211. 72 http://www.newsobserver.com/2010/06/30/558114/health-options-about-to-expand.html#storylink=misearch. 
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ARC Contract No.: CO-16835-2010 85

A few pilots aimed at controlling costs for people with chronic disease are underway and more are expected 

in 2012 as part of CMS Chronic Care Innovations.73 In North Carolina, Blue Cross teamed with the 

University of North Carolina with plans to offer a clinic dedicated to subscribers who are high risk. Incentives 

for that program are still under development. Maryland Blue Cross is incentivizing primary care providers to 

become medical homes. Georgia Department of Community Health has organized quality programs to focus 

on rewarding outcomes, particularly in long term care. 

Most ACA health reform payment changes are scheduled to occur in 2014. Communities that fail to form 

integrated healthcare delivery systems before 2014 will get behind in the rapid cycle of healthcare delivery 

reform, and may lack the resources to ever catch up. Early reports from reform initiatives indicate that the 

massive change effort involved in health reform requires collective work, either by group association, health 

system membership or insurance/ practice cooperation. Lack of capital or tendency to accept relationships as 

they are may work against particularly the most remote communities. On the other hand, the Appalachian 

Region has demonstrated time and again that its independent inventiveness can, of necessity, design solutions 

faster than more cosmopolitan large centers. 

Rural Health Clinics, which are in every Appalachian state, except Maryland,74 have the organized approach 

and the improved primary care payment required to support coordinated care, but they still consist largely of 

two to four providers, and are not quite large enough to support the care coordinators and behavioral health 

specialists that are associated with outcome changes. As the originator of that legislation, ARC can help focus 

CMS attention on changes needed in Medicare and Medicaid to make the Rural Health Clinic form of primary 

care more accessible in the region. Today, once a location attains the Medically Underserved Area (MUA) 

benchmark level of primary health manpower, practices lose the opportunity to become designated as Rural 

Health Clinics. This was not the original intent of the legislation. In 2011, a committee formed to study the 

criteria for qualifying an area to have Rural Health Clinics was asked by one Governor to provide for

“Exceptional Medically Underserved Areas.” This designation is defined in legislation and adding it to the 

eligibility qualifications would permit a practice to keep Rural Health Clinic status if its area loses its official 

designation as an MUA. See Appendix J.

An insightful United Health report75 lists core strategies that will modernize rural delivery systems: 

• Provide incentives to expand the availability of rural primary care physicians.

• Encourage greater teamwork in rural primary care, including making full use of the skills of 

advanced nurse practitioners and other health professionals.

• Increase clinical collaboration across rural regions and with urban providers.

• Support greater integration and coordination of rural care with health information technology.

• Use mobile infrastructure to bring care to rural areas.

• Adopt new approaches to improving consumer health and wellness, including new alliances with 

third sector/non-traditional partners.

• Improve payments for primary care physicians. 

 

73 CMS press release Health Care Reform Law Demonstration To Improve Care, Lower Costs For Seniors And People With 

Disabilities, Dec 20, 2011.

74 CMS Listing of Certified Rural Health Clinics. July 2011. 75 Modernizing Rural Health Care, op. cit.
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Emergence of telemedicine for reaching remote areas will be constrained by the speed with which all remote 

regions have access to broadband coverage. The National Broadband Plan, released in 2010, recommends as a 

national broadband availability target that every household in America have access to affordable broadband 

service offering actual download (i.e., to the customer) speeds of at least 4 Mbps and actual upload (i.e., from 

the customer) speeds of at least 1 Mbps. It notes that 14 to 24 million still lack access.76

The U.S. Food and Drug Administration (FDA) also plays a role in access to telemedicine. Before a tool can 

be used for healthcare purposes, it must be submitted to the FDA for approval. The time to market delays in 

FDA approval now represent barriers to widespread adoption and product development. 

6.3.4 ESTIMATED CHANGES IN MEDICAID STATE SPENDING

ACA requires that, starting in 2013, states must pay primary care physicians Medicare rates for Medicaid 

beneficiaries. For the years 2013 and 2014, the federal government will pay the differential in full. After 

2014, the burden will shift to the states. Thus, a good thing may come at high cost to states, if cost 

management associated with health reform does not occur. 

Health reform is intended to create savings that will offset the costs. Kaiser Commission on Medicaid and the 

Uninsured notes that states have a major role on the implementation side of health reform, including Medicaid 

expansion, health insurance exchange design, private insurance regulation, and developing coordinated 

eligibility and enrollment processes.77

Looking at five states including Maryland and New York, as examples, the Kaiser Report notes:

• The federal program will pay all costs associated with covering new Medicaid enrollees between 

2014 and 2020, and phase down to 90 percent of the new eligibles’ costs after that.

• Program design changes in Medicaid are intended to increase coordination of care for 

Medicare/Medicaid dual eligibles and reduce cost of their care. As noted earlier, this group is 

among the most expensive to serve.

• States can set up a health insurance exchange, or the federal government will do it for them. 

As noted in Chapters 1 and 5, increases in Medicaid enrollment may put severe pressures on state Medicaid 

budgets, particularly after 2014. Though state costs for new eligibles will be offset by federal payments at 

first, the costs of expanded benefits for existing eligibles will be entirely born by states. States struggling with 

Medicaid budget deficits of $100 million and more as a result of the current recession may not have funds to 

meet the health reform mandates. 

 

76 Federal Communications Commission News Release July 20,2010, Washington, DC. http://www.fcc.gov/measuring-broadbandamerica National Broadband Plan at 135 (recommending that the national broadband availability target also include “acceptable 

quality of service for the most common interactive applications”). 77 R.R.Bovbjerg, B.A. Ormond and V. Chen. State Budgets under Federal Health Reform: The Extent and Causes of Variations in 

Estimated Impacts. Kaiser Commission on Medicaid and the Uninsured. February 2011.
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There is no consensus on what health reform will cost individual states. One Kaiser report notes that 

incremental costs for states could range from a five-year $164 million in West Virginia to $1.1 billion in 

Pennsylvania. For all states together, estimates range from $20 billion reported by the Congressional Budget 

Office to a savings of $33 billion estimated by CMS. Variations reflect the difficulty estimating the size of the 

uninsured gap and how individuals will respond to the opportunities. CMS estimates presume a dramatic 

reduction in physician Medicare payments that will not occur. An automatic adjustment in a formula known 

as the Sustainable Growth Rate (SGR) would reduce physician payments 35 percent. However, Congress has 

reversed this formula every time it reaches double digits.

The United Health report forecasts that under health reform, rural areas could see coverage increase by eight 

million new Medicaid or health insurance exchange beneficiaries, of whom about five million will be newly 

insured. All but three Appalachian states, West Virginia, Pennsylvania and New York, will increase their 

Medicaid enrollment by 30 to 44.9 percent.78

Whether rural primary care providers will have capacity or willingness to absorb the Medicaid increase is a 

matter of concern. In the Appalachian Region, United Health reports that Alabama, Georgia, Mississippi, 

northern West Virginia and North Carolina will have the substantial primary care challenges. The Kaiser 

Commission on Medicaid and the Uninsured added Kentucky to the primary care shortage list.79 Without 

coverage, budgets may not increase as much.

States will retain their role in determining Medicaid payment amounts. Low payments will likely result in 

sustained patterns of healthcare provider access problems in areas with high concentrations of Medicaid 

beneficiaries.

As noted earlier, the big ACA impact will occur in 2014, when Medicaid eligibility must expand to cover 

non-elderly adults who have incomes up to 133 percent of the federal poverty level (FPL). The federal 

government will cover 100 percent of all costs for these newly eligible from 2014 through 2016. After that, 

the federal share will begin to shift to states. In 2017, the portion of newly eligible covered by the federal 

government will decrease to 95 percent and will gradually decrease to 94 percent in 2018, 93 percent in 2019, 

and 90 percent in 2020 onward. States will receive the same Medicaid matching rate (FMAP) for the classes 

of people eligible for Medicaid before healthcare reform. 

Costs of state health insurance exchange pools are included in estimates of new Medicaid costs. 

Several briefs have argued the state burden from healthcare reform will be minimal because the federal 

government will cover most of the Medicaid expansion costs. They argue that expansion of Medicaid services 

and coverage will also allow states to shift or eliminate health costs that will be newly covered under ACA. 

Table 26 describes a range of early estimates – ranked in ascending order of state Medicaid spending change 

due to health reform. 

 

78 Amednews.com. Interactive map, a major expansion, data from HRSA Area Resource File, 2008. http://www.amaassn.org/amednews/site/media/braceforit.htm. Accessed October 27, 2011. 79 Ibid. 
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TABLE 26 - SUMMARY OF MEDICAID EXPANSION EFFECT ON STATE BUDGETS

Study

% Change from 

Baseline

(2014-2019)

New Medicaid

Enrollees

(2019)

Total State Spending

(2014-2019)

Angeles and Broaddus 1.25% N/A $20.0 billion

Holahan and Headen (standard) 1.4% 15.9 million $21.1 billion

Holahan and Headen (enhanced) 2.9% 22.8 million $43.2 billion

Milliman (Mississippi)** 10.4% N/A N/A

Milliman (Nebraska)** 10.7% N/A N/A

Milliman (Indiana)** 15.4% N/A N/A

* Baseline assumes no passage of healthcare reform

** Milliman estimates are for individual states only 

Angeles and Broaddus from the Center on Budget and Policy Priorities have addressed the question of federal 

and state costs for Medicaid as health reform rolls out. These authors project that the federal government will 

shift most of the cost burden away from states. From 2014 through 2019, the first five years of healthcare 

reform, states will see a 1.25 percent increase in Medicaid spending as a result of ACA.80 Taking the CBO 

baseline estimates from March 2010, Angeles and Broaddus estimate that the additional $20 billion in 

Medicaid expansion cost from 2014 through 2019 is a small percentage of the projected $1.6 trillion that 

states will already spend on existing Medicaid expenditures. The increased cost from healthcare reform over 

the pre-reform spending represents a 1.25 percent increase through 2019. 

John Holahan and Irene Headen conducted an analysis for the Kaiser Commission on Medicaid and the 

uninsured. This study used a Medicaid participation model to create state-by-state results of the spending 

impact of Medicaid expansion. Using different multiple participation scenarios, the authors argue that “the 

federal government will pay a high portion of new Medicaid costs in all states and the increases in state 

spending are small compared to increases in coverage and federal revenues and relative to what states would 

have spent if reform had not been enacted.”81 See details in Appendices F and G. 

The standard participation scenario assumes newly eligible Medicaid enrollment is at the same rate as current 

Medicaid enrollment and minimal enrollment for currently eligible participants. Under the standard 

participation scenario, federal spending for Medicaid expansion, which does not include CHIP, will total 

$443.5 billion for the federal government and $21.1 billion for state governments through 2019.82 This is 

slightly higher than the CBO estimate of $20 billion, which includes both Medicaid and CHIP expansion 

costs. 

In the model, enrollment in Medicaid will expand by 15.9 million by 2019 and will lead to a reduction of 11.2 

million uninsured individuals. Enrollment was expected to increase 27.4 percent from a baseline model with 

no reform legislation passed. 

 

80 January Angeles and Matthew Broaddus. “Federal Government Will Pick up Nearly All Costs of Health Reform’s Medicaid 

Expansion”. Center on Budget and Policy Priorities. Revised June 18, 2010. http://www.cbpp.org/files/4-20-10health2.pdf. Accessed 

January 3, 2011.

81 John Holahan and Irene Headen. “Medicaid Coverage and Spending in Health Reform: National and State‐by‐State Results for 

Adults at or Below 133% FPL”. The Kaiser Commission on Medicaid and the Uninsured. May 2010. 

http://www.kff.org/healthreform/upload/Medicaid-Coverage-and-Spending-in-Health-Reform-National-and-State-By-State-Resultsfor-Adults-at-or-Below-133-FPL.pdf. Accessed January 3, 2011. 82 Ibid. p. 23. 
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Because of federal match increases, state spending is projected to increase only 1.4 percent. In comparison, 

federal spending will increase 22.1 percent above the baseline model. A state-by-state breakout of the changes 

in Medicaid expansion enrollment and spending is seen in Appendix F for the standard scenario. 

Under the enhanced participation scenario, the model uses a higher Medicaid participation level which would 

increase Medicaid enrollment and correspondingly it assumes a lower level of uninsured population. 

Enrollment in Medicaid would expand by 22.8 million by 2019 and would lead to a reduction of 17.5 million 

uninsured individuals. Under the enhanced scenario, 5.3 million would have had other health coverage before 

the passage of health reform.83 Enrollment was expected to increase 39.3 percent from a baseline model with 

no reform legislation passed. Under this scenario, state spending is projected to increase 2.9 percent. Federal 

spending will increase 26.5 percent above the baseline model.84 A state-by-state breakout of the changes in 

Medicaid expansion enrollment and spending is seen in Appendix G for the enhanced scenario. 

Holahan and Headen argue that the increased enrollment for states will far exceed the new state costs. 

However, the authors caution the magnitude of enrollment and costs will vary by state and by existing 

Medicaid coverage. States that currently have fewer Medicaid benefits and high uninsured rates will see the 

largest increases in federal spending.85

A different approach to cost estimates on an individual state basis have been created by Milliman, a 

consulting firm with a long history of involvement in healthcare actuarial estimates. Milliman’s estimates of 

the state impact of healthcare reform are higher than other reports that have been released. 

The states of Indiana, Mississippi, and Nebraska have commissioned individual reports estimating the 

additional Medicaid state costs from healthcare reform.86 With a full participation scenario, the analysis 

assumes a full 100 percent participation rate at the beginning of Medicaid expansion in 2014. Under this 

scenario, the increase in Medicaid expansion costs from 2014 through 2019 would be 15.4, 10.4, and 10.7 

percent for the states of Indiana, Mississippi, and Nebraska, respectively. 

When compared to the Kaiser analysis at the enhanced scenario, which does not include CHIP and is at a 

lower participation rate, Milliman has increased Medicaid state costs for Indiana, Mississippi, and Nebraska at 

4.8, 6.4, and 2.2 percent, respectively. 

John Holahan and Stan Dorn argue that although states will spend slightly more of their own budgets on 

Medicaid through 2019 as a result of healthcare reform, there are potential areas for state savings. Citing CBO 

estimates, the authors say increases in Medicaid coverage will come from newly eligible and not from 

currently eligible individuals. Costs from newly eligible individuals would be mostly covered by the federal 

government and states most affected by reform are those that already have high number of currently eligible 

individuals as a result of high income eligibility levels. These states include New York, Massachusetts, and 

California.87

 

83 Ibid. p. 30. 84 Ibid. p. 21. 85 Holahan and Headen. p. 7. 86 Robert Damler. “Letter to Anne Murphy, Secretary of the Indiana Family and Social Services Administration, on the Patient 

Protection and Affordable Care Act With House Reconciliation – Financial Analysis”. Milliman, Inc. May 6, 2010; John Meerschaert. 

“Financial Impact Review of the Patient Protection and Affordable Care Act as Amended by H.R. 4782, The Reconciliation Act of 

2010 on the Mississippi Medicaid Budget”. Milliman, Inc. October 1, 2010; and Robert Damler, “Letter to Vivianne Chaumont, 

Director of the Nebraska Division of Medicaid and Long-Term Care, Department of Health and Human Services, on the Patient 

Protection and Affordable Care Act with House Reconciliation – Financial Analysis”. Milliman, Inc. August 10, 2010. 87 John Holahan and Stan Dorn. “What Is the Impact of the Patient Protection and Affordable Care Act (ACA) on the States?” Timely 

Analysis of Immediate Health Policy Issues, June 2010. http://www.urban.org/UploadedPDF/412117-impact-patient-protection.pdf. 
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The authors believe that ACA can provide savings for states in six areas that can vary from one state to 

another. First, states can reduce spending on their own existing, state-related health funding for the poor 

because federal Medicaid spending will replace those state services. A projected $70 to $80 billion in savings 

from 2014 through 2019 can be shifted from state to federal Medicaid services.88 Second, significant savings 

could come from moving Medicaid patients above 133 percent of FPL out of Medicaid and into health 

insurance exchanges. Patients who are in the exchanges would qualify for a federal tax credit without state 

matching funds. Third, the authors believe states have smaller financial burdens on CHIP if Congress ends 

funding for the program in 2015 and young patients move from CHIP to expanded Medicaid coverage. 

Fourth, savings can be generated through greater integration and funding of dual eligibles. Fifth, states may 

reduce coverage for their employees and retirees. ACA provided an allowance of $5 billion for its role in 

reducing chronic care costs through subsidized reinsurance for early retirees. Sixth, states that are currently 

providing coverage for patients whose income is between 133 and 200 percent of FPL can move the patients 

into the “basic health program” option. This option allows states to “convert ACA’s tax credits to funding for 

contracts with health plans serving adults in this income range.”89

In addition to savings, Holahan and Dorn say ACA will increase effective federal matching rates in states that 

did not have broader eligibilities. States that might see greater matching rates would typically be in the south 

and the west.

ACA eliminates a major hospital funding program for low-income persons, the Disproportionate Share 

Program (DSH). CBO estimates that Medicaid DSH payments will fall as a result of the increasing number of 

insured patients. The CBO estimates a decrease in DSH payments of $0.5 billion in 2014, $0.6 billion in 

2015, $0.6 billion in 2016, $1.8 billion in 2017, $5 billion in 2018, $5.6 billion in 2019 and $4 billion in 

2020.90 Hospital providers in urban areas will be most affected by this change. 

There is no doubt that implementation of all the provisions of ACA will change the mix of state, local and 

federal payments for Medicaid at the state level. Further, estimates of the extent of these changes in state and 

local expenditures for Medicaid are highly dependent on a number of assumptions about the uptake rates of 

various kinds of public and private insurance as exemplified by the significant contrast between the estimates 

made by Milliman and those made by the Kaiser Commission. All of these estimates are related in turn to the 

actual design and implementation of the insurance exchanges, the pace at which these new structures are put 

in place, and the array of choices available to participants.

As important as these sector-specific factors may be, their impact may be dwarfed by variation in overall 

performance of the U.S. economy, particularly national and local unemployment levels, which may likely 

affect the burden on state and local governments, particularly as economic stimulus funds disappear. As 

described in Figure 6, private spending will continue to be the largest single source of healthcare revenue, 

thus a major determinant of access. 

 

88 Ibid. p. 2. 89 Ibid. p. 2. 90 Ibid. p. 3. 
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ARC Contract No.: CO-16835-2010 91

CHAPTER 7 SUMMARY FINDINGS AND RECOMMENDATIONS 

7.1 CONCLUSIONS AND FINDINGS FROM THE HEALTHCARE COST, COVERAGE 

AND ACCESS INDEX (HCCA)

This report describes how the research team generated a county-level index of healthcare cost, coverage, and 

access, (HCCA) that can be replicated from data collected uniformly and annually by federal agencies. It 

shows that parts of the Appalachian Region, particularly in central and southern Appalachia, rank in the 

lowest percentiles nationally. 

When applied to all counties in the nation, the HCCA showed that nearly half of Appalachian counties ranked 

below the 40th percentile. Appalachia also ranked low on the healthcare resource (HCRA) and healthcare cost 

components (HCC). It ranked high on health insurance coverage (HIC). Even on that measure, certain states 

have significant numbers of counties that ranked in the lowest quintile. The region’s biggest disparity 

challenge lies in healthcare reimbursement (HCC). Half of Appalachian counties ranked in the lowest national 

quintile. Healthcare resource access (HCRA) is less a problem in the Appalachian Region on average, but the 

region has more than 176 counties that ranked below the 40th percentile. Thus, barriers associated with travel 

for care are still a reality in the Appalachian Region. 

