|
Items in cart [0] |
Questions? Call 888-624-8373 |
PAPERBACK PDF BOOK Free Resources |
||||||||||||||||
|
||||||||||||||||
|
|
|||||||||||||||
| ||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||
| Copyright © 2009. National Academy of Sciences. All rights reserved. Terms of Use and Privacy Statement |
Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter.
Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.
Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.
OCR for page 69
-I.
5
State Health Insurance
Making Affordable Coverage
Available to All Americans
SUMMARY DESCRIPTION
Demonstration projects in this category are intended to result in insurance coverage for nearly all
residents of a state. The Depa~l~ent of Health and Human Services (DHHS) would issue a Request
for proposals (RFP) to state governments (end U.S. territories) for undertaking two major activities:
(~) achieving increased availability of affordable insurance coverage through public and/or private
insurance programs, and (2) establishing a statewide electronic insurance enrollment clearinghouse.
A limited number of demonstration sites—perhaps three to five would likely be selected from the
applicants. The demonstration projects should be 10 years in duration, but with the expectation that
there will be measurable accomplishments within ~ ~ months.
The committee believes that a lO-year commitment by DHHS to these demonstration projects
would be necessary to encourage states to undertake the very significant efforts envisioned in the
areas of building public-private partnerships, developing information and communications technol-
ogy (ICT) infrastructure, and redesigning public insurance programs. Furthermore, in light of
currently severe state budget limitations, the federal government may need to contribute all or nearly
all of the increased funds required to conduct these demonstrations.
BACKGROUND
The number of people in the United States who were without health insurance during the entire
year of 2001 was 41.2 million, or approximately 14.5 percent of the population ~J.S. Census Bureau,
2002~. Although there was a slight drop in the number of uninsured people in the late i990s,
,
,~
OCR for page 70
f State Health Insurance
probably as the result of a particularly strong
economy, the number has been increasing
overall for more than a decade (Institute of
Medicine, 2001~.
When one considers the number of U.S.
residents who experience breaks in insurance
coverage of at least ~ month during a year, the
magnitude of the uninsured problem becomes
even greater. In 1996, 27.1 percent of noneld-
erly residents, or 62 million individuals, lacked
coverage at some point during the year
(Monheit et al., 2001~.
Since Medicare provides nearly universal
coverage for the elderly, almost all of the unin-
sured are individuals under age 65 (U.S. Census
Bureau, 2001~. The majority (67.3 percent) of
residents under age 65 who have some form of
health insurance obtain that insurance through
their employer (Fronstin, 2001~. Another
14.1 percent are enrolled in public insurance
programs, such as Medicaid and the State Chil-
dren's Health Insurance Program (SCHIP)
(Fronstin, 2001~. Eligibility requirements for
Medicaid and S CHIP vary from state to state,
but most have maximum income thresholds of
200 percent of the federal poverty level (FPL)
or less. (Centers for Medicare and Medicaid
Services, 20004. There is also a small proportion
(6.6 percent) of people who purchase individual
insurance policies (Fronstin, 2001~.
People may lose their coverage for all or
part of a year for a number of reasons: Toss of a
job where insurance was offered; loss of Medi-
caid or SCHIP eligibility once children grow up
or if the family income increases; Toss of one's
spouse because of separation, divorce, or death;
Toss of eligibility under a parents' plan upon
turning IS or graduating from college; situations
in which one's insurer or employer goes out of
business or an employer denies coverage; or an
inability to pay increasing premium costs
(Institute of Medicine, 2001~.
State efforts to date to cover the uninsured
have achieved some success in reducing the
total number of people without coverage. With a
large majority of states now offering public
coverage to children up to 200 percent of the
FPL, S CHIP has accomplished a significant
expansion of coverage of low-income children
(Centers for Medicare and Medicaid Services,
2002~. In addition, at least 18 states now offer
public coverage to parents up to the FPL, and a
few, using federal waivers, extend coverage to
low-income parents above the FPL (BroadJus et
al., 2001~. The experience of states such as
Wisconsin, Massachusetts, New Jersey, and
Rhode Island demonstrates that extending
coverage to parents allows public programs to
reach many more children as well (Dubay and
Kenney, 2002; Institute of Medicine, 2002; Ku
and BroadJus, 2000~. Only a handful of states
have significantly expanded coverage for low-
income childless adults (Mann, 2002~.
Eligibility for public programs is not
enough to ensure coverage, especially for chil-
dren. In 1999, three-quarters (6.S millions of the
estimated 9 million uninsured children who
were eligible for Medicaid or SCHIP were not
enrolled by their parents (Dubay et al., 2002~.
Some low-income parents (or guardians) may
also lack information on public programs for
which their children are eligible, or may find the
enrollment procedures too cumbersome.
