The Shriver Brief : Poverty Law Commentary & Insights : Sargent Shriver National Center on Poverty Law : Affordable Housing, Healthcare Reform

Women are the most likely to have the greatest contact with the health care system, as they often coordinate health care for themselves and their families. Yet women face unique barriers to obtaining and paying for health care. Nearly half of all low-income women are uninsured, and those who are insured are less likely to visit the doctor because of unaffordable out-of-pocket costs. However, things are changing for the better. Thanks to health care reform, low-income women now will face dramatically fewer cost barriers to access health care. The newly passed health care reform law, the Patient Protection and Affordable Care Act of 2010, will make health care more affordable, easier to obtain and provide more comprehensive services, ensuring women receive the care they need. 

Starting January 1, 2014, 8.2 million women whose incomes are at or below 133% of the federal poverty level will now be eligible for health coverage through the expansion of the Medicaid program. According to the National Women’s Law Center, up to 154,300 uninsured, low-income women in Illinois will gain health care coverage through the Medicaid expansion.  Another benefit, this coverage will be more comprehensive and include family planning and contraceptive services that are, without a doubt, a plus for women.

Moderate-income women and their families will also reap the benefits from health care reform with the creation of health insurance exchanges. Women with incomes up to 400% of federal poverty level can receive tax-credits that effectively lower out-of-pocket costs and help pay for health insurance coverage. Up to 7 million uninsured women nationwide and 471,000 women in Illinois will benefit from health insurance exchanges and tax-credits.

All women will benefit from the provision that requires all new individual and small business health plans to carry an “essential benefits package”, which provides coverage for essential services such as maternity care, prescription drug coverage, and mental health services.  Because of the difficulty women have finding these services in the individual market, this coverage marks a vital improvement in providing fundamental services women need.

Women stand to gain greatly from health care reform. In fact, women across socioeconomic levels have already started benefiting from health care reform. The National Women’s Law Center and the Commonwealth Fund have done extensive work to make clear what health care reform means for women. For more information on how health care reform benefits all women, read or subscribe to the latest issue of WomanView, entitled “30 Million Women Will Benefit from Health Care Reform.”

Heidy Robertson coauthored this article.

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Investing in our children is investing in Illinois. When we help children grow and thrive, we are paving the way for our state’s next generation of healthy workers and leaders. Investing in our children means investing in their health through All Kids--Illinois’ nationally renowned health insurance program. Ensuring that every Illinois child has access to health insurance allows children to grow into healthy, productive adults. And we know that our investment is paying off because of the “All Kids Final Report”--a recently released study of the All Kids program. The Covering All Kids Health Insurance Act mandated the study, and it was conducted by the Health Evaluation Collaborative and Institute for Health Research and Policy at University of Illinois at Chicago School of Public Health. 

The study aimed to measure the progress of the All Kids program in insuring children as well as examine areas for improvement. The study showed that the All Kids program has been hugely successful in helping to cover Illinois’ uninsured children: more than nine out of every ten Illinois children have health insurance coverage—many through the All Kids program or a parent’s workplace. While an overwhelming majority of the children who are eligible for employer-sponsored coverage were enrolled in that coverage, that is not an option afforded to all. Luckily, All Kids is there to catch those kids whose families cannot afford or do not have the choice of employer-sponsored coverage so their families have one less thing to worry about during these difficult economic times.

Since All Kids was first offered, the rate of uninsured children has dropped dramatically. At the beginning of the All Kids program, one out of every five low-income children were uninsured, but today, that number is down to approximately one in twenty low-income children. The majority of this enrollment growth since All Kids became available to all uninsured children is among children who were already eligible before the program was expanded. Children are the least expensive population to insure, and the investment now in their health will pay back in dividends later. Research shows that individuals with access to health care as children are less likely to have chronic health problems as adults.  

The recently released study also showed that children in All Kids were significantly more likely to have received an annual check-up and to have seen a dentist in the last 12 months than uninsured children, which means that they received necessary vaccinations and illnesses could be caught early to allow for more time in the classroom. Parents of All Kids’ enrollees were also more likely to report that their child had a “medical home” than both parents of uninsured children and privately insured children, which means that the state of Illinois has been successful in connecting All Kids’ enrollees to a provider who knows the child's health history and can provide health care on a regular basis. These investments are crucial to ensure Illinois kids are ready to learn and on the right track to become healthy, productive young adults.

The study also highlighted areas for improvement, including connecting All Kids’ enrollees to the care they need. We need to ensure that All Kids enrollees can get appointments with specialty doctors when they need them and that providers and clinics offer expanded hours for working parents to take their children to their primary care provider. Overall, the study findings show that there is much to be proud of with the All Kids program: It is leading the way in covering kids, which benefits our entire state. Every child should be able to count on access to affordable, quality health insurance and care, and supporting the All Kids’ program isn’t just the right thing to do. It’s one of the best investments we can make as a state.

This article was co-authored by Kathy Chan, Associate Director, Illinois Maternal and Child Health Coalition.
 

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Every time you see a healthy, happy child this fall, there’s a good chance we’ve got Congress to thank for it. If you’ve never heard of the Federal Medical Assistance Percentage (FMAP), doesn’t worry – almost no one has. But FMAP – the share of Medicaid costs covered by the federal government – is a lifeline for the 1.6 Illinois children who depend upon Medicaid for the health care they need to grow and thrive. FMAP helps seniors, people with disabilities, and parents stay healthy, too. This week, as part of its response to the recession, Congress extended a temporary FMAP increase that will provide $545 million dollars to help Illinois avoid drastic cuts that would have put children’s health at risk and cost state employees and local health care providers their jobs. And these funds will generate additional economic activity in Illinois. Every $1 million in federal funds generates $1.7 million in business activity on average, 17.1 new jobs, and $600,000 in wages and salaries.

Keeping kids covered is a win for our state. Kids get the checkups and preventive care they need to stay healthy, so they miss less school and so problems like nearsightedness and hearing trouble don’t hold them back. Parents get the peace of mind of knowing that a playground mishap or flu outbreak won’t drive the family deeper into debt. And we all get more value from every health dollar, by focusing on prevention instead of letting today’s minor problems become tomorrow’s costly burdens.

Among our leaders in Washington, Senators Durbin and Burris along with the entire Democratic Congressional delegation voted to keep Illinois kids healthy by keeping FMAP strong. Every late summer picnic, every high school football game, and every afternoon at the park – everywhere we see happy, healthy kids is a reminder to thank our leaders for standing up for families struggling through the recession and putting the health of Illinois children first.

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In the next several weeks kids throughout the state will head back to school. As summer vacation comes to a close, annual vaccinations and check-ups are often on the back-to-school to-do list of Illinois families. But for the estimated 148,000 uninsured children in Illinois, accessing these services can be a challenge. Fortunately, in Illinois this is a problem we can solve. In Illinois every uninsured child qualifies for Illinois’ public health insurance program: All Kids. For kids whose families cannot afford or do not have the choice of employer-sponsored coverage, All Kids is there to catch them so their families have one less thing to worry about during these difficult economic times.

Health insurance coverage allows children to get the care they need so they can spend more days in the classroom. Healthy children can grow and thrive. And children who have access to care now are much more likely to grow into healthy, productive adults. In fact, a recent study found that children enrolled in All Kids were significantly more likely to have had a well-child visit in the last year than uninsured children. And parents of children enrolled in All Kids were significantly more likely to report that their children had a usual source of care than did parents of uninsured children. Enrolling every uninsured child in All Kids health insurance can ensure that children have access to care so they are ready for the first day of school, have eyeglasses so they can see the chalkboard, dental exams so they are not distracted by a toothache, and medications for childhood illnesses like asthma so they can run and play.

Check out the Shriver Center’s All Kids Enrollment Event Toolkit for resources and best practices for enrolling eligible children in All Kids. And be sure to take a look at the new resources from Cover the Uninsured on back-to-school efforts. Parents can enroll their children in All Kids online or find an All Kids Application Agent in their area who can assist with the application process. 

This article was coauthored by Carrie Gilbert.

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This May, the Illinois Auditor General released an audit of the Covering All Kids Insurance Act expansion population of the All Kids program, Illinois’ comprehensive and affordable health insurance program for all uninsured children, which benefited over 1.67 million kids in 2009 and has garnered bi-partisan support in the state General Assembly over the last several years. The Sargent Shriver National Center on Poverty Law recently released a brief examining the scope of the audit and the conclusions made by the Auditor General. Instead of providing helpful information to Illinois legislators and citizens on the program’s expenditures of money and awards of contracts, as directed by the law authorizing the audit, it overreaches into policy issues beyond its legislative authority and unwisely recommends changes to the All Kids program that, if implemented, would contradict health policy experts and jeopardize billions of federal Medicaid match dollars. 

The legislative purpose of the audit was to monitor expenditures of money and awards of contracts under the program, not to evaluate public policy. However, the Auditor General chose to focus the overwhelming majority of his attention on the public policy behind the Covering All Kids Insurance Act (to cover all children) and the carefully researched administrative policies regarding enrollment and retention in the program that have been adopted by the Department of Healthcare and Family Services (DHFS). It is unclear why the Auditor General assumes that the General Assembly was inviting an audit of its own public policy choices, and by doing so, second guesses the implementation choices made by DHFS experts on these matters. Moreover, the requirement of an annual audit for a subset of a state Medicaid program is unusual, administratively costly, and not supported by any data or legislative finding. The Covering All Kids Insurance Act—which provides coverage to less than 6% of the total All Kids population—was unjustifiably singled out for this scrutiny.

The Auditor General’s critique of Illinois’ use of passive renewal and 12-month continuous eligibility, and his other recommended changes to the enrollment procedures contradict national health policy experts and federal health leaders. If implemented, these recommendations could result in eligible kids being dropped from coverage, leaving them less likely to receive treatment for chronic conditions such as diabetes and asthma, and more likely to have poorer health, greater rates of avoidable hospitalizations, higher mortality rates, delays in necessary care, and unfilled prescriptions. At the same time, many of these recommendations, if implemented, could jeopardize federal Medicaid match money under the maintenance of efforts requirements of the stimulus law and federal health reform--at a loss of billions of dollars for Illinois.

The audit spends much time complaining about the lack of documentation in case files differentiating the types of immigrant children covered by the program, because, according to the audit, the correct documentation would entitle the state to federal matching funds that Illinois would otherwise forego. However, the difference in documentation among immigrant children did not become relevant to federal financing until Congress passed CHIPRA in January 2009 allowing federal matching funds for certain immigrant children for the first time. The Auditor General paid insufficient attention to the fact that DHFS can retroactively obtain the documentation needed to maximize and claim these federal funds for the time period in question. Similarly, the Auditor General failed to mention that the expansion population of the Covering All Kids Insurance Act has been entirely paid for by offsetting spending reductions elsewhere in the state’s medical assistance programs, as intended by the General Assembly when it passed the law.

