The Three-Share Approach

1. The Three-Share Approach Eileen Ellis Health Management Associates April 21, 2006

2. Covering the working uninsured • More than 45 million people uninsured • More than 60 million at some time during a year • More than 2/3 of the uninsured are employed or a dependent of an employed person, and • Many work for firms that do not provide insurance, or • The cost of insurance is prohibitive for lower wage workers. • About 20% of working uninsured work for smaller employers Health Management Associates

3. Local solutions Because there is no apparent national solution A number of local communities have undertaken the development of county-based initiatives to subsidize premiums for workers in firms not able to provide coverage on their own. Currently 6 plans in Michigan, 3 plans in Illinois, under discussion in Ohio, Oklahoma and Texas. Several have been in operation for several years. Health Management Associates

4. What does “Three-Share” mean? Three-Share means cost is split between: • Employer • Employee • Public or Community Subsidy Employer is small (usually <50 workers) & uninsured, with relatively low median wage (usually <$15/ hour) Public subsidy does not mean an increase in cost of caring for indigents. Health Management Associates

5. How does “Three-Share” work? The community decides: • Who is eligible • Size of firm, wage levels • History of insurance coverage • Length of employment, part time / full time • What benefits are covered • Copays • Deductibles (generally zero or very small) • Choice of insurer and provider Health Management Associates

6. Why does “Three-Share” work? • By splitting the financial responsibility,Three-Share ensures that each party has a vested interest in the program’s success. Even more important • The subsidy, by making the program less expensive, ensures the retention of workers with lower health care costs, thus stabilizing the program for all workers and firms. Health Management Associates

7. How does the subsidy work? • Many counties already subsidize indigent care • With cooperation from the State’s Medicaid agency, these funds can be increased by the Medicaid match by using a CPE or IGT. • The increased funds can then be used to provide the subsidy for the new program. • Plan costs between $150 and $250 PMPM, • Subsidy between $50 and $80 PMPM. Health Management Associates

8. How about financing? Illinois • Local Departments of Health (DoH) are currently paid less than cost for Medicaid services • County/City certifies Medicaid loss to State Agency under an intergovernmental agreement • State Agency increases federal payments to DoH • DoH uses extra funds to finance coverage for uninsured using a Three Share arrangement Health Management Associates

9. How about financing? Options Beyond the methods used by IL: • States with room in DSH cap should look to MI • States with Constitutional requirement to provide for the indigent could use existing County funding as “seed money” to expand federal funds by providing coverage of indigents or increased funding for under-paid providers who cover the indigent • States could use waiver authority to provide coverage for limited benefits for those who could spend down to Medicaid. Health Management Associates

10. Michigan Models – Not Insurance Wayne County Health Choice – begun in 1994 • Services provided & paid for by 3 competing managed care plans • Unlicensed subsidiaries of licensed HMOs • Current enrollment more than 4,000 members Muskegon County Access Health– begun in 1999 • Services provided and paid for by Access Health (not an insured product) • Current enrollment over 1,000 members • Claims administered by a third party administrator, but risk retained by Access Health Health Management Associates

11. Michigan Models – Insurance • Underwritten by a licensed insurer • First dollar coverage • Nominal copayments • Annual and lifetime limits on benefits Ingham, Kent & Washtenaw Counties • Begun in 2004 & 2005 Four Star Plan – Wayne County MI (Fall 2005) • Sponsored by Wayne County and 4 Health Systems • Health Systems comprise provider network Health Management Associates

12. Winnebago County, Illinois Health Access Plan • Begun in July of 2003 • Underwritten by Pan American Life Insurance • Enrollment will be limited to 3,000 once funding is secured. • Currently covering 50 members. Health Management Associates

13. Michigan’s Limited Benefit Programs – “One Share”? Available in 70 of 83 counties. • Income ceilings range from 150% to 250% of poverty • 150% of poverty = $14,700 for an individual • = $30,000 for a family of four • Nearly 60,000 enrollees • Benefits include: physician services, pharmacy (mostly generic formulary), laboratory, and radiology. Outpatient hospital and ER are usually excluded. Health Management Associates

14. Michigan’s Limited Benefit Programs – Two Models “Volunteer” programs in 18 of 83 counties – rural areas with access issues: about 2,000 enrollees • Physician services through volunteer clinics • Plan pays for pharmacy and ancillary services “Plan B” programs in 52 of 83 counties: about 57,000 enrollees • Benefits through enrolled providers • Cost pmpm ranges from $30 to $70 Subsidy for both funded same as Three Share Health Management Associates