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May 2007

New State Updates

New York: In April 2007, the State of New York enacted its 2007-2008 budget. Health care featured prominently in the budget debate and the final budget included several important health provisions including:

  • Expansion of Child Health Plus (CHPlus) to children in families with incomes up to 400 percent of the federal poverty level (FPL) – the current eligibility level is 250 percent FPL. The state expects that most of its estimated 400,000 uninsured children will now have access to insurance;
  • Streamlined enrollment for the adult populations covered under Medicaid and Family Health Plus programs. Family Health Plus covers childless adults up to 100 percent FPL and parents up to 150 percent FPL;
  • Case management demonstrations focused on high-cost populations;
  • Expanded resources for disease prevention and primary care including investments in public health programs and prevention programs for cancer, diabetes, obesity, asthma, and other diseases; and
  • Significant funding increases for the Office of the Medicaid Inspector General to combat fraud and abuse.

Overall budget savings were realized through a variety of measures that affected many of the stakeholders in the health care sector including hospitals, nursing homes, pharmaceutical companies, and managed care organizations.

The budget bill also requires the Commissioner of Health to conduct an analysis of proposals for achieving universal health coverage in New York including, proposals for providing or promoting universal health coverage through variations on existing private and public health coverage mechanisms; proposals for providing universal health coverage through publicly-sponsored health coverage financed through broad-based public financing; and a combination of these types of mechanisms.

Washington: During the 2007 legislative session, the Washington legislature passed a number of bills that expand coverage and reform the health care delivery system. Governor Christine Gregoire (D) has signed all of these bills.

Senate Bill 5093: This legislation’s express purpose is to provide access to coverage for all children in the state by 2010. Starting July 2007, it funds intensive education, outreach, and administrative simplification efforts to enroll all currently eligible children, covering over one-half of Washington’s uninsured children. Beginning in January 2009, the legislation authorizes the state to expand the State Children’s Health Insurance Program (SCHIP) to children who have family incomes up to 300 percent FPL; the current eligibility level is 250 percent FPL. The department is authorized to seek federal financial participation for the expansion population. In addition, children in families with incomes above 300 percent FPL will have access to SCHIP at full-cost. Premiums would apply to children above 200 percent FPL. The legislation also includes a premium assistance program, if cost-effective, for those families with access to employer-sponsored insurance.

House Bill 1569: This legislation authorizes the creation of a Massachusetts-style Connector called the Washington Health Insurance Partnership (WHP). WHP is initially targeting small employers with low-income workers. For a small employer to designate WHP as its health benefits administrator, the employer has to have at least one eligible employee (a Washington resident earning less than 200 percent FPL) and set up a cafeteria plan as defined by Section 125 of the federal income tax code. Cafeteria plans allow pre-tax premium payments by both an employer and an employee. If a small employer meets these two conditions, all of its employees regardless of income can purchase through WHP (even after leaving employment).

In addition, the legislation establishes sliding scale premium subsidies for individuals who earn less than 200 percent FPL based on gross family income on a similar schedule as that currently used by the Washington Basic Health Plan.

Finally, the Washington Health Insurance Partnership board shall submit a study and make recommendations regarding the addition of markets (e.g., individual market and public programs) into the WHP.

Senate Bill 5930: In January 2007, the Washington Blue Ribbon Commission on Health Care Costs and Access submitted a final report that outlined a five-year plan for substantially improving access to quality health care. The final report outlined 16 recommendations and a vision for a high performance health system in the State of Washington. Senate Bill 5930 incorporates many recommendations of the Blue Ribbon Commission including: provisions for chronic care and management, establishment of a quality forum to promote evidence based practices, improved transparency of cost and quality information for consumers, reducing unnecessary emergency room utilization, and additional provisions to make health care affordable and accessible, e.g. expansion of coverage to dependent children under age 25, design of a health opportunity account demonstration for Medicaid, and the possibility of publicly-funded reinsurance.

Kansas: In April 2007, the Kansas Legislature passed Senate Bill 11. Section four of the bill would create a phased-in premium assistance program that would provide premium subsidies for Kansans who earn less than 100 percent FPL to purchase private insurance actuarially equivalent to the state employee health plan. By 2009, Kansans who earn below 50 percent FPL would receive the assistance and each year afterwards the upper income limit would increase by 25 percent until the maximum of 100 percent FPL. The Kansas Health Policy Authority is authorized to seek federal financial participation.