With the exception of the insurance coverage component, HIC, the HCCA measures correlate significantly 

with the health outcomes measure, years of potential life lost from preventable causes under age 75 per 

100,000 population (YPLL_75). Healthcare cost was inversely related to YPLL_75, with low cost areas 

having high premature mortality. 

When the research team controlled for either socioeconomic status (ARC Economic Distress Index), or for 

persistent poverty, the HCCA could account for variation in the YPLL_75 from one county to another. The 

ARC Economic Distress Index alone is a good predictor of YPLL_75 nationwide and in Appalachian states,

but less so in Appalachian counties; whereas the HCCA Index was a good predictor in all geographies. This 

suggests a relationship between healthcare cost, coverage and access that is independent of socioeconomic 

status.

The proposed HCCA and its component indices can be a useful tool for measuring progress in development 

of healthcare access in the Appalachian Region. Including an additional measure of health outcomes, the 

YPLL_75, in future measures could show the extent to which advances in cost, coverage and access have 

been accompanied by improvements in health status.

7.2 IMPLICATIONS OF HEALTH REFORM

Federal healthcare reform, the Accountable Care Act (ACA), will change healthcare delivery systems and 

payment structures. Health reform will bring significant increases in Medicaid coverage in the Appalachian 

Region, adding at least 30 percent to most state eligible pools. Low reimbursement and the additional strain of 

increased coverage on state budgets raise the question of whether improved health coverage will change true 

accessibility for residents. Moreover, data in this study show limited correlation between health insurance 

coverage and good health outcomes in areas with high poverty. 
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Health reform legislation launched several national initiatives involving billions of dollars in federal 

expenditures to improve healthcare access and provide cost savings. Some are grant funds, involving short 

term subsidies for service delivery changes with hopes that successful programs will find funding sources. 

Others involve structural change in reimbursement formulas. Though grant programs direct significant funds 

to universities and some to healthcare providers, the major healthcare funds flow is in the reimbursement 

associated with Medicare and Medicaid entitlement programs. These funds follow the user, hence should 

spread funding across a broad geography. 

The largest initiative involving entitlement programs resides at CMS in the Center for Medicare and Medicaid 

Demonstration Programs and Center for Medicare and Medicaid Innovation (CMMI) pilots. CMMI is charged 

to “research, develop, test and expand innovative payment and service delivery models that will improve the 

quality and reduce the costs of care" for patients covered by CMS-related programs.

CMS demonstration sites are receiving significant funding to invest in infrastructure and programmatic 

changes that will improve communication among health providers and improve funding for primary care. 

Early reports indicate that such communication and primary care investment can reduce healthcare spending 

as much as 30 percent. If so, success of this program could reverse or, at best, confuse any conclusions about 

total health expenditures. 

Health reform statutes also required the U.S. Department of Health and Human Services/ Health Resource and 

Service Administration (HRSA) to re-examine the way it defines underserved areas. A negotiated rulemaking 

committee to review criteria for the designation of medically underserved areas and health professional 

shortage areas is charged with this responsibility. 

7.3 RECOMMENDATIONS

7.3.1 POLICY ISSUES

Healthcare policy issues that merit ARC attention must affect multiple states and have achievable solutions. 

Even with limited resources, ARC could do much for the region by working with HRSA and CMS to ensure 

access to Rural Health Clinics throughout the region and by advocating for regional adjustments to the 

geographic eligibility criteria in central and southern Appalachia. 

If proposed changes to the CMS hospital Geographic Wage Index do not include special provisions for 

communities in rural central and southern Appalachia, access provisions in the ACA reform statute may not 

reach reality there, because providers will not be able to afford the tools required to optimize health reform 

programs. 

In fact, several federal agencies are key players. One, CMS, directly affects sustained payment for services. 

Health reform research studies show improvements in health outcomes most likely to occur among persons 

using care provided in integrated healthcare delivery systems aligned with primary care medical homes. 
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With its policy position, ARC has opportunities to represent a regional voice in several areas of healthcare 

reform:

• Advocating for Geographic Wage Index change, through CMS, MedPac, or Institute of Medicine; 

• Advocating for Rural Health Clinic expansion through CMS Center for Medicare and Medicaid 

Innovation and HRSA; 

• Communicator of successful efforts to address care management for Medicare/ Medicaid dual 

eligibles;

• Champion of expanded FTC broadband access, which is so essential for remote area healthcare 

delivery; 

• Communicator of local success with information technology and community-based initiatives that 

extend the reach of specialists into remote areas;

• Continued support for initiatives to develop the healthcare labor force, including entry-level 

positions inside the region; 

• Participant in HRSA definition of underserved areas; and

• Advisor on CMMI Innovation, particularly programs that will pay for extended practice providers 

like community health workers and dental hygienists. 

7.3.2 PARTICIPATE WITH INSTITUTE OF MEDICINE COMMITTEE TO MODIFY CMS

GEOGRAPHIC WAGE INDEX

The HCCA Index cost component is the unmodified CMS hospital Geographic Wage Index. Data for the 

Geographic Wage Index are collected from cost reports filed by hospitals. However, Medicare applies it to 

adjust payments and, by reference to Medicare, other payers use it for their payment baseline. At least four 

national committees are reviewing the Geographic Wage Index, including the Institute of Medicine, the 

Centers for Medicare and Medicaid, the Research Triangle Institute and MedPac. Many are calling for 

changes in the way this controversial measure is calculated and applied. High indices boost local payments 

and low indices pull them down. 

In June 2011, the National Institutes of Medicine (IOM) published its first report on the Geographic Wage 

Index91. The report explored the structure of two indices used by CMS to adjust Medicare payments to allow 

for geographic variations in cost. The first is the hospital Geographic Wage Index. A second index is applied 

to physician service payment. Both hospital and physician wage indices are applied within state boundaries. 

Both address the labor component of healthcare costs. The physician index is the most simple, for in many 

states, it is uniform statewide. In some states, specific metro areas have a different index. The hospital 

Geographic Wage Index is much more complex, varies significantly within and across state lines, and has 

been politically modified with carve out exceptions since its introduction in 1965.The IOM June report 

observed some structural problems with the hospital Geographic Wage Index.

• Some counties have no hospital, so they are represented by the nearest hospital 

• Areas within states are aggregated to two groups, individual CBSA’s and “Rest of State”

 

91 Edmunds, Margaret and Frank A. Sloan, Editors, Geographic Adjustment in Medicare Payment Phase I: Improving Accuracy. 

Committee on Geographic Adjustment Factors in Medicare Payment. Board on Health Care Services. Institute of Medicine of the 

National Academies. Washington, D.C. June 1, 2011
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• Communities on the boundaries of CBSA’s are often relegated to a lower cost area when they are, 

in fact, paying CBSA wages

• Some labor costs are becoming uniform nationally; the index should be tailored to reflect the costs 

that actually vary locally

• Variation in the index is too broad. With 1.0 as the national average, the lowest index is 0.7 and the 

highest is 1.65. The actual differential should probably be 0.8 to 1.292

• Reclassifications are common, made possible by special exceptions for:

o Sole Community Hospital 

o Rural floors

o Frontier Index 

o Special petitions based on proof of labor migration patterns

• Reclassifications more often reflect political considerations, than uniformly reflect national labor 

cost differences.

• Boundaries do not truly reflect labor market boundaries 

• Data on the cost reports are self-reported, thus have limited transparency

The IOM Committee agreed that labor costs differ between metropolitan and non-metropolitan areas, with 

higher wages prevailing in metropolitan areas. However, it recommends more focus on the price of labor in 

each market that is beyond the control of the hospital. It notes that the cost reports are prone to reflect a 

hospital’s own decisions about wages. 

The IOM has recommended a number of changes: 

• Use one index. Do not separate physicians from other providers.

• Use Bureau of Labor Statistics wage data for a fixed, defined set of occupations

• Standardize all geographic areas to metropolitan and non-metropolitan 

• Use data from all healthcare employers, not just hospitals

• Develop a weighting system for all types of healthcare workers to reflect the actual mix of different 

healthcare professionals in the labor force. The IOM recommends that the weights be derived from 

the hours each profession works in the specific type of healthcare facility: hospital, hospice, home 

health agency, etc.

• Adjust the index nationwide to account for commuting patterns. This would smooth the differences 

at the boundaries of metropolitan statistical areas. It would likely boost payments for some rural 

areas.

• Maintain MSA and statewide non-MSA boundaries. 

These are recommendations, and will likely take years to translate to national policy. However, Congress did 

mandate that a report on the Geographic Wage index be produced in 2011. No doubt, many of these 

recommendations will be seriously considered, and built into new amendments to the Medicare and Medicaid 

statute.

 

92 Interview with RTP staff to the IOM Committee. Kathleen Dalton, Ph.D. June 1, 2011.
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“ARC’s primary care development 

program in the 1970’s was one of the 

best things that happened in northeast

Mississippi. People from different 

communities got together and shared 

what they were learning and trying. 

Political party and racial lines 

disappeared”.

-Reece Dixon, State Legislator Noxubee 

County Mississippi, 2011.

7.3.3. SUPPORT REGIONAL AND LOCAL HEALTHCARE LABOR FORCE REFORMS AND 

TECHNOLOGY

ARC has the structure to integrate health resource planning into overall comprehensive planning. As a 

member of the White House Rural Council, ARC can advocate for policy change. 

ARC has several opportunities in workforce development, and in 

technology evolution. 

• Successful health workforce/ health resource 

developments that take place in one state or within the 

ARC states can be diffused more effectively across 

regional and state boundaries when sponsored by the 

ARC. Similarly, failures may not spread if ARC helps 

tell the story or the “lessons learned”.

• Demonstrations in one state or community can be 

shared quickly among local decision makers and may 

not have to wait for dissemination through the peer 

review literature. CMS is encouraging this approach as 

a part of its “Rapid Cycle Improvement Initiative”, 

which requires extensive documentation and quick 

feedback facilitated by a developed electronic contact system.

• Sound evaluation and good documentation of successes and failures in one area can be of use to 

health program planners in another area within the region and nationally, as ARC participates in 

critical work sessions with other federal health agencies. 

• ARC’s long history with the J-1 visa program to bring physicians to underserved areas should be 

documented and evaluated to determine its possible utility in addressing shortages expected as 

health reform emerges. In several parts of Appalachia, where communities worked with ARC to set 

high standards and emphasize retention strategies, it has been an excellent source of highly 

qualified physicians, many of whom stayed. 

Labor departments and workforce intermediaries are increasingly recognizing that healthcare is one of the few 

current growth industries. Even with efforts to reduce total costs, innovative and expanded roles for front line, 

entry health workers will exist across the care delivery spectrum in areas like emergency medicine 

technicians, health behavior community workers. Opportunities for entry include:

• Basic education with a health focus in secondary and community college education (numeracy, 

literacy, computer skills); 

• Career ladder development to permit entry level workers and returning military to convert skills 

acquired to credits in academic professional programs, eventually reaching licensed professional 

levels; and

• State loan repayment programs. 

ARC should also systematically assess how its general economic development programs may have affected 

health and health systems, for example, by increasing physician recruitment/ retention, reducing emergency 

and routine travel time, increasing health literacy, etc.
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A wide array of mandates and opportunities are associated with the rapid innovations occurring in health 

information technology, payment initiatives and healthcare labor force; many of which are enjoying support 

from federal agencies. Using its cross-agency relationships, ARC can facilitate access to these by providers in 

the region, and, act as an intermediary to assure that regional providers are not unduly hampered by the 

mandates. 

Expanded requirements for information technology are exceeding the healthcare industry’s capacity to absorb 

it. Capital costs associated with electronic medical records, evidence based medicine, pharmaceutical 

protocols, and other evidence based medicine documentation, and electronic review of community health 

data, are almost as costly as the hospitals and clinics that house the providers. This represents an enormous 

hurdle in both capital infrastructure and labor force training for providers who are already facing economic 

challenges. 

7.3.4 ADVOCATE FOR LOW RESOURCE AREAS

All 13 states have loan repayment programs for diverse health professionals in the medical, dental, nursing 

and allied health areas. Most are cooperatives with the National Health Service Corps, and funded through the 

Health Resources and Services Administration (HRSA). The definition of Medically Underserved Areas by 

HRSA excludes many communities from access to these benefits. Many ARC counties can benefit from these 

programs, and ARC could play a role in creating an Appalachian exception to include counties that have high 

YPLL_75 scores and/or low Health Care Resource Availability scores but may not meet HRSA criteria. 

Better collaboration and information sharing between programs across state line might lead to improvements, 

especially in boundary communities. 

There are many federal loan repayment programs, e.g., National Health Service Corps loan repayment 

program, nursing loan repayment programs, geriatric career incentive rewards, pediatric specialist loan 

repayment program, public health workforce loan repayment program. 

Funding associated with the 2010 stimulus legislation, American Recovery and Reinvestment Act (ARRA), 

dramatically expanded the number of National Health Service Corps (NHSC) clinicians deployed throughout 

the country. Documenting how much ARC counties were affected by these federal resources and what impact 

they are likely to have on long term retention is important. An assessment of the extent to which ARC states 

and communities have made use of opportunities for the health workforce and health resource programs 

initiated or expanded through health reform, via the Affordable Care Act, would tell how well and quickly the 

region responds to short-notice funding opportunities. 

Continuing the ARC role of informing the region’s communities about new opportunities (and challenges) in 

Federal funds availability helps the region to compete with better resourced companies and providers outside 

the region. 

Private philanthropies have been catalytic in drawing attention to the special needs of the region. Because 

they are closer geographically, the regional foundations like Benedum, Kate B. Reynolds and the Foundation 

for Healthy Kentucky offer the strongest promise for start-up initiatives. Funding by these foundations often 

provides a platform from which regional providers can advance to larger scale funding from foundations like 

the Robert Woods Johnson Foundation, which regularly launches initiatives aimed at healthcare delivery 

improvement. ARC working with these foundations has helped many in the region and could be expanded as 

some of these foundations begin to work collaboratively. 
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ARC Contract No.: CO-16835-2010 97

Continued advocacy by ARC for expansion of opportunities to qualify for Rural Health Clinic designation 

would make low-cost primary care access even more available in the Appalachian Region. One Appalachian 

state, Maryland, has no Rural Health Clinics in 2011; New York and Ohio have few.

Telemedicine offers significant advantages to remote regions, and funding programs cover both infrastructure 

and service development; payment for services is still in developmental stages. ARCs experience in economic 

development makes it uniquely positioned to encourage novel health workforce development programs. 

Ideally, such programs should have multiple goals: 

• Enhance population health and improve community health outcomes; 

• Contribute to “bending the cost curve” of healthcare by shifting some healthcare tasks “downward” 

from more expensive providers (e.g., physicians, RNs) to lower cost frontline workers (e.g., patient 

care technicians and community health workers) to intervene before problems become expensive to 

solve; and 

• Create stable jobs and career ladders for those frontline workers who can be recruited from 

unemployed, or underemployed local workers, or youth who might otherwise leave the region, or 

returning veterans whose skills are not formally recognized by credential boards. 

7.3.5 ACTIVELY ENGAGE WITH CMS CENTER FOR MEDICARE AND MEDICAID INNOVATIONS

The Appalachian Regional Commission has an opportunity to represent Appalachia’s interests in an advocacy 

role with CMMI. CMMI has significant authority and funds to try innovative approaches to care delivery and

extract lessons learned directly to new payment methods. Its mandates to increase access and reduce total 

healthcare costs fit well with the ARC mission. CMMI began announcing programs in 2011 and will solicit 

ideas and organize funding initiatives from 2012 through 2020. The program is ideally suited to the 

Appalachian Region; it requires state and healthcare provider participation and would put ARC and 

participating states front and center with some of the program’s strategic goals. In one of the first initiatives, 

CMS will subsidize programs that develop and sustain employment for extended practice providers and entrylevel workers like community health workers. 

Listed among its intended targets are programs that reflect the ARC Health Demonstration legacy: 

• Multi-Payer Advanced Primary Care Practice Demonstration 

• Comprehensive Primary Care Initiative 

• Partnership for Patients 

• State Demonstrations to Integrate Care for Dual Eligible Individuals 

• Demonstration to Improve Quality of Care for Nursing Facility Residents 

• Financial Models to Support State Efforts to Coordinate Care for Medicare-Medicaid Enrollees 

One of the key reasons for the project is described as the “Need to identify and test new ways to create the 

workforce of the future that will deliver and support new care models”, for example:

• New roles and skills for existing health professionals,

• New types of workers to support care transformation, and 

• Team-based models to better utilize a mix of health providers. 
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7.4 AREAS FOR FURTHER STUDY

The region can benefit from pushing the boundaries in most dimensions of this report. Although most 

Appalachian residents have health insurance, what is covered may be limited. And, nationwide, the amount of 

care covered by insurance is declining. In some areas, a person eligible for Medicaid has better coverage than 

a person with high deductible private insurance. A new measure that better reflects the depth of coverage will 

be needed to truly understand distinctions in the value of health insurance coverage from one geographic area 

to another. Standardization of coverage is a national issue that will require participation of both the 

measurement agencies at CDC, AHRQ and HRSA, and the payers at CMS and private insurance. It should get 

substantial attention as CMS, the states and the insurance industry work out the terms of the ACA-mandated 

health insurance exchanges.

Beyond changes to the Geographic Wage Index, healthcare payment system reform will profoundly affect the 

Appalachian Region. Initial attempts to curb high use may actually hurt areas of the region that benefit from 

the economic impact of healthcare spending. It will be important for the region’s healthcare industry to keep 

pace with rapid cycle innovations emerging from health reform initiatives; and to participate in evaluations of 

both beneficial and adverse impacts on the region. 

The region’s rich history of effectively using alternative health professionals is ready for career path 

development and inclusion in payment programs. A baseline report describing the many programs that are 

working effectively under grant subsidy would accelerate their inclusion in national health reform payment 

programs. 

The cost of dual eligibles in Appalachian counties was not explored in this report, nor was the state burden of 

long term healthcare services. Both represent a large part of the state budget burden for healthcare and a 

review of successful efforts at reducing these costs while increasing health status would also be useful to 

Appalachian states.

