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In this Issue:
1.
Last Call! SCI Summer Meeting: "Pressing Forward:
Cuts, Coverage,
and
Creativity
2. Health Care Tax Credits: Early Lessons from the
Trade Act
3. A Closer Look at Cost Sharing in Public Programs:
National and
State-Specific Studies Provide Lessons to States
4. Update: Premium Assistance Toolkit
5. Cover the Uninsured Week Wrap-Up
6. Safety Net “Crowding Out” Private Health
Insurance for Childless Adults
7. Database Captures Health Services Research Projects
in Progress
8. Coming Soon from SCI
9. Reports of Interest
1.SCI
Summer Workshop for State Officials
W Lakeshore Hotel Chicago
June 28 – 29, 2004
 Registration
is filling quickly for the SCI Summer Workshop for State Officials.
This meeting, which will be held at the W Lakeshore Hotel Chicago
on June 28 – 29, 2004, will address various state health care
issues, including:
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Keeping coverage issues at the forefront of policy agendas;
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Models for building on employer-sponsored coverage;
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Managing public program premiums and cost-sharing changes;
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Scaled-back benefit packages and their take-up in public and private
markets; and
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The new consumerism and its impact on states.
We
hope you will be able to join us for this workshop, which is only
open to state officials. There is no registration fee. To access
updated meeting information or to register online, visit SCI's meeting
page.
2.
Health Care Tax Credits: Early Lessons from the
Trade Act
It’s
been almost two years since President Bush signed the Trade Act
of 2002 into law on August 6, 2002. Perhaps the most closely watched
outcome of that legislation by health policymakers was the new system
of health care tax credits that it created. The credits pay for
65 percent of the cost of health insurance premiums for a small
group of workers displaced by international trade and early retirees
who receive a federal pension from the Pension Benefit Guaranty
Corporation.
This
aspect of the Trade Act is significant because it provides the first
U.S. experiment in about a decade with fully refundable and advanceable
federal income tax credits for health insurance — a concept
that has resurfaced many times over the years as a potential mechanism
for addressing the uninsured.
Preliminary
evidence suggests that the credits are off to a slow start, with
only about 4 percent of the 200,000 to 300,000 eligible individuals
enrolled in the program as of March 2004. However, it is still too
soon to reach any definite conclusions about take-up, especially
considering that advance payment under the program did not start
until August 2003.
Recent
research supported by The Commonwealth Fund and The Nathan Cummings
Foundation provides a useful early analysis of the health care coverage
tax credits. Preliminary findings and lessons to guide future reforms
are summarized in an April
2004 report written by Stan Dorn and Todd Kutyla of the Economic
and Social Research Institute. The report’s key findings are
as follows:
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Federal officials have made tremendous progress in establishing
the infrastructure to support the program.
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They were able to meet the statutory deadline of August 1,
2003, for advance payment. To accomplish this, they created
a mostly electronic system for exchanging information and
payments, and collaborated across multiple federal, state,
and private entities.
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The officials who created the program have been nimble and
creative. For example, grants from the Department of Labor
were used to mimic the effects of tax credits and to pilot
test advance-payment systems in two states.
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Relatively few eligible individuals have taken up health care
tax credits.
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Affordability may be an obstacle. For many unemployed individuals
and early retirees, even 35 percent of a health insurance
premium is prohibitive. The 35 percent premium cost of $1,713
per year would consume 5 percent of the total annual income
for a four-person family at 200 percent of the federal poverty
level.
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The timing of the advance payment may be another enrollment
barrier. Beneficiaries must first enroll in a health plan
and pay full premiums for a month or more until advance payment
starts. Although they can receive a refund for these costs
with their year-end tax refund, many cannot afford to front
the payments.
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Many eligible workers may not receive the information they
need to enroll. The 20-page brochure typically mailed to eligible
individuals is complex and difficult to understand. Moreover,
not all potentially eligible beneficiaries receive it: recently
displaced workers who are still receiving unemployment insurance
are not on the eligibility lists on which such mailings are
based.
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The administrative costs of the tax credits may be high.
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However, it is not yet clear whether the new tax credit infrastructure
can be expanded to a larger population at marginal cost, or
if high administrative costs will translate into high operational
costs that grow in proportion to the number of people served.
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The health plans used to provide coverage through the program
are heterogeneous.
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In states offering qualified coverage, there was a roughly
50/50 split between those that used COBRA plans and those
that used state-qualified plans.
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State-qualified plans included mini-COBRA plans in 9 states,
non-group plans with underwritten premiums in 11 states, high-risk
pools in 13 states, and community-rated plans in 6 states.
For
a follow-up report in which Stan Dorn outlines options for modifying
the tax credit program based on early findings, please visit: www.esresearch.org/newsletter/trade_act_options.pdf.
3.
