of STATE the STATES January 2008
Rising To the Challenge
of STATE the STATES 1 of STATE t h eSTATES
About the Photo This year’s cover image reflects both the struggle and determination of state efforts to expand coverage to the uninsured. With high expectations for blue sky ahead, a number of states are rising to the challenge of moving forward with meaningful health care reform – rocky, sometimes perilous terrain. States are climbing largely alone, with little Federal support and only the experi- ence of their peers and predecessors to guide them. However, their grip is sure and their eyes are looking up. The status quo is no longer an option.
About SCI State Coverage Initiatives (SCI) is a national program of the Robert Wood Johnson Foundation (RWJF) administered by AcademyHealth. SCI works with states to plan, execute, and maintain health insurance expansions, as well as to improve the availability and affordability of health care coverage. For more information about SCI, please visit our Web site www.statecoverage.net. table of contents
4 Executive Summary: Rising to the Challenge 7 Surveying the Landscape 15 Key Policy and Design Issues: The Building Blocks for Reform 25 State Strategies: The Status Quo is Not an Option 53 Medicaid: A Vehicle for State Coverage Expansions 57 Looking Forward 58 SCI Publications and Meetings 59 Endnotes
Written By: Margaret Trinity, Enrique Martinez-Vidal, Isabel Friedenzohn, Amanda Folsom, Brynnan Cox Managing Editor: Isabel Friedenzohn Contributing Editors: Enrique Martinez-Vidal, Kristin Rosengren External Reviewers: Susan Besio, Jenny Hamilton, William Hayes, Rachel Nuzum, Joseph Thompson Art Direction: Ed Brown
of STATE the STATES 3 of STATE the STATES
Executive Summary Rising to the Challenge For the sixth year in a row, the number of uninsured grew, reaching a recent high of 47 million. In 2007, states intensified their efforts by implementing planned reforms, passing new legislation, and debating ambitious reform proposals.
Governors, legislators, and stakeholders politically feasible proposals that build on for obtaining health care coverage among demonstrated renewed optimism as they the current, mixed public-private health individuals and employers. Already, the moved forward with planning, enacting, insurance system. state has achieved several remarkable and implementing a wide array of reforms. Their actions demonstrated that the Despite new efforts to think beyond the status quo is no longer an option: the current paradigm and find new tools to Employer-Based Coverage lack of national movement to address the address health care reform, historically Stabilizes, but Children Continue issue of the uninsured, combined with difficult policy questions remain. States to Lose Ground growing political will among Governors currently considering the applicability The year capped a period of unprecedented and legislators fueled momentum for of comprehensive reforms in their state declines in employer-based coverage, which state coverage reforms. Stable financial will have to identify and prioritize their conditions also played a role, allowing goals, address the challenges of financing, dropped to 59.7 percent in 2006. And while a many states to move forward in ways that determine the viability of mandates, and stable economy and slowing premium growth were not possible during the early years of define affordability. It is the solutions have stemmed the erosion of employer- this decade when harsh fiscal conditions to these questions that will create the sponsored insurance, it remains to be seen forced states to retrench. building blocks for state health care whether the declines of the past few years will reforms to come. be reversed. These steady declines are mirrored State approaches to reform vary by an increase in the number of uninsured over considerably, often depending on Overall, states’ reform activities can be the course this decade. Children continued to the political and fiscal environment; grouped into three categories: lose ground, swelling the ranks of the uninsured demographic characteristics, insurance by 600,000 in 2006 and market dynamics, and other economic n Comprehensive reforms. Maine, accounting for more than variables also impact a state’s capacity Massachusetts, and Vermont forged one-quarter of the to act. Yet almost universally, states are ahead with ambitious reform programs growth in uninsured. considering health care reform in a very that aim to provide residents with pragmatic way. A single-payer system universal or near-universal coverage. These figures lent is generally not considered a politically renewed determination viable option; however, neither are Massachusetts continued to capture the to states’ efforts. reforms that rely completely on a free nation’s attention with the implementation market, consumer-driven health care of a sweeping reform program that system. Instead, most state reforms look to emphasizes shared financial responsibility
of 4 STATE the STATES milestones: strong enrollment in its private market reforms and launched Many of these states used Medicaid as low income subsidy program, and the new purchasing mechanisms. For a vehicle to expand coverage, taking launch of the Commonwealth Health example, Washington enacted significant advantage of the new flexibility offered Insurance Connector, which helps small legislation that provides access to by the Deficit Reduction Act (DRA) of employers and individuals purchase coverage for all children by 2010, and 2005. States also used SCHIP expansions affordable insurance. Many states have begins a premium subsidy program for as a strategy for expanding coverage, expressed interest in the Connector model families. The state also plans to develop although uncertainty in the long term and its promise of easing the access and a Massachusetts-style Connector to financing of SCHIP may limit those market hurdles so often experienced increase opportunities for employers to efforts moving forward. (After months of by the uninsured. In fact, although offer affordable coverage to low-income negotiation, lawmakers could not agree on the Massachusetts model was initially workers. In Oregon, Governor Ted a reauthorization plan the SCHIP program; viewed as unique and holding little Kulongoski specified a detailed timeline the program has been extended in its potential for transferability, other states for developing a full-scale health reform current form until March 2009.) are now borrowing key components of proposal. A slew of other states are Massachusetts’ approach. gearing up to undertake substantial A discussion of coverage in 2007 would reforms in 2008 and beyond. not be complete without addressing While Massachusetts garnered the most the wealth of state activities aimed at headlines, Maine and Vermont moved n Incremental strategies. Many states system-wide improvements in quality, forward quietly with ambitious coverage moved forward with incremental care coordination, and cost containment. reform agendas of their own. Maine reforms that expanded health Increasingly, states are coupling continued to encounter challenges with coverage for subpopulations within coverage expansions with strategies its Dirigo Health Program, which has the uninsured. In 2007, momentum that target chronic conditions, wellness experienced disappointing enrollment continued for guaranteeing access and prevention, the uptake of health and has suffered from a controversial to health coverage for all children. information technology, and public funding mechanism. Vermont began The Illinois All Kids program, the reporting of information on cost and enrollment in its Catamount Health first program of its kind to guarantee quality. With these efforts, states are plan, which like Massachusetts’ approach, universal coverage to children, exceeded aiming not only to improve quality, but includes mandatory requirements for enrollment expectations but faces also to control costs and improve the value employers. Policymakers are watching several challenges as it tries to maintain of public and private programs. closely the results of the state’s outreach the momentum of its inaugural year. efforts and the success of protections Following in the footsteps of Illinois, a Looking Forward designed to discourage crowd out of variety of states are pursuing expansions With the number of uninsured continuing employer-based insurance. aimed at children, including Hawaii, to rise, employer-sponsored coverage Missouri, and Texas. New York created continuing to weaken, and no federal The climate appeared right for reform the nation’s highest ceiling for the State action in sight, state health care reform will elsewhere, as significant new coverage Children’s Health Insurance Program continue to play a critical role in decreasing proposals emerged from California, (SCHIP) by raising the eligibility the number of uninsured individuals in the Pennsylvania, and New Mexico. requirement from 250 percent of the United States. States have played a critical Governor Schwarzenegger captured federal poverty level (FPL) to 400 role in increasing the urgency surrounding national headlines at the start of 2007 percent. Connecticut will also be raising conversations about improving health care with his vision of a sweeping reform its SCHIP eligibility to 400 percent FPL. coverage for the country’s uninsured and proposal that would achieve coverage underinsured. Yet, given the future fiscal for all Californians, while ensuring A number of states—Connecticut, picture, it is unclear how much further states affordability and promoting wellness. Idaho, Indiana, Maine, Maryland, can go. While states have been the nation’s Montana, and Washington—expanded laboratory for testing new ideas—both n Substantial reforms. In 2007, a coverage to young adults by changing politically and practically— their ability to handful of states moved forward with the definition of ‘dependent’ and create momentum and provide direction for substantial reforms that not only extending access to insurance for young a national policy solution is also significant. expanded coverage, but also undertook adults older than 18.
of STATE the STATES 5 of 6 STATE the STATES of STATE the STATES
surveying the landscape
Meeting the health care coverage needs of the uninsured remains a difficult national problem, yet the prospects for federal reform are dim. In addition, more than ever, rising health care costs are increasingly threatening to undermine coverage of those currently insured.
Nonetheless, states have persisted in their uninsured Americans have gone without and take-up rates vary substantially efforts to devise innovative solutions to coverage for at least four years.2 between small and large firms, with small maintain or extend health care coverage to firms seeing greater decreases in all these their populations. In 2007, improved fiscal Number of Children Losing variables.4 conditions, combined with only modest Coverage Grows Medicaid spending increases, enabled Of particular concern, children under age The majority of Americans continue to states to turn their attention to program 18 lost coverage again in 2006, increasing receive health insurance through their improvements and coverage expansions the uninsured by more than 600,000 employers. However, the period of 2000 that have been out of reach in recent years. and continuing a disturbing trend that through 2006 brought unprecedented began in 2005, when 360,000 additional erosion in the percentage of people This section uses various data sources to children became uninsured.3 Between covered through their employer — illustrate the current landscape. While there 2004 and 2006, the uninsured rate for decreasing from 64.2 percent to 59.7 is some variation in the data across these children increased from 10.8 percent to percent.5,6 The economic downturn that sources, the overall trend is consistent. In 11.7 percent. Together, these figures more began in 2001, along with rising health general, this section reflects the story at the than reverse the expansion in children’s care costs and premiums, accelerated national level; however, it is important to coverage achieved between 2000 and 2004, the decline in employer offer rates. consider that state-level data may provide when 400,000 children gained coverage. Not surprisingly, the steady decline in greater insight into a specific state’s situation. employer-sponsored health coverage is Understanding Employer- mirrored by an increase in the number of Uninsured Numbers Continue Sponsored Insurance Trends uninsured individuals for the same period. to Increase Employer-sponsored insurance coverage With the number of uninsured reaching rates reflect interplay between employer Over the last two years, the number of a recent high of 47 million nationally in offer rates, employee eligibility levels, and employers offering health coverage has 2006 (increasing from 15.3 percent to 15.8 employee take-up rates. Eligibility rates stabilized somewhat as premium growth percent between 2005 and 2006), solutions and take-up rates have remained relatively decreased and the economy strengthened. to cover the uninsured remained a top stable; however, employer offer rates It is unclear, however, whether the erosion priority for many states in 2007. The latest decreased substantially between 2000 and in employer-sponsored insurance that census figures show that, in 2006, the ranks 2005 before stabilizing during the past occurred from 2000 to 2006 can be of the uninsured increased by 2.2 million two years. This information is averaged reversed and what conditions might from the previous year.1 Seventeen million for employers of all sizes; offer, eligibility, encourage an increase in the number of
of STATE the STATES 7 Uninsured in america: the facts
Number and Percentage of Uninsured Increases Employer-Sponsored Coverage Still Decreasing
n The total number of uninsured increased to 47 n In 2006, the percentage of people covered by million in 2006, up from 44.8 million in 2005. The employer-sponsored insurance for some or all of the percentage of people without health insurance year totaled 59.7 percent, which is statistically lower increased to 15.8 percent in 2006, up from 15.3 than the 2005 level of 60.2 percent.12 percent in 2005.7 n In 2007, 60 percent of employers offered health
n One in every six Americans under age 65 is insurance. While the offer rate has remained relatively uninsured.8 stable over the last few years as premium growth has moderated, it is nonetheless substantially lower than n The increase in the number of uninsured reflects the 69 percent offer rate in 2000.13 the second consecutive year in which employer- sponsored insurance decreased with no significant n While most (99 percent) large businesses with 200 increase in Medicaid or SCHIP programs.9 or more employees offer health insurance coverage, fewer than half (45 percent) of small businesses with n Rates of uninsurance continue to vary dramatically three to nine employees offer coverage.14 across the country. Texas had the highest percentage of people lacking health insurance (24.1 percent), and Minnesota had the lowest (8.5 percent), although Health Insurance Premiums Rise Less Rapidly15 Minnesota’s rate was not statistically different from uninsured rates in Hawaii (8.6 percent), Iowa n Health insurance premiums rose by 6.1 percent in (9.3 percent), Wisconsin (9.4 percent), and Maine 2007, less than 2006’s increase of 7.7 percent and (9.5 percent).10 the slowest rate of premium growth since 1999. Still, premium increases outpaced growth in employee n Twelve states showed statistically significant increases in wages and overall inflation. the number of uninsured: Alabama, Arizona, Arkansas, Florida, Louisiana, Mississippi, New Jersey, New Mexico, New York, North Carolina, North Dakota, and Utah.11
Figure 1 the Nonelderly uninsured as a share of the population and by poverty levels, 2006
260.0 Million 11% >400% FPL 9% 300 – 399% FPL
Employer-Sponsored 16% 200 – 299% FPL 61% Unisured 18% 29% 100 – 199% FPL
Medicaid 16% 36% <100% FPL
Source: “Medicaid and the Uninsured: A Primer,” Kaiser Commission on Medicaid and the Unin- Private Non-Group 46.5M Uninsured sured, October 2007. 5%
of 8 STATE the STATES 16 n Since 2001, the cumulative cost of health insurance Number of Uninsured Children Grows has increased by 78.4 percent as compared to n The number of children under age 18 without health a cumulative inflation rate of 16.7 percent and a insurance increased by 611,000 between 2005 and cumulative wage growth rate of 19.3 percent over 2006, reaching a total of 8.7 million (11.7 percent). the same period. n Children accounted for more than one-quarter of the n With an average annual premium for family growth in the number of uninsured in 2006. coverage topping $12,106 in 2007, health insurance coverage is becoming increasingly unaffordable n Children covered by employer-sponsored health for many families and businesses. The average insurance declined at all income levels.17
annual premium for family coverage significantly n Children living in poverty (100 percent FPL and eclipsed the gross earning of $10,712 for a full-time, below) appear especially vulnerable, with over 19 minimum-wage worker. The annual premium for percent of them being uninsured. single coverage averaged about $4,479. n Slightly more than one-fifth (22.1 percent) of n While the percentage of employee premium Hispanic children lack health insurance, a much contributions has remained constant for several higher percent as compared to non–Hispanic white years, the average annual contribution for single (7.3 percent), black (14.1 percent), and Asian (11.4 and family coverage increased significantly between percent) children. 2006 and 2007 from $627 and $2,973 to $694 and $3,281, respectively.
Figure 2 Average annual firm and worker contribution to premiums and total premiums for covered workers for single and family coverage, ALL PLANS, 2007
SINGLE $694 $3,784 $4,479
FAMILY $3,281 $8,824 $12,106
$0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000
Worker Contribution
Firm Contribution
Note: Family coverage is defined as health coverage for a family of four. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2007.
of STATE the STATES 9 Figure 3 Percentage of People without Health Insurance by State, 2005-2006 Average
WA 12.5 ME MT ND 9.8 16.4 11.6 OR MN 16.7 8.6 NH, 10.6 ID SD WI NY VT, 10.9 15.1 11.7 9.1 13.5 MA, 9.8 WY MI RI, 10.1 14.6 10.4 CT, 10.2 IA PA 9.9 NV NE 9.4 NJ, 15.0 18.3 11.4 OH IL IN 10.7 DE, 12.2 UT 12.7 MD, 13.6 CA 16.9 CO 13.9 WV 18.8 16.9 15.2 VA DC, 12.4 KS MO KY 13.1 11.3 12.5 13.9 NC TN 16.6 AZ OK 13.6 20.2 NM 18.4 AR 21.6 SC 18.2 16.6 AL GA MS 18.0 18.8 14.9 TX LA 24.1 19.8
AK 16.9 FL 20.7 less than 11%
11% to 13.9%
14% to 17%
more than 17%
Source: U.S. Census Bureau, Current Population Survey, 2005 to 2007 Annual Social and Economic HI Supplements. http://www.census.gov/hhes/www/hlthins/hlthin06/percent_uninsured_state.xls 8.7 Data for the following territories are: American Samoa, 92% (2000); Guam 21% (2003); Puerto Rico, 7% (2005); U.S. Virgin Islands, 30.1% (2005). Data for other U.S. Territories are unavailable.
Figure 4 Percent Change in U.S. Medicaid Enrollment, FY 1998 – FY 2008
9.5%
7.9%
Annual growth rate 5.6%
4.2% 3.2% 3.2% 2.2%
0.5% -1.9% 0.2% - 0.5%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 projected Note: Enrollment percentage changes from June to June of each year. Source: For 1998-2006: Medicaid Enrollment in 50 States: June 2006 Data Update, Kaiser Commission on Medicaid and the Uninsured (KCMU), October 2007. FY 2007 and FY 2008 based on KCMU survey of Medicaid officials in 50 states and DC conducted by Health Management Associates, October 2007.
of 10 STATE the STATES Figure 5 overall average annual total medicaid spending growth, 2000-2006
11.9%
7.2% 6.5%
-0.2%
Annual Spending at 2000 – 2002 2002 – 2004 2004 – 2005 2005 – 2006 End of Period (billions) $257.3 $295.9 $315.0 $314.5
SOURCE: “Medicaid and Enrollment Spending Trends,” Kaiser Commission on Medicaid and the Uninsured, October 2007, www.kff.org/medicaid/upload/7523_02.pdf. employers offering health insurance.18 nation’s weakening housing market and Medicaid jumped on average from 3.2 Rising health benefit costs and a jittery expect lower tax revenues. Others must percent in 2007 to an average 7.8 percent economy may make it difficult to increase address underfunded state employee for their 2008 appropriations. 27 employer-sponsored insurance coverage pensions, aging populations, and failing levels in the near future.19 infrastructures.23 Added to this mix is the Looking forward, Medicaid continues as certainty that health care spending will the major force in state spending, exerting While employer-sponsored coverage continue to rise for the foreseeable future. pressure on state budgets and promising experienced significant erosion between future fiscal challenges. 2000 and 2004, public program enrollment Even amid states’ recent focus on coverage expanded during that time thus averting expansions, Medicaid enrollment declined In general, states’ major funding concerns additional increases in the rate of slightly in fiscal year 2007, accounting for fall into two categories: (1) financing uninsurance. However, since 2004, the the first decline in enrollment in nearly coverage expansions for the uninsured; decline in employer coverage has not been a decade. The drop likely resulted from and (2) increased Medicaid expenditures. offset by public program expansions.20 both an improving economy with lower States have other health care worries as This trend may herald the beginning of a unemployment rates and the impact of well, including an aging population that disquieting shift whereby the number of new Medicaid citizenship documentation will demand more health care services, uninsured grows at a faster pace in part requirements. The decline was accompanied health care cost increases and their because public programs are no longer by a 2.9 percent growth in Medicaid impacts on those currently insured, expanding to offset declines in employer spending in fiscal year 2007, after record- reductions in federal funding for public coverage.21 low spending growth (1.3 percent) in health programs, workforce shortages, fiscal year 2006.24 The upturn in spending and the uncertain long-term outlook for Fiscal Stability in 2007, Worsening is attributable to state expansion efforts, SCHIP funding, to name just a few. Recent Outlook for 2008 increases in provider reimbursements, and CBO projections suggest that health care From a budgetary perspective, most states increasing enrollment after temporary spending will continue to rise at an average experienced healthy revenue growth in declines in fiscal year 2006.25,26 Despite annual rate of 8 percent through fiscal fiscal 2007, but some are already seeing moderate growth in the program, many year 2017. 28 With Medicaid accounting worsening economic conditions and their states are feeling pressure to increase their for 22 percent of state budgets, the annual fiscal 2008 budgets reflect a slowdown general fund allocation for Medicaid in the increase promises to continue exerting in revenue and expenditure growth. 22 face of a declining federal matching rate. pressure on state budgets.29 Many states are feeling the effects of the In fact, states’ general fund spending on
of STATE the STATES 11 Access Barriers persist in Rural Areas
Approximately one-fifth of the U.S. spending for health care exceeds 10 coverage. Public programs provide health population lives in rural areas.30 Rural percent of family income or, for low- care coverage to 16 percent of remote residents are uninsured at higher rates income families below 200 percent rural residents compared to 10 to 11 than their urban counterparts, and are FPL, out-of-pocket costs exceed percent in other areas. uninsured for longer periods of time five percent of family income. In fact, than residents in urban areas. Among 12 percent of rural residents who do Rural areas of the country experience non-elderly rural residents, 19 percent not live adjacent to urban areas are persistent barriers in improving access are uninsured, compared to 16 percent underinsured compared with 10 percent to health care services. Hospital of urban residents. And while more of rural residents who live adjacent to closures, poor public transportation, urban than rural residents report that urban areas and 6 percent of urban and physician and dentist shortages they have never had health insurance residents. Even when researchers all contribute to these barriers. coverage, rural residents lack coverage controlled for socioeconomic and Furthermore, rural residents are less for longer periods of time. More than other characteristics, they found that likely to have health insurance because one-third of rural residents have been the chances of being underinsured they are less likely to have employers uninsured for more than three years, remained 70 percent higher for rural that offer such coverage. In fact, when compared to just over a quarter of their nonadjacent residents than for their offered health insurance, rural residents urban counterparts.31 urban counterparts.32 — both those living adjacent to and not adjacent to urban areas — are just as Furthermore, research shows that rural For predominately rural states, the likely to enroll in coverage as their urban residents who have private coverage uninsured pose a significant and complex counterparts. are at higher risk of being underinsured problem. In Montana and Maine, for than their urban counterparts. example, more than 70 percent of the State health care reforms to address Generally speaking, the research states’ uninsured live in rural areas. For the uninsured need to take into account categorizes individuals as being these residents, Medicaid and SCHIP key economic, workforce, health underinsured if family out-of-pocket play a critical role in ensuring health care status, and health delivery system characteristics that differentiate rural Figure 6 length of time that the rural and urban populations regions from urban areas. under age 65 have been uninsured
n Small businesses form the backbone 28% of rural economy. The disparity 20% 1 year 36% 20% 1 year > 3 years to 3 years > 3 years to 3 years between rates of uninsured in rural versus urban areas may result from 24% less 25% less 27% than or equal 20% than or equal never been the fact that rural residents are to 1 year never been to 1 year insured insured more likely to work for an employer that does not offer private health care coverage, for example a small Rural Urban business or agricultural enterprise. Source: Data Profile, Rural and Urban Health, Center on an Aging Society, Georgetown University, Number 7, January 2003.