As part of their expanded coverage for
adults, a small but growing number of states
offer premium assistance to help low-income
families afford the employee contributions
needed for coverage by private employers.
Rhode Island adopted a premium assistance
program after finding that its public program
expansion had reduced the state's uninsured
rate, but also resulted in unaffordable shifts
from private employer to public coverage
(Rhode Island Depa~l~ent of Human Services,
2002~. Oregon will use premium assistance as
the central focus for its pending expansions
(Crawford, 2002; Office for Oregon Health
Policy and Research, 2001~. There are also nu-
merous proposals under consideration by
federal policy makers to use tax credits to help
uninsured residents buy individual health insur-
ance; analyses indicate that this strategy would
likely help some uninsured, but alone would not
achieve coverage for all residents (Gabel et al.,
2002a; Hadley and Reschovsky, 2002~.
OCR for page 71
State Health Insurance
In spite of the many efforts made, states
generally have not been able to develop
approaches that facilitate stables continuous
coverage for the* residents. Changes in a
family's situation (new job, change to part-time
status) can cause changes in program eligibility,
coverage source, and consequently provider
relationships. Federal program structures and
eligibility rules sometimes require various
family members to enroll in different programs
offering different provider networks. Families
may be willing to participate in one program but
not another because of perceived differences in
programs. And the complexity and fragmenta-
tion of private and public coverage sources and
subsidies mean that many who need coverage
do not enroll at all. Frequent changes in cover-
age can create significant costs for families and
for the health care system as a whole as a result
of discontinuities in care management and treat-
ment, as well as administrative waste. State
expansion initiatives are probably fiscally frag-
ile because individual state economies are
vulnerable to economic downturns that lead to a
loss of private coverage (due to higher unem-
ployment), while at the same time increasing
demand;for public programs and reducing tax
.
revenues.
The committee believes that offering afford-
able insurance coverage to all residents should
rank among the highest of health care priorities,
even though it will not be easy to find solutions
to achieve this goal. Numerous options exist,
however, and should be explored (Meyer and
Wicks, 2001~. Strategies that maintain or even
increase private contributions to insurance
premiums will be needed, as will increased
public expenditures. Efforts must also be made
to stabilize or slow the rate of increase in the
cost of insurance.
GOALS
Demonstration projects in this category are
intended to achieve the following goals:
1. Coverage for all citizens and legal residents
in a state
Affordable insurance coverage avail-
able to all citizens and legal residents in
a demonstration state
Stable insurance coverage no breaks
in coverage and minimal switching
from one insurance program to another
Consumers having some degree of
choice of insurance carriers and plans
and geographically accessible providers
within a plan
Availability of comparative perform-
ance data for insurance carriers, plans,
and providers to inform consumer deci-
. . .
s1on ma. ong
Coverage that is fam~ly-centered, with
parents and children having the oppor-
tunity to be covered under the same
health plan
2. The right care at the right time
Shared responsibility for health (e.g.,
encouragement and support for healthy
behaviors and lifestyles)
Improved use of primary preventive
services (e.g., measurable improve-
ments in screening, early-stage diagno-
sis)
Better management of chronic condi-
tions (e.g., ongoing, coordinated care,
with emphasis on secondary and tertiary
prevention)
Improved patient satisfaction (e.g.,
fewer disruptions in clinician and
patient relationships, ease of access to
appropriate care providers)
3. Reduced clinical waste reductions in
redundant services (e.g.9 visits and ancillary
tests) that result from the lack of a consis-
tent source of care
4. Reduced administrative transactions
Fewer transactions resulting from
. .
c ranges in Insurance coverage
1~
OCR for page 72
~ State Health Insurance
Reduced redundancy in clinical record
keeping, resulting from fewer disrup-
tions in cTinician-patient relationships
5. Improved efficiency, resulting from an elec-
tronic clearinghouse for enrollment, eligibil-
ity verification, and billing and payment
processes
Reductions in paperwork
- Improved timeliness
6. Establishment of a strong public-private
partnership that provides a foundation and
mechanism for states to address other com-
munity health and health care issues
DEMONSTRATION ATTRIBUTES
Each demonstration would involve two
components: expansions of affordable insurance
coverage options through public anchor private
programs, and establishment of a statewide
electronic enrollment clearinghouse.
Coverage Expansions
Demonstration states would choose to
expand insurance coverage through either tax
credits to be applied to private insurance plans,
Medicaid/SCHIP expansions to cover families
and adults, or a combination of the two.
Although there is much interest in coverage
expansions (107th Congress, 2002), there has
been limited experience with these approaches
to date.
Tax Credit Approach. Under this
approach, the federal government would
provide support to a demonstration state to be
used for premium assistance. The state would
establish a program providing state tax credits
to uninsured individuals based on a sliding scale
tied to income. A demonstration state would
determine individual eligibility based on state
income tax filings, payroll taxes, or other infor-
mation.