A
Closer Look at Cost Sharing in Public Programs:
National and
State-Specific Studies Provide Lessons
to States
More
than 50 million Americans receive health insurance coverage through
Medicaid and the State Children Health Insurance Program (SCHIP)
at a cost of more than $235 billion each year. These state-federal
programs provide access to health care to low-income, elderly, and
disabled individuals who otherwise would be unable to afford the
cost of health care. Both Medicaid and SCHIP limit cost-sharing
requirements. However, states can obtain waivers through the federal
government to implement beneficiary contributions beyond Medicaid
and SCHIP limits.
In
early 2000, program costs rose as states experienced major budget
shortfalls. In these tough budget times, many states have looked
to their Medicaid and SCHIP programs to implement changes that would
contain costs.
The
Kaiser Family Foundation report, “States
Respond to Fiscal Pressure: A 50-State Update of State Medicaid
Spending Growth and Cost Containment Actions,” found that
49 states and Washington, D.C., planned to undertake Medicaid cost-containment
in FY2004. Although cost-containment strategies have helped states
balance their budgets, in some cases these actions have had a negative
impact on beneficiaries, providers, and the health care system.
Increasingly,
states have raised beneficiary contributions to contain costs. According
to a recent GAO report, “Medicaid
and SCHIP: States’ Premium and Cost Sharing Requirements for
Beneficiaries,” 26 states reported charging premiums for
a portion of children in their SCHIP programs, while nine states
had cost sharing mechanisms for some children in their Medicaid
programs. For adults in Medicaid, 25 states charged premiums and
more than 40 states used cost sharing for a majority of the adults
in the program. The GAO also found that during fiscal years 2001
through August 1, 2003, 34 states increased beneficiary contributions
required in Medicaid, SCHIP, or both programs. A subset of states,
including Washington and Oregon, are reconsidering cost-sharing
requirements and studying their effects on access.
State
Examples
Washington
has a long tradition of providing health insurance coverage for
children. In 1987, it became one of the first states to expand enrollment
in Medicaid and other public programs to children through increasing
income eligibility beyond traditional limits. However, the recent
economic downturn and budget shortfalls have caused the state to
adopt cutbacks in Medicaid, SCHIP, and the Basic Health program,
a state-only plan that requires significant co-payments and premiums
for beneficiaries.
As
a result, in 2003 the Washington legislature substantially reduced
funding for public health coverage. They also decided to impose
premiums for some families beginning at 100 percent of the Federal
Poverty Level (FPL). Under this proposal, individuals with family
incomes from 100 to 150 percent FPL would be charged $15 monthly
premiums; those with incomes at 151 to 200 percent FPL would be
charged $20 monthly premiums; and those with incomes at 201 to 250
percent FPL would be charged $25 monthly premiums.
In
2004, however, the State Supplemental Budget authorized a reduction
in Medicaid premiums for categorically needy-optional children in
households with incomes between 151 percent and 200 percent FPL
to a $10 per month premium requirement. The budget also eliminated
premiums for categorically needy-optional children in families with
incomes at 100 to 150 percent FPL and established a three-child
family maximum (i.e. a $30 maximum monthly premium). Simultaneously,
children in SCHIP with incomes between 201 percent and 250 percent
FPL will have their premiums increased from $10 to $15 per month.
Adults in the Basic Health program face newly implemented changes
including a $150 per person deductible, a 20% coinsurance requirement
for certain services, a $1500 per person out of pocket maximum,
and increased office visit and pharmacy co-payments. These simultaneous
changes are important to consider because families whose children
are enrolled in Medicaid or SCHIP and whose adults are enrolled
in Basic Health will now be subject to premium requirements and
other cost-sharing for both adult and child family members.
A report
released in late April by the Working for Health Coalition, titled
"Wrong Target: Policies That Hurt our Kids and Cost us More,”
found that 45,000 children had dropped out of state-funded health
insurance programs in Washington in the last 16 months. The report
also states that the enrollment in these programs dipped when new
requirements and policies were put into place. Washington lawmakers
now face considerable backlash and criticism from children’s
advocates, physicians, and many others. Washington is currently
developing its own tools to measure the impact of the changes on
beneficiaries in the program.
On
June 8, 2004 Governor Gary Locke announced that he will postpone
collecting premiums from most low-income parents of children who
are enrolled in Medicaid. The new premium changes were scheduled
to go into effect July 1. The governor’s decision now extends
the effective date to July 2005.
As
one of the trailblazers of managing costs in public programs, Oregon
has had to think about the impact of its actions on low-income beneficiaries.