Who Are the (Non-elderly) Uninsured? 33
While the number of uninsured is growing workers. In fact, only 18 percent poor (100 to 199 percent FPL). The rapidly, the economic and social factors of the uninsured are members of near-poor are especially vulnerable that place individuals at risk for being families that do not participate in the to being uninsured because they are uninsured have remained remarkably workforce. less likely to be Medicaid-eligible. consistent. n The poor and near-poor are the most n Minorities are more likely to be unin- likely to be uninsured. About two- sured than whites. Almost one-third n The majority (71 percent) of un- thirds of the uninsured are either poor of Hispanics and Native Americans insured are members of working (below 100 percent FPL) or near- lack health insurance coverage families with one or more full-time
of 12 STATE the STATES n Rural areas experience persistent asked about both their physical and reduce hospital closures. State- workforce shortages. Rural areas mental health status. certified as necessary providers, have fewer providers—less than CAHs are located in rural areas and 11 percent of physicians practice n Strong safety net is critical to meeting meet geographic criteria. The federal in rural areas—translating into less needs of rural uninsured. States Flex program encourages states to access for rural residents to health need local safety nets in rural areas create a rural health plan, providing care services. Over 20 million rural to ensure the success of statewide grants to states to encourage the Americans live in health professional health coverage reforms. Some development of rural health networks, shortage areas with a provider-to- states are trying to promote linkages the improvement of EMS systems, patient ratio of 1 to 3,500 or worse. between Critical Access Hospitals and the implementation of quality While states may be able to devise (CAHs), federally-qualified health care improvement initiatives. approaches for providing affordable centers, home health agencies, and health coverage options, poor other local service providers. CAHs Adapted from “Data Profile, Rural and Urban Health”, access to services may stymie these receive cost-based reimbursement Center on an Aging Society, Georgetown University, from Medicare in order to improve Number 7, January 2003, and The “Uninsured in Rural efforts. Traveling long distances is America,” Kaiser Commission on Medicaid and the not an effective solution, particularly their financial performance and Uninsured, April 2003. for the elderly. Physician workforce shortages have a disproportionate Figure 7 Many Rural Workers Not Offered Employer-Sponsored effect on already fragile rural Health Insurance health care infrastructures and the affordability and accessibility of Offer, Enrollment, and Coverage, 1998 coverage options for rural residents. 86% 83% 84% Rural Non-Adjacent n Rural residents are older and report Rural Adjacent worse health status. Rural Americans 69% Urban are older and in poorer health than 66% 59% their urban counterparts, engage 56% 58%
more frequently in risky health- 49% related behaviors, and suffer slightly higher rates of chronic conditions. Fewer rural adult residents receive screening for certain types of cancer, including prostate, breast, colon, and skin cancer. Given these findings, it is not surprising that a larger proportion of rural than urban residents report “fair to poor” when ESI Offered Enrolled, If Offered Covered by Employer
Who Are the (Non-elderly) Uninsured? 33
as compared with 14.5 percent of half aged 19-34. Many low-income n The uninsured who suffer from whites. African Americans are also children qualify for public programs; chronic conditions are less likely to uninsured at a higher rate (19.4 per- however, in general, low-income receive medical and dental care and cent) than whites.34 adults qualify for Medicaid/SCHIP have substantially higher unmet health only if they are disabled, pregnant, or care needs than their counterparts n While the number of uninsured chil- the parents of dependent children. with health insurance coverage.35 dren is growing, adults are still more likely to be uninsured than children. n Young adults aged 18-24 and 25-34 Non-elderly adults account for 80 have the highest uninsured rate at 29.3 percent of the uninsured with almost percent and 26.9 percent, respectively.
of STATE the STATES 13 of 14 STATE the STATES of STATE the STATES
Key Policy and Design Issues: The Building Blocks for Reform
Despite new efforts to think beyond the current paradigm and find new tools to address health care reform, historically difficult policy questions remain.
Over the past year, the momentum among Amidst this activity, it is helpful to to benefit design, subsidies, insurance states to address the uninsured continues remember one of the primary “Lessons market reforms, and cost containment to build. The reason for continued efforts Learned” from last year’s State of the States strategies—are all approaches intended are two-fold: the successful enactment of report: new state reform initiatives may to address the affordability issue. It is the reforms in several states in 2006 raised take time to reach goals and they should solutions to these questions that will create expectations for progress while, as in be evaluated only after they have had time the building blocks for state health care previous years, the growth in the number to mature. New policy and design lessons reform.38 of uninsured, rising health care costs, will emerge from state experiences and declining employer-sponsored insurance, help inform policymakers wrestling with Do Different Populations Require Different Solutions? and lack of response at the federal level reform models over time.37 While states One way that states are approaching have left states with no choice but to can learn from each other during both comprehensive, substantial, or even address health care reform themselves. development and early implementation incremental reform is to think about the stages, they will continue to experiment uninsured in three general population State approaches to reform vary given their own particular circumstances. categories: those who have very little considerably, often depending on The challenges may be greater than resources to bring to the private insurance the political and fiscal environment; some states can overcome; however, it market; those who have some resources demographic characteristics, insurance is important for them to take risks and but cannot bear the full cost of insurance market dynamics, and other economic explore new terrain to inform each other premiums; and those who have sufficient variables also impact a state’s capacity and the national dialogue. incomes to participate in the insurance to act. Yet almost universally, states are market on their own. Various solutions are considering health care reform in a very States currently considering the being considered to address the needs of pragmatic way. Extremes, it appears, are applicability of comprehensive reforms these diverse populations. out. A single-payer system is generally in their state will have to identify not considered a politically viable option; and prioritize their goals, address the State discussions often involve determining however, neither are reforms that rely challenges of financing, determine where the demarcations between these on a completely free market, consumer- the viability of mandates, and define populations fall. In general, states driven health care system. Instead, most affordability. Affordability of premiums commonly use the eligibility levels of state reforms look to politically feasible and underlying health care costs are major their Medicaid and SCHIP programs to proposals that build on the current, mixed driving factors for state health care reform. establish the lowest tier—those who have public-private health insurance system.36 Many of the policy discussions laid out in very little resources to bring to the private this section — including those pertaining insurance market. For children, this level is
of STATE the STATES 15 generally is between 100 and 300 percent A Roadmap for Reform: What are n Building on successful existing FPL; there is substantial variation for the Goals? institutions and administrative both SCHIP parents and childless adults It is important for states to have a clear vision structures? across states, ranging from 12 percent to of what they are attempting to achieve. n Creating new institutions and structures 275 percent FPL. Recognizing the limited States need to identify their goals and how to oversee reform? resources of this population, many states at to prioritize them. Some goals are oriented the lowest end of the range may be striving toward specific populations such as: Understandably, states’ established to raise the eligibility levels of their public priorities will vary because of their programs. n Universal or near-universal coverage; environments: market dynamics, political will, and their fiscal situation all play a role n Reduce the number of uninsured who States are exploring many strategies to in framing if, and how, a state can tackle are currently eligible but not enrolled facilitate participation in the private health care reform. in public programs; insurance market by those that have some resources but cannot bear the full cost n Increase, or at least maintain, the num- Subsidies and Financing – Who Will Pay? Who Will Benefit? of insurance premiums. This population ber of small employers who can afford Another lesson from last year’s State is defined differently among states, but to offer coverage; of the States is that there are no free generally builds from their public program n Help low-income workers afford to solutions. Low to moderate income eligibility levels and has a ceiling of 300 take-up their employers’ offer; and uninsured individuals need either public to 400 percent FPL. Because a significant program support or some level of public percentage of this uninsured population n Make coverage more accessible and subsidization. States realize that, even are in working families, state strategies affordable for high cost (or high risk) with the best plan at hand, the cost of look to both increasing employer offer individuals. implementing reforms can be daunting. rates and employee/individual take up Other goals create parameters to guide the Certainly no comprehensive reform can rates. Subsidies and other methods to development of a framework for health occur without significant state investment reduce premiums are at the heart of these care reform. For example, are the reform and some type of assurance that funds strategies. programs: will remain available for the life of the program. So determining who will pay, Finally, for those who have sufficient n Affordable given a particular state and how much, is a key question for incomes to enter the insurance market budget situation? policymakers. on their own, states are either trying to n Likely to be sustainable over the encourage voluntary participation or long-term? Should there be shared responsibility mandating that individuals purchase n Producing the highest ratio of individuals among different stakeholders? If so, insurance. covered per state dollar spent? who will share in covering the costs— n Minimizing the replacement of public individuals, employers, the federal coverage for private coverage (crowd-out)? government, state government, health plans and insurance companies, providers? table 1 2007 HHS Poverty Guidelines for 48 Contiguous States and D.C. Although some would say that there is Persons in Family enough money within the current health 100% FPL 200% FPL 300% FPL or Household care system to cover the costs of insuring everyone, the reality is that redistribution 1 $10,210* $20,420 $30,630 of resources within the current system is politically problematic. This redistribution 4 $20,650** $41,300 $61,950 can affect both financial responsibility (i.e., who will pay) and income (i.e., who will 39 *For Alaska: $12,770; Hawaii: $11,750 ** For Alaska: $25,820; Hawaii 23,750 get paid). So, while states are considering SOURCE: Federal Register, Vol. 72, No. 15, January 24, 2007, pp. 3147–3148 some level of financial redistribution, most Federal income guidelines do not reflect the variation in median household income or cost of living are searching for new funding sources.40 across states that particularly impacts low-income individuals and families.
of 16 STATE the STATES As in the past, states will continue to experimented with its Savings Offset and a mandatory requirement to purchase look to the federal government for Payment as an explicit redistribution insurance.43 Most states are not ready to Medicaid waivers that will bring in federal mechanism to fund subsidies for its pursue an individual requirement and are matching funds to cover new low-income expansion program; however, that has attempting to create a ‘culture of insurance,’ populations. However, as health care been a financing model fraught with legal using education and outreach activities to costs continue to rise faster than wages and political challenges. convince those uninsured people who can and inflation, states must scramble to afford insurance to purchase it. In addition, find sources of continuous funding that As states grapple with financing issues states continue to explore how to make the will not run counter-cyclically with poor in the short and intermediate term, they concept of insurance easier to understand economic conditions. are also focusing on what policies can be for consumers so that they will purchase implemented that will achieve cost savings the coverage. In the end, while states hope Massachusetts was able to redirect over the long run. Inevitably, states are that voluntary measures will result in substantial money from its Free Care Pool looking to greater systems improvement increased coverage, experience so far has (in which it had invested heavily in prior strategies and chronic care management demonstrated that a voluntary system years) but many states do not have that in the hopes that they will help create a will not yield universal or near-universal sort of option available to them. more efficient health care system and a coverage. healthier population. However, an upfront Some states, like California, have investment must still be made in order to The requirement that individuals have considered provider taxes as a way to ultimately reap savings in the long-term. health insurance has also been called infuse the system with more resources and either unenforceable or an impingement Governor Schwarzenegger had recently Should Health Insurance on individual freedom.44 A variety of Coverage Be Required for proposed leasing the state lottery to mandatory activities (e.g., automobile Individuals? provide annuities to support his reform insurance, child support, childhood The individual mandate included in proposal. In Pennsylvania, Governor immunizations, filing income taxes, Massachusetts’ reform has generated Rendell is looking to surpluses from minimum wage) have been examined by significant interest nationally, yet the idea of a malpractice fund to help finance his researchers who found that, in general, making insurance compulsory is a complex proposed reforms. “[t]he effectiveness of a mandate depends one. It is perhaps the most difficult element critically on the cost of compliance, the of recent reforms to translate into other Employer payroll taxes are another penalties for noncompliance, and the states. Beyond the challenge of determining option that states like Pennsylvania timely enforcement of compliance.”45 the political feasibility of a mandate, a state’s and California are considering. While economic circumstance can determine the Regarding personal freedom, the trade- employer assessments and other financial likelihood of requiring coverage. A state’s off is that of fairness. Free-riders in the requirements are always attractive as a median family income is correlated with both insurance system penalize those who are funding source, states must consider how the number of uninsured and the revenues responsible and do the ‘right thing’ by the federal Employee Retirement Income available to support subsidies for those purchasing insurance; uncompensated Security Act (ERISA) may impact their who cannot afford the products available in care the uninsured receive is shifted onto ability to implement those requirements that state. States with lower median family the premiums of those who are insured (see page 42).41 46 incomes tend to have higher uninsured rates (the “hidden tax”) ; and, if the uninsured and a smaller tax base while the opposite are healthy, their healthy risk is not part of the risk pool, which could help mitigate Other taxes are also being tested as revenue is generally true in wealthier states.42 It is premium increases for those in the pool.47 models. “Sin” taxes such as tobacco and important to note that this issue impacts not alcohol taxes have been passed in several only the question of an individual mandate, states; however, relying on income from but also any type of subsidy program that a Finally, a critical element of any individual sources whose use is discouraged by state may consider. requirement to purchase insurance is higher taxes and, at least in the case of that the state provides some level of tobacco products, pressure from public If the aim of states is to reach close to 100 subsidization or includes a process health campaigns, is problematic as percent coverage, two elements that must where those who cannot meet a defined well. The governor of Illinois originally be addressed are the price of the product affordability threshold are exempted from proposed using a gross receipts tax. Maine the requirement.
of STATE the STATES 17 What Should be the Employers’ debated within the larger discussion of to consider certain parameters such as Role in Health Care Reform? health care reform.49 levels of individual or family income. For In an attempt to maintain a strong example, a $5,000 deductible for a person base of employer-sponsored insurance, What is Affordable Coverage? earning the U.S. median family income some states continue to consider more The enactment of an individual mandate ($48,000) may be too onerous.51 mandatory “pay-or-play” strategies, in Massachusetts brought the affordability which essentially tax employers but issue to the forefront: the mandate in States considering an individual mandate provide a waiver from the tax if the that state is meaningless if the available must address the affordability question. employer provides access to coverage.48 coverage products are not affordable. In Policymakers will have to consider how In part, states are examining the concept part because of Massachusetts’ experience, to provide subsidies to assist those with of employer mandates out of concern the issue of affordability has emerged as insufficient incomes to purchase the that the uninsured will end up on public one of the more challenging components affordable product and understand that programs or require uncompensated care, of state reform. Put simply: what is some individuals may have to be exempted which results in cost-shifting to those with considered affordable from the perspective from the requirement, as Massachusetts did. private coverage. Both Massachusetts and of individuals, families, and employers? Vermont have implemented employer (The issue of affordability in terms of a Another factor for policymakers to requirements; however, neither are state’s budget is addressed in the section consider when determining affordability substantial in terms of the financial impact above on subsidies and financing.) is determining what constitutes an on employers nor in terms of state revenue appropriate benefit design, both in terms gained. Likewise, some employers, by The experience of the Massachusetts of how it impacts the mandate and the virtue of their small size, are exempted. On Connector Board is the most recent subsidy. As states work through these the other hand, employer requirements example of an effort to create affordability issues, they may propose affordability have an enormous political impact in standards for sliding scale subsidies, but standards and benefit designs that vary underscoring the importance of shared it is the first to do so in the context of widely across the states. responsibility. an individual mandate. The state must provide subsidies to those without the What Is the Most Appropriate Aside from Hawaii’s Prepaid Health Care means to purchase coverage; and those Benefit Design? Act of 1974, which requires nearly all subsidies are based on a specific benefit Regardless of whether states are pursuing employers in the state to provide health price threshold that must be compared to strategies to make health insurance benefits to employees who work more than income levels. Therefore, the need for an compulsory, the overall cost of health 20 hours, currently, the most substantial affordability standard is related to both the insurance remains an issue of great employer requirement in place is the mandate and the subsidies being provided. concern. However, more and more Massachusetts Section 125 benefit plan stakeholders in the health care system requirement. To be eligible for a waiver Unfortunately, the issue of affordability are not just concerned strictly about the from a mandatory assessment, employers is more complex than considering only cost of a coverage but the value of that are not required to contribute to the cost premiums in and of themselves; out- plan – that is, what set of services are of health care, but instead must set up the of-pocket costs including deductibles, being purchased for a specific amount of mechanism for the individual employee to coinsurance levels, and co-payments money. The design of the benefit plan is a purchase insurance with pre-tax dollars. are also part of the equation. There is lever that is constantly being considered considerable debate about the appropriate to reduce premiums, encourage efficient Because employer contributions currently levels for all of these cost variables but, in and appropriate consumer behavior, and play a significant role in financing health general, there is agreement that levels of even change insurance plan and provider care coverage, there continues to be an both premium and out-of-pocket costs behavior. Benefit design includes what interest in maintaining the employer- should somehow be related to income and services are included and excluded, the based insurance system. However, as the ability of individuals to afford those types of cost-sharing incorporated, and health care costs increase in a competitive costs. Some experts believe that out-of- how access to providers is structured. marketplace, and employer-sponsored pocket costs should not count towards insurance decreases, the role of employers affordability standards.50 Nonetheless, to In the past, many states used the in financing coverage will continue to be set affordability standards, it is important straightforward method of allowing
of 18 STATE the STATES premium reductions to be based on deductible plans, have been introduced small employers that offer a “wellness” limiting the benefits included in the in the market. While still not accounting benefit that is designed to prevent disease, plan. This was done primarily by for a significant percentage of the insured reduce poor clinical outcomes, and allowing insurance carriers to sell plans market, they fill some or all of the gap promote health behaviors and lifestyle that included either no or very limited between first dollar coverage and the choices. It should be acknowledged that mandated benefits; however, these plans deductible level that was seen, by lower- there is inherent tension between short- are not perceived as worth their value income individuals, as a disadvantage term yearly insurance contracts and the because, in order to reduce the premium of high-deductible plans on their own. state’s long-term strategies for prevention sufficiently, they often exclude the very According to Internal Revenue Services and chronic care management. There is benefits that consumers want.52 More (IRS) rules, many preventive services can little incentive for carriers to implement recently, states are seeing greater take-up be covered before reaching the deductible. these long-term strategies. With many of products that are allowed to exclude The premise of these accounts is that policyholders moving between carriers, some mandated benefits but still remain policyholders will reduce any over- no single carrier believes it will recoup the relatively comprehensive. In addition, utilization that was occurring because of short-term costs over the long run. some states are approaching the concept third-party payments (i.e., by insurers or of limited benefit plans in other ways. For self-insured employers) under a first-dollar Interest in how a health plan organizes example, the CoverTN program starts with coverage plan (i.e., plans with low or no its network of providers continues to be the premise of requiring a maximum $150 deductibles).54 Likewise, the ideal of this discussed. New forms of managed care that premium per month and has built the approach is that patients will become more emphasize primary care, preventive care, product design around that requirement; savvy consumers of health care services— and chronic care management are being the New Mexico State Coverage Insurance demanding lower costs and higher encouraged to improve health and reduce product looked to limit the benefits quality— and market forces will motivate costs in the long term. Tiered networks by imposing a $100,000 annual cap. providers to improve their quality based that motivate policyholders to use those Increasingly, there is an effort to determine on the desire to have favorable public providers with the best value (price which benefits should be included in a information published about them. and quality) are also being increasingly plan based on medical evidence; however, However, in order for patients to be able incorporated into the benefit design. evidence-based benefit design is still in its to choose wisely among hospitals and infancy and, for the most part, has yet to practitioners, useful price and quality According to a recent study by the Kaiser be fully implemented.53 information is necessary. This information, Family Foundation, evidence indicates that while increasingly more public, is still not the ideal cost-effective insurance plan has High-deductible health plans (HDHPs) widely available and there is a lot of work three features, including: 1) high initial cost- that provide for catastrophic coverage are to be done to make it easily accessible and sharing (with deductible or coinsurance); another type of benefit plan design that understandable to consumers. 2) an income-related out-of-pocket cap; results in lower premiums. Essentially and 3) up-front coverage of chronic care developed to protect assets in the event of Other states are looking to encourage maintenance. 55 It will be interesting to see if a catastrophic event, HDHPs have always certain patient behavior more directly more plans incorporate these elements. been available in the open market but have through benefit design. Rhode Island has not been very popular for lower-income legislated “wellness health benefit plans” How Can Risk Be Pooled? individuals since they have very little assets that require policyholders to participate Another key policy issue that states must to protect. In addition, lower-income in wellness programs, such as smoking consider is how to achieve adequate orders individuals often do not have the resources cessation, weight loss, and disease of magnitude in pooling risk. Private to afford the cost of the services that are management programs, as well as to select insurance is fundamentally based on the incurred prior to the deductible being met; a primary care physician and complete idea of risk pooling or risk spreading. in effect, they feel like they are paying a a health risk appraisal. In exchange, Pooling across various levels of risk allows premium in order to still be uninsured. deductibles, co-pays and co-insurance insurance to function because it guards are reduced to amounts normally seen against potential exposure to high costs More recently, health reimbursement in plans with much higher premiums brought about by adverse selection (i.e., arrangements (HRAs) and health savings (see page 49). Maryland has enacted a only the high risk, high cost individuals accounts (HSAs), coupled with high- similar law that provides subsidies to will seek insurance).
