© 2005 Powell Goldstein LLP. All Rights Reserved. New Approaches to State Health Reform: Extending Coverage to the Uninsured and Reducing State Health Care Costs New Approaches to State Health Reform: Extending Coverage to the Uninsured and Reducing State Health Care Costs Barbara Eyman Powell Goldstein LLP Medicaid Congress Washington DC June 6, 2006

Overview of Approaches  Public Funding Models –Medicaid/SCHIP Initiatives –Employer-Based Initiatives –Reducing Risk –Tax Incentives –Behavioral Incentives  Non-Monetary Measures –Leveraging State Purchasing Power –Consumer-Driven Market Approach –Public Private Purchaser Alliance –Employer/Individual Mandate  Community- Based/Safety Net Provider Initiatives

Public Funding Models: Expanding Medicaid/ SCHIP Eligibility  Optional Coverage Groups  HIFA Waivers  Other 1115 Demonstrations Examples: –Oregon, Utah, Illinois (AllKids) –22 States Pursuing Eligibility Expansion in 2006 (Kaiser Family Foundation)

Public Funding Models: Using Medicaid/SCHIP Funds to Expand Private Coverage  State Uses Medicaid Funds to Subsidize Private Coverage  Premium Assistance (Section 1906) –Cost Effectiveness Requirement –Wrap-Around Coverage  HIFA and Other 1115 Waivers

Public Funding Models: Using Medicaid/SCHIP Funds to Expand Private Coverage Example: Arkansas: Safety Net Benefit Program  HIFA Waiver  Small Employer-Based Coverage (<50 Employees)  Newly Designed Product  Limited Benefit Package  $15/$100 Monthly Cost + Co- Pays/Deductibles  100% Employee Coverage Requirement  Funded by Premiums, Tobacco Funds, Federal Match

Public Funding Models: Subsidizing Employer-Sponsored Private Coverage  State Subsidizes Employers and/or Employees for the Purchase of Existing Employer-Based Coverage  No New Product Created  Subsidy Intended to Reduce Cost and Increase Employee Uptake

Public Funding Models: Subsidizing Employer- Sponsored Private Coverage Example: Utah: Covered at Work  $50 Monthly Subsidy for Employees  Eligibility Criteria –(<150% FPL) –Premiums > 5% of Income –Not Eligible for Medicaid  No Minimum Benefit Package

Public Funding Models: Establishing Affordable Employer-Based Plan  State Creates New Coverage Product  Provides Subsidies for Participation  Requires Employer Contribution  Offered through Employers and/or to Self-Employed and Individuals  Offered through Private Carriers or Self-Administered  May Offer Multiple Coverage Options  May Leverage Medicaid Funding for Medicaid- Eligible Participants

Public Funding Models: Establishing Affordable Employer-Based Plan Example Maine: DirigoChoice  Small Employers (<50 Employees), Self- Employed, Individuals  75% Employee Participation Requirement  Market-Based Benefit Package  Employer Pays 60% of Employee Cost  Low Income (<300% FPL) Discounts on Monthly Payments, Co-Payments & Deductibles  Funded by Employer & Individual Contributions, State Funds, Federal Medicaid Match

Public Funding Models: Establishing Affordable Employer-Based Plan Example Tennessee: Cover Tennessee  $150 Monthly Premium Shared by Employers, Employees, State  Focus on Small Employers  Benefit Package to be Bid by Private Insurers  Open to Uninsured Individuals without Insurance for 6 Months

Public Funding Models: Enhancing Affordability by Reducing Risk  State Covers Catastrophic Costs –Reinsurance –Stop Loss  State Covers Higher than Average Overall Risk (Arizona)  May Include Cap (to Encourage Ongoing Cost-Containment)  May Include Partial Coverage

Public Funding Models: Enhancing Affordability by Reducing Risk Example New York: Healthy New York  Small Employers (<50 Employees), Self-Employed, Individuals Eligible  Standard Benefit Packages Offered by All HMOs  Rates Vary by HMO  90% Claims Reimbursement between $5,000 and $75,000

Public Funding Models: Creating High Risk Pools  Targeted at Uninsurable Individuals  Federal Funding Available for Qualifying Pools –Premiums  200% Private Rates –HIPAA-Qualified –Ongoing Financing Mechanism –At Least 2 Coverage Options  Funding Sources Include Premiums, Insurance Assessments, Hospital Assessments, State General Revenues, Federal Grant Funds

Public Funding Models: Providing Tax Incentives  Employer Tax Incentives  Individual Tax Incentives –Health Coverage Tax Credit  Tax Incentives for Health Savings Accounts

