Volume 28, Issue 491 May 14, 2007

CONTENTS

State News • Indiana Places HSAs at the Center of Coverage Expansion • An “Oldie but Goodie”: the 340B Program • Longer Driver’s “ED” Equals Fewer Accidents

HIGHLIGHTS Asset Dumping and Medicaid…HIV Testing Requirements…Reporting Hospital Infections…Oral Health Report…Drug Use and Depression

GRAPHICALLY SPEAKING Women Forgo Health Care Because of Cost

STATE NEWS

INDIANA PLACES HSAs AT THE CENTER OF COVERAGE EXPANSION

Matthew Gever and Christina Kent

Indiana has become the first state in the nation to pass legislation making health savings accounts (HSAs) the main vehicle for expanding coverage to the uninsured.

Signed into law on April 30, HB 1678 (http://www.in.gov/apps/lsa/session/billwatch/billinfo?year=2007&session=1&request=get Bill&doctype=HB&docno=1678) directs the state to increase its cigarette tax in order to provide funds for the new “Check Up” program. Proposed by Governor Mitch Daniels, the Check Up program will combine HSA-like “POWER accounts” with high-deductible, back-up commercial health plans to expand coverage to as many as 132,000 low-income Hoosiers.

Qualifying Hoosiers will pay for a portion of the POWER accounts on a sliding scale based on income. The state will contribute the rest of the funds necessary to establish accounts of $1,100 per adult. If the funds in the accounts are depleted within a year, the commercial plans will kick in to provide continued coverage.

“We believe it is a reasonable market approach, with the added dimension of personal responsibility, to addressing the issue of the uninsured,” said Dennis Rosebrough, spokesman for the state Family and Social Services Administration.

U.S. Health and Human Services Secretary Mike Leavitt praised the legislation, saying, “There is no other program out there as innovative as what I'm seeing here in Indiana.”

The POWER accounts are only a part of the much broader Healthier Indiana plan, which, among other things, will: • increase the income limit for Medicaid eligibility for pregnant women; • allow for continuous eligibility of a child for Medicaid and the children’s health insurance program until the child turns three; • enable certain small employers to join together to purchase group health insurance; and • give qualifying employers a tax credit for the first two years that the employer makes coverage available.

Another provision will allow individuals up to age 24 to stay on their parents’ health plans. “More often than not, students graduate from college and have trouble finding an immediate job,” said Representative Charlie Brown. “It is not fair to be throwing them off policies during one of the most stressful times of their lives.”

Now that the General Assembly has passed the bill, the state will have to obtain federal Medicaid waivers to put it into effect. “The precise manner in which the funding will operate is still not completely tied down,” said H. John Okeson, senior legislative counsel to the Governor.

The State Fills in the Gap To qualify for the Check Up plan, Hoosiers must have been uninsured for at least six months. They also must contribute between 2 percent and 5 percent of their incomes, on a means-tested sliding scale, to help fund the POWER accounts. The state will contribute the rest of the funds to establish accounts of $1,100. Participants also will receive $500 worth of preventive care at no cost to themselves.

Participants will use debit cards to withdraw funds from the POWER accounts to pay for medical expenses, up to the account limit of $1,100 per adult. At the end of the year, $500 of any unspent funds will stay in the account for the next year, and the participant may withdraw anything above $500.

The state will pay the premiums for the back-up private health plans. The law outlines the services that the plans must cover, which include, among other things, mental health care, home health services (including case management), substance abuse services, and dental and vision care. Providers in those plans will be paid Medicare rates, in an effort to ensure that they’ll participate.

Cigarette Tax Crucial Much of the funding for the POWER account program will come from increasing the state’s cigarette tax by about 44 cents per pack. It’s estimated that this increase will bring in at least an additional $206 million in the first year. A portion of those revenues will pay for smoking cessation programs and for immunization of children less than two years old, but the bulk will go to fund the POWER accounts and the back-up plans.

Advocates of the tax increase say it will bring the total state tax that Hoosiers pay to 99.5 cents per pack—still less than the national average tax of $1.12 per pack. Currently, 27 percent of Hoosier adults smoke, which leads to health-care costs of more than $1 billion a year, including more than $400 million from Medicaid. Advocates hope that the price increase will encourage many smokers to quit.