Hard working Illinois families know far too well today’s economic reality and the importance of their children’s health insurance. We owe Illinois families a complete, accurate picture of the All Kids program, including a thoughtful real-world analysis of how over 1.6 million Illinois children and their families would be affected by implementation of the auditor’s recommendations. The full brief on the All Kids program is available on the Shriver Center's website.

 

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Throughout the debate on health care reform, the focus on changes for older Americans was largely prescription drugs and closing the drug coverage "doughnut hole." These changes are extremely important for many senior citizens who hit their drug coverage limit and are forced to pay high out-of-pocket costs. In fact, there is a $250 payment to seniors who reach the doughnut hole--a down payment until the eventual full elimination of the doughnut hole that will happen later this year.

However, the new law also includes several other provisions that will greatly assist older Americans, particularly low-income senior citizens, which the National Senior Citizens Law Center details in several recent reports.

• For older Americans who rely on long-term services, the new law will create financial incentives for states to shift Medicaid spending toward community-based services, including a six-percentage point increase in federal Medicaid reimbursement for community-based care initiatives.
• The law establishes several pilot programs to study and improve coordination of care for Americans who receive coverage through both Medicare and Medicaid, otherwise known as "dual eligibles."
• The law strengthens medical assistance programs to ensure beneficiaries promptly receive covered services.
  
• The law eliminated co-payments for prescription drugs for individuals receiving long-term care services in the home and in an institutional setting. Under current law, individuals living in an institutional setting do not have co-payments, while those receiving services in the home do have co-payments.
  
• For Americans who are too young to qualify for Medicare but who retire early, a temporary "reinsurance" program will reduce the cost burden on employers.
  

According to the National Senior Citizen Law Center, the most significant new provision in the new law is the extension of coverage for 32 million Americans, which includes millions of people aged 50-64, through a Medicaid expansion, new state-based Exchanges with subsidies for low- and middle-income Americans, and regulation of the worst practices of insurance companies. Finally, millions of low-income older Americans will have access to the care that they need, and important improvements will be made to programs that contribute to the health and well-being of older Americans.

Check out the NSCLC reports for details on how reform benefits older Americans!

Carrie Gilbert co-authored this post.

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The United States Department of Health and Human Services and the states have already begun to implement the health reform law, which will finally provide health insurance coverage to low-income childless adults and individuals with preexisting conditions. Ultimately, health reform will insure an additional 32 million people. In Illinois, we do not need to wait to cover all uninsured children. Thanks to Illinois' All Kids program, we have the opportunity to provide kids with the health coverage and care they need right now. Illinois has led the way in health coverage for children, and was the first state in the country to offer comprehensive, affordable coverage to every uninsured child.

Kids who have health insurance are more likely to receive the preventive care, treatment for chronic conditions and vaccines that they need. Children with health insurance are generally healthier throughout their childhood and adolescence. Good health in childhood has been linked to a more productive and lucrative adulthood. 2008 Census data revealed the lowest uninsured rates for children in over 20 years, largely because public programs like All Kids serve as a vital safety net for children whose families lose or cannot afford health coverage.

While Illinois has made immense progress in the effort to cover uninsured children since the inception of All Kids, there are still approximately 235,400 uninsured Illinois children. Because of the All Kids program, however, this is a problem we can solve: we must find and enroll these uninsured kids. One of the best ways to find and enroll uninsured kids is to host a one-day enrollment event in your community. An enrollment event provides families with answers to their questions about the All Kids program as well as the resources and support they need to enroll their kids. The Shriver Center has assembled a toolkit with information, sample materials, and support and advice for hosting a successful enrollment event that you can check out here. Now is the time to enroll Illinois kids in health coverage in provide them with the access to health care they deserve.

This post was coauthored by Carrie Gilbert.

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For any Illinoisan who may have put aside their dream of starting a small business for fear of losing or not being able to afford health insurance coverage, it’s safe to start dreaming again. Illinois small businesses are getting some financial relief from the recently enacted health insurance reform signed into law by President Obama on March 23, 2010. This will be of great help as small businesses’ health care costs have grown 129% since 2000. Luckily, President Obama had small business owners in mind when he signed the health insurance reform bill into law. He said, “I’m signing it for Ryan Smith, who’s here today. He runs a small business with five employees. He’s trying to do the right thing, paying half the cost of coverage for his workers. This bill will help him afford that coverage.”  And the thousands of Ryan Smiths in Illinois will see many benefits from the new law. Here are some of the main benefits:

Right away many Illinois small businesses—and an estimated 3.6 million total small businesses nationwide—will get a tax cut this year to help them pay for health insurance for their employees. This tax credit starts at up to 35% of the money the small business owner spends on premiums for employees and increases over time, eventually reaching 50% when the Insurance Exchanges go into effect in 2014. Nonprofit organizations also qualify, starting at 25% and increasing to 35% of the employer contribution. In this way, small business owners who choose to provide health insurance to their employees will be able to do so more affordably and can stop worrying about rate hikes. 

By 2014, small business owners will also have access to the new Small Business Health Options Program (SHOP) Exchanges so they can find the best deal through a simple and efficient process. Funding will be given to the states through January 1, 2015 to establish these Exchanges within one year of enactment. In the Exchange, small businesses with up to 100 employees (states can limit to 50 employees) can purchase qualified coverage. 

This Exchange will greatly assist small businesses, which have been paying up to 18 percent more than large companies for the same health insurance policy. The independent and non-partisan Congressional Budget Office found that premiums for small businesses will go down. The larger pool leads to more insurer competition and lower administration costs, thereby increasing affordable insurance options. And the larger pooling structure will protect small businesses from sudden, arbitrary rate hikes because a worker gets sick. For those small business employees and self-employed who are currently excluded from coverage due to a pre-existing condition (and who have been uninsured for at least six months), right away there will be a temporary high risk pool established to guarantee coverage.

Small business owners will benefit greatly from the new law. With dollars freeing up due to the tax credit, new competitive insurance marketplace and other health cost savings, small business owners will be able to reinvest in and grow their organizations, offer increased salaries to employees, hire new employees and retain quality employees.  

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I'm not a health care expert, just a spectator like most of America. It's been said that watching legislation being made is like watching sausage being made. Thanks to the 24-hour news cycle, blogs, etc., we've all just been treated to 14 months of the stomach-turning process of watching legislation being made. This may account for the less-than-jubilant reaction to the enactment of health care reform into law.

Make no mistake, however. This is real, lasting, fundamental, historic social change, on a par with the creation of Social Security in the 1930s and Medicare in the 1960s. It ends the national shame of more than 40 million people without health insurance. It creates a system where everyone must play and everyone has a stake.

Health care reform is not a traditional safety net program. You don't get a card. But we live in a much more complicated world than we did in the 1930s or the 1960s. This reform had to be a accomplished within the confines and constraints of two of the most powerful industries in America--the pharmaceutical industry and the insurance industry. Health care reform succeeded because it builds on the existing health care structure to accomplish at least nine extraordinary goals:

1. First and foremost, it creates a system of subsidies that will allow all people--adults, children, working, not working--to access affordable health insurance.
    
2. It will protect people from financial ruin if they contract a disabling disease.
    
3. It will prevent insurance companies from canceling insurance policies when the policyholder gets sick.
    
4. It will provide workers with job mobility since insurance companies will no longer be permitted to deny coverage based on a preexisting condition.
    
5. It will make insurance affordable for middle-income people through a system of subsidies.
    
6. It will provide very low-income single adults with access to Medicaid.
    
7. It will make it affordable for small businesses to provide health insurance to their workers.
    
8. The doughnut hole will be eliminated and seniors will be able to afford their prescriptions.
    
9. Young adults--an age group that is particularly likely to be uninsured--will be able to remain on their parents' insurance policies until they turn 26.

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Many Americans will feel the effect of health reform this year, as significant changes start to go into effect. During 2010:

• Children will not be denied coverage due to a preexisting condition.
   
• Young adults will be able to stay on their parents' health plans to age 26.
   
• Insurance companies will be prohibited from revoking coverage when people become ill, and from setting lifetime limits on benefits.
   
• Small businesses will be eligible for new tax credits to offset their premium costs.
   
• People with preexisting conditions will be eligible for subsidized coverage through a national, high-risk pool.
   
• New limits will be set for the percent of premiums that insurers can spend on nonmedical costs, e.g., administrative or profit, and, beginning in 2011, carriers that exceed those limits will be required to offer rebates to enrollees.
   
• Medicare will provide $250 rebates to beneficiaries to help with prescription drug costs (with greater help coming in future years).
   
• Medicare will eliminate cost-sharing for preventive services in Medicare and private plans so they are free.

Much more follows in later years.

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On March 21, the House of Representatives passed historic health insurance reform legislation. The House passed the reform bill previously passed by the Senate, which now becomes law upon the President’s signature (expected as early as March 23).  The House also passed a package of changes to the Senate bill that have been negotiated with the Senate, and which the Senate is expected to pass very soon (using the “reconciliation” procedure that requires a simple majority vote).

The package of reforms is a major step forward to provide Americans more security, more choices, and better cost control for their health care.  See the impact in your legislative district.

This is the end of the worst practices of the insurance industry—no more denials due to pre-existing conditions or dropping coverage for people who get sick, or hidden ceilings on your coverage.

We will all get the same insurance choices that Members of Congress have. What is good for them will be good for everyone.

We have kept what is good in our health system and added oversight of insurance practices, control of insurance rate increases, choice of plan and doctor, more competition, and expanded prevention.

Medicare will be strengthened—reform will cut waste and fraud in Medicare, improve solvency and close the gap in prescription drug coverage for seniors.

There will be access to affordable health care for 3.6 million small businesses and 32 million Americans who have been left out – until now.

The first order of business is to thank your House member, if he or she voted “yes”.  Here is the roll call.  This is VERY important – these are leaders who deserve thanks and support.

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Remember the show, Let’s Make a Deal, with Monty Hall? Well, it's back--sort of. For more than a year, Congress has been saying that it’s close to making a deal on legislation to overhaul America’s health care and financial systems. 

The original Let’s Make a Deal show was based on the show’s host, Monty Hall, offering deals to members of the audience. The contestants usually had to weigh the possibility of an offer being for a valuable prize, or an undesirable item. In its simplest format, a contestant was given a prize of medium value (such as a television set), and the host offered the contestant the opportunity to trade for another prize. However, the offered prize was unknown. It might be concealed on the stage behind one of three curtains, or behind "boxes" onstage, or within smaller boxes brought out to the audience.

Congress seems to have brought this classic TV game show back. “We’re close to a deal,” on health care legislation. “We’re close to a deal,” on financial reform legislation. 