There are many different options for design
ing a state tax credit program (Fuchs et al.
2002~. In general, there are two types of tax
credits- nonrefundable and refundable. A non-
refundable credit reduces the actual amount of
tax paid by the individual. It provides a "dollar
of subsidy for each dollar spent," but only up to
the amount of the individual's total income tax
liability (Fuchs et al., 2002~. A refundable credit
is not limited by tax liability, but rather,
amounts in excess of tax liability are payable to
the individual.
The size of the population reached by a tax
credit approach will depend on several factors,
including the type of tax credit selected, the
sliding income scale used to determine eligibil-
ity, and the design and amount of the tax credit.
A refundable tax credit is recommended in that
it has the ability to reach more uninsured indi-
viduals and to provide more assistance to those
in greatest need. Credits can even be provided
to individuals who do not have positive tax
liability.
The number of people affected will also be
influenced by the design of the tax credit and
income range over which it is available. There
are three basic designs: a fixed dollar amount
(e.g., $3000 per family as proposed by President
Bush), a percent of premium (e.g., 65 percent of
premium as contained in the COBRA Trade Ad-
justment Assistance Act just enacted), or a
percent of income (e.g., premium in excess of
5 percent of income). The tax credit would typi-
cally be limited to those with incomes below a
given level (e.g., up to 200 percent of poverty
or, alternatively, those in the 15 percent tax
bracket $27,000 for an individual and $46,700
for a family). A tax credit that ensures no family
pays more than 5 percent of income for a stan-
dard plan would likely achieve a modest partici-
pation rate, perhaps in the range of about 15 to
20 percent of those eligible (Ku and Coughlin,
1999~. In the case of a fixed dollar amount,
younger adults and families are more likely to
participate than older people because premiums
in the individual market would be much higher
for older adults (Gabel et al., 2002b). About
65-75 percent of premium assistance
(comparable to what employers contribute on
average to employees plans) would also induce
OCR for page 73
State Health Insurance
fairly high participation rates (e.g., 60 percent of
the unemployed uninsured) (Edwards et al.,
2002~.
To obtain a tax credit, individuals would be
required to enroll in an insurance plan approved
by the state. States should provide individuals
with at least some choice of insurance plans.
For example, a state might provide a choice of
two or three of the following options: employee
coverage, private or state purchasing pool, state
employee health plan, and individual insurance
plan. As a component of these demonstrations,
states should be able to ask DHHS to give unin-
sured individuals aged 62 and older the opportu-
nity to enroll in Medicare. The state tax credit
accompanied by a Medicare buy-in option
would minimize disruptions in coverage and
provider relationships, and would afford DHHS
an opportunity to assess the potential effects of
broader-based policy proposals (Shells and
Chen, 2001~.
Individuals who did not exercise their
choice of options (and who did not indicate a
desire to opt out) would be enrolled in a default
plan offering reasonable geographic access to
providers. Those individuals who received a tax
-
subsidy covering some but not all of their
premium would be expected to pay the remain-
ing portion or be disenrolled. Demonstration
states may need to establish a mechanism for
discouraging individuals from moving to the
state to obtain coverage (e.g., a requirement for
a 6- or 12-month employment history in the
state without coverage).
The tax credit approach has some appealing
characteristics, but there are also limitations.
Tax credits are a fairly flexible method of
providing varying levels of assistance to indi-
viduals depending upon need. If designed prop-
erly, tax credits can also work in a complemen-
tary fashion with employer-based contributions
to health insurance. However, one of the key
challenges is to set the credits at levels that
provide enough additional assistance to indi-
viduals to encourage them to enroll in a health
insurance program, while not having the unin-
tended consequences of reducing employer
contributions to premiums or increasing the
proportion of employers who choose not to
offer insurance coverage.
The tax credit approach can also be struc-
tured to encourage continuity of patient relation-
ships with health plans and providers. By allow-
ing the tax credit to be used towards any one of
several insurance options (e.g., Medicare buy-
in, employment-based coverage, individual
insurance plan, COBRA, Medicaid/SCHIP or
other state plan), changes in an individuals
income or employment status are less likely to
result in disruptions in insurance coverage or
provider relationships.
Lastly, the tax credit approach may provide
states with greater control and predictability
over health care expenditures than is the case
with expansions in public insurance programs.
Tax credit programs do not require states to
assume insurance risk or responsibility for the
provision of certain benefits to beneficiaries.
States can still afford some protections for bene-
ficiaries by restricting the use of tax credits to
the purchase of insurance from a selected set of
approved plans that meet certain minimum
requirements in terms of benefits, copayments,
and quality requirements.
