Barbara Eyman Powell Goldstein LLP Medicaid Congress Washington DC June 6, 2006

1. New Approaches toState Health Reform: Extending Coverage to the Uninsured and Reducing State Health Care Costs Barbara Eyman Powell Goldstein LLP Medicaid Congress Washington DC June 6, 2006

2. Public Funding Models Medicaid/SCHIP Initiatives Employer-Based Initiatives Reducing Risk Tax Incentives Behavioral Incentives Non-Monetary Measures Leveraging State Purchasing Power Consumer-Driven Market Approach Public Private Purchaser Alliance Employer/Individual Mandate Community-Based/Safety Net Provider Initiatives Overview of Approaches

3. Public Funding Models:Expanding Medicaid/SCHIP Eligibility • Optional Coverage Groups • HIFA Waivers • Other 1115 Demonstrations Examples: • Oregon, Utah, Illinois (AllKids) • 22 States Pursuing Eligibility Expansion in 2006 (Kaiser Family Foundation)

4. State Uses Medicaid Funds to Subsidize Private Coverage Premium Assistance (Section 1906) Cost Effectiveness Requirement Wrap-Around Coverage HIFA and Other 1115 Waivers Public Funding Models:Using Medicaid/SCHIP Funds to Expand Private Coverage

5. Public Funding Models:Using Medicaid/SCHIP Funds to Expand Private Coverage Example: Arkansas: Safety Net Benefit Program • HIFA Waiver • Small Employer-Based Coverage (<50 Employees) • Newly Designed Product • Limited Benefit Package • $15/$100 Monthly Cost + Co-Pays/Deductibles • 100% Employee Coverage Requirement • Funded by Premiums, Tobacco Funds, Federal Match

6. Public Funding Models:Subsidizing Employer-Sponsored Private Coverage • State Subsidizes Employers and/or Employees for the Purchase of Existing Employer-Based Coverage • No New Product Created • Subsidy Intended to Reduce Cost and Increase Employee Uptake

7. Public Funding Models:Subsidizing Employer-Sponsored Private Coverage Example: Utah: Covered at Work • $50 Monthly Subsidy for Employees • Eligibility Criteria • (<150% FPL) • Premiums > 5% of Income • Not Eligible for Medicaid • No Minimum Benefit Package

8. Public Funding Models:Establishing Affordable Employer-Based Plan • State Creates New Coverage Product • Provides Subsidies for Participation • Requires Employer Contribution • Offered through Employers and/or to Self-Employed and Individuals • Offered through Private Carriers or Self-Administered • May Offer Multiple Coverage Options • May Leverage Medicaid Funding for Medicaid-Eligible Participants

9. Public Funding Models:Establishing Affordable Employer-Based Plan Example Maine: DirigoChoice • Small Employers (<50 Employees), Self-Employed, Individuals • 75% Employee Participation Requirement • Market-Based Benefit Package • Employer Pays 60% of Employee Cost • Low Income (<300% FPL) Discounts on Monthly Payments, Co-Payments & Deductibles • Funded by Employer & Individual Contributions, State Funds, Federal Medicaid Match

10. Public Funding Models:Establishing Affordable Employer-Based Plan Example Tennessee: Cover Tennessee • $150 Monthly Premium Shared by Employers, Employees, State • Focus on Small Employers • Benefit Package to be Bid by Private Insurers • Open to Uninsured Individuals without Insurance for 6 Months

11. Public Funding Models:Enhancing Affordability by Reducing Risk • State Covers Catastrophic Costs • Reinsurance • Stop Loss • State Covers Higher than Average Overall Risk (Arizona) • May Include Cap (to Encourage Ongoing Cost-Containment) • May Include Partial Coverage

12. Public Funding Models:Enhancing Affordability by Reducing Risk Example New York: Healthy New York • Small Employers (<50 Employees), Self-Employed, Individuals Eligible • Standard Benefit Packages Offered by All HMOs • Rates Vary by HMO • 90% Claims Reimbursement between $5,000 and $75,000

13. Public Funding Models:Creating High Risk Pools • Targeted at Uninsurable Individuals • Federal Funding Available for Qualifying Pools • Premiums  200% Private Rates • HIPAA-Qualified • Ongoing Financing Mechanism • At Least 2 Coverage Options • Funding Sources Include Premiums, Insurance Assessments, Hospital Assessments, State General Revenues, Federal Grant Funds

14. Public Funding Models:Providing Tax Incentives • Employer Tax Incentives • Individual Tax Incentives • Health Coverage Tax Credit • Tax Incentives for Health Savings Accounts