“Indiana sells some of the cheapest cigarettes in the nation, and many believe smoking rates here will never drop until the price goes up,” said Senator Dennis Kruse.

While more than 130,000 Hoosiers could be eligible for POWER accounts, enrollment in the program will be limited by the amount of funds available, and will be provided on a first- come, first-served basis. The state hopes to launch the program on Jan. 1, 2008.

“I have asked a host of people whether they can think of a better example and nobody has,” added Governor Daniels.

Not all were conviced, however. “The cigarette tax is a regressive tax on the working poor,” said Senator Mike Delph.

Representative Eric Koch would have preferred a law that avoided any expansion of public programs. “While well-intended, this plan treats the symptoms, rather than the problem,” he said in a statement. “It does not address the structural causes of high health-care costs and health insurance premiums. Health-care reform will only be achieved through market- based, consumer-driven solutions, not more government programs and tax increases.”

Some advocates say that HSAs could backfire because low-income persons are unlikely to have the information required to obtain necessary health care. Also, they say, individuals don’t have the clout needed to get the lower prices available to health plans.

But others say the plan could start a national trend. “If you look at many of the major Health and Human Services initiatives over the last 75 to 80 years, they started within the states,” said Okeson. “I’m hopeful that people will watch this at the state level and at the federal level. It’s a well thought out way to provide coverage in a market-oriented, consumer-directed way. It puts the consumer in the best position to decide what kind of care to buy.”

STATE NEWS

AN “OLDIE BUT GOODIE”: THE 340B PROGRAM

Kory Mertz

An old federal program to help states save money on prescription drugs continues to prove its worth. During their 2007 sessions, nine states introduced legislation aimed at increasing use of the federal program know as 340B.

Established by a 1992 law, the 340B program allows qualifying providers to purchase drugs for outpatient use at significantly reduced rates: approximately 20 percent below the Medicaid price. Eligible providers include federally qualified health centers, “disproportionate share” hospitals, and certain clinics that focus on specific diseases such as AIDS or hemophilia.

340B programs have been established in every state, but many believe they could get more savings if the program were used more extensively. The legislation introduced in 2007 generally focuses on increasing use of the program through educational campaigns, as well as mandated use with an eye toward reducing state drug costs.

In Alaska, Representative David Guttenberg introduced HB 82 (http://www.legis.state.ak.us/basis/get_bill_text.asp?hsid=HB0082A&session=25). The bill, now under consideration, would prohibit 340B-eligible providers from purchasing covered outpatient drugs for a price higher than the 340B discounted price. The bill also would require the Commissioner of the Department of Health and Social Services to inform all eligible providers of the availability of the 340B program.

“We just need to make sure that everybody in Alaska takes advantage of every discount program they can, whether it’s federal or state or otherwise,” said Representative Guttenberg.

In Vermont, SB 115 (http://www.leg.state.vt.us/docs/legdoc.cfm?URL=/docs/2008/bills/senate/S-115.HTM) would direct the state to create a plan to inform Vermonters that health services and 340B prescription prices are available through federally qualified health centers.

States can save money through 340B by getting individuals covered under public programs to become patients of entities that can buy outpatient drugs at the discounted 340B price. To be considered a patient of an entity, that entity must have primary responsibility for the patient’s care and responsibility for the patient’s medical record. Drugs bought through 340B are not subject to any Medicaid rebates; Medicaid can only be charged the acquisition cost plus a reasonable dispensing fee. (For more information on these bills and other Rx legislation, go to: www.ncsl.org/programs/health/drugbill07.htm.)

Significant Savings Through their innovative approach, Texas stands out among the states with 340B programs as having achieved enormous savings. In 2001, the Lone Star State enacted SB 347 (http://www.legis.state.tx.us/tlodocs/77R/billtext/html/SB00347F.htm), which allows the Texas Department of Criminal Justice (TDCJ) to work with a 340B eligible entity to provide health care for inmates.