Medicaid/SC H1P Expansions to Cover
Families. Under this approach, the federal
government would provide federal matching
support (at rates currently applied to SCHIP
beneficiaries) for a significantly expanded eligi-
bility program under a state Medicaid or SCHIP
program. Initially, a state would expand eligibil-
ity for its Medicaid or SCHIP program to cover
low-income parents of children enrolled in these
public programs (an approach sometimes
referred to as a family health insurance
program). Coverage of other uninsured family
members (older siblings) or family units
(childless couples or adults) might follow. Indi-
viduals in these public programs should be
enrolled for a minimum period of 12 months to
encourage greater stability of coverage (i.e.,
fewer gaps in enrollment and less switching
from one health plan to another).
Many factors would influence the approach
selected by states. For example, states that do
73 i
OCR for page 74
f State Health :Insurance
not have income taxes (i.e., Alaska, Florida,
Nevada, New Hampshire, South Dakota,
Tennessee, Texas, Washington, and Wyoming)
are less likely to pursue a premium assistance
approach. Some pioneering states already have
experience with demonstration projects that
involve coverage of modest-income parents and
children under Medicaid and SCHIP (Mann,
2002), and these states might choose to continue
pursuing this strategy to cover larger numbers
of the uninsured, including childless adults.
Regardless of the approach selected, there
should be a reasonable expectation for any
given demonstration project that nearly all resi-
dents in the state will have obtained health
insurance coverage within 3 years.
Although the intent is to give states a good
deal of flexibility in developing innovative ap-
proaches to expanding coverage, all demonstra-
tion projects should be designed to encourage
the following:
.
One plan per family—There is evidence
that both access and quality improve for
children and adults when the family is
enrolled in a single health plan (Institute of
Medicine, 2002~. Having a single health
plan helps simplify administrative matters
for both consumers and insurance programs,
and increases the likelihood of multiple
family members being able to obtain care at
common delivery sites or provider groups.
Demonstrations should be structured to
encourage one plan per family through such
options as enrollment of Tow-income
parents in the same Medicaid and SCHIP
program as their children, or use of
premium assistance options toward employ-
ment-based family coverage.
Evidence-based insurance package States
should be required to establish coverage
policies that are science-based, specifying
the types of services to be covered and
under what circumstances. The Agency for
Healthcare Research and Quality should be
provided the resources necessary to work in
a supportive capacity with the demonstra-
rem
lion states, providing syntheses of the evi-
dence on the effectiveness of various
approaches. Each demonstration state will
need to establish a mechanism to allow for
public dialogue and input into decisions
regarding coverage policies. Careful consid-
eration should be given to the identification
and inclusion of effective preventive,
mental health, and developmental screening
and treatment services.
.
A personal clinician Having a personal
clinician (primary care physician, specialist,
physician assistant, advanced practice
nurse) increases the likelihood of patients
obtaining the right care at the right time in
the right setting (Bindman et al., 1995; Star-
field, ~ 986, ~ 995~. Insurance programs and
health plans participating in the statewide
demonstration project should be encouraged
to ensure that each individual has access to
a designated personal clinician capable of
providing culturally appropriate services
(e.g., simultaneous language translation ser-
vices) (Youdelman and Perkins, 2002~.
Correspondingly, individuals should be in-
formed of their responsibility to seek care in
appropriate settings and to remain from use
of emergency departments for routine or
urgent care that is best provided in other
settings. Both patients and their personal
clinicians should be made aware of their
joint responsibility to ensure appropriate
access to and wise use of resources.
Fair payment Each insurance program
should provide adequate payments to
providers, and states should take immediate
steps to ensure that plans and providers
participating in state-sponsored programs
(i.e., Medicaid and SCHIP) receive ade-
quate payment. If payments to providers are
set too low, many may choose not to partici-
pate in public programs, thus impeding
access, and others may participate but not
provide all of the services from which
patients would likely have benefited. Over
time, the public and private insurers in the
various demonstration sites should also be
encouraged to identify innovative ways of
OCR for page 75
State Health :Insurance
providing payments to clinicians that
encourage and reward the provision of high-
quality care.
Electronic Enrollment Clearinghouse
During the first 18 months of each project,
the participating state would establish an elec-
tronic clearinghouse for eligibility verification
and insurance program enrollment. One of the
immediate benefits of the clearinghouse would
be the ability to check whether individuals have
insurance, and if not, to enroll them immedi-
ately in one of the insurance options made avail-
able through coverage expansions. The clearing-
house would not be the only method of enroll-
ing uninsured individuals. States enrollment
processes should also provide for applications to
be submitted by telephone, fax, or other means.
The clearinghouse would likely yield bene-
fits to consumers, clinicians, and insurers.
