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March 2007

Updates on State Reform Initiatives

Illinois: Governor Rod Blagojevich (D) continues to push forward a new plan to address the uninsured in his state. Following the success of his All Kids initiative, earlier this month he announced his Illinois Covered plan. Under the plan, residents would fall into three categories:

  • Assist: This program would be available for childless adults that are ineligible for the state’s Medicaid program, do not have access to employer-sponsored insurance, and have incomes below the federal poverty level. The state will pay premiums for those individuals who have employer-sponsored coverage.
  • Choice: The state will require all managed care plans to offer a new affordable and comprehensive insurance product to individuals and small businesses. By reinsuring the product (similar to the mechanism used by HealthyNY), the state intends to make premiums more affordable. Premiums paid by the consumer will be based on income levels.  Those eligible for the Choice plan include:
    • Individuals without access to employer-sponsored insurance; and
    • Small businesses (≤ 25 employees) that contribute at least the minimum required percentage of the premium.
  • Rebate: The Covered Rebate program is essentially a premium assistance program subsidizing coverage and providing discounts to everyone who either purchases coverage through Illinois Covered Choice or who has access to an employer-sponsored plan (if the employer contributes at least 70 percent of the premium for employees). The Rebate program would also “cap” health insurance premiums for employees by having the state cover the difference between the cost of full premium and the sliding-scale employee contribution amounts that will be set based on income level.

FamilyCare Program: Additionally, the Governor intends to increase the eligibility level for parents in the existing FamilyCare program (SCHIP) from 185 percent of the federal poverty level (FPL) to 400 percent FPL. Eligible parents with access to employer-sponsored insurance could also take advantage of the new Rebate program.

Dependent Coverage: The proposal also allows dependents to have access to insurance on their parent’s policy up until their 30th birthday.

Additional delivery system improvement and cost containment provisions are also included in the Governor’s proposal including: the development of a statewide consensus plan to promote wellness and to manage chronic conditions; improved accountability, transparency, and better information to assist consumers in making better choices about their health care; and efforts to improve patient safety, promote electronic medical records, improve information about quality of care, and reduce administrative costs.

The plan will need to be approved by the legislature. It is envisioned that implementation would begin in 2008.

Massachusetts: With the approaching July 1 deadline for individuals to purchase coverage, Massachusetts is one step closer to providing affordable options. Earlier this month, the board for the Health Insurance Connector approved Commonwealth Choice plans which will be available to all residents, but specifically geared to those above 300 percent FPL. There was unanimous support for the new bids submitted by seven carriers in the state after previous bids coming in at approximately $380 per month spurred concern regarding the state’s ability to meet the affordability criteria that the state had envisioned for individuals and small businesses in the state. The lowest priced plan will cost approximately $175 per month (for ages 35-39) in the eastern region of the state. The same plan will cost nearly $20 less in other parts of the state.[i]

The Commonwealth Choice plans will be structured into three tiers with varying premiums, co-payments, deductibles and out-of-pocket contributions.  The three plan levels will all offer comprehensive coverage, including inpatient and outpatient medical care, emergency care, mental health and substance abuse services, rehabilitation services, hospice and vision care.

While the new plans are meeting the affordability test, the high-deductible components, which have helped in reducing the premiums, still raise some concerns. Of the seven approved plans, one does not have a deductible, one has a $1000 deductible, another has a $1,500 deductible, and the remaining four have deductibles of $2,000. While some have raised the issue that the higher deductibles could create an obstacle for individuals to get care they need, it is important to note that all of the plans cover preventive care visits and most cover all primary care visits prior to the deductible. Nancy Turnbull, president of the Blue Cross Blue Shield of Massachusetts Foundation, was quoted in the Boston Globe on the complexity of this issue. “The state is going to have to make some difficult trade-offs between comprehensiveness of benefits and affordability of coverage, at least in the short-run,” said Turnbull. “High deductibles are a blunt and crude way to make coverage affordable. In the future, I hope we can find other ways."[ii]

Oregon: The Oregon legislative and executive branches are working to craft new health care reform legislation. The Oregon Health Policy Commission recently submitted a report—Road Map for Health Care Reform: Creating a High-Value, Affordable Health Care System—to Governor Ted Kulongoski (D) outlining major recommendations for reform in the state. Following the experience of recent state reforms, many of the policies outlined by the Commission reflect the same elements included in the reforms that have recently been announced or implemented. The recommendations include:

  • The creation of a Health Insurance Exchange;
  • An individual mandate to purchase affordable coverage;
  • Publicly-financed coverage and insurance subsidies to ensure affordable coverage for lower-income Oregonians;
  • Sustainable system financing, including a broad-based employer contribution;
  • Public-private collaboration on value-based purchasing, managing for quality, and making the system more transparent;
  • Development of electronic health records;
  • Improvement in health care safety;
  • Helping all Oregonians establish a medical home; and
  • Supporting community-based innovations that align resources for more cost-effective, higher quality care.[iii]

Currently, a bill is being drafted that incorporates many of the recommendations in the Commission report.