The Health Quality of Older Americans
Alternative Medicine: An Overview
Fact Sheet
Craig Caplan, AARP Public Policy Institute
May 1998
Table of Contents:
Background |
Insurance Coverage of Alternative Medicine | State Mandates |
Cost Effectiveness of Alternative Medicine |
Conclusions |
Footnotes
Alternative medicine covers a wide range of medical approaches, therapies, and philosophies that, in general, have been rejected or neglected by physicians in the United States in the twentieth century1. Until very recently, alternative medical treatments and practices have not been widely taught in medical schools, reimbursed by medical insurance companies, or used in hospitals2. However, signs of a new openness to alternative medicine have begun appearing in recent years: a growing number of medical schools have begun teaching courses in alternative medicine; more private insurance plans have begun to recognize the utility of some forms of alternative medicine and have offered coverage in conjunction with conventional treatments; and, in 1992, a Congressional mandate established the Office of Alternative Medicine, a small entity within the National Institutes of Health that was chartered to assess alternative therapies. Its annual budget has grown every year since 1993 and, between 1997 and 1998, increased from $12 million to $20 million3.
Popular forms of alternative treatments include acupuncture, biofeedback, chiropractic services, homeopathy, and naturopathy4. These are described below:
- Acupuncture: uses thin needles inserted into specific "reflex points" to relieve pain and to treat conditions such as nausea and chemical dependency.
- Biofeedback: uses relaxation and visualization in order to lower patients' stress levels, alleviate headaches, or reduce their blood pressure.
- Chiropractic services: adjusts the spine to treat pain and to prevent disease.
- Homeopathy: uses very small and diluted doses of natural, yet frequently poisonous, substances such as snake venom, poison ivy, and mercury to treat certain illnesses or disorders (e.g., allergies, asthma, epilepsy).
- Naturopathy: uses a variety of therapies to help the body heal itself through nutrition counseling (e.g., emphasizing low-fat diets), herbal medicines (e.g., St. John's wort and other natural herbs), ultrasound therapy, massage, yoga, and other methods. Purist naturopaths avoid all antibiotics and other mainstream medicine.
A study published in the New England Journal of Medicine in 1993-the most comprehensive published study of alternative therapies-reported that 34 percent of adults had used alternative therapies such as these in 19905. However, about 72 percent of these users did not inform their physician that they used such therapies. Altogether, the amount spent on alternative therapies totaled $13.7 billion in 1990, with $10.3 billion of that amount spent out-of-pocket6. Moreover, in 1994, there were 59,000 licensed alternative medicine practitioners in chiropractic, oriental medicine (acupuncture and herbal medicine), and naturopathy. About 50,000 of these providers were practicing in chiropractic medicine7.
More recent research investigated the characteristics of persons who have used alternative medicine. First, individuals with college or graduate degrees were found to be more likely to use alternative medicine than those with high school education or less. Second, individuals reporting serious health problems were more likely to use alternative medicine than healthier individuals. Furthermore, the majority of individuals who used alternative medicine did so largely because they viewed these practices as being compatible with their own values, beliefs, and philosophy toward life and health, not because they were dissatisfied with conventional medicine8.
Top of Page
Insurance Coverage of Alternative Medicine
Some health plans and employers have begun to voluntarily cover different types of alternative medicine. In January 1997, Oxford Health Plans became the first major health care plan in this country to offer comprehensive coverage for a range of alternative care services, including acupuncture, chiropractic, naturopathy, and other specialties (e.g., nutrition, yoga, massage therapy). Policy holders, if they choose to pay an additional three percent premium, are reimbursed for these alternative services. Unlike other health plans that offer some coverage for alternative medicine, Oxford does not require a referral by a patient's primary care physician (PCP) to use these services. Only certain groups in New York, New Jersey, and Connecticut can purchase this rider9.
Other insurers have offered more limited coverage of alternative medicine. Coverage often varies dramatically from one insurer to another10. Plans offering limited coverage to some subscribers include American Western Life Insurance Company, Blue Cross/Blue Shield, Kaiser Permanente, Mutual of Omaha, and Prudential. Many of these plans cover chiropractic care; others include acupuncture, biofeedback, massage therapy, herbal remedies, and/or other forms of alternative medicine11.