Consumers would benefit immediately from
faster and, in some cases, easier enrollment
processes. Current enrollment processes rely to
a great extent on the patient (or their provider
office) completing paperwork, which is then
mailed-or faxed to state offices. The paperwork
must be processed and a response sent to the
individual. The electronic process would be
faster and presumably less burdensome to
consumers and providers. The streamlined eli~i-
bility process would result in more timely
payment of providers, and over time, the clear-
inghouse might also be used for electronic bill-
ing and payment of claims. Lastly, insurers
would likely derive some benefits Tom the
clearinghouse, including ease of identification
of dual eligibles, and possibly reduced adminis-
trative costs associated with the eligibility deter-
mination and other business functions that
might be earned out using the electronic clear-
inghouse (e.g., provider payment, receiving and
responding to benefits coverage and utilization
review requests).
State governments should work in partner-
ship with private insurers, DHHS, and others in
designing and establishing the electronic clear-
inghouse. The clearinghouse is intended to be
used by both public (i.e., Medicare, Medicaid,
and SCHIP) and private insurance programs for
eligibility verification, enrollment, claims proc-
essing, and payment. The return on investment
in this infrastructure would increase if all insur-
ance programs participate, and the likelihood of
this happening would be higher if leading
private and public insurers are involved in the
design up front. During the first 6 months of the
demonstration projects, public and private insur-
ers would need to work closely on system
design issues. Processes for safeguarding confi-
dentiaTity and security would need to be estab-
lished, and these processes should meet all legal
and regulatory requirements for privacy
imposed by the Health Insurance Portability and
Accountability Act of 1996 (HIPAA) and other
statutes. It is not necessary for all insurers to
adopt uniform eligibility, claims processing,
payment, and other processes, but some degree
of standardization or mapping of key data
elements to a reference standard would be nec-
essary. DHHS should play a very active role in
this process to promote the development and
use of national standards where appropriate (see
Chapter 4 for a discussion of data standards).
The enrollment network should be capable
of verifying eligibility for coverage under vari-
ous insurance programs by accessing relevant
sources of information, such as state income tax
records and payroll records, as well as enroll-
ment information submitted by individuals
seeldng coverage (with retrospective verifica-
tion of income and other information). Health
care delivery sites should have connectivity to
the clearinghouse for purposes of eligibility
verification and immediate enrollment of unin-
sured patients in insurance programs (although
consumers, often with the assistance of their
providers, would still have the option of seeking
enrollment by telephone, fax, or mail).
Although the intent is to use the clearing-
house to enroll individuals in an insurance
program automatically, each demonstration
state should carefully consider options for
providing consumers with some degree of
choice of insurance carriers and plans. There
should also be a mechanism for consumers to
OCR for page 76
~ State Health Insurance
opt out of insurance coverage for religious or
other personal reasons; however, states should
design policy approaches so that those without
coverage will constitute a very small percentage
of the currently insured population.
It is anticipated that over time, the elec-
tronic cieannghouse would evolve into a more
general ICT platform and be used for many
purposes. As noted above, electronic billing and
payment functions might be added within a few
years of demonstration start-up. The platform
might also serve as a vehicle for providing clini-
cians and consumers with information on bene-
fits, clinical evidence, and public health
concerns. Ultimately, the platform might serve
as a vehicle for accessing patient-level clinical
information (e.g., laboratory and imagine
results, prescription medications, emergency
department visits, specialist encounters) and for
ordering ancillary services, prescribing medica-
tions, referring patients to specialists, and
admitting patients to hospitals (with appropriate
confidentiality protections). Although the focus
of these demonstrations is intended to be on
expanding insurance coverage, participating
states should give some consideration to these
potential future applications of the clearing-
house~during the planning phase (see Chapter 4
for a discussion of the many applications of a
comprehensive ICT infrastructure).
In establishing their clearinghouse, demon-
stration sites should be encouraged to learn
from other programs already under way. One
innovative project is the New England Health-
care EDI [electronic data interchange] Network
(REHEM), a consortium led bv Computer
Science Corporation that has been operational
since 1998 (New England Healthcare EDI
Network, 2002~. Membership is open to provid-
ers, health plans, and payers in Massachusetts
and Rhode Island. There are currently 14
members, including most of the region's largest
insurers and health plans.
NEHEN provides members with access to a
secure high-speed network for sending and
receiving transactions. Members can either inte-
grate NEHEN functions directly into their own
management systems or access the NEHEN
1~
network using NEHENLite, a Web-based appli-
cation. Members pay a flat monthly fee (which
is not transaction-based) to cover the cost of
managing and coordinating the consortium's
activities and the development of common work
products. All intellectual property created for
NEHEN is shared among the members.
NEHEN's primary focus is on administra-
tive simplification. The initial pilot project,
which started in June 1998, involved checking
insurance eligibility in real time for every
patient encounter to reduce both claim denial
rates and claim rework effort. A pilot is now
under way to integrate Medicaid into the
system. Another pilot project involves authori-
zation for specialist referrals. Developmental
efforts are also under way to address claims
processing, including submission, inquiry, and
remittance.