of STATE the STATES 19 Large employer groups are naturally while others are formed by associations of increase efficiencies. Any changes made formed risk pools that generally employers and/or individuals. The theory to insurance markets are complex, and include a broad enough range of risk behind the older purchasing cooperative can have substantial repercussions, as a that adverse selection is mitigated. The models relied on the idea that if a number change implemented in one part of the federal employee or state employee of small employers were pooled together, insurance market may have unintended benefit program is another example of efficiencies could be gained and a more consequences in other areas of the health an employer-based risk pool that has competitive premium rate could be care system. sufficient numbers of enrollees to spread obtained from insurers. Health purchasing the risk. In the non-group (individual) and cooperatives or purchasing pools were Nevertheless, states continue to consider the small group markets the risk pool is created around the country, but most were how revisions to insurance market rules limited, so insurance carriers have devised not deemed successful at constraining can improve access and decrease costs. practices to avoid the inherent risk of health insurance premiums, achieving Some insurance market reform strategies adverse selection found in those markets. adequate market share to maintain currently under discussion include efficiencies, or reducing the number of implementing a minimum insurance Medicaid, a public program for the very the uninsured. Many closed their doors medical loss ratio (i.e., the percentage poor and disabled, functions more like after failing financially and, in general, the of the premium dollar that a health a subsidy mechanism, rather than a risk model did not live up to its promise.57 plan must spend on medical care versus pool. Because of the overall poor health of administrative costs, taxes, and profit); the lowest income Medicaid beneficiaries, As discussed above, having an individual changing the definition for commercial adverse selection is impossible to avoid. mandate and subsequent market insurance of dependents and extending However, at higher levels of income regulation can ensure that the pooling coverage beyond the age of 18 for students eligibility in Medicaid and SCHIP, risk mechanism spreads risk evenly and and non-students;58 the merging of the pooling strategies can be more effective as discourage insurers from ‘cherry picking’ non-group and small group markets;59 beneficiaries exhibit a broader range only the healthy risks. However, since most guaranteed issue with risk equalization to of risk. states are not considering an individual counteract potential adverse selection;60 mandate, they may need to consider and efforts to find savings through Discussions by state policymakers about what mechanisms should be instituted administrative simplification and pooling risk focus primarily on those to deter adverse selection and market standardization. uninsured whose incomes are too high segmentation. to qualify them for public programs and States have different insurance markets who do not have access to or cannot afford While pooling risk continues to be a and regulatory structures that affect how private insurance. Consequently, some critical aspect of healthcare reform, some various reforms may work. For those states look to use their public program states are considering broader health states considering an individual mandate, as the risk pool for moderate-income insurance market reforms, such as a various regulatory mechanisms in the individuals, while other states want to Connector-style purchasing mechanism small group and non-group insurance subsidize employer-sponsored insurance or the merger of the non-group and small markets—including guaranteed issue, or some other purchasing mechanism. group markets, to achieve some of the modified community rating, and medical However, for those individuals with same results. underwriting prohibitions—can make adequate resources to afford insurance, the adoption of that reform more the private market should act as their Do Insurance Markets Need to be feasible. Other states that allow medical Reformed or Reorganized? pool and states are examining strategies to underwriting, experience rating, and As states work toward expanded coverage, encourage their participation. non-guaranteed issue would find it more they are looking beyond the use of public challenging to implement a mandate. programs such as Medicaid and SCHIP. Allowing or encouraging group purchasing Inevitably, they turn to the private arrangements has been widely viewed as As noted above in the discussion of risk insurance markets to examine how those a viable strategy to provide coverage and pooling, a purchasing mechanism can markets are functioning and whether a number of states still use this strategy.56 have numerous advantages in helping any changes could lower premiums, Some arrangements are established to make markets work more efficiently. expand choice of plans and products, or through state legislation or regulation, If structured appropriately, it can offer
of 20 STATE the STATES the advantage of allowing the pooling two of those goals could be achieved expanding coverage, but most have of premium contributions from various simultaneously but always at the expense not implemented fundamental cost sources (e.g., for workers with multiple of the third. Increasingly, policymakers containment activities. The reality is that employers), providing a purchasing underscore the idea that improving access controlling costs is a more elusive problem option for part-time workers ineligible cannot take place unless cost-containment than improving coverage and quality. for employer-sponsored insurance, and and systems improvement initiatives States will continue to explore different giving employees and individuals a choice are pursued at the same time. Yet, there mechanisms to decrease the cost increase of among several health plans rather is still a general feeling that coverage trend; however, it may be possible to than a single option. Purchasing through expansions should not be held hostage promote coverage expansions in the short a mechanism such as Massachusetts’ to the other two goals.61 For the political term while continuing to focus on cost Connector can create portability of a plan dialogue to advance, long-term strategies control and systems improvement in the that currently does not exist in the small to reduce costs and improve quality must long run. group and non-group markets. Some be implemented in order to sustain states are even considering the possibility coverage expansions. Conclusion of requiring their entire small group or The policy questions posed in this section non-group market to purchase through In their quest for a more effective and are interrelated and must be considered in an exchange. A connector or exchange efficient health care system, states are aggregate—contributing to the complexity also provides a mechanism for simplified increasingly focusing on a variety of and challenges of state health care reform. enrollment and administrative efficiency strategies to improve quality and contain States must consider which of these for employers who would like to offer costs.62 These strategies include: prevention elements to tackle first and under what health care coverage but do not have the and wellness programs; improved care timeline. As states move forward with resources for benefit management. coordination for chronic conditions; reform proposals, many of them are not in public health initiatives that target specific the position to enact comprehensive reform Many states are also exploring the aspect diseases and conditions such as obesity, in one fell swoop. However, as evidenced by of the Massachusetts reform that requires tobacco use, diabetes, and asthma; value- one of the lessons noted in last year’s State most employers to set up Section 125 plans based purchasing and other payment of the States, states attempting to reach to allow employees to have their insurance reforms; medical error reduction, health- near-universal coverage usually build these premium contributions withheld on a pre- care acquired infection reduction and other reforms on prior efforts. So states that are tax basis (see page 42). patient safety initiatives; data collection working on health care reform would do and reporting of price and quality well to enact some of these building blocks What are the Best Mechanisms information; and, administrative and upon which future reforms can be added. for Cost Containment and While this may appear to be a somewhat Overall Systems Improvement? regulatory efficiencies. Many states are also incremental approach, it goes beyond just The relationship between cost speeding the adoption of electronic systems those limited strategies because they are containment, increased access, and and other health information technologies conceived with comprehensive reform quality improvement has been well to improve the efficiency, effectiveness, and in mind. Sequential reforms are those established by health policy researchers coordination of medical care. that move toward universal coverage with and policymakers; however, in the past, a vision and deliberate, realistic steps to the predominant belief was that any Some states are moving ahead with cost control strategies while simultaneously achieve it.
of STATE the STATES 21 State Coverage Strategies: Evolving with Time and Effort
Both Massachusetts and Vermont began implementing their new reforms. California worked toward comprehensive reform while a number of states continued developing proposals or refining models hoping to enact new reforms in 2008 and 2009.
California—Governor Schwarzenegger announced a comprehensive health Indiana—Reforms enacted that increase tobacco taxes, providing funding for care reform proposal, prompting significant state and national debate. Special immunization programs, Medicaid expansions, increased Medicaid reimburse- 2007 session of the state legislature convened to address health care reform; ment rates, tax credits for employers that establish Section 125 plans, and revised proposal introduced. Assembly passes reform bill. tobacco prevention and cessation programs. The state received federal waiver approval for the Healthy Indiana Plan. Colorado—The Blue Ribbon Commission for Health Care Reform approved a set of recommendations, which would require state residents to purchase Kansas—Passed a bill that creates a phased-in premium assistance program health insurance or face a tax penalty, and would expand eligibility for the that provides subsidies to Kansans who make below 100 percent FPL for pur- state’s public programs. chasing private insurance actuarially equivalent to the state employee health plan. The Kansas Health Policy Authority presented health reform recommen- Connecticut—Passed reform bill increasing Medicaid reimbursements for dations to the legislature. physicians and hospitals, expanding eligibility levels for pregnant women and children, and requiring automatic enrollment of uninsured newborns in Maine—Governor Baldacci signed a bill allowing the DirigoChoice program to HUSKY, the state’s Medicaid and SCHIP program. New Authorities charged be self-administered. with developing recommendations for overall health care reform and for strengthening the safety net. Maryland—Governor O’Malley signed into law a bill that will expand Medicaid eligibility and offer subsidies to small businesses to offset the cost of providing Hawaii—Passed several bills that expand health coverage to infants and coverage to employers. children, raise the reimbursement rate for Medicaid providers, and reestablish insurance rate regulation provisions. Massachusetts—Massachusetts’ individual mandate to obtain health insurance took effect July 1. Minimum creditable coverage and affordability Illinois—Following the collapse of agreement with the legislature, Governor standards were determined by the Connector board. Blagojevich began implementing, through executive authority, an expansion of the state’s FamilyCare plan and other reforms. Missouri—Passed a reconfigured state Medicaid system called MO Health- Net. The Legislature restored coverage and benefits to some populations whose services were eliminated two years ago.
Massachusetts and Vermont demonstrated that bi-partisan compromise and comprehensive reforms are possible at the state level. Several other states approved or began implementing coverage initiatives focused on children and working uninsured adults.
Arkansas – CMS approved a waiver to allow Arkansas to receive federal Maryland – Legislature over-rode Governor Ehrlich’s veto of the “Fair Share Medicaid funds for a program that will provide low-cost health coverage to Act.” Later in the year, the U.S. District court struck down the bill, declaring the 2006 small businesses. measure was pre-empted by ERISA. The state has appealed the decision.
Idaho – Taking advantage of the state plan amendment process provided Maine – Blue Ribbon Commission on Dirigo Health established to evaluate in the DRA, the state split the Medicaid and SCHIP population into three components of the state-subsidized coverage program for major benefit plans. the uninsured, particularly Dirigo’s funding mechanism.
Illinois – All Kids program implemented. Many other states propose similar Massachusetts – Passed a landmark comprehensive bill designed plans to cover all children. to cover 95 percent of the uninsured in the state within the next three years. Kansas – Received federal approval for their reform proposal under the DRA. Oklahoma – Legislature approved expansion of O-EPIC program to cover Kentucky – Moved forward on their Medicaid redesign plans after receiving businesses with 50 or fewer employees. approval for their state plan amendment under the DRA.
Financial conditions continued to improve for many states and more proposed or implemented coverage initiatives. During this time, the foundation for comprehensive reforms was being laid in Massachusetts and Vermont.
Florida – Received CMS approval for Medicaid redesign plans Kentucky – Legislature passed minimum benefit legislation. to be piloted in two counties. 2005 Maine – Enrollment began in DirigoChoice. Georgia – Legislature passed minimum benefit legislation. Maryland – Legislature passed the “Fair Share Act,” requiring large em- Illinois – Legislature passed All Kids program, expanding coverage to ployers to spend at least 8 percent of their payroll on health care. The bill children above SCHIP levels and continued to phase-in an was vetoed by Governor Ehrlich. expansion of coverage for parents up to 185 percent FPL. Massachusetts – Several health care reform proposals were introduced Iowa – In exchange for giving up $66 million in Inter-Governmental Transfers, the state received a waiver from CMS to provide a limited set of and each house in the legislature passed its own version of comprehen- Medicaid benefits to adults up to 200 percent FPL. sive reform. State received approval for Mass Health waiver extension establishing a Safety Net Care Pool. – Governor Sibelius announced the Kansas Health Care Au- ofKansas 22 STATE the thority, STATES which streamlined all major health care programs in the state to Fimproveor more efficiency information and allow the state on to statepush for reforms.strategies, visit www.statecoverage.net/matrix. * While this timeline aims to highlight the major activity in states; it is State Coverage Strategies: Evolving with Time and Effort not inclusive of everything that has occurred in the past few years.
Congress and the administration failed to reach agreement on the reauthorization of the State Children’s Health Insurance Program (SCHIP).
Minnesota—Governor Pawlenty announced his Healthy Connections proposal to South Dakota—Legislatively-created Zaniya Project Task Force developed a plan, make the state’s Medicaid program more affordable for children, and expand eligibility. including action steps and timelines, to provide health insurance to uninsured South Other features include rewards for healthy behaviors, a requirement that small Dakota residents. businesses establish Section 125 plans, and a Massachusetts-style Connector. Tennessee—Launched Cover Tennessee program which includes several expansions New Mexico—Governor Richardson unveiled a comprehensive reform proposal to cover children, uninsurable adults, low income workers, and small businesses. that would require all state residents to purchase coverage. Vermont—Vermont began enrolling eligible residents into Catamount Health on New York—Finalized a budget that will expand health insurance coverage for children October 1, 2007. by raising eligibility from 250 percent FPL to 400 percent FPL, the nation’s highest ceil- ing for SCHIP eligibility. Washington—Passed several bills to provide access to coverage for all children in the Oklahoma—Governor Henry signed legislation expanding income eligibility for adults state by 2010, and to create a Connector-like program called the Washington Health from 185 to 250 percent FPL and for children up to 300 percent FPL under the Insure Insurance Partnership (WHP). Oklahoma/O-EPIC program, which provides health insurance subsidies to businesses and self employed individuals. Currently, the program has implemented this expansion Wisconsin—Increased the cigarette tax by $1 per pack, providing funding to expand up to 200 percent FPL. health care coverage to nearly all children in the state through the state’s new Badger- Care Plus program. Oregon—Governor Kulongoski signed the Healthy Oregon Act, providing a timeline for comprehensive health reform recommendations, and establishing the Oregon Health Federal: Fund Board. Ballot Measure 50 failed, leaving in question funding for a children’s cover- • Bush administration proposed reforming the tax code to allow standard deductions age expansion. for private health insurance in an effort to make insurance more affordable. • CMS awarded Transformation Grants to states to improve effectiveness and Pennsylvania—Under his “Prescription for Pennsylvania” plan, Governor Rendell efficiency in state Medicaid programs. began pursuing an ambitious coverage expansion, alongside health systems • Numerous states began jointly pursuing legal challenges against the Bush improvements and efforts to promote healthy behavior. Administration for violating provisions of the federal SCHIP program. Rhode Island—Launched HealthPact RI plans that encourage small businesses to • SCHIP reauthorization stalled. Stop-gap funding was approved to fund the program offer health coverage to workers. Initiated a series of stakeholder meetings designed to until March 2009. result in recommendations to the 2008 General Assembly related to cost containment and affordable coverage for uninsured residents.
Several states also took advantage of the flexibility outlined in the DRA to redesign their Medicaid programs.
Pennsylvania – Legislature approved funding for Cover All Kids, a program allow- Vermont – Reached agreement on Catamount Health with goal of reaching uni- ing families with incomes above the SCHIP eligibility level to purchase health insur- versal coverage by 2010. The program includes an employer assessment, a new ance for their children on a sliding scale basis based on income. Implementation to insurance product with subsidies for individuals below 300 percent FPL, and several begin January 1, 2007. chronic disease management initiatives.
Rhode Island – Legislature passed a number of new health initiatives including several West Virginia – Moved forward on Medicaid redesign plans after receiving CMS coverage expansions focused on providing premium relief for small businesses. approval for their state plan amendment under the DRA.
Tennessee – Legislature passed Cover Tennessee program, which Federal: includes several expansions to cover children, uninsurable adults, • Medicare Part D implemented. States are no longer responsible for low-income workers, and small businesses. providing prescription drug coverage to dual eligibles. • Congress passed the DRA which authorizes states to Utah – Revamped its Covered at Work program and introduced the implement a variety of changes to their Medicaid programs. new Partnership for Health Insurance program, which provides • The Medicaid Commission proposed long-term solutions to address subsidies for low-income workers who are enrolled in coverage Medicaid’s escalating costs. provided through their employers.
Maryland passed “Fair Share” legislation, sparking interest in several states regarding employer responsibility. Spurred by continued budget challenges and the threat of federal changes to the Medicaid program, many states also developed Medicaid reform proposals.
New Mexico – State Coverage Insurance program, which is available to low- Tennessee – Granted a waiver amendment to end coverage of uninsured and income, uninsured working adults with family incomes below 200 percent FPL, uninsurable adults in the TennCare program and began disenrolling approxi- is implemented. mately 170,000 individuals.
Montana – State implements Insure Montana, an initiative using tax credits and Vermont – Governor Douglas vetoed the Green Mountain Health bill, which a purchasing pool to help small businesses afford the cost would have provided primary and preventive services to the uninsured. The of health insurance. state also received approval for their Global Commitment to Health waiver.
Oklahoma – The O-EPIC program waiver is approved by CMS. West Virginia – The Small Business Plan began enrollment. The state also established the WVAccess high-risk pool. Pennsylvania – Signed an agreement with Blue Cross Blue Shield insurance plans to spend close to $1 billion in surplus funds over six years on varing Federal: health programs in the state, including adultBasic. • Secretary Leavitt established the Medicaid Commission charged with of recommending ways to cut $10 billion from the programSTATE over five the STATESyears. 23 of 24 STATE the STATES of STATE the STATES state strategies: the STATUS QUO is NOT AN OPTION
If last year’s big story was the passage of comprehensive reform, then this year’s must certainly be, at least in part, the story of implementation. However, while states like Maine, Massachusetts, and Vermont work through the questions and challenges of implementation, many states are still in the process of thinking about how coverage expansions fit within broader health care reform.
More than ever before, governors, legislators, initiatives point to a greater understanding differ on major elements, they share and stakeholders resoundingly agree that among policymakers that the issues several important similarities in the the status quo is simply not an option. The facing the states cannot be remedied by structure of the reforms and some lessons bipartisan nature of recent reforms has also focusing solely on coverage and access learned.65 Chief among the lessons is that motivated policymakers in other states to issues; however, there is also increasing comprehensive reforms take time and seek common ground. recognition that coverage expansions are must build on difficult experiences gained necessary to have an effective and efficient along the way. Fortunately in 2007, fiscal conditions in health care system. Consequently, many many states continued to stabilize and states are combining coverage expansions Among the similarities, all three states have improve, providing more resources for with strategies aimed at improving focused their reform efforts on stemming sustaining and expanding health coverage. quality while controlling costs. Likewise, the erosion of employer-sponsored In fact, 42 states reported efforts to expand states are demonstrating an increasing insurance. Both the Massachusetts and health insurance coverage, according to a awareness that reform efforts targeted to Vermont reform models include strict survey released by the Kaiser Commission cost containment can also promote healthy requirements for employers, including on Medicaid and the Uninsured.63 These behaviors and more effective management payment by employers who do not efforts ran the gamut from expansions of chronic disease.64 currently contribute to their workers’ aimed at particular groups such as health care costs. Maine is considering uninsured children to comprehensive This section characterizes state modifications to its Dirigo Health proposals that would not only ensure near- reforms into three major categories: program that would include both an universal coverage for all state residents comprehensive, substantial, and employer requirement and an individual but also aim for system-wide reforms incremental. It is important to note that mandate in 2008 and 2009, respectively. addressing quality improvement and cost- these categories reflect a general effort The three states broke new ground with containment. to organize and distinguish the range of the passage of health care reform — no reforms being pursued. easy feat for any state — and have entered The story of what occurred across the the uncharted terrain of implementation. COMPREHENSIVE REFORMS: states in 2007 is a preface to a larger NORTHEASTERN STATES FORGE Massachusetts: Implementation Begins story that will unfold over the next few AHEAD WITH IMPLEMENTATION In a unique reform that has drawn the years. While most governors’ proposals In 2007, the nation watched as nation’s attention, Massachusetts is the were not enacted, they stimulated new Massachusetts, Maine, and Vermont first state to implement an individual dialogue in state capitals that could continued their quests to provide residents mandate. With a goal of covering nearly well lead to meaningful reforms in with universal or near-universal coverage. all residents, Massachusetts continued to the coming years. This year’s reform While the three states’ reform initiatives
of STATE the STATES 25 implement its comprehensive reform plan n Shared responsibility. To promote a percent in fiscal year 2007. Such strong during 2007. Four major principles guide culture of insurance and personal enrollment in a relatively short period the state’s health care reform initiative:66 responsibility, Massachusetts developed is a significant achievement, but it a system wherein everyone “plays his comes at a cost to the state. As a result n Public/private partnership. or her part,” including the government, of higher-than-expected enrollment, the Massachusetts describes the importance employers, individuals, health plans, state faces a possible budget shortfall of the “tent,” a process that requires and health care providers. Massachusetts of approximately $147 million. Despite “the participation, support, and is the first state to require individuals mechanisms to address the shortfall, collaboration of a wide range of to obtain health care coverage and to use including the authority to shift funds stakeholders,” including employers, an individual mandate, in combination from the Health Care Safety Net Trust health care industry representatives, with employer requirements, to provide Fund, the Connector will continue community-based groups, and near-universal health coverage for to monitor expenditures and assess consumer advocacy organizations. The its residents. next steps. Chair Leslie Kirwan tent — or partnership — also requires states that “it’s too early to make any the dedication of both federal and state Initially viewed as a unique model departure from the health reform plans. funds to ensure subsidized coverage. with little potential for replicability, We will follow the trends and adjust, Working closely with the employer Massachusetts’ reform is now the subject if needed.”69 community, the state designed its of great interest as policymakers in reforms with the goal of mitigating other states have begun borrowing some n Connector begins offering non-subsidized the crowd-out of private insurance. elements of the reforms.67 In addition, plans through the Commonwealth Choice For example, the state does not permit the state’s groundbreaking efforts both program. One of the primary objectives individuals with access to employer- to create a comprehensive benefit design of the Commonwealth Choice program sponsored insurance to qualify for under Commonwealth Choice and help is to provide individuals with a choice its subsidized Commonwealth Care residents obtain affordable coverage in the selection of a health plan. To program, and employers with 11 or through the Connector have generated that end, Commonwealth Choice offers more full-time equivalents who do not strong interest among other states, with six carriers’ non-subsidized health offer health insurance may be subject to many adopting these components of insurance plans. an annual assessment. the Massachusetts plan in their own To help consumers compare the many reform proposals. At the same time, n Transparency. Massachusetts’s health options available to them, the plans are the complexity of the Massachusetts’ care reform offers the promise of greater organized into four tiers with varying undertaking has “sparked a broader transparency around health care quality premiums, copayments, coinsurance, debate over the merits and feasibility of and costs. In 2006, the state launched a and deductibles. Plans in the “gold,” comprehensive reform.”68 Health Care Quality and Cost Council “silver,” and “bronze” tiers are available charged with establishing statewide With only a little over a year of for purchase through both the goals for improving health care quality, implementation experience, Massachusetts Connector and the open market. Plans containing health care costs, and has reached several remarkable milestones. in the fourth “young adult” level are reducing racial and ethnic disparities. By available only to adults aged 18-26 and 2012, the Council seeks to ensure that n Low-income subsidy program enrollment only through the Connector; they may Massachusetts will consistently rank growing rapidly. Enrollment in not be purchased in the open market. Commonwealth Care began in October among the states achieving the highest In general, plans with lower monthly 2006 for adults with income at or levels of performance in health care. premiums involve higher levels of cost- below 100 percent FPL. In January sharing and are more likely to require 2007, enrollment expanded further to n Shifting from free care funding to an annual deductible. All plans offer adults with income between 100 and insurance funding. A major objective of comprehensive coverage, including 300 percent FPL. As of December 2007, the reform is redirecting public funds inpatient and outpatient medical care, the program covered close to 160,000 previously used to fund uncompensated emergency care, mental health services, previously uninsured individuals. Given care into coverage for individuals in an rehabilitation services, hospice services, the strong enrollment in the subsidy insurance-based system. and vision care. program, costs associated with the state’s free care pool dropped by 15
of 26 STATE the STATES The Nuts and Bolts of Massachusetts Health Care Reform
In 2006, the Commonwealth of took effect on July 1, 2007, the n Insurance market reforms. Insurance Massachusetts passed landmark Massachusetts plan reached an market reforms are an important legislation with the goal of covering nearly important milestone.71 In fact, the component of the Massachusetts all of its residents within three years. state required individuals to begin strategy; in July 2007, the state The law represented the culmination of purchasing coverage no later than July merged the individual and small- more than a year of negotiations and 1, 2007 but set December 31, 2007 as group insurance markets. A compromise between lawmakers and a deadline to obtain coverage or face mandated study on the impact of the former Governor Mitt Romney. The financial penalties. With the six-month merger concluded that, on average, law required the participation of both grace period, the July deadline became health insurance premiums for small employers and individuals by a) placing responsibility on residents for acquiring more of a “call to action,” according to employers would increase by about coverage through an individual mandate Health Insurance Connector Authority 1.5 percent but that premiums for that requires all who can afford insurance Chair Leslie A. Kirwan.72 Residents individuals would decrease by 15 to obtain it, and b) requiring employers to who do not purchase coverage by the percent.74 make an annual “fair share” contribution. end of 2007 will lose their personal
(For more information on affordability exemption allowance for tax year 2007 n Premium subsidy and Medicaid standards, see page 18). and, in subsequent tax years, incur a expansion. The various employer fine for each month without insurance requirements and insurance n Creation of Commonwealth Health equal to 50 percent of the lowest cost market reforms are coupled with Insurance Connector Authority insurance product that the individual is the establishment of a premium (Connector). The Connector is an deemed able to afford. subsidy program (Commonwealth independent, quasi-governmental Care) and Medicaid expansion. state entity charged with helping small n “Fair and reasonable” employer With approximately 170,000 eligible employers and individuals purchase contribution. The reforms are coupled adults, Commonwealth Care offers affordable health insurance. Initially with an employer requirement for subsidized insurance to adults funded by $25 million in state seed “fair and reasonable” contributions to who otherwise lack access to money, the Connector will eventually employees’ health insurance coverage. health care coverage through an be funded by an administrative load Employers with 11 or more full-time employer, Medicaid, Medicare, or the collected from both the subsidized workers who do not contribute to their Veterans Administration. It aims to and private products it sells.70 The Connector facilitates the process of employees’ health care coverage must shift funding from direct payment of small employers offering Section 125 pay an annual “fair share” contribution safety net providers (via the state’s plans (see page 42) and offers newly capped at $295 per full-time equivalent free care pool reimbursements) to developed Commonwealth Choice (FTE). Small businesses with fewer individuals through a subsidized plans which are unsubsidized. than 11 employees are not subject to insurance mechanism. It is important Part-time and seasonal workers this requirement. In addition, employers to note that the health plans currently can combine employer contributions with 11 or more workers are required serving the Commonwealth Care within the Connector. It also allows to adopt Section 125 cafeteria plans population are Medicaid Managed individuals to keep their policy that permit workers to purchase Care Organizations (MCOs) that even if they switch employees. The health insurance with pre-tax dollars. include many of those safety net Connector is also the sole entity This requirement is true regardless providers originally receiving direct enrolling uninsured low-income of whether or not employers offer payment through the free care populations (below 300 percent FPL) health insurance to their employees. pool.75 In fact, one of the program’s in the subsidized Commonwealth Care Employers with 11 or more employees goals was to insure 54,000 adults Health Insurance Program. who do not adopt a Section 125 who had previously received services plan may be assessed a “free rider” paid for by the state’s free care pool. n Individual mandate to purchase surcharge if their employees incur The program is available to adults insurance. When the individual uncompensated care costs.73 with family income at or below 300 mandate to obtain health insurance percent FPL.