In addition to the premium assistance program, Senate Bill 11 authorizes:

  • Loan guarantees for eligible primary care safety net clinics
  • The creation of the Small Employer Cafeteria Plan Development program to encourage small employers to take advantage of the federal pre-tax premium rules.
  • The authorization of grants or loans for the purpose of forming associations to increase access to health care.

Senate Bill 11 begins to reform the health system incrementally by increasing health insurance coverage and outlining a roadmap to develop health reform options for consideration by the 2008 Kansas Legislature. Premium assistance is part of the short-term plan. In November 2007, the Authority and Health for All Kansans Steering Committee will present data-driven health reform options to the Governor and Legislature that accomplishes these goals. The Authority and Steering Committee will work with four Advisory Councils, comprised of stakeholders, who will provide input and recommendations to form a plan that impacts the health of Kansans.

Indiana: In May 2007, lawmakers and Governor Mitch Daniels (R) came to agreement on House Bill 1678. The legislation increases taxes on tobacco an estimated $0.44 per pack. Of this tax increase, $0.33 will be used for immunization programs, and for providing coverage to the uninsured including:

  • Medicaid expansion for pregnant women to 200 percent FPL; up from 150 percent FPL. Pregnant women will now have presumptive eligibility.
  • Expanding Medicaid to all adults and parents up to 200 percent FPL, contingent on federal approval.

The remaining $0.11 will be distributed as follows:

  • Three cents of the tax will go toward increasing physician and dentist Medicaid reimbursement rates.
  • Another 3 cents will be used to provide a tax credit to employers that establish a Section 125 plan. For employers who do not offer a fully insured health plan that satisfies Section 125 of the Internal Revenue Service code, the state will provide the lesser of $50 per employee or $2,500 for two years if the employer establishes a Section 125 plan.
  • The remaining 5 cents will be used to increase tobacco prevention and cessation programs and for other health programs.

In addition to the new tobacco revenue, the state will use its general funds to:

  • Expand SCHIP to children up to 300 percent FPL; up from 200 percent FPL. Children up until the age of three will now have continuous eligibility.
  • Offer small employers (2-100 employees) a tax credit up to 50 percent of the cost of a qualified wellness program.

The bill also allows certain small employers to join together to purchase health insurance and expands the definition of ‘dependent,’ allowing parents to cover their children up until the age of 24 upon policyholder request.

A key aspect of the reform is the design of the health plan that will be offered to the newly covered adults. Utilizing the Health Savings Account model combined with comprehensive insurance coverage above the deductible, individuals would annually receive $500 of pre-deductible, free preventive care and have a $1,100 deductible.

The deductible is paid for through a POWER (Personal Wellness Responsibility) Account established in the individual’s name. The account will contain the monthly contributions made by participants in addition to a State contribution for a combined total of $1,100 per adult, which covers the cost of the deductible. The State's contribution will vary according to a sliding scale based on a participant's financial ability to contribute to the account. The State will subsidize the account to ensure there is a total of $1,100 per adult in the account. Participants will contribute no more than 5 percent of their gross family income, and will not have any cost-sharing once the deductible is met. At the end of the year, the balance of the POWER account will roll-over to reduce the following year’s required contribution, if the participant has received their age-, gender- and disease-specific preventative services. If they have not received these services, only their own pro-rated contribution to the POWER account will roll-over but the State’s contribution will be returned to the State. This design is intended to create an incentive for recipients to utilize services in a cost-conscious manner.

Covered services include physician services, prescription drugs, diagnostic exams, disease management, home health services, inpatient and outpatient hospital services, and mental health parity. Individuals may elect to purchase an optional dental and vision rider. They must pay 50 percent of the cost of the premium which is in addition to their contribution to the POWER account. There is a $300,000 annual limit on coverage and a life-time benefit limit of $1,000,000. All recipients must be uninsured for at least six months, be a U.S. citizen, and not have access to employer-sponsored insurance.

The legislation also gives authority for a premium assistance program for adults who earn less than 200 percent FPL and have access to employer-sponsored insurance but cannot afford the premiums.