IMPLEMENTATION ISSUES
For the demonstration projects in this cate-
gory to be successful, key implementation
issues should be addressed. Specifically, the
demonstrations should have adequate and stable
long-range financial support and cooperation
from both the public and private sectors.
Financial Support
Regardless of the approach selected by a
demonstration site, increased federal and state
financial support would be necessary. There
should also be an ongoing federal commitment
to the Tong-term goal of making affordable
coverage available to all residents.
The executive branch has a considerable
ability to restructure Medicaid and S CHIP pro-
grams through Section Ills waivers (Kaiser
Commission on Medicaid and the Uninsured,
2001). Over 20 percent of federal Medicaid
spending is in support of Section l l 15 demon-
strations. Those demonstrations have been used
to extend coverage to groups not eligible under
current law (e.g., low-income nonelderly, non-
disahled adults without children); provide
OCR for page 77
State Health Insurance
targeted benefits to specific groups (e.g., access
of Medicare beneficiaries to Medicaid prescrip-
tion drug discounts, family planning services for
low-income women not otherwise eligible for
Medicaid, and coverage for people with HIV
who would not otherwise qualify for Medicaid
because their disease has not progressed to the
point where they are considered disabled); and
implement changes in managed care and other
delivery systems (e.g., mandatory managed care
enrollment, substate programs that modify pay-
ment and care delivery, special management
programs for those dually eligible under Medi-
care and Medicaid) (Kaiser Commission on
Medicaid and the Uninsured, 2001~.
It is quite likely that congressional enabling
authority and financial support would be needed
to conduct some or all of the proposed demon-
strations. The proposed demonstration projects
differ from earlier efforts in three ways:
· Magnitude of change- The objective of the
proposed demonstration projects is to
achieve coverage for all or nearly all resi-
dents in a state. Other demonstrations to
date have been important in extending
coverage to certain groups of the uninsured,
but';modest in scope overall.
Fundamental change in enrollment proc-
esses—The proposed demonstration projects
include the development of an electronic
clearinghouse that will remove adm~nistra-
tive bamers to enrollment and improve the
timeliness and efficiency of processes for
eligibility verification and enrollment. ~
.
.
Not budget neutral To date, nearly all
Section ~ ~ 15 waivers have been granted for
budget-neutral demonstrations (Kaiser
Commission on Medicaid and the Unin-
sured, 2001~. Given the proposed scope of
the demonstration projects, it is unrealistic
to expect that they would be budget neutral.
.
Ongoing flexibility to achieve goals-
Approval for demonstration projects has
traditionally been provided for detailed
program policy structures that are inflexible
once approved. Given the scale of the
proposed demonstrations, it is unrealistic to
expect a state to identify a priori the best
combination of policies and approaches for
achieving the demonstration goals within
budget constraints. Participating states
should have the latitude to adjust program
policy structures to achieve overall cover-
age goals. To ensure accountability and
facilitate evaluation, changes should be
reported prospectively to DHHS.
Although it was beyond the scope of this
project to provide detailed estimates of the
impact of the proposed demonstration projects
on expenditures, it is a virtual certainly that
overall costs would increase at both the federal
and state levels, and that these would be ongo-
ing expenditures. Federal support for the elec-
tronic clearinghouse would represent one-time
start-up funding (once operational, the clearing-
house could be supported by very modest user
fees). Of far greater significance, the federal
government would need to provide ongoing
support for expanded enrollment in Medicaid
and S CHIP (at the enhanced SCHIP matching
rate) and/or to offset the cost of state tax credits
to the uninsured for premium assistance. The
federal government could provide this addi-
tional support in the form of a block grant to a
state tied to a state commitment to expand
coverage to a prespecified number of individu-
als, or through existing Medicaid funding chan-
nels accompanied by flexibility to use the
federal matching dollars to assist with paying
premiums for private-sector plans.
State Medicaid and SCHIP expenditures
would increase as enrollment expands, and
states would presumably bear some of the costs
~ A bill (HR 5233) to promote Internet enrollment systems in S CHIP and Medicaid was introduced in the U.S.
House of Representatives on July 25, 2002. If passed, the bill would make available $50 million to the
Secretary of Health and Human Services for providing grants to states to establish Web-based enrollment
systems.
OCR for page 78
~ State Health Insurance
of providing premium assistance to the unin-
sured enrolled in private insurance plans. To
secure state participation, it might also be neces-
sary for the federal government to identify a
mechanism for providing additional support to
states during economic downturns (i.e., counter-
cyclic funding). Extension of coverage to the
uninsured would likely yield many benefits to
the community, including improved health
status (which in some cases may reduce health
care costs) and increased worker productivity.
