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In this Issue:
1. Health Still a Priority for Governors in 2005
2. Ask the Expert: ERISA's Implications for State Health Care Access Initiatives
3. Federal Fiscal Year 2006 Budget Proposal: Implications for Medicaid Reform
4. National Health Access Program
5. Insurers Help Coverage Program in Pennsylvania
6. Enrique Martinez-Vidal Joins State Coverage Initiatives Team
7. Coming Soon from SCI
8. Reports of Interest
1. Health Still a Priority for Governors in 2005
The topics of health care costs and reform remain at the top of many state agendas, as laid out in several of the 2005 State of the State addresses presented by governors throughout the nation. Although still grappling with state budget deficits, many governors have used their speeches to prompt their states to strike out in new and more ambitious directions. As has been the case in previous years, there appears to be no single approach or winning strategy that addresses the challenges faced by states in seeking to maintain and/or expand health insurance coverage while responding to rapidly rising costs.
State of the State addresses in no way encompass all of the options being considered by states, but they can shed light on the priorities of the state administration. As of mid-March, 49 governors had delivered their annual addresses to their states, laying out their priorities for this fiscal year and beyond. Medicaid, prescription drugs, health insurance coverage for children, and addressing the problem of the uninsured topped the list of most governors' initiatives in health care.
Twenty-seven governors discussed initiatives to bring down the costs of prescription drugs through a variety of strategies. Many states have offered drug discount cards like Michigan 's MiRx prescription drug discount card, which has helped 20,000 families obtain lower-cost medications. California Governor Arnold Schwarzenegger is pursuing a similar prescription drug discount card for low-income Californians. Other states have banded together to form purchasing cooperatives to obtain lower cost drugs. Many states are looking at ways to help seniors purchase affordable prescription drugs through reimportation, wrap-around benefits once the Medicare Part D prescription drug benefit takes effect in 2006, and state pharmaceutical purchasing pools, among other strategies.
Twenty-two governors discussed issues related to Medicaid in their speeches. Across the board, governors addressed the growing and unsustainable costs of Medicaid and the strain on state budgets. As a result, a number of states are looking at ways to reduce costs by creating more efficient administrative processes, changing benefits, and changing payments to providers.
A large number of governors also acknowledged the need to address the problem of health insurance coverage for the uninsured. Twenty-one governors discussed various strategies to reduce the number of uninsured, including premium assistance programs, purchasing pools, risk pools, expanding coverage through public programs like Medicaid and the State Children's Health Insurance Program (SCHIP), tax credits, health savings accounts, and expansions to targeted populations like working adults. Many states are creating programs targeted to small businesses who cannot afford to offer coverage or whose employees cannot afford to purchase the insurance offered. Maine 's Dirigo program is an example of such a strategy, and in his State of the State address, Governor John Baldacci reported that as of January, the program had enrolled nearly 3,000 people representing over 250 small businesses and nearly 1,000 sole proprietors.
Despite tough budgets, a few states have found ways to increase budgetary allowances to maintain coverage and/or expand coverage to uninsured citizens. Examples of state plans to maintain and expand health insurance coverage include:
- Alabama Governor Bob Riley (R) used his annual address to advocate for passage of his budget proposal, which will seek to increase state funding for Medicaid in order to maintain the level of health care services it provides and increase funding for the state's SCHIP program by almost 25 percent to eliminate an existing waiting list.
- Alaska Governor Frank Murkowski (R) asked legislators to approve his plan to fund Medicare premiums and deductibles for every Alaskan senior with an annual income under $35,000.
- Colorado Governor Bill Owens (R) proposed using part of the proceeds of a tobacco tax increase to create a "sustainable" plan to expand health insurance coverage through expanding enrollment in the state's SCHIP program, as well as funding certain preventative screening services and a rural health care initiative.
- Hawaii Governor Linda Lingle (R) proposed spending $2.7 million on primary care services at community health centers and $5 million to enroll 6,000 eligible children and 1,000 low-income adults in Medicaid. She also proposed allowing small businesses to pool together to purchase health insurance.
