Improving Coverage and Access: An Overview of State Activities Donald Cohn, Associate

1. Improving Coverage and Access: An Overview of State Activities Donald Cohn, Associate AcademyHealth December 7, 2006

2. State Coverage Initiatives (SCI ) • An Initiative of The Robert Wood Johnson Foundation • Direct technical assistance to states • State specific help, research on state policy makers’ questions • Convening state officials • Web site: http://statecoverage.net • Coverage Matrix • Publications • Grant funding

3. Payer Regulator Provider Public Health State Role in the Health System • Medicaid/SCHIP • State Employees & Retirees Coverage • High-risk pool • Uninsured • Underinsured • Oversight of health insurance market • Oversight of providers • Oversight of facilities • Prevention • Health performance

4. Drivers of State Health Reform Efforts • Health insurance becoming increasingly unaffordable for working families • Increasing numbers of uninsured • Some states beginning to emerge from fiscal crisis • Lack of national consensus

5. Health Care Premiums Outpace Worker’s Wages = Health Coverage Increasingly Unaffordable * Estimate is statistically different from the previous year shown at p<0.05. ^ Estimate is statistically different from the previous year shown at p<0.1. Note: Data on premium increases reflect the cost of health insurance premiums for a family of four. Historical estimates of workers’ earnings have been updated to reflect new industry classifications (NAICS). Data: KFF/HRET Survey of Employer-Sponsored Health Benefits: 1999-2006.

6. Health Insurance Coverage Changes Among Working-Age Adults, 2000-2004 17.9 20.6 5.6 5.8 8.6 10.5 67.9 63.1 Note: Data taken from Kaiser Commission on Medicaid and the Uninsured/Urban Institute, Health Insurance Coverage in America, 2004 Data Update. November 2005.

7. Reasons Why 3.4 Million Employees Lost Insurance Between 2001 and 2005 Employee Take-Up Decline 27% Employer Sponsorship Decline 48% Loss of ESI Dependent Coverage—11% Employee Eligibility Decline—14% Note: Data taken from “Changes in Employees’ Health Insurance Coverage, 2001-2005”, Kaiser Commission on Medicaid and the Uninsured, October 2006.

8. Percent of Adults Ages 18–64 Uninsured by State 1999–2000 2004–2005 NH NH ME WA NH VT ME WA VT ND MT ND MT MN MN OR NY MA WI OR MA NY ID SD WI RI MI ID SD RI WY MI CT PA WY NJ CT IA PA NJ IA NE OH DE IN NE OH NV DE MD IN IL NV WV UT VA IL MD CO DC WV UT VA KS MO KY CA CO DC KS MO KY CA NC NC TN TN OK SC AR OK AZ NM SC AR AZ NM MS GA AL MS GA AL TX LA TX LA FL FL AK AK 23% or more HI HI 19%–22.9% 14%–18.9% Less than 14% Data: Two-year averages 1999–2000 and 2004–2005 from the Census Bureau’s March 2000, 2001 and 2005, 2006 Current Population Surveys. Estimates by the Employee Benefit Research Institute. Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2006

9. WA NH ME VT MT ND MN OR WI NY MA ID SD MI RI WY CT PA IA OH NE DE NV IN IL MD UT VA CO DC CA KS MO KY NC TN OK AR SC NM AZ AL GA MS TX LA FL States Vary in Employer Coverage Quartile Rank Less than 50 % 50% to 53 % 54% to 59 % More than 59 % Adapted from Kaiser Family Foundation Source: Urban Institute and KFF estimates from 2005, 2006 CPS supplement

10. Different Strategies to Improve Coverage and Access • Comprehensive approaches • Massachusetts, Vermont, and Maine • Incremental • Covering children • Making new insurance options more affordable for low-income working uninsured • Improve access through safety net

11. Reactions to Recent State Reforms • New approach presents excitement about what is possible– states want to “avoid being left behind” • This works for that State, but we are different • New idea sparks new creative approaches • Fear of over-reaching – sustainability of initiatives • Importance of on-going coalition of support

12. Comprehensive Efforts Massachusetts Vermont Maine

13. Maine’s Dirigo and MaineCare Eligibility Dirigo Health: Affordable Premiums for Workers in Small Firms Dirigo Health: Reduced Employee Contributions for Workers in Small Firms MaineCare Expansion MaineCare

14. Access: DirigoChoice Individual Premiums General Funds Year 1 • New Insurance product offered by Anthem DirigoChoice Small Employers, Individuals, Self-employed Employer Premiums Medicaid Savings Offset Payment in Year 2 Premium Subsidy < 300% FPL