15. Public Funding Models:Behavioral Incentives • Disease/Chronic Care Management • Medicaid/Non-Medicaid • High Risk Pools • Disease Specific • High Utilizers • Prevention/Wellness Incentives • ME DirigoChoice: $25 to Choose PCP/$75 for First PCP Visit and Health Assessment • Eliminate Cost Sharing for Preventive Care • Rates Based on Tobacco Use/Weight

16. Non Monetary Measures:Leveraging State Purchasing Power • State Employee Health Plans • Medicaid • Small Businesses

17. Non Monetary Measures:Leveraging State Purchasing Power Example Connecticut: Municipal Employees Health Insurance Program • State Negotiated Plans • Made Available to Small Businesses (< 50 Employees) • More Favorable Group Rates

18. Non Monetary Measures:Leveraging State Purchasing Power Example Maine: RX Plus • Leverages Medicaid Drug Purchasing to Offer Discounted Drugs to Uninsured • State Negotiated Medicaid Rebates for Uninsured • Participating Manufacturers Included in Medicaid Preferred Drug List

19. Non Monetary Measures:Leveraging State Purchasing Power Example Pennsylvania: adultBasic • Negotiated Deal with 4 BCBS Plans • Requires Dedication of a Percentage of Premium Revenues to Fund adultBasic Coverage • adultBasic Provides Affordable Coverage for Low Income Adults • $85 Million in 2005 Covering 29,0000 Individuals

20. Non-Monetary Measures: Enhancing Consumer Driven Market Forces • Health Savings Account/High Deductible Health Plans • 6 States Provide Exempt HSA Contributions from State Taxes • 9 States Provide HSA Option for State Employees • Some States Experimenting with HSAs for Medicaid (FL & IA Have CMS Approval)

21. Non-Monetary Measures: Enhancing Consumer Driven Market Forces Example • Maine Quality Forum • Promoting Best Practices • Publishing Comparative Quality Data • Average Pricing Data • Promoting Electronic Data • Patient Safety Initiative: Safety Star Certification

22. Non-Monetary Measures:Permit Limited Benefit Plans • Exempt State-Sponsored and/or Other Plans from Insurance Benefit Mandates Examples • Arkansas: Health Insurance Purchasing Group Law • Florida: HealthFlex

23. Non Monetary Measures:Public-Private Purchaser Alliance • State & Private Purchasers Set Uniform Standards Example Minnesota Smart Buy Alliance • Alliance Includes Purchasing for 3.5 Million People • Standardized Information for Consumers on Cost and Quality • HIT Requirements (SmartCard, Electronic Prescribing, Standardized Claims Forms, Patient Satisfaction and Outcomes Tracking, Etc.)

24. Non-Monetary Measures:Employer Mandate • Mandated Employer-Based Coverage • May Exempt Small Employers • May Provide Subsidies • May Assess Employers Not Offering Coverage (Pay or Play)

25. Non-Monetary Measures:Employer Mandate Example California: Health Insurance Act of 2003 • Pay or Play: Employers with 20+ Employees Must Cover 80% of Premiums or Pay Fee to State Health Purchasing Fund • Employers with <20 Workers Exempt • Tax Credit for Employers with 20-49 Employees • Required Dependent Coverage for 200+ Employees • Measure Defeated on 2004 Ballot Initiative

26. Non-Monetary Measures:Employer Mandate Example Vermont: Catamount Health • Standardized Health Plan for Uninsured • Offered by Private Insurers (Initially) • Subsidies for Low Income Individuals • Employers Assessed $365/FTE for Each Uncovered Worker • 8 FTEs Exempt (Declining to 4 by Year 4) • Includes Employees Not Offered Coverage and Employees Not Accepting Coverage

27. Non-Monetary Measures:Employer Mandate Example Maryland: Fair Share Health Care Fund Act • Businesses with >10,000 Maryland Employees Must Contribute 8% of Payroll to Health Insurance Coverage or Pay into Pool • Subject to ERISA Challenge

28. Non-Monetary Measures:Individual Mandate

29. Community-Based Initiatives • Healthy Communities Access Program • Federal Grants to Coalitions of Safety Net Providers • Coordinate Care, Improve Quality, Increase Public Program Enrollment, Enhance Access, Etc. • Three-Share Programs • Employer/Employee/Government Share in Health Coverage Costs • Affordable Rates/Limited Coverage • Targeted to Small Employers

30. Safety Net Provider Initiatives • Provider-Based Networks “Covering” Uninsured • Integrated, Coordinated Care • Medical Home • Quality Initiatives • Reduce Inappropriate ER Usage Examples • Boston Medical Center/Cambridge Health Alliance • Virginia Coordinated Care (Virginia Commonwealth University Health System) • UNM Care (University of New Mexico)

31. Barbara Eyman Powell Goldstein LLP 901 New York Avenue, NW Washington DC 202-624-7359 beyman@pogolaw.com