Sponsored by The Robert Wood Johnson Foundation's State Coverage Initiatives Program
Conducted by AcademyHealth

Q: Do employer subsidies for the Kansas tax credit come from state-only funds? Can any federally qualified insurance plan use the tax credit?

A: [Schwartz] It is federally funded through an 1115 waiver if insurance is offered for the first time. Otherwise, the subsidy comes from state-only funds. Yes, any federally qualified insurance plan can use the tax credit.

Q: Mr. Schwartz said that part of the struggle with the credit is that brokers do not promote the tax credit. Why is this so?

A: [Schwartz] I would imagine that is because the agents do not get anything extra if their client enrolls in this plan. They may feel it is only extra time for them to go through that option with the client, as well as learn about the option itself.

Q: What is Massachusetts' participation rate?

A: [Cook] In the small group market (less than 10 workers), it is 100 percent.

Comment by Schwartz: A recent survey asked employers who knew about the plan, why they had not taken advantage of the option. They answered that five years was not long enough. They did not want to get embroiled in the plan, get their employees used to the plan and then after five years have to fund it themselves. Also, tax credits are simple and politically palatable: conservatives feel that anything that gets rid of taxes is desirable and liberals feel that it is still a subsidy "no matter how you dress it up." Therefore, use "tax credits" instead of "appropriation."

Q: Why is Blue Cross/Blue Shield against the tax credit? This is new business that they have not had in the past.

A: [Schwartz] I am not quite sure, but it is possibly because the credit is not in line with what they have done before; it is a wrinkle, an extra complication for the insurer.

Comment from Audience: Do not let the response of the Blues in Kansas discourage you, however. The Blues are helping us put our tax credit together in Idaho.

Q: Do your programs result in better selection for insurers or worse selection, because this may be the reason that the Blues are not getting excited about these plans?

A: [Cook] I think that there is a myth - we encountered it when we were first developing our plan - that what we were working on would bring an uninsured population into the insurance marketplace, resulting in a negative impact on the rest of the population. Our experience with direct coverage programs and premium assistance is that the pmpm costs compare quite favorably with that of the Medicaid population, which is a more or less high utilizing population.

Q: What about the equity concerns of plans that help all employers regardless of whether they offer health insurance already (Massachusetts) and those that help only those that are offering for the first time (Kansas)?

A: [Cook] There are two equity issues to consider. First, and somewhat tied into the crowd-out argument, is that someone should not be penalized for having done the right thing. Second, subsidies often go to the very wealthy. We rationalize it by asking the employer to adjust the withhold relative to a benchmark. We also rationalize it because we help to compensate those who take on extra administrative burden. In Kansas, the two-year look-back was pretty much an arbitrary decision.