- Massachusetts Governor Mitt Romney (R) spoke of his plans to implement his proposed Commonwealth Care plan, which will offer more affordable health insurance options to the uninsured and small employers.
- Montana Governor Brian Schweitzer (D) promised to use the funds from a $1-per-pack cigarette tax increase approved by voters last November to fully fund Montana's SCHIP program and provide "targeted tax credits" to small businesses to allow them to join together to negotiate lower-cost health insurance.
- Nevada Governor Kenny Guinn (R) stated that $8 million will be used to expand health insurance coverage for pregnant women and low-income families employed in small businesses.
- New Mexico Governor Bill Richardson (D) is aiming to reduce the rate of uninsured state residents by 10 percent (41,000 people) by allowing small businesses to buy into the state health insurance plan, requiring health insurers to offer companies plans for part-time workers, and providing tax incentives to encourage small businesses to provide insurance to employees. Richardson also proposed a 16 percent ($78.4 million) increase for Medicaid.
- Utah Governor Jon Huntsman (R) said that he has allotted $5 million in his budget proposal for Medicaid funding to restore dental and vision coverage to beneficiaries who recently lost it.
Additionally, children's health programs were of paramount concern to a number of governors. Eighteen governors proposed or supported initiatives related to children's health. Many governors continued to pledge support to their state's SCHIP program and a few discussed further expanding benefits.
In addition to prescription drug costs, children's health, Medicaid, and the uninsured, 13 governors addressed health promotion efforts in their respective states; 13 governors revealed plans focused on specific health conditions like mental health, substance abuse and cancer; 11 governors described plans to improve long term care facilities through a variety of strategies including state-sponsored, long-term care insurance and awareness campaigns for families; and nine governors spoke of the urgency of passing medical malpractice reforms in order to keep doctors in their states.
The complete text of all 2005 State of the State addresses can be found on stateline.org.
2. Ask the Expert: ERISA's Implications for State Health Care Access Initiatives
Please join State Coverage Initiatives (SCI) and the National Academy for State Health Policy (NASHP) for a Cyber Seminar on ERISA's Implications for State Health Care Access Initiatives on Monday, March 21, 2005 from 1:30-3:00 p.m. EST.
ERISA (the Employee Retirement Income Security Act of 1974) was created to establish uniform federal standards to protect private employee pension plans from fraud and mismanagement. But the federal statute also covers most other types of employee benefits plans, including health plans. Several of ERISA's provisions preempt state laws and complicate state efforts to make health care coverage more broadly available. The courts' interpretation of ERISA and the cases that have come before the courts have changed over the years.
Who is the expert?
Patricia Butler, J.D., Dr.P.H., a leading national authority on ERISA and its implications for states, will be the featured speaker. Alice Burton, director of SCI, Enrique Martinez-Vidal, deputy director of SCI, and Alan Weil, NASHP's executive director, will participate in the discussion. Questions will be taken from the audience.
Who should attend?
This seminar is designed for state policymakers and researchers considering a range of coverage initiatives, including premium assistance, employer "pay-or-play," and tax credits for employers.
How can I register?
Registration materials are available at www.statecoverage.net/cyberseminar/index.htm.
Please note the $25 registration fee is our direct cost for a connection to the conference. An entire team from your organization can participate for one registration fee. If you have a computer with Internet access and a telephone, you should be able to participate.
If you have any questions about registration, please call Alyson Brice at 202.292.6731.
3. Federal Fiscal Year 2006 Budget Proposal: Implications for Medicaid Reform
The Bush administration's budget for fiscal year (FY) 2006 was presented to Congress on February 7, 2005. States, among many stakeholders in the health policy arena, have been particularly interested in the implications of the budget on Medicaid reform. Bush's budget proposes to reduce Medicaid spending by $60 billion over 10 years, yet the burden of approximately 75 percent of those reductions falls directly on states. When taking into account some program increases in the program related to increased outreach through the new Cover the Kids campaign, extending transition medical assistance (TMA), and some long-term care proposals, the net reduction would be approximately $45 billion in spending over the next decade.