of STATE the STATES 27 Commonwealth Choice plans may by referring to the high deductibles as “a component of the state’s reforms, purchased through the Connector through blunt and crude way to make coverage the Trust Fund will reimburse acute- any of the following three methods: affordable,” have noted that the high care hospitals and community health deductibles could prevent individuals centers for care provided to the residual 76 n By an individual without the from obtaining needed care. However, uninsured and underinsured. Over involvement of an employer. out of a total of 30 non–young adult time, as more uninsured gain coverage plan designs (six carriers x five designs), under the state’s reforms, the state will n By an employee using a pre-tax half require no deductible, eight have shift funding from the trust fund to payroll deduction, with no employer a $2,000 deductible, and the rest fall Commonwealth Care. The state has contribution; by using pre-tax dollars, in between with deductibles varying already seen a significant reduction an individual may save up to 40 percent. between $500 and $1,500. In addition, it in free care pool use and costs. The
n By an employee using a pre-tax is important to note that all plans cover number of people using the free care payroll deduction, with the employer preventive care visits, and most cover all pool dropped by 20 percent between contributing to the monthly premium. primary care visits before triggering the 2006 and 2007 mostly because many (This program is scheduled to begin deductible. former pool users were automatically in 2008 and will be available to small enrolled in Commonwealth Care or n Significant reduction in free care pool signed up voluntarily.78 employers with 50 or fewer employees.) use and costs. Massachusetts has created As a result, the a Health Safety Net Trust Fund that state reduced funding for the Trust Fund While the new Commonwealth Choice will act as successor to the state’s by 30 percent for fiscal year 2008. plans provide individuals a wider choice Uncompensated Care Pool (free care In addition, the free care pool is of plans than what was previously pool) by combining uncompensated instituting copayments and deductibles offered in the non-group market, the care funds with other Medicaid funds, that mirror the cost-sharing high-deductible components, which including Medicaid Disproportionate requirements in Commonwealth have helped reduce premiums, have Share Hospital Funds.77 As an important Care, thereby encouraging people led to some concern. Some critics, who continue to seek care through the free care pool to enroll in the Table 2 commonwealth choice plans Commonwealth Care program through Tier the Connector. Policymakers have (# of plan designs Cost-Sharing Monthly Premium* per carrier) expressed some concern about the effectiveness of the Trust Fund, and it Gold Low copayments $289–$549 with drug coverage (1) No annual deductible remains to be seen whether transferring Uncompensated Care Pool funds Moderate copayments Silver to subsidies for coverage will in fact Some have an annual $232–$406 with drug coverage^ (2) result in a decline in free care over the deductible long term. $167–$280 with drug coverage Higher copayments Bronze Most have an annual Massachusetts has grappled with several (2) deductible $148–$256 without drug implementation challenges that provide coverage^^ policymakers with valuable lessons. While the sweeping legislation that created the Higher copayments $135–$230 with drug coverage Young Adult Most have an annual reform plan provided a blueprint for the (age 18 - 26) deductible state’s move to universal coverage, it did (2) Most have an annual benefit $110–$193 without drug not lay out the specific details of program coverage maximum implementation, including what level of coverage is needed for the individual * Monthly premiums are based on the individual premium for a 35-year-old for December 2007. Actual monthly premiums vary by mandate and what constitutes affordable age, region, and health plan. ^ All Silver plans offer prescription coverage. While each carrier offers two plan designs, the range in premiums is the same for both coverage.79 These design issues were left design options. The two plan designs have varying benefit and deductible structures. ^^ Beginning in February 2008, Bronze plans without prescription drug coverage will no longer be offered in order to comply with the state’s “minimum creditable coverage” standards.
of 28 STATE the STATES to the board of the Connector, which Growing interest in connectors initially struggled to strike a balance between ensuring adequate coverage and The Commonwealth Health Insurance The Massachusetts Connector differs in maintaining an affordable level of benefits. Connector is only one part of the several important respects from the early Massachusetts 2006 comprehensive purchasing cooperative experiments. In May 2007, the Wall Street Journal health care reform law, but it is a described the Connector’s 10-person board significant aspect that has sparked n Not a purchasing pool. First, the as a “motley panel” with representation nationwide interest. Massachusetts Connector is not a purchasing pool from business, labor, academia, and legislators designed the Connector but rather is an exchange and does state government. However, the board’s to improve the ease with which small not assume any risk for the insur- diversity has not stopped members from employers and individuals may purchase ance products it offers. Instead, compromising successfully on several key affordable insurance. In addition, the participating insurers pool their issues. The Wall Street Journal described Connector: Connector plan experience with the tough choices made by the board, their other small-group and non- noting that members accomplished n reduces paperwork; group business, thereby offsetting something “unusual” by “finding ways n provides for portability and pre-tax potential risk-selection problems. As to compromise on some of their most treatment of premiums; and an exchange, the Connector is not cherished positions and reach common n combines subsidies or contributions responsible for negotiating better ground.” The article recounted how board from several sources. rates for its members compared to member Celia Wcislo of the Service the outside private market. Employees International Union fought Although the exact structure of the hard for lower premiums but ultimately Massachusetts Connector may not n Insurance market reforms. The voted in support of the proposed succeed elsewhere, other states are Massachusetts insurance market premium levels in order to ensure board closely watching the Connector’s provides an important backdrop unity. It is this type of consensus that operation and hope to learn from the to the Connector’s design. Among ultimately is positioning Massachusetts Massachusetts Connector experience other reforms, the 2006 reform law to become the first state to achieve to inform their own efforts to provide merged the small-group and non- near-universal coverage. The display of improved access for the uninsured. group insurance markets. In addi- unity is extraordinary given the board’s tion, the state’s insurance markets responsibility for making decisions in a States are interested in learning about had undergone significant reform public forum — decisions that inevitably both the history of the Connector in the past; today, Massachusetts’ will affect all residents of Massachusetts.80 and how it can address the access insurance market includes modified and market hurdles experienced by community-rating and guaranteed- Minimum Creditable Coverage. Among the uninsured. The Massachusetts issue requirements. Connector has its genesis in the its various responsibilities, the board was health purchasing cooperatives of the required to define minimum creditable The Connector design has captured the early 1990s. Massachusetts based coverage in order to set criteria for the interest of other states, partly because its Connector design on the Health development of new benefit plans to be of its unique combination of insurance Insurance Plan of California (HIPC). offered through the Connector and to market reforms and premium subsidies. The HIPC, like other first-generation determine whether existing coverage of It is unlikely that a Connector-like purchasing cooperatives, operated state residents can meet those criteria. structure on its own would solve the on the premise that small-employer problems of the uninsured, although After deliberations, the board determined pooling would result in greater market the Connector offers the potential the minimum creditable coverage as efficiencies and more competitive for combining some of the elements comprehensive benefits, including insurance premiums. The first- required to meet the needs of the prescription drug coverage. Amid concerns generation purchasing cooperatives, uninsured as part of a reform effort. that some residents would need to enhance however, did not succeed in reducing their current coverage to meet the new either premiums or the number of Adapted from Lischko A., “Health Insurance Connectors standard, especially with regard to the uninsured residents. In fact, many of & Exchanges: A Primer for State Officials,” State Coverage Initiatives, September 2007. prescription drug benefit, the board has these cooperatives failed.
of STATE the STATES 29 postponed enforcement of the coverage most expensive eastern region of the state. n Geographic and demographic requirements until January 2009. The same plan will cost nearly $20 less in characteristics pose challenges. In 2007, other parts of the state. the New York Times examined these Affordability. For the board, tackling the challenges, describing them as specific issue of affordability has proven to be In terms of affordability with respect to the to Maine’s economic and demographic a difficult task: defining affordability characteristics.84 impacts several components of the overall individual mandate, the Board ultimately Maine has large rural, reforms including appropriate premiums decided to permit some exemptions. elderly, and low-income populations, for both subsidized (Commonwealth “Health insurance is expensive,” states many of who suffer from chronic health Care) and unsubsidized commercial board member Jonathan Gruber, noting conditions. With many small and plans (Commonwealth Choice), as that for a family of four with an income seasonal businesses, fewer employers well as to determine exemptions to the of $40,000 (200 percent FPL), health offer health insurance than in other states. And with only a single major individual mandate. (For more details on coverage would consume almost 30 percent of family income.81 affordability policy issues, see page 18). Even with carrier (Anthem Blue Cross Blue Shield) subsidized rates, the board recognized offering individual coverage to Maine First, the board determined the that coverage would remain prohibitive residents, the program has struggled to structure of subsidized premiums under for some groups. As a result, the board offer broad choices. Underlying health Commonwealth Care varying them by established a series of exemptions that, care cost growth remains a constant income level and by health plan. In 2006, according to Gruber, effectively resulted in concern as well. it set a sliding scale subsidy structure and an individual mandate for all young, single member premiums ranging from a low of persons in the state “while exempting In September 2007, state health officials $18 for individuals with annual incomes many older individuals and families with announced that they would not renew between 100.1 and 150 percent FPL, to a incomes between 300 percent of poverty the state’s contract with Anthem; high of $106 for individuals with annual and the state’s median income.”82 However, instead, Harvard Pilgrim Health Care, incomes between 250 and 300 percent according to the board, approximately 1 under a fully insured contract, will FPL. In early 2007, the board established to 2 percent of the population — about administer DirigoChoice beginning a new premium structure; it eliminated 60,000 individuals — could be eligible for January 2008. Benefits and the size of premiums for individuals with incomes the exemption. While this is not a small the subsidies will not change under the up to 150 percent FPL and provided population, the state hopes that 98 to 99 state’s one-year renewable contract with additional subsidies to those with incomes percent of state residents will still have to Harvard Pilgrim, a nonprofit health between 151 and 200 percent FPL. comply with the mandate.83 The ongoing insurer. Maine Governor John Baldacci experience in Massachusetts highlights not expressed optimism that Harvard The development of the Commonwealth only the extent of the challenges associated Pilgrim’s presence will encourage Choice plans was inextricably linked to with implementing a mandate but also competition in the marketplace, thereby the determination of the aforementioned the need to allow for exemptions based on moving the state closer to providing minimum creditable coverage standards. It affordability concerns. affordable insurance for those without was the responsibility of the board to select coverage.85 the final plans for the Commonwealth Maine: Building on Dirigo Health 1.0 Choice program that not only met the In 2003, Maine enacted its Dirigo Health n Controversial funding mechanism. benefit standards but still remained Reform and set forth the ambitious goal of Financing for DirigoChoice combines affordable. Ten carriers submitted bids expanding coverage to the state’s estimated a variety of funding streams including to the Connector in January 2007. Seven 124,000 uninsured residents by 2009. employer contributions, individual of these carriers received approval by the Implementation has not been without contributions, a one-time appropriation Board, and six of these carriers signed complications. Sustainability of the of state general funds, and federal contracts with the Connector in March health coverage program, DirigoChoice, Medicaid matching funds for Medicaid- of 2007 in order to be offered through in particular, has been of great concern eligible individuals. Most of the cost the Commonwealth Choice program.The among those involved in promoting and of DirigoChoice, however, is financed lowest priced plan costs approximately implementing Dirigo. through a “savings offset payment $175 per month (for ages 35-39) in the (SOP),” which is based on savings
of 30 STATE the STATES identified by the Dirigo Health reform, As of September 2006, the state had universal coverage, enrollment totals including savings associated with enrolled about 700 small firms in are still substantial for a voluntary activities that reduce uncompensated DirigoChoice, with an average firm size enrollment program. It is important care.86 The state determines the savings of seven employees; half of the firms had to note, however, that 42 percent of offset payment annually through an not previously offered their employees DirigoChoice enrollees came in as adjudicated process based on “aggregate health care coverage. Nonetheless, individuals, and 28 percent as sole measurable cost savings.” Because the these businesses represent only 2.5 proprietors. While the enrollment aggregate cost savings approved by the percent of all eligible businesses, and experience points to the difficulty of Superintendent of Insurance have been survey results indicate that very small relying on a voluntary approach to lower each year than expected, revenues firms (two to three employees) find achieve universal coverage, the state available to fund subsidies under DirigoChoice unaffordable.89 While explicitly chose a voluntary strategy DirigoChoice have suffered. According the state’s enrollment experience falls initially recognizing that it would be to a recent evaluation of the Dirigo far short of policymakers’ hopes for inappropriate to mandate coverage Health reforms, “[t]hough conceptually sound, the process for estimating aggregate measurable cost savings, Dirigo health 1.0: A primer which determine the SOP amount, was vulnerable to criticism about the validity Adopted in 2003, the Dirigo Health age program that offers lower-cost of program impact estimates, many of Reform Act sought to make affordable plans to small businesses, the self- which cannot be directly observed.”87 health care coverage available to all employed, and eligible individuals In fact, the savings offset payment Maine residents by 2009. The state’s lacking access to employer-sponsored mechanism triggered a court challenge motto “Dirigo,” which means “I lead,” insurance. Employers cover up to 60 in which the financing mechanism was is a fitting moniker for the program; percent of coverage costs, with em- upheld; however, most stakeholders at the time, Maine was the first state ployees paying the balance. Residents agree that an alternative funding source since the early 1990s to enact with annual household incomes below is necessary.88 comprehensive health care reform 300 percent FPL qualify for premium legislation. subsidies on a sliding scale. n Voluntary enrollment and small-firm interest fall short. The program has Under Dirigo Health, the state imple- generated criticism for its disappointing mented two major coverage initiatives: enrollment, which reached a combined (1) MaineCare is a Medicaid eligibil- total of 28,000 in 2007 for the ity expansion for parents of children DirigoChoice program and Dirigo under age 19 with incomes between Health’s MaineCare companion plan for 150 and 200 percent FPL; and (2) eligible parents. This enrollment level DirigoChoice, launched in 2005, is a is modest when compared to the state’s subsidized health insurance program. estimated 124,000 uninsured residents. As the centerpiece of Maine’s Furthermore, for low income residents, health coverage the fully subsidized Medicaid program reforms, Dirigo- has proven more attractive than the Choice is a public/ partially subsidized DirigoChoice plan. private subsidized Nearly 80 percent of DirigoChoice health cover- members earn family income below 300 percent FPL, qualifying them for coverage subsidies, and 46 percent of all members earn income below 150 percent FPL, qualifying them for substantial discounts.
of STATE the STATES 31 without having cost containment Dirigo 2.0 envisioned shifting the funding, particularly the fate of the savings mechanisms in place and adequate problematic savings offset payment to a offset payment and the challenge of resources for subsidies available. surcharge imposed on hospital bills and finding agreement on alternative funding calls for other reforms, including: mechanisms. n Dirigo offers promising features. Despite Vermont: Catamount Health Enrollment the challenges faced by Dirigo, several n Allowing the savings offset payment Underway promising features of the program have to continue for a transition year emerged, including an effort to reduce and extending the current 2 percent In 2005, even as more than 60,000 Vermonters lacked health insurance, the hospital costs and improve management premium tax on insurers to HMOs. number continued to grow. Half the state’s of chronic conditions. Maine’s three largest n An employer requirement in 2008 and health care systems are collaborating to individual mandate in 2009 for those uninsured were eligible for but had not enrolled in state-subsidized programs make patients’ electronic health records with income over 400 percent FPL. such as Medicaid. More than two-thirds accessible across the three systems, share n A new requirement that insurance of the state’s uninsured residents lacked information about critically ill patients companies must alter benefit packages insurance for more than a year, and more in rural hospitals, and launch preventive and cost-sharing. than three-quarters reported cost as the health programs for chronic conditions n An increase in the required medical loss main reason for their uninsured status.94 such as obesity and substance abuse, with ratio from 75 to 78 percent in the small- the aim of reducing high-cost medical group market; those failing to reach interventions.90 The state’s reform the new threshold must refund excess In 2006, the Vermont Legislature and initiatives also created an institutionalized premium amounts to policyholders. Governor Jim Douglas responded to these problems by reaching agreement organization—Dirigo Health’s Maine n A new Maine Individual Reinsurance on a series of reforms that aim to achieve Quality Forum —to promote improved Program that will reinsure all insurance near-universal coverage by 2010. The quality of care. The Forum is both a companies offering coverage in the clearinghouse of best practices and individual market; the program will new Catamount Health program is at the information to improve health and a be funded primarily by a premium tax center of these reforms, offering a non- health care information resource for imposed on all insurance companies in group insurance product for uninsured Vermont residents. providers and consumers. For example, the the state. Forum recently undertook a campaign to n Reduction of employer requirements for The state began enrollment in the raise awareness of heart attack symptoms participation in DirigoChoice.92 Catamount Health plan for eligible in response to a state survey showing that n Implementation of clinical care the majority of Mainers cannot correctly management and managed behavioral Vermonters in October 2007. During the identify heart attack warning signs. health in the MaineCare program. first two months of enrollment, the state fielded 8,400 calls, and the state’s health care n Premium discounts for individuals coverage information Web site recorded In early 2007, Governor Baldacci announced who do not smoke and for small and nearly 300,000 hits. As of late December new plans for Dirigo Health Reform and large businesses that provide approved 2007, the state had approved more than termed the initiative Dirigo Health 2.0. worksite wellness programs. 2,800 applications and enrolled more than In June 2007, he signed into law a bill n A focus on primary care in the state health 700 individuals, well on the way to the authorizing Maine’s Dirigo Health program plan to improve health/reduce costs. 4,245 estimated for the first nine months of to self-insure, in an effort to make the n Healthy ME Rewards to provide implementation. Another 300 people have program more affordable for small businesses incentives for the previously uninsured already been given assistance to enroll in and uninsured individuals. Enactment of to choose a physician and complete their employer’s plan, almost 50 percent of the law does not mean the state program health risk assessments. the projection for the first year. will immediately self-insure, but it is “another very important tool in the tool Unfortunately, the legislature failed to Supporters and critics alike are closely box,” according to Trish Riley, director of take action on these reforms in 2007, watching the state’s outreach efforts and the Governor’s Office ofH ealth Policy and leaving the state with a significant budget the viability of a benefits package that Finance.91 The state plans to contract with shortfall for Dirigo and no changes to some observers view as too generous. Harvard Pilgrim Health Care on a fully- Dirigo’s program components.93 The 2008 The full cost monthly premium of $393 insured basis for the time being. legislative session will again address Dirigo
of 32 STATE the STATES Vermont health care reform: An Overview
Catamount Health is a preferred provider Access Plan enrollees (the Medic- chronic diseases. An estimated 50 organization plan offered by two insur- aid expansion program that cov- percent of Vermonters with chronic ers. Residents choose the insurer with ers adults to 150 percent FPL and conditions account for 70 percent which they would like to sign up; both adults with children to 185 percent of health care spending in the state, offer a comprehensive benefits pack- FPL) into their employer’s insurance but only 55 percent obtain appro- age that includes prescription benefits. plan, as part of the funding sustain- priate care at the right time.95 In Vermont residents may purchase Cata- ability mechanism for the health care response, the law endorsed imple- mount Health if they are uninsured, over reform programs. mentation of a statewide program age 18, and not eligible for an employer- to prevent and manage chronic sponsored insurance plan. Under certain n Annual employer contribution. Cata- conditions, based on the pilot circumstances, residents eligible for their mount Health requires employers Blueprint for Health, launched in employer-sponsored insurance and with who do not currently contribute to 2003. The goal of the Blueprint is to income under 300 percent FPL may pur- their employees’ health care premi- have a standardized system of care chase Catamount Health. ums to help pay for program costs. for the treatment of chronic condi- Employers are assessed $365 an- tions across all providers and public n Premium subsidy for low-income nually for each uncovered full-time and private payers in the state by uninsured individuals. A far-reaching equivalent if the employer does not 2011. Under the Vermont reforms, health reform initiative, Catamount offer coverage or offers coverage Medicaid, Catamount Health plans, Health includes a premium assis- only to some employees or if some and the state employee health tance product as well as several workers remain uninsured. All busi- plan must contract for chronic care chronic condition management ini- nesses with nine or more uninsured management that is aligned with tiatives. The state’s Premium Assis- full-time equivalents in 2007 and the Blueprint approach. The use of tance Program substantially reduces businesses with five or more unin- health information technology is a the cost of coverage by offering sured full-time equivalents in 2010 cornerstone of this initiative’s effort assistance to individuals whose fam- must make employer contributions. to improve quality. ily income is below 300 percent FPL,
including those who have access n Chronic care initiatives. One to employer-sponsored insurance. of the primary goals of Premiums are income-based: indi- the Vermont legislature viduals with family income less than was to prevent, improve 200 percent FPL pay $60 per month management of, and while those with income between curb runaway 275 and 300 percent FPL pay $135 spending per month. The state provides this associ- premium assistance for the unin- ated sured individual to either enroll in the with new Catamount Health Plan or to enroll in their employer’s insurance plan, depending on which is more cost-effective to the state. They are also using this mechanism to move current and new Vermont Health
of STATE the STATES 33 is more than 20 percent higher than the COMPREHENSIVE PROPOSALS: of the concepts in the Governor’s proposal. original $320 projected by the legislature, MOMENTUM CONTINUES TO BUILD In mid-December, the California Assembly raising the specter of higher-than-planned While Massachusetts, Maine, and Vermont approved AB X1 1. The bill is pending program costs. Nevertheless, the Governor continue to implement their reforms, review by the State Senate. The Senate and key legislators agreed to use state observers are following new proposals for leader delayed action on the bill and called general funds to implement the program comprehensive reform from a handful of for an independent review of the financing as planned, even though they received an states, including California, Pennsylvania, of the plan and its impact on the overall unexpected decision by the Centers for and New Mexico. Not surprisingly, some state budget. That analysis is expected to be Medicare and Medicaid Services (CMS) in of these proposed reforms have prompted issued in January. August to only provide federal support for significant debate. premium assistance up to 200 percent FPL. California law requires a two-thirds vote by the legislature to establish new fees or California: Debate on Comprehensive Policymakers are also closely monitoring Reform Plan taxes. Given that Republican members of the impact of Catamount’s eligibility In January 2007, California’s Governor California’s legislature are opposed to the rules and whether the program includes Arnold Schwarzenegger announced his imposition of new fees/taxes, and their sufficient protections to discourage vision for creating “an accessible, efficient, votes are needed to achieve a two-thirds the crowding out of employer-based and affordable health care system.” The majority, the financing for the reform plan insurance.98 In addition, the state governor’s plan was based on many of must be approved through a statewide began implementation of an employer the elements included in other state initiative. The initiative requires collection assessment in April 2007. As of October reforms such as those in Massachusetts of signatures to be placed on the ballot 2007, the state had collected 78 percent and Vermont. His reform plan offers and is expected to be on the ballot in of estimated first-quarter revenues, three cornerstones: (1) prevention, health November 2008. but hundreds of employers had not yet promotion, and wellness (see page 48 AB X1 1 includes: completed the necessary paperwork.96 for more details); (2) coverage for all Californians; and (3) affordability and cost n Individual mandate, benefit design, and The state’s Blueprint for Health (see page 33) containment. subsidies. The proposal requires all is currently implementing: individuals to have insurance coverage; The governor’s proposal to achieve the definition of coverage adequate to n early screening for diabetes, asthma, and universal coverage for California’s 6.8 fulfill the mandate will be determined other chronic conditions; million uninsured residents emphasized by the Managed Risk Medical Insurance shared responsibility with an individual Board (MRMIB). Persons with incomes n care coordination teams that interface mandate to obtain and maintain coverage, under 250 percent FPL whose premiums with the provider and patient; employer financing requirements, provider exceed 5 percent of income are exempt
n provider reimbursement that fees, guaranteed issuance of all insurance from the mandate. Hardship and other encourages care management; products, consumer contributions, and an exemptions to the mandate would be expansion of public programs. defined by MRMIB. The state would n information technology tools to subsidize coverage for adults with annual provide medical information to better While the governor’s plan received much income at or below 250 percent FPL. All coordinate care; and media and policymaker attention during children up to 300 percent FPL would the legislative session, the session adjourned n education for both providers and be eligible for subsidies. No premiums in fall 2007 before any action was taken patients on patient self-management would be charged for persons receiving on the proposal. Following the close of tools. subsidized coverage with income below the state’s legislative session, the governor 150 percent FPL. Lower-income workers While the Blueprint for Health is reportedly called the legislature into “special session” with incomes between 250-400 percent having a positive impact in many to address health care reform and released FPL who do not qualify for subsidized communities, uncertainty remains as to the an update of his reform plan. In early coverage but whose health insurance potential of these chronic care programs to November, California’s legislative leaders premiums for a minimum benefit plan impact overall costs associated with health (Nunez, Perata) introduced AB X1 1; a exceed 5 percent of family income would care in the state.97, 98 compromise measure that builds on many receive a tax credit.
