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States move ahead: Tired of waiting for national health care reforms
Not believing that a national solution to a number of pressing health care problems is likely to come soon, states are moving ahead with a variety of reform initiatives to meet local needs.
"Governors cannot wait for federal solutions to the rising cost of health care and the growing number of uninsured," says Molly Voris, senior policy analyst with the National Governors Association's Center for Best Practices. "As a result, health care reform efforts at the state level have been a priority for governors in recent years. States are approaching health care reform broadly and are aiming to improve cost containment efforts through quality improvement and measurement, incorporating prevention and wellness into their health plans, and using information technology to further improve care delivery."
Ms. Voris tells State Health Watch that she can't comment on the viability of states making reforms on their own rather than pursuing a national solution, but still notes that each state is unique in its reform needs and thus states are approaching reform from a variety of perspectives.
Governors are mindful of the likelihood that their states will again face an economic downturn some time in the future and are trying to avoid expenditures that will have to be cut back at that time, she says. "Governors are looking at broader reform efforts and not just coverage expansion," she says. "They are looking at wellness and at quality improvement and measurement. They are making efforts to improve the overall health care system and are looking for ways to save money."
According to Ms. Voris, states are exploring three main areas of reform to improve coverage and care within their health care systems:
1. Innovative coverage approaches using both public and private expansions. Public expansions involve using Medicaid and SCHIP programs to expand coverage to populations that would otherwise likely be uninsured, particularly children with slightly higher incomes. The private expansions use state dollars to provide incentives and subsidies for small businesses to make it more feasible for them to provide health insurance to their employees. States also are using premium assistance programs to help low-income workers buy their employer-sponsored insurance, and are setting up and contributing to health savings accounts to allow individuals to purchase their own health care services.
2. Reforming the private insurance marketplace. States are approaching reforms, Ms. Voris says, by requiring employer participation to discourage employers from dropping the health insurance they offer to their workers, and requirements that individuals have health insurance or face a penalty. Through tax incentives, states are encouraging employers to set up Section 125 plans to allow their workers to deduct their health insurance premiums with pretax dollars. States also are using a connector model that provides access to more affordable and portable insurance, as well as allowing a greater choice of insurance products for those not receiving their insurance through their employer. Some states are creating state-defined benefits packages to ensure individuals are receiving basic health services through private insurers.
3. Improving the health care system. Through quality improvement and measurement, states are using methods such as pay-for-performance, adoption of standard quality measures, and development of electronic data exchange to improve the efficiency and quality of patient care. They also are incorporating prevention and wellness benefits into reform plans and insurance regulations to improve the cost effectiveness of care by treating preventable diseases earlier and improving coverage value.
Numerous states have implemented or are considering expanding the Medicaid and SCHIP programs to include uninsured individuals who would otherwise not qualify. States have used both state and federal funds to expand eligibility by increasing income and asset levels or expanding the categories of individuals who qualify for programs. Other states have offered buy-in programs allowing the uninsured with slightly higher incomes to purchase health insurance coverage through Medicaid or SCHIP.
Individual states take action
Illinois' All Kids Program (see related story at the end of this article) was implemented to offer affordable health insurance with a Medicaid-like benefit package to all children in the state. To qualify, individuals must have been without health insurance for 12 months. Cost-sharing amounts are based on a sliding scale except for preventive care, which has no copayments.
Wisconsin's Badger Care Plus health reform proposal focuses on covering all children, providing coverage and enhanced benefits for pregnant women, making the program simple, and promoting prevention and healthy behaviors. Badger Care Plus combines several existing programs into one comprehensive program
Since low-income workers frequently are not offered insurance through their employers or are unable to afford the coverage that is offered, some state initiatives are aimed at increasing access to affordable health coverage in the private insurance market, mainly through employer-sponsored insurance. Several state plans provide incentives to small businesses to offer coverage to their employees and subsidize premiums for low-income workers. Other states are offering premium assistance to allow low-income workers to buy their employer-sponsored insurance. And some states are setting up and contributing to health savings accounts for low-income individuals, while others are providing incentives for small businesses that set up health savings accounts for their employees.
The Oklahoma Employer/ Employee Partnership for Insurance Coverage (O-EPIC) program was created to assist small businesses in offering their employees health insurance. Participating employers with 50 or fewer employees must contribute 25% of the employee's premium and must offer a qualified O-EPIC plan. Qualifying plans are required to cover state-defined basic benefits and have maximum out-of-pocket spending limits. The state subsidizes the cost of the coverage to ensure affordability.
The Healthy NY program in New York State offers affordable health insurance options to small employers, providing businesses with 50 or fewer employees access to state-defined benefit packages. Plan costs are state-subsidized. Employers must have a 50% participation rate and must contribute at least 50% of the employee's premium.