The University of Texas Medical Branch at Galveston (UTMB) provides around 80 percent of the Texas inmate population’s health care and qualifies for 340B. After intensive collaboration, the TDCJ, the university, and others were able to create a system by which the university could provide 340B-priced drugs to all the inmates under their care. For more information on the process see this presentation (http://www.utmb.edu/cmc/Downloads/CNF_2002_06_GastReducingDrugCosts.zip).

In 2006, Allen Hightower, executive director of Texas’ Correctional Managed Health Care Committee, spoke highly of the program before a Texas House committee. “It’s one of the more significant cost-containing measures that we have implemented,” he said. “We estimate that we are saving the state about $10 million a year because of drug pricing alone.”

The program’s widespread success has led to efforts to expand it to other state agencies such as the Texas Youth Commission. The Texas Health Care Policy Council (http://www.governor.state.tx.us/divisions/bpp/thcpc/), in a recent report (http://www.governor.state.tx.us/divisions/bpp/thcpc/files/PharmPurchasingfinal_1205.pdf) , singled out the innovative partnering of the TDCJ and UTMB as a program that should be evaluated for potential expansion.

Other states are using 340B in programs that target specific diseases. Utah, for example, offers 340B-priced drugs to hemophilia patients through a contract with the University of Utah, a 340B covered entity. The university provides case management to the patients, with monthly in-person visits from a nurse. Since 2003, the program has saved the state $3 million.

The Heinz Family Philanthropies has issued a few reports that estimate the savings state treasuries could wring from 340B programs. Their report (http://www.heinzfamily.org/pdfs/ri340b.pdf) on Rhode Island suggests that 340B could produce savings of $2.7 million in the first year of use. A similar report (http://www.hfp.heinz.org/pdfs/Oregon_Blueprint.pdf) on Oregon estimated net savings of $3.1 million.

The 340B program is run by the federal Office of Pharmacy Affairs (http://hrsa.gov/opa/), and a list of the qualifying providers is available at http://pssc.aphanet.org/about/whoiseligible.htm.

NCSL's pharmaceuticals project receives support from the Office of Pharmacy Affairs and can provide information and technical assistance to states on using 340B. For more information please go to http://www.ncsl.org/programs/health/drug340B.htm or contact [email protected].

STATE NEWS

LONGER DRIVER’S “ED” EQUALS FEWER ACCIDENTS

Melissa Savage

States have long used graduated driver’s licensing (GDL) laws to help teen drivers become safe ones. Now some are debating whether to toughen those laws in an effort to further decrease death and injury rates.

The Illinois General Assembly is considering a bill (SB 0172 (http://www.governor.state.tx.us/divisions/bpp/thcpc/)) that, if passed, would give the Prairie State one of the toughest teen driver laws in the country. The bill would beef up existing Illinois law by: • increasing the time teens must hold learner permits; • adding nighttime driving restrictions; • requiring at least six hours of actual street driving in driver’s education; • making teens wait longer before giving rides to their friends; and • requiring teens to drive citation-free for 15 months before they are eligible for an unrestricted license.

Lawmakers hope to “reduce the number of Illinois teens dying each year on our state highways,” said Senator John Cullerton. “This legislation will help us reach that goal.”

Nationwide, motor vehicle crashes are the leading cause of death among 15- to 20-year- olds, accounting for approximately one-third of all deaths among this age group. Sixteen- year-olds are the most at risk because their driving experience is so limited and because their immaturity may result in risk-taking behind the wheel, according to the National Traffic Safety Administration.

Research by the AAA Foundation for Traffic Safety and others shows that GDL laws reduce injury and death among teen drivers. The laws allow students to progress from a “learner’s permit,” to an intermediate stage that allows unsupervised driving—subject to restrictions such as limits on the number of young passengers in the car—and finally, to full licensure with no restrictions.

According to AAA, 43 states and the District of Columbia have three-stage GDL laws for teens. The association says the other seven states lack either an intermediate licensing stage or a mandatory learner’s permit.

New Jersey lawmakers recently approved legislation creating a commission to study the leading factors contributing to teen crashes—distraction, aggressive driving and speed. “Legislators need to take a comprehensive approach to examining teen driver safety, and begin pushing for safer standards and greater education for our young drivers,” said bill sponsor Senator Ellen Karcher.