Health Care Reform

The need across the country for health insurance reform has not abated. Americans agree that the nation's health insurance system is broken, but Congress still hasn’t sent a bill to President Obama to fix it. The current deal on the table is for the House to pass the Senate’s bill and then for both chambers to pass a budget reconciliation bill that resolves their differences. The proposed deal would ban insurance companies forever from denying coverage to children with preexisting conditions and from dropping coverage when an individual becomes sick. Insurance companies would no longer be able to randomly hike premiums or to impose lifetime or annual limits on the amount of care someone can receive. All new insurance plans would be required to offer free preventive care so that illnesses may be caught early. Young adults will be able to stay on their parents’ insurance policies until they are 26 years old. Uninsured individuals and small business owners would have the same kind of choice of private health insurance that members of Congress get for themselves. And individuals who do not have insurance coverage through a large group could be part of a bargaining pool that negotiates lower rates. Also, if an individual is ineligible for Medicaid but still can’t afford the insurance offered through the pool, she or he would receive a tax credit to assist with this cost. Finally, this deal would provide a new, independent appeals process if a claim has been unfairly denied.

It’s time for Congress to take the deal and make health insurance available and affordable for all.

Financial Regulation Reform

After the catastrophic financial crisis, President Obama called for the creation of an independent Consumer Financial Protection Agency, which would have as its sole mission the protection of consumers. It would create and enforce clear rules to ensure fairness of credit card terms and conditions, overdraft loan programs, payday and car title loans, and mortgages. In the fall, the House of Representatives passed legislation creating such a new Consumer Financial Protection Agency, which would provide the type of consumer protections that should have been in place all along. The Senate, however, has been debating the issue for months.

Specifically, Senate Republicans and the financial-services industry have opposed the creation of such an entity. Instead they would prefer that the Federal Reserve continue to be responsible for consumer protection as part of its regulation of nationally chartered banks. The central bank has always been responsible for the health of the nation's largest banks and the safety of American borrowers; however, its failures in both roles have been well documented. For years, the Federal Reserve primarily focused on monetary policy over bank supervision and often made consumer protection an afterthought. As a result, millions of American families have been left unprotected and financially unstable.

Additionally, the Federal Reserve only regulates banks, which would mean that the so-called shadow banking system of payday lenders, debt collectors, and loan originators and servicers would remain unregulated. The power of these entities has been demonstrated by the huge role they had in the current economic crisis. Allowing them to continue their predatory practices without being regulated would not be a deal on reform but rather a continuation of the status quo. Lawmakers have repeatedly said that they are close to a deal on this very divisive issue. Yet, proposals to let the Federal Reserve remain the primary regulator of consumer protection laws, is not a deal, it’s just the status quo. 

Well Monty, Where’s the Deal?

Congress seems to be weighing the possibility of whether reforming health care and financial systems will ultimately be valuable prizes, or undesirable items. Yet, rather than holding onto its existing undesirable prizes, Congress should choose Door #1, quality, affordable health insurance reform NOW and a dedicated agency to monitor and rein in the reckless behavior of financial institutions. 

Well Congress, where’s the deal?
 

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Co-authored by Carrie Gilbert

Over the last several weeks, we have looked at the different proposals coming through Congress to achieve comprehensive health insurance reform. Congress is now modifying two versions – one in each – the House and the Senate. We have come quite a long way since the beginning of this series, however before health reform is signed into law, there are several more important steps. The Senate has officially begun debate. In order, to take a final vote and pass health reform, they will need 60 votes to end debate on the floor. Then they need a simple majority to pass it out of the Senate. Once each house has a passed a version, it will go to conference committee so that the differences can be resolved and a final bill written.   Your Senators and Representatives will need to hear from you every step of the way. Reassure those that support health reform that they are doing the right thing and let the fence-sitters and naysayers know that as their constituent you would like to see them support health reform. Here is the number to call 1-800-828-0498 to let your representatives know how you feel. 

Here is our final installment of the homestretch series: The Finish Line.  We wrap up the previous issues we have looked at and offer insight into unresolved issues.   

Children’s coverage:

House bill
H.R. 3692 would ultimately dissolve the Children’s Health Insurance Program (CHIP) as of December 31, 2013. Children below 150% of the federal poverty level (FPL) would then move into Medicaid and those above would be moved into the new Health Insurance Exchange or employer-based insurance.   While CHIP is still in place, HR 3692 eliminates waiting periods for children who were previously covered by employer sponsored insurance.  By the end of 2011, the Secretary of HHS will have to conduct a study for what the Exchange will look like and make recommendations to Congress for improving the Exchange for children’s coverage.

Senate bill
H.R. 3590 maintains CHIP for children above 133% FPL through 2019. However, it does not allocate funding past its current renewal date of September 30, 2013. If Congress does not fund CHIP after 2013 then families may enroll in the Exchange and may qualify for subsidies. 

Thoughts
Some advocates fear that moving children out of CHIP without first ensuring that the Exchange is comparable in price and benefits, would harm families and children. They fear that CHIP goes well beyond what private plans in the Exchange would offer in terms of benefits and covered services. However, others argue that moving entire families into the Exchange would simplify the process and increase the likelihood that children get coverage. Studies have found that when the parents are covered, the children are more likely to be covered and receive necessary benefits. Additionally, there would be an “essential benefits package” requirement in the Exchange that would serve as a benefits floor for private plans. Finally, in the Exchange all families up to 400% FPL would qualify for subsidies, whereas one state has CHIP eligibility to 400% FPL, thereby covering more families. On the Senate side, Senator Bob Casey (D-PA) introduced an amendment to protect and ensure health care coverage for low-income children, including continued full funding for CHIP through 2019. 

Medicaid Expansion:
House bill
The House bill expands Medicaid to 150% FPL in January 2013 with 100% federal financing for 2 years and 91% federal financing beginning in year 2015 for new eligibles (such as childless adults) and some current eligibles covered by a waiver. States with Medicaid levels above 150% will be required to maintain their current levels. The House bill’s additional funding is geared towards helping states transition to the expanded Medicaid program.   Additionally, the House bill would increase Medicaid payment rates to primary care providers to 100% of Medicare rates by 2012. 

Senate bill
The senate bill expands Medicaid to 133% FPL and includes childless adults. The bill requires that the expansion occurs by 2014, but states could begin expanding as early as 2011. Some individuals who qualify for Medicaid could also receive subsidies in the Exchange, although people below 100% FPL could only receive subsidies if they do not qualify for Medicaid. 

Thoughts
Health Affairsdid a study about a year ago, which found that average medical expenses are lower per person under public programs than under private insurance. When controlling for demographics and income, the medical expenditures for the same adult would be 26% higher under private insurance than Medicaid. Additionally, out-of-pocket costs are vastly higher under private insurance than under Medicaid. A Medicaid enrollee would spend 6 to 7 times more on out-of-pocket costs under private insurance than under Medicaid. The CBO estimates that Medicaid expansion to 150% FPL will cover 15 million people. This is not to say that we should balk at the Senate’s Medicaid expansion to 133%, and both bills expand Medicaid to previously ineligible childless adults, which finally addresses a longstanding gap in public coverage for those who often do not qualify or cannot afford private insurance. 

Affordability:

House bill
HR 3692 requires all individuals to purchase coverage, but provides tax credits to individuals and families with incomes above Medicaid eligibility but below 400% FPL. A family of four headed by a 45-year-old making $44,000 a year would pay roughly $2,400 in premiums, or $200 a month, according to the Kaiser Family Foundation. The tax credits are awarded on a sliding scale based on income to limit premium contributions to an affordable percentage of income, starting at 1.5% of income for 133% FPL to 12% of income for 400% FPL. The House bill requires employers to provide health insurance or pay a tax on their total payroll. However, for businesses with annual payrolls less than $750,000 the tax is assessed on a sliding scale, and businesses with annual payrolls under $500,000 are exempt from the tax entirely. 

Senate bill
Similarly, in the Senate bill individuals will receive affordability credits to pay for premiums. The credits would start at 4% of income for households at 134% of FPL and increase to 9.8% of income for households at 300%-400% FPL. The Senate bill also includes employer mandates and penalties, but exempts employers with 50 or fewer employees.

Thoughts
The Senate bill is more affordable for households between 250-400% FPL, but the House bill is more affordable for households under 250% of FPL. In the case of those at the bottom of the subsidy scale, under the Senate bill they could end up paying at least twice as much as what they would pay under the House bill. However, a recent analysis by MIT economist, Jonathan Gruber, found that the Senate bill makes health insurance for individuals purchasing in non-group market much more affordable. The same plan that would cost $5500 without reform would cost $4600 with reform. Gruber also found that the House bill would deliver a savings ranging from $200 for individuals to $500 for families, even without subsidies. The nonpartisan CBO and the Joint Committee on Taxation analysis of how the Senate bill might affect health insurance premiums concluded that the Senate bill will reduce premium costs for 57% of Americans who will receive subsidies by as much as 59%, and rates in large group market by as much as 3%.   Rates may rise for individuals who have to purchase coverage on their own but do not qualify for subsidies, but this is mostly because the plans offered in the Exchange will be better plans than those currently offered and therefore slightly more expensive. 

Public Option
House bill:
HR 3692 creates a National Health Insurance Exchange, where individuals and employers (employers would be phased-in beginning with the smallest employers) can purchase plans that meet certain qualifications in order to be considered an adequate plan. A public option would be included in the Exchange. The public option would follow the same insurance industry guidelines as private plans. The public option would negotiate rates with providers so that they are not below Medicare rates but not above the average rates for comparable private plans. 

Senate bill:
HR 3590 creates a state-based Exchange for individuals and businesses with fewer than 100 employees. States can allow bigger businesses to buy insurance in the Exchange beginning in 2017. The Exchange would include a public option, which must comply with insurance industry regulations for private plans. The Senate bill permits states to choose not to offer the public option, but they would have to pass legislation to do so. The Senate bill would also create a program to foster the development of CO-OPS or non-profit health insurance companies. 

Thoughts:  
According to the CBO, the House bill’s public option would enroll less than 2% of the population (about 6 million customers over the next 10 years) and probably have higher premiums than private plans. The Senate’s bill would attract about 4 million customers. Nevertheless, the public option has become a heated topic. If Senator Reid can find a public option compromise that pleases all 60 democratic votes, then he can close debate and move toward the final vote. Republicans want six weeks of debate, but as soon as Democrats come to an agreement on the public option they can shut down the debate and avoid the Republican arsenal of stalling and bill-killing tactics. Finding this magical compromise is much easier said than done. Senator Joe Lieberman (I-CT) and other conservative Democrats, most notably Ben Nelson (D-NE), Mary Landrieu (D-LA) and Blanche Lincoln (D-AR) have voiced opposition to the opt-out public option. Landrieu has said that she would support the “trigger” option, which would activate the public option if the private industry does expand coverage fast enough.   Sen. Olympia Snow (R-VT), the only Senate Republican to vote for health reform this year, has also voiced support for the “trigger”. Sen. Nelson supports an opt-in option for states, while Lieberman and Lincoln are going to be much harder to bring to the table on the public option. Meanwhile, Democrats on both the House and Senate side can be lost if there is not a public option. However, a potential compromise is beginning to emerge from negotiations between five liberal and five moderate Democratic Senators. The compromise would remove the public option and replace it with a network of non-profit health insurance plans, which the Office of Personnel Management would administer. The Office of Personnel Management currently administers the Federal Employee Benefits Program. In exchange for removing the public option, moderate Democrats would agree to expanded Medicare and Medicaid.  Getting the 60 votes necessary to close debate involve negotiation on several issues, but the public option balancing act may be the single most important issue for getting to 60. 

