New Year, New Health Reform Proposals

Many states begin new legislative years in January 2005, and despite tough fiscal forecasts, health insurance coverage remains on the agenda. SCI grantees Maine and West Virginia begin new coverage programs in January 2005, while several others will implement ballot initiatives. In addition, officials from Massachusetts, Minnesota, and Kansas will debate systematic health reforms during the upcoming legislative session.

Maine

On January 1, 2005, DirigoChoice began coverage. This collaborative effort between Maine’s Department of Health and Human Services and Anthem Blue Cross Blue Shield will offer health insurance to small businesses (with fewer than 50 employees),  the self-employed, and other eligible individuals. Maine used SCI grant funds to help develop actuarial figures and DirigoChoice plan details.

State officials expect to enroll 31,000 members during year one. As of January 1, 2005, 216 small businesses and 1,100 self-employed residents enrolled in DirigoChoice for a total of 1,800 covered residents. Officials began marketing the plan Nov 1, 2004.

West Virginia

West Virginia operates a public/private partnership between insurance companies and the West Virginia Public Employees Insurance Agency (PEIA) that allows small businesses (i.e., firms with 2-50 employees who have offered no prior coverage for one year) to access PEIA’s reimbursement rates and drug purchasing power. The state predicts the program will generate a 20 to 25 percent discount below market rate for small businesses. The state of West Virginia used SCI grant funds to help fund the program development, which is scheduled to begin in the winter of 2005. West Virginia officials estimate the program will provide health insurance to 8,000 previously uninsured small business employees after five years.

Kansas

On November 9, 2004, Governor Kathleen Sebelius (D) and Insurance Commissioner Sandra Praeger announced a bi-partisan reform plan called HealthyKansas, which will seek to contain costs by focusing on reducing administrative expenses and increasing health insurance and prescription drug affordability. The package is expected to cost $50 million. To pay for the program, the governor will seek a 50 cent per pack tax increase on cigarettes and will increase the wholesale tobacco tax to 15 percent.

The governor will order all health programs to be consolidated under a new division called the Kansas Health Care Authority. In addition, the plan calls for a new Care Cost Containment Commission headed by Lt. Governor John Moore. In order to improve health care access and affordability, the governor and insurance commissioner proposed the following initiatives:

• Small Business Risk Pools for firms that currently offer health insurance
• Public Awareness programs for obesity and chronic health conditions
• Collaboration with Kansas pharmacies to provide low-income Kansans with access to affordable generic prescription drugs
• A health insurance expansion to 40,000 children and 30,000 working parents via HealthWave (the state's SCHIP program) and the Business Health Policy Committee

Massachusetts

The 2005 Massachusetts legislative session is likely to include debate on health coverage for the uninsured, as both Democrats in the legislature and the governor unveiled their respective visions to cover this group. Governor Mitt Romney (R) announced his “Commonwealth Care” plan on November 23, 2004. His market-based approach includes four components:

1. Enticing small business to offer insurance via eliminating insurance mandates (allowing lower cost and high deductible options) and punishing firms that fail to offer coverage. For example, the Governor would deny state contracts to firms that fail to offer coverage. Any increase in the minimum wage would apply only to firms that fail to offer health insurance.
2. Enrolling eligible citizens into Medicaid.
3. Replacing the Uncompensated Care Pool with a managed treatment system called Safety Net Care, which will encourage proper health care utilization practices among the uninsured. 
4. Expanding the length of coverage for unemployed workers.

Romney stated his plan would not require any additional taxation and he vowed to work with the legislature on health care.

Meanwhile, Senator Richard T. Moore (D), who is the co-chairman of the committee on health care, proposed a bill mandating that employers sponsor health insurance. Employer mandates are not new to Massachusetts. In 1988, the state passed the "Massachusetts Medical Security Act," an employer mandate requiring all firms with more than six employees to offer health insurance or contribute to a state uninsured pool. The act was never implemented.

With the current plan proposed by Senator Moore, employers that do not offer coverage would face a “health access assessment” tax on payrolls above $50,000. Massachusetts would subsidize low-income residents (i.e., those earning incomes between 200 and 400 of the federal poverty level), and the state would combine the individual and small-group markets, thereby enrolling all uninsured residents. To pay for the bill, Moore proposes a 50 cent per pack cigarette tax increase combined with the health access assessment.

Minnesota

Governor Tim Pawlenty (R) proposed a plan to cut health spending by $12 billion per year (or 30 percent of annual spending) using a “Smart Buy” purchasing alliance. Government officials, local businesses, labor organizations, and many other stakeholders would join together in the alliance and negotiate premium reductions in a plan modeled after private-sector arrangements. The alliance, which would constitute 60 percent of Minnesota’s population, would buy separately but on common principles. In addition, the governor called for a change in the tax code to encourage Health Savings Accounts.

 
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