of 34 STATE the STATES n Financing. The financing for the n Health insurance carriers and plans. The n Student health coverage. The proposal will be carried in a ballot reform imposes new rules on insurers, “prescription” would require full-time initiative. On Dec 29, 2007, the initiative requiring them to guarantee issue students attending four-year colleges was filed with the State Attorney coverage to any Californians who are and universities to have health care General (AG) for review. After the subject to the mandate, regardless of coverage. initiative receives a “Title and Summary” pre-existing conditions. from the AG, signature gathering will n Cover All Pennsylvanians. To increase begin. If proponents gather and submit The California climate appears ripe for coverage for the uninsured, the governor 694,354 valid signatures by April 21, reform, with 69 percent of California proposed an initiative entitled Cover All 2008, the initiative will appear on residents believing that reforms are Pennsylvanians (CAP) that would assist the November 2008 statewide ballot. needed and 72 percent favoring Governor uninsured adults and small businesses in Financing would be derived from Schwarzenegger’s proposal.99 obtaining basic coverage through private several sources. Employers who do insurers. As a new health insurance not provide health coverage to their If AB X1 1 bill passes, and voters approve product, CAP would be delivered employees would be subject to a 1 to the financing for the plan in November through the private market and provide 6.5 percent health care contribution 2008, it will be the largest expansion of a new option for the uninsured. fee based on the size of the employer’s coverage since the creation of Medicaid Businesses would qualify for CAP if they payroll; tobacco taxes would be raised and Medicare, extending health coverage have not offered health insurance to by $1.75 per pack; hospitals would pay a to approximately four million uninsured their employees in the past six months, fee of 4 percent of revenue; and county Californians. if they have 50 or fewer employees, and governments would contribute up to if, on average, those employees earn $1 billion. Over $4 billion in federal Pennsylvania: Promoting Health and less than the state’s average annual Containing Costs Medicaid funds will augment state wage. These low-wage businesses may Like California, Pennsylvania is debating revenues to finance the plan. participate in CAP if they enroll at least an ambitious coverage expansion 75 percent of all employees who work combined with programs to improve n Cost containment. As with the over a specified number of hours per health care systems and promote healthy Massachusetts reforms, the plan week and pay 50 percent of enrolled behaviors. In early 2007, Pennsylvania envisions a requirement that employers employees’ discounted premium. Governor Ed Rendell unveiled his establish Section 125 plans to permit Businesses that join the program would Prescription for Pennsylvania to increase some tax savings for both employers and pay approximately $130 per worker per access to affordable health care coverage their employees. Individuals would also month, and employees would pay on for all Pennsylvanians, improve the be able to make pre-tax contributions a sliding scale, ranging from $0 to $70 quality of care available in the state, and to HSAs. The state intends to work with per month depending on income, with bring health care costs under control for both providers and insurers to improve state and federal monies subsidizing employers and employees. The governor efficiency and reduce overall health the balance of the premium. Uninsured will consider an individual mandate if care costs. In addition, like Vermont, self-employed and other uninsured the number of uninsured Pennsylvania the reform proposal emphasizes individuals would be eligible to enroll residents does not significantly decline implementation of health information individually in CAP if they meet a “go over the next few years. technology and goes even further, bare” period requirement. stipulating a goal of achieving 100 n Cover All Kids. In October 2006, the percent electronic health data exchange Uninsured adults earning less than General Assembly passed legislation in the next 10 years. It also looks to 300 percent FPL and employees of requested by the Governor to provide increase Medi-Cal reimbursement rates eligible small businesses would receive affordable health care coverage available to reduce cost-shifting and what has assistance in the form of discounts to all children. In February 2007, been referred to as the ‘hidden tax’ on and subsidies to help pay their CAP Pennsylvania received federal approval of private payers, and to impose an 85 premiums. Uninsured adults earning their state plan amendment to subsidize percent medical loss ratio requirement more than 300 percent FPL could premiums for children in families with on health plans. participate in CAP by paying the full incomes at or below 300 percent FPL. cost of the premium, approximately
of STATE the STATES 35 $280 per month. The Governor has infection control law; several laws that Mexico would encourage the uptake identified several potential funding expand the scope of practice for nurses of medical information technology by sources to finance CAP, including a and dental hygienists to encourage an requiring electronic claims submission, fair-share assessment on employers who improved team approach to health care; developing a plan requiring the use and do not offer health insurance to their and expansion of the subsidized school exchange of electronic medical records, employees, an increase in the cigarette breakfast program, wellness mobiles, and protecting patient privacy and right tax, federal matching funds, utilizing and seed money for new federal to information. the surplus funds in the Health Care qualified health centers (FQHCs) and n Health coverage authority. The Providers Retention Account,100 and nurse-managed centers. proposal would create a single point of redirected existing health care dollars. accountability for data, analysis, plan The Governor’s proposed coverage New Mexico: Governor Unveils Universal Coverage Proposal management, and policy to increase expansion program has been introduced At the end of October, Governor Bill coverage and access, and control costs. in both chambers of the General Richardson unveiled a comprehensive Assembly. n Evaluation. As an important element reform blueprint to provide all New to assure accountability, Governor Mexicans with health insurance coverage At the time this report went to print, Richardson’s proposal calls for and to redesign the way health care is Governor Rendell, with the support of implementing an evaluation component delivered in the state. Under Richardson’s several legislators, called for the legislature to determine that policies and structures HealthSOLUTIONS New Mexico proposal, to enact the CAP by February 14, 2008. are meeting defined goals. state residents would be required to purchase coverage. Those residents who n Systems improvements. Like the meet income qualifications would be As part of his proposal, the governor New England states and California, eligible for lower cost state-subsidized signed an executive order that will require Pennsylvania’s proposed reforms plans. The plan would require employers contractors doing business with the State incorporate several initiatives aimed to contribute to a “Healthy New Mexico to demonstrate that they offer health at systems improvements and cost Workforce Fund” to help fund the coverage when working in New Mexico. containment. Initiatives include a proposal, with employers receiving The order will go into effect in July 2008 requirement that hospitals work to a dollar-for-dollar offset if already and be phased in over three years. prevent hospital-acquired infections contributing toward their employees’ and adopt an error reduction system health coverage. Other aspects of the Undocumented immigrants and some and interoperable electronic medical proposal include: legal immigrants who have been in the records. The state is also attempting to U.S. for less than five years would not be realign payments to reward the effective n Insurance reforms. Governor eligible for coverage under the Medicaid prevention and treatment of chronic Richardson’s proposal would require components of the plan due to federal conditions as well as wellness efforts and an 85 percent medical loss ratio for restrictions. Governor Richardson will more efficient quality care. Additional insurance carriers, guaranteed issue with ask the state legislature to consider his measures include the provision of no exclusion of pre-existing conditions, proposal in 2008. integrated treatment to those needing limiting the rating bands in the small both mental health and substance abuse group market, increased transparency services and an initiative to provide and accountability through common SUBSTANTIAL REFORMS ENACTED consumers with real-time price and data reporting requirements, a In 2007, several states moved forward quality information. The state also moratorium placed on new insurance with substantial reforms that not only proposed to impose a smoking ban on benefit mandates through 2010, and expanded public coverage programs but all workplaces, restaurants, and bars. allowing Indian Health Services and also called for private sector reforms, tribal providers to be part of a carrier’s including insurance market reforms, Several incremental bills were enacted provider network. subsidized coverage, and new purchasing in 2007, including an assisted living mechanisms. Many states are also facility licensing and oversight law; n Electronic health transactions and enacting reforms with ambitious systems a comprehensive hospital-acquired information. HealthSOLUTIONS New improvement goals, including cost
of 36 STATE the STATES containment, improved quality, better opportunity for small employers (2-50 making; and assessing the feasibility management of chronic conditions, and employees) to offer affordable health of publicly-funded reinsurance as an faster implementation of new health insurance to low-income workers. For approach to address affordability of information technologies. a small employer to designate the HIP coverage for high-cost individuals. as its health benefits administrator, the Washington: Building a High-Performing employer must have at least one eligible Oregon: A Timeline for Full-Scale System Reform employee (a Washington resident In pursuit of expanded coverage and In June 2007, Governor Ted Kulongoski earning less than 200 percent FPL) improved quality of care for its residents, signed the Healthy Oregon Act, providing and set up a Section 125 cafeteria plan. Washington enacted significant health a detailed timeline for developing If a small employer meets these two reform legislation in 2007. The law mirrors recommendations for full-scale health conditions, all employees regardless of certain features of the comprehensive reform for consideration during the income may purchase coverage through reforms implemented by other states, 2009 legislative session. The legislation the HIP and maintain that coverage particularly Massachusetts, while pursuing provides a framework for the state’s reform even after leaving employment. The systems improvements and wellness approach, promising a state health care law establishes sliding-scale premium programs similar to those proposed by system that is “affordable, effective, and subsidies for individuals earning up California and Pennsylvania. universal.”102 Legislators envision a system to 200 percent FPL based on gross that will control costs and address quality family income. The state is studying n Covering all kids by 2010. Governor through bulk purchasing, evidence-based the feasibility of expanding the HIP to Chris Gregoire signed legislation practices, implementation of electronic incorporate additional markets — such to provide access to coverage for all records and other technologies, improved as the individual market and public children in the state by 2010. The management of chronic conditions, and programs. law authorizes funding for intensive introduction of market incentives. education, outreach, and administrative n Promoting healthy behavior, quality n Establishment of Oregon Health simplification in order to ensure the health care and cost-containment. Fund Board. Appointed by the enrollment of all currently eligible The law incorporates many governor and confirmed by the children, who now account for over recommendations to help make health Senate, the seven-member Oregon one-half of Washington’s uninsured care accessible and affordable that Health Fund Board—made up children. Beginning in January 2009, emanated from the Washington Blue of experts in areas of consumer the law authorizes an expansion of Ribbon Commission on Health Care advocacy, management, finance, the state’s SCHIP program to children Costs and Access.101 Recommendations labor, and health care—is charged in families with incomes up to 300 include: a health promotion with developing a comprehensive percent FPL; the current eligibility program for state employees; a reform and implementation plan. level is 250 percent FPL. In addition, health information technology Five subcommittees will make children in families with incomes above collaborative including grants to recommendations on financing, 300 percent FPL will have access to expand the use of IT in medical offices; delivery system reform, benefit SCHIP at full cost. Premiums would provisions for expanding chronic definition, eligibility and enrollment, apply to children above 200 percent care management, evidence-based and federal policy issues and FPL. The law also includes, if cost- health technology assessment and opportunities. In addition, existing effective, a premium assistance program piloting pay-for-performance in state state commissions and committees for families with access to employer- health programs; a quality forum to are charged with compiling data and sponsored insurance. promote evidence-based practices conducting research to inform the and improve transparency of cost and subcommittees’ decision making. n Massachusetts-style Connector. The quality information for consumers; governor also signed legislation creating reducing unnecessary emergency n Recommendations for 2009 legislative the Washington Health Insurance room utilization; a health opportunity session. The various state commissions Partnership (HIP), a Massachusetts- account demonstration for Transitional and committees are to report their style Connector. The HIP increases the Medicaid; a demonstration of patient findings to the subcommittees by decision aids for shared decision February 1, 2008. Through a public
of STATE the STATES 37 Table 3 Enrollment Experience of Select State Coverage Programs
For additional information on these programs and other state initiatives, visit www.statecoverage.net/matrix/index.htm
Enrollment Target Program Fall 2007 Eligibility Population (start date) Updates (individuals)
Businesses must have less than 25 employees with 50 percent earning $43,000 a year or less. The plan is available for businesses who have not CoverTN offered insurance for six consecutive months, or if offered, the employer has 12,800 (2007) not paid 50 percent or more of the premiums. The plan must be offered to all employees.
Employers with 2-500 employees who have not offered a health plan to employees within the past twelve months. At least one employee must qualify ARHealthNet for subsidized premiums and have a household income at or below 200 2,000 (2006) percent FPL, and all employees must participate in the program or provide documentation of coverage.
Insure Montana Previously uninsured firms (2-9 employees) that have not offered insurance for 5,500 (2006) 24 months and have no employees who earn more than $75,000 per year. For employers of small businesses with 2-9 employees offering health plans, a tax credit of up to 50 percent of paid premiums is available. 5,000
New Mexico Low-income, uninsured, working adults with family income below 200 Small Business State Coverage percent FPL. Participating employers must have ≤50 employees and have not 10,200 (may include Insurance voluntarily dropped a commercial health insurance in past 12 months. workers without (2005) access to employer- Insure Workers and their spouses, who work in firms with 50 or fewer workers and sponsored Oklahoma contribute up to 15 percent of premium costs; self- employed; unemployed insurance) (Previously individuals currently seeking work; and individuals whose employers do not known as offer health coverage with household incomes at or below 200 percent FPL. 4,300 O-EPIC) (2005) Small employers must contribute at least 25 percent of eligible employee’s premium costs and offer an Insure Oklahoma-qualified health plan.
West Virginia Small businesses (2–50 employees) that have not offered health benefit Small Business coverage to their employees during the preceding 12 months. Employers must 1,500 Plan pay at least 50 percent of the premium cost. (2005)
Small employers that have previously not offered insurance and with 30 Healthy New percent of workers earning less than $34,000 annually. 150,000 York (2001) Sole proprietors and working individuals without access to ESI who earn less than 250 percent FPL and have been uninsured 12 months.
Arizona Health Small business, the self-employed, and political sub-divisions. No income limits 26,000 Care Group apply, but HCG does have employee participation requirements and crowd-out (1986) requirements.
of 38 STATE the STATES Enrollment Target Program Fall 2007 Eligibility Population (start date) Updates (individuals)
Maryland Primary Adult Individuals below 116 percent FPL. 27,500 Care (2006)
Utah Primary Care Network Adults below 150 percent FPL. 17,500 (2002)
District of Columbia 49,000 Uninsured individuals with family incomes below 200 percent FPL. Alliance (2001) Low-Income Adults Pennsylvania Adults with incomes up to 200 percent FPL who have been without health adultBasic 52,200 insurance for 90 days prior to enrollment. (2001)
Minnesota Care Families with children up to 275 percent FPL under Medicaid and childless 128,700 (1992) adults up to 175 percent FPL.
Washington Basic Health Individuals with family incomes below 200 percent FPL. 124,700 (1988)
Massachusetts Commonwealth Individuals with incomes below 300 percent FPL. 160,000 Care (2007)
Massachusetts Commonwealth All residents, but specifically geared to those above 300 percent FPL. 10,200 Choice (2007) Comprehensive Plans Vermont Residents 18 or older who have been uninsured for at least 12 months, do not Catamount have access to employer-sponsored health insurance, and do not qualify for 700 Health public programs. (2007)
Maine DirigoChoice Small businesses, the self-employed, and eligible individuals without access to 28,000 (2005) employer-sponsored insurance and with incomes below 300 percent FPL.
of STATE the STATES 39 meeting process, stakeholders across FPL. A premium subsidy program Illinois: Governor Pursues Expansions the state will review the subcommittee would offer financial assistance to Following the success of his All Kids recommendations and provide children with family income up to initiative, Governor Rod Blagojevich comments. The governor and legislature 300 percent FPL. Under Measure 50, announced a comprehensive coverage will then receive the final plan by the state sought voter support for an initiative called “Illinois Covered” in his October 1, 2008, for introduction in the increase in the state cigarette tax of 84.5 2007 budget address to the legislature. 2009 legislative session. cents per pack to fund the initiative. The plan envisioned providing access to The proposal was put on the ballot affordable coverage to all Illinoisans. Key n Failure of Ballot Measure 50. In 2006, after Democratic legislators failed to provisions include: Governor Kulongoski proposed a plan win sufficient Republican support for to cover more than 10,000 uninsured the tax. In “the most expensive political n Expanded access to childless adults with children through an expansion of the campaign in Oregon history,” voters incomes up to 100 percent FPL; Oregon Health Plan combined with soundly defeated the proposed tobacco n Required all managed care plans to offer 103 a private purchasing arrangement for tax increase by a 3-to-2 margin. The a state-reinsured, modified community- higher-income children. Under the defeat returns the issue to the governor rated insurance product to individuals Healthy Kids initiative, the Oregon and state legislators, who will need to without access to employer-sponsored Health Plan would cover all children find other means to fund the proposal. insurance and to small businesses (25 or with family income under 200 percent fewer employees) that contribute at least
auto-enrollment: a promising strategy
Offering health care insurance plication. Auto-enrollment strategies coverage programs and then enroll subsidies and conducting extensive have been highly successful in both them, unless they opt out. outreach are not sufficient to ensure public and private benefit programs, Automatic enrollment is a relatively that eligible but uninsured indi- including retirement savings plans, new strategy for ensuring the suc- viduals will enroll in state programs Medicare Part D, and the National cess of state coverage expansions. designed to improve their access to School Lunch Program. Closely managing the details of health care coverage. States must such strategies is critical to their pay careful attention to enrollment Massachusetts experienced early success. States will need to provide mechanisms; slow uptake can success with automatic enrollment. strong safeguards that ensure their undermine new programs. Without Commonwealth Care’s Connector enrollment systems’ privacy and successful enrollment, states will automatically enrolls eligible adults data security. They will also need jeopardize the fundamental ob- in a health plan if they do not select to be creative in maximizing federal jective of their health care reform a plan. Enrollees then have up to matching funds to invest in the efforts: improved access to health 60 days to switch health plans. The information technology needed to care for uninsured residents. state has experienced stronger- maintain the systems. Finally, states than-expected enrollment in the must undertake thorough testing of Auto-enrollment is a promising program. their information systems before the strategy to ensure that as many implementation of enrollment. De- eligible individuals as possible take Automatic enrollment approaches spite these challenges, automatic part in states’ coverage programs. offer three important functions: enrollment could be an important, The term auto-enrollment refers to identifying the uninsured, checking and often overlooked, potential a strategy by which eligible but un- their eligibility, and enrolling them for component of states’ health reform insured individuals receive coverage coverage. Most important, states initiatives. based on information already avail- can use existing data sources on Adapted from Dorn S., Automatic Enrollment able to state officials without the income and coverage to identify Strategies: Helping State Coverage Expansions burden of completing a formal ap- uninsured residents who qualify for Achieve Their Goals, State Coverage Initiatives, August 2007.