Insurance Market Reforms
House bill:
HR 3692 would require private insurers within the Exchange to guarantee coverage regardless of the policyholder’s health and renew the coverage each year, and insurance companies could not rescind a policyholder’s plan. Insurance companies would be required to issue plans despite pre-existing conditions. Variation in premium rates would be illegal based on gender and geography. Premiums can vary based on age but limited to a ratio of 2 to 1. Insurance companies could not impose annual or lifetime caps for medical care.  

Senate bill
The Senate bill also guarantees issue and renewability. As in the House legislation, companies could not rescind coverage or refuse coverage based on a pre-existing condition. Premium variation is allowed based only on age and tobacco use within ratios of 3 to 1 and 1.5 to 1 respectively. 

Thoughts
Insurance market reforms are some of the most needed and least debated aspects of health reform. Countless people have been denied coverage or had their coverage rescinded due to pre-existing conditions or post claims underwriting and rescission practices. These insurance reform changes are significant change to current insurance company business practices. However, even if one issue causes health reform to fail then even these widely agreed upon changes will get thrown out. These changes would mean significant improvements in care for lots of Americans who currently struggle to find adequate coverage.    However, since insurance companies currently charge the young and healthy much less than middle-age people who are more likely to get sick, the young may pay more under both bills than they currently do, if their income is too high for them to qualify for public coverage or subsidies. 

Impact on the deficits and paying for reform:
House bill:
The House bill uses a combination of penalties for lack of coverage, taxes on wealthy Americans and changes to Medicare payment to pay for reform. It is expected to reduce deficit by $109 billion over ten years. 

Senate bill:
The Senate bill uses a combination of taxes on high cost insurance plans, increases to the Medicare payroll tax and a 5% tax on non-medically necessary cosmetic surgery. The Senate bill is expected to reduce the deficit by $130 billion over the first ten years and by more than half a trillion dollars in the following decade. 

Thoughts:
Both bills offer positive elements to craft an affordable bill that curbs the cost of health insurance over time. The tax on wealthy individuals will raise considerable revenue, while the tax on high-cost insurance plans will slow health care growth over time. 

Other Hot Issues:

Abortion: Federal funding for abortions became a contentious issue at the last minute in the House debate. The House passed their bill with language which makes it illegal for the public plan to cover elective abortions, and for individuals receiving subsidies to purchase plans which cover elective abortions. The Senate bill, on the other hand, allows individuals who receive federal subsidies to purchase plans which cover abortions, but insurance companies would have to segregate federal funds to ensure that only the policyholder’s money is used to pay for the procedure. It is expected that early this week Senator Bill Nelson (D-NE) will introduce an amendment to make the language in the Senate bill more like that in the House bill. Some House Democrats have said that while they voted for the amendment once, they will not do it again, and their votes could be lost if the language remains as restrictive as it now is. Speaker Pelosi has stated, however, that health reform will not fail on account of the abortion debate. 

Immigration: The House bill allows undocumented immigrants to buy insurance in the Exchange; however they would have to use their own money to do so. The Senate bill, on the other hand, restricts access to the Exchange completely. Some Congressional Democrats, in particular the Hispanic Caucus, are disappointed with the language regarding immigrants, particularly in the Senate bill. 

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Co-Authored by Carrie Gilbert

[This is the sixth in a series of six articles summarizing the leading categories of issues at stake in the final stages -- the homestretch -- of the debate on national health insurance and health care reform.]

Last week the Senate released their combined bill which has been sent to the floor for debate. Many of the basic principles of the Senate and House bills are similar; however there are still major differences, including the method for paying for reform. For our final installment in our homestretch series we will compare these two proposals on how they will pay for reform and their impact on the budget deficit. 

Covering millions of previously uninsured Americans obviously has an upfront cost; however given the current state of our broken health insurance system, the proposed reforms will actually reduce the deficit. Both bills have received deficit neutral scores from the Congressional Budget Office (CBO), despite having different methods for reducing the budget.

The House bill, called the Affordable Health Care for America Act or HR 3962, proposes a combination of mandate penalties, reforms to Medicare and Medicaid and a tax on wealthy individuals to raise revenue to pay for reform.   The House bill is projected to save $426 billion over ten years by reforming Medicare and Medicaid. The federal government currently pays about $1,100 more per person to cover the same beneficiaries through Medicare Advantage, private Medicare plans, than through traditional Medicare. HR 3962 will reduce overpayments to Medicare Advantage plans.   Overall, the bill attempts to reduce fraud and waste in both the Medicaid and Medicare systems. 

In addition to extensive reforms to Medicare and Medicaid, H.R. 3962 includes a 5.4% surcharge on couples with incomes over $1 million, which would affect less than 1% of taxpayers, and amount to a moderate tax burden for these households. Some people fear that this new tax would harm small businesses that file taxes as individuals. However, the Tax Policy Center calculates that just 1.6% of taxpayers in this group would face the surcharge, and that many in this group are actually wealthy investors and not true small business owners. Ultimately, only 0.6% of taxpayers who derive more than half of their income from business sources would face this surcharge. 

The newly released Senate bill, The Patient Protection and Affordable Care Act or HR 3590, may slow the growth of health care costs over time by, for instance, imposing an excise tax on high-cost health insurance plans, decreasing overpayments that private insurers receive through Medicare Advantage, and reducing the cost of prescription drugs in Medicaid.   The new tax on high-priced health insurance policies (or Cadillac plans with yearly premiums of $8,500 for individuals and $23,000 for families) applies to self-insured plans and plans sold in the group market, and not to plans sold in the individual market (except for coverage eligible for the deduction for self-employed individuals). HR 3590 would also increase the Medicare payroll tax from 1.45 to 1.95% on individuals earning $200,000 per year and couples earning $250,000 per year. Both of these new taxes will yield considerable revenue.   

HR 3590 imposes many fees to pay for the bill, including on pharmaceutical manufacturers, medical device manufacturers and the health insurance sector. Many of these fees do not apply to companies whose sales are below $5 million and the fees are allocated across the industry based on market share. Moreover, HR 3590 mandates that non-profit Blue Cross Blue Shield (BCBS) organizations have a medical loss ratio of 85% or higher to receive the special tax benefits provided to them. This means that they have to spend at least 85% of profits on their beneficiaries’ medical care. 

Ultimately, the House bill will reduce deficits by $109 billion over the next ten years. The Senate bill will reduce deficits by $130 billion over the next ten years, and by about one-quarter of one percent of GDP in the decade thereafter, which amounts to about $55 billion in 2020 and several hundred billion dollars over the 2020-2029 period. The bill finances its expanded health coverage by redirecting existing spending and tax subsidies from less productive uses elsewhere in the health sector. Therefore, the Center for Budget and Policy Priorities’  and CBO report that the Senate Bill extends health coverage to 31 million more Americans, while keeping the total federal cost for all health care spending and tax subsidies in the decade after 2019 essentially where it would be under current law. Additionally, a group of economists sent a letter to President Obama last month advocating for many of the reforms in the Senate bill as a way to stem the costs of the health care industry. 

This does not mean that the Senate bill is the better bill. There are provisions in both bills which are worth preserving the in the final bill. Over the next several weeks, as the Senate works to pass their version of the bill and then the two bills go to conference committee, there will be several opportunities for improving the bills and producing a superior final bill. Both bills contain key provisions for slowing the growth of health care costs and paying to insure more Americans. As always, the ultimate goal is affordable quality health insurance for all Americans.

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[This is the fifth in a series of six articles summarizing the leading categories of issues at stake in the final stages -- the homestretch -- of the debate on national health insurance and health care reform.]

 A recent Congressional Report initiated by Senator Jay Rockefeller found that while the insurance industry has long claimed that 87% of premium dollars go to pay for medical care, in fact, the average is 82% for the top six insurers. This five point difference equates to billions of dollars not being spent on hardworking families’ medical care. And these findings underscore the need for meaningful reform of the insurance industry. The three bills in Congress (H.R. 3962, Senate HELP and Senate Finance) include major reform to the private health insurance companies. These reforms will vastly change the way in which companies decide who qualifies for insurance and who does not. In a historic vote this past weekend, the House passed H.R. 3962, including many changes to the health insurance market.   Senator majority leader Harry Reid (D-NV) has combined the two Senate proposals and sent a couple of different versions to the Congressional Budget Office (CBO) for consideration. He is waiting on the report from the CBO before releasing a final Senate bill, which will be the version sent to the Senate floor for debate. Until the final Senate bill is released we will offer comparison and analysis on the two Senate bills (HELP and Finance).

The three bills provide for significant reform to the health insurance industry, which would greatly expand access to health insurance. As discussed in Homestretch part 4, all three proposals create a health insurance Exchange, which would regulate the individual and small group insurance plans available in the Exchange.   Benefit plans in the Exchange would be standardized. Plans would vary on the level of cost-sharing of co-pays and deductibles. Private insurance companies participating in the Exchange could not deny coverage based on pre-existing conditions. Additionally, premiums could not vary because of gender or pre-existing conditions. 

The only characteristics that are permitted to factor into premiums are age, tobacco use, family composition and geography. The three proposals set ratios for premium variation based on age and tobacco use. The Senate Finance bill limits age variation to a 4 to 1 ratio and tobacco use to a 1.5 to 1 ratio. For example, a company can only charge its oldest customers four times that of its youngest customers.   The Senate HELP bill limits age variation to a 2 to 1 ratio and tobacco use to a 1.5 to 1 ratio. H.R. 3962 limits age variation to a 2 to 1 ratio, but does not allow insurance companies to vary premiums based on tobacco use.   The insurance companies indicated they will fight the limiting ratios, because they argue that they will raise costs to younger and healthier individuals. 

The Exchange contained in the three bills would also require that insurance companies issue insurance to a consumer regardless of their health status. Additionally, an insurance company could not sell a consumer a plan that explicitly does not cover their pre-existing medical condition. Companies would have to guarantee that they will renew an individual’s policy each year.   Additionally, each proposal sets limits for annual out-of-pocket costs to policy holders.   Insurance companies would not be able to limit the amount of claims a policy holder makes either annually or in a lifetime. In other words, an insurance company could not suddenly tell a policyholder that they will no longer cover that policyholder’s claims. 

Senator Rockefeller faced significant difficulties in getting the insurance companies to voluntarily divulge what portion of the premiums goes to medical care versus profit, administration, etc. This would change under all proposals. Both of the Senate proposals require insurance companies to report how much of the revenue from premiums goes toward paying for medical services. The House proposal requires that the Secretary of Health and Human Services sets a minimum percentage of revenue that must pay for medical services.   If the companies do not meet this minimum then they must provide rebates to their customers. 