Block grants for Medicaid, which are under consideration as a way to give states more flexibility and put 

defined limits on federal contributions, may or may not help Appalachian states. A review of proposals 

against current federal payments to states would be helpful.
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ARC Contract No.: CO-16835-2010 99

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APPENDICES

APPENDIX A: CMS WAGE INDEX

TABLE 27- CMS WAGE INDEX APPROVED FOR USE IN 2010 MEDICARE PAYMENTS

(EXCERPTS FROM RECLASSIFIED INDEX) 

CBSAGEO cbsa unadjusted 

ahw 

unadjusted 

wage index

cbsa occmix adjusted 

wages

cbsa occmix 

adjusted ahw

occ mix adjusted 

wage index

a b c d e f

01 24.5828 0.7327 537,171,016.88 24.81461 0.7401

02 39.1490 1.1669 55,870,291.81 39.07405 1.1655

03 29.4898 0.879 115,413,433.82 29.55665 0.8816

04 24.5993 0.7332 405,796,338.06 25.27959 0.754

05 40.2613 1.2001 282,058,410.30 39.60987 1.1814

06 33.3101 0.9929 266,785,865.61 32.51602 0.9699

07 37.2154 1.1093 199,174,413.45 37.74876 1.1259

08 33.2470 0.991 181,828,359.29 33.57681 1.0015

10 28.7395 0.8566 414,629,181.48 28.88329 0.8615

11 25.5738 0.7623 796,499,027.93 26.25911 0.7832

12 37.2838 1.1113 229,761,783.16 37.88722 1.1301

13 25.9421 0.7733 86,108,799.32 25.66652 0.7656

14 27.8874 0.8312 767,721,224.45 27.94876 0.8336

15 28.6157 0.8529 475,590,501.29 28.5959 0.8529

16 28.9343 0.8624 413,214,145.70 28.77978 0.8584

17 27.3979 0.8167 382,851,414.05 27.34289 0.8156

18 26.2109 0.7813 998,040,430.76 26.54652 0.7918

19 25.5337 0.7611 524,643,658.07 26.27411 0.7837

20 28.7816 0.8579 348,349,981.79 28.72936 0.8569

21 30.6333 0.9131 202,587,754.07 30.99966 0.9246

23 29.4509 0.8778 1,008,509,665.22 29.54314 0.8812

24 30.7321 0.916 434,719,304.17 30.74302 0.917

25 25.6260 0.7638 936,884,454.57 25.91737 0.773

26 25.7365 0.7671 581,873,857.91 26.25918 0.7832

27 28.1781 0.8399 177,787,208.61 27.85996 0.831

28 29.2055 0.8705 318,361,097.12 29.08873 0.8676

29 32.4571 0.9674 43,705,967.27 32.49179 0.9691

30 33.4037 0.9957 453,167,298.66 33.53765 1.0003

32 29.9848 0.8938 316,882,007.34 30.18106 0.9002

33 27.7410 0.8269 993,168,365.41 28.15631 0.8398

34 28.6542 0.8541 1,430,081,871.85 28.85795 0.8607

35 26.2109 0.7813 72,696,021.57 26.80444 0.7995

36 28.5362 0.8506 1,095,384,224.15 28.61054 0.8534

37 25.6773 0.7654 570,564,918.08 26.21748 0.782

38 34.3414 1.0236 312,301,998.80 34.22945 1.021

39 27.8664 0.8306 1,348,642,320.53 28.04196 0.8364
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CBSAGEO cbsa unadjusted 

ahw 

unadjusted 

wage index

cbsa occmix adjusted 

wages

cbsa occmix 

adjusted ahw

occ mix adjusted 

wage index

42 28.1621 0.8394 586,312,111.57 28.18972 0.8408

43 28.5519 0.851 144,197,091.29 28.07504 0.8374

44 26.1942 0.7808 679,934,388.12 26.53199 0.7914

45 26.0298 0.7759 1,073,441,785.43 26.67742 0.7957

46 28.0567 0.8363 82,653,766.16 28.34997 0.8456

47 32.7529 0.9763 150,892,853.86 32.20597 0.9606

49 26.4005 0.7869 475,395,964.87 27.08658 0.8079

50 34.2998 1.0224 198,657,517.99 33.99501 1.014

51 24.8124 0.7396 456,190,357.94 25.11384 0.7491

52 30.8842 0.9206 602,552,912.35 30.98923 0.9243

53 31.9893 0.9535 153,392,368.63 31.53379 0.9406

10180 26.6569 0.7946 134,608,459.40 27.99435 0.835

10380 11.6131 0.3462 22,914,237.30 11.29923 0.337

10420 29.6921 0.885 549,839,345.38 29.69807 0.8858

10500 29.8542 0.8899 177,531,492.74 29.99301 0.8946

10580 29.4455 0.8777 765,992,510.29 29.56859 0.8819

10740 31.5326 0.9399 657,191,563.81 32.16856 0.9595

10780 26.8807 0.8012 192,221,458.48 27.37408 0.8165

10900 32.2446 0.9611 820,887,225.88 32.95485 0.9829

11020 29.7350 0.8863 145,459,054.64 29.6321 0.8838

11100 29.1493 0.8689 210,048,961.59 28.86153 0.8608

11180 31.8496 0.9493 55,052,646.44 32.03333 0.9555

11260 40.3019 1.2013 287,947,371.32 39.78169 1.1866

11300 30.3672 0.9052 108,338,849.87 30.61859 0.9133

11340 30.2705 0.9023 139,776,634.52 30.67785 0.915

11460 34.5306 1.0293 1,078,630,885.62 34.39726 1.026

11500 25.6425 0.7643 90,615,578.11 25.53313 0.7616

11540 31.1643 0.9289 131,100,162.27 31.05119 0.9262

11700 30.3850 0.9057 396,215,526.24 30.49976 0.9097

12020 31.8446 0.9492 196,954,955.58 30.91235 0.922

12060 32.1786 0.9591 3,077,772,100.35 32.17651 0.9597

12100 38.7640 1.1554 335,910,444.36 38.32462 1.1431

12220 27.3031 0.8138 79,374,938.97 28.3184 0.8446

12260 31.5672 0.9409 527,200,313.81 31.71917 0.9461

12420 31.9321 0.9518 798,759,163.07 31.95571 0.9531

12540 37.6822 1.1232 477,861,580.53 38.11265 1.1368

12580 34.2662 1.0214 3,209,722,482.84 34.0219 1.0148

12620 34.0646 1.0154 227,651,974.54 33.66637 1.0042

12700 42.3315 1.2618 217,831,436.91 42.24554 1.2601

12940 27.4430 0.818 516,025,094.36 27.67032 0.8253

12980 33.5494 1 120,775,692.16 33.83193 1.0091

13020 31.0916 0.9267 91,647,418.75 31.72294 0.9462

13140 28.1248 0.8383 319,036,661.78 27.95648 0.8339

13380 38.2307 1.1395 124,352,444.75 37.89383 1.1303

13460 38.4005 1.1446 144,606,968.98 37.88804 1.1301

13644 34.5474 1.0298 599,447,050.91 34.10797 1.0173

13740 29.4611 0.8781 210,552,772.31 30.29329 0.9036

13780 29.4553 0.878 244,828,103.59 30.10871 0.898
Appendix A 

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ARC Contract No.: CO-16835-2010 107

CBSAGEO cbsa unadjusted 

ahw 

unadjusted 

wage index

cbsa occmix adjusted 

wages

cbsa occmix 

adjusted ahw

occ mix adjusted 

wage index

13820 28.6977 0.8554 980,843,975.64 28.5866 0.8526

13900 25.6205 0.7637 131,947,842.97 26.57642 0.7927

13980 28.1620 0.8394 86,482,280.18 28.0388 0.8363

14020 30.3396 0.9043 110,045,795.57 31.27462 0.9328

14060 31.4638 0.9378 113,212,495.16 31.81891 0.9491

14260 31.2610 0.9318 429,030,222.18 31.31018 0.9339

14484 40.8844 1.2186 3,316,113,219.64 41.28132 1.2313

14500 34.4432 1.0266 279,016,172.14 34.54688 1.0304

Key by column:

a. Geographic Code for CBSA from Bureau of Labor Statistics

b. Unadjusted average hourly wage (AHW) by CBSA from cost reports of providers in or assigned to this CBSA

c. Unadjusted wage mix index by CBSA, with 1.0 as national average

d. Total occupational mix adjusted wages by CBSA

e. Occupational mix adjusted AHW by CBSA

f. Occupational mix adjusted wage index before reclassification, with 1.0 as national average of all CBSA’s

These data are before reclassification for any special adjustment for providers or areas.

Source: CMS FY 2010 Final Rule Home Page, Details for Final Occupational Mix Adjusted & Unadjusted AHWs & PreReclass Wage Indexes by CBSA. 

https://www.cms.gov/AcuteInpatientPPS/10FR/itemdetail.asp?filterType=none&filterByDID=-

99&sortByDID=1&sortOrder=ascending&itemID=CMS1227467&intNumPerPage=10 
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Appendix B 

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ARC Contract No.: CO-16835-2010 109

APPENDIX B: SHEPS CENTER MEDICALLY UNDERSERVED MAP

FIGURE 46 - MEDICALLY UNDERSERVED AREAS & POPULATIONS IN THE UNITED STATES 

NPRM3 DESIGNATION CHANGE CATEGORIES: MUA/PS
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Appendix C 

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ARC Contract No.: CO-16835-2010 111

APPENDIX C: FEDERAL MEDICAL ASSISTANCE PERCENTAGE RATES BY STATE 

2011

TABLE 28 - FEDERAL ASSISTANCE PERCENTAGES AND ENHANCED FEDERAL MEDICAL ASSISTANCE PERCENTAGES

EFFECTIVE OCTOBER 1, 2010- SEPTEMBER 30, 2011 (FISCAL YEAR 2011)

State Federal Medical 

assistance percentages

Enhanced Federal medical 

assistance percentages

Alabama. 68.54 77.98

Alaska. 50.00 65.00

American Samoa * 50.00 65.00

Arizona 65.85 76.10

Arkansas 71.37 79.96

California 50.00 65.00

Colorado 50.00 65.00

Connecticut 50.00 65.00

Delaware 53.15 67.21

District of Columbia ** 70.00 79.00

Florida 55.45 68.82

Georgia 65.33 75.73

Guam * 50.00 65.00

Hawaii 51.79 66.25

Idaho 68.85 78.20

Illinois 50.20 65.14

Indiana 66.52 76.56

Iowa 62.63 73.84

Kansas 59.05 71.34

Kentucky 71.49 80.04

Louisiana 63.61 74.53

Maine 63.80 74.66

Maryland 50.00 65.00

Massachusetts 50.00 65.00

Michigan 65.79 76.05

Minnesota 50.00 65.00

Mississippi 74.73 82.31

Missouri 63.29 74.30

Montana 66.81 76.77

Nebraska 58.44 70.91

Nevada 51.61 66.13

New Hampshire 50.00 65.00

New Jersey 50.00 65.00

New Mexico 69.78 78.85

New York 50.00 65.00

North Carolina 64.71 75.30

North Dakota 60.35 72.25
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State Federal Medical 

assistance percentages

Enhanced Federal medical 

assistance percentages

Northern Mariana Islands * 50.00 65.00

Ohio 63.69 74.58

Oklahoma 64.94 75.46

Oregon 62.85 74.00

Pennsylvania 55.64 68.95

Puerto Rico * 50.00 65.00

Rhode Island 52.97 67.08

South Carolina 70.04 79.03

South Dakota 61.25 72.88

Tennessee 65.85 76.10

Texas 60.56 72.39

Utah 71.13 79.79

Vermont 58.71 71.10

Virgin Islands * 50.00 65.00

Virginia 50.00 65.00

Washington 50.00 65.00

West Virginia 73.24 81.27

Wisconsin 60.16 72.11

Wyoming 50.00 65.00

Source: “Federal Financial Participation in State Assistance Expenditures; Federal Matching Shares for Medicaid, the 

Children’s Health Insurance Program, and Aid to Needy Aged, Blind, or Disabled Persons for October 1, 2010 

through September 30, 2011,” Office of the Secretary, DHHS. ACTION: Notice, Federal Register: November 

27, 2009 (Volume 74, Number 227) [Page 62315-62317], http://aspe.hhs.gov/health/fmap11.htm 
Appendix D 

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ARC Contract No.: CO-16835-2010 113

APPENDIX D: NATIONAL HEALTH SPENDING PROJECTIONS THROUGH 2020

TABLE 29- PROJECTED NATIONAL HEALTH EXPENDITURES: THE ESTIMATED IMPACT OF REFORM - AGGREGATE AMOUNTS 

1The health spending projections were based on the National Health Expenditures released in January 2011. The projections include impacts of the Affordable Care Act.2July 1 Census resident based population estimates.

NOTE: Numbers and percent’s may not add to totals because of rounding.

Source: Centers for Medicare & Medicaid Services, Office of the Actuary. 
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Appendix E 

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ARC Contract No.: CO-16835-2010 115

APPENDIX E: OVERVIEW OF MEDICAID ECONOMIC IMPACT

TABLE 30 – MEDICAID ECONOMIC IMPACT FOR ARC STATES

State State Study Findings

Georgia A. Essig, Governor’s FY 2004 

and FY 2005 Medicaid 

Budget Proposals (Georgia 

Budget Notes, no. 16), 

February 2004 ,Fiscal 

Research Center, Andrew 

Young School of Policy 

Studies, Georgia State 

University

The state funded portion of the Medicaid 

budget in FY 2001 was $2.15 billion. Spending 

for FY 2001 resulted in :

• $3.225 billion federal match. 

• Employment impact: 75,000 jobs.

• Business activity impact: $7.2 billion. 

Medicaid cuts proposed in the FY2004 and 

FY2005 budget of $73.7 million will result in: 

• $114.5 million lost federal match. 

• 2,360 jobs lost 

Maryland Medicaid: Good Medicine 

for MD’s Economy,2003, 

Advocates for Children and 

Youth 

Effect of $1 million in Medicaid cuts would 

result in: 

• $2.27 million in lost business activity 

• $800,000 in lost wages 

• 22 lost jobs 

Mississippi B. Blair and M. Millea, 

Economic Impacts of Federal 

Medicaid Expenditures on 

the State of Mississippi in 

2002, August 2003, 

Mississippi Health Policy 

Research Center, Mississippi 

State University 

Mississippi’s 2002 Medicaid expenditure of 

approximately $620 million resulted in: 

• $1.98 billion federal match 

• $2.69 billion in additional economic output 

• $1.39 billion of the state’s GSP was 

attributable to federal Medicaid funding

• 39,059 jobs supported by Medicaid inflow 

• $1.05 billion in personal income 

• Increase in personal income generated 

$60.7 million in tax revenue

North Carolina K. Kilpatrick, et al, The 

Economic Impact of 

Proposed Reductions in 

Medicaid Spending in North 

Carolina, April 11, 2002, 

Institute for Public Health, 

School of Public Health, 

University of North Carolina, 

Chapel Hill.

High reduction (-$408,309,631 federal + state) 

• Employment impact: 9,700 lost jobs 

• Economic output loss: $706,257,420 

Federal reduction only under the high scenario 

(-$278,593,774) 

• Employment impact: 6,590 lost jobs

• Economic output loss: $479,846,829 

Low reduction (-$399,292,466 federal + state) 

• Employment impact: 9,500 lost jobs 

• Economic output loss: $690,432,383 
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State State Study Findings

North Carolina C. Dumas, W. Hall and P 

Garrett .The Economic 

Impacts of Medicaid in North 

Carolina, March/April 2008 

North Carolina ,Journal of 

Medicine 69,( 2)

Federal reduction only under the low scenario 

(-$272,467,295)

• Employment impact: 6,454 lost jobs 

• Economic output loss: $469,094,951 

North Carolina state Medicaid expenditures of 

$2.36 billion resulted in: 

• $3.941 billion in federal dollars 

• 182,000 jobs (including full and part time 

positions) 

• $6.11 billion in wages, salaries and sole 

proprietorship/partnership profits

• $1.892 billion in rents, interest and 

corporate dividend payments to NC citizens

• $2.2 billion in government tax revenues 

Ohio R. Greenbaum and A. Desai,

Uneven Burden: Economic 

Analysis of Medicaid 

Expenditure Changes in Ohio 

,April 2003 , School of Public 

Policy and Management, The 

Ohio State University 

A. Desai, Y. Kim, and R. 

Greenbaum Estimating Local 

Effects of Medicaid 

Expenditure Changes ,June 

2005, Health Policy Institute 

of Ohio and The Health 

Foundation of Greater 

Cincinnati

Ohio’s FY 2001 state expenditure of $3.6 billion 

for Medicaid expenditures resulted in the 

following: 

• Employment impact: 132,028 jobs 

• Income impact: $4.1 billion 

• New business activity: $11.5 billion A 

reduction of $491 million in state 

Medicaid expenditures would result in : 

• Reduced economic activity: $1.5 billion over 

a two-year period 

• Employment impact: 16,500 jobs 

• Fiscal impact: $22 million in tax revenue (tax 

revenue figure includes only state income 

taxes and does not estimate the effect on 

sales and other taxes) 

Cuts proposed in state spending in SFY2006 

($3.26 million) and SFY2007 ($5.98 million) 

budget include: 

• A $3 billion reduction in economic activity 

over the two year period 

• 30,000 jobs lost over the two year period

South Carolina Division of Research 

Moore School of Business 

University of South Carolina 

Economic ,Impact of 

Medicaid on South Carolina, 

January 2002, Fiscal 

Analytics, Ltd. 

South Carolina’s 2001 state expenditure for 

Medicaid resulted in: 

• $2.1 billion federal matching funds 

• Support of more than 61,000 jobs

• Generation of $1.5 billion in income for state 

citizens
Appendix E 

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ARC Contract No.: CO-16835-2010 117

State State Study Findings

Virginia The Impact of Additional 

Medicaid Spending in 

Virginia ,June 2003 

A $250 million increase in state Medicaid 

spending would result in support of 10,000 to 

15,000 jobs 

RIMS II calculations (using Virginia-specific 

multiplier of 2.5 from Medicaid; Good 

Medicine for State Economies, Families 

U.S.A.): 

• $250 million federal match 

• $626 million in new business activity 

IMPLAN calculations (using multiplier of 1.7): 

• $250 million federal match 

• $426 million in new business activity

West Virginia Christiadi and T. Witt, 

Economic Impact of 

Medicaid Federal-Match on 

the West Virginia Economy 

FY 2002 ,January 2003 

,Bureau of Business and 

Economic Research, College 

of Business and Economics, 

West Virginia University

West Virginia’s FY 2002 state expenditure of 

$371 million for Medicaid generated:

• $1.133 billion federal match 

• Total employment of: 32,685 jobs 

• Total income of $667.3 in employee 

compensation 

• Total business volume of $1.881.0 billion 

• $955.2 million of value added
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Appendix F 

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APPENDIX F: MEDICAID COVERAGE AND SPENDING: HEALTH REFORM

TABLE 31 - NATIONAL AND STATE-BY-STATE RESULTS FOR ADULTS AT OR BELOW 133 PERCENT FPL (STANDARD 

PARTICIPATION SCENARIO) 

*Includes newly enrolled 1115 waiver eligible population.

** Massachusetts has a low share of uninsured within the newly enrolled due to low levels of uninsurance in the baseline.

Note: These estimates relate solely to the Medicaid expansion and do not account for other changes in health reform such as access to 

subsidized coverage in the exchanges or state or federal savings from reduced uncompensated care or the transition of individuals from 

state-funded programs to Medicaid in 2014.

Source: Medicaid Coverage and Spending in Health Reform. Kaiser Commission on Medicaid and the 

Uninsured. www.kff.org/healthreform/upload/ Medicaid-Coverage-and-Spending-in-Health-Reform-National-andState-By-State-Results-for-Adults-at-or-Below-133-FPL.pdf. 
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Appendix G 

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APPENDIX G: MEDICAID COVERAGE AND SPENDING: HEALTH REFORM

TABLE 32 - NATIONAL AND STATE-BY-STATE RESULTS FOR ADULTS AT OR BELOW 133 PERCENT FPL

(ENHANCED PARTICIPATION SCENARIO) 

*Includes newly enrolled 1115 waiver eligible population.

** Massachusetts has a low share of uninsured within the newly enrolled due to low levels of uninsurance in the baseline.

Note: These estimates relate solely to the Medicaid expansion and do not account for other changes in health reform such as access to 

subsidized coverage in the exchanges or state or federal savings from reduced uncompensated care or the transition of individuals from 

state-funded programs to Medicaid in 2014.