of 40 STATE the STATES the minimum required percentage of the (ICHIP), the state’s high-risk pool, will vary according to a sliding scale based premium; to include children with pre-existing on a participant’s financial ability to conditions who are aging out of the All contribute to the account. The state will n Increased the eligibility level for parents Kids program. The state will subsidize subsidize the account to ensure there is a in the existing FamilyCare program their ICHIP premiums up to age 21. total of $1,100 per adult in the account. (SCHIP) from 185 to 400 percent FPL; Participants will contribute no more than n Establishment of a new program that n Allowed dependents to have access to 5 percent of their gross family income, and will provide access to a medical home, insurance through their parent’s policy will not have any cost-sharing once the through a community health center, until their 30th birthday; and deductible is met. At the end of the year, to residents with incomes under 100 the balance of the POWER account will n Contributed to delivery system percent FPL who are uninsured and not roll-over to reduce the following year’s improvement and cost containment Medicaid-eligible. The program will required contribution, if the participant strategies. also provide a prescription drug benefit has received their age-, gender- and and non-elective inpatient hospital care. Unfortunately, after four months of disease-specific preventative services. If negotiations with the state legislature, n Establishment of a new premium they have not received these services, only agreement was not reached. In August assistance program aimed at providing their own pro-rated contribution to the 2007, the Governor announced that his relief for middle-income families POWER account will roll-over but the administration would use its executive struggling with rising insurance state’s contribution will be returned to the authority to pursue changes aimed premiums. The program will provide state. This design is intended to create an at increasing access to health care for annual subsidies up to 20 percent of incentive for recipients to utilize services in thousands of uninsured residents. the cost of group health insurance a cost-conscious manner. Legislators have questioned the availability premiums up to $1000 for families at or of funding for the program. below 300 percent FPL. Covered services include physician services, prescription drugs, diagnostic The health care initiatives that will be Indiana: Healthy Indiana Plan exams, disease management, home implemented through executive authority In mid-December 2007, CMS announced health services, inpatient and outpatient include: the approval of the Healthy Indiana Plan hospital services, and mental health n An expansion of the existing breast and (HIP), an 1115 waiver demonstration parity. Individuals may elect to purchase cervical cancer program to meet the project. HIP will be available to uninsured an optional dental and vision rider. They needs of uninsured women, regardless adults between 22 and 200 percent FPL must pay 50 percent of the cost of the of income. The expansion provides who are not eligible for Medicaid. premium which is in addition to their access to free screenings for breast and contribution to the POWER account. cervical cancer to all uninsured women A key aspect of HIP is that it utilizes the There is a $300,000 annual limit on in Illinois. For those who are diagnosed, HSA model combined with comprehensive coverage and a life-time benefit limit treatment coverage is provided through insurance coverage above the deductible. of $1,000,000. All recipients must be the state Medicaid program. The Individuals will annually receive $500 of uninsured for at least six months, be a U.S. program began enrolling women in pre-deductible, free preventive care and citizen, and not have access to employer- October 2007. have a $1,100 deductible. sponsored insurance. n An expansion of the state’s FamilyCare Maryland: Assisting Small Business and program for uninsured parents and The deductible is paid for through Expanding Medicaid for Adults caretakers of SCHIP-eligible children a POWER (Personal Wellness On November 19, 2007, Governor Martin under age 19, who have been uninsured Responsibility) Account established in O’Malley signed the Working Families and for 12 months and have family incomes the individual’s name. The account will Small Business Health Coverage Act that up to 400 percent FPL. Enrollment for contain the monthly contributions made will offer subsidies to small businesses to this expansion population began in by participants in addition to a state offset the cost of providing coverage to mid-November 2007. contribution for a combined total of employees and expand Medicaid eligibility $1,100 per adult, which covers the cost of n An expansion of the Illinois to certain adult populations. Provisions the deductible. The state’s contribution Comprehensive Insurance Program included in the new law include:
of STATE the STATES 41 update on erisa court decisions
Following two court decisions in 2007, plan’s ability to choose which insurance to testimony of Wal-Mart officials, the Court the federal Employee Retirement Income purchase. The reasoning in Travelers can held that the law was not designed to raise Security Act of 1974 (ERISA) continues be used to defend some types of state revenue for the state but was a penalty to complicate the states’ ability to include laws that require employers to pay a tax designed to give the employer an “irresist- employers in efforts to reform health cover- or fee to support public health coverage ible incentive” to increase employee health age financing. programs if the state allows employers to care spending. One of the three appellate choose to spend the threshold amount on judges would have upheld the law on the ERISA imposes obstacles on such state employee health benefits—a “pay-or-play” grounds that financing Medicaid is an area health reform efforts through a broad provi- approach to health coverage financing. of traditional state authority and that the sion that pre-empts state laws that “relate law gave the employer an opportunity to to” private sector employer-sponsored Recent Pre-Emption Decisions pay a fee to the state. pension and fringe benefits, including In 2007, two federal courts held that health insurance. Congress’s objective ERISA pre-empts some versions of pay- Following the Court of Appeals decision in enacting the pre-emption clause was or-play laws enacted by the state of Mary- in Maryland, the federal district court for to permit employers to sponsor nation- land and by Suffolk County, New York. The the Eastern District of New York held th ally uniform employee benefit plans. As 4 Circuit Court of Appeals held in January in July 2007 that ERISA pre-empted a the final arbiter of the meaning of the that ERISA pre-empts the 2006 Mary- county ordinance with a similar objective. pre-emption clause, the U.S. Supreme land Fair Share Act, affirming a July 2006 The 2006 Suffolk County law would have Court has held that a state law relates to decision by the Maryland federal district required large retail stores with a certain 105 employer-sponsored plans if it either refers court. The Maryland law required private amount of grocery revenues or floor area to such plans or substantially affects their employers with at least 10,000 employees devoted to selling groceries to make benefits, administration, or structure. For to spend at least 8 percent of their payroll health care expenditures for employees example, courts held that ERISA pre- (or 6 percent for nonprofit employers) on at a rate that approximates the cost to empted Hawaii’s 1974 requirement that a broadly defined set of health benefits or the county’s public health system of unin- employers offer and pay part of the cost of pay the difference to help fund the state’s sured workers or to pay the difference to employee health benefits (until Congress Medicaid program. the county.106 The ordinance’s objective amended ERISA in 1983 to authorize the was to protect smaller retailers that offer Hawaii law). Basing its decision on the bill sponsors’ health benefits from unfair competition statements and the practical impact of from larger retailers with either no or An important exception to the Supreme the law, the Court of Appeals held that the limited employee health coverage. Court’s broad reading of the pre-emption purpose of the law was to force Wal-Mart clause was the 1995 Travelers Insurance (the only employer subject to the law that While the law affected many large retail- decision.104 In that case, the Court held did not meet the threshold) to expand its ers, local legislators noted that Wal-Mart that ERISA did not pre-empt a state hos- existing ERISA health insurance plan and was one target. Although the ordinance pital rate-setting law that was not directed to maintain records on employee health differed from the Maryland law (applying at employer-sponsored plans even though spending in the state. The court found to more firms and calculating the assess- the law had an impact on such plans by that the law would interfere with uniform ment differently), the federal district court raising the costs of hospitalization for plans national administration of the employer’s held that the laws were “strikingly similar.” purchasing coverage from commercial health benefits in conflict with the objective The appeals court therefore applied the insurers (but not from Blue Cross). The of the pre-emption clause, citing several reasoning in the 4th Circuit’s decision to Court reasoned first that, as a long- similar proposals in other states and locali- hold that ERISA pre-empts the Suffolk standing area of state authority, hospital ties. In contrast to the indirect effect of County ordinance. The court held that rate-setting was not presumed eligible for state laws such as hospital rate-setting at the local law created the same incentive a congressional override. Then, the Court issue in the Travelers decision, the Court as under the Maryland law for employ- held that, despite raising the cost of buying of Appeals said that the Maryland law at- ers to structure their health care plans commercial insurance, the state law did tempted directly to regulate the structure to meet the minimum spending require- not compromise an employer-sponsored of employer health plans. Based on the ment. Given that the decision character-
of 42 STATE the STATES ized the county ordinance as essentially that the city was very likely to prevail in In the current environment, it appears that identical to the Maryland law and applied its appeal (to be heard later in 2008).109 state health policymakers should care- the 4th Circuit’s decision, it does not ap- The court characterized the city ordi- fully consider the implications of requiring pear to break new legal ground. nance as requiring employer payment, employers to offer health coverage, even not employee benefits. It held that indirectly. For example, if a state is con- In 2007, the city of San Francisco enacted ERISA does not appear to preempt the sidering imposing employer assessments, a local ordinance requiring all firms with law, because the choice of paying the that state is probably best advised to craft employees in the city to spend a speci- city or providing health care to workers assessments as revenue measures with a fied amount per hour on behalf of workers is entirely up to the employer, under the credit for health care spending, include a on various types of health services or to reasoning of the Travelers decision and large proportion of employers, and design pay the city.107 Along with contributions case law in the 9th Circuit. the assessment to fund broad-based from individuals, the employer assess- public programs. In general, states risk ments will help fund the city’s Health Care While the Maryland and New York deci- serious ERISA challenge if they do not Access Program by using a network of sions are not helpful to states seeking to maintain neutrality with respect to whether public and private providers with which include employer financial contributions as employers pay the assessment or offer the city’s uninsured residents can enroll. In a source of health care reform funding, the health coverage directly. Despite these late 2007, a federal district court held that reasoning in the 9th Circuit opinion (which potential constraints and given the unpre- ERISA preempts the ordinance because may foreshadow the ultimate appeal dictable manner in which courts ultimately it is “connected with” and “refers to” decision) suggests that states could enact decide whether ERISA pre-empts pay or ERISA plans.108 The court characterized laws requiring employers to help finance play laws, states should not hesitate to the ordinance as requiring employers to public health care access programs as develop new approaches, even if they run spend prescribed amounts on behalf of long as they allow employers to choose to the risk of pre-emption challenges. employees—a benefits mandate rather cover workers. than a requirement to pay the city but Cafeteria (Section 125) Plans credit other health care spending against Furthermore, some analysts argue that Many states have expressed interest in the city payment level. the Maryland and New York decisions making health insurance more affordable misapply Supreme Court precedent and by requiring employers to set up “cafeteria In reaching this conclusion, the court relied would not necessarily persuade courts plans” under which employees may pay for either individually purchased insurance on the 4th Circuit’s Fielder decision but also in other states.110 And, those decisions or their share of employer-sponsored on other federal court preemption case involve laws narrowly crafted to affect coverage with pre-tax wages as permit- law. The court further held that the ordi- only one or a small number of retail ted under Internal Revenue Code Section nance “refers to” ERISA plans because it grocers and therefore are distinguished 125. Such plans reduce employees’ and makes specific reference to ERISA plans from pay-or-play laws under consider- employers’ share of income, unemploy- in its text and implementing regulations ation in other states such as California, ment, and FICA (Federal Insurance and also requires employers to calculate where a bill would apply to a large share Contributions Act) taxes.111 Part of the what they owe the city by taking into con- of employers with a credit for spending 2006 Massachusetts health reform law sideration what they spend on employee on employee health care and finance a required employers to establish Section health care. In concluding that expanding broad public coverage program through 125 plans. Some analysts argue that health care access was a “laudable goal,” several funding sources. While the cafeteria plans are ERISA plans and that the court suggested that the city could Maryland and Suffolk County decisions ERISA would pre-empt state mandates impose an employer tax against which limit state options for including employ- for such plans.112 The U.S. Department of employer health care expenditures could ers as a source of funding for health Labor, however, does not consider Sec- be credited. care reform initiatives, other pay-or-play tion 125 plans to be ERISA plans, and no approaches such as the laws enacted court has specifically ruled on the matter. In early 2008, the Court of Appeals for in Massachusetts and Vermont or Consequently, states would likely be able the 9th Circuit granted a stay of the low- under development in California remain to defend such employer requirements er court’s order in an opinion indicating untested. against a pre-emption challenge.
of STATE the STATES 43 n The provision of subsidies to small increase the cigarette tax by $1 per pack, while those between 250 and 300 percent employers and employees of small providing funding to expand health FPL will be subsidized with state-only employers if the employer: care coverage to nearly all children in funds. Families with incomes above 300 - has not offered a health benefit plan the state. A recent state survey found percent FPL will be required to contribute within the prior 12 months; that about 71,000 children in the state the full cost of coverage. Enrollment will were uninsured at some point in time start on February 1, 2008. - has two to nine eligible employees; during 2006. Children would be covered - meets certain low-wage requirements through the state’s new BadgerCare Plus FRAMING HEALTH CARE REFORMS FOR 2008 AND BEYOND to be established through regulation; program, which merges Family Medicaid, While Washington, Oregon, Illinois, BadgerCare, and Healthy Start to form a - establishes a Section 125 payroll Indiana, Maryland, and Wisconsin enacted comprehensive health insurance program deduction plan to allow for pre-tax new health reforms in 2007, a slew of for low income children and families. premium contributions; and states are preparing to undertake health Under BadgerCare Plus, the following care reforms over the next few years. Even - agrees to offer a wellness benefit that 113 populations will be eligible: those states with programs already in place is designed to prevent disease, reduce continue to explore additional areas for poor clinical outcomes, and promote n All children, regardless of income, with reform. In Vermont, for example, the 2008 health behaviors and lifestyle choices. sliding scale premiums required for those above 200 percent FPL; legislative session will be focusing on new n The expansion of Medicaid eligibility reforms including: 1) the underinsured up to 116 percent FPL for parents and n Pregnant women with incomes up to and small businesses; 2) increasing access caretaker relatives with a dependent 300 percent FPL; to Catamount Health by expanding
child living at home; n Parents and relatives caring for a child eligibility for the uninsured; 3) hospital up to 200 percent FPL; budgeting and cost containment; and 4) n The phase-in over four years of primary prevention. Medicaid eligibility up to 116 percent n Young adults in foster care who turn FPL for childless adults—enrollment 18 on or after January 1, 2008, will States appeared especially interested in may be capped and benefits may be automatically be eligible for BadgerCare expanding coverage to uninsured children limited based on available funding; and Plus until they turn 21, regardless of and establishing entities similar to the income; Massachusetts Connector. Many of these
n Financing through a combination of n Farm families and other families who states are also emphasizing the promotion general funds, hospital uncompensated are self-employed may be eligible under of healthy behaviors and disease care savings, a one-time surplus BadgerCare Plus if their income is under prevention. Typically, states begin the from the state’s high risk pool, and 200 percent FPL; and reform process by convening an advisory federal funds. The availability of body that guides the planning process and general funds for the childless adult n Parents whose child/children are in foster then makes recommendations to state expansion depends on the adoption, care and have a reunification plan in policymakers. through public referendum, of a new place may be eligible for BadgerCare Plus article to the Maryland Constitution if their income is below 200 percent FPL. Colorado. On November 19, 2007, to authorize video lottery terminal Under the new expansion, families with Colorado’s Blue Ribbon Commission gaming (slot machines) in the state. incomes that exceed 200 percent FPL will for Health Care Reform approved be able to purchase basic health coverage recommendations for comprehensive In addition, the Governor, through an for their children for $10 to $68.53 per health reform. The reform agenda focused executive order, created the Maryland child per month, depending on their on cost, quality, and access to health Health Quality and Cost Council (see page income. Wisconsin plans to subsidize coverage. The recommendations stipulate 48 for details). premium costs for those families with that efficiency improvements should be incomes up to 300 percent FPL; CMS phased in before coverage expansions. All Wisconsin: BadgerCare Plus has approved a waiver that allows federal told, the Commission’s recommendations Governor Jim Doyle reached agreement match for children up to 250 percent FPL would expand coverage to almost 90 in October on a state budget that would percent of the state’s 792,000 uninsured
of 44 STATE the STATES residents, at an estimated cost of $1.1 responsibility for designing a universal n Providing and Protecting Affordable billion. Its 31 recommendations included: health care system. The authority will Health Insurance— including convene stakeholders to recommend expanding Medicaid coverage up to 100 n Providing premium subsidies for low- affordable options for providing coverage percent FPL for adults without children income, uninsured workers; to the state’s uninsured and underinsured and encouraging Section 125 plans. residents. The state also inaugurated a n Requiring employers to enable Statewide Primary Care Authority charged In addition, the report included financing employees to purchase health insurance with developing a universal primary care options and recommendations for with pre-tax dollars; system for all Connecticut residents. containing health care costs. n Reducing administrative costs by standardizing claims forms, insurance Iowa. The Legislative Commission on Minnesota. In early 2007, Governor application forms and authorization Affordable Health Care Plans for Small Tim Pawlenty announced his Healthy procedures; Businesses and Families, established in Connections proposal. The proposal’s 2007, submitted its final report to the overarching goal is to make the state’s n Creating a “connector” and promoting legislature with recommendations to be Medicaid program more affordable for access to information for consumers; considered during the 2008 legislative children and to expand eligibility. In n Developing a statewide health session. Among the 79 recommendations, addition, private health plans would information network focused on the commission highlighted the need offer special accounts to encourage interoperability; to: develop a plan to cover all children; healthy behaviors, and businesses with establish a Health Care Exchange; define 10 or more employees would be required n Providing a medical home for all parameters of affordability and benefit to establish Section 125 plans. The Coloradans; design; develop a system utilizing medical governor is interested in establishing the n Requiring that every resident of homes; and strength quality improvement Minnesota Health Insurance Exchange, Colorado have at least a “minimum and cost containment strategies. a Massachusetts-style Connector that benefit plan;” would facilitate the purchase of health Kansas. The Kansas Health Policy insurance. Following the announcement n Creating a Consumer Advocacy Authority recently released the “Kansas of his proposal, the governor’s budget bill Program; and Health Policy Authority Board Health provided for the formation of the Health n Expanding Medicaid coverage to all Reform Recommendations of 2007.” Care Transformation Task Force, which legal residents of Colorado in families These recommendations to the governor is charged with advising the governor on earning up to 205 percent FPL. and legislature resulted from not only a plan to transform the state’s health care deliberations of the Authority’s board, system. The task force must submit a final The Commission was established in but also from meetings of four advisory action plan in early 2008. November 2006 by the state legislature. Its councils involving 144 members and a bi-partisan members were appointed by listening tour across 22 communities. The South Dakota. The state enacted a law Governor Bill Ritter, former Governor Bill priorities for reform include: establishing the Zaniya Project Task Force Owens, and leaders in the state legislature. and charging it with developing a plan The Commission reviewed five health n Promoting Personal Responsibility—for to provide health insurance to uninsured care reform proposals, ultimately selecting healthy behaviors, informed use of South Dakota residents. Loosely translated, the model that most closely resembles health care services, and sharing financial Zaniya means “health and well-being” the comprehensive reforms undertaken responsibility for the cost of care; in the Lakota language. The task force by Massachusetts. The Commission recently issued a legislatively-mandated will present its recommendations to the n Promoting Medical Homes and Paying report with recommendations on how Colorado legislature in early 2008. for Prevention—to improve the to approach comprehensive health care coordination of health care services, reform. Task force members called for Connecticut. During its 2007 session, prevent disease, and contain the rising expanded Medicaid eligibility for pregnant the state legislature called for the costs of health care; and women and increased coverage of children creation of the HealthFirst Connecticut and families through premium subsidies Authority, an advisory group charged with or an SCHIP program expansion. The
of STATE the STATES 45 task force also recommended the creation dental services, and a significant increase Governor Blagojevich signed the Covering of a high-risk pool to cover individuals for community mental health clinics (in the All Kids Health Insurance Act extending who may be deemed uninsurable in the wake of the shootings at Virginia Tech). In insurance coverage to all uninsured commercial market. addition, his budget increases eligibility for children in the state. Medicaid prenatal coverage from 185 to 200 In the years since Connecticut’s and Virginia. In September 2007, the percent FPL and expands coverage for breast Illinois’ groundbreaking initiatives, several Governor’s Health Reform Commission and cervical cancer screenings. states have considered similar proposals for the Commonwealth of Virginia aimed at expanded coverage of children. submitted its final report, which is INCREMENTAL APPROACHES These states have determined that it is intended to serve as a roadmap for reform In 2007, several states moved forward cost-effective to cover children; however of the state’s health care system. Over the with incremental reforms that expanded some efforts to increase eligibility levels past year, the commission examined the coverage for targeted groups of uninsured. for children have encountered resistance at health care workforce; the affordability, Most of these reforms expanded coverage the federal level. In fact, Oklahoma, Ohio, quality, and accessibility of health care for children, although some also targeted and Louisiana represent a few states that in the state; the transparency of health parents, the aged, and disabled. Several attempted to get CMS approval to expand information; prevention and wellness states expanded coverage by changing coverage to children up to 300 percent FPL efforts; and long-term care. In its final the definition of dependent for insurance and were denied (see page 54 – Medicaid report, the commission laid out several purposes. While these reforms may Changes on the Horizon). recommendations for the governor’s not seem as substantial as those being consideration, including the establishment considered or implemented in other states, n Hawaii’s legislature expanded health they represent significant building blocks of a health care data workforce center; an care coverage to infants and children for future reforms in those states. increase in funds allocated to the safety through two pilot programs. The net; expanded eligibility for the state’s Hawaii Infant Health Program provides States are pursuing expansions through a SCHIP program; creation of a private coverage to uninsured newborns up variety of approaches, including Medicaid, health insurance product for uninsured to 30 days of age for up to $10,000 in SCHIP, Medicaid waivers, flexibility under Virginians with income less than 200 health care assistance per infant. percent FPL and no other access to the Deficit Reduction Act (DRA), and public or private health insurance; and public/private partnerships. Given that n Connecticut’s legislature made several many of the strategies rely on Medicaid establishment of a nonprofit foundation changes to its HUSKY program to help finance expanded coverage, the to focus on promoting clinical preventive (Medicaid and SCHIP), expanding future of the various efforts will depend services and healthy lifestyle choices across coverage for children from 300 to 400 on states’ fiscal outlook and the challenges the state. percent FPL at a cost of $6 million of receiving federal Medicaid and SCHIP in 2008. The state will also begin waivers to expand coverage to optional In December, as part of his 2008 budget automatic enrollment of uninsured populations including childless adults.114 proposal, Governor Kaine proposed newborns in HUSKY and will pay the Other funding sources include employer a premium support program called premium for the first two months, at an Virginia Share. It is designed to help small and individual contributions, tobacco 115 estimated cost of $2.7 million. businesses—with 50 employees or fewer— taxes, and provider taxes. provide private health coverage to employees Expanding Coverage to Children n Missouri’s General Assembly passed who earn up to 200 percent FPL. The state In 2007, momentum continued to build a reconfigured state Medicaid system, of Virginia will pay one-third of the monthly for ensuring access to health coverage called MO Health Net, in early 2007. premium up to $75 per month. Both for all children and for covering children The law restores coverage and benefits employers and employees will contribute above federal SCHIP levels. In 1997, to some of the subpopulations whose one-third of the premium. The Governor Connecticut’s Husky B program, the services were eliminated two years estimates that 5,000 additional Virginians state’s SCHIP program, was the first state ago, including 6,000 children who lost will obtain health insurance through the program in the nation to allow uninsured coverage because their parents had program. He also proposed additional children in families above 300 percent FPL access to employer-sponsored health funding for safety net providers, investing to buy into the program. In 2005, Illinois insurance. In addition, the law restores more resources into safety net clinics,
of 46 STATE the STATES SCHIP coverage to 20,000 children n Idaho expanded the definition of n Indiana requires commercial through revised income eligibility dependent under a new law whereby health insurers and HMOs to cover requirements. unmarried non-students can remain dependents until age 24 at the on their parents’ insurance until age 21. policyholder’s request. n New York Governor Eliot Spitzer Unmarried, financially dependent, full- n Maine passed legislation requiring finalized a budget that would raise the time students can remain on parental insurers to continue coverage for eligibility requirement for the state’s insurance until age 25. Child Health Plus program from 250 to 400 percent FPL. Unfortunately, CMS Illinois’ all kids program: An Update denied the state’s request in September. Implemented in July 2006, the Illinois All A consumer-friendly application n Texas Governor Rick Perry recently Kids program is open to any child unin- spurred early enrollment success. signed legislation that will allow sured for 12 months or more, regardless families below 185 percent FPL to of income, health status, or citizenship. The program’s universality — it is avail- undergo redetermination only once Families pay monthly premiums and co- able to all children in the state —en- rather than twice a year; the law also payments on a sliding scale. The expan- hanced program marketability and revised the 90-day waiting period sion is funded exclusively through state consumer understanding during the requirement so that it applies only to funds, using enrollee cost-sharing as program’s early stages. children with health insurance during well as savings generated from new care the 90 days before applying for SCHIP. management initiatives. As of April 2007, The program benefited from the strong The revisions may result in the addition nearly 50,000 children had enrolled in the leadership of Governor Blagojevich and of 100,000 children to the Texas SCHIP program. Illinois’ experience implement- enjoyed widespread support across a program. The changes come on the ing and operating All Kids offers valuable range of stakeholders. heels of declining enrollment in the lessons. state’s SCHIP program. Roughly 25,000 The program faces several challenges children lost coverage during the first In exceeding initial targets, enrollment has at its one-year anniversary. One chal- six months of 2007. been supported by a strong outreach lenge lies in ensuring the success of effort that relies on innovative strategies. the state’s new managed care initia- Increasing Dependent Coverage One such strategy is an application agent tives, which are designed to generate Young adults—commonly defined as initiative that involves community organi- the savings needed to finance the those aged 19 through 29—are one of zations, medical providers, and insurance All Kids program. Other states and the largest and fastest-growing groups agents in completing children’s All Kids policymakers will be watching to see of uninsured, totaling nearly 14 million applications. Outreach activities have whether the program can maintain the in 2004, an increase of 2.5 million since also resulted in increased Medicaid and momentum of its inaugural year. 2000.116 To address this problem, several SCHIP enrollment among children previ- states expanded coverage during their Source: Coughlin T. A., and M. Cohen, “A Race to the ously eligible for but not enrolled in those Top: Illinois’ All Kids Initiative,” Kaiser Commission on 2007 legislative sessions by changing the Medicaid and the Uninsured, August 2007. programs. definition of dependent and extending access to insurance for young adults over age 18. States control the definition of dependent coverage in the commercial insurance market, the state employees’ health insurance pool, and other public programs funded by state dollars. n Connecticut enacted legislation requiring group comprehensive and health insurance policies to extend coverage to children until age 26.