The aforementioned reform is quite similar among the three proposals, but to whom they would apply differs. Senate Finance would apply these changes to the individual and small group market (businesses with fewer than 50 employees). Senate HELP and the House bill would apply reforms to all private insurance markets, including businesses of all sizes. And the Senate Finance bill would, however, require that all new policies, both inside and outside of the Exchange, meet the standards of one of four benefit levels set forth in the proposal. 

These reforms will offer greater consumer protections and decrease insurance companies’ discriminatory practices. Some of these measures may face fierce debate an opposition in the coming weeks as the Senate sends a final bill to the floor for debate and final bill is composed for President Obama’s consideration.   These reforms will mean containing costs, creating choices, upgrading care and ultimately covering all. 

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[This is the fourth in a series of six articles summarizing the leading categories of issues at stake in the final stages -- the homestretch -- of the debate on national health insurance and health care reform.]

The 55% of Americans who favor a government insurance plan and health reform advocates are rejoicing over yesterday’s news from Senate Majority Leader Harry Reid (D, NV). Yesterday, Reid stated that the bill he intends to send to the Senate floor next month will include a "public option" – a federal government created insurance plan offered to Americans who do not get medical coverage through their employers -- with the condition that states could opt out of the program. Reid’s move is being hailed as a bold and vital move by health reform supporters throughout the country and a major milestone for health insurance reform as it moves forward in both houses. This is not to say that Reid’s model of the public option is a definite or that amendments will not attempt to eliminate or alter the public option in the Senate bill.  

Majority Leader Reid and House Speaker Nancy Pelosi (D-San Francisco) are advancing separate healthcare bills, each containing different provisions for the public option. House Democrats may have the support to pass a bill that would create a nationwide government plan without any option for states not to offer the plan; however Speaker Pelosi has stated that the opt-out alternative could be included in a reconciled bill. Both the Senate bill and the House bill will need to be reconciled later this year before final legislation could be sent to the White House for President Obama's signature.

All three of the current versions of the bill in Congress (Senate HELP, Senate Finance and the House Tri-committee bill--H.R. 3200) include a health insurance Exchange, which would serve as the marketplace for qualified plans that follow new insurance provisions. The Exchange would create a competitive marketplace that offered choices of plans, which would have to follow a common set of regulations. The Exchange has several advantages including choice, price competition and portability if you choose to change jobs. In all three proposals, the Exchange would be a place where individuals without access to employer-sponsored coverage could purchase insurance. Small employers could also purchase plans for their employees through the Exchange. In both the Senate Finance bill and H.R. 3200, eligibility for employers would be phased in starting with smaller employers. 

Conservative Democrats and some Republicans supported a Consumer Operated and Oriented Plan (CO-OPs) program. The Senate Finance bill included a CO-OP program, which would encourage the creation of non-profit health insurance companies run by the members. Members would be required to use the profits to lower premiums, improve benefits or improve the quality of the care consumers receive. In order to be included in the Exchange, CO-OPs would have to follow the same regulations as the private plans. Many health reform advocates maintain that CO-OPs have failed in the past and will fail this time too. Additionally, the Congressional Budget Office does not find significant savings in the CO-OP model, whereas it does with the public option plan. Senate Finance Committee Chairman Baucus has said that he chose to include the CO-OP over the public option in the Finance bill because he felt it would garner greater support, but he is still open to the public option. 

Despite the disagreement among policy makers regarding the potential success of CO-OPs, much of the debate has now turned to the public option.  With Reid’s announcement, the question seems to have become not if there will be a public option, but what form the public option will take. Reid’s opt-out model allows states to withdraw from the public plan in 2014, a year after the public plan goes into effect. Senator Olympia Snowe (R-ME), the only Republican on the Senate Finance committee to vote for the Finance committee version of the bill, supports the “trigger” model of the public option. The trigger would only put a public option into effect in states that do not meet standards of affordability. Snowe stated yesterday that she was disappointed with Reid’s decision to go with the opt-out model over the trigger model.   

The Insurance industry has released a report which argues that the public option will raise costs to those people with private insurance plans, in order to offset the reduced cost of the public plan. In fact, public health insurance actually costs less than private insurance. However, the public option as proposed by Reid would be offered through the Exchange, which would only be available to those individuals without employer sponsored insurance. And only a fraction of people would choose the public option, according to the Congressional Budget Office. Moreover, the Exchange would serve as a regulator of benefit plans, and Reid’s proposal also requires the government plan to negotiate provider rates, instead of relying on Medicare rates, which are often lower than private reimbursement rates. 

Congress must produce a bill that creates competition in the health insurance market, in order to successfully lower costs and provide quality choices to consumers. A majority of Americans, policy makers and advocates see the public option as the best way of doing this. H.R. 3200 and Reid’s proposal can achieve this but we cannot lose focus on the overall goal of passing health insurance reform this year. If an opt-out or trigger can create competition while lowering costs and providing quality care, then they should be considered to keep the momentum going. The ultimate goal is quality affordable health insurance for all Americans.

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[This is the third in a series of six articles summarizing the leading categories of issues at stake in the final stages -- the homestretch -- of the debate on national health insurance and health care reform.]

Health insurance reform is crucial for the success and prosperity of American families. However it will only succeed if there are affordability measures in place for families, individuals and small business owners.   Congress now has three bills that have passed out of committee and must be reconciled to create the final bill. The key will be to take the best elements of each bill to ensure Americans adequate and affordable health insurance.   In all three bills, almost all individuals are required to carry health insurance. The goal of the individual mandate is to encourage the use of primary care providers and preventive care, while reducing the use of emergency rooms for non-emergency care. This could prove problematic for individuals who do not qualify for subsidies but cannot find an affordable plan, and for low-income individuals. However, with adequate subsidies and affordability measures, Congress can ensure that health insurance is affordable for everyone.

Individual and Employer mandate
All three bills require that almost all individuals have health insurance and those who do not will be required to pay a penalty. However, each of the bills has a different method of penalizing certain individuals. Both Senate bills (Health, Education, Labor and Pensions (HELP) and Finance) impose a tax penalty of $750 per individual per year and per adult per year, respectively. The Senate HELP bill exempts people whose incomes are below 150% of the Federal Poverty Level (FPL), people without coverage for fewer than 90 days, members of Indian tribes, and residents of states without an Exchange in place. The Senate Finance Committee exempts certain individuals as well, including, individuals with incomes below 133% FPL, individuals with religious objections, individuals who can prove financial hardship, American Indians, and if the lowest cost plan exceeds 8% of an individual’s income. 

The House Tri-Committee bill (H.R. 3200) imposes a penalty of 2.5% of income up to the cost of the Exchange’s national average premium. The House bill exempts dependents, individuals with religious objections or financial hardship. 

The three bills also include employer mandates which require employers to contribute to their employees’ cost of insurance. An employer mandate is necessary to ensure that costs do not get passed to employees and that employers do not drop employee insurance with the adoption of the Exchange. However, these mandates must be carefully designed as not to impose higher costs on small business owners or discourage the hiring of low-income individuals.

The Senate Finance bill would impose a tax on employers with more than 50 employees that do not offer coverage. They would be taxed for each employee that receives a tax credit through the Exchange. This provision may discourage employers to hire low-income individuals who would be more likely to receive credits in the Exchange. Additionally, the Finance bill would require an employer with more than 200 employees to automatically enroll employees into the employer’s health insurance plan. Employees may choose to receive coverage from another source. 

The Senate HELP bill requires employers to offer health insurance and pay 60% of the premium cost. Under this bill, employers will be subject to a $750 penalty for each full-time employee and $375 for each part-time employee who is uninsured and not offered insurance. The provision exempts employers with 25 or fewer employees. 

H.R. 3200 requires employers to offer coverage and pay at least 72.5% of premium for an individual and 65% of premium for a family. The penalty for not following this requirement is to pay 8% of the employer’s total payroll into the Health Insurance Exchange Trust Fund. Certain employers would receive exemptions from the penalty. For small employers with a payroll of less than $750,000 a year, the penalty would be imposed on a sliding scale instead of the flat assessment rate of 8%. 

Subsidies
The key to successfully mandating health insurance without creating a financial imposition on low and middle income families, is implementing adequate subsidies for people to buy insurance through the Exchange. The goal of the subsidies is to limit the premium cost to individuals based on a sliding scale. The House bill does the best job of limiting the percentage of an individual’s income that goes toward premiums. However, the Senate HELP bill provides the best subsidies or individuals below 150% FPL. The Senate Finance bill has improved their subsidies substantially; however more could still be done.   It is also important to keep in mind that Medicaid eligible individuals, non-citizens and non-Legal Permanent Residents will not qualify for the subsidies, with the exception of some Medicaid eligible individuals under the Senate Finance bill. Here is a table of the subsidies for income tiers under each bill:

 *The HELP bill raises Medicaid eligibility to 150% FPL and excludes Medicaid recipients from receiving subsidies. Both the Senate Finance and H.R. 3200 bills raise the eligibility to 133% FPL. However, under the Senate Finance individuals can choose to enroll in the Exchange and receive subsidies. 

**H.R. 3200 provides for subsidies on a sliding scale within an income bracket and designates an initial subsidy level and a maximum subsidy level for each bracket (i.e. individuals between 133%-150% FPL will receive subsidies that limit their premiums somewhere between 1.5% and 3% of their income.)

Out-of-pocket caps
Under the current health insurance system, a large number of Americans—including those who have health insurance-- pay for many services, treatments and tests out of their pockets, particularly for preventive care. The three health insurance reform bills would set a cap for what individuals and families could pay out-of-pocket in a year. The out-of-pocket caps must be substantial enough that individuals do not face underinsurance if faced with an illness or accident. That is, the caps should be low enough that insurance kicks in before families face financial insecurity and are unable to pay for necessary care. The below chart depicts the proposed caps included in the three bills as compared to the standards that would protect Americans from underinsurance.  

*The Senate HELP bill expands Medicaid to 150% FPL, so individuals in this income bracket would qualify for Medicaid

**As estimated by House Ways and Means as of July 31, 2009.

There is still much work to be done as the three health insurance reform bills come together, in order to ensure that comprehensive health insurance is truly accessible and affordable for Americans. The groundwork for such a solution is here. As Congress negotiates to create one final bill, they must keep in mind that the mandate and subsidies must complement each other to ensure quality, affordable health insurance choices because this is what Americans need and this is what they demand. 

Health care advocates throughout the country are urging Americans to call their Senators and ask them to support the affordability provisions in the Senate HELP bill. If you aren’t sure who your Senators are you can find out on Families USA’s website at http://ga3.org/familiesusa/leg-lookup/search.html. 

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Without passage this year of health insurance reform containing an expansion for low-income families, states will spend more on their programs for the poor than they currently pay out.  A recent Robert Wood Johnson Foundation report shows that within a decade the number of people without health insurance could increase by more than 30 percent in more than half of the states and in every state, the number of uninsured would increase by at least 10 percent.