In all likelihood, there would also be some
offsets to the insurance expansion program,
such as less need for disproportionate share
hospital payments and reduced tax wnte-offs for
uncompensated care on the part of for-prof~t
providers (Garson, 2000~.
Steps should also be taken to ensure that the
necessary information is gathered to enable
evaluation of the effects of these demonstra-
tions. Additional investments in expanding
coverage would be sizable. The committee
believes that the benefits to individuals and
communities would also be sizable, but this
belief should be substantiated through rigorous
evaluation of the impact of expanded and stable
coverage on (1) health status improvements;
(2) the "health, social, and financial stability of
families; (3) timely and appropriate use of
preventive, acute, and chronic care; and
(4) enhanced productivity of workers and school
participation of children.
Public- and Private-Sector
Cooperation
Given the magnitude of change involved in
these demonstrations, it would be important to
build a broad base of private- and public-sector
support. Prior to the start of the demonstration
projects, efforts should be made to secure the
support of the business community at the
national, state, and local levels. DHHS and the
Department of Labor, working with the
National Governors Association, the National
Business Coalition on Health, the Business
Roundtable, and the Leapfrog Group, should
convene leaders from the business community
and state governments to discuss the importance
of the demonstration projects. Other groups that
might play an important role in building a broad
base of support for and providing ongoing infor-
mation about the demonstrations include the
National Academy for State Health Policy, the
National Association of insurance Commission-
ers, and the National Conference of State
Legislatures.
In each demonstration site, the support of
the business community and private insurers
would be critical to success. Regardless of the
approach selected by a state, the insurance
expansions should be accomplished in a way
that preserves the current levels of contributions
from private employers and employees. Reaping
the full benefits of the electronic clearinghouse
would require the full (or nearly full) participa-
tion of all insurers. Although the tax credit
approach is not an employer mandate, the
success of this approach would depend on the
willingness of employers, both self-insured and
non-self-insured, to work voluntanly with the
state to encourage the enrollment of individual
employees and their families in employer-
sponsored plans.
REFERENCES
107th Congress, 2nd Session. 2002. H.R. 3009:
Trade Act of 2002. Public Law No: 107-210.
Bindman, A. B., K. Grumbach, D. Osmond, M.
Komaromy, K. Vranizan, N. Lurie, J. Billings,
and A. Stewart. 1995. Preventable Hospitaliza-
tions and Access to Health Care. JAMS 274
(4~:305-1 1.
Broaddus, M., S. Blaney, A. Dude, J. Guyer, L. Ku,
and J. Peterson (Center on Budget and Policy
Priorities). 2001. "Expanding Family Coverage:
States' Medicaid Eligibility Policies for Working
Families in the Year 2000 (Revised February 13,
20021.~' Online. Available at http://www.cbpp.
Org/1-2-02health.pdf [accessed Sept. 3, 20023.
Centers for Medicare and Medicaid Services. 2000.
"State Children's Health Insurance Program
(SCHIP) Aggregate Enrollment Statistics for the
50 States and the District of Columbia for Fed-
eral Fiscal Year (FFY) 2000." Online. Available
OCR for page 79
State Health Insurance
at http ://www.hcfa. gov/init/fy2000.pdf
[accessed Oct. 16, 2001~.
Centers for Medicare and Medicaid Services. 2002.
"The State Children's Health Insurance Program
Quarterly Enrollment Report, Second Quarter
Fiscal Year 2002: January 1, 2002 - March 31,
2002." Online. Available at htip://www.cms.hhs.
gov/schip/fyO2sqer.pdf [accessed Aug. 13,
20023.
Crawford, H., Oregon Department of Human Ser-
vices. 2002. "Changing the Oregon Health
Plan." Online. Available at http://www.
statecoverage.net/statereports/or24.pdf [accessed
Sept. 4, 2002~.
Dubay, L., J. M. Haley, and G. M. Kenney. 2002.
Children's Eligibility for Medicaid and SCHIP:
A View From 2000. New Federalism: National
Survey of America's Families, Vol. Number B-
41. Washington, D.C.: Urban Institute.
Dubay, L. and G. M. Kenney. 2002. Expanding Pub-
lic Health Insurance to Parents: Effects on Chil-
drenis Coverage Under Medicaid. Washington,
D.C.: Urban Institute.
Edwards, J. N., M. M. Doty, and C. Schoen. 2002.
The Erosion of Employer-Based Health Cover-
age and the Threat to Workers' Health Care:
Findi;ngs From the Commonwealth Fund 2002
Workplace Health Insurance Survey. New York
NY: The Commonwealth Fund.
Fronstin, P. 2001. Sources of Health Insurance and
Characteristics of the Uninsured: Analysis of the
March 2001 Current Population Survey. Issue
Brief 240. Washington, D.C.: Employee Benefit
Research Institute.