The budget addresses maintaining the integrity of the Medicaid program by proposing restrictions on intergovernmental transfers, redefining reimbursement policies for targeted case management and rehabilitation services, phasing down allowable provider tax rates from 6 to 3 percent, reforming transfer of asset policy for Medicaid eligibility, capping administrative allocations to states, and other administrative reforms. The FY06 budget also seeks to reduce Medicaid spending by proposing reductions in pharmacy costs, altering payment formulas, and changing the reimbursement for targeted case management. New analysis by the Congressional Budget Office suggests that the savings from the Medicaid and the State Children's Health Insurance Program (SCHIP) reductions would be much less than the administration's estimates. However, there is some disagreement on the amount of savings that would be incurred.
While the President's budget also proposes to provide states with additional flexibility in Medicaid, little detail regarding the options available to states has been revealed. Many expected new information regarding Medicaid reform to become available after the National Governors Association annual winter meeting, where Medicaid was the emphasis of discussion. However, during this crucial meeting between the governors and the Bush administration, no agreement was made on changes to the Medicaid program. Immediately following the meeting, HHS Secretary Mike Leavitt stated there were certain issues upon which there had been some agreement. These include:
- Medicaid is overpaying for prescription drugs;
- The elderly should not be allowed to transfer their assets to their children to qualify for Medicaid nursing home coverage;
- Governors should be able to charge co-payments to Medicaid beneficiaries based on income, and should be able to manage care and costs by using the tools available to private insurers;
- States should have more flexibility to decide benefits; and
- Home- and community-based care should be recognized by Medicaid as a "preferred alternative" to nursing homes.
Despite conflicting reports, many governors have cited that there is still much disagreement even with regard to the aforementioned issues. Several are still concerned that Medicaid reform will be linked to the budget, and will only come in the form of budgetary reductions. With uncertainty in many aspects of the federal reforms, the governors will continue moving forward in this process. They are currently developing short-term strategies that may allow them certain flexibilities and long-term plans for finding efficiencies and making critical structural changes to the program.
According to Theresa Sachs, former technical director at the Centers for Medicare and Medicaid Services, it is likely that many of the principles from the Bush administration's previous attempt at Medicaid reform in 2003 may be included in the current plan. However, only time will tell whether any changes to the program will include sweeping reforms that will facilitate coverage expansions, such as a departure from the categorical nature of the program. Sachs added, "If the financing reforms squeeze states' budgets, it will be extremely difficult for them to even consider coverage expansions in the future."
4. National Health Access Program
In an effort to reduce the nation's uninsured population, a coalition of large employers recently unveiled the National Health Access program. Targeting workers (part-time, seasonal, contractors, and pre-65 retirees) and their dependents that generally are not eligible for employer-sponsored insurance, the National Health Access program pools workers across 60 large employers and offers a choice of six plans. Each employer will determine group eligibility.
Participants can select among six options ranging from a discount network to a Health Savings Account (HSA) combined with a high-deductible health plan. The UnitedHealth Group was selected to be the primary carrier, but CIGNA and Humana will participate in limited markets. Participants can select among the following plan options:
Level 1: Discount Network (Not Insurance)
· Provides medical, pharmacy, dental, and vision discounts within network.
Level 2: Scheduled Wellness Benefit
· Level 1 discount plus: 80 percent reimbursement for office visits, 100 percent preventative care, $20 per prescription (up to five per year), two dental visits, one vision visit. All benefits subject to plan maximum of $350.
Level 3: Scheduled Outpatient Benefit
· Level 1 benefit plus: 100 percent office visits, outpatient surgery, and preventive care. Level 3 pays $20 for up to 10 prescriptions per year, two dental visits, one vision visit. All benefits subject to plan maximum.
Level 4: Scheduled Inpatient and Outpatient Benefit
· Level 3 benefit plus: $800 per day inpatient surgery (30 days) and 100 percent emergency room visits. All benefits subject to plan maximum.
Level 5: Major Medical-HSA eligible
· HSA combined with high-deductible health plan. Plan details include: $2,000 deductible for individuals and $4,000 for families, out-of-pocket maximums of $5,000 for individuals and $10,000 for families, 70 percent co-insurance, pharmacy, and access to Level 1 discounts. All benefits subject to plan maximum.