In 2002, while facing an estimated $2.5 billion deficit, the Emergency
Board of the Oregon legislature reduced benefits after just implementing
new cost-sharing requirements for the beneficiaries in the OHP (Oregon
Health Plan) Plus and OHP Standard health plans. The state's decision
to require co-payments for those enrolled in OHP Standard was made
in part after studying the Washington Basic Health Plan. Many providers
were skeptical about the implementation of such cost-containment
measures, but state officials contended that providing benefits
with reasonable co-payments is better than not providing coverage
at all. Through the Oregon Health Research & Evaluation Collaborative
(OHREC), officials have studied the impacts of these cost-containment
strategies on access, enrollment, and utilization of the beneficiaries
enrolled in OHP Plus and OHP Standard at the time of these changes.
The
findings thus far indicate that the changes affected enrollment,
utilization, and access. After implementation of the cost-containment
strategies, enrollment in the OHP Standard Plan decreased by 45
percent. Premium cost was the most common reported reason for loss
of coverage. OHREC also found that for those who lost coverage,
a significant portion (76 percent) remained uninsured. These changes
also had a direct impact on other parts of the health care safety
net: those who lost coverage were more likely to go to emergency
departments for care and to go without needed prescriptions.
Jeanene
Smith, M.D., Ph.D., from the Office of Oregon Health Policy and
Research will discuss these and other findings at the SCI
Summer Workshop for State Officials, along with Tricia Roddy
from the Maryland Department of Health and Mental Hygiene and Christy
Bonstelle from the Massachusetts Office of Medicaid. This session
will address recent changes in premiums and/or cost-sharing in public
programs, with particular attention to state research on how these
modifications are affecting public program take-up and utilization.
4.
Update: Premium Assistance Toolkit
State
Coverage Initiatives (SCI) and the Centers
for Medicare and Medicaid Services (CMS) are funding the development
of a series of Premium Assistance (PA) toolboxes in conjunction
with the National Academy for State
Health Policy (NASHP). The toolboxes are intended to help states
plan, design, and implement PA programs. The toolbox topics include:
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Planning a Premium Assistance Program;
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Costs to Implement the Program;
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Design of Benefits and Cost Sharing; and
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Redesign of the Eligibility Process.
Three
Opportunities to Learn More about Premium Assistance
1.
Making it Work: Tools for Successful Premium Assistance Programs
(Tuesday, August
3 – Wednesday, August 4, 2004)
In
conjunction with its annual state health policy conference in
St. Louis, August 1-3, NASHP is convening a meeting August 3rd
- August 4th, for people with day-to-day responsibilities for
planning, designing, or implementing their state’s PA program.
States with operational PA programs will provide technical assistance
to states that are close to designing or implementing one.
For
more information, e-mail Laurie Belden at NASHP (lbelden@nashp.org)
and include your full contact information.
2.
SCI Summer Workshop for State Officials:
"Pressing
Forward: Cuts, Coverage and Creativity"
Premium
Assistance – among other strategies to partner with employers
– will be the subject of a panel at SCI’s
summer workshop. Officials from Rhode Island and New Mexico
will discuss their different paths to PA and a broader discussion
will be held on the challenges and opportunities of this strategy.
State officials may register here.
3.
State Reports Database
More
than 100 reports written on or by states on the topic of PA are
in SCI's database (keyword: “premium assistance”).
5.
Cover the Uninsured Week Provides Tools and
Information on Uninsured
During
the week of May 10-16, 2004, The Robert Wood Johnson Foundation
(http://www.rwjf.org) (RWFJ) and its partners held the second Cover
the Uninsured Week (http://covertheuninsuredweek.org/). The week
began with a national kick-off event (http://www.connectlive.com/events/uninsuredweek/)
on Wednesday, May 5, in Washington, D.C., which included a host
of speakers, including RWJF President and CEO Risa Lavizzo-Mourey,
M.D., and Noah Wyle, star of NBC’s “ER” and the
campaign’s national spokesperson.
The
week included more than 2,000 events held in communities across
the country, including health and enrollment fairs for uninsured
Americans, interfaith events, and health coverage seminars for small
business owners. At the latter seminars, the Foundation distributed
its “Guide to Health Insurance Options for Small Business
Owners,” (http://covertheuninsuredweek.org/materials/business/BusinessGuide.pdf)
a document prepared by RWJF and the Healthcare Leadership Council,
with guidance from the U.S. Chambers of Commerce, America’s
Health Insurance Plans, and the Blue Cross and Blue Shield Association.
As
part of the week, the American College of Emergency Physicians released
a survey (http://covertheuninsuredweek.org/media/research/ERSurvey.pdf)
indicating that 72 percent of 2,000 emergency room doctors reported
that the number of uninsured people they have treated in the past
year has increased.
Co-chaired
by Presidents Gerald Ford and Jimmy Carter, this year’s nonpartisan
Cover the Uninsured Week was endorsed by nine former U.S. Surgeons
General and U.S. Secretaries of Health and Human Services.
6.