of STATE the STATES 47 dependents until age 25 as long as and CAHPS (Consumer Assessment gym memberships or transportation they remain dependent and have no of Healthcare Providers and Systems). vouchers, for example — to participants dependents of their own. According to a survey released by the who practice healthy behaviors and Kaiser Commission on Medicaid and the preventive health activities. Rewards n Maryland enacted legislation allowing Uninsured, 44 states plan to use HEDIS under the program will be available young adults to remain eligible for and/or CAHPS performance measures in the Medi-Cal, Healthy Families, insurance until age 25 if the individual in 2008 to reward improved provider and state public employees’ program resides with the insured policyholder performance.118 (CalPERS). and is unmarried.
n Montana passed legislation providing States are also turning to chronic care n Healthy behavior strategies. California’s insurance coverage under a parent’s policy management to address care coordination proposed rewards program is similar for unmarried children under age 25. issues and rising costs associated with to strategies that are currently being asthma, diabetes, and heart disease. Many implemented in other states like Vermont. n Washington enacted a requirement states are developing weight loss and It is coupled with a comprehensive obesity that any commercial health plan smoking cessation programs in an effort prevention program, including a public offering insurance coverage must allow to curb costs associated with obesity awareness campaign, community-based the option of covering unmarried and smoking-related illnesses. And, funding, and school-based efforts to dependents until age 25. increasingly, states are including in their promote healthy eating and physical Other states that have increased the age basic state-defined benefits package a set activity. Increased funding for tobacco use until which dependents may remain on of preventive benefits that promote healthy reduction programs will improve access their parents’ policy include Colorado, lifestyles, even incorporating incentives or through the state’s California Smokers’ Delaware, Massachusetts, New Hampshire, rewards for healthy behaviors. Helpline. A statewide diabetes and “pre- New Jersey, New Mexico, Rhode Island, diabetes” program would seek to reduce California: Rewarding Healthy Behaviors South Dakota, Texas, and Utah. both the incidence of and costs associated California’s ambitious reform proposal with diabetes through improved screening, envisions covering nearly all Californians A RENEWED FOCUS ON SYSTEMS prevention, and self-management. IMPROVEMENT AND COST through a combination of strategies, California is pursuing these prevention CONTAINMENT including an individual mandate, a programs in parallel with numerous The recommendations of Washington’s premium assistance program, and strategies designed to contain costs. Blue Ribbon Commission and Vermont’s expansion of the state’s Medi-Cal/ Blueprint for Health reflect an emerging SCHIP programs. The reforms place New State Councils Focus on Cost trend among states to couple coverage an equally strong emphasis on wellness and Quality expansions with strategies aimed at and prevention. To improve health Several states have established formal chronic condition management, wellness outcomes and implement long-term entities to continue exploring initiatives and prevention, patient safety, and cost containment strategies, Governor aimed at reducing costs and improving transparency through public reporting, Schwarzenegger is proposing disease quality. Maine, with its implementation and data collection.117 States have been management for diabetes, programs to of Dirigo, was the first state to create engaged in this work for a long time, and combat obesity and tobacco use, and an organization, the Maine Quality continue to develop innovative programs strategies to improve patient safety. Forum, specifically dedicated to quality to control costs, improve quality of care, improvement. In their 2006 reforms, and improve the value of public and n Rewards programs. Governor Massachusetts followed suit by creating private program benefits. Schwarzenegger intends to implement a Health Care Quality and Cost Council the Healthy Actions Incentives and to address quality improvement and In fact, many states are making quality Rewards programs to address the cost containment on an ongoing basis. improvement a priority within their rising health care costs attributable Also in 2006, West Virginia created an Medicaid programs, particularly given the to preventable disease and disability. Interagency Health Council charged with availability of nationally accepted quality The programs will provide rewards addressing issues related to access, cost measure sets such as HEDIS (Healthcare — premium reductions, extra control, quality, and equitable financing. Effectiveness Data and Information Set) benefits, or other rewards such as Interestingly, Maine enacted a law in
of 48 STATE the STATES 2007 that establishes another entity — In 2007, the Louisiana legislature follow. The Forum’s volunteer board the Maine Hospital Cost Commission mandated the creation of the Health represents a cross-section of public and — that, as an independent executive Care Quality Forum, a new private, not- private insurance purchasers, patient agency, will examine alternative hospital for-profit organization charged with advocates, hospitals, physicians, and financing systems designed to contain leading evidence-based, collaborative insurers in the state.119 costs, encourage efficiency and quality, and initiatives to improve the health of the ensure predictability in service costs. state’s population. The Forum was created In October 2007, Governor O’Malley as a response to the closure of the state’s established, by executive order, the Other states are moving forward with Charity Hospital. It seeks to develop Maryland Health Quality and Cost similar initiatives. The new councils chronic condition care standards and Council. The Council is charged with: established by Maryland and Louisiana will examine the state’s overall health are illustrative of state efforts to push as well as variations in practice patterns n Coordinating and facilitating for the adoption of best practices and across the state. While the Forum does collaboration on health care quality health information technology even as not have authority to regulate physicians improvement and cost containment policymakers debate reforms that would and hospitals that fail to meet forum- initiatives by the various stakeholders in expand coverage. established quality standards, it will the health care system; publish best practices for providers to
Healthpact RI: encouraging small business to offer coverage
As of October 2007, small busi- n Benefit design encourages n Tiered provider networks. The nesses in Rhode Island have a new, wellness programs. Blue Cross development of new tiered provider lower-premium option to provide Blue Shield of Rhode Island and networks will reduce costs further. health insurance coverage to their UnitedHealthcare of New Eng- The plans will encourage enrollees employees—HealthPact RI plans. land now offer a Basic plan and to select providers with demon- Legislation passed in 2006 called an Advantage plan. Each em- strated cost-effective, high-quality for the establishment of “wellness ployee has the option of choosing practice patterns. Rhode Island health benefit plans,” which would between the two types of benefit estimates that between 5,000 and include coverage for physician visits, designs, which are priced at the 10,000 small business employees hospitalization, preventive services, same level. While premiums for will enroll. and prescriptions drugs. Two private the two plan types are equivalent, carriers in the state offer the Health- Advantage members incur lower Pact RI plans. out-of-pocket costs but must participate in wellness programs,
n New plans target small employ- such as smoking cessation, ers. Insurers are required to offer weight loss, and disease man- HealthPact RI plans to businesses agement programs. Advantage with 50 or fewer employees. The members must also take personal law requires premiums to equal no responsibility for their health by more than 10 percent of average selecting a primary care physician annual state wages. Employee- and completing a health-risk ap- only premiums will average $314, praisal. For enrollees participating an amount 18 percent lower than in the wellness programs, deduct- that charged by similar plans cur- ibles, copayments, and coinsur- rently on the market. ance are reduced to amounts normally charged by plans with much higher premiums.
of STATE the STATES 49 n Making recommendations on health Other Wellness Programs: New York, planning services to about 90,000 women care quality and cost containment Texas, Missouri whose incomes make them ineligible for initiatives and priorities to policy Parts of California’s and Pennsylvania’s Medicaid. makers, state and local governmental proposals are similar to initiatives entities, professional boards, the underway in other states. New York will Conclusion Maryland Patient Safety Center, expand resources for disease prevention For states, the age of health care reform industry groups, consumers, and other and primary care by investing in public continues. As 2008 unfolds and legislatures stakeholders; health programs and prevention programs convene, the nation will likely witness for cancer, diabetes, obesity, asthma, and considerable discussion on various n Developing a chronic care management other disease. Texas recently enacted a approaches to health care reform and, it plan to improve the quality and cost- Healthy Lives pilot program that will is hoped, the enactment of reforms across effectiveness of care for individuals reward Medicaid patients who complete the country. As in previous years, states with, or at risk for, chronic disease; smoking cessation, weight loss, and other have taken the lead and are rising to the
n Facilitating the integration of health preventive health programs in one region challenge of pioneering new solutions information technology in health care of the state. The pilot program could and reformulating old ones to address the systems; and provide expanded health benefits or needs of the uninsured and the reform establish a reward account for participants of the health care system. There is still n Examining and making in disease management programs, “no rest for the weary.” Over half of the recommendations regarding other permitting an exchange of rewards for battle is actually getting reforms passed issues relating generally to the Council’s health-related items not covered by upon which political leadership and major mission to improve health care quality Medicaid. Missouri will begin offering stakeholders can agree. Then begins the and reduce costs. cancer screenings and family equally difficult work of implementation.
of 50 STATE the STATES table 4 Key Features of Enacted and Proposed Reforms
State Initiative Key Features
Comprehensive Reforms Enacted . Individual mandate . Employer Fair Share assessment Massachusetts . Employer Free Rider surcharge Commonwealth Care (2006) . Health Insurance Connector . Insurance market reforms . Commonwealth Care* . DirigoChoice* Dirigo Health Maine (2003) . Cost containment reforms . Maine Quality Forum . Employer assessment Vermont (2006) Catamount Health . Catamount Health Plan* . Chronic care initiatives
Comprehensive Reform Proposals
. Individual mandate . Employer requirement to offer Section 125 plans . Guaranteed issue California AB X1 1 . Children covered up to 300% FPL . Adults covered up to 250% FPL . Tax credit for premium costs for certain families . Wellness and systems improvement initiatives
. All children at or below 300% FPL covered (enacted) . Individual mandate for full-time college students Pennsylvania Prescription for Pennsylvania . New insurance product for low-income workers and small businesses . System improvement initiatives
. New health coverage authority . Individual mandate . Employer mandate New Mexico HealthSOLUTIONS New Mexico . Insurance reforms . Mandating electronic claims submissions; electronic medical records . State contractors required to offer coverage**
Substantial Reforms Enacted
. Funding to ensure covering all kids by 2010 . SCHIP expansion from 251 to 300% FPL; full-cost buy-in for Reforming Health Care System in Washington those above 300% FPL. Washington . Washington Health Insurance Partnership . Health promotion and quality improvement initiatives . Oregon Health Fund Board Oregon Healthy Oregon Act . Final reform plan recommendations to Governor/Legislature by October 2008. . Expansion for uninsured parents and care-takers of SCHIP eligible children up to 400% FPL . Expansion of state’s high-risk pool for children with pre-existing conditions Illinois** Illinois Covered aging out of All Kids . Medical home program for residents under 100% FPL . Premium assistance program . Subsidies to small employers and their employees Working Families and Small . Medicaid expansion for parents/caretaker relatives Maryland Business Health Coverage Act . Phased-in Medicaid expansion for childless adults . Maryland Health Quality and Cost Council**
*Includes subsidies for low-income workers ** Through executive authority
of STATE the STATES 51 of 52 STATE the STATES of STATE the STATES medicaid: a vehicle for state coverage expansions
As states’ fiscal outlooks continued to improve in 2007, many states looked to Medicaid as a vehicle for expanding health coverage. Since passage of the Deficit Reduction Act (DRA) in 2005, states have taken advantage of the law’s new flexibility to design benefits for expansion popula- tions and to use Medicaid Transformation Grants to streamline the Medicaid enrollment process and increase program efficiency and effectiveness.
According to the 2007 Kaiser Commission income disregards for expansions.121 As for or renewing their Medicaid eligibility on Medicaid and the Uninsured’s State a result, states may cover higher-income status must provide evidence of U.S. Medicaid Budget Survey, more than populations under alternative benefit plans citizenship. While the requirement half of states improved their Medicaid without Section 1115 waivers. was intended to deter undocumented programs for fiscal years 2007 and 2008 immigrants from fraudulently enrolling by, for example, increasing income Seven states have received federal approval in Medicaid (ensuring that federal eligibility limits, offering new benefits, and to make program changes under the Medicaid funds support U.S. citizens streamlining application and enrollment DRA.122 Soon after the law took effect, and certain qualified immigrants), many processes. Forty-two states reported that West Virginia, Kentucky, and Idaho states have reported that compliance they plan to expand coverage in the future, gained approval to implement broad with the requirement has resulted in most through Medicaid, and no state Medicaid redesigns under the DRA’s delays or denials of Medicaid coverage said that it plans to cut Medicaid benefits new provisions for flexibility in benefit for citizens. Three out of four state in fiscal year 2008.120 Several states, design and cost sharing.123 These states Medicaid directors reported that the including Maryland, Tennessee, Wisconsin, now offer tailored benefit packages to documentation requirement contributed California, Missouri, and Colorado, turned specific populations and have encouraged to slowed growth in Medicaid enrollment their attention to leveraging Medicaid greater patient involvement in health in fiscal year 2007.124 Several states, funding as part of broader state-based care. Kansas, Virginia, and Washington including Kansas, Virginia, Wisconsin, and health care reform. received approval to offer alternative Alabama, reported that the documentation benefit packages that include services such requirement is primarily preventing DRA Flexibility to Change as disease management and personal care U.S. citizens, instead of undocumented Benefits and Cost-Sharing for certain populations. South Carolina immigrants, from establishing Medicaid The DRA generated one of the most received approval to offer Medicaid eligibility.125 significant changes to Medicaid in the beneficiaries the option of enrolling in program’s 40-year history. Among its a high-deductible health plan under the Debate continues about whether several changes, DRA provided states with state employee benefit system. the documentation requirement is new flexibility to make certain changes achieving its intended effect. Since its through the state plan amendment process Citizenship Documentation implementation, several congressional that previously had required Section 1115 Requirement proposals and one federal class action waiver authority. In particular, states now Along with the new flexibility provided lawsuit have sought to modify or repeal have a means of combining new flexibility by the DRA, states must deal with a new the requirement.126 In addition, the vetoed in benefit design and cost-sharing with citizenship documentation requirement. SCHIP reauthorization bills had proposed longstanding Medicaid authority to use Since July 1, 2006, individuals applying
of STATE the STATES 53 to extend the documentation requirement the DRA. Recently proposed federal This CMS action coincided with SCHIP to children in SCHIP. regulations would reduce federal Medicaid reauthorization negotiations during which spending on rehabilitation services for congressional leaders debated whether the Medicaid Transformation Grants individuals with disabilities, school- SCHIP bill should establish a Medicaid During 2007, 35 states, the District of based services (including Medicaid eligibility threshold at 300 percent FPL, the Columbia, and Puerto Rico received enrollment support provided by public level at which lawmakers had previously $150 million in federal Medicaid school officials), hospital outpatient care, agreed to cap SCHIP eligibility. While 127 Transformation Grants. The DRA and Graduate Medical Education. The there are still no formal rules capping authorized the grants for fiscal years Medicare Medicaid SCHIP Extension Act Medicaid eligibility, and no states have 2007 and 2008 to support innovative (S.2499), signed by President Bush on expanded Medicaid above 300 percent methods for improving the efficiency and December 29, 2007, prohibits the Secretary of FPL, many fear that these Medicaid effectiveness of Medicaid. U.S. Health and of Health and Human Services from taking eligibility restrictions will undermine the Human Services Secretary Mike Leavitt any action on cuts affecting rehabilitation broad bipartisan goal of covering more stated, “With these grants states can and school-based services before June 30, children. streamline and modernize their systems, 2008.130 stabilize the exponential growth of the Streamlining Medicaid Enrollment. The 128 program and protect it into the future.” Some states fear that these proposed SCHIP reauthorization process gave states changes will adversely affect their some hope that they may soon have more Most of the grants focus on health coverage expansion efforts. For example, options and incentives for streamlining information technology (HIT) and Massachusetts officials estimate that the Medicaid enrollment. The vetoed SCHIP information exchange, fraud and abuse proposed regulations could cost the state reauthorization bills, for example, would reduction, and chronic care management. over $100 million per year and undermine have provided performance bonuses to Several states are using their grant funds efforts to enroll the uninsured in Medicaid states to enroll more of those eligible to develop HIT tools specifically focused just as the state is implementing its for but not enrolled in SCHIP and 129 on e-prescribing. Illinois and Kansas landmark comprehensive health care to streamline Medicaid and SCHIP are using predictive modeling technology reform plan. Robert Siefert of the Center enrollment processes by coordinating with to address fraudulent activity while for Health Law and Economics at the other public programs. Despite President improving quality of health care services. University of Massachusetts Medical Bush’s vetoes, bipartisan support in Several states are using their grants to School noted that the proposed reductions Congress for these ideas will likely remain create systems to streamline enrollment in school-based outreach “would close on the table even though the SCHIP and reduce potential enrollment off a very important outlet for reaching reauthorization debate came to a close in delays and the administrative burdens people potentially eligible for MassHealth December. associated with the DRA’s citizenship [and Commonwealth Care].”131 documentation requirement. For example, SCHIP Reauthorization Failed - Program Extended to March 2009 Arkansas, Massachusetts, Michigan, and Restrictions on Expansions. States are facing Since its inception in 1997, SCHIP has Rhode Island are developing systems for new obstacles in covering higher-income been an important source of coverage electronically verifying citizenship and populations above 250 percent FPL. In for uninsured children who do not streamlining the documentation process. an August 17, 2007 letter to state officials, qualify for Medicaid and cannot afford Oklahoma is using grant funds to establish CMS announced that states would be private coverage. SCHIP was scheduled an online enrollment process to support a barred from extending SCHIP coverage to be reauthorized in 2007 after ten recent expansion of its Medicaid program, to children in families with incomes successful years. Many states hoped that SoonerCare. above 250 percent FPL unless they can reauthorization would bring increased demonstrate that 95 percent of those Medicaid Changes on the Horizon SCHIP funding to support health coverage eligible under 200 percent FPL are enrolled Administrative Cuts. Medicaid programs expansions. in the program.132 CMS has since cited this may face federal cuts of $11 billion SCHIP policy to block Medicaid expansion over five years on top of $11.5 billion in proposals from several states, including reductions already approved under Ohio, Louisiana, and Oklahoma.133
of 54 STATE the STATES Congress passed two SCHIP reauthorization children. The second bill added several veto message cited ongoing concerns bills in 2007, but both were vetoed by new provisions to respond to opponents’ with crowd-out, allowing parents in the President Bush. The bills sought to enroll concerns, including a prohibition program, and tax increases.135 There were four million additional children through a on coverage of children with family not enough votes in the House to override $35 billion increase in SCHIP funding over incomes over 300 percent FPL, additional the President’s veto. In the end, SCHIP five years, funded by a tobacco tax increase.134 citizenship verification requirements and was extended through March 2009 with Both bills included quality initiatives, crowd-out provisions, and expedited a modest spending increase sufficient to outreach grants, and fiscal incentives to transition of childless adults off of SCHIP. cover the estimated 6.6 million children encourage states to enroll low-income Despite these changes, the President’s currently enrolled in the program.136
of STATE the STATES 55 of 56 STATE the STATES of STATE the STATES
Looking Forward
The reforms enacted in state legislatures and signed in governors’ offices over the next two to three years could define state health reform for the coming decade.
