As state legislatures finish their respective sessions, several states have passed bills aimed at reducing the number of uninsured. States have increasingly looked to target the working uninsured and small businesses using two policy goals: 1) maintaining existing coverage by slowing cost growth, and 2) expanding public coverage.
Iowa:
In May 2005, Iowa Governor Tom Vilsack (D) signed a comprehensive Medicaid reform bill, HF 841, into law. The reform includes a new program, called Iowacare, which will cover approximately 30,000 adults under 200 percent of the federal poverty level (FPL). The expansion differs from traditional Medicaid in several important ways:
- It is a capped, non-entitlement program.
- It has a smaller benefit package than traditional Medicaid.
- The provider network is limited to the University of Iowa Hospitals and Clinics, Broadlawns Hospital, and four state mental health institutes.
- All enrollees must undergo a medical examination and a personal health improvement plan within 90 days of enrollment.
- Enrollees will have access to a pharmacy assistance clearinghouse.
- It requires enrollees to pay a monthly premium on a sliding scale and all enrollees must pay the same co-pays as the adult Medicaid population.
- The legislation authorizes reduced co-pays or additional discounts for members who comply with personal health improvement plans and quit smoking.
The legislation requires federal financial participation as a pre-condition to the Medicaid expansion. Iowa is waiting for federal approval.
After negotiation with the Centers for Medicare and Medicaid Services, the state of Iowa will cease the use of intergovernmental transfers (worth $66.1 million in fiscal 2006) in exchange for additional federal Medicaid waiver funds. The state is eliminating the Indigent Care Program and is replacing it with the new Iowacare expansion.
The bill also requires the Iowa Department of Human Services (DHS) to design a future premium assistance program for those adults under 200 percent FPL who have access to employer-sponsored insurance and whose employers pay at least 50 percent of the premium cost.
Finally, DHS must create a health care account program for those who have been served by the new Iowacare expansion for more than 12 months. The health care account program would give recipients the choice between the expansion coverage program and a health care account credit to obtain benefits covered under the expansion program up to a specified amount. The recipient could withdraw the difference, if any, between the account balance and the amount spent at the end of the year.
Colorado:
Colorado Governor Bill Owens (R) signed House Bill 1262 that dedicates a portion of the 2004 voter approved tobacco tax increase to the expansion of public coverage. The bill also allocates the new revenue into smoking cessation for high-risk youth, treatment for 300 women under age 40 who were diagnosed with breast cancer, expanded screenings for breast and cervical cancer, rural health programs, and programs that address health disparities for populations suffering from chronic diseases.
The expansion will increase coverage for pregnant women and children via the Children’s Basic Health Plan (CBHP), from 185 percent up to 200 percent FPL. In addition, the bill removes the Medicaid Asset test, and expands the state’s Medicaid program to cover parents of enrolled CBHP children up to 75 percent FPL.
Maryland:
The Maryland General Assembly passed a bill, Fair Share Health Care Fund (SB 790/HB 128), requiring all private-sector firms that employ 10,000 or more to spend at least 8 percent of their payroll on health care. Non-profit firms would have to spend 6 percent of their payroll on health care. Firms that fail to reach their respective payroll thresholds would pay the difference into a new Fair Share Health Care Fund. These funds would support the Maryland Medicaid program.
On May 19, 2005, Maryland Governor Ehrlich (R) vetoed the Fair Share Health Care Fund bill. In his message to the legislature, Governor Ehrlich described the bill as “not a health care bill; it is a tax bill.” Lawmakers will consider overriding the Governor’s veto at the start of the 2007 session next January.
Kansas:
Kansas Governor Kathleen Sebelius (D) signed Senate Bill 272 that creates a new state agency called the Kansas Health Policy Authority (KHPA). On July 1, 2006, the KHPA, housed within the executive branch, will assume operational and purchasing responsibilities for Kansas health programs, including: the regular medical portion of Medicaid, Health Wave (SCHIP), the state health care benefits program, workers’ compensation, the Medicaid Management Information System, MediKan, pharmacy programs, and the Kansas Business Health Partnership.
The agency has the charge to improve the health of all Kansans, and to develop a coordinated health policy agenda. The KHPA, originally part of Governor Sebelius’s HealthyKansas proposal, is designed to reduce health care costs by streamlining all health programs under one division and consolidating purchasing power of the state.
Vermont:
Nearing the end of the legislative session, the Vermont Legislature passed a health care reform bill that will provide primary and preventative care to uninsured Vermonters. Called Green Mountain Health, the goal of the bill is to provide all Vermonters with universal access to coverage by 2009 beginning with the limited benefits package. A commission will give recommendations to the legislature about the benefit package.
Beginning with the 2007 tax year, the bill imposes an employer “health effort” tax. The tax is equal to 1 percent of the employer’s total qualified wages up to $50,000 plus 3 percent of the employer’s total qualified wages in excess of $50,000 and may be reduced by the employer’s health insurance costs. In addition, all Vermonters must present proof of coverage for 274 days during the taxable year or face a 1 percent income tax.
Governor Jim Douglas (R) wanted several additional cost-containment provisions and has declared his opposition to any payroll tax increase. The Governor has threatened a veto and cited the payroll tax as a problem; his preference for funding the plan relied on increased taxes on insurance premiums, however, this funding source was not part of the final package passed by the Vermont Legislature.
The bill also contains several other measures including:
- Pharmacy cost containment within all public coverage
- Carriers and hospitals are authorized to adopt financial incentives to encourage healthy lifestyles or disease management
- Global budgeting for hospitals to control costs
- Medical malpractice reform
Finally, the legislation authorizes studies to examine the feasibility of establishing a single-payer system.
