Health Coverage: The Cost of Neglect; Promising Strategies Jack A. Meyer Economic & Social Research Institute Presentation for NGA Annual Retreat, September 4, 2003

Cost of Being Uninsured % of adults not receiving preventive services (uninsured, insured) n Mammography in past 2 yrs (32%, 11%) n Pap test in past 3 yrs (20%, 6%) n Hypertension screening (20%, 6%) n Cholesterol screening (40%, 18%) n Diabetics’ dilated eye exam (44%, 27%) n Diabetics’ foot exam (64%, 40%) Source: Hadley, 2003; Ayanian, 2000

Cost of Being Uninsured--Less Preventive Care n % increase in probability of late-stage diagnosis--uninsured compared to insured –colorectal cancer--70% –melanoma--160% –breast cancer--40% –prostate cancer--50% Source: Hadley, 2003; Canto, 2000

Cost of Being Uninsured-- Household Finances and Work n 44% of uninsured had serious problem paying medical bills; nearly a third were contacted by a collection agency n Poor health reduces annual earnings: –earnings lost: white men, 21%, black men, 22%, white women, 12%, black women, 28% –states also incur costs in areas such as mental health and safety net spending Source: Kaiser, January 2003; Hadley, 2003

Possible Federal Action n Use the $50B in budget (could be$75B) to expand coverage. Options: –Extend Trade Act credits to all unemployed –Feds fund pilot coverage expansion in several states n Federal funding for dual eligibles’ drugs n Feds fund pilot coverage expansion projects in several states n Restore coverage for legal immigrants

Longer-Term Options n Employer mandate n Individual mandate n Federal income tax credit n Major expansion of Medicaid/S-CHIP n Insurance exchanges, FEHB n National health plan

State Coverage Expansion Strategies I. Expand public coverage programs II. Promote private insurance III. Hybrid approaches

I. Expand Public Coverage:Utah n Provides primary/preventive care to 25,000 uninsured <150%FPL (versus 5,000 under traditional waiver) n Hospitals agreed to donate $10m in services n Reduced benefits for some mandatory & optional Medicaid enrollees, enrollment fee n Folded state-only UMAP into Medicaid, leveraging $3.5m state funds into $20m with federal resources n 13,000+ enrolled, $66 pmpm

Expand Public Coverage: Maine n Eligibility: up to 100% FPL, assets $2k/3k n Services: Full, comprehensive Medicaid benefit package through PCCM n Mechanism: 1115 HIFA waiver, transfer of unused DSH funds, tobacco tax n Began Oct ‘02; 15,000 enrolled (June ‘03) n Passed legislation to raise eligibility to: 125% FPL childless adults, 200% FPL parents

II. Promote Private Insurance n Premium assistance for low-income workers n Incentives to employers n Reinsurance n Purchasing pools n Insurance regulatory reform

ADVANTAGES n Expand access w/out full cost borne by states n Avoid substituting public for private coverage n Minimize erosion of ESI n Feds offering new flexibility (HIFA) n Builds on employer-based system n No stigma n Political climate favors private sector solutions OBSTACLES n Fear of government role in private market n Low employer participation n Administrative complexity n Leaves out most needy Premium Assistance

MassHealth Family Assistance: Dual Strategy n “Premium Assistance”- Worker subsidy –up to 200% FPL, self-employed, small firm (or parent at large firm), employer pays 50+% premium of private insurance meeting benchmark –Family pays up to $30/mo., $25/mo./adult –<133% FPL: Family pays $0 –4,315 adults; 4,100 children; total 16,000 covered by subsidized insurance n Insurance Partnership--small business subsidy

Healthy New York n Commercial insurance product that state requires all HMOs to offer n Eligible: small, low-wage firms, uninsured workers w/o access to ESI, low-income self-employed n Stop-loss fund: state pays claims $5k-$75k n Streamlined benefits, in-network n Slow start, enrollment 27,000, mostly individuals n Recent changes to expand eligibility, reduce premiums, increase benefit options

Local-State Partnership: Access Health (Muskegon County, MI) n Offers comprehensive benefits to small/medium firms with mostly low-income uninsured workers n Contracts directly with 97% providers n 330+ firms enrolled, 1,200+ lives covered n “3-way shared buy-in” –$4m annual budget: 30% employer, 30% worker, 40% community subsidy n State allows DSH$ to match local funds

III. Hybrid Approaches n Leverage public and private funds n Support both private coverage, safety net n Models: –Buy-in to Medicaid/SCHIP (eg, NY) or state employee insurance (GA) –Allow small firms to purchase state-subsidized plan (eg, AR,NM, ME) –Support indigent care pool (MD, MA)

Maine’s Proposed Dirigo Health Plan n State creates comprehensive, affordable health plan through private insurers n Available to workers in small firms, self-employed, w/o access to employer coverage, dependents n Employers contribute 60+% premium

(cont.) Maine’s Proposed Dirigo Health Plan n Sliding scale subsidy for workers <300% FPL n Financed by: employers, workers, state & feds, redirecting 60% of funds for bad debt/charity care n No new state appropriations n Pending CMS approval

Conclusion n Health coverage saves lives n Feds can act now to expand coverage n Long-term reforms can build on Medicaid/S-CHIP and employer system n States provide learning “workshops”