1 State Coverage Initiatives Workshop State Innovations in Health Coverage Cover Tennessee Laurie Lee Director, Health Planning August 3 – 4, 2006 Chicago, Illinois

2 Context - TennCare Pharmacy costs tripled from 2001 to 2005 $713M to $2.6B 44.7% in 2001, averaging +20% CAGR Covered the highest percent of state population of any state(23%) Consumed the highest percent of state dollars of any state (33%) $650M budget hole for FY06 Without change, TennCare was anticipated to consume all new tax revenue each year for the five years beginning with FY

3 Reform Process Governor Bredesen’s goal: keep all on the program Must reduce benefits for some so all can stay on Advocates said no to cuts, did not offer workable alternatives Program mired in litigation Disenrolled waiver populations: uninsured, uninsurable, waiver duals Who is still covered: ALL children, both in Medicaid and Waiver All Medicaid eligible adults Medically Needy (Spend Down) pregnant women; currently enrolled Medically Needy adults All facing disenrollment are screened first for Medicaid eligibility

4 What About the Rest of the State? 48 th out of 50 in health status rankings One of the states with the greatest overall health score declines in the nation Prevalence of obesity more than doubled from from 11.8% to 27.1% of the population Leading causes of death: Heart Disease: #1 cause of death Cancer Stroke Diabetes is 6 th leading cause of death in Tennessee and growth rate is alarming After 12 years of the most expansive Medicaid program in the country, health status indicators continue to decline...

5 What About the Rest of the State? 10% of the population uninsured (~580,000 prior to TennCare disenrollment) Adults make up over half of TN’s uninsured Small employers are most likely not to offer health insurance High monthly premium is reason most often cited for not offering health insurance 70% of employers not currently offering health insurance would be willing to pay up to $100 per employee per month Only 14% would be willing to pay $150 or more per employee per month

6 Cover Tennessee Goal is to broaden access to health coverage Overall principles: Everyone pays something Pay for important things first Pay for what works Affordable and sustainable CoverTN design principles Public/private partnership Simplicity Creativity

7 CoverKids Open to children (18 and under) in families with incomes up to 250% FPL Buy-in available above income limit Comprehensive health coverage – benefits modeled after the state employee health plan; likely HMO option Flexibility in program and benefits design Emphasis on wellness and prevention; coverage to include no cost vaccinations, healthy babies program and well-child visits (using American Academy of Pediatrician Guidelines) Maximizes federal funding sources 49 other states operate a State Children’s Health Insurance Plan Establishes SCHIP program to extend health coverage for every uninsured child in TN

8 AccessTN High-risk pool Guaranteed issue for seriously ill Tennesseans Premiums at 1 1/2 to 2 times standard market rates Funded through a combination of participant premiums, state subsidy, insurance industry assessment and federal funds Comprehensive health coverage – benefits modeled after the state employee health plan PPO model Also must offer a high deductible plan with a health savings account Premium assistance program for low-income individuals 33 states currently operate similar pools Provides health insurance to seriously ill adults who have been turned down by insurance companies as uninsurable

9 CoverTN Affordable healthcare coverage average premium targeted at $150 per month shared equally and voluntarily between state, willing employer and covered individual Available to uninsured Tennesseans below 250% FPL Employment required at the time of enrollment Portability a key feature - participant owns the coverage No or low cost for preventive health services Cost containment through limits on number of times services utilized instead of excluding services; may include maximum payout per year or maximum annual payout by service category Premiums vary depending on age, tobacco use and obesity Creates a partnership between the state, small employers and qualified employees to offer guaranteed issue, affordable, basic health coverage for working Tennesseans who are uninsured

10 CoverRX Available to uninsured Tennessee residents age 19 and over with household income below 250% FPL Access to affordable medications based on a targeted, mostly generic formulary Coverage for small, selected list of brand drugs to support Safety Net program for the with severely and persistently mentally ill (SPMI) and insulin-dependent diabetics Includes wrap-around discount for drugs not included in formulary No premium payment; cost-sharing at point of sale Expands upon the State’s Safety Net program offering affordable medication to low-income individuals

11 Funding Summary InitiativeState Funding FY07FY08FY09Three Year Total CoverKids$7M$21M$35M$63M AccessTN* $3.8M (program cost) $13M (premium assistance) $10M $13M $10M $13M $24M $39M CoverTN$34M $57M$125M CoverRx**$11.5M$16.8M $45M Totals$69.3M$94.8M$131.8M$296M *Additional $ 35M in reserve for AccessTN **Additional $11.5M in FY07 for close out of existing pharmacy safety net program while new program is procured

12 Operational Considerations Organizationally housed in Division of Insurance Administration Leverages existing infrastructure and administrative expertise Separate from TennCare Programs outsourced to insurance companies, plans Procured through competitive RFP process Minimal addition to state departments and personnel State maintains distance from enrollment process; separation from entitlement focus Special operational issues Portability of CoverTN Program interface (e.g., SCHIP/Medicaid) Eligibility determination Marketing and Outreach Overall program Special emphasis on CoverKids and CoverTN