Not everyone is so inclined. In late March, the Arkansas House rejected a bill that would have added nighttime driving restrictions and limited the number of teen passengers allowed in a teenage driver’s car. Representative Billy Gaskill said it’s unfair to target teens this way and asked his colleagues to “leave these kids alone.” Other legislators questioned the wisdom of having more cars on the road—a potential issue arising from limiting teens’ ability to carpool.

This article is adapted from a story by NCSL’s Melissa Savage in State Legislatures (http://www.ncsl.org/magazine/index.htm) magazine.

HIGHLIGHTS

MEDICAID

Asset Dumping Rare Most nursing home residents don’t sell off assets at below market value to qualify for Medicaid long-term care coverage, says a new report (http://www.gao.gov/new.items/d07280.pdf) from the Government Accountability Office. Concerns that the practice might be widespread prompted Congress in 2006 to expand from three years to five years the “look back” period in which seniors who transfer their assets at less-than-market value are ineligible for Medicaid. Previously, states had been able to apply for federal waivers that would allow them to “look back” for more than three years. The report, which examined 540 nursing home applications in three states, found that the practice is “generally limited and often based on anecdote.” More than 90 percent of seniors entering nursing homes with Medicaid coverage had assets of $30,000 or less, not including their homes; 85 percent had annual incomes of $20,000 or less. In addition, the report found that Medicaid beneficiaries in nursing homes had a median income of about half that of non-Medicaid nursing home residents, and were less likely to report transferring cash than their non-Medicaid counterparts. “This report confirms that the Medicaid long-term care program is not rife with cheats and scam artists,” Representative John Dingell said in a statement. A congressional aide, however, suggested that the small sample size doesn’t mean that there aren’t “rich people who pretend to be poor so they can qualify for welfare.”

PUBLIC HEALTH

HIV Testing Requirements Illinois Representative LaShawn Ford has introduced legislation (HB 980 (http://www.ilga.gov/legislation/fulltext.asp?DocName=&SessionId=51&GA=95&DocTypeId =HB&DocNum=980&GAID=9&LegID=28669&SpecSess=&Session=)) that would drop the requirement for patients to give written consent to an HIV test. Currently, a patient cannot be tested for HIV without his or her knowledge, under the state’s 20-year-old AIDS Confidentiality Act. Part of the impetus for the bill is to make HIV testing more routine. Making the test a part of standard medical care would help diagnose the virus for those who are unaware of their infections, backers say. “You have to know you have it, and the only way to do that is to get tested,” Representative Mary Flowers, a co-sponsor of the bill, told the Chicago Tribune. Opponents argue that involuntary testing will deny individual choice and lessen the likelihood that patients will be educated about HIV prevention. “Because HIV remains a deeply stigmatized disease with life-long medical, social and emotional consequences, all patients must be fully informed and actively involved in the decision to accept HIV testing,” said a statement from the AIDS Foundation of Chicago.

HEALTH-CARE QUALITY

Infectious Disease Control A bill (HB 3078 (http://www.ilga.gov/legislation/BillStatus.asp?DocNum=0378&GAID=9&DocTypeID=HB&L egID=27160&SessionID=51&GA=95)) currently being considered by the Illinois Legislature would require hospitals to test for methicillin-resistant staphylococcus aureus, or MRSA, a drug-resistant bacterium that kills thousands of people in the United States every year. Hospitals would have to test patients that they consider to be “at-risk” for infection. MRSA infections can come from community settings such as gyms, but are most commonly transmitted at health-care facilities. Nearly 11,000 patients in Illinois were infected last year, representing a 54 percent rise over three years, according to the Illinois Hospital Association. To combat the spread, the bill would require that those who test positive be isolated, and hospitals would have to report infections annually to the Department of Public Health. A similar strategy is employed by the Department of Veterans Affairs at its hospitals; Minnesota, New York and Pennsylvania are considering similar legislation. Some critics worry that these efforts will detract from other patient safety efforts. Supporters counter that hospitals have not done enough on their own. “The hospitals have said they want to deal with this for at least 20 years, and the incidence of MRSA infections keeps rising at an alarming rate,” Senator Christine Radogno told the Chicago Tribune.