Under the Insure Montana initiative, tax credits and subsidies to make health coverage more affordable are available for both small business employees and employers. A tax credit is available for small businesses with fewer than 10 employees who currently offer and contribute toward their employees' health insurance costs. On average, participating small businesses receive a credit of up to $100 per month per employee.
Utah's Premium Partnership for Health insurance program is designed to help residents pay for employer-based health insurance that would otherwise be too costly. It is available to employees with low incomes who are eligible for their employer's plan but do not currently have health insurance. Eligible individuals can receive up to $150 for their monthly premium and up to $100 per month for each child. Enrolled children also have options for dental coverage. Utah law requires employers to pay half of their employees' premiums.
Minnesota is modernizing existing public programs and increasing subsidies for private coverage rather than the state-managed MNCare program for children in families with income above 200% of poverty. The state will develop a standard benefit package, to be known as MNCare II, which will be offered in the private market to ensure basic services are covered and coverage is affordable. The governor's plan requires insurers with more than 3% of the individual market to offer the MNCare II package. Insurers are free to modify the benefit to make it more attractive to parents of children who may be enrolled. Minnesota also is creating the Minnesota Health Insurance Exchange through which employers will be able to give their employees access to health care coverage. The Exchange also will cover the individual insurance market. It will monitor products to ensure they meet basic requirements and will collect premiums and remit them to plans to reduce the administrative burden for individuals and employers.
Texas is considering a premium assistance program to help low-income uninsured working adults gain access to affordable health insurance. The state will offer varying levels of premium assistance based on a sliding scale. Participating plans must be certified by the state. The plans include a minimal deductible and co-payments, which can be paid for by individuals out of a health savings account established by the state.
Indiana has created the Healthy Indiana Plan for adults and pregnant women with incomes below 200% of poverty. Participating individuals will have a Personal Wellness Responsibility (POWER) account that acts as a health savings account, with $1,100 to cover the deductible. A private health insurance plan approved by the state is available to individuals after they have met the deductible and includes services such as preventive care and disease management. The plan also includes $500 for preventive care such as physical examinations, screenings, chronic disease management, and smoking cessation.
A Kansas small employer health insurance credit offers small businesses a tax credit for offering and contributing to health savings accounts for their employees. The credit is available to businesses with fewer than 50 employees that have not contributed to their employees' health insurance over the past two years. The enhanced credit for newly contributing employers is $70 per member per month in the first year, phasing down to $35 per member per month in the third year and ending after the third year.
Some states are reforming the private insurance marketplace to make health insurance more affordable. Thus, Massachusetts is requiring employers with more than 10 employees to offer insurance or pay a portion of their employees' health insurance premiums and also offer employees the ability to pay health insurance using Section 125 tax-free deductions of premiums. Massachusetts also is implementing a plan to insure every state resident. The plan includes an individual mandate and a way to fine residents through the state income tax if they are found to not have insurance. And the Massachusetts Commonwealth Health Insurance Connector Authority is offering small businesses and individuals an opportunity to buy affordable health insurance through a large purchasing pool.
Vermont employers are required to pay $365 annually for each full-time employee if the employer does not offer insurance, only offers insurance to some workers, or some employees remain uninsured. This will be required of all employers with nine or more employees in 2007 and spread to employers with five or more employees starting in 2010. Also, individuals without access to an employer-sponsored insurance plan in Vermont will be offered the Catamount Health plan, provided by private insurers that must offer a standard set of state-defined benefits.
Maine Gov. John Baldacci wants to make the state's Dirigo Health Plan a self-insured plan that will be more affordable for small businesses and uninsured individuals.
Tennessee's CoverTN program offers affordable and portable health insurance to employers with 25 or fewer full-time employees that offer the plan to all employees and agree to pay one-third of employees' premiums. Participating employers are required to set up Section 125 plans for employees to have the pretax deduction of insurance premiums.
Missouri Gov. Matt Blunt is redesigning the state's Medicaid program and is reforming the health care system by requiring purchase of insurance premiums with tax-free dollars through Section 125 plans established by employers.
Michigan's uninsured will have access to private sector insurance plans offered by a newly created Exchange, which will administer the program. The Exchange will set a minimum benefit package with flexibility to be able to offer a range of services at various premium levels.
Connecticut Gov. M. Jodi Rell has introduced the Charter Oak Health Plan to create a public-private partnership offering a state-defined benefit package through private insurers.
Although most state-led health reform initiatives have concentrated on coverage efforts, Ms. Voris says, there also are components intended to improve the quality of the health care system as well as the overall health of the population.