Public Funding Models: Behavioral Incentives  Disease/Chronic Care Management –Medicaid/Non-Medicaid –High Risk Pools –Disease Specific –High Utilizers  Prevention/Wellness Incentives –ME DirigoChoice: $25 to Choose PCP/$75 for First PCP Visit and Health Assessment –Eliminate Cost Sharing for Preventive Care –Rates Based on Tobacco Use/Weight

Non Monetary Measures: Leveraging State Purchasing Power  State Employee Health Plans  Medicaid  Small Businesses

Non Monetary Measures: Leveraging State Purchasing Power Example Connecticut: Municipal Employees Health Insurance Program  State Negotiated Plans  Made Available to Small Businesses (< 50 Employees)  More Favorable Group Rates

Non Monetary Measures: Leveraging State Purchasing Power Example Maine: RX Plus  Leverages Medicaid Drug Purchasing to Offer Discounted Drugs to Uninsured  State Negotiated Medicaid Rebates for Uninsured  Participating Manufacturers Included in Medicaid Preferred Drug List

Non Monetary Measures: Leveraging State Purchasing Power Example Pennsylvania: adultBasic  Negotiated Deal with 4 BCBS Plans  Requires Dedication of a Percentage of Premium Revenues to Fund adultBasic Coverage  adultBasic Provides Affordable Coverage for Low Income Adults  $85 Million in 2005 Covering 29,0000 Individuals

Non-Monetary Measures: Enhancing Consumer Driven Market Forces  Health Savings Account/High Deductible Health Plans  6 States Provide Exempt HSA Contributions from State Taxes  9 States Provide HSA Option for State Employees  Some States Experimenting with HSAs for Medicaid (FL & IA Have CMS Approval)

Non-Monetary Measures: Enhancing Consumer Driven Market Forces Example  Maine Quality Forum –Promoting Best Practices –Publishing Comparative Quality Data –Average Pricing Data –Promoting Electronic Data –Patient Safety Initiative: Safety Star Certification

Non-Monetary Measures: Permit Limited Benefit Plans  Exempt State-Sponsored and/or Other Plans from Insurance Benefit Mandates Examples –Arkansas: Health Insurance Purchasing Group Law –Florida: HealthFlex

Non Monetary Measures: Public-Private Purchaser Alliance  State & Private Purchasers Set Uniform Standards Example Minnesota Smart Buy Alliance –Alliance Includes Purchasing for 3.5 Million People –Standardized Information for Consumers on Cost and Quality –HIT Requirements (SmartCard, Electronic Prescribing, Standardized Claims Forms, Patient Satisfaction and Outcomes Tracking, Etc.)

Non-Monetary Measures: Employer Mandate  Mandated Employer-Based Coverage  May Exempt Small Employers  May Provide Subsidies  May Assess Employers Not Offering Coverage (Pay or Play)

Non-Monetary Measures: Employer Mandate Example California: Health Insurance Act of 2003  Pay or Play: Employers with 20+ Employees Must Cover 80% of Premiums or Pay Fee to State Health Purchasing Fund  Employers with <20 Workers Exempt  Tax Credit for Employers with Employees  Required Dependent Coverage for 200+ Employees  Measure Defeated on 2004 Ballot Initiative

Non-Monetary Measures: Employer Mandate Example Vermont: Catamount Health  Standardized Health Plan for Uninsured  Offered by Private Insurers (Initially)  Subsidies for Low Income Individuals  Employers Assessed $365/FTE for Each Uncovered Worker –8 FTEs Exempt (Declining to 4 by Year 4) –Includes Employees Not Offered Coverage and Employees Not Accepting Coverage

Non-Monetary Measures: Employer Mandate Example Maryland: Fair Share Health Care Fund Act  Businesses with >10,000 Maryland Employees Must Contribute 8% of Payroll to Health Insurance Coverage or Pay into Pool  Subject to ERISA Challenge

Non-Monetary Measures: Individual Mandate

Community-Based Initiatives  Healthy Communities Access Program –Federal Grants to Coalitions of Safety Net Providers –Coordinate Care, Improve Quality, Increase Public Program Enrollment, Enhance Access, Etc.  Three-Share Programs –Employer/Employee/Government Share in Health Coverage Costs –Affordable Rates/Limited Coverage –Targeted to Small Employers

Safety Net Provider Initiatives  Provider-Based Networks “Covering” Uninsured  Integrated, Coordinated Care  Medical Home  Quality Initiatives  Reduce Inappropriate ER Usage Examples –Boston Medical Center/Cambridge Health Alliance –Virginia Coordinated Care (Virginia Commonwealth University Health System) –UNM Care (University of New Mexico)

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