Source: Medicaid Coverage and Spending in Health Reform. Kaiser Commission on Medicaid and the 

Uninsured. www.kff.org/healthreform/upload/ Medicaid-Coverage-and-Spending-in-Health-Reform-National-andState-By-State-Results-for-Adults-at-or-Below-133-FPL.pdf. 
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Appendix H 

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ARC Contract No.: CO-16835-2010 123

APPENDIX H: CDC COMMUNITY HEALTH STATUS INDICATORS SAMPLE: COOSA 

COUNTY, ALABAMA

1 AVERAGE LIFE EXPECTANCY

2, 3 SELF-RATED HEALTH STATUS

2 ALL CAUSES OF DEATH

3 AVERAGE NUMBER OF UNHEALTHY DAYS IN PAST MONTH

nda: No data available; nrf: No report, survey sample size fewer than 50

Notes: 

1. Murray et al., PLoS Medicine 2006 Vol. 3, No. 9, e260 doi:10.1371/journal.pmed.0030260. 

2. NCHS. Vital Statistics Reporting System, 1996-2005. 

3. CDC. Behavioral Risk Factor Surveillance System, 2000-2006. 
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Appendix I 

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ARC Contract No.: CO-16835-2010 125

APPENDIX I: DEFINITION OF ELIGIBLE LOCATION FOR RURAL HEALTH CLINIC 

§ 491.2 Definition of shortage area for Rural Health Clinic (RHC) purposes. Shortage area means a 

geographic area that meets one of the following criteria. It is— (a) Designated by the Secretary as an area 

with shortage of personal health services under section 330(b)(3) of the Public Health Service Act; (b) 

Designated by the Secretary as a health professional shortage area under section 332(a)(1)(A) of the public 

Health Service Act because of its shortage of primary medical care professionals; (c) Determined by the 

Secretary to contain a population group that has a health professional shortage under section 332(a)(1)(B) of 

that Act; or (d) Designated by the chief executive officer of the State and certified by the Secretary as an area 

with a shortage of personal health services. [68 FR 74816, Dec. 24, 2003] 

Source: 42CFR491.2 as referenced on CMS.gov website November 3, 2011. 
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Appendix J 

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ARC Contract No.: CO-16835-2010 127

APPENDIX J: NEGOTIATED RULEMAKING COMMITTEE: DRAFT EXCEPTIONAL 

MEDICALLY UNDERSERVED POPULATION (EMUP), OCTOBER 12,

2011

DEFINITION Exceptional Medically Underserved Population (EMUP)

The original Exceptional Medically Underserved Population designation authority was established in Public 

Law 99‐280 (1986) and remains in force at Section 330______of the PHS Act. This provision is intended to 

allow designation of a population group that does not meet the established MUA and/ or MUP criteria but has 

an “unusual local conditions which are a barrier to access to or the availability of personal health services” for 

the population. The EMUP designation would be used only if a community could not be designated under the 

general MUA and/ or MUP criteria, normally because the access barrier or other unusual local condition 

involved is not covered by the standard MUA/P criteria. The EMUP must allow for detailing unusual local 

conditions, access barriers, and availability indicators that would indicate a need for an exceptional 

designation. 

The request for EMUP needs to include a written recommendation for the designation from the Governor or 

other CEO of the State, and may include recommendations of other local officials. This process also allows 

for experts to weigh in with opinions on the proposed exceptional designation of an appropriately needy 

population in a locality. 

DEFINITION EMUP SERVICE AREA

The EMUP service area does not need to be an existing RSA or PCSA as defined for geographic designations. 

The EMUP may have its own unique service area boundaries, if the unusual local conditions which are a 

barrier to access to or the availability of personal health services cross or the boundaries of or are a subset 

within an existing RSA or PCSA. The EMUP’s service area boundaries must be an area in which the 

population can both reasonably access the services provided and support the state and or federal resources 

assigned or allocated to serve that population. 

GUIDANCE FOR EMUP DESIGNATIONS

Designation requested by Governor; should address all factors: 

• An area or population group that does not meet the regular MUP and/ or MUA criteria 

• Unusual local conditions which show:

• A barrier to accessing primary medical care or indication of medical under‐service not covered by 

the regular

• MUA/P criteria is present; 

• documented data showing high disease or mortality rates for the requested population group; and/or 

• Significant negative changes in a community profile; such as but not limited to high unemployment, 

high increase in school lunch program enrollment, high increase in WIC program, major employer 

closings or other community distress. 

• Compare to national or state norms; include data and source of data; should be a minimum of two 

examples of unique high morbidity/mortality and or significant changes in community profile. 

• Focus on why this area or population group is “exceptional”; what makes it stand out from other 

similar areas, the surrounding areas, the county, and the state. provide a comparison of the local, 

regional, state, and/or national data for whatever factors are involved to show they are worse than 

the rest of the state and/or nation.
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UPDATES TO EMUP

No designation will be held in perpetuity. Updates to the EMUPs will occur at least one to two years 

post availability of the decennial census data. The first EMUP re‐designation or update will be upon 

availability of the complete 2010 decennial census; another shall be made following the 2020 census. 

(There was not consensus on this...a compromise could be every 5 years). Governor’s Designation 

Secretary Certified (GDSC) (added at the pleasure of a Committee member who wanted to make sure 

we were not making changes to this...)

A GDSC was created in the Omnibus Budget Reconciliation Act of 1989 under section 6213(c). 

“areas designated by the Governor of a State and certified by the Secretary as having a shortage of 

personal health services.” The Negotiated Rule Making Committee will not make any regulatory or 

guidance recommendations on said Act. 

Source: www.HRSA.gov/advisorycommittees.../draftexceptionalmup.pdf
Appendix K 

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ARC Contract No.: CO-16835-2010 129

APPENDIX K: METHODOLOGY FOR ARC HEALTH CARE COST AND ACCESS INDEX

1 DIMENSIONS OF COST AND ACCESS

Following the logic and procedure of the ARC’s “County Economic Status Classification System,” (ARC 

Economic Status Index), the proposed Health Care Cost and Access Index should include a relatively small 

number of core indicators and compare these indicators with national values. The ARC’s Economic Status

Index is quite simple and straightforward in its composition and generally intuitive in interpretation. Further, 

it makes use of data sources that are reliable, publicly available, and constructed and validated by federal 

government sources using nationally uniform data collection strategies. Further the index makes use of 

sources that are transparent and rely upon justifiable validated small area analysis techniques for making 

county level estimates. Thus, the official sources for the data used in the Economic Status Index include: the 

U.S. Department of Labor, Bureau of Labor Statistics (unemployment levels), U.S. Department of Commerce, 

Bureau of Economic Analysis (per capita market income), and the U.S. Department of Commerce, Census 

Bureau (poverty level). It is evident that for the component indicators of the index, consistency and reliability 

are preferred over currency of information in choosing indicators. In other words, the index seeks to tap into 

stable structural trends in the Appalachian Region, the component states, and the United States as a whole, 

and to assess these trends relative to the national situation.

For example, a three-year average unemployment statistic is chosen over a single year’s unemployment rate. 

This approach serves to control year to year volatility within counties in these rates due to local circumstances 

(e.g., plant closings and openings), as well as to reflect the fact that variations in employment levels can have 

an enduring effect on the community. As a result, for any given year, the unemployment rates used in the 

index will lag by an interval of two to four years. Similarly, there is likely to be a two-year lag in the per 

capita market income level. Finally the poverty level, another component of the index, was historically

measured in decennial census years. Hence, the range of lag time range from one to ten years depending on 

the year for which the estimate is made. (It should be noted that the Census Bureau does construct and 

disseminate small area estimates of the poverty rate, and income distribution relative to the poverty rate, on a 

regular basis, and that it would be helpful to use these estimates as data in health related access measures 

(e.g., small area health insurance estimates). In the future, the poverty level will be measured annually in the 

American Community Survey (ACS). 

To build the index on the foundation, we explored both the literature on healthcare access and published 

national databases. 

2 CRITERIA FOR CONSTRUCTING HEALTH CARE COST AND ACCESS INDICES

2.1 CONCEPT

An index that could be used by the Appalachian Regional Commission to measure disparities associated with 

healthcare access, cost and coverage at the county level requires consistent, available data that reliably reflect 

the issues.

Composite measures combining several items may represent distinct but inter-related aspects of a single 

underlying concept. Indices used to assess healthcare cost and access disparities should be relatively 

transparent, simple to understand, comparable across the entire U.S., and easily replicable. 
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Whenever possible the subcomponents of the index should be drawn from publically available, periodically 

updated official sources of data. Despite the fact that there may be a time lag between data collection and 

reporting, it is preferable to use uniformly collected and reported data that have been well validated rather 

than more recent, but not so well validated data.

However, locally available estimates may be used for comparisons to better understand the limitations of the 

national data. Healthcare data are not always collected and compiled with the same frequency as economic 

data, nor is there as much consensus about the way in which various kinds of health related phenomena 

should be measured, or who has the best measurement strategy or the best raw data that can be used. There 

are three dimensions upon which healthcare cost and access disparities will be assessed: access, cost and

status/outcomes; we will discuss these in some detail below. 

2.2 HEALTHCARE ACCESS

Healthcare access is measured in terms of two primary sub-dimensions: resource availability and financial 

access. Resource availability refers to the physical presence of resources within a local community (i.e. 

presence of short term general hospital beds, presence of physicians of various types and specialties). 

Financial access means having of the economic means to access these resources (chiefly through the presence 

of health insurance). The presence of certain dedicated resources for underserved and uninsured population 

within a county reflects both of these dimensions (e.g., Rural Health Clinics, Community Health Centers, and 

Federally Qualified Health Centers). 

2.3 HEALTH CARE COSTS

2.3.1 DEFINITIONS

Costs to those who pay for healthcare (payers) are measured by the expenditures of public and private 

insurance in per capita terms. Generally this means aggregate expenditures over an annual period divided by 

the number of “participants” (users and nonusers who were eligible to use the service over the time period 

observed). In some cases, particularly where relatively few eligibles actually make use of the service, the 

appropriate denominator might be the number of actual users, rather than merely the eligibles. This means 

that coverage of the population must be specified (e.g., Private Insurance, “Uninsurance,” Medicaid, 

Medicare, and Veterans Administration). This has to be carefully done to assure that denominators are 

available and consistently applied for the same years as the numerator data. 

Actual costs to deliver care are more difficult to measure. The most uniform of existing measurements is the 

wage index used by CMS to adjust payments to account for labor cost differences. The wage index is 

expressed as a ratio of the local to the national wage average.

CMS and the Congressional Budget Office also track healthcare expenditures by state, for federal budgeting 

purposes. In 2011, CMS reported National Health Expenditures online for the year 2004 

at www.cms.gov/NathionalHealth/ExpendData. 
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2.3.2 CMS EXPENDITURE REPORTS

2.3.2.1 NATIONAL HEALTH EXPENDITURES

• Historical annual health spending in the U.S. by type of service delivered (hospital care, 

physician services, nursing home care, etc.) and source of funding for those services (private 

health insurance, Medicare, Medicaid, out-of-pocket spending, etc.), by year through 2009. 

• Projections based on the National Health Expenditures. These estimates spending for healthcare 

in the U.S. through 2020. Projections are presented by type of service delivered (hospital care, 

physician services, nursing home care, etc.) and by source of funding for those services (private 

health insurance, Medicare, Medicaid, out-of-pocket spending, etc.). The projections include a 

simulation of personal healthcare and Medicare per-enrollee spending using the age-mix of 

future selected years and include adjustments for health reform from the Office of the Actuary 

Health Reform Model (OHRM). 

2.3.2.2 STATE HEALTH EXPENDITURES

• Personal healthcare (PHC) expenditures by State of Provider are estimates of health spending 

by the location of healthcare providers in the 50 States and in the District of Columbia. These 

estimates are presented by the type of establishment delivering care (hospitals, physicians, 

nursing homes, etc.) and by source of funding (Medicare and Medicaid). 

• PHC expenditures by State of Residence are based on State of Provider estimates adjusted for 

the flow of residents between states in order to consume healthcare services. These estimates 

present health spending on behalf of residents in the 50 States and in the District of Columbia. 

Included are estimates of aggregate and per capita health spending by type of establishment 

delivering care (hospital, physicians, nursing home, etc.). Per enrollee spending for Medicare 

and Medicaid are also presented by type of establishment.

• PHC estimates by type of service and source of funding are customarily separated into seven 

age groups: 0-18, 19-44, 45-54, 55-64, 65-74, 75-84, and 85 and over. Some databases 

consolidate the information in three main age groups: Children (ages 0-18), Working-age 

Adults (ages 19-64), and Elderly (ages 65 and over). 

2.3.2.3 SPONSORS: BUSINESS, HOUSEHOLD AND GOVERNMENT HEALTHCARE SPENDING

• Estimates of healthcare spending by sponsor: Businesses, Households and Governments. These 

estimates provide context for discussion of who ultimately pays for healthcare, the underlying 

pressures and the burden that affect these sponsors and their decisions to finance healthcare in 

the United States. The estimates are derived from a subset of the National Health Expenditure

Accounts by the Office of the Actuary. State level data are assembled periodically. The most 

recent published in July 2011 are for the year 2009. 

• In 2004, healthcare spending by state of residence continued to vary significantly, ranging from 

an average of $6,683 per resident in Massachusetts to $3,972 in Utah. The national average 

spent for personal healthcare services in the United States was $5,283 per resident.

On this report, Appalachian states divided almost evenly above and below the national average.
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TABLE 33 - APPALACHIAN STATE HEALTH CARE SPENDING BY STATE OF RESIDENCE RANK ORDERED* 

State

Total All Payers Per Capita 

Personal Health Care 

Expenditures (PHCE) 2009

Georgia $4,600

Virginia $4,822

Mississippi $5,059

South Carolina $5,114

Alabama $5,135

North Carolina $5,191

Tennessee $5,464

Kentucky $5,473

Maryland $5,590

Ohio $5,725

Pennsylvania $5,933

West Virginia $5,954

New York $6,535

U.S. Average $5,283

Source: Centers for Medicare & Medicaid Services, Office of the Actuary, 

National Health Statistics Group 

(https://www.cms.gov/NationalHealthExpendData/downloads/res-states.pdf). 

*Note the table above is includes the most recent data available. 

Nationwide, Medicare expenditures per beneficiary were highest in Louisiana ($8,659) and lowest in South 

Dakota ($5,640) in 2004; for Medicaid, expenditures per enrollee were highest in Alaska ($10,417) and 

lowest in California ($3,664). 

Residents cross state borders for healthcare for reasons such as ease of travel, proximity to state borders, and 

the availability of facilities and services that cannot be found in one’s home state. 

In 2004, states where spending by state-of-residence was significantly greater than spending by state-ofprovider included Wyoming, Idaho, West Virginia, New Mexico, and Vermont. This indicates that residents 

of these states travel outside of their state for healthcare in greater proportions than others travel into that state

for care. On the other hand, spending by state-of-residence was less than spending by state-of-provider for 

North Dakota, Tennessee, South Dakota, Minnesota, and the District of Columbia. Use controls, age and 

travel barriers account for their differences. 

2 3.2.4 NATIONAL HEALTH EXPENDITURE SURVEY 

The Center for Disease Control, National Center for Health Statistics also tracks personal health expenditures 

through the National Health Expenditure Survey, which is conducted by sampling individuals and providers. 

These data are not available at the county level. 

The Agency for Healthcare Research and Quality (AHRQ) conducts a bi-annual Medical Expenditure Panel 

Survey (MEPS) in which it samples families, providers and insurance companies for data on healthcare 

charges and employer contributions. Geographically, these are aggregated only for the four quadrants of the 

country. Reported expenditures tend to be lower than those reported by the CMS Office of the Actuary. 
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2.3.2.5 AMERICAN COMMUNITY SURVEY – U.S. CENSUS

Through the American Community Survey, the U.S. Census staff samples type of health insurance coverage 

and extends the sample to the Congressional District level. This can be approximately contoured to the 

Appalachian Region. However, the data set has only consumer expenditure survey information and is 

dependent on recall over a full year. 

2.3.3 GEOGRAPHIC WAGE INDEX

2.3.3.1 DESCRIPTION

To reflect the difference in cost of healthcare from one area to another, CMS maintains several geographic 

healthcare wage indices. Initially, focused only on hospitals, the indices now include one for hospitals, one for 

physicians, one for skilled nursing and facilities, one for end stage renal disease and a separate one for home 

health. With the exception of home health and physicians, the wage indices are based in some way on the 

hospital index. Some have a rural floor factor. Annually, CMS sets the wage index to one as the national 

norm. Indices are calculated for three Core Based Statistical Areas (CBSA) in each state: based on 

Metropolitan, Micropolitan and Other. For the most part, Census definitions set the boundaries. In some 

cases, Congressional action may assign a provider or a geographic area to a higher paying CBSA. Every 

provider certified to bill Medicare is then assigned a wage index on the basis of its address.

FIGURE 47 - CORE BASED STATISTICAL AREAS PER OMB
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Figure 47 illustrates the distribution of the CBSA’s nationwide. A close look shows much of West Virginia 

and Appalachian Kentucky fit in the “Other” or non-core classification.

The Geographic Wage Index itself is a three-year average, with the most recent year as much as five years 

behind. The 2011 index includes data from years: 2003, 2004 and 2005. By statute, the Wage Index is used to 

adjust Medicare payments. In practice, Medicaid and private insurers set their payment schedules as a 

multiple of Medicare. The Index tends to reflect higher wages than the BLS wage index.93 Many Appalachian 

counties are classed as non-core or rural under this grouping and these tend to get the lower indices. 

2.3.3.2 ORIGIN

Section 1886(d) (3) (E) of the Social Security Act requires that, as part of the methodology for determining 

prospective payments to hospitals, the Secretary must adjust the standardized amounts "for area differences in 

hospital wage levels by a factor (established by the Secretary) reflecting the relative hospital wage level in the 

geographic area of the hospital compared to the national average hospital wage level." This adjustment factor 

is the wage index.

CMS currently defines hospital geographic areas (labor market areas) based on the definitions of Core-Based 

Statistical Areas (CBSAs) established by the Office of Management and Budget and announced in December 

2003. The wage index also reflects the geographic reclassification of hospitals to another labor market area in 

accordance with sections 1886(d) (8) (B) and 1886(d) (10) of the Act. 

The Act further requires that CMS update the wage index annually, based on a survey of wages and wagerelated costs of short-term, acute care hospitals. Data included in the wage index derive from the Medicare 

Cost Report, the Hospital Wage Index Occupational Mix Survey, hospitals' payroll records, contracts, and 

other wage-related documentation. In computing the wage index, CMS derives an average hourly wage 

(AHW) for each labor market area (total wage costs divided by total hours for all hospitals in the geographic 

area) and a national AHW (total wage costs divided by total hours for all hospitals in the nation). A labor 

market area's wage index value is the ratio of the area's AHW to the national AHW. The wage index 

adjustment factor is applied only to the labor portion of the standardized amounts.94

2.3.3.3 MODIFICATIONS

The index has been a source of significant political debate; and work-around amendments often occur. For 

example, to protect hospitals in sparsely populated Frontier states, the ACA requires CMS to adopt a hospital 

wage index that is not less than 1.0000 for hospitals located in frontier states, beginning in FY 2011. Frontier 

states are defined in the law as states where at least 50 percent of the counties have a population density of 

less than six people per square mile. In the final rule, CMS is basing the frontier county and state 

determinations on the most recently available Annual Population Estimates from the U.S. Census. As a result, 

51 IPPS hospitals in five states - Montana, Nevada, North Dakota, South Dakota, and Wyoming - will benefit 

from this provision in FY 2011. 