Currently, only certain groups of low-income people are eligible for publicly provided health insurance—Medicaid—referred to below as “traditional eligibles.” Left out are approximately 60 million uninsured low-income adults between 18 and 65 who do not qualify for Medicaid, no matter how needy they may be, since that program has always targeted children, their parents (or other adult caretakers), the disabled and those over 65.  In fact, low-income adults below 200% of poverty account for just over half of the non-elderly uninsured. They do not have access to the care that can prevent a treatable problem from becoming an illness requiring hospitalization (and often becoming prematurely disabled or dying) and resulting in expensive bills (where the costs are often shifted onto other payers). 

The expansion of the Medicaid program can ably fill this enormous gap in coverage, and, in fact, is included as a provision in the three main bills aiming to reform the health insurance system. House Resolution 3200 America’s Affordable Health Choices Act (H.R. 3200), the Senate HELP Committee Affordable Health Choices Act (Senate HELP), and the Chairman Max Baucus’ Senate Finance Committee’s Mark (Chairman’s Mark) all seek to expand coverage to low-income adults. Click here to see a table format displaying the specific provisions in two of the bills addressing the expansion of public coverage or read further.

As you will see in the following descriptions of the competing proposals, the House version is more helpful on most issues. The Shriver Center supports the most helpful provision in each case—we favor more comprehensive, more affordable and higher quality coverage.

Expanding Access to Medicaid
H.R. 3200 and the Senate HELP Bill would expand Medicaid to all individuals up to 133% of the federal poverty line (FPL) and 150% FPL, respectively. The Chairman’s Mark concedes to states to make the final decision. States would have the option to expand Medicaid coverage to childless adults with 133% FPL as the minimum eligibility.

Cost Sharing Between the Federal Government and the States for Expanded Medicaid
Medicaid financing is currently shared across state or local governments and federal government following the formula set forth in the federal matching percentage for each state (officially known as the Federal Medical Assistance Percentage, or FMAP).  On average, the federal government pays for 57% of Medicaid costs, but this varies from a floor of 50% to a high of 76% in 2010.  However, states are receiving an enhanced FMAP as a result of the American Recovery and Reinvestment Act (ARRA) to help support Medicaid during the economic downturn, when demand for Medicaid increases and states can least afford to support their programs.

State governors are worried about the cost of Medicaid expansion and the reform proposals address these concerns. H.R. 3200 proposes full federal funding (100% FMAP) for new traditional eligibles between states’ eligibility levels as of June 16, 2009 and 133% FPL and traditional eligibles currently covered by waivers. Under the Chairman’s Mark, states would receive assistance in financing the cost of the Medicaid expansion through a percentage point increase in the FMAP. The percentage point increase in the FMAP for each state would depend on the “neediness” of that state (i.e. low Medicaid enrollment proportional to unemployment rates). By 2019 all states will receive a FMAP increase of 32.3% for the newly eligible (e.g., Illinois’ FMAP would be 82.3%).

Increase in Provider Rates
Currently, provider payment rates vary across states since state Medicaid programs have broad flexibility to set rates. On average, hospital fees are estimated to be 5% below Medicare rates, physician fees 40% below, and managed care rates about 15% below Medicare rates. Average Medicaid fees across the United States for primary care physicians are at 66% of Medicare fees.

H.R. 3200 phases in increases in payments for primary care services in fee-for-service and managed care to Medicare payment rates (80% of Medicare in 2010, 90% in 2011, and 100% in 2012 and after). The cost of the rate increases would be 100% federally financed over a 2009 base. An Energy and Commerce Committee amendment requires states to specify and get approval for the payment rates to be paid under the state’s Medicaid program. The amendment also requires an annual report on Medicaid payment rates and methodologies and an explanation of the process used to allow providers and the public opportunity to review and comments on rates.

The Chairman’s Mark does not specifically address provider rates but would establish a bundled payment demonstration project for up to 8 states for acute and post-acute care. The proposal also would establish a “Global Payments” demonstration project (providers are paid standardized per-patient annual fees designed to cover care for the entire year) for up to 5 states from 2010 to 2012 for large safety-net hospital systems. The Mark further sets forth the establishment of a CMS Innovation Center designed to test, evaluate, and expand in Medicare, Medicaid, and CHIP (Children’s Health Insurance Program) different payment structures and methodologies to foster patient-centered care, improve quality, and slow Medicare costs growth. Finally, the proposal would establish demonstration projects in Medicaid and CHIP to allow pediatric medical providers organized as accountable care organizations to share in cost savings.

Changes to Medicaid’s Benefits
In H.R. 3200, those eligible for Medicaid would continue to receive the traditional Medicaid benefits package (all “medically necessary” services). Under The Chairman’s Mark, all newly-eligible adults would receive a benefit package that meets minimum quality coverage requirements as determined by the new law. These packages are not likely to be as comprehensive as Medicaid.

In the Chairman’s Mark, all newly-eligible adults would receive benefits that meet the minimum requirements (including prescription drugs) as established by the Deficit Reduction Act. The Proposal would require states to offer premium assistance and wrap-around benefits to Medicaid beneficiaries who are offered Employer-Sponsored Insurance if it cost-effective to do so in 2013.

Choice of Medicaid or the Exchange
Some of the health insurance reform proposals would create a Health Insurance Exchange (the Exchange), which has been described as “a new entity intended to create a more organized and competitive market for health insurance by offering a choice of plans, establishing common rules regarding the offering and pricing of insurance, and providing information to help consumers better understand the options available to them.” One goal of an Exchange is to offer enrollees a choice of health insurance plans, and some proposals, including H.R. 3200, include a public plan option to foster competition among plans on the price of coverage and minimize the tendency for the plans to vary benefits in order to attract healthier than average enrollees.

Each of the proposals addresses the overlap of Medicaid and the Exchange a little differently. The Senate HELP proposal stipulates that people eligible for Medicaid would receive health insurance through the state and would, thus, be ineligible for the Exchange. H.R. 3200 would allow newly eligible individuals, the childless adults, to choose coverage through the Exchange, if they were enrolled in health coverage that qualifies under the new quality provisions during the six months before becoming Medicaid eligible.

Specifically, in H.R. 3200, non-traditional (childless adults) Medicaid eligibles may enroll in coverage through the Exchange if they were enrolled in qualified health coverage during the 6 months before becoming Medicaid eligible. States must enter into a “Memorandum of Understanding” with the Exchange to coordinate enrollment of individuals in Exchange-participating health plans and under the state’s Medicaid program. There is a “Medicaid screen and enroll obligation” requiring states to auto-enroll non-traditional Medicaid-eligible individuals in Medicaid if they apply for coverage in the Exchange and are found to be Medicaid eligible. For traditional eligibles, states can opt to use the same auto-enrollment process or use presumptive eligibility and follow Medicaid enrollment procedures. States may be authorized to determine eligibility for affordability credits through the Exchange.

Under the Chairman’s Mark, once the Exchange is fully operational, individuals below 100% FPL would be ineligible for the tax credit. However, beginning in 2014, individuals between 100-133% FPL could choose between Medicaid and tax credits for the Exchange. Senator Baucus recently updated the Chairman’s Mark to accept an amendment by Rep. Rockefeller (D, WV) that allows individuals above 133% FPL who receive only wrap-around Medicaid benefits to be eligible for tax credits through the state Exchange. The Chairman’s Mark also would require states to establish a Medicaid enrollment website to promote seamless enrollment between Medicaid and tax credits through a state exchange. These state Exchanges may contract with state Medicaid agencies to determine eligibility for Medicaid, CHIP, and tax credits for state residents if the contract lowers overall administrative costs and reduces the likelihood of eligibility errors and disruptions in coverage. Lastly, states would not have to maintain current eligibility levels for Medicaid coverage of non-pregnant, non-disabled adults with incomes above 133% FPL until Exchanges are fully operating or Jan. 1, 2014. States could cut back this eligibility as of Jan.1, 2010, if they are facing budget deficits or expect to face deficits in the coming year.

Maintenance of Effort (MOE) by the States
While states generally have flexibility to change optional eligibility levels for their state Medicaid programs, ARRA’s provision of additional funding for states in the form of an enhanced FMAP requires states to maintain eligibility levels and enrollment procedures from July 1, 2008 to be eligible for enhanced funds.

Under H.R. 3200, Medicaid eligibility standards, methodologies, or procedures (including waivers) may not be more restrictive that what was in place as of June 16, 2009. However, an Energy and Commerce Committee amendment provides an exception to the MOE for certain waivers that permit individuals to receive a premium or cost-sharing subsidy for individual or group health insurance coverage.

The Chairman’s Mark would require states to maintain existing Medicaid income eligibility levels for all Medicaid populations. The MOE for coverage above 133% FPL would expire when the state exchange becomes fully operational (expected to be 2013).
 

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[This is the first in a series of six articles summarizing the leading categories of issues at stake in the final stages -- the homestretch -- of the debate on national health insurance and health care reform.]

In a large sense, comprehensive health care reform is a major winner for all children, apart from the provisions that specifically apply to children.  Kids, after all, live in families, and those families live in communities.  If parents are insured and healthy, it helps kids: statistically, if parents are insured then children are enrolled, and if parents go to the doctor, then children go to the doctor.  It also helps children if there is less financial stress in families, a prime factor associated with family violence and disintegration.  And it helps children if they live in communities where people have access to health care and treatment.  It helps children if the overall health system costs less and concentrates more resources on the quality of care according to the most effective treatment methods.  It helps children if they can get insurance as dependents of their parents, regardless of where they live -- currently, many children are in a senseless lottery where their health insurance status depends on how states or employers treat their parents.  And it helps kids to make them insured on their 19th birthday, as if they continue to be important at that age.  Health reform is what awaits them on that birthday. 

But having said that, as we fight for quality affordable health insurance for every American, it is essential to ensure that the gains made to insure millions of children -- including those made earlier this year by this Administration and this Congress -- are not thoughtlessly reversed.  The recently released census data show that the rate of uninsured children is at an all time low, due largely to successful state health insurance programs.  But while the figures are encouraging for uninsured children, the numbers are distressing for their parents and other uninsured adults. The President is right in his approach to this complex national problem -- one of the cornerstones to getting it right is to affirm and even expand what works.  Above all, that should apply to children.  As Congress works through the homestretch, it should include features that guarantee that children's coverage under reform is at least equal to coverage under a good current state SCHIP program, and that we achieve universal coverage for children.  The Administration should make it clear that this is its position, too.

All of the proposals currently alive in the House and Senate essentially phase out the State Children's Health Insurance Program (SCHIP).  They move kids whose parents' income is below 133% of the federal poverty level (FPL) into Medicaid, and those whose parents' income is between 133% and 250% of the FPL into the health insurance Exchange -- which means those families will be purchasing insurance from an array of private insurance choices (and under all versions other than Baucus', the Exchange will also include the option to purchase a public health insurance plan).  The insurance available to cover children under the Exchange could be more costly to many families in the 133% to 250% FPL income range than their current coverage under Medicaid or SCHIP.  This cost increase could affect premiums as well as out of pocket co-pays.  In addition, the scope and quality of the coverage for children could be diluted under Exchange plans as compared to Medicaid or SCHIP.  There are a number of other possible losses for certain children in the Exchange as compared to the current situation in many states.

