Congress Must Act to Extend Funding for the CHIP Program

More than 174,000 Illinois children could lose their current health coverage if Congress does not act now to extend funding for the Children’s Health Insurance Program (CHIP).     

In Illinois, CHIP federal dollars provide significant support to the All Kids program, which gives low-income children access to comprehensive health coverage, including screening, prevention, medically necessary diagnostic and treatment services, and vision, mental health, and hearing services.  Federal CHIP dollars also help sustain All Kids’ oral health safety net, covering services such as teeth cleanings, check-ups, x-rays, and fluoride treatments.  

CHIP has also helped Illinois emerge as a national leader of children’s health coverage.  In the past five years, Illinois has received more than $60 million in bonus payments under CHIP—and Illinois is one of only nine states to receive bonus payments for five consecutive years.  Federal CHIP funding has helped bring Illinois’s children’s coverage rate up to more than 95 percent, one of the highest rates in the country.

Without continued CHIP funding, Illinois would lose access to significant federal dollars—as much as $454 million in 2016 alone—at a time when our state has never been more budget-strapped. And failing to meet children’s health needs today prevents Illinois from reaping the long-term social and economic benefits associated with children’s health coverage, including increased educational attainment and higher future earning potential.

Extending CHIP funding through 2019 would accomplish dual goals. It would limit disruptions in medical and oral health care for children currently enrolled in the CHIP-funded Illinois All Kids program. It would also provide our state with the stability it needs to effectively plan a budget. Congress needs to pass a four-year extension of CHIP funding that maintains the current elements of the program already in place.


White House Holds First Ever Environmental Justice Forum

GlobeThe White House held an Environmental Justice Forum on December 15, 2010 – the first ever such forum. Participants included Environmental Protection Agency (EPA) Administrator Lisa Jackson, Council on Environmental Quality (CEQ) Chair Nancy Sutley, and Attorney General Eric Holder (recipient of the Sargent Shriver National Center on Poverty Law’s 2010 Equal Justice Award), as well as over 100 environmental groups. The forum reinforced President Obama’s goal of requiring federal agencies to consider environmental justice impacts in their daily decision-making. 

The forum comes after EPA’s Jackson and CEQ’s Sutley reconvened the Interagency Working Group on Environmental Justice for the first time in 10 years, and the White House announced its recommitment to the Executive Order on Environmental Justice, which requires federal agencies to collaborate to further the goal of ensuring that minority, low-income, and other underrepresented communities do not bear the brunt of environmental degradation.

In his remarks, Attorney General Holder said that the Justice Department’s Environmental Justice Initiative will address the link between race, economics, employment, and environmental sustainability by integrating environmental justice goals into its enforcement and strategic planning. He stated that it is “unconscionable” that minority and low-income neighborhoods bear a disproportionate burden of pollution and that the Civil Rights Act of 1964 is a potent tool for enforcement with the “potential to transform lives and strengthen communities.” He called on all Justice Department attorneys to “start thinking of environmental justice as a civil rights issue” and went on to say that “Dr. Martin Luther King, Jr.—a father of our nation’s environmental justice movement—may have put it best when he declared that, ‘Injustice anywhere is a threat to justice everywhere.’”

Echoing Holder’s comments, CEQ’s Sutley said that the Forum was the start of a dialogue across agencies to promote a healthy environment for all people, including traditionally underrepresented communities who are overburdened with environmental negatives. She noted that environmentally degraded communities not only fare worse on health issues, but that a poor environment can limit economic opportunities.

The forum also spotlighted several environmental justice initiatives that the Obama Administration has undertaken. For instance, the EPA, Department of Transportation, and Department of Housing and Urban Development have already collaborated in a Partnership for Sustainable Communities grant program to promote walkable, liveable, and healthy communities, by awarding grants to several communities and community groups around the country.  

The EPA’s senior advisor on environmental justice reported on Plan EJ2014, part of EPA’s initiative to expand the conversation on environmental justice. The goals of the Plan are to:

  • Protect health in communities over-burdened by pollution.
  • Empower communities to take action to improve their health and environment.
  • Establish partnerships with local, state, tribal, and federal organizations to achieve healthy and sustainable communities.