 

93 MaCurdy, Thomas, Thomas Deleire, Karla Lopez de Nava, Paulette Kamenecka, Yang Tan, Sean McClellan. Revision of Medicare 

Wage Index Final Report, Part 1. April 2009. Accumen, LLC. Burlingame, CA.

https://www.cms.gov/AcuteInpatientPPS/03_wageindex.asp#TopOfPage. Accessed January 3, 2011. 94 Centers for Medicare & Medicaid Services (CMS). “Wage Index”. http://www.cms.gov/ AcuteInpatientPPS/03_wageindex.asp. 
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An amendment to the Medicare statute added a Geographic Adjustment Factor (GAF) to the index. Its 

intended purpose was to correct for higher costs that particularly rural communities may pay to compete for 

staff from nearby urban or metropolitan counties. 

2.4 HEALTH STATUS / HEALTH OUTCOMES

We have chosen three-year average YPLL_75-75 as the key measure of health outcomes. This is a mortality 

based measure rather than a health status measure, but it disproportionately weights mortality that occurs in 

younger ages, because more years of life are lost by the death of a younger person over time. 

It would be helpful to have another measure that deals with illness severity or long term disability over the 

life course or risks such as estimates of morbidity. However, most such estimates are secondary to the use of 

health resources (e.g., hospital discharge data) or based on statistical models that lack sufficient precision at 

the local level (e.g., model based BFRSS surveys or health risks or health behavior). 

2.5 DATA REDUCTION STRATEGIES. 

2.5.1 SELECTION OF CANDIDATE SOURCES

The selection process involved three key drivers. 

• The criterion: uniform data available at the county level quickly narrowed the selection process for 

data. Even then, more items are available than needed to construct a valid index. 

• Where multiple items are indicative of a single concept, we used multivariate data reduction 

techniques to assess the contribution of each discrete item to the underlying hypothetical construct 

representing the underlying concept. 

• Factor analysis was used for data reduction. This locates Items which “load” on factors help guide 

selection of final items for inclusion in the indices. As core indicators of access, we selected two to 

five items that are both substantively meaningful and statistically indicative of health access.

2.5.2 SMALL AREA ANALYSIS

When population based data are not available for a small geographic area such as a county, estimates are 

made. These estimates can involve a variety of methods, but typically use one of three basic approaches: 

direct estimates; synthetic estimates; or estimates based on geographic “smoothing”.

• Direct estimates are generally made from samples of individuals residing within the boundaries of 

the small area. However, in order to generate valid and reliable estimates, there must be a sufficient 

number of cases to generate a stable estimate. Generally this would be in excess of 100 cases. 

Further, the method of selection should be known, and if possible, random. Direct estimates are 

thought to be preferred to other methods, when there are sufficient data points in a small area and 

simple random sampling is used. 

• Synthetic estimates (model-based estimates) use data from large national, regional, or statewide 

samples to make estimates for small geographic areas like counties, but do not use direct methods 

from the data points actually within that geographic area. Instead, a statistical model relating the 

characteristic of interest (e.g., “uninsurance”) to a set of demographic predictors, e.g., age, sex, 

race, educational level, job type, etc. If these population characteristics can be reconstructed from
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local areas, then the statistical model can be applied and a local area estimate can be made using the 

population characteristics of the local area.

o The validity of these estimates depends on how well the statistical model predicts the 

characteristic of interest. If important characteristics are left out of the statistical model, the 

validity decreases. Characteristics can be missing because they are not available in the original 

dataset (e.g., unionization status of individual), or the predictors have a more complex 

relationship than the statistical model will support. 

o The Small Area Health Insurance Estimates are model-based or synthetic estimates of numbers 

and percentages in communities based on information from large national surveys reporting the 

insurance status of individuals and households. These are combined with locally applied 

estimates of the population characteristics of a given county and re-aggregated up to the county 

level to yield estimates of the numerators and denominators needed to measure the insured and 

uninsured populations. 

• Geographic smoothing is a variation of direct estimation in which the deficiencies of having a small 

number of actual data points is compensated for by extending out the radius of the “small area” to 

include data points from adjacent areas and using these points (with some down-weighting factors 

for remote areas) to increase the sample size. The focal and peripheral counties are then combined 

into an estimate. 

When empirical tests of these three methods are applied against population-based data, results have revealed 

that direct estimation is the least reliable, and that model-based estimates of health characteristics are 

generally much more reliable, assuming the model is reasonably robust. SAHIE and YPLL_75 are both 

validated model-based estimates. 

2.6 SUMMARY OF ITEMS RELEVANT TO HEALTH DISPARITIES INDEX CONSTRUCTION

2.6.1 DATA ELEMENTS

Data elements and related sources that the study team reviewed for possible inclusion in an index of health 

cost and access measurement of health disparities, separated into five categories. The following sections 

describe each element in order of the particular dimension of access or cost measured or examined. 

• Items 1 through 12 are potential access indicators which are also arrayed by sub-domain: items 1 

through 2 reflect resource availability indicators; 3 through 4 reflect access indicators involving use 

of services. Items 5 through 10 represent financial aspects of Access to Care; items 11 and 12 

represent more of a policy dimension, i.e., dedicated facilities or resources designed to promote 

access; 

• Items 13 through 16 represent a healthy physical and social environment; items 17 through 19 

represent socioeconomic status; Item 20 represents health status or health outcomes; and 

• Finally the cost of care is represented by the remaining items 21 through 16. For each of the 26 

items profiled, the source, most recent year, and smallest level of geographic data availability is 

provided along with a brief definition, the actual database source and a website where available. 
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2.6.2 MEASURES OF HEALTH COST AND ACCESS

1. Primary Care Physicians per 100,000 American Medical Association. 2009. Physician Masterfile 

2008. From: Department of Health and Human Services, Health Resources and Services 

Administration, Bureau of Health Professions, Office of Workforce Policy and Performance 

Management (HRSA). 2010. Area Resource File 2009-2010 [Compact Disc]. Rockville, MD: 

HRSA. 2010. 

American Osteopathic Association. 2007. Physician File for 2007. From: Department of Health 

and Human Services, Health Resources and Services Administration, Bureau of Health 

Professions, Office of Workforce Policy and Performance Management (HRSA). 2010. Area 

Resource File 2009-2010 [Compact Disc]. Rockville, MD: HRSA. 2010. 

2. Dentists per 100,000 American Dental Association. 2007. Distribution of Dentists in the U.S. for 

2007. From: Department of Health and Human Services, Health Resources and Services 

Administration, Bureau of Health Professions, Office of Workforce Policy and Performance 

Management (HRSA). 2010. Area Resource File 2009-2010 [Compact Disc]. Rockville, MD: 

HRSA. 2010. 

3. At-Risk Adults With Routine Checkups National Center for Chronic Disease Prevention and 

Health Promotion, Centers for Disease Control (CDC). 2010. Behavioral Risk Factor 

Surveillance System 2009 [online data]. Atlanta, GA: Centers for Disease Control. Available at 

ftp://ftp.cdc.gov/pub/ data/brfss/CDBRFS09ASC.zip, retrieved December 18, 2010. 

4. Adequacy of Prenatal Care National Center for Health Statistics, Centers for Disease Control 

(CDC). 2010. National Vital Statistics System 2008 [online data]. Atlanta, GA: CDC. Available 

at 205.207.175.93/ VitalStats/ReportFolders/reportFolders.aspx, retrieved December 18, 2010. 

2.6.3 MEASURES OF FINANCE

5. Adults Could Not See Doctor Because Of Cost National Center for Chronic Disease Prevention 

and Health Promotion, Centers for Disease Control (CDC). 2010. Behavioral Risk Factor 

Surveillance System 2009 [online data]. Atlanta, GA: CDC. Available at 

ftp://ftp.cdc.gov/pub/data/brfss/CDBRFS09ASC.zip, retrieved December 18, 2010. 

6. Nonelderly Adults (ages 18–64) Insured Department of Commerce, U.S. Census Bureau (Census 

Bureau). 2010. Small Area Health Insurance Estimates (SAHIE) for Counties and States 2007 

[online data]. Washington, DC: Census Bureau. Available at 

www.census.gov/did/www/sahie/data/ 2007/files/sahie07all.txt., retrieved November 11, 2010 

7. Children (ages 0–17) Insured Department of Commerce, U.S. Census Bureau (Census Bureau). 

2010. Current Population Survey, Annual Social and Economic (ASEC) Supplement 2009 [online 

data]. Washington, DC: Census Bureau. Available at www.census.gov/hhes/www/cpstables/ 

032010/health/toc.htm, retrieved December 19, 2010. 

8. Uninsured Individuals (age under 65) Department of Commerce, U.S. Census Bureau (Census 

Bureau). 2010. Small Area Health Insurance Estimates (SAHIE) for Counties and States 2007 

[online data]. Washington, DC: Census Bureau. Available at 

www.census.gov/did/www/sahie/data/ 2007/files/sahie07all.txt., retrieved November 11, 2010. 
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9. Medicare Beneficiaries Department of Health and Human Services, Centers for Medicare & 

Medicaid Services (CMS). 2010. Medicare Aged and Disabled by State and County 2007 [online 

data]. Washington, DC: CMS. Available at www.cms.gov/MedicareEnRpts/Downloads/ 

County2007.zip. Retrieved October 15, 2010. 

Department of Health and Human Services, Centers for Medicare & Medicaid Services (CMS). 

2010. State County Penetration Data for Medicare Advantage Files, as of December 2009.From: 

Department of Health and Human Services, Health Resources and Services Administration, Bureau 

of Health Professions, Office of Workforce Policy and Performance Management (HRSA). 2010. 

Area Resource File 2009-2010 [Compact Disc]. Rockville, MD: HRSA. 2010. 

10. Medicaid Beneficiaries Department of Health and Human Services, Centers for Medicare &

Medicaid Services (CMS). 2010. Medicaid Analytic Extract (MAX) Person-Summary Files for 

2004-2005. From: Department of Health and Human Services, Health Resources and Services 

Administration, Bureau of Health Professions, Office of Workforce Policy and Performance 

Management (HRSA). 2010. Area Resource File 2009-2010 [Compact Disc]. Rockville, MD: 

HRSA. 2010 

11. Community/Migrant Health Centers Department of Health and Human Services, Centers for 

Medicare & Medicaid Services (CMS). 2010. Number of Community Mental Health Centers for 

2008. From: Department of Health and Human Services, Health Resources and Services 

Administration, Bureau of Health Professions, Office of Workforce Policy and Performance 

Management (HRSA). 2010. Area Resource File 2009-2010 [Compact Disc]. Rockville, MD: 

HRSA. 2010. 

12. Health Professional Shortage Areas (HPSA) Department of Health and Human Services, Centers 

for Medicare & Medicaid Services (CMS). 2010. HPSA Code for 2009. From: Department of 

Health and Human Services, Health Resources and Services Administration, Bureau of Health 

Professions, Office of Workforce Policy and Performance Management (HRSA). 2010. Area 

Resource File 2009-2010 [Compact Disc]. Rockville, MD: HRSA. 2010. 

2.6.4 MEASURES OF PHYSICAL AND SOCIAL HEALTH

13. Access to Healthy Foods Department of Commerce, U.S. Census Bureau (Census Bureau). 2010. 

County Business Patterns (CBP) 2008 [online data]. Washington, DC: Census Bureau. Available 

at ftp.census.gov/econ2008/CBP_CSV/cbp08co.zip, retrieved December 18, 2010. 

14. Liquor Store Density Department of Commerce, U.S. Census Bureau (Census Bureau). 2010. ZIP 

Code Business Patterns (ZBP) 2008 [online data]. Washington, DC: Census Bureau. Available at 

ftp.census.gov/econ2008/CBP_CSV/zbp08totals.zip, retrieved December 18, 2010. 

15. Public Health Funding Trusts for America’s Health. 2009. Prevention for a Healthier America: 

Investments in Disease Prevention Yield Significant Savings, Stronger Communities. 

Washington, DC: Trusts for America’s Health. Available at 

healthyamericans.org/reports/prevention08/ Prevention08.pdf, retrieved December 19, 2010. 

16. Immunization Coverage National Immunization Program and the National Center for Health 

Statistics, Centers for Disease Control (CDC). 2010. U.S. Vaccination Coverage Reported via 

National Immunization Survey (NIS) 2009 [online data]. Atlanta, GA: CDC. Available at 

www.cdc. gov/vaccines/stats-surv/nis/tables/09/tab02_antigen_iap.xls, retrieved December 18, 

2010. 
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2.6.5 MEASURES OF SOCIOECONOMIC STATUS

17. Unemployment Rate Department of Labor, Bureau of Labor Statistics (BLS). 2010. Local Area 

Unemployment Statistics [online data]. Washington, DC: BLS. Available at 

ftp.bls.gov/pub/time.series/la, retrieved December 19, 2010. 

18. Income Inequality Department of Commerce, U.S. Census Bureau (Census Bureau). 2010. 

American Community Survey 2009 [online data]. Washington, DC: Census Bureau. Available at 

www.census.gov/acs/www, retrieved December 19, 2010. 

19. Children in Poverty Department of Commerce, U.S. Census Bureau (Census Bureau). 2010. 

Small Area Income and Poverty Estimates 2009 [online data]. Washington, DC: Census Bureau. 

Available at www.census.gov/did/www/saipe/, retrieved December 19, 2010. 

2.6.6 MEASURES OF HEALTH STATUS AND OUTCOMES

20. Years of Potential Life Lost Before 75 (YPLL_75) National Center for Health Statistics, Centers 

for Disease Control (CDC). 2010. Compressed Mortality File (CMF) on CDC WONDER On-line 

Database [online data]. Atlanta, GA: CDC. Available at wonder.cdc.gov/wonder/help/cmf.html, 

retrieved November 22, 2010. 

2.6.7 MEASURES OF COST OF CARE

21. Preventable Hospitalizations The Dartmouth Institute for Health Policy and Clinic Practice. 2010. 

The Dartmouth Atlas of Health Care 2007. Lebanon, NH: , The Dartmouth Institute for Health 

Policy and Clinic Practice.

22. Hospital Admissions for Pediatric Asthma per 100,000 Children Agency for Healthcare Research 

and Quality (AHRQ). 2010. HCUP State Inpatient Databases (SID). Healthcare Cost and 

Utilization Project (HCUP). 2003-2004. Rockville, MD : AHRQ. 2010. 

23. Total Single Premium per Enrolled Employee Agency for Healthcare Research and Quality 

(AHRQ). 2010. Medical Expenditure Panel Survey (MEPS), Insurance Component State and 

Metro Area Tables 2009 [online data]. Rockville, MD : AHRQ. Available at 

www.meps.ahrq.gov/mepsweb/data_stats/ 

quick_tables_search.jsp?component=2&subcomponent=2, retrieved December 19, 2010. 

24. Total Medicare (Parts A & B) Reimbursements per Enrollee The Dartmouth Institute for Health 

Policy and Clinic Practice. 2010. Medicare Reimbursements by Enrollee 2007 [online data]. 

Lebanon, NH: , The Dartmouth Institute for Health Policy and Clinic Practice. Available at www. 

dartmouthatlas. org/data/topic/ topic.aspx?cat=21, retrieved December 18, 2010.

25. Bankruptcies Filed Administrative Office of the U.S. Courts. 2010. Bankruptcy Statistics [online 

data]. Washington, DC: Administrative Office of the U.S. Courts. Available at www.uscourts. 

gov/uscourts/Statistics/BankruptcyStatistics/BankruptcyFilings/2010/0310_f2.xls, retrieved 

December 19, 2010. 

26. Medical Bankruptcies David U. Himmelstein, M.D; Deborah Thorne, Ph.D.; Elizabeth Warren, 

J.D.; Steffie Woolhandler, M.D., M.P.H. “Medical bankruptcy in the United States, 2007: Results 

of a national study.” American Journal of Medicine, June 4, 2009. Availble at www.pnhp. 

org/new_bankruptcy_study/Bankruptcy-2009.pdf, retrieved December 19, 2010. 
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3 CONSTRUCTION OF THE ARC HEALTH COST AND ACCESS INDEX 

3.1 SELECTION OF DATA ELEMENTS

In this section we explain how the health access index was constructed. We will first explain how three 

distinct subcomponent indices were constructed and then how the three were combined into a single index. 

3.2 HEALTH RESOURCE ACCESS INDEX CONSTRUCTION

Our intent in examining health resources indices was to start with the distribution of primary care physicians, 

which have frequently been used as an overarching measure of healthcare access and to compare this 

distribution with more specialized physicians. 

TABLE 34 - NUMBER AND PERCENT OF COUNTIES WITHOUT PHYSICIANS, 2008 (U.S. AND ARC COUNTIES) 

Counties without:

All U.S. Counties 

(N=3141)

Appalachian 

Counties (N=420)

Number Percent Number Percent

Primary Care MDs or Dos 157 5.0% 3 0.7%

General Surgeons 1196 38.1% 134 31.9%

General OBGYNs 1486 47.3% 170 40.5%

Medical Subspecialists 1442 45.9% 140 33.3%

Surgical Subspecialists 1410 44.9% 187 44.5%

Hospital Specialties 1313 41.8% 150 35.7%

Mental Health Specialists 1669 53.1% 197 46.9%

Emergency Medicine 1480 47.1% 159 37.9%

Any of the above non primary care specialties 633 20.2% 44 10.5%

Number of Counties 3141 100.0% 420 100.0%

Source: ARF 2010.

Table 34 compares physician shortages in Appalachian counties to all U.S. counties and county surrogates. 

Appalachian counties are less inclined to lack any physicians than are counties elsewhere in the U.S. Only 

three Appalachian counties (less than one percent) had no primary care physicians in 2008. This stands in 

contrast to 5 percent of all U.S. counties that lack primary care physicians. Clearly, this difference may be 

evidence of the success of the long-standing efforts to build a primary care workforce in the Appalachian 

Region through a variety of federal and state programs. 

Similarly, only 44 Appalachian counties (less than 11 percent) had none of the physician specialists we 

identified in our analysis, while nationally 633 counties (over 20 percent of the counties in the nation) lacked 

any of these non-primary care specialties. 

However, as Table 35 reveals, when Appalachian and non-Appalachian counties are compared by population, 

there is very little difference between the mean values in physician to population ratios. 
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ARC Contract No.: CO-16835-2010 141

TABLE 35 - MEAN VALUES OF PHYSICIANS TO POPULATION RATIOS OF VARIOUS TYPES 

(APPALACHIAN AND NON-APPALACHIAN COUNTIES, 2008) 

Physicians Per 100,000 population

Non Appalachian Counties

N=2721

Appalachian Counties

N=420

Mean Std. 

Dev. Skew Mean Std. Dev. Skew

Primary Care (MD or DO) 66.18 47.29 3.055 66.34 69.10 10.951

General Surgeons 6.27 8.60 4.549 6.77 11.65 9.562

General Obstetrics Gynecology 5.20 7.01 2.104 5.11 6.88 4.445

Medical Sub Specialists 11.95 23.78 6.346 12.98 39.19 15.175

Surgical Sub Specialists 11.08 18.12 4.705 10.79 20.96 8.761

Hospital Specialists 12.19 21.47 6.731 11.15 24.62 10.984

Mental Health Specialists 4.95 9.73 4.914 4.24 6.53 2.986

Emergency Medicine Specialists 4.96 7.92 4.114 4.78 7.54 6.995

Combined non-primary Care 162.63 628.14 16.73 139.39 534.47 18.38

Source: ARF 2010.