The country is at a crossroads with regard As we head into one of the most open candidates and party platforms. to health care reform. As is highlighted in presidential election campaigns in Regardless, at least in the short term, a this publication, an enormous amount of recent memory, health care continues to federal solution is far less promising than activity—more so than in previous years— percolate to the top of priority domestic the ones being undertaken at the state is occurring in many states right now. issues. Indeed, most of the candidates level. States are once again taking on the have submitted proposals to address all or challenge of increasing coverage for the Unfortunately, at the federal level, the some of the issues related to access, cost, uninsured, decreasing the health care cost status quo is the prevailing and apparently and quality. While there is a certain level trend, and improving the overall system of preferred option. Reauthorization of of excitement to see momentum building care. SCHIP did not occur. Instead, the program on such important issues, it is impossible was extended through March 2009 with a to predict whether any major national The challenges are enormous. And, with modest spending increase. Consequently, health reform will actually occur. If there new projections of a looming economic any major policy discussions regarding is anything that we have learned from downturn, states will have to see if fiscal the reauthorization will not occur for at decades of work attempting to do health circumstances will prevent them from least another year. Once widely perceived care reform, it is that health care reform is moving forward on reform plans. It is to be a ‘slam dunk’ in health reform, that not inevitable.137 our hope that states will continue to keep program’s reauthorization has instead health care as a priority and look to long- highlighted how increasingly controversial Despite the uncertainty at this crossroads term investments to sustain new programs. and challenging it is to consider in health reform, there is still reason for Some of the challenges may be greater government involvement in health care. optimism. While it is fairly certain that no than many states can overcome; however, The looming question remains: how does major movement on health care will occur their hard work will inform the health care the struggle over financing and children’s at the federal level in the next year, reform reform discussion for years to come — health care reflect upon the federal may very well remain a defining issue, locally and nationally. government’s ability to deal with any type motivating greater discussion as we move of health care reform moving forward? closer to identifying the 2008 presidential
of STATE the STATES 57 2007 SCI Publications and Meetings
OF STATE THE STATES @WdkWho(&&- State of the States 2007: Building Hope, TennCare Reform, One Year Later: Raising Expectations An Assessment of the Impact of the 2005-2006
Building Hope, January 2007 IjWj[9el[hW][?d_j_Wj_l[i Changes in the TennCare Program Raising J[dd9Wh[H[\ehc"Ed[O[WhBWj[h0 Expectations 7d7ii[iic[dje\j^[?cfWYje\j^[(&&+#(&&, www.statecoverage.net/pdf/stateofstates2007.pdf 9^Wd][i_dj^[J[dd9Wh[Fhe]hWc June 2007
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9ecckd_joH[i[WhY^9ekdY_b 9^WjjWdee]W"J[dd[ii[[ By Ione Farrar, David Eichenthal, and Benjamin Coleman http://www.statecoverage.net/pdf/tenncare.pdf SCI National Meeting January 25-26, 2007, New Orleans, LA Reinsurance Institute: Final Meeting Agenda and presentation slides available July 19, 2007, Washington, DC http://www.statecoverage.net/0107agenda.htm Agenda and presentation slides available http://www.statecoverage.net/reinsuranceinstitutemeeting.htm ERISA Update: Federal Court of Appeals Agrees ERISA Preempts Maryland’s SCI Workshop for State Officials
;H?I7KfZWj[0 <[Z[hWb9ekhje\7ff[Wbi “Fair Share Act” August 2-3, 2007, Denver, CO 7]h[[i;H?I7Fh[[cfji CWhobWdZ¼i¹ Fh[fWh[Z\eh7YWZ[co>[Wbj^WdZj^[ DWj_edWb7YWZ[co\ehIjWj[>[Wbj^Feb_Yo 8oFWjh_Y_W7$8kjb[h"@:":hF> March 2007 Agenda and presentation slides available February 2007 By Patricia Butler http://www.statecoverage.net/0807agenda.htm http://www.statecoverage.net/SCINASHP2.pdf Automatic Enrollment Strategies: Helping State Efforts to Expand Coverage to the Coverage Expansions Achieve Their Goals Efforts to Expand Coverage to the Uninsured: Program Design Challenges and Tradeoffs in Six States Uninsured: Program Design Challenges and IjWj[9el[hW][?d_j_Wj_l[i August 2007 7kjecWj_Y;dhebbc[djIjhWj[]_[i0 >[bf_d]IjWj[9el[hW][;nfWdi_edi 7Y^_[l[J^[_h=eWbi March 1, 2007 Tradeoffs in 6 States By Stan Dorn Prepared by: Todd Eberly, Asher Mikow, John O’Brien, and Susan Tucker March 2007 http://www.statecoverage.net/pdf/autoenrollment.pdf August 2007 By Todd Eberly, Asher Mikow, John O’Brien, and Susan Tucker http://www.statecoverage.net/pdf/HRSAReport0307.pdf Health Insurance Connectors and Exchanges: A Primer for State Officials IjWj[9el[hW][?d_j_Wj_l[i >[Wbj^?dikhWdY[ Small Group Consultations: What are Connectors and How 9edd[Yjehi ;nY^Wd][i0 September 2007 7Fh_c[h\ehIjWj[E\ÄY_Wbi Do They Work? By Amy Lischko April 26, 2007, Washington, DC, and June 19, 2007, Austin, TX September 2007 http://www.statecoverage.net/pdf/healthinsur- Agenda and presentation slides available ance0907.pdf http://www.statecoverage.net/0407agenda.htm http://www.statecoverage.net/0607agenda.htm Coverage Institute: Kick-Off Meeting September 26-28, 2007, Chicago, IL Profile in Coverage: Healthcare Group http://www.statecoverage.net/coverageinstitute.htm FheÄb[i_d9el[hW][0 of Arizona 7h_pedW>[Wbj^YWh[=hekf May 2007 Marketing State Insurance Coverage Programs: http://www.statecoverage.net/arizonaprofile.pdf Experiences from Four States IjWj[9el[hW][?d_j_Wj_l[i CWha[j_d]IjWj[?dikhWdY[ 9el[hW][Fhe]hWci0 November 2007 ;nf[h_[dY[i\hec November 2007 http://www.statecoverage.net/pdf/issuebrief1107.pdf Small Group Consultation: Auto-Enrollment in State Coverage Initiatives May 22, 2007, Baltimore, MD St@teside Agenda and presentation slides available SCI Monthly Newsletter http://www.statecoverage.net/0507agenda.htm Current editions and archives can be found at www.statecoverage. net/stateside.htm of 58 STATE the STATES endnotes 1 DeNavas-Walt, C. et al. “Income, Poverty, and Health ber 11, 2007; The Commonwealth Fund, “A Roadmap to National Workshop, January 25, 2007, http://www. Insurance Coverage in the United States: 2006,” U.S. Health Insurance for All,” October 2007. statecoverage.net/0107agenda.htm. Census Bureau Current Population Survey, August 2007. 37 Much of the information in this section was synthesized 60 Governor Bill Richardson’s Legislative Proposal to 2 MEPS Statistical Brief No. 183, “The Long-Term from discussions among state policymakers and health Achieve Universal Health Coverage for New Mexico, Uninsured in America, 2002–2005: Estimates for the U.S. policy experts who participated in SCI’s Coverage In- October 25, 2007, http://www.governor.state.nm.us/ Population under Age 65.” stitute Kick-Off Meeting in September 2007. SCI would MEDIA/PDF/healthsolutionsbilloutline.pdf. 3 DeNavas-Walt, C., op. cit. like to acknowledge the contributions those meeting 61 Commission on a High Performance Health System. “A 4 “Employer Health Benefits, 2007 Annual Survey,” Kaiser participants had in providing insight into these issues. High Performance Health System for the United States: Family Foundation and Health Research and Educa- 38 The Urban Institute, in their Roadmap to Coverage An Ambitious Agenda for the Next President,” The Com- tional Trust, September 2007. report for Massachusetts, also uses the concept of build- monwealth Fund, Volume 75, November 15, 2007. 5 historical Health Insurance Tables, U.S. Census Bureau ing blocks as they describe proposed strategies to achieve 62 Weil, A. Presentation at Harvard IPHSI Meeting, Boston, Current Population Survey. http://www.census.gov/hhes/ health care reform. September 18, 2007; The Commonwealth Fund’s “Ambi- www/hlthins/historic/hihistt1.html. 39 Maine’s explicit attempt to redistribute through the Sav- tious Agenda.” 6 “Employer Health Benefits, 2007 Annual Survey,” op. cit. ings Offset Payment was resisted politically and through 63 Smith, V. op. cit. 7 DeNavas-Walt, C., op. cit. litigation. 64 “States in Action: A Bimonthly Look at Innovations in 8 Ibid. 40 Aaron, H., op. cit. Health Policy,” The Commonwealth Fund, March/April 9 holahan, J., and A. Cook. “Medicaid and the Uninsured: 41 butler, P. “ERISA implications for State Health Care Ac- 2007. What Happened to the Insurance Coverage of Children cess Initiatives: Impact of the Maryland ‘Fair Share Act’ 65 burton A., I. Friedenzohn and E. Martinez-Vidal. “State and Adults in 2006,” Kaiser Commission on Medicaid Court Decisions,” SCI/NASHP Issue Brief, November Strategies to Expand Health Insurance Coverage: Trends and the Uninsured, September 2007, www.kff.org/ 2006. and Lessons for Policymakers,” The Commonwealth uninsured/upload/7694.pdf. 42 “Hidden Costs, Value Lost: Uninsurance in America,” Fund, Volume 51, February 7, 2007. 10 DeNavas-Walt, C., op. cit. The comparison is drawn Institute of Medicine, 2003. 66 Carey B. “Massachusetts Health Reform: Progress and from three-year average uninsured rates for 2004–2006. 43 Gruber, J. “Incremental Universalism: The Policy Issues,” Prognosis,” presented at State Coverage Initiatives Sum- 11 The comparison is drawn from two-year average Presentation at SCI Coverage Institute Kick-Off Meeting, mer Meeting, August 2, 2007: http://www.statecoverage. uninsured rates, comparing the 2004-2005 average to the September 26, 2007. net/0807agenda.htm. 2005–2006 average, http://www.census.gov/hhes/www/ 44 Tanner, M. “Individual Mandates for Health Insurance: 67 “Massachusetts Health Care Reform Plan: An Update,” hlthins/hlthin06/percent_uninsured_state.xls. Slippery Slope to National Health Care,” Cato Institute op. cit. 12 DeNavas-Walt, C., op. cit. Policy Analysis, No. 565, April 2006. 68 Ibid. 13 “Employer Health Benefits, 2007 Annual Survey,” op. cit. 45 Glied, S. et al. “Consider It Done? The Likely Efficacy Of 69 Dembner, A. “Success Could Put Health Plan in the Red: 14 Ibid. Mandates For Health Insurance,” Health Affairs 26 (6): Mass. Program May Come Up $147m Short,” Boston 15 Ibid. 1612, 2007. Globe, November 18, 2007. 16 Unless otherwise noted, all data come from DeNavas- 46 The hidden tax refers to the cost of uncompensated 70 lischko, A., op. cit. Walt, C., op. cit. care – unpaid medical bills – that health care providers 71 St@teside, August 2007, available at www.statecoverage.net. 17 holahan, J. and A. Cook, op. cit. incorporate into their charges to private insurance carri- 72 Monahan, J. “No one expecting an insurance rush,” 18 Ibid. ers which get passed on as part of the premiums charged Worcester Telegram and Gazette, June 27, 2007. 19 Ibid. (Harbage, P. and L. Nichols. “A Premium Price: The 73 Employers with 11 or more employees who do not offer 20 historical Health Insurance Tables, U.S. Census Bureau Hidden Costs All Californians Pay In Our Fragmented health insurance may be assessed a “free rider” surcharge Current Population Survey., op cit. Health Care System,” New America Foundation, Decem- if their employees access free care a total of five times per 21 fronstin, P. “Sources of Health Insurance and Character- ber 2006). year in the aggregate, or if one employee uses free care istics of the Uninsured: Analysis of the March 2007 Cur- 47 nichols, L. et al. “Health Debate Reality Check: The Role more than three times. This fee will range between 10 rent Population Survey,” Issue Brief No. 310, Employee of Individual Requirements,” New America Foundation and 100 percent of the state’s cost of services provided, Benefit Research Institute, October 2007. Policy Brief, December 2007. with the first $50,000 per employer being exempt. 22 “The Fiscal Survey of States,” National Governors 48 butler, P., op. cit. 74 “Massachusetts Health Care Reform Plan: An Update,” Association and National Association of State Budget 49 for a detailed discussion of this debate see Alliance for Kaiser Commission on Medicaid and the Uninsured, Officers, December 2007. Health Care Reform: Employer-Based Coverage: Shore It June 2007. 23 Ibid. Up or Ship It Out (September 12, 2007). 75 only those managed care plans now contracting with 24 Smith, V. et al. “As Tough Times Wane, States Act to 50 Gruber, J., op. cit. Massachusetts Medicaid may provide coverage through Improve Medicaid Coverage and Quality: Results from 51 http://www.census.gov/hhes/www/income/income06/ Commonwealth Care for the first three years. http://content. a 50-State Medicaid Budget Survey for State Fiscal Years statemhi2.html. healthaffairs.org/cgi/content/full/hlthaff.25.w432v1/DC1. 2007 and 2008,” Kaiser Commission on Medicaid and 52 friedenzohn, I. “Limited-Benefit Policies: Public and 76 Dembner, A. “High Deductibles a Healthcare Worry: The the Uninsured, October 2007. Private Sector Experiences,” State Coverage Initiatives Newly Insured May Shun Doctors,” Boston Globe, March 25 Ibid. Issue Brief, July 2004. 5, 2007. 26 Cauchon, D. “Medicaid Spending Jumps Sharply,” USA 53 Chernew, M. et al. “Value-Based Insurance Design,” 77 “Massachusetts Health Care Reform Plan: An Update,” Today, October 8, 2007. Health Affairs Web Exclusive, January 30, 2007. op. cit. 27 Smith, V., op. cit. 54 fronstin, P. et al. “The 2nd Annual EBRI/Common- 78 Dembner, A. “Free Care May Come at a Cost to Poor,” 28 “The Fiscal Survey of States,” op. cit. wealth Fund Consumerism in Health Care Survey, 2006: Boston Globe. July 13, 2007. 29 Ibid. Early Experience with High-Deductible and Consumer- 79 Gruber, J. “Massachusetts Health Care Reform: The View 30 Urban residents are defined here as those who live in a Driven Health Plan,” EBRI Issue Brief, No. 300, Decem- from One Year Out,” prepared for the Cornell University metropolitan statistical area (MSA) and rural residents ber 2006. Conference on the Economics of Pay or Play Employer are those who do not live in an MSA. 55 Gruber, J. “The Role of Consumer Copayments for Mandates, July 2007. 31 Ziller, E.C., A.F. Coburn , and A.E. Yousefian. O“ ut-Of- Health Care: Lessons from the RAND Health Insurance 80 Meckler, L. “How 10 People Reshaped Massachusetts Pocket Health Spending and The Rural Underinsured,” Experiment and Beyond,” Kaiser Family Foundation, Health Care,” The Wall Street Journal, May 30, 2007. Health Affairs, November/December 2006. October 2006. 81 Ibid. 32 Ibid. 56 SCI Coverage Matrix: http://www.statecoverage.net/ 82 Ibid. 33 “The Uninsured, A Primer,” Kaiser Commission on matrix/index.htm. 83 Raymond, A. “The 2006 Massachusetts Health Reform Medicaid and the Uninsured, October 2007. 57 lischko, A. “Health Insurance Connectors & Exchanges: Law: Progress and Challenges after One Year of Imple- 34 DeNavas-Walt, C., op cit. A Primer for State Officials,” State Coverage Initiatives, mentation,” Blue Cross Blue Shield of Massachusetts 35 “Uninsured Americans with Chronic Health Conditions: September 2007. Foundation, May 2007. Key Findings from the National Health Interview Survey,” 58 SCI Coverage Matrix: http://www.statecoverage.net/ 84 belluck, P. “As Health Plan Falters, Maine Explores The Urban Institute and the University of Maryland, May matrix/dependentcoverage.htm. Changes,” New York Times, April 30, 2007. 2005. 59 Please see presentations for “Merging the Markets for 85 Adams, G. “Harvard Pilgrim to run Maine’s subsidized health 36 Aaron, H., Senate Budget Committee Testimony Septem- Individual and Small Group Coverage” session, SCI’s program,” October 23, 2007, available at www.boston.com. of STATE the STATES 59 86 To determine the savings the state has measured the Access was a joint Governor-Legislative entity created in 121 Schwartz, S. “Financing State Coverage Expansions: savings impact of the moratorium on the Certificate of 2006 legislation to recommend a sustainable five-year Can New Medicaid Flexibility Help?” National Academy Need; the implementation of a Capital Investment Fund plan for substantially improving access to affordable for State Health Policy, September 2007. to limit future Certificate of Needs post-moratorium; health care for all Washington residents. A copy of the 122 See http://www.cms.hhs.gov/DeficitReductionAct/03_ the impact of rate regulation in the small-group insur- Commission’s final report, January 2007, is available SPA.asp#TopOfPage. ance market; voluntary targets on hospital expenditures; at http://www1.leg.wa.gov/documents/joint/HCCA/ 123 State of the States, AcademyHealth, pp. 41-44, 2007. the infusion of new state funds to match Medicaid for Final%20Report.pdf. 124 Smith, V., op. cit. increases in physician and hospital payments to reduce 102 Graves, B. “Health Care Bill Goes to House,” The Oregonian, 125 “The Basics: The Medicaid Citizenship Documentation cost shifting; and the cost associated with savings in the June 21, 2007. Requirement,” National Health Policy Forum, July 27, 2007. system resulting from insuring the previously uninsured. 103 har, J. “Health Plan Gets Burned After State’s Costliest 126 A federal class action, Bell v. Leavitt, challenging the 87 “Leading the Way? Maine’s Initial Experience in Expand- Race,” The Oregonian, November 7, 2007. Medicaid citizenship documentation requirements ing Coverage Through Dirigo Health Reforms,” Com- 104 N.Y. State Conference of Blue Cross & BlueShield Plans v. was filed on June 28, 2006, in federal District Court in monwealth Fund, November 1, 2007. Travelers Insurance, 514 U.S. 645 (1995). Chicago. Plaintiffs voluntarily dismissed the case on 88 Ibid. 105 Retail Industry Leaders’ Association v. Fielder, 475 F. 3d March 30, 2007. Immediately after the case was filed, 89 Ibid. 180 (4th Cir. 2007). the Bush Administration reinterpreted the DRA to 90 “Three Maine Provider Systems Announce Collabora- 106 Retail Industry Leaders’ Association v. Suffolk County, E.D. exempt approximately 8 million Supplemental Security tive Effort to Reduce Costs,” Kaiser Daily Health Policy N.Y. 06 CV 00531 (ADS) (ETB), July 14, 2007. Income (SSI) and Medicare beneficiaries. In December Report, March 6, 2007. 107 The amounts are $1.17 per hour for private employers 2006, the Administration corrected its interpretation 91 Adams, G. “Baldacci Signs Bill to Allow Dirigo to Self- with 20–99 employees or nonprofit employers with 50 or again, exempting 500,000 foster children and children insure,” June 27, 2007, available at www.boston.com. more employees and $1.76 per hour for firms with 100 receiving adoption assistance. Plaintiffs concluded that 92 Under the original Dirigo Health law, employers were or more workers. the changes and the variability in the way states were required enroll at least 75 percent of their workers and 108 Golden Gate Restaurant Association v. City and County of implementing the new rules made for a national class pay at least 60 percent of employee premiums. The bill San Francisco, (No. C 06-06997 JSW, N.D. Cal. December action unable to tailor the relief adequately. would now allow employers to contribute less than 60 26 2007). 127 http://www.cms.hhs.gov/MedicaidTransGrants/. percent toward the cost of premiums. It would allow 109 Golden Gate Restaurant Association v. City and County of 128 http://www.hhs.gov/news/press/2007pres/20070125.html. employers to count part-time workers to meet the 75 San Francisco, (No. 07-17370, Jan. 9, 2008, 9th Cir.). 129 Connecticut, Florida, New Mexico, North Dakota, Ten- percent enrollment requirement. 110 butler, P.A. “ERISA Update: Federal Court of Appeals nessee, Utah, and West Virginia (enhanced medication 93 health Care Financial Management Association, Maine Agrees ERISA Preempts Maryland’s ‘Fair Share Act’,” management). Chapter, The Beacon, Vol. 35; No. 4, 2007. AcademyHealth, State Coverage Initiatives Program, 130 http://www.thomas.gov/cgi-bin/bdquery/z?d110:s.02499. 94 besio, S. “Vermont Health Care Reform,” National Academy 2007, http://www.statecoverage.net/SCINASHP2.pdf. 131 Dembner, A. “Medicaid cuts could cost Mass. $100m,” for State Health Policy, Annual Conference, October 2007. 111 fICA funds Medicare and Social Security. Boston Globe, November 13, 2007. 95 Ibid. 112 Schiffbauer, W.G. “ERISA Preempts Provisions of 132 Centers for Medicare and Medicaid Services, Letter to 96 Ibid. Massachusetts’ ‘Pay or Play’ Health Care Reform Law,” State Officials, August 17, 2007, http://www.cms.hhs.gov/ 97 Silow-Carroll, S., and T. Alteras. “Profile: In-Depth Look BNA Pension & Benefits Reporter, 33(38):2315-2318, smdl/downloads/SHO081707.pdf at an Initiative that Makes a Difference, Comprehensive September 26, 2006. 133 Pear, R. “U.S. Curtailing Bids to Expand Medicaid Rolls,” State Reforms Address Health Care Quality and Effi- 113 badgerCare Plus Web site: http://dhfs.wisconsin.gov/ The New York Times, January 4, 2008. ciency,” States in Action: A Bimonthly Look at Innovations badgercareplus/. 134 h.R. 976 The Children’s Health Insurance Program in Health Policy, Vol. 8, March 20, 2007. 114 Smith V., op. cit. Reauthorization Act of 2007 (CHIPRA) and H.R. 3963, 98 besio, S., op. cit. 115 “The Fiscal Survey of States,” op. cit. the revised version of CHIPRA. 99 baldassare, M. “PPIC Statewide Survey: Californians and 116 Collins, S.R. et al. “Rite of Passage? Why Young Adults 135 Press briefing with Dana Perino, December 12, Their Government,” Public Policy Institute of California, Become Uninsured and How New Policies Can Help,” 2007, http://www.whitehouse.gov/news/releas- September 2007. The Commonwealth Fund, updated May 24, 2006. es/2007/12/20071212-5.html. 100 health Care Provider Retention Account is a restricted 117 Silow-Carroll, S., and T. Alteras, op. cit. 136 Stolberg, S. “President Vetoes Second Measure to Ex- state account that is funded with a 25-cent-per-pack 118 Smith V., op. cit. pand Children’s Health Program,” The New York Times, cigarette tax. Health Care Provider Retention Account 119 “Louisiana Health Care Quality Forum to Develop December 13, 2007. funds have been used to keep the state’s professional Chronic Care Standards, Examine Overall Health of 137 oberlander, J. “Learning from Failure in Health Care liability insurance market stable and to assure continued State,” Kaiser Daily Health Policy Report, November 13, Reform,” New England Journal of Medicine, 357; 17, access to quality health care. 2007. October 25, 2007. 101 The Blue Ribbon Commission on Health Care Costs and 120 Smith, V., op. cit. of 60 STATE the STATES AcademyHealth, the national program office for SCI, is the professional home for health services researchers, policy analysts, and practitioners, and a leading, non-partisan resource for the best in health research and policy. AcademyHealth promotes interaction across the health research and policy arenas by bringing together a broad spectrum of players to share their perspectives, learn from each other, and strengthen their working relationships. 1150 17th Street, NW, Suite 600 Washington, DC 20036 tel: 202.292.6700 fax: 202.292.6800 email: [email protected] web: www.statecoverage.net