Although there is a relatively small proportion of plans offering alternative care coverage now, more HMOs are expected to begin reimbursing their members for some alternative treatments in the next few years. In fact, a recent survey of 80 national HMOs found that 58 percent intended to offer alternative care therapies to members by 199812. Additionally, in March 1998, Health Care Value Management, New England's largest Preferred Provider Organization (PPO), announced that it would offer alternative medicine benefits to its 400,000 members13. Finally, a few self-insured companies, including Microsoft, have already included generous coverage of alternative practices in their health plans. Microsoft employees have a plan option that includes unlimited access to naturopaths and chiropractors14.
Except for certain chiropractic services15, the federal Medicare program does not currently offer coverage of alternative medicine. However, the Health Care Financing Administration (HCFA), the agency that administers Medicare, has started to evaluate several treatments. First, in response to recent findings, Medicare announced it would test a new (non-surgical) preventive heart program developed by Dean Ornish, M.D. One study showed that this preventive heart program reduced the need for surgery and cut patients' medical costs by $10,000 a year16. Additionally, a 1997 report by a National Institutes of Health (NIH) panel found that acupuncture is effective in treating postoperative and chemotherapy nausea, vomiting, and other conditions. As a result, Medicare has started assessing the cost effectiveness of including acupuncture in its benefits package17.
While some health plans and self-insured employers, as well as Medicare, voluntarily cover or are considering covering alternative medicine, some states have issued mandates. For example, a law in New York that went into effect on January 1, 1998, requires insurers to cover up to 15 chiropractic visits per year. Critics fear, however, that such mandates could greatly increase costs and drive large companies to leave the commercial insurance market and, instead, self-insure18. Altogether, in early 1995, 41 states reportedly required private insurers to offer chiropractic services19, either as a rider or mandated as a benefit. Additionally, according to Oxford Health Plans, eight states currently mandate that insurers offer acupuncture treatments. Moreover, the state of Oregon and the city of Miami have mandated acupuncture treatment for chemically dependent offenders20.
Of all 50 states, Washington state has had the most extensive mandate. A law that took effect on January 1, 1996, required health plans to provide access to licensed providers of alternative health care. It stated that all categories of providers would be given equal treatment by insurance companies. The law initially mandated that, in every health plan, insurers must cover visits to chiropractors, acupuncturists, naturopaths, and other alternative care providers. However, after 12 of the state's largest insurers challenged the mandate, a federal judge ruled that the mandate was preempted by the Employee Retiree Income Security Act of 1974 (ERISA). In turn, the ruling was changed so that the mandate applied only to state-regulated health plans21. As of April 1998, an appeal by the state was pending.
Cost Effectiveness of Alternative Medicine
Since relatively little is known about the cost effectiveness of alternative medicine in general, many insurers are cautious about voluntarily offering the same levels of coverage for alternative medicine as they have for conventional medicine22. The NIH continues to sponsor various studies of alternative treatments. However, many conclusions from these studies will not be reached for several years23.
Washington state's alternative medicine experience could ultimately provide useful information to other states. However, the use of Washington state's mandated alternative medicine benefits has not yet been sufficiently high to provide analysts with meaningful cost-benefit data. As a result, no cost effectiveness studies have been completed there.
Proponents and opponents have argued about whether Washington state's mandate has added to the cost of health care. Proponents believe that the mandate lowers costs as people move from more expensive procedures to less expensive alternative medicine treatments. Opponents, on the other hand, think that it raises costs for everyone, not just those who use alternative medicine procedures24. In the short term, they contend, costs increase as insurance policies pay for alternative treatments, because persons who have never tried alternative treatments are more likely to do so. Additionally, critics argue, persons who had used such treatments only sparingly have incentives to use more services (since insurance coverage lowers their out-of-pocket spending). Until there are sufficient data on use to conduct well-designed studies of Washington state's experience, however, learning about the cost effectiveness of its mandated alternative medicine benefit is likely to remain difficult.
Alternative medicine may potentially reduce health care costs and provide more effective care; but since alternative medicine can take so many forms, it is difficult to generalize about the usefulness and effectiveness of alternative medicine as a whole. While acceptance of alternative medicine has grown in parts of the medical community (e.g., more insurers are voluntarily offering coverage, more medical schools are including alternative medicine course options), alternative medicine still has many skeptics. As research on various types of practices continues, it should become easier for insurers, providers, employers, and others to evaluate which treatments effectively complement traditional medicine.
