State Coverage Initiatives Chiquita Brooks-LaSure June 15, 2007

States Coverage Initiatives are at Different Stages of Proposal and Implementation Minnesota Pennsylvania Massachusetts Illinois California Vermont Proposed Implemented Governors released proposals in January 2007 Governor’s proposal released in March 2007 Competing proposals in legislatures Supporting legislation introduced Implementation Underway Coverage begins September 2007 Individual mandate effective July 2007

Common Mechanisms States Use to Expand Insurance Coverage Insurance Market Reforms Premium Assistance Public Program Expansions New Health Plan Offerings Purchasing Pools Insurance Regulation Reform State Coverage Initiatives Individual Mandates Employer Penalties State Financing Chronic Care & Quality Initiatives

Some States Are Adopting Individual Mandates to Require Residents to Purchase a Minimum Level of Coverage Individual Mandate MA All residents required to have comprehensive coverage, including prescription drugs VT None PA Phased-in mandate for individuals with incomes >300% FPL CA All residents must have a minimum level of coverage (up to $5,000 deductible and max OOP limit of $7,500) MN IL

Premium Assistance Subsidizes the Cost of Private Coverage for Low-Income Individuals PA Available for ESI or Individual Coverage MA Residents with incomes <300% FPL ESI & Individual Coverage VT PA Individual coverage only CA Residents with incomes <250% FPL MN IL Residents with incomes <400% FPL

Insurance Exchanges and Standardized Benefit Plans Are Intended to Create More Affordable Coverage Options Insurance Market Reforms MA Insurance exchange offering new plans for individuals and small businesses VT New standardized health plan for individuals PA New standardized health plans for individuals and small businesses CA Insurance exchange offering new plans for individual coverage MN Insurance exchange for individual coverage IL

Most States are Penalizing Employers That Do Not Offer Coverage to Offset Program Costs Employer Penalties MA $295 per uninsured FTE* per year – excludes firms with <10 employees VT $365 per uninsured FTE* per year – firms may exclude a decreasing number of employees from the penalty each year PA 3% payroll tax – excludes firms with <50 employees CA 4% payroll tax – excludes firms with <10 employees MN None IL 3% payroll tax – excludes firms with <10 employees *FTE stands for full-time equivalent employee.

Several States Are Expanding Public Programs to Cover Low-Income Residents Public Program Expansion MA Medicaid eligibility expansion for children (200-300% FPL); eliminate wait list VT None PA CA Expand Medicaid eligibility to all adults under 100% FPL and increase eligibility to 300% for children (regardless of immigration status) MN Expand Medicaid buy-in program for adults and children IL Expand Family Care eligibility to 400% FPL for working parents without access to ESI

Many States are Including Quality Improvement Initiatives in Their Coverage Proposals Chronic Care & Quality Initiatives MA Healthy lifestyles program; Greater cost and quality reporting; Aims to reduce disparities VT Develop a model for chronic care management and prevention in the state; Expanded provider education PA Wellness, prevention, and chronic care initiatives; Improve hospital quality and reduce errors; Develop HIT initiative CA Healthy lifestyles program; Improve quality in health facilities; Extensive HIT initiative; Build consumer tools for transparency MN Preventive care requirements for new plans; Work toward greater HIT adoption in the state IL Develop a state plan to increase wellness and improve chronic care management; Increase consumer accountability & transparency

State Funding Mechanisms and Estimates of Program Costs Vary Widely State Financing Annual Cost (As Reported by State) State Federal Employer Penalty Other Assessments Other Taxes MA $1.4B  Hospitals & Insurers VT $45M Tobacco PA $255M CA $12B Hospitals & Physicians MN $44M IL $2.1B Tax on businesses earning >$2M/yr.