CHILDREN’S HEALTH

Oral Health Preschoolers today are more likely to have cavities than children in the 1990s, according to a survey (http://www.cdc.gov/nchs/data/series/sr_11/sr11_248.pdf) released May 1 by the Centers for Disease Control and Prevention. The report found that the rates of permanent tooth decay among certain children ages two to five rose from 24 percent in the period of 1988 to 1994, to 28 percent in 1999 to 2004. While the study did not officially examine causes for the increase in cavities, researchers pointed to a greater consumption of soda and sweetened fruit juice, along with a lower intake of milk and fluorinated water. But the report wasn’t all bad news. Dental health overall has been improving, and older children and adolescents were found to have fewer cavities and fewer adults had gum disease. In addition, the use of dental sealants—a plastic, protective coating applied to teeth to prevent tooth decay—increased from 22 percent to 30 percent among children ages six to 11; gum disease fell from 27 percent to 17 percent in seniors age 65 and older. Disparities, however, in access to oral health care persist. About 31 percent of Mexican-American children ages six to 11 had decay in their permanent teeth, compared to 19 percent of non-Hispanic white children. About 12 percent of children from families below the federal poverty line have untreated tooth decay, compared to 4 percent of children in families with higher incomes.

MENTAL HEALTH

Drug Use and Depression A new report (http://oas.samhsa.gov/2k7/newUserDepression/newUserDepression.cfm) from the Substance Abuse and Mental Health Services Administration has found that youth with depression are twice as likely to use drugs or drink for the first time than youth without depression. The report references teens aged 12 to 17 who have had a major depressive episode within the past year. Of those who had, 29 percent of them took their first drink, compared to 14.5 percent for those who had not had an episode. Similar rates were found for use of other drugs, such as marijuana and heroin. Approximately 9 percent of youth reported experiencing depression in the past year. Rates for girls were triple that of boys— 13.5 percent vs. 4.5 percent. Overall rates were similar across racial/ethnic groups.

GRAPHICALLY SPEAKING

WOMEN FORGO HEALTH CARE BECAUSE OF COST

Anna C. Spencer

Insured women are more likely than insured men to forgo health care because of cost, says a new report (http://www.nwlc.org/pdf/1020_Patchias_women_hlt_coverage_affordability_gap.pdf) from the National Women’s Law Center. Thirty-eight percent of women are struggling with medical bills compared with 29 percent of men, according to the report. In addition, one-third of insured women and close to two-thirds of uninsured women don’t get the care they need because they can’t afford it. In contrast, roughly 20 percent of insured men and half of uninsured men avoid care because of cost.

Women are at a disadvantage because they have greater health-care needs and are more likely to have lower incomes, says the report. Other factors contributing to the gender gap in health-care consumption include the fact that women are slightly more likely than men to purchase coverage in the individual market, which is often more expensive and less comprehensive than employer coverage, and are also more likely than men to take prescription drugs.

“Women are more likely than men to go without needed health-care services because of costs, yet they still have higher out-of-pocket expenses,” said Judith Waxman, vice president for Health and Reproductive Rights at the National Women’s Law Center. “This disparity exists for both insured and uninsured women.”

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RESEARCH & EDITORIAL STAFF Donna Folkemer, Forum Director Anna C. Spencer, Managing Editor Christina Kent, Editor Contributors: Allison Colker, Carla Curran, Matthew Gever, Kala Ladenheim, Kory Mertz, Tara Lubin, Sarah Steverman

EDITORIAL INQUIRIES Anna C. Spencer, Managing Editor Tel: 202-624-5400 Fax: 202-737-1069 email: [email protected] State Health Notes is published biweekly (24 issues/yr.) by the FORUM FOR STATE HEALTH POLICY LEADERSHIP, an information and research center at the National Conference of State Legislatures in Washington, D.C. State Health Notes is funded through the generous support of the Robert Wood Johnson Foundation and the Henry J. Kaiser Family Foundation. For more information about State Health Notes, visit our Web site at: www.ncsl.org/shn or email us at [email protected]

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