Examining State Prison Health Care Spending: Cost Drivers And Policy Approaches

This article was originally published on the Health Affairs Blog.

Health care and corrections have emerged as fiscal pressure points for states in recent years as rapid spending growth in each area has competed for finite revenue. Not surprisingly, health care spending for prison inmates—the intersection of these two spheres—also has risen swiftly.

Yet this trend of rising health care costs for prisoners may have been reversed in many states, according to a new report by the State Health Care Spending Project, a collaboration between The Pew Charitable Trusts and the John D. and Catherine T. MacArthur Foundation. Total correctional health care expenditures and per-inmate spending increased in nearly all states from fiscal years 2007 to 2011, but in most states it began declining after peaking in 2009 and 2010. Nationwide, prison health care spending totaled $7.7 billion in 2011, down from a high of $8.2 billion in 2009, after adjusting for inflation. The downturn in spending stemmed in part from a reduction in state prison populations.

As states work to manage prison health care expenditures, a decrease in spending was a positive development as long as it did not come at the expense of access to good quality care. Yet states continue to face a variety of challenges that threaten to drive costs back up. Chief among these is a steadily aging prison population.

Older Inmates, Greater Expense

From 1999 to 2013, the number of state and federal prisoners age 55 or older—a common definition of “older” prisoners set by many state departments of correction and the National Commission on Correctional Health Care (to be consistent with data reported by the Bureau of Justice Statistics, project researchers use 55 as the definition of an older prisoner)—increased 234 percent, from 43,300 to 144,500. During the same period, the population of inmates younger than 55 grew much more slowly: up 9 percent, from 1.26 million to 1.37 million. As the number of inmates who have grown old behind bars dramatically increased, so did the cost of the health care required to treat them, although estimates of the cost vary.

The National Institute of Corrections said the annual cost of incarcerating prisoners age 55 and older with chronic and terminal illnesses is an average of two to three times the expense for all other inmates, particularly younger ones. More recently, other researchers have found that the cost differential may be wider.

Medical experts say inmates typically experience the effects of age sooner than do people outside prison because of issues such as substance use disorder, inadequate preventive and primary care before incarceration, and stress linked to the isolation and sometimes-violent environment of prison. And, like senior citizens outside prison walls, older inmates are more susceptible to chronic medical and mental  conditions, including dementia, impaired mobility, and loss of hearing and vision. In prisons, these ailments necessitate increased staffing levels and officer training as well as special housing — all of which create additional health and non-health expenses.

To better understand inmate aging trends on a state-by-state level, State Health Care Spending Project researchers partnered with the Association of State Correctional Administrators to survey state officials. Specifically, corrections administrators were asked to provide the percentage of inmates age 55 or older in their state prison populations each year from fiscal 2007 to 2011. During this period, the percentage of older prisoners increased in all but two of the 42 states that provided data (Hawaii and Mississippi), and the average share of older inmates increased from 6.2 percent of all inmates to 8.2 percent. The proportion in fiscal 2011 ranged from less than 6 percent in New Jersey, Minnesota, Indiana, Hawaii, and Connecticut to more than 13 percent in Oregon, Vermont, and West Virginia.

Project researchers found evidence of a relationship between the relative size of a state’s older prison population and its spending per inmate, though testing the causal relationship was beyond the scope of the research. States where older inmates represented a relatively large share of the total prison population from fiscal 2007 to 2011 tended to have higher per-inmate spending than other states. For instance, median per-inmate spending over the study period was 37 percent higher in the 10 states with the largest share of inmates 55 and older than it was in the 10 states with the smallest share of older inmates. This relationship between older inmates and health care spending suggests that the share of a state’s prison population represented by older inmates may be one factor among several that influences trends in per-inmate spending over time.

Prevalence of Disease and Mental Illness

Prison inmates have a higher incidence of chronic and infectious diseases, such as AIDS and hepatitis C, and mental illness than that of the general population. These costly conditions, many of which exist before incarceration, significantly burden state correctional budgets, which assume the entire cost of care.

Estimates of the prevalence of hepatitis C in prisons vary across the country, indicating regional differences in high-risk behaviors such as intravenous drug use. A survey of state correctional department medical directors and health administrators placed the national rate of hepatitis C among inmates at 17.4 percent in 2006. By comparison, roughly 1 percent of all U.S. residents have chronic hepatitis C infection. The cost implications of these numbers could become more significant for some states in the years ahead if they decide to use expensive new prescription drugs recently approved by the U.S. Food and Drug Administration to care for those with chronic hepatitis C infection.

In 2010, roughly 65 percent of incarcerated adults in prison or jails met the medical criteria for an alcohol or drug use disorder, and inmates were seven times more likely than non-inmates to have such a condition. One-third had mental illness, and one-quarter had a co-occurring mental illness and substance abuse disorder.

Cost-containment Strategies 

As state policymakers feel the strain of correctional health care costs on their budgets and look ahead to their aging prison population, corrections officials are pursuing ways to rein in expenses without sacrificing the quality of care:

Telehealth—The use of electronic information and telecommunications technologies to support, among other things, long-distance health care services. This strategy can help improve prisoners’ access to primary care doctors and specialists while reducing transportation and guarding expenses. Additional public safety benefits can be realized as well, because inmates need fewer trips off the prison grounds for medical care.

Outsourcing care—Many states look to outside partners to provide all or part of their prison health care services at lower costs while maintaining or improving the quality of care. Effective management and oversight—for example, attaching performance standards and tracking systems to contracts or monitoring the timeliness and effectiveness of prisoners’ treatment—are critical to the success of these partnerships.

Medicaid financing—A number of states have made a concerted effort to enroll eligible prisoners in Medicaid so that the program can be billed for qualifying health services, which are limited to care delivered outside prison. States can obtain federal Medicaid reimbursement that covers at least 50 percent of the cost of enrolled prisoners’ inpatient care delivered in a hospital or nursing home. Further, states expanding their Medicaid eligibility under the Affordable Care Act may save even more money. Most inmates, as nondisabled adults without dependent children, will become eligible for coverage of inpatient costs only under this expansion. The federal government will initially reimburse 100 percent of the cost of covered services for all newly eligible enrollees, including inmates. The federal matching rate will gradually decrease to 90 percent by 2020.

Medical or geriatric parole—Many states have adopted medical or geriatric parole policies that allow the release of older, terminally ill, or incapacitated inmates who meet certain requirements. Because of the high cost of incarcerating older prisoners with chronic or terminal illnesses, granting medical or geriatric parole when appropriate can achieve notable savings, even if the state retains financial responsibility for parolees’ health care costs outside prison.

However, states have released relatively few such people because of narrow eligibility criteria, complicated applications, lengthy review processes, difficulty in assessing medical suitability, and a shortage of nursing home spaces for these inmates. Also, because many older and infirm prisoners were convicted of violent crimes or were sentenced under habitual-offender laws, opposition among policymakers and the public to the concept of medical or geriatric parole has proved to be another significant obstacle.

Correctional health care spending continues to pose a fiscal challenge for state lawmakers, though evidence indicates that spending peaked at the end of the last decade. These expenses may be higher in states where older inmates represent a relatively large proportion of the prison population. Moving forward, four strategies—telehealth, outsourcing care, Medicaid financing for eligible inmates, and appropriate use of medical or geriatric parole—among others, provide promising opportunities for states to save taxpayer dollars and to maintain or improve the quality of inmate care while protecting public safety.