Health Coverage: The Cost of Neglect; Promising Strategies

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

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

3. Cost of Being Uninsured--Less Preventive Care • % 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

4. Cost of Being Uninsured--Household Finances and Work • 44% of uninsured had serious problem paying medical bills; nearly a third were contacted by a collection agency • 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

5. Possible Federal Action • 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 • Federal funding for dual eligibles’ drugs • Feds fund pilot coverage expansion projects in several states • Restore coverage for legal immigrants

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

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

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

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

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

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

12. MassHealth Family Assistance: Dual Strategy • “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 • Insurance Partnership--small business subsidy

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

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

15. III. Hybrid Approaches • Leverage public and private funds • Support both private coverage, safety net • 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)

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

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

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