Several amendments have been added to the House bill that would protect children moving from Medicaid or SCHIP into the Exchange and strengthen SCHIP for those children who remain in the state programs.  An amendment introduced by Representative Diana DeGette (D, CO), would require the Secretary of Health and Human Services to submit a report comparing the coverage a child receives under an average state child health plan to that they would receive under the Exchange.  No child would be permitted to move from a state program into the Exchange until the Secretary has certified that children will receive comparable care under the Exchange to that they were receiving in the state programs.  If the Secretary finds that coverage is worse under the Exchange than under the state programs, changes would need to be made before children could move into the Exchange.
 
Also, the Scott Amendment, named for Rep. Robert C. Scott (D, VA), would require plans in the Exchange to include the full range of early and periodic screening, diagnosis and treatment services provided for under Medicaid through the age of 21.  And three amendments by Rep. Bobby Rush (D, IL) would have ensured that children receive identical coverage through the Exchange that they receive under Medicaid, that cost-sharing and affordability measures under Medicaid would follow children into the Exchange and reduce barriers to enrollment for eligible children. 

In the Senate Finance Committee, amendments to the Baucus mark have been filed that mirror those in the House bill regarding protections for children.  In addition, an amendment from Sen. Rockefeller (D, W.Va) would continue the SCHIP program until at least 2019. 

Those are the battle lines in the coming weeks.  Children will benefit greatly from health reform in general.  On the specifics, let's make sure that we do not roll back the recent progress on coverage and cost and that we guarantee affordable universal coverage and access to care for children.

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August was a long month of rowdy town hall meetings and outrageous rumors and attacks aimed at killing comprehensive health reform. But now it’s September. With his powerful speech to a joint session of Congress and vigorous personal advocacy, the President has turned the momentum and refocused the effort to pass a good bill. Polling shows strong, consistent public support. At long last the final one of the five congressional committees with jurisdiction, the Senate Finance Committee, has begun to mark up a bill. Senator Max Baucus of Montana, the committee's chair, released his version of a bill last week (known as "the chairman's mark" and normally accorded much deference by committee members of his own party). The Finance Committee will consider many amendments, and then pass a bill. All the other committees did their work before August.

The process is entering its homestretch. The Senate Finance Committee will complete its work in the next week or two, possibly improving on Baucus' suggested version. Then the Senate will need to reconcile that bill with the one passed by the health committee (called the HELP Committee, which was Sen. Kennedy's committee, now chaired by Sen. Harkin) and then pass it on the floor. The three House committees with jurisdiction have already reconciled their versions into one bill. It needs a floor vote. After both chambers pass bills, there will be a conference to reconcile the two bills, and then the conferenced version will go back to both floors for passage, at which point it will go to the President for signature.

In general, the Baucus proposal provides the "conservative" bookend of the coming debate, and the House and Senate HELP bills, which are similar, provide the other bookend. The Finance Committee, Senate reconciliation, and Senate-House conference are all points at which the whole proposal can be move one direction or another on the many issues within the package. To help understand what is being negotiated and decided, we will publish six blogs that summarize the major categories of issues and where the lines are being drawn on them. We will cover:

·         Children's coverage

·         Low-income coverage under Medicaid

·         Affordability, subsidies and the individual mandate

·         The Exchange and the public option

·         Health insurance reforms and health care cost controls

·         Paying for it and the impact on the deficit

The first one -- "Children's Coverage -- Do no Harm!" is also published today. If these blogs move you to reach out to your delegation in both houses of Congress, you can find the contact information HERE.

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This week the Shriver Center and United Power for Action and Justice collected videos that illustrate the desperate need for quality affordable health insurance choices.  It's not right that hard-working Americans are struggling to afford health insurance.  People shouldn't have to choose between going to see their doctor or paying their bills or saving for retirement.  These three individuals illustrate why our leaders need to make health care more affordable for everyone before our costs rise even higher: A veterinarian feels trapped in one high-cost plan in order to obtain necessary medication for himself and his family.  A self-employed individual ultimately chooses to forgo health insurance when it becomes too expensive.  A woman finds herself falling into debt when a health insurance plan does not deliver on its promises.

Click here to view the stories.

Please share this widely with your friends, family members and colleagues.

To share your own story click here.

Call your legislators today at 1-800-828-0498, and let them know that reform can't wait!   Don't know who your legislators are? Click here and Families USA will help you find them.

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This week the Shriver Center and United Power for Action and Justice collected stories from small business owners that illustrate that the time is NOW for a system that guarantees access for all to quality affordable health care so small businesses can thrive and propel our economy, job growth and innovation.  The lack of affordable health insurance choices forces many Americans to forgo jobs with small employers that are unable to afford private health insurance and it discourages small business growth, the backbone of the American economy.   Three small business owners discover that affordable, quality insurance that includes preventive health care is unavailable to them and their employees: A small business owner loses employees when he cannot afford to offer the same health insurance benefits that a large corporation can.  A designer settles for insurance that may only cover catastrophes.  An entrepreneur cannot save for retirement because of her astronomical health insurance costs.

Click here to view the stories.

Please share this widely with your friends, family members and colleagues.

To share your own story click here.

Call your legislators today at 1-800-828-0498, and let them know that reform can't wait!   Don't know who your legislators are? Click here and Families USA will help you find them.

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This week the Shriver Center and United Power for Action and Justice collected stories from three individuals who find they cannot rely on their health insurance during times of transition or hardship.  Families should be able to provide adequate health care for their children and individuals should have the proper access to preventive care.  We cannot afford to wait for affordable and secure health care.  These stories illustrate the need for health reform that provides peace of mind no matter what life might throw your way: A new mother cannot afford to pay for her hospital bills and a new daycare expense.  A family of six worries about paying for essential drugs and regular doctor visits.  A man faces discrimination when applying for individual private insurance.  

Click here to view the stories.

Please share this widely with your friends, family members and colleagues.

To share your own story click here.

Call your legislators today at 1-800-828-0498, and let them know that reform can't wait!   Don't know who your legislators are? Click here and Families USA will help you find them.

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The Shriver Center Board of Directors and staff are deeply saddened by the passing of Senator Edward M. Kennedy, the "Lion of the Senate", and an inspiration to all who are committed to the achievement of economic and social justice. Senator Kennedy championed access to quality health care, education and civil rights for all people in the United States and around the world. He authored more pieces of major legislation than any other United States senator and recently successfully led efforts to pass the Lilly Ledbetter Fair Pay Act that ensures equal pay for equal work. He will be greatly missed. Our thoughts are with the Kennedy family and the extended family of Kennedy staff and friends across the country.

Upon learning of Senator Kennedy’s passing, several staff members took time to reflect on his role in American history.

I would like to express my sadness brought about by the death of Senator Ted Kennedy. I found myself crying this morning and reflecting on the outstanding services the Kennedy family has given to the people who have needed help, and what the family has meant to me. I can recall standing on the cafeteria steps at Jackson State University and being told that President Kennedy had been assassinated, and how for weeks I cried. I vividly remember watching my colleague James Meredith leave Jackson State to attend Old Miss and how President Kennedy was so determined for him to have rights - the same rights as anyone else - that he sent members of the U.S. National Guards to escort him to class. I just want to thank Sen. Kennedy and the Kennedy family for their fight for justice for those who are less fortunate. I wish there was a way I could express myself nationally.             

- Nancy Carey, Administrative Assistant

I, too, am sad to hear the news about Senator Kennedy. His family has been a part of my life forever. Coming from a large family, I remember when I was growing up my father used to read the newspaper about the Kennedys and would tell us how we must strive to have a better life. Sen. Kennedy is going to be missed greatly, especially by many African-Americans of my generation.

            - Mae English, Administrative Associate

This is very sad news for all of us--and even sadder that he will not be around to help our country achieve real health care reform.

-Wendy Pollack, Director, Women's Law & Policy Project

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As Illinois debates how to fix its disastrous budget, several politicians and interest groups are claiming that the State can save a billion dollars just by moving Medicaid enrollees to HMO-style capitated managed care.  This is recited like a liturgy in church, but rarely accompanied by any meaningful details.  There's a good reason for that -- the people chanting this verse have not learned from the failed experiments of the past, and thus, wisely, they refrain from trying to give details.  It's a political argument, not a real policy idea and not good reform.  For that reason, the debate requires some facts. 

It is first necessary to understand what Illinois is already doing.  Our existing model of primary care case management-disease management (PCCM-DM) for the majority of Medicaid enrollees has been showing impressive results.  Illinois already links 1.7 million of the 2.4 million Medicaid recipients with primary-care doctors' offices that are paid monthly fees to manage the care for each enrollee. The program encourages outreach and preventive health-care services for patients such as screenings, tests, shots and medicines, which helps catch medical problems early and avoids costly emergency room use down the road.  Last year efficient implementation of this care management program saved the state more than $100 million. 

Illinois has an additional program that helps 220,000 Illinoisans with chronic illnesses better manage and coordinate their care and reduce the incidence of costly acute medical crises.  It saved the state an additional $104 million in 2008.  

So, with the existing PCCM-DM system providing good care while capturing significant savings, the advocates for capitated managed care would seem hard pressed to explain what additional savings or care improvements their system might obtain.  They avoid trying to answer that question, and instead fall back on the panicky assertion that Medicaid costs "are not sustainable".  But that claim not only avoids the issues about what we should actually do, it is also misleading.  When you take a look at the larger picture you see that Medicaid growth is not in a vacuum; the entire health care system overall is what is unsustainable.  For instance, in 2007, the U.S. spent $2.2 trillion on health care, an average of $7,421 per person.   And since 1970, health care spending has grown at an average annual rate of 9.6 percent or 2.4 percentage points faster than nominal GDP. 

Compared to those numbers, Illinois' Medicaid program is actually doing quite well.  There has been an average annual reduction of 3 percent in the program's cost per person over the last four years.    Medicaid billings in Illinois grew slower than the national average at just 4.2 percent from 2008 to 2009 and just 4.4 percent over the last four years.   Medical costs are expected to grow by 7.0 percent in FY 2010-below the projected national average of 7.7 percent. Illinois ranks 42nd among states in per Medicaid beneficiary expenditures (Illinois is at $4,129 per beneficiary; the national average is $4,575).   This is much lower than the three states that have recently implemented broad-based capitated managed care programs of the type being touted for Illinois. In fact, Illinois has worked to minimize the cost of medical care to taxpayers and maximize federal dollars, resulting in needing just $.39 in state general taxes for every $1.00 spent on Illinois Medicaid programs.

So, the current Medicaid system in Illinois already captures managed care savings, already spends less per covered person than most other states, including those with capitated managed care programs, and already captures substantial federal funds for the lion's share of the costs.  What additional benefit would be derived from switching to capitated managed care?  