The White House emphasized its commitment to addressing climate change issues, with CEQ’s Sutley reiterating the White House’s commitment to ensuring that low-income communities are provided with the tools to cope with global warming, as it will hit them the hardest. For an in-depth look at the meaning of climate change and a green economy for low-income people and communities and key actions legal advocates can take in response, see the Shriver Center’s Clearinghouse Review, September-October 2010 Special Issue Climate Change and a Green Economy: New Advocacy Opportunities.

Responding to questions regarding sustainable communities, Sutley noted that the Department of Agriculture, Department of Health andHuman Services, and First Lady Michelle Obama have cooperated to created “Know Your Farmer, Know Your Food” a locally grown food initiative. Sutley also noted that President recently signed legislation reauthorizing the nation’s child nutrition programs; the law promotes healthy eating at home and in schools, gardens, and locally grown food sources. And she mentioned the America’s Great Outdoor Initiative, which is spearheaded by the Department of Interior and aims create and preserve green spaces in communities around the country.

A video recording of the White House Forum on Environmental Justice is available on YouTube (Part I, Part II, Part III and Part IV). Readers can also see a video of the live chat session held after the forum, “Open for Questions: Environmental Justice.”


Kathleen Donahue McNally coauthored this article.


Americans Want Health Care Reform to Go Forward

StethoscopeSome people are spinning hard about the outcome of the recent mid-term elections. They are trying to say that the changes in Congress were a “mandate” to repeal health care reform. As usual, most of those spinners have little to say about how to resolve health care issues--for them health care is an ideological or political issue, not an issue of importance in everyday lives. It is a tactical issue in the beltway game, a ploy in the never-ending struggle for power and for special interest money.

But out here, when the issue is reduced to kitchen-table reality, people don’t think ideologically or politically. They think about their own health care, their families’ health care, and their own financial circumstances. 

Here are some numbers about health coverage and the election. 

Even on the ideological level on which they choose to operate, the spinners are wrong. The election result was driven by concern about the economy and jobs, not health care. According to a CNN exit poll, only 19% of voters named health care reform as their top concern--a distant second to the 61% of voters most concerned with the economy.

On the big abstract ideological question about support for the health reform law, the voters split down the middle: 48% say they support repeal and 47% say they want the reform law to stay the same or be expanded. Some mandate. 

Polls consistently confirm that, when the public hears truthful facts (as opposed to the other kind of “facts”) about the health reform law, they want the benefits and support health reform. The specifics of health care reform already help people in ways that matter deeply to them. Undoing health care reform would mean:

  • People would continue to be denied coverage or charged more for it due to pre-existing conditions.
  • People diagnosed with the particular pre-existing condition of being female would continue to be discriminated against in the cost of their coverage. The spinners would continue that outrageous discrimination. 
  • People would continue to have coverage dropped when they get sick.
  • People would continue to have lifetime caps on their insurance coverage.
  • Small businesses would continue to have to pay higher rates for health insurance than big corporations.
  • There will be no smart investment in prevention as the focus of our healthcare system--clearly the way to get both lower cost and better patient outcomes.
  • People would lose the comfort of knowing that, no matter what happens to their job, their health, or their family, there will always be access to affordable, decent coverage.  
  • Entrepreneurs would continue to experience the drag on their creativity and chances for success caused by the health coverage problems. And health coverage issues would continue to prevent would-be entrepreneurs from even getting started, stuck in their current jobs in order to retain insurance.

The post-election spinners stay far away from these real problems. The new law leaves the private insurance sector in place (a single-payer system would have ended it), but imposes fair boundaries on it. The spinners, scrupulously avoiding anything specific about how to address health coverage issues, instead simply call the new law names: “takeover,” “socialism.” But calling something a name is not the same as talking about it honestly--indeed, it’s a time-honored way to stifle full discussion. The health reform law is in fact a very promising public-private effort to address a problem that plagues American households everywhere. The spinners are wrong about the importance to real people of health care reform. When the focus is on the actual health coverage problems that plague American households, most Americans want their federal and state officials to get on with implementation--and do a good job of it.