Level 6: Major Medical-Limited
· Level 5 benefit plus: lower deductibles ($1,100 single/$2,200 family), and a lifetime annual benefit cap of $1 million.
While the pool does not receive employer subsidies at this time, premiums are estimated to range from $4 per month for a discount network to more than $300 for major medical coverage. Premiums will be calculated using age, gender, geographic location, and some options will impose waiting periods. Rates will be capped for the first 18 months of the program.
Proponents of the plan argue the National Health Access program offers greater flexibility and lower costs versus the individual insurance market. As many as three million workers and their dependents may benefit from the plan. Pending state regulatory approval, the plan will begin open enrollment on September 1, 2005.
5.
Insurers Help Coverage Program in Pennsylvania
In October 2004, St@teside reported that the waiting list for Pennyslvania's adultBasic coverage program for low-income adults reached an all-time high. While 39,000 adults are currently enrolled in the program, there are also 100,000 individuals still waiting to enter the program.
Financed with the state's portion of the national tobacco settlement fund, adultBasic is available to residents between the ages of 19 and 64 who have not had health care coverage, including Medicaid, for more than 90 days and who have incomes at or below 100 percent of the federal poverty level. By paying a $30 monthly premium, beneficiaries have access to a benefit package that covers hospital care, doctor visits, and lab work. It does not cover prescription drugs.
On February 7, Governor Edward Rendell (D) signed an agreement with Blue Cross Blue Shield (BCBS) that states that the four BCBS insurance plans in Pennsylvania will spend close to $1 billion in surplus funds over six years on different health programs in the state, including adultBasic. This new Annual Community Health Reinvestment fund will donate $85 million in 2005 alone, allowing approximately 29,000 new state residents to come off the wait list and enroll in the program. The new infusion of funds will be particularly helpful since the program's funding from the tobacco settlement fund is going to be reduced by $12 million this year.
6. Enrique Martinez-Vidal Joins State Coverage Initiatives Team
The State Coverage Initiatives program is pleased to announce that Enrique Martinez-Vidal has joined AcademyHealth as the deputy director of the State Health Policy Group and the State Coverage Initiatives program.
Prior to joining the SCI team, Martinez-Vidal was the deputy director for performance and benefits at the Maryland Health Care Commission, an independent state agency. There he was responsible for the oversight of Maryland's small group insurance market reforms; the annual evaluation of Maryland's mandated health insurance benefits; the collection and public dissemination of quality and performance information for hospitals, nursing homes and health plans; providing primary assistance on all legislative issues; and working on numerous other projects related to the affordability of health care, quality improvement, and patient safety.
Martinez-Vidal was formerly a policy analyst with the Maryland Department of Legislative Services for five years. During that time he staffed the House Economic Matters Committee and was involved with a number of health-care related issues. He has a B.A. in political science and international studies from Dickinson College and a master's degree in public policy from Georgetown University.
7. Coming Soon from SCI
Check for updates on SCI's latest publications and meetings, including:
- Cyber Seminar on ERISA co-sponsored with NASHP, March 21, 2005
- A Profile in Coverage on the Maine Dirigo Program
- SCI's Summer Workshop for State Officials to be held in Chicago , July 28 - 29, 2005.
8. Reports of Interest
The following are the most recently released reports on coverage. State specific reports can be found in SCI's database of state reports.
Briefing Charts on the Federal Budget: Implications for Medicare and Medicaid
The Henry J. Kaiser Family Foundation
March 2005
Covering Health Issues - 2004 Sourcebook
Alliance for Health Reform
March 2005
Health Coverage for Low-Income Adults: Eligibility and Enrollment in Medicaid and State Programs, 2002
The Henry J. Kaiser Family Foundation
March 2005
The President's Proposals For Medicaid and SCHIP: How Would They Affect Children's Health Care Coverage?
Georgetown University Health Policy Institute
March 2005
Health Insurance Coverage in Minnesota , 2001 vs. 2004
Minnesota Department of Health
February 2005
The President's Proposed Fiscal Year 2006 Budget
National Governors Association
February 2005
U.S Health Spending Projections 2004 - 2014
Health Affairs
February 2005
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