Safety
Net “Crowding Out” Private Health Insurance for
Childless Adults
The
health care safety net—which includes public hospitals, community
health centers, local clinics, and some primary health care physicians—is
“crowding out” (replacing) other insurance options for
unmarried childless adults nationally, according to a new findings
brief published by the Changes
in Health Care Financing and Organization (HCFO) program. The
brief summarizes research conducted by HCFO grantees Anthony Lo
Sasso, Ph.D., and colleagues at Northwestern University.
The
researchers examined the effect of uncompensated care provided by
clinics and hospitals on insurance coverage for two groups: children
under age 14, and unmarried childless adults age 18 – 64.
Although the researchers did not find evidence that children are
being crowded out of private or public coverage, they found that
adults with good access to safety-net services were less likely
to have health care insurance.
“Our
analysis provides a unified framework bringing together privately
offered insurance characteristics, Medicaid eligibility, and characteristics
of the local safety net to better explain and understand the health
insurance decisions of firms and individuals,” says Lo Sasso.
“We hope policymakers will use the information to craft policies
and provide incentives to providers to minimize distortions in the
private market while still providing care to those truly in need.”
AcademyHealth
is the national program office for HCFO.
7.
Database Captures Health Services Research Projects in Progress
The
Health Services Research Projects in Progress (HSRProj) database,
which is available online at www.nlm.nih.gov/hsrproj,
provides information about ongoing state, federal, and private grants
and contracts in health services research.
Users
can access a wealth of information about ongoing research including:
- Names
of performing and sponsoring agencies;
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Names and addresses of the principal investigator;
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Beginning and ending years of the project; and
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Details about study design and methodology, including demographic
characteristics of the study group, number of subjects in the
study population, population base of the study sample, and source
of the project data.
Records
are indexed with the National Library of Medicine's Medical Subject
Headings (MeSH®) and, when available, the National Institutes
of Health's CRISP (Computer Retrieval of Information on Scientific
Projects) keywords. Project descriptions are included whenever possible.
HSRProj
is a joint effort of AcademyHealth and the Cecil G. Sheps Center
at the University of North Carolina, with funding from the National
Library of Medicine. Visit www.academyhealth.org/hsrproj
to learn more.
8.
Coming
Soon from SCI
New
Products
Check
in with www.statecoverage.net for updates
on SCI’s latest publications. We have several issue briefs
in the pipeline, including those focusing on:
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States’ experiences with scaled-back benefits packages in
public and private markets (Isabel Friedenzohn, SCI);
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Viable reinsurance models (Deborah Chollet, Mathematica Policy
Research);
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Health Savings Accounts and their implications for states (Mila
Kofman, Georgetown University); and
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New ERISA developments and their implications for states (Pat
Butler, Consultant).
Look
for these products this summer and fall.
Save
the Date
SCI,
in collaboration with Rutgers
Center for State Health Policy, will host an invitational meeting
to help states navigate the Medicare prescription drug benefit.
The meeting is for state Medicaid and pharmacy assistance program
officials. It will be held on October 7 - 8, 2004,
in Philadelphia, and is funded by The
Robert Wood Johnson Foundation (through SCI and the Center
for Health Care Strategies), The federal Agency
for Healthcare Research and Quality, and The
Commonwealth Fund.
9.
Reports
of Interest
The
following are the most recently released reports on coverage, most
of which are additions to SCI's database of state reports. For a
complete list of available reports, visit the State
Reports Database.
Coverage
and Access of Adults in the District of Columbia: Key Facts
Henry J. Kaiser Family Foundation
May 2004
The
View of Small Business Owners
Georgia Healthcare Coverage Project
May 2004
Insuring
the Uninsured: Three Models for Financing Healthcare Coverage
Georgia Healthcare Coverage Project
May 2004
Medicaid
and SCHIP: States’ Premium and Cost Sharing Requirements
for Beneficiaries
United States General Accounting Office
March 2004
Rite
of Passage? Why Young Adults Become Uninsured and How New Policies
Can Help
The Commonwealth Fund
May 2004
Moving
Immigrants from a Medicaid Look-Alike Program to Basic Health
in Washington State: Early Observations
Henry J. Kaiser Family Foundation
May 2004
Employer
Sponsored Health Insurance in New York: Findings from the 2003
Commonwealth Fund/ HRET Survey
The Commonwealth Fund
May 2004
The
Cost of Care for the Uninsured: What Do We Spend, Who Pays, and
What Would Full Coverage Add to Medical Spending?
Henry J. Kaiser Family Foundation, Kaiser Commission on Medicaid
and the Uninsured
May 2004
Medicaid
and State Funded Coverage for Adults: Estimates of Eligibility
and Enrollment
Henry J. Kaiser Family Foundation, Kaiser Commission on Medicaid
and the Uninsured
April 2004
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