Health Care Reform Is Here!

Child Playing DoctorIt’s finally here.

Families across the country can breathe a sigh of relief now that we have reached a major milestone of the new health care law. Starting today, many of the provisions of the new health reform law go into effect! Because of the new law, families will no longer have to worry about their children being denied coverage because of a pre-existing condition (and starting in 2014, no one will have that worry), being dropped from insurance, or facing bankruptcy because of reaching the “lifetime limit” on insurance coverage and still needing expensive health care. Health plans don't have to implement the provisions until their next annual renewal date (so for plans that begin their coverage year on Jan. 1, 2011, that's when the changes will start). Thanks to the Affordable Care Act, the law is finally on our side!

However, some people have spread confusion about the new law. That’s why it’s so important that all of us to get the facts out about our new health care rights under this new law. We need to make sure our families, friends and neighbors understand how the new law will help them.

Take a look at the health care changes going into effect on September 23, 2010, and then send them along to your friends and family:

And if you want more information, visit or Families USA's summary of the new health reform law.

No More Getting Dropped After You Get Sick:  You can no longer be cut after the fact.

Free Preventive Care: New health insurance plans must provide preventive services such as mammograms and immunizations without patients paying deductibles or co-payments.

Expanded Coverage to Young Adults:  Young adults can stay on their parents’ health plan until age 26. See Young Invincible website for more information.

Immediate Access for Children, Even If They Have Pre-Existing Conditions: Children under 19 can no longer be rejected from health care plans due to pre-existing conditions or have their health condition be uncovered. New plans cannot exclude children from coverage for a pre-existing condition. And in 2014, adults cannot be denied coverage due to a pre-existing condition. (Uninsured adults with a pre-existing condition may qualify for Illinois’ Pre-existing Condition Insurance Plan (IPXP).)

No More “Lifetime Limits”:  Insurers can no longer stop your benefits because you have “maxed out.”

Tax Credits for Small Businesses Providing Coverage to Workers:  Already effective, qualified small businesses get tax credit for up to 35% of their premiums for covering their workers.

Medicare Prescription Drugs Rebates for Seniors: Medicare Part D enrollees who hit the Medicare prescription drug benefit gap in 2010 will automatically receive a $250 rebate check.

Direct access to OB/GYNs: The new health reform law provides direct access to in-network OB/GYNs for women in health plans that require them to designate primary care providers. This means that, if you are a female, you can see an OB/GYN without prior authorization from the health plan or referral from another doctor, such as your primary care provider.

Access to out-of-network emergency room services: The new law prevents health plans from requiring higher copayments or co-insurance) for out-of-network emergency room services. The new law also prohibits health plans from requiring you to get prior approval before seeking emergency room services from a provider or hospital outside your plan’s network.

We need your help to set the record straight about these changes – share them with your friends and family now!

And there is more to come! Here are some other changes coming in the next year:

Insurers Must Spend More of Your Premium Dollars on Medical Care: Starting in January 2011, your health insurer must spend 80 to 85 cents of your premium dollar on actual health care and quality improvement, or you get a rebate.

Cost-savings to Seniors on Medicare: Effective January 1, 2011, seniors who reach the coverage gap will receive a 50-percent discount when buying Medicare Part D covered brand-name prescription drugs. Over the next ten years, seniors will receive additional savings on brand-name and generic drugs until the coverage gap is closed in 2020.

Free Preventive Services for Seniors on Medicare: Effective January 1, 2011, the law provides certain free preventive services, such as annual wellness visits and personalized prevention plans, for seniors on Medicare. 

Reducing Health Disparities: Effective March 2012, to help understand and reduce persistent health disparities, the law requires any ongoing or new federal health program to collect and report racial, ethnic, and language data. The Secretary of Health and Human Services will use this data to help identify and reduce disparities.

Increasing Medicaid Payments for Primary Care Doctors: Effective January 1