No statistically significant differences between the Appalachian counties and the non-Appalachian counties 

were found, either in the percentage of counties lacking a specific specialty or in the mean physician to 

population ratios for each of the different types of physicians counted separately or combined. In some cases 

the mean Appalachian county appeared to have a slightly higher physician to population ratio (primary care, 

general surgery, medical subspecialists, obstetrician-gynecologists), while in other cases it appeared slightly 

lower (e.g., mental health, emergency medicine, obstetrics gynecology, surgical subspecialists, hospital 

specialists). Yet, when all the non-primary care specialties are combined, the difference appears to favor the 

non-Appalachian counties. This is largely attributable to the highly concentrated geographic clustering of 

many U.S. subspecialists in very large metropolitan areas outside of Appalachia.

However, given the high degree of skewness of the distribution of county level physician-to-population ratios, 

it is important to examine other properties of the physician-population ratios to determine if such measures 

can be useful in discriminating physicians at the lower levels of physician to population ratios. 

When the information about physician population ratios is displayed in percentile form, it becomes evident 

that there are a number of challenges to meaningful discrimination between counties in terms of physician 

availability especially at the low end of the distribution and among non-primary care physician specialties.
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142 ARC Contract No.: CO-16835-2010 

TABLE 36 - PHYSICIANS PER 100,000 POPULATION, APPALACHIAN AND NON-APPALACHIAN COUNTIES, 

ARRAYED BY PERCENTILE 

Type of Physician Type of County

Percentile Level

5

th 10th 25th 50th 75th 90th 95th

Primary Care (MD or 

DO)

Non Appalachian 00 17.91 37.83 59.06 86.91 118.48 142.99

Appalachian 14.72 22.65 37.28 56.91 78.90 109.69 140.01

General Surgeons Non Appalachian 0 0 0 4.69 9.40 14.94 19.61

Appalachian 0 0 0 5.12 9.25 13.75 17.89

Gen OBGYN Non Appalachian 0 0 0 2.25 8.75 14.29 18.27

Appalachian 0 0 0 3.96 7.78 12.50 18.02

Medical Sub-Specialists Non Appalachian 0 0 0 2.46 15.42 34.58 51.85

Appalachian 0 0 0 5.85 14.70 28.30 40.91

Surgical Sub-Specialists Non Appalachian 0 0 0 3.89 16.80 31.11 41.76

Appalachian 0 0 0 4.91 14.73 26.31 37.51

Hospital Specialists Non Appalachian 0 0 0 4.74 16.90 33.61 46.09

Appalachian 0 0 0 5.41 14.42 27.57 41.50

Mental Health 

Specialists

Non Appalachian 0 0 0 .00 6.50 14.57 20.74

Appalachian 0 0 0 1.90 6.50 10.58 17.51

Emergency Medicine 

Physicians

Non Appalachian 0 0 0 1.82 7.79 13.77 18.25

Appalachian 0 0 0 3.38 6.68 11.79 15.82

Combined Non Primary 

Care Physician Groups

Non Appalachian 0 0 16.05 65.19 149.58 312.34 490.69

Appalachian 0 0 38.33 76.38 149.43 250.14 341.42

In Table 36, at least 25 percent of the counties in the U.S., and a comparable percentage of counties in the 

Appalachian Region, lack most of the physician specialty groups that we have identified. Note zeros in 

columns representing 25th percentile and below. For many of these specialist groups, the typical (50th

percentile) Appalachian county has a higher physician to population ratio than does the typical (50th

percentile) U.S. County.

On the other hand, relatively fewer Appalachian counties are in the top quartile (i.e. at the 75th percentile) in 

terms of physician to population ratios for almost any of the identified physician groups. 

Because of the uneven distribution of specialist physicians in particular, it is quite difficult to make 

comparisons at the lower end of any of the physician availability measures except for primary care. 

Hence comparing Appalachian and non-Appalachian counties may prove to be relatively difficult because so 

many counties are “tied” at “zero” for the various types of physician specialties. Even when all the nonprimary care physician groups are combined as in the last row of the table, at least 10 percent of counties have 

none of the non-primary care physician groups we have examined. 

We remedied this situation of a “lumpy” distribution by adopting two approaches: (1) extending the physician 

availability measures from a single point in time to include physicians present in a county over a three-year 

period; and (2) arraying the counties which have no physicians of a given type for a given year in order of 

their population for purposes of establishing a percentile rank. Each of these two strategies can be justified as 

a measurement strategy. 
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ARC Contract No.: CO-16835-2010 143

First of all, single point in time estimates of physician-to-population ratios can be quite inaccurate especially 

for counties with small populations and small numbers of physicians, because the retirement, in-migration or 

out-migration of a single physician can dramatically change that ratio from one year to another. Further, the 

health impact of a physician is likely to endure beyond a single year meaning that a county that loses its sole 

physician can plausibly be characterized as having had better healthcare access in the subsequent year, than 

would a county that did not have a physician in either year. In fact, migration of physicians in and out of rural 

counties and states is quite substantial and has been well documented for both primary care physicians and 

specialists.95 Such a pattern of migration can make counties with small population change from being without 

a doctor in one year, to having a quite favorable physician to population ratio in another year. 

Our second approach is arraying counties with a persistent experience of zero physicians in order of their 

overall population. This is based on the logic that a more populated county without a physician experiences a 

greater population health burden in terms of access than would a smaller county without a physician. Further, 

doctor-less counties are often counties where populations are not only small but in decline, rather than 

growing, making acquisition of a new physician even more difficult. 

By using these two techniques together—yearly averaging and selective ordering of counties without 

physicians, and by assessing these parameters separately for primary care physicians and non-primary care 

physicians, we can effectively discriminated counties with a various degrees of physician availability from 

one another in a more meaningful way—especially among those counties that lack a variety of different kinds 

of health resources—and thereby produced a more valid and stable index. 

3.3 SELECTION OF RESOURCE ITEM S

Given the complexity of the distributions of different non-primary care specialties, we selected the following 

four items as indicators of healthcare resource access: 

• Primary care physicians per 100,000 population (average of three consecutive years: 2006-2008), 

• Non-primary care physicians per 100,000 population (average of three consecutive years: 2006-

2008), 

• Dentists per 100,000 population for 2007, most recent year available, 

• Hospital beds per 10,000 population for 2008 or most recent year available. 

Each of the four variables was sorted for all counties in the U.S. and a rank value assigned on that basis. In 

cases where counties were tied, with zero practitioners or no hospital beds, counties with larger populations 

were assumed to have less favorable access scores and were ranked accordingly. A county’s combined raw 

score on the healthcare resource access component is the average of the ranks on the four items. Raw scores 

were then converted to percentiles and this is the final component score for each county. 

 

95 Ricketts, T.R., S.E. Tropman, R. Slifkin, T.R. Konrad. Migration of Obstetricians-Gynecologists In to and Out of Rural Areas. 

Medical Care. May 1996. 34(5)428-438. Also T.R. Konrad, Li Hong. Migrating Docs: Studying Physician Practice Location. JAMA. 

December 27, 1995. 274(24):1914
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3.4 HEALTH INSURANCE ACCESS COMPONENT CONSTRUCTION

The Health Insurance Access component consists of a combination of those health insurance variables that are 

available at the county level. All four SAHIE based measures, which are available from the Census for every 

U.S. County, are very highly inter-correlated, but each reflects different age and income groups. The four 

were selected from the database in the following table. 

TABLE 37 - HEALTH INSURANCE ACCESS COMPONENT CONSTRUCTION

Age Group 

(Census Est.)

Relevant 

Subgroup Insurance Variable Source

Most 

Recent 

Year

Interpretation

0-19 All income 

group

Percent Insured* SAHIE 2007 Extent of coverage of all children by 

public or private health insurance

0-19 Below 200% 

of Poverty Percent Insured* SAHIE 2007 Extent of coverage of poor children by public or private health insurance

18-64 All income 

group

Percent Insured* SAHIE 2007

Extent of coverage of all working age 

adults by public or private health 

insurance

40-64 All income 

group

Percent Insured* SAHIE 2007

Extent of coverage of middle aged 

adults by public or private health 

insurance

65+ Medicare 

Part A

Ratio of HI 

(Pt. A) to est. pop 

65+

CMS 2007 Extent of coverage of older adults by 

Medicare hospital insurance

65+ Medicare 

Part B

Ratio of SMI 

(Pt. B) to est. pop 

65+

CMS 2007

Extent of coverage of older adults by 

Medicare supplementary medical 

(physician) insurance

65+& Medicare 

beneficiaries 

<65

Medicare 

Part C

Medicare Advantage 

Penetration. 2008 CMS 2007

Extent to which eligible Medicare 

beneficiaries have Medicare advantage 

coverage (Part C)

65+& Medicare 

beneficiaries 

<65

Medicare 

Part D

Medicare Part D 

Penetration. 2008 CMS 2007

Extent to which eligible Medicare 

beneficiaries have drug coverage 

through Medicare Part D.

18-64 All income 

group

Medicare Disabled 

beneficiaries CMS 2008

Percent of working age population 

with Medicare coverage by reason of a 

disability

18-64 All income 

group

SSA / SSI Recipients SSA 2008

Percent of working age population 

with a dependency that enables them 

to receive Supplemental Security 

Income

Age 18+ Veterans Unique VA Users VA 2009

Percent of Veterans who have used 

the VA healthcare system in the last 

year.

*Estimates of the Percent Uninsured, exactly equal to 100-Pct Insured, have been calculated for SAHIE, but yield no 

additional information 
Appendix K 

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ARC Contract No.: CO-16835-2010 145

For children, the lack of available health insurance is more closely associated with poverty, while for middleaged adults the need for health insurance is greater with the onset of chronic disease. The use of all four 

SAHIE based indicators in effect gives us information about the entire population of children and working 

age adults as well as up-weighting for the presence of health insurance among two especially vulnerable 

groups: poor children and middle aged adults. 

Similarly, the percent of working age population with both Supplemental Security Income (SSI) payments 

and Medicare are two different measures of insurance coverage for a disabled adult population. These two 

variables are moderately correlated, have a high degree of variability across counties, and both are markedly 

and statistically significantly higher in Appalachian counties. 

In fact, when we combined the two indicators, we found an estimated 6.3 percent of the working age 

population is on one of these two sources of disability payments in non-Appalachian counties, whereas and 

estimated 10.3 percent of the working age population in Appalachian counties has one of the two sources of 

income or insurance.

We considered and discarded the idea constructing the Health Insurance Access index by ranking each of the 

11 health insurance access items across all counties in the U.S. and then taking the average rank. This rank 

was rescaled to percentiles to represent the final health insurance access rank for that county. That approach 

was both complex and unnecessary. 

3.5 LABOR COST INDEX CONSTRUCTION

3.5.1 GEOGRAPHIC WAGE INDEX

The Geographic Wage Index was used in its raw form. Each county has an index based on the hospital 

providers located in the country. The index uses 1.0 as the national average. Counties with no hospital are 

aggregated with the nearest hospital inside the state. Limitation of granularity to three clusters in each state: 

metropolitan, micropolitan, and other non-core does limit distinctions and some argue misrepresents the 

actual cost of care. Alone, this component has equal weight with the other access items. 

3.5.2 HEALTH CARE UTILIZATION MEASURES - DARTMOUTH ATLAS

Healthcare utilization measured in dollars spent is often cited in discussion of healthcare costs. This is 

difficult to measure uniformly, because there is no national database of healthcare expenditures. CMS 

estimates expenditures at the state and regional level using data from sample surveys, but there is no national 

source for private insurance payments at the county level. Most public studies of healthcare expenditures rely 

on Medicare claims files. These are available in a five percent sample without restriction, and the claims file 

is very expensive to manipulate.

An enterprising group of researchers, led by John E. Wennberg, PhD, began mining Medicare claims files in 

the mid 1990’s. Year over year, they noticed significant variations in per capita Medicare payments that could 

not be explained easily. They published their findings in a series of maps under the title Dartmouth Atlas of 

Health Care Expenditures.96 

 

96 Wennberg, John E. “Dartmouth Atlas of Health Care Expenditures”. The Dartmouth Atlas of Health Care: Atlases & Reports”. 

http://www.dartmouthatlas.org/publications/reports.aspx. 
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Certain areas like McAllen, Texas drew national attention when the New Yorker Magazine drew data from 

the atlas and ran a feature article on the correlation between physician owned hospitals and the high 

expenditures in this community.97

The atlas measures only expenditures for hospital care and only expenditures for Medicare. Medicare 

beneficiaries are persons over 65, persons certified as disabled by the Social Security Administration, persons 

with end stage renal disease, and blind persons. 

Recently, the atlas has drawn criticism from researchers who can find explanations for some of the variations. 

For these reasons we did not include utilization data in the index.

3.6 COMBINED INDEX MEASUREMENT

The overall Healthcare Cost, Coverage, and Access (HCCA) Index is an average of three components: the 

healthcare cost (HCC), the insurance access (HIC), and the resource access (HCRA). Following the logic of 

the Appalachian Regional Commission’s (ARC) Economic Status Index, the combined HCCA Index was 

converted to percentiles and a percentile value assigned to each county in the U.S. 

TABLE 38 - SUMMARY OF SUBCOMPONENT INDICES

Element Source Measure Units

Coverage per Capita

ARF – 2006

CMS – 2007

ARF – 2009

ARF – 2005

ARF – 2005

VA File

Insurance Coverage - Under 65 

(Insured and Uninsured)

Medicare B – 

Medicare C – 

Medicaid – Over 65 – 

Medicaid – Under 65 

VA - Users

Coverage 

Participation

Participation

Dual Eligibility 

Participation 

Resource Availability per 

Capita

ARF -2008

ARF -2008

ARF -2008

ARF -2008

ARF -2007

ARF -2008

Primary Care

Surgeons + OB

Surgical Specialties

Hospital Specialties

DDS - Dentists

Behavioral Health

Primary Specialty

Primary Specialty

Primary Specialty

Primary Specialty

Primary Specialty

Primary Specialty

Cost CMS 2010 Geographic Wage Index Normalized to 1=national average

The rationale for choosing these elements is that they measure three dimensions of access: 

• Purchasing capacity of the individual, 

• Availability of resources to serve the individual, and 

• The labor cost of serving the individual. 

 

97 Gawande, Atul. The Cost Conundrum. The New Yorker. June 1, 2009. 

http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande
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ARC Contract No.: CO-16835-2010 147

Labor is the most variable of healthcare costs and makes up 60 percent of the healthcare expense and 35 

percent of all hospital costs.98 All of the data elements meet the test of availability, scalability and uniformity. 

All are collected by federal agencies.

We similarly excluded the VHA per capita spending measure. VHA spending is a resource consumption 

measure. It does show disparities, which are discussed in Chapter 3. 

3.7 CALCULATION OF INDEX

The HCCA is calculated by standardizing each of the components to a per capita measure and summing the 

per capita measures for each county. These were then normalized to multiples of a national average and 

grouped in percentiles.

The resource availability component is calculated by summing the per capita counts for each of the 

professional groups and normalizing to national by percentile. To get a county Geographic Wage Index, we 

started with the CMS Medicare Hospital Geographic Wage index for the county. The geographic wage index 

is already set to 1.0 as the national average, so it requires no further normalization.

3.8 FORMULA

The formula from the Healthcare Cost, Coverage, and Access (HCCA) Index is: 

Geographic Wage Index + Health Insurance Coverage per capita component + Health Resource per capita 

component / 3.

(HCC + HIC + HCRA) / 3

The following tables show how the normalized data were combined with the wage index to provide the 

HCCA. 

TABLE 39 – HCC COMPONENT CONSTRUCTION AND FOR CONSTRUCTING THE FINAL HCCA INDEX INDICATOR

Component 

Item

Component Item 

Definition

Time 

Periods

Basic 

Scaling 

Method

Component Item

Component 

Item 

Definition

Health Care 

Cost 

HCC= CMS 

Hospital 

Geographic 

Wage Index 

Rescaled

2005 Percentile 

Value

The CMS Hospital Geographic 

Wage Index was Rank ordered 

then converted to a percentile. 

Tied counties were given tied 

ranks for percentile ranking 

HCC_R

Combined 

Health Access 

Index

CHAI= (HCRA_R + HIC_R

+ HCC_R) /3

Percentile 

Value

Rank ordered then converted 

to a percentile CHAI_R

 

98 American Hospital Association. “The Cost of Caring”. March 2010. http://www.fiercehealthcare.com/story/labor-costs-are-keydriver-hospital-cost-growth/2010-03-15. Accessed December 2010.
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TABLE 40 - STEPS IN HIC COMPONENT CONSTRUCTION

Component 

Item

Component Item 

Definition

Time 

Periods

Basic 

Scaling 

Method

Computation Refinements

Component 

Item 

Definition

HI_KIDS Pct. of children 0-19 

insured by public or 

private sources

2007

(latest 

available 

data)

Percentile 

Value

Rank ordered then 

converted to a percentile 

HI_KIDS_R

HI_POORKIDS Pct. of children age 

0-19in families with 

incomes less than 

200% poverty 

insured by public or 

private sources

2007

(latest 

available 

data)

Percentile 

Value

Rank ordered then 

converted to a percentile

HI_POORKI

DS_R

HI_ADULTS Percent of all adults 

19-64 insured by 

public or private 

sources

2007

(latest 

available 

data)

Percentile 

Value

Rank ordered then 

converted to a percentile

HI_ADULTS_

R 

HI_ 45-64 Percent of adults 

aged 45-64 insured 

by public or private 

sources

2007

(latest 

available 

data)

Percentile 

Value

Rank ordered then 

converted to a percentile

HI_ 45-64_R

MC_A Ratio of HI (Pt. A) to 

est. pop 65+

2007 Percentile 

Value

Rank ordered then 

converted to a percentile

MC_A_R

MC_B Ratio of SMI (Pt. B) 

to est. pop 65+

2007 Percentile 

Value

Rank ordered then 

converted to a percentile

MC_B_R

MC_C Medicare Advantage 

Penetration. 2008

2007 Percentile 

Value

Rank ordered then 

converted to a percentile

MC_C_R

MCF_D Medicare Part D 

Penetration. 2008

2007 Percentile 

Value

Rank ordered then 

converted to a percentile

MCF_D_R

MC_Disab Medicare Disabled 

beneficiaries as a 

percent of 

population of 

working age

2008 Percentile 

Value

Rank ordered then 

converted to a percentile

MC_Disab_

R 

SSA SSA Recipients as a 

percent of 

population of 

working age.