1 Alternative medicine is also often referred to as complementary medicine. The new term integrative medicine refers to the medical care approach of combining conventional medicine with complementary medicine.
2 National Institutes of Health, Office of Alternative Medicine Clearinghouse, "Frequently Asked Questions," March 1997.
3 Data from National Institutes of Health, Office of Alternative Medicine, "Slide 4--History of Office of Alternative Medicine," (from worldwide web address http://altmed.od.nih.gov/oam/resources/present/oam-core/4.html, March 23, 1998).
4 Capell, Kerry (editor), "Alternative Medicine: Not So Alternative Anymore," Business Week, June 2, 1997, pp. 150-151; Smith, Lee, "Coming to a Health Plan Near You: Yoga and Belladonna," Fortune, September 29, 1997 (from worldwide web address http://www.pathfinder.com/fortune/specials/bestoffortune/comp_ind4.html).
5 A November 1997 telephone survey of 1,500 adults conducted by Landmark Healthcare Inc., a managed alternative care company in Sacramento, California, found that 42 percent of these individuals had used some type of alternative care in the past year (see Brody, Jane E., "Alternative Medicine Makes Inroads, but Watch Out for Curves," The New York Times, April 28, 1998).
6 Eisenberg, David M., et al., "Unconventional Medicine in the United States--Prevalence, Costs, and Patterns of Use," New England Journal of Medicine 328(4), January 28, 1993, pp. 246-252.
7 Cooper, Richard A., and Stoflet, Sandi J., "Trends in the Education and Practice of Alternative Medicine Clinicians," Health Affairs 15(3), Fall 1996, pp. 226-238.
8 Astin, John A., "Why Patients Use Alternative Medicine," JAMA 279(19), May 20, 1998, pp. 1548-1553.
9 Lagnado, Lucette, "Oxford to Create Alternative Medicine Network," Wall Street Journal, October 7, 1996 (from worldwide web address http://www.newagenet.com/LightParty/Health/ Oxford.html).
10 Capell, 1997.
11 Hube, Karen, "More Insurers Pick up the Tab for Alternative Medicine," Money, October 1996; Lagnado, 1997.
12 Capell, 1997.
13 Business Wire, "New England's Largest PPO to Offer Complementary and Alternative Medicine Benefits," March 24, 1998 (from worldwide web address http://biz.yahoo.com).
14 Smith, 1997.
15 A chiropractor licensed (or legally authorized) by the state is included in the definition of physician under Part B of Medicare, "but only with respect to the coverage of the chiropractor's own professional services, and services and supplies 'incident' to those services, and only with respect to treatment by means of manipulation of the spine. In addition, a chiropractor's services are covered only if the treatment is to correct a subluxation demonstrated to exist by X-ray" (CCH Incorporated, Medicare Explained [Chicago: CCH Incorporated, 1997], p. 86).
16 Sternberg, Steve, "Medicare gives preventive Ornish heart program a try," USA Today, September 10, 1997.
17 "Briefly This Week," Medicine and Health, November 13, 1997, p. 4.
18 National Journal Group, Inc., "Statelines - New York: Governor Signs Chiropractor Bill," American Health Line, August 22, 1997.
19 National Journal Group, Inc., "Access/Quality/Cost - Alternative Treatments: Acceptance is Increasing," American Health Line, January 30, 1995.
20 Oxford Health Plans, "Did you know?" Oxford Health Plans' (from worldwide web address http://www.oxhp.com/altmed/skptc.htm), 1997.
21 National Journal Group, Inc., "Statelines - Washington: Insurance to Cover Alternative Medicine," American Health Line, December 18, 1995; National Journal Group, Inc., "Statelines - Washington: Insurers Challenge Alternative Care Mandate," American Health Line, January 10, 1996; National Journal Group, Inc., "Statelines - Washington: Insurers Freed from Alternative Care Mandate," American Health Line, May 8, 1997.
22 Capell, 1997.
23 Smith, 1997.
24 Hope, John, "Washington health plans find utilization, costs for alternative health care modest so far," State Health Watch, October 1997, pp. 5, 11.
Written by Craig Caplan, AARP Public Policy Institute
May 1998
© 1998 AARP
May be copied only for noncommercial purposes and with attribution; permission required for all other purposes.
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Pub ID: FS67