15. Maine - potential lessons • Voluntary programs not likely to achieve universal coverage • Financing – difficult to transfer uncompensated care dollars to premium subsidies • Challenge of building and maintaining a consensus

16. Employer and Individual Coverage Mandates • Hawaii Prepaid Health Act (1970s) • 86% employers offer insurance versus 56% nationally • 12% uninsured vs. 18% nationally • Maryland Fair Share Act • Court rejected • Massachusetts • Employer Assessment & Free Rider Surcharge • Individual mandate (affordability is key question) • Vermont • Employer Assessment • Will consider individual mandate in 2010 if 96% coverage not achieved

17. Incremental Approaches Children Purchasing Pools Limited Benefits Reinsurance Creative Uses of Medicaid Safety Net

18. Children and AllKids: Illinois • IL – AllKids expansion (July 2006) • All uninsured children eligible, sliding scale premium • $45 million estimated cost - financed through savings from shift to primary care case management (PCCM) • Builds on success and bi-partisan support for SCHIP • Cost effective to cover children • Improves outreach to eligible, but unenrolled • Other states consider • SCHIP Reauthorization due in 2007

19. Purchasing Pools: California PacAdvantage • Longest running and largest health insurance purchasing alliance formed in 1993 • Over 100,000 covered lives • Small firms (2-50) able to enroll and offer a choice of private health plans • Evaluations demonstrated that PacAdvantage improved choice of health plans, but was never demonstrated to have expanded coverage • August 2006 - PacAdvantage announced closing due to withdrawal of participating plans

20. Purchasing Pools: Insure Montana • $10 million coverage initiative funded through tobacco tax • Tax Credits • 40% of overall funding is for tax credits for small business that provide health insurance (tax credit provided on a “first come first serve basis”) • Purchasing Pool – • 60% of overall funding is for subsidies for small businesses that were previously unable to offer coverage on a “first come first serve basis” to assist both employer and employee pay portion of health insurance premium. • Enrollment (Fall 2006) = 360 firms, 2200 lives

21. Lessons Learned: Purchasing Pools • Strategy has generally not expanded coverage to the uninsured • Has improved plan choice for small firms • Has not generated significant administrative savings or price discounts • Unless designed carefully, pools can create adverse risk selection • To be effective, need to combine pool with other strategies such as subsidy or individual mandate

22. Limited Benefit Plans have had Marginal Impact • At Least 13 states have passed limited benefit legislation, 2 states have passed new legislation in 2005 • Barebones and other limited benefit plans have had low take-up rates • May lead to currently insured to scale back benefits • May contribute to increased uncompensated care

23. What are Consumer-Directed Health Plans? • Common characteristics • High deductible insurance plan • Personal account to pay for care • Gap between the annual amount in account and deductible • Internet-based decision support • Driven by rising health care costs • Past cost containment approaches have not worked • Traditional health insurance (until early 80’s) • Regulated prices for government programs (until early 90’s) • Managed care and purchaser power (until early 00’s) • New solution- CDHPs? • Shift of power to cost-conscious, educated consumers

24. Distribution of Health SpendingAdults Ages 18-64, 2001 Source: Employee Benefit Research Institute estimates from the 2001 Medical Expenditure Panel Survey.

25. Common State Reactions to CDHPs • State as a Payer • CDHP option within state employees plan or high-risk pool? • Medicaid reform • Give additional state tax incentives to encourage CDHPs? • State as a Regulator • Allow high deductible plans to be sold in market? If so, sold in which market? • Market segmentation and risk selection • Do consumers really understand new cost sharing?

26. Reinsurance: Healthy New York • 20% of people account for 80% of health spending • State subsidizes costs for high cost enrollees with the goal of lowering premiums for all • State requires all HMOs to offer product • Some benefits excluded (MH/SA) • Small firms w/ low-wage workers, low income self-employed, uninsured workers w/o access to employer sponsored insurance may enroll

27. Healthy New York Reinsurance Subsidy • Estimated savings of 50% for individuals • Over 125,000 enrolled (8/06) • Most enrollment is non-group • State Reinsurance Fund spent $13.3 million in 2003, $34.5 million in 2004, $61.7 million in 2006 State Reinsurance Fund 90% Carrier 10% Carrier 100% Carrier 100% $ 0 $5,000 $75,000

28. Early Lessons on Reinsurance: Healthy NY • Requiring HMOs to offer Healthy New York product is less expensive than establishing new program • Perceived efficiency and value of program • Getting participation requires long-term partnership to build trust that coverage will continue to be there • While targeting small groups, product has enrolled mainly individuals and self-employed • Must have market oversight to assure lower premiums

29. Creative Uses of Medicaid • Premium Assistance: 15 states • Medicaid/SCHIP pays for employee portion of existing private insurance • Medicaid Buy-In • All-Kids = sliding scale subsidy subsidized by SCHIP • New Insurance Product with a subsidy • Subsidy for low income individuals, and small firms

30. Coverage: Both a Problem of Offer and Take-up 4% 13% 35% 8% 55% 92% 14% 79% 15% 52% 30% Note: Data taken from “Changes in Employees’ Health Insurance Coverage, 2001-2005”, Kaiser Commission on Medicaid and the Uninsured, October 2006.