2008 Percentile 

Value

Rank ordered then 

converted to a percentile

SSA_R

VETS Number of unique 

veterans using VA 

services as a 

percentage of VA 

estimates of Veteran 

Users

2009 Percentile 

Value

Rank ordered then 

converted to a percentile

VETS_R

Health 

Insurance 

Coverage 

HIC= Avg. of the 11 rescaled 

percentile items above 

(HI_KIDS_R.... VETS_R)

Percentile 

Value

Rank ordered then 

converted to a percentile

HIC_R
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ARC Contract No.: CO-16835-2010 149

TABLE 41 - STEPS IN HCRA COMPONENT CONSTRUCTION

Component 

Item

Component Item 

Definition

Time 

Periods

Basic 

Scaling 

Method

Computation 

Refinements

Final 

Rescaled 

Variable 

Name

PCP Primary Care 

Physicians per 100K 

pop

Averaged 

across the 

3 most 

recent 

years 

Percentile 

value 

Those 5-10%% of U.S.

counties without 

physicians (tied at zero) 

were arrayed so most 

populated counties have a 

greatest degree of 

physician shortage

PCP_R

NPCP Non-primary care 

Physicians per 100K 

pop

Averaged 

across the 

3 most 

recent 

years

Percentile 

Value

Those 10-20% of U.S.

counties without 

physicians (tied at zero) 

were arrayed so most 

populated counties have a 

greatest degree of 

physician shortage

NPCP_R

DDS Dentists per 100K 

pop

2007 

(latest 

available 

data) 

Percentile 

Value

Those 5-10%% of U.S.

counties without dentists 

(tied at zero) were arrayed 

so most populated 

counties have a greatest 

degree of physician 

shortage 

DDS_R

HOSPBEDS Short term general 

hospital beds per 

10K population

Averaged 

across 

the3 most 

recent 

years

Percentile 

value

For those counties 

without hospitals (tied at 

zero) were arrayed so 

most populated counties 

have a greatest degree of 

physician shortage.

HOSBEDS_R

Health Care 

Resource 

Availability 

Index.

HCRA= (PCP_R + NPCP_R + DDS_R 

+ HOSPBEDS_R)/4

Average of 

the 4 

percentile 

values or 

PCP

The average or the 4-

item summed percentile 

scores is then again rank 

ordered and converted to 

a percentile across all U.S.

counties

HCRA_R

3.9 RATIONALE FOR SELECTION OF MEASURES

The measurements were selected by first isolating measures that were reliably collected and maintained, such 

that they could be updated annually at the county level. This screen narrowed the access and resource list to 

elements available on the ARF or OSCAR files. The team seriously considered using the UNC Sheps Center 

Disparity Index, which relies on socioeconomic data and count of primary care providers. Though well tested 

and respected by many, the index requires a complex mathematical analysis of expected utilization by a 

normative age, race, sex and income mix of the population. Dramatic changes in healthcare utilization that are 

expected as a result of health reform would make it difficult to choose, much less predict, behavior of this 

normative population. 
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Moreover, recent studies suggest that many of the problems in rural healthcare access are associated with the 

lack of surgical specialties in rural hospitals. 99 These issues caused the team to use the basic elements 

available through the Sheps Center modeling efforts, but to use them in a more elemental format, reflective of 

the raw resource.

Classic work by Ricketts has documented significant differences in health insurance coverage.100 Though we 

did run a regression analysis to determine correlation or lack thereof, between total insurance coverage and 

resources, this element was a major focus of the ACA and should change dramatically after 2014. Timeliness 

of data at present is a major concern. In some cases, the most current available data are five years old. 

However, with several top-level commissions and task forces focused on the issue of timeliness and 

consistency of coverage data, we expect currency to improve before the year 2014, when most of the health 

reform measures become effective. 

The final measure, the CMS Geographic Wage Index is the best available national index of healthcare labor 

cost. The hospital index is one of several geographic wage indices employed by CMS. Data are collected 

annually, on cost reports filed by providers who are certified to participate in Medicare reimbursement. The 

index is published annually and used to calculate Medicare reimbursement for most Medicare facilities. 

CMS and actuarial groups routinely engage in cost accounting for individual services, and report total dollars 

spent. However, those calculations include both utilization and cost. The Geographic Wage Index alone 

measures raw cost. It is indexed to an average wage and normalized to a national average wage. It can be 

traced to the county level by matching metropolitan and urban designations within the state. All other areas 

are designated “Other.” It can also be traced to the county level using the geographic address for each hospital 

provider in the state. We combined and rejected a more complex model for counties without hospitals; the 

index can adopt nursing home, then rural health clinic, then home health agency. A county without any of 

these providers would have no healthcare labor cost. We chose instead to group counties in the way that CMS 

groups them from the hospital wage index. 

We also rejected a more current index, the Health Care and Social Assistance Index, which is assembled as 

part of the Employment Cost Index (ECI) by the Bureau of Labor Statistics, because it is not granular enough. 

These data are published quarterly from information collected as part of the National Compensation Survey 

and assembled to produce the ECI.

101 However, these survey data represent only 150 local areas nationwide. 

We considered this and the measure of Health Insurance Cost also collected by BLS. Although the ECI is 

attractive because it provides 12-month percent changes in employer costs for health as reference tests, ECI 

data are too sparse to be used in county-based comparisons. 

 

99 Poley, Stephanie, Thomas Ricketts, Ph.D., Daniel Belsky and Katie Gold. Pediatric Surgeons: Subspecialists Increase Faster than 

Generalists. ACS/HPR Institute. July 2009. 100 Ricketts, Thomas C., et al. Designating Places and Populations as Medically Underserved, a Proposal for a New Approach. JL for 

Poor and Underserved. (2007). 567-589. 101 Bureau of Labor Statistics, Chapter 8, National Compensation Measures. http://www.bls.gov/opub/hom/pdf/homch8.pdf. 

Downloaded December 2010. 
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4 DATA SOURCES

4.1 ACCESS MEASURES

All access measures selected for use in the proposed index are drawn from the Area Resource File (ARF) file. 

ARF is compiled from multiple national databases by the Health Resource and Service Administration 

(HRSA) of the U.S. Department of Health and Human Services (DHHS). The Cecil B. Sheps Center of the 

University of North Carolina Chapel Hill (Sheps Center) has worked with these files and understands and has 

documented statistical variation in each measure. The Sheps Center and other have used ARF data in multiple 

analytic studies. 

Cost measures for the index are reduced to one, the hospital Geographic Wage Index used by CMS. Data are 

100 percent samples drawn from the cost reports prepared by Medicare certified facilities. All locations are 

coded to FIPS codes. Some of the 420 counties have no facility. However, the Wage Index has a default for 

“Other” counties. This default permits assignment of an index to all counties. Nationwide, counties are 

assigned to the “Other” default and within the state boundaries. These are typically rural counties, and have 

been the source of significant policy decisions to create additional indices. For example, the Frontier Index 

was developed to offset the otherwise low “Other” value for counties with fewer than six persons per square 

mile. Overlays like Frontier status and rural minima are used to make adjustments to the Geographic Wage 

Index. To avoid distortions we used the unadjusted Geographic Wage Index. 

4.2 INSURANCE RELATED ACCESS 

Small Area Health Insurance Estimates (SAHIE) is the name given to insurance survey data compiled by the 

U.S. Census Bureau. Table 42 represents the SAHIE data that were extracted from the ARF. The latest year 

available is 2007.

TABLE 42 – SAHIE EXTRACTED DATA FROM ARF

Age Group Insurance Income Level

0-19 Children Insured/Uninsured All income levels

0-19 Children Insured/Uninsured Up to 200% of poverty level

0-64 Children / Adults Insured/Uninsured All income levels

0-64 Children / Adults Insured/Uninsured Up to 200% of poverty level

These measures have been calculated as percentages of the relevant denominators in the ARF. They were 

verified and items used where the fields are populated. They are available at the county level and can be 

described in per capita terms. 
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The measures in Table 42 exclude the over 65 population. According to Census data for the American 

Community Survey, in 2009, approximately 99 percent of people are covered. See discussion in Chapter 4. 

All persons over 65 who are legal citizens qualify for Medicare Part A, facility coverage. This is minimum 

coverage. Unfortunately, there are no uniform measures of Part B, C, D and E coverage. Insurance policies 

are not uniform and “coverage” definitions vary from one area to another. 

Separating insurance coverage by working and not working people is also not possible at the county level. 

Experts at Kaiser and Research Data Assistance Center (ResDAC) agree. 

5 STATISTICAL ISSUES WITH DATA

5.1 LIMITED DATA AT THE COUNTY LEVEL

The data sources ARF, SAHIE, and CMS were chosen because they were available at the county level 

without manipulation, easily replicable, publically acceptable, and transparent. 

5.2 RECENT DATA / DATA FOR A CONSTANT YEAR

The proposed Healthcare Cost, Coverage, and Access (HCCA) Index is based on ARF, SAHIE, and CMS 

data. The ARF data used is from 2006-2008; the SAHIE data is from 2007; and the CMS data are from 2005. 

These data were the most recent available from the three sources. We chose to use data from different years, 

as opposed to consistently using 2005 data, noting that CMS used 2005 data for 2011 rate setting. 

5.3 DOUBLE COUNTING OF INSURANCE COVERAGE

The Health Insurance Coverage (HIC) component describes health insurance coverage and includes eleven 

inputs. After consideration, seven of the inputs and three of the remaining four inputs were combined. Inputs 

were eliminated after discovering that some Medicaid enrollees and children below 200 percent poverty were

being double counted. 
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APPENDIX L: USE OF VETERANS HEALTH ADMINISTRATION SERVICES IN 

APPALACHIAN COUNTIES, 2009

TABLE 43 – UNIQUE USERS AS A PERCENTAGE OF VA ELIGIBLES BY NATIONAL PERCENTILE GROUP

State Name Number of Counties by Percentile Group

00 to 20 20 to 39 40 to 59 60 to 79 80 to 99 Grand Total

Alabama 7 13 9 2 6 37

Georgia 24 8 5 0 0 37

Kentucky 0 4 8 12 30 54

Maryland 0 1 1 1 0 3

Mississippi 0 2 6 13 3 24

New York 0 7 1 5 1 14

North Carolina 1 8 10 7 3 29

Ohio 0 5 12 12 3 32

Pennsylvania 6 17 6 15 8 52

South Carolina 2 4 0 0 0 6

Tennessee 6 12 11 7 16 52

Virginia 2 5 6 8 4 25

West Virginia 1 2 10 13 29 55

Grand Total 49 88 85 95 103 420

Source: Data from United States Department of Veterans Affairs, Health Economics Resource Center Second 

Quarter 2010, VA National Patient Care Database, analysis by UNC Sheps Center and PDA, Inc, 2011. 

TABLE 44 – UNIQUE USERS AS A PERCENTAGE OF VA ELIGIBLES

State Name Number of Counties by Percentage Group

00 to 20 20 to 39 40 to 59 60 to 79 80 to 99 Grand Total

Alabama 9 26 2 0 0 37

Georgia 27 10 0 0 0 37

Kentucky 0 39 14 1 0 54

Maryland 0 3 0 0 0 3

Mississippi 0 23 1 0 0 24

New York 1 12 1 0 0 14

North Carolina 1 28 0 0 0 29

Ohio 1 31 0 0 0 32

Pennsylvania 9 42 1 0 0 52

South Carolina 3 3 0 0 0 6

Tennessee 9 39 4 0 0 52

Virginia 3 22 0 0 0 25

West Virginia 2 37 16 0 0 55

Grand Total 65 315 39 1 0 420

Source: Data from United States Department of Veterans Affairs, Health Economics Resource Center Second 

Quarter 2010, VA National Patient Care Database, analysis by UNC Sheps Center and PDA, Inc, 2011. 
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APPENDIX M: MULTIVARIATE REGRESSION ANALYSIS OF HCCA INDEX

CONTROLLING FOR THE ECONOMIC DISTRESS INDEX

We tested the hypothesis that the HCCA and its components have a direct, independent relationship to the rate 

of premature mortality (YPLL_75) which we took to reflect a global measure of health status at the county 

level. Multiple regression models were employed to examine the joint relationships with the socio-economic 

variable, (the ARC_EDI) as well as health system variables reflected by the new HCCA index. In addition, at 

the national level, we included a variable reflecting whether or not a county was in the ARC region. These 

results are reported for all counties at the national level in Table 45 in Appendix M, again for all counties in

the 13 Appalachian states in Table 46 in Appendix M, and for the ARC counties in Table 47 in Appendix M. 

In all three analyses, the socioeconomic status of counties, as reflected in the ARC_EDI, seems to have a 

substantial relationship to premature mortality. However, at the national level, our proposed HCCA Index 

exhibits an independent relationship to premature mortality as well. 

Relationships between the HCCA, the ARC_EDI and the YPLL_75 are significant nationally, but not in 

Appalachian states or counties. This suggests that something other than economic distress could be affecting 

premature mortality rates in the Appalachian states. Further, Appalachian counties experienced higher rates of 

premature mortality (YPLL_75) than would be predicted on the basis of their scores on ARC_EDI and HCCA 

alone, suggesting that there may be an unmeasured factor at work in counties located in the Appalachian 

Region over and beyond the combined impact of socioeconomic status (ARC_EDI) and health system 

characteristics (HCCA). All of these relationships were highly statistically significant (p<.001) when 

measured at the national level. The same statistical models were applied to a smaller number of counties in 

the 13 ARC states (Table 47 in Appendix M), and to the Appalachian counties alone (Table 48 in Appendix 

M). The relationships observed at the national level were repeated to some extent at the level of the 13 states 

and the ARC counties alone, although the HCCA did not relate as well on the smaller samples of counties in 

the Appalachian Region. Please see Appendix M for the complete statistical analysis and commentary. 

In the flowing tables, blue shading shows stronger relationships. Each table is followed by a scatter plot 

showing how closely the actual data distributed in the regression matches the predicted values.
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TABLE 45 - REGRESSION MODEL: PREDICTIVE VALUE OF YEARS OF POTENTIAL LIFE LOST_751 BY ARC

ECONOMIC DISTRESS INDEX AND HCCA, FOR ALL COUNTIES IN THE U.S. (N=3007 COUNTIES) 

All Predictor U.S. Counties 

N=30072

Unstandardized Coefficients Std. Coeff t Sig. Level

B Std. Error Beta

(Constant) 8612.301 8.748 984.533 .000

ARC Economic Distress Index Rank (1 = 

Best; 3,110 = Worst) .182 .005 .558 35.181 .000

Combined Healthcare Cost, Coverage and 

Access Index - percentile 1.823 .159 .178 11.453 .000

Flag for ARC County (0/1) 43.682 11.599 .052 3.766 .000

1

Predictors of YPPL_75 per 100,000 population (logged), for U.S. Counties, 2005-2007. 2 N=3007 because some counties have a missing value for the some variables.

LnYPLL_75x100K = 8612.301 + 0.182*ARC_EDI + 1.823*HCCA_Index + 3.682* ARC County 

• Economic Distress is more important than either the HCCA or presence in the Appalachian Region as a 

predictor of variance. Log of YPLL_75 times 100,000 equals a consistent multiple of these three 

variables. 

• Adjusted R square means equation explains 46.2 percent of the variation; above 40 percent is good. 

Significance level less than .001 is good; t value tells how significant; a 1.96 value is 95% chance of 

correct. Above 1.96 is good. Betas are standardized; value above 0.05 is good. 

R R Square Adjusted R Square Std. Error of the Estimate

.680a .462 .462 215.34130

FIGURE 48 - SCATTER PLOT REGRESSION MODEL: PREDICTIVE VALUE OF YPLL_75 BY ARC_EDI

AND HCCA INDEX FOR ALL COUNTIES IN THE U.S. (N=3007 COUNTIES) 
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TABLE 46 - REGRESSION MODEL: PREDICTIVE VALUE OF YPLL_751 BY ARC_EDI AND HCCA

INDEX FOR ALL COUNTIES IN THE 13 APPALACHIAN STATES (N=1069 COUNTIES) 

All Predictor Counties in the 13 

Appalachian States, N=10692

Unstandardized Coefficients Std. Coeff t Sig. Level

B Std. Error Beta

(Constant) 8698.380 13.806 630.025 .000

ARC Economic Distress Index Rank 

(1 = Best; 3,110 = Worst) .210 .008 .708 26.591 .000

Combined Healthcare Cost, Coverage and 

Access Index - percentile .480 .255 .049 1.879 .061

Flag for ARC County (0/1) -22.301 11.330 -.042 -1.968 .049

1

Predictors of YPLL_75 per 100,000 Population (logged), for U.S. Counties, 2005-2007. 2 N=1069 because some counties have a missing value for the dependent variable. 

LnYPLL_75x100K=8698.38+ .0.21*ARC_EDI + 0.48*HCCA_Index-22.30* ARC County 

Within the Appalachian States, the Economic Distress Index is the better predictor of variance 

R R Square Adjusted R Square Std. Error of the Estimate

.733a .537 .536 178.13009

FIGURE 49 - SCATTERPLOT OF REGRESSION MODEL: PREDICTIVE VALUE OF YPLL_75 BY ARC_EDI

AND HCCA INDEX, FOR ALL COUNTIES IN THE 13 APPALACHIAN STATES (N=1069 COUNTIES) 
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TABLE 47 - REGRESSION MODEL: PREDICTIVE VALUE OF YPLL_751 BY ARC_EDI AND HCCA

INDEX FOR ALL COUNTIES IN THE APPALACHIAN REGION (N=419 COUNTIES) 

All Predictor Appalachian Counties

N=4192

Unstandardized Coefficients Std. Coeff t Sig. Level

B Std. Error Beta

(Constant) 8772.504 28.727 305.379 .000

ARC Economic Distress Index Rank (1 = 

Best; 3,110 = Worst) .174 .014 .565 12.123 .000

Combined Healthcare Cost, Coverage and 

Access Index - percentile .076 .435 .008 .174 .862

ARC County (1/0) NA NA NA NA NA

1

Predictors of YPLL_75 per 100,000 Population (logged) and multiplied by 100,000, for U.S. Counties, 2005-2007. 2 N=419 because one county has missing values for the dependent variable. 

LnYPLL_75x100K=8772.504 + 0.174*ARC_EDI + 0.076* HCCA_Index 

The ARC Economic Distress Index is a better predictor of YPLL_75 variance in the Appalachian Region. 

R R Square Adjusted R Square Std. Error of the Estimate

.569a .324 .320 185.75601

FIGURE 50 - REGRESSION MODEL: PREDICTIVE VALUE OF YPLL_75 BY ARC_EDI AND HCCA INDEX FOR 

ALL COUNTIES IN THE APPALACHIAN REGION (N=419 COUNTIES) 

Note: The ceiling and floor effect are caused by ranking the counties.
Appendix M 

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TESTING THE RELATIONSHIPS TO HEALTH STATUS AND ECONOMIC DISTRESS

Tables 48 through 50 in Appendix M show linear regressions of the components of the HCCA and the 

ARC_EDI against YPLL_75 rates for United States, Appalachian states and Appalachian counties. Blue 

shading shows highly significant relationships. 

The county ARC_EDI has the strongest relationship with county health status of any of the variables in the 

equations at all levels: United States, Appalachian states, and Appalachian counties. Even though the 

healthcare resource component (HCRA) has a relatively high correlation with county health status 

(YPLL_75), HCRA has little relationship to county health status, once the ARC_EDI has been statistically 

controlled. This is true at the national, Appalachian state and Appalachian county levels. The other two 

components of the HCCA index have complex relationships with health status depending on the geographic 

focus of the analysis:

• At the national level, once ARC_EDI is controlled for, less health insurance coverage and lower 

reimbursements continue to be significantly correlated with health status. Similarly, being an ARC 

county has a small, but still statistically significant, relationship with poorer YPLL_75, the measure 

of health status (p < .05). Please see Table 48.

• At the 13-state level, once ARC _EDI is controlled for, less health insurance coverage is not related 

to health status, but lower reimbursements continue to be significantly correlated with poorer health 

status. Similarly, being an ARC county has a statistically significant relationship with health status 

(p < .001). Please see Table 49. 