HMO-style managed care pays a doctor a flat rate each month for each patient, regardless of how much care is provided (that is called "capitation").  The health care provider assumes all of the risk for all of the health care provided.  Historically, and logically, this model of care has resulted in difficult problems for patients to access needed care, preventive care, and specialty care.  It is a bottom line-focused business that has to include a margin to pay its senior executives and produce profits for shareholders.  The model itself raises concerns about its ability to produce savings to the state below its already-low per person Medicaid expenditures, plus profits, without compromising care.

To be clear, we are interested in any and all efficiencies in Medicaid, including those that might flow from a capitated managed care model, but they must be done in a way that realizes savings without compromising care and patient outcomes. 

Adding to the concerns evident from the model itself, there have been misadventures around the country.   California experimented with requiring its Medicaid population to move to capitated managed care in an effort to control costs.  In the end, it was found that despite a dramatic increase in Medicaid capitated managed care enrollment there was neither a significant reduction in spending nor improved health outcomes, and a study concluded that this policy actually, "reduced the efficiency of the Medicaid program in California...In fact, Medicaid spending appeared to increase by almost 20 percent following the shift to managed care and persisted long after the mandates first took effect."   

Nor can Illinois ignore its own recent history: The Illinois case of Memisovski v.Maram revealed that well child care at Medicaid HMOs in Cook County was well below that provided in fee for service, and it revealed that the HMOs could not account for the amount of care being provided. Further, Amerigroup, one of the managed care organizations with which Illinois once contracted, defrauded Medicaid by enrolling recipients in a discriminatory way, systematically avoiding pregnant women and people with disabilities.  This history places a burden of proof on the proponents of capitated managed care to show that it will not endanger patients in a failed attempt to save money.  The baldly political invocation of the capitated managed care idea in the current state budget debates does not meet this burden - it doesn't even try.

Perhaps the state can devise and implement an integrated, well-coordinated capitated managed care program that resolves these concerns.  The Quinn Administration is planning a pilot program, and we hope it is done with this kind of care.  But if it is meant magically to produce $1 billion dollars in quick savings, then it will fail.  The only way to get a billion dollars, if you're not just cutting care, is to reform the whole healthcare system.  They're doing that in Washington.

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Why Health Reform Will Happen: Real People Explain Why They're Fed Up

This week, the Shriver Center and United Power for Action and Justice have collected stories that illustrate the damaging effects of the health care crisis on small business owners. Small business owners struggle to provide affordable insurance for themselves and their employees. Strong small businesses are key to the United States' economic health. Encouraging small business growth and strength means reforming the health care system to ensure affordable, quality care choices. Below, three individuals share their stories: A small business owner faces staggering premiums. A self-employed consultant struggles to find a policy to cover a child's eye condition. And a non-profit organization CEO grapples with trying to adequately cover his employees in an uncontrollable health insurance system.

Click here to see real people tell their stories.

Please share this widely with your friends, family members and colleagues

To share your own story click here.

Call your legislators today at 1-800-828-0498, and let them know that reform can't wait! Don't know who your legislators are? Click here.

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“The high cost of health care is killing us.” So testified John Arensmeyer, the founder and CEO of the Small Business Majority, before a congressional committee regarding its health care reform draft proposal. The Small Business Majority (SBM) is a nonprofit, nonpartisan organization representing 27 million Americans who are self-employed or business owners of less than 100 employees. SBM is supporting comprehensive health care reform efforts that control the skyrocketing cost of health care to make coverage affordable and improve the competitiveness of small businesses.   A significant portion of the SBM membership is uninsured: of the 45 million uninsured Americans in 2007, almost 23 million were small business owners, employees or their dependents.

At the hearing, Arensmeyer testified that the crushing cost of health care was reported to be the biggest overall problem by 78% of small businesses responding to a Robert Wood Johnson Foundation survey-outranking even fuel and energy costs and the weak economy. A telephone survey of small business owners in 16 states furtherrevealed that 72% are struggling to afford health insurance and 69% say reform is necessary to save the economy. The results are not partisan; 68% of respondents identified as Republican or independent. 

“Health care reform is not an ideological issue—it’s an economic one,” said Arensmayer. Small businesses are the economic engine of our country; when they struggle, our entire economy struggles. Health insurance companies charge the self-employed and small businesses much higher rates than larger companies. Consequently, small businesses are forced to either drop coverage for their employees, charge employees a higher share of the premiums or dramatically scale back health care coverage. 

“It’s common to hear about double-digit premium increases each year, eating into profits and sometimes forcing staff reductions,” Arensmeyer testified. He called for:

• guaranteed availability of coverage
•  no exclusions for preexisting health conditions
•  health insurance rating rules that prohibit adjustments for health status
•  a cap on premiums and out-of-pocket spending
•  marketplace transparency
•  affordability credits to ensure that small business employees can actually participate without financial hardship

Health care costs are growing faster than the overall economy and without comprehensive health care reform, small businesses will pay nearly $2.4 trillion dollars over the next 10 years in healthcare costs for their workers, according to MIT economist Dr. Jonathan Gruber. Further, without reform, 178,000 small business jobs are estimated to be lost by 2018 as a result of healthcare costs.

Comprehensive health care reform is essential for the health of American small business, which is essential for the American economy and is a cornerstone of the American notion of opportunity and growth. We all need a health care system that controls costs, restores a sense of control and choice, and gets out of the way of individual enterprise.

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States across the country are wrestling with budget crises.  In that context attention always turns to Medicaid, just because it is a large budget line, and it is therefore an attractive mark for anti-tax advocates who do not really have viable alternatives to taxes but like to speak vaguely about cutting spending.  The Illinois budget mess offers a lesson in why these folks have the germ of a good idea but are missing the most promising way to achieve it.

Most knowledgeable people concede that there is no way out of the huge Illinois budget deficit but to raise revenues.  Of course, many of those same people do not support raising the necessary revenues.  The opponents disingenuously cry out that Illinois must never increase revenues until it has made “cuts” to the spending side.  Tellingly, they have been unwilling or unable to specify exactly where they would cut the billions needed to balance the budget without increased revenues.  Accountability is not their strong suit.

But there is nevertheless an interesting modest overlap between this “cuts” position of the opponents of revenue increases, and the position of the proponents. Led by the Governor, the proponents are committed to making reductions in state spending, as part of the overall budget package that includes the revenue increases.  Greater efficiency is always a good and desired goal, and it is even more important in such difficult times. Moreover, revenue increases are more palatable, more fair, if state government is making efficiency improvements at the same time.  

So both sides are focusing on ideas for cuts.  One of the centers of attention for this kind of brainstorming is all of the state’s publicly supported health care coverages, popularly lumped together under the term “Medicaid”.  The programs cover children, low income working parents, people with disabilities, and the elderly. The opponents of revenues, citing old and sloppily done consultants’ reports, say that Illinois could be saving $1 billion or more on Medicaid, mostly by imposing hardcore HMO-style managed care, insisting that people use generic instead of costly brand name drugs, and caring for more people in the community instead of nursing homes. The proponents of revenues, citing actual experience in Illinois that shows the state is already realizing significant savings from care management, generic drugs, and community based care, say that they are willing to try any reasonable new ideas, but estimate savings in the tens of millions. The fact is that Illinois is already among the lowest in per person Medicaid expenditures.

Both sides are missing the most likely source of significant Medicaid savings that will neither limit coverage nor impair care. It is not a Springfield initiative, but a Washington DC initiative that will get this done. As should be obvious, Medicaid is just one part of the larger health care system, most of which is in the private sector. Medicaid suffers from the same system-wide phenomena that are driving the dizzying upward spiral of health care costs for all of us – profiteering across the board, inefficiencies, lack of focus on prevention, loss of consumer choice and control, and so forth. It is this increase in cost, decrease in control, and loss of peace of mind that is driving the anger in the American people that in turn is driving the move towards comprehensive reform being led by President Obama. 

These problems in the larger health care system fuel the trend in Medicaid spending. Thankfully, every year Medicaid spending (known as Medicaid “liabilities”) grows at a rate that is smaller than the overall consumer price index for medical related goods and services. Medicaid is a more efficient system. Yet Medicaid costs are necessarily directly related to the larger health system market. When health care costs go up generally, they also go up for Medicaid.

All those folks in Springfield looking for ways to spend less on Medicaid should realize that they are looking in the wrong town. The action on this is in Washington, where the battle over comprehensive reform is playing out right now. Just a couple of days ago, President Obama asked Congress to produce ideas for overall health system reforms to bring down the cost of care, or at least the rate of growth of the cost of care. He noted that in so doing, they would also be helping to produce $200-300 billion in savings for Medicare and Medicaid. 

For those truly interested in controlling the growth in Medicaid spending, the most promising course is to help make sure that the drive for national comprehensive health care reform is successful this year.  Meanwhile, the Springfield folks should tend to the knitting and vote for the revenues needed to fund state government.

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What’s the state of health care reform now that Congress has begun seriously grappling with the topic? Are we likely to see a comprehensive health care reform bill this year, as promised? Key developments in the past few weeks offer some encouraging signs.

There are five Congressional committees that will be involved in drafting health care reform legislation (three in the House, two in the Senate), and consensus among them will be vital for passage of any major bill. The House committees involved - Ways and Means, Education and Labor, and Energy and Commerce – have announced that they will propose a single bill, although probably not until mid-July (a leaked Energy and Commerce Committee PDF offers some hints as to what that bill might look like). 

Things get more complicated on the Senate side. The two important Senate committees – Finance and Health, Education, Labor and Pensions (HELP) – have a shorter timeline, promising bills by the end of June. That deadline is likely to be met, but probably because the two committees are drafting legislation independent of one another. Senator Kennedy (chairman of the HELP Committee) and Senator Baucus (chairman of the Finance Committee) have released a joint letter stating their intention to create legislation that can be “quickly merged into one bill” (which will be necessary before the Senate can vote on it) but so far the two committees have their differences. 

On the Finance side, Chairman Baucus and Senator Grassley (the highest-ranking Republican) are committed to bipartisan reform, and the committee’s recently-released report outlines proposals that may not be as aggressive as some advocates would prefer. The public plan option (guaranteeing a government-run plan as an affordable option for all Americans, at all times) is mentioned but not required in the outline, while many advocates are convinced such a plan is necessary to keep private insurance honest and efficient. And there’s not a lot of talk about protecting low-income consumers from big out-of-pocket costs like deductibles and premiums. On the other hand, Senator Kennedy’s plan will likely include stronger safety-net provisions and the requirement of a public plan, along with a requirement that all employers either offer their employees insurance or pay into funds that help cover the uninsured. 

Furthermore, Senator Baucus has come out in opposition to passing reform through a procedure called budget reconciliation. Reconciliation would make the health care legislation filibuster-proof, allowing it to pass without any Republican votes at all. Many high-ranking Democrats favor using this procedure if necessary, while Senator Baucus wants to keep it bipartisan by coming to an agreement with at least some Republicans. The fact, though, that affirmations of support and good-faith effort have been made in writing by all committee chairmen, and the degree to which all stakeholders have been involved in the legislative process so far, are good signs. The legislation for health care reform will be drafted and proposed this year, perhaps by August. At that point it is up to us, advocates and consumers alike, to make sure it passes. 

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