Fuchs, B., M. Merlis, and J. James. 2002. Expanding
Health Coverage for the Uninsured: Fundamen-
tals of the Tax Credit Option. NHPF Back-
ground Paper. Washington, D.C.: National
Health Policy Forum.
Gabel, J. R., K. Dhont, and J. Pickreign. 2002a. Are
Tax Credits Alone the Solution to Affordable
Health Insurance? Comparing Individual and
Group Insurance Costs in 17 U.S. Markets. New
Yorlc, NY: The Commonwealth Fund.
Gabel, J. R., K. Dhont, H. Whitmore, and J. Pick-
reign. 2002b. Individual Insurance: How Much
Financial Protection Does It Provide? Health
A~6Millwood) Web exclusive.
Garson, A., Jr. 2000. The US Healthcare System
2010: Problems, Principles, and Potential Solu-
tions. Circulation 101 (16~:2015-6.
Hadley, J. and J. D. Reschovsky (Center for Study-
ing Health System Change). 2002. "Tax Credits
and the Affordability of Individual Health Insur-
ance (Issue Brief Number 53 - July 2002~."
Online. Available at http://www.hschange.conn/
CONTENT/458/ Accessed Sept. 4, 2002~.
Institute of Medicine. 2001. Coverage Matters:
Insurance and Health Care. Washington, D.C.;
National Academy Press.
.
. 2002. Health Insurance Is a Family Matter.
Washington, D.C.: National Academy Press.
Kaiser Commission on Medicaid and the Uninsured.
2001. "Medicaid "Mandatory" and "Optional"
Eligibility and Benefits." Online. Available at
http://www.kff.org/content/2001/2256/2256.pdf
[accessed Sept. 4, 20024.
Ku, L. and M. Broaddus (Center on Budget and Pol-
icy Priorities). 2000. "The Importance of Fam-
ily-Based Insurance Expansions: New Research
Findings About State Health Reforms." Online.
Available at http://www.cbpp.org/9-5-OOhealth-
rep.pdf "accessed Sept. 5, 2002~.
Ku, L., and T. A. Coughlin. 1999. Sliding-Scale Pre-
mium Health Insurance Programs: Four States'
Experiences. Inquiry 36 (4~:471-80.
Mann, C. (The Kaiser Commission on Medicaid and
the Uninsured). 2002. "The New Medicaid and
CHIP Waiver Initiatives." Online. Available at
http://www.kff.org/content/2002/4028/4028.pdf
Accessed Sept. 4, 20023.
Meyer, J. A. and E. K. Wicks. 2001. Covering Amer-
ica: Real Remedies for the Uninsured. Washing-
ton DC: Economic and Social Research Insti-
tute.
Monheit, A. C., J. P. Vistnes, and S. H. Zuvekas.
2001. Stability and Change in Health Insurance:
New Estimates From the 1996 MEPS. MEPS
Research Findings No. 18. AHRQ Pub. No. 02-
0006. Rockville, MD: Agency for Heal~care
Research and Quality.
New England Healthcare EDI Network. 2002.
"NEHEN lIomepage." Online. Available at
http://www.nehen.net Accessed July 30, 20023.
Of lice for Oregon Health Policy and Research. 2001.
"SCHIP Funding for Employer-Sponsored In-
1~
OCR for page 80
State Health Insurance
surance: Federal Issues and Barriers Encoun-
tered. A Briefing Paper." Online. Available at
http :llwww. ohpr. org/hrsa/Briefs/
SCHIPforFHIAP.pdf [accessed Sept. 4, 20021.
Rhode Island Department of Human Services. 2002.
"RIte Care and RIShare." Online. Available at
http: llwww. dhs. state . ri.us/dhs/famchild/shcare.
him [accessed Sept. 4, 20024.
Shells, J. and Y. J. Chen. 2001. Medicare Buy-In Op-
tions: Estimating Coverage and Costs. New
Yorlc, NY: The Commonwealth Fund.
Starfield, B. 1986. Primary Care in the United States.
Int J. Health Serv 16 (2~:179-98.
. 1995. Access Perceived or Real, and to
What? SIGMA 274 (4):346-7.
U.S. Census Bureau. 2001 . "Health Insurance Cov-
erage: 2000." Online. Available at http://www.
census.gov/hhes/www/hlthin00.html [accessed
July 26, 20021.
- . 2002. "Health Insurance Coverage: 2001."
Online. Available at ht~://www.census.gov/
prod/2002pubs/p60-220.pdf "accessed Sept. 30,
2002].
Youdelman, M. and J. Perkins. 2002. Providing Lan-
guage Interpretation Services in Health Care
Settings: Examples From the Field. New York,
NY: The Commonwealth Fund.
80
Representative terms from entire chapter:
tax credit