• When examining only the Appalachian counties, once ARC_EDI is controlled for, more health 

insurance coverage and lower payments for health services are associated with poorer health status, 

but these relationships do not achieve the same level of statistical significance (i.e., p < .001). This 

phenomenon may be related to intersection of a relatively high proportion of insurance coverage 

consisting of Medicaid and Medicare Disability, along with a relatively low level of reimbursement 

to providers by these programs in Appalachian counties. Please see Table 50.
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TABLE 48 - REGRESSION MODEL: YPLL_751 BY ARC_EDI AND COMPONENTS OF HCCA INDEX FOR ALL COUNTIES IN THE 

UNITED STATES (N=3007 COUNTIES) 

All U.S. Counties

N=30072

Unstandardized Coefficients Std. Coeff t Sig. Level

B Std. Error Beta

(Constant) 8576.849 10.547 813.238 .000

ARC _EDI Value Rank

(1 = Best; 3,110 = Worst) .181 .005 .552 34.802 .000

HCRA

(1=best;100=worst) .181 .150 .018 1.204 .229

Health Insurance Coverage Component 

(1=best;100=worst) .679 .146 .066 4.637 .000

Health Care Cost Component 

(1=best;100=worst) 1.759 .156 .174 11.290 .000

Flag for ARC County (0/1) 25.640 11.900 .030 2.155 .031

1

Predictors of YPLL_75 per 100,000 Population (logged), for all U.S. Counties, 2005-2007. 2 N=3007 because some counties have a missing value for the some variables.

LnYPLL_75x100K = 8576.849 + .181*ARC_EDI + .181*Access_Comp + .679*Coverage_Comp + 

1.759*Cost_Comp + 25.64* ARC County 

R R Square Adjusted R Square Std. Error of the Estimate

.686 .471 .470 213.68456
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TABLE 49 - REGRESSION MODEL: YPLL_751 BY ARC_EDI AND COMPONENTS OF HCCA INDEX FOR ALL COUNTIES IN THE 13

APPALACHIAN STATES (N=1069 COUNTIES) 

All Counties in the 13 Appalachian States

N=10692

Unstandardized Coefficients Std. Coeff t Sig. Level

B Std. Error Beta

(Constant) 8692.132 16.996 511.427 .000

ARC Economic Distress: Index Rank (1 = 

Best; 3,110 = Worst) .203 .008 .682 24.175 .000

Health Care Resource Availability 

Component (1=best;100=worst) .211 .205 .024 1.030 .303

Health Insurance Coverage Component 

(1=best;100=worst) -.162 .251 -.014 -.647 .518

Health Care Cost Component 

(1=best;100=worst) .784 .246 .086 3.188 .001

Flag for ARC County (0/1) -30.717 11.726 -.057 -2.619 .009

1

Predictors of YPLL_75 per 100,000 Population (logged), for U.S. Counties, 2005-2007. 2 N=1069 because some counties have a missing value for the dependent variable. 

LnYPLL_75x100K = 8692.132+ .203*ARC_EDI + .211*Access_Comp - .162* Coverage_Comp + 

.784*Cost_Comp + -30.717* ARC County 

R R Square Adjusted R Square Std. Error of the Estimate

.735 .540 .538 177.69279
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TABLE 50 - REGRESSION MODEL: YPLL_751 BY ARC_EDI AND COMPONENTS OF HCCA INDEX FOR ALL 

COUNTIES IN THE APPALACHIAN REGION (N=419 COUNTIES) 

Appalachian Counties

N=4192

Unstandardized Coefficients Std. Coeff t Sig. Level

B Std. Error Beta

(Constant) 8774.442 35.032 250.470 .000

ARC Economic Distress: Index Rank (1 = 

Best; 3,110 = Worst) .153 .016 .496 9.725 .000

Health Care Resource Availability 

Component (1=best;100=worst) .387 .344 .049 1.125 .261

Health Insurance Coverage Component 

(1=best;100=worst) -.995 .390 -.103 -2.548 .011

Health Care Cost Component 

(1=best;100=worst) 1.017 .442 .110 2.302 .022

1 Predictors of YPLL_75 per 100,000 Population (logged) and multiplied by 100,000, for U.S. Counties, 2005-2007. 2 N=419 because one county have a missing value for the dependent variable. 

LnYPLL_75x100K = 8774.442. + .153*ARC_EDI + .387*Access_Comp -.995 * Coverage_Comp + 

1.017*Cost_Comp 

R R Square Adjusted R Square Std. Error of the Estimate

.735 .540 .538 177.69279

CONTROLLING FOR PERSISTENT POVERTY 

Tables 51 through Table 56 repeat the analyses in Table 51 through Table 53. The exception is that a

dichotomous variable indicating a persistent poverty county is substituted for the ARC_EDI as a measure of 

socioeconomic status. Blue shading indicates high significance and scatter plots follow the tables to show the 

distribution of data.

The scatter plots show how well the values of the predicted YPLL_75 variable from the multiple regression 

equations (on the X-axis) fit to the observed distribution (on the Y-axis). Consistent with the larger multiple 

regression coefficients in the equations involving the ARC_EDI, those statistical models show a more 

consistent relationship between the predicted and observed values, than do the equations involving the 

persistent poverty index. 
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TABLE 51 - REGRESSION MODEL: YPLL_751 BY PERSISTENT POVERTY OF THE COUNTY AND HCCA INDEX,

FOR ALL COUNTIES IN THE U.S. (N=3007 COUNTIES) 

All U.S. Counties

N=30072

Unstandardized Coefficients Std. Coeff t Sig. Level

B Std. Error Beta

(Constant) 8765.919 8.965 977.828 .000

Persistent Poverty (1=yes;0=no) 255.170 14.200 .290 17.970 .000

Combined Healthcare Cost, Coverage and 

Access Index - percentile 3.623 .165 .354 21.918 .000

Flag for ARC County (0/1) 111.852 12.881 .132 8.684 .000

1

Predictors of YPLL_75 per 100,000 Population (logged), for U.S. Counties, 2005-2007. 2 N=3007 because some counties have a missing value for the some variables.

LnYPLL_75x100K=8765.919 + 255.170*Pers_Pov + 3.623* HCCA_Index + 111.852* ARC County 

Explained variance is not as good because socioeconomic status (persistent poverty) is only a “yes” or “no” 

variable.

R R Square Adjusted R Square Std. Error of the Estimate

.560 .313 .312 243.38126

FIGURE 51 - REGRESSION MODEL: YPLL_75 BY PERSISTENT POVERTY OF THE COUNTY AND HCCA INDEX, FOR ALL 

COUNTIES IN THE U.S. (N=3007 COUNTIES)
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TABLE 52 - REGRESSION MODEL: YPLL_751 PERSISTENT POVERTY OF THE COUNTY AND HCCA INDEX FOR 

ALL COUNTIES IN THE 13 APPALACHIAN STATES (N=1069 COUNTIES) 

All Counties in the 13 Appalachian 

Counties N=10692

Unstandardized Coefficients Std. Coeff t Sig. Level

B Std. Error Beta

(Constant) 8866.800 15.145 585.448 .000

Persistent Poverty (1=yes;0=no) 238.733 17.713 .361 13.478 .000

Combined Healthcare Cost, Coverage and 

Access Index - percentile 3.273 .261 .337 12.520 .000

Flag for ARC County (0/1) 34.015 13.383 .064 2.542 .011

1 Predictors of YPLL_75 per 100,000 Population (logged), for U.S. Counties, 2005-2007. 2 N=1069 because some counties have a missing value for the dependent variable. 

LnYPLL_75x100K = 8866.800 + 238.733*Pers_Pov + 3.273* HCCA_Index + -34.015* ARC County 

By controlling for poverty, we remove pieces that were not controlled in the ARC Economic Distress Index 

R R Square Adjusted R Square Std. Error of the Estimate

.585 .342 .341 212.35163

FIGURE 52 - REGRESSION MODEL: YPLL_75 BY PERSISTENT POVERTY OF THE COUNTY AND 

HCCA INDEX FOR ALL COUNTIES IN THE 13 APPALACHIAN STATES (N=1069 COUNTIES) 

Note: Dense areas on the left are counties with the higher income, less dense areas on the right are persistent poverty 

counties. 
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TABLE 53 - REGRESSION MODEL: YPLL_751 BY PERSISTENT POVERTY OF THE COUNTY AND HCCA FOR 

ALL COUNTIES IN THE APPALACHIAN REGION (N=419 COUNTIES) 

Appalachian Counties

N=4192

Unstandardized Coefficients Std. Coeff t Sig. Level

B Std. Error Beta

(Constant) 9002.378 25.199 357.254 .000

Persistent Poverty (1=yes;0=no) 228.794 26.563 .393 8.613 .000

Combined Healthcare Cost, Coverage and 

Access Index - percentile 1.527 .427 .163 3.579 .000

ARC County (1/0) NA NA NA NA NA 1 Predictors of YPLL_75 per 100,000 Population (logged) and multiplied by 100,000, for U.S. Counties, 2005-2007. 2 N=419 because one county has missing values for the dependent variable. 

LnYPLL_75x100K=9002.378 + 228.794*Pers_Pov + 1.527* HCCA_Index 

R R Square Adjusted R Square Std. Error of the Estimate

.473 .224 .220 199.04304

FIGURE 53 - REGRESSION MODEL: YPLL_75 BY PERSISTENT POVERTY OF THE COUNTY AND HCCA, FOR 

ALL COUNTIES IN THE APPALACHIAN REGION (N=419 COUNTIES)

Note: Points on the right are persistent poverty counties, on left are not persistent poverty counties.

The regression shows significant correlation between the HCCA and premature mortality in counties, even 

when the equation is controlled for designation as a Persistent Poverty county. With few exceptions 

Appalachian counties with high persistent poverty had higher premature mortality and, with a few exceptions, 

the level of premature mortality was close to what would be predicted by the county’s HCCA score. The 

discontinuity on the regression scatter plot reflects the yes/no nature of the Persistent Poverty classification. 

The scatter plot in Figure 53 also shows that a few Persistent Poverty counties have much lower than expected 

premature mortality, as represented by the few low mortality scores in the right hand cluster. 
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TABLE 54 - REGRESSION MODEL: YPLL_751

 BY PERSISTENT POVERTY OF THE COUNTY AND COMPONENTS OF HCCA INDEX 

FOR ALL COUNTIES IN THE UNITED STATES (N=3007 COUNTIES) 

All U.S. Counties 

N=30072

Unstandardized Coefficients Std. Coeff t Sig. Level

B Std. Error Beta

(Constant) 8688.943 11.870 732.018 .000

ARC Economic Distress: Index Rank (1 = 

Best; 3,110 = Worst) 246.108 14.171 .279 17.368 .000

Health Care Resource Availability 

Component (1=best;100=worst) 1.256 .164 .122 7.668 .000

Health Insurance Coverage Component 

(1=best;100=worst) 1.277 .164 .125 7.802 .000

Health Care Cost Component 

(1=best;100=worst) 2.685 .173 .265 15.552 .000

Flag for ARC County (0/1) 89.330 13.295 .105 6.719 .000

1 Predictors of YPLL_75 per 100,000 Population (logged), for all U.S. Counties, 2005-2007. 2 N=3007 because some counties have a missing value for the some variables.

LnYPLL_75x100K = 8688.943+ 246.108 *Pers_Pov + 1.256*Access_Comp + 1.277* Coverage_Comp + 

2.685*Cost_Comp + 89.330 *ARC 

R R Square Adjusted R Square Std. Error of the Estimate

.569 .324 .322 241.60900
Appendix M 

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TABLE 55 - REGRESSION MODEL: YPLL_751 BY PERSISTENT POVERTY OF THE COUNTY AND COMPONENTS OF HCCA INDEX 

FOR ALL COUNTIES IN THE 13 APPALACHIAN STATES (N=1069 COUNTIES) 

All Counties in the 133 Appalachian States

N=10692

Unstandardized Coefficients Std. Coeff t Sig. Level

B Std. Error Beta

(Constant) 8797.858 19.914 441.782 .000

ARC Economic Distress: Index Rank 

(1 = Best; 3,110 = Worst) 212.092 17.741 .321 11.955 .000

Health Care Resource Availability 

Component (1=best;100=worst) 1.479 .228 .167 6.485 .000

Health Insurance Coverage Component 

(1=best;100=worst) .159 .293 .014 .542 .588

Health Care Cost Component 

(1=best;100=worst) 3.012 .255 .332 11.798 .000

Flag for ARC County (0/1) 2.736 13.809 .005 .198 .843

1 Predictors of YPLL_75 per 100,000 Population (logged), for U.S. Counties, 2005-2007. 2 N=1069 because some counties have a missing value for the dependent variable. 

LnYPLL_75x100K = 8797.858 + 212.092*Pers_Pov + 1.479*Access_Comp + .159* Coverage_Comp + 

3.012*Cost_Comp + 2.736*ARC 

R R Square Adjusted R Square Std. Error of the Estimate

.610 .372 .369 207.66614
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TABLE 56 - REGRESSION MODEL: YPLL_751 BY PERSISTENT POVERTY OF THE COUNTY AND COMPONENTS OF HCCA INDEX,

FOR ALL COUNTIES IN THE APPALACHIAN REGION (N=419 COUNTIES) 

Appalachian Counties

N=4192

Unstandardized Coefficients Std. Coeff t Sig. Level

B Std. Error Beta

(Constant) 8926.903 36.199 246.604 .000

Persistent Poverty (1=yes;0=no) 191.767 26.417 .330 7.259 .000

Health Care Resource Availability 

Component (1=best;100=worst) 1.140 .340 .145 3.353 .001

Health Insurance Coverage Component 

(1=best;100=worst) -1.155 .407 -.120 -2.839 .005

Health Care Cost Component 

(1=best;100=worst) 2.348 .411 .253 5.715 .000

1 Predictors of YPLL_75 per 100,000 Population (logged) and multiplied by 100,000, for U.S. Counties, 2005-2007. 2 N=419 because one county have a missing value for the dependent variable. 

LnYPLL_75x100K = 8926.903 + 191.767*Pers_Pov + 1.140*Access_Comp -1.155* Coverage_Comp + 

2.348*Cost_Comp 

R R Square Adjusted R Square Std. Error of the Estimate

.532 .283 .276 191.75721
Appendix M 

PDA, Inc. & Cecil. G. Sheps Center/UNC-Chapel Hill 

ARC Contract No.: CO-16835-2010 169

ADDITIONAL MATERIAL

The additional material provides supporting documentation for the YPLL_75 analyses including the flag for 

presence of county in Appalachia. 

FIGURE 54 - LOGRITHMIC TRANFORMATION OF YEARS OF POTENTIAL LIFE LOST PER 10,000 POPULATION UNDER AGE 75

The absolute level of years of preventable life lost estimated for each county has been standardized by the 

population of the county. This quantity is measured along the horizontal axis. This quantity is rescaled using a 

natural logarithmic transformation. That result is displayed along the vertical axis. This, mathematically,

makes the subsequent statistical manipulations more statistically stable and interpretable and less affected by 

extreme values. 
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YPLL_75 per 100,000 population from the Wisconsin 2005-2007 County Population Health Ranking files 

were used in the regression; the regression creates a “mean” for the values used. This is a mean of the 

premature mortality rates. Differences in these means are more apparent when expressed in terms of their 

natural logarithms.

FIGURE 55 - COMPARISON OF ESTIMATED PREVENTABLE MORTALITY RATES IN 2005-2007

AVERAGE OF YEARS OF POTENTIAL LIFE LOST UNDER AGE 75 PER 100,000 POPULATION

Source: University of Wisconsin County Health Rankings, Premature mortality was

estimated with the equation: County YPLL_75 / 100K x county population 2008 / 100,000. 

Mortality was summed for all counties and divided by the total population times 100,000

YPLL_75 is a rate. To demonstrate its meaning, Figure 55 illustrates the number of people under 75 who 

would have died prematurely in the years 2005 through 2007, if 100,000 people were randomly selected from 

three different populations: Appalachia, Appalachian states and the United States. During that period, 18 

percent more Appalachians than U.S. residents would have died prematurely. 

(8,622 / 7,246 - 1) / 100 = 18% 
Appendix M 

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ARC Contract No.: CO-16835-2010 171

FIGURE 56 - CORRESPONDENCE BETWEEN ARC_EDI AND YPLL_75 PER 

10,000 POPULATION IN ALL U.S. COUNTIES, 2005-2007

People who live in more economically distressed communities tend to die younger of potentially preventable 

causes.

ARC Economic Distress Index, 5 Categories

Attainment Competitive Transitional At-Risk Distressed
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FIGURE 57 - CORRESPONDENCE BETWEEN HCCA INDEX AND YPLL_75, ALL U.S. COUNTIES, 2005-2007

People who live in counties with a less favorable Health Access and Cost profile tend to die younger of 

potentially preventable causes.
Appendix M 

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ARC Contract No.: CO-16835-2010 173

FIGURE 58 – YPLL_75, ALL U.S. COUNTIES, 2005-2007 – ARRAYED BY ARC_EDI (5LEVELS) AND HCCA INDEX

Both economic distress and healthcare access problems tend to occur in the same counties. However both 

factors seem to be associated with years of potential life lost. This pattern is observed when the ARC EDI is 

arrayed into 5 categories.
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FIGURE 59 – YPLL_75, ALL U.S. COUNTIES, 2005-2007 – ARRAYED BY ARC_EDI (3LEVELS) AND HCCA INDEX

Both economic distress and healthcare access problems tend to occur in the same counties. However both 

factors are associated with years of potential life lost. A similar pattern is seen when the ARC EDI is arrayed 

into 3 categories.
Appendix M 

PDA, Inc. & Cecil. G. Sheps Center/UNC-Chapel Hill 

ARC Contract No.: CO-16835-2010 175

FIGURE 60 – YPLL_75, APPALACHIAN COUNTIES, 2005-2007 – ARRAYED BY ARC_EDI (3LEVELS) AND HCCA INDEX

A similar pattern of economic distress and healthcare access problems occurring in the same counties is found 

in Appalachia. There are a high number of counties in the bottom 25% of counties nationally in terms of 

economic distress, and also in the bottom two quintiles in terms of health access and cost. (Two cells in the 

upper right corner of the graph above). Conversely, almost no counties in Appalachia are both in the top 25 

percent in terms of their economic distress index and in the top two quintiles in terms of their health access 

and cost profile.
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FIGURE 61 –YPLL_75, APPALACHIAN COUNTIES, 2005-2007ARRAYED BY ARC_EDI (3 LEVELS) AND HCC COMPONENT

A very high proportion of Appalachian counties are both economically distressed and providers in those 

counties are reimbursed at relatively low levels. Residents of these counties have disproportionately high 

levels of mortality in terms of years of potential life lost (see the upper right hand cell of table above).
Appendix M 

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ARC Contract No.: CO-16835-2010 177

FIGURE 62– YPLL_75, APPALACHIAN COUNTIES, 2005-2007 ARRAYED BY ARC_EDI (3 LEVELS) AND HIC COMPONENT

Higher insurance coverage is more closely associated with decreases in mortality in Appalachian counties that 

have a more advantaged profile. 
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FIGURE 63 – YPLL_75, APPALACHIAN COUNTIES, 2005-2007 ARRAYED BY ARC_EDI (3 LEVELS) AND HCRA COMPONENT

More extensive health resources seem to have a more consistent and pronounced effect on lengthening life in 

the most economically distressed Appalachian counties, i. e. those in the bottom 25 percent. 
Appendix N 

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ARC Contract No.: CO-16835-2010 179

APPENDIX N: COUNTY ECONOMIC STATUS IN APPALACHIA, FY 2012

FIGURE 64 – COUNTY ECONOMIC STATUS IN APPALACHIA, FY 2012