31. New Medicaid Strategies Address Low Offer Rates • New insurance products for small firms with low-wage workers • Employers, individual and Medicaid pay premium • New Mexico – open to uninsured adults <200% FPL, individuals may pay employer contribution • Oklahoma covers workers and spouses <185% FPL who work for small firms; program begins with voucher; safety-net option will be provided for workers with employers unwilling to participate • Arkansas recently received waiver to offer limited benefit product to small firms, Medicaid funding will be available for low-wage workers (<200% FPL)

32. New Mexico State Coverage Insurance: Public/Private Partnership $355 estimate per person New Mexico Human Services Department

33. Medicaid’s Changing Role • Use in expanding coverage to the uninsured • Covering different populations, sometimes higher income groups • Increased cost-sharing • Changing benefit designs • Consumer Responsibility

34. Utah’s Primary Care Network • Adults to 150% FPL (1115 waiver) • Some reductions in benefits Medicaid • Primary care benefit package for expanded population: • Office visits - DME • Immunizations - Basic dental • Emergency/Urgent care - Hearing and vision screening (no glasses) • Lab/X-ray - Rx (4 per month) • Donated care from Hospitals

35. Recent DRA State Plan Amendments • West Virginia: • “Secretary-approved coverage” for children and parents • Member agreement – providers monitor patient’s compliance • Kentucky: • 4 Benefit plans: global choice (default), Family Choices (most kids); Optimum Choices (MRDD), Comprehensive Choices (Nursing Home Care) • New cost sharing and service limits • “Get Healthy Benefit Accounts” • Idaho: • 3 Benefit plans for healthy children and working adults, individuals with disabilities and elderly Source: Robin Rudowitz, KCMU, June 2006

36. Medicaid – Looking Ahead • Growing complexity of Medicaid • Enrollment growth offset decline of employer sponsored insurance • Medicaid growing for same reasons health care cost growing + enrollment • State budget pressures – cost containment options – eligibility, utilization, reimbursement • Medicaid important source of federal matching funds for new state initiatives

37. Growth in Uninsured PopulationServed by Health Centers, 1990-2005 Percent Increase Uninsured Served by Health Centers (6.4 million; 128% increase since 1990) All Uninsured (47 million; 34% increase Since 1990) SOURCE: Data from 1996-2005 UDS; National estimates from Bureau of the Census. 1990 1995 2000 2005

38. Growth of Health Centers: 1970-2005 952 Centers 150 Centers Source National Association of Community Health Centers

39. Access versus Insurance • Communities with strong insurance coverage and a strong safety net presence demonstrated the highest access to care. • Investment in insurance goes further to improve access to care versus investment in the safety-net. • Insurance expansions and safety-net expansions should be viewed as complements. • Without universal coverage, the safety net is important and some investment in the safety is needed. The question is how much? Cunningham and Hadley, “Expanding Care versus Expanding Coverage: How to Improve Access to Care,” Health Affairs: July/August 2004

40. Challenges of Community-Based Models • Assuring long-term, sustainable funding • Need to address both access and insurance • The safety-net is a delivery system while insurance is a financing strategy • Difficult to design a program to fill gaps in complex health system

41. Terminology Matters Conservative-SpeakLiberal-Speak Personal Responsibility Individual Mandate Insurance exchange Purchasing Pool Basic Health Insurance Barebones Policies Reasonable cost-sharing High Deductibles Costly Mandated Benefits Essential Benefits Employer Assessment Employer Fair Share Quality Health Insurance Comprehensive Health Insurance Source: Lischko, A. Communicating the Policy Choice. Slides presented at SCI’s Policy Analysis Workshop, Virginia, October 2006.

42. Concluding Thoughts • States play critical role in moving the conversations about coverage expansions • Testing new ideas (politically and practically) • Creating momentum for national policy solution • Catch 22: Often need ambitious goal to sell new initiatives but need to be realistic about what states can do • Given overall fiscal picture, how far can states go? • Comprehensive versus Incremental • Sequential = incremental plus a vision • Few states can even approach universal coverage without a federal framework and funding