Using coverage expansion and Medicaid redesign as vehicles, many states have incorporated quality improvement and measurement into their reform plans to improve efficiency and patient care, according to Ms. Voris. States are using quality standard measures to evaluate the care providers are delivering. States also are using pay-for-performance measures to increase quality of care. And several states are taking steps toward interoperability with electronic data systems by developing a system for electronic data exchange, including electronic health records. "Health information technology advancements help to eliminate duplicative care, reduce medical errors, and increase efficiency with the exchange of real-time medical data," she says.
Minnesota has created QCare (Quality Care and Rewarding Excellence) as a quality standard that will be used to reward top performing providers. QCare will initially set standards for four areas where many of the state's health care dollars are spent—diabetes, hospital stays, preventive care, and cardiac care. The state Department of Health says if QCare standards are met, more than $153 million in health care costs will be saved annually.
North Carolina's Medicaid Community Care is a managed care program emphasizing quality improvement by adopting standards determined by an advisory group, including for asthma and diabetes care.
Prescription for Pennsylvania will focus on improving patient safety by reducing hospital-acquired infections and targeting avoidable medical errors. The state also will promote use of a proven national model that manages treatment for chronic conditions such as heart and lung disease, diabetes, and asthma.
Washington Gov. Christine Gregoire is taking a comprehensive approach to quality with creation of the Washington Quality Forum to address disparities in care based on the location care is received, expansion of chronic care management in all state health programs, and direction to state agencies to change state contracts and reimbursement to pay for performance and promote prevention.
States also are including wellness and health promotion benefits in many reform plans, state employee insurance plans, Medicaid redesigns, and small group and individual markets.
Rhode Island created a wellness health benefit plan that insurers are required to offer to employers with fewer than 50 workers and individuals purchasing health plans.
A proposal by California's governor would encourage healthy lifestyles and behaviors by providing rewards in the Medi-Cal, Healthy Families, and CalPERS public employee programs.
Nebraska has established a steering committee and advisory committee to improve the health of state employees. The program made a health appraisal survey available to state employees and is addressing the need for improved physical activity, nutrition, and smoking cessation.
Illinois extends coverage to 'All Kids'
In the summer of 2006, Illinois implemented its All Kids initiative that uses all state funds to build on the Medicaid and SCHIP programs to offer coverage to all uninsured children regardless of income, health status, or citizenship. Within a few months of implementation, 50,000 previously ineligible children were added to the rolls of the insured.
A Kaiser Commission on Medicaid and the Uninsured case study on the program says under All Kids, families can purchase insurance on a sliding income basis. The entire Medicaid, SCHIP, and state-only programs now cover 1.3 million children under the All Kids umbrella.
Illinois officials, advocates, and observers interviewed for the case study attribute some of the program's obvious success to the state's considerable outreach efforts that involved innovative strategies including an application agent initiative in which community organizations, medical providers, and insurance agents helped individuals complete applications. The state's consumer-friendly application also was cited as a major reason for the program's early enrollment success. And another important factor is All Kids' availability to all children in the state, making it easy to market and easy for families to understand.
Kaiser says state officials had to deal with several program issues in putting the program together. Thus, because it is available to children at all income levels, the state wanted to deter employers from dropping dependent coverage and families from dropping private coverage to enroll their children in All Kids. The solution they chose was a 12-month uninsurance waiting period for children in families with income over 200% of the federal poverty level, although they also provided several exceptions such as children who lost coverage because a parent lost a job for any reason.
Setting appropriate cost-sharing
Another challenge, the case study says, was how to set cost-sharing to emphasize preventive care and make it affordable for low-income families. At the same time, for higher-income families who typically have other insurance options, officials wanted premiums to be sufficiently high to prevent All Kids from "crowding out" private coverage. Under All Kids, no cost-sharing is imposed for preventive medical and dental care, regardless of income, and cost-sharing is designed so the program is "very affordable" for low-income families. For higher-income families, All Kids premiums were set to be comparable to those in the commercial market.
One of the greatest challenges for the program will be to maintain and sustain its funding, which is intended to come from projected savings from two new managed care initiatives—a primary care case management program and a disease management program. Those two programs are projected to save $57 million a year, which would cover the estimated $25 million first-year costs for All Kids.
Kaiser says the bulk of Illinois' Medicaid and SCHIP populations, along with All Kids expansion children, will be required to enroll in the primary care case management program when it is fully implemented, and about 200,000 high-cost Medicaid beneficiaries are targeted for the disease management program.
The case study reports the two case management programs have experienced some implementation problems and it remains to be seen whether the projected savings will materialize to support All Kids in future years. Another important issue, it says, is whether the program offers meaningful universal coverage to children. Given premiums for higher-income families purposefully were set high, a question is whether All Kids offers true coverage to all children, particularly those with higher family incomes.
Download the case study report at www.kff.org/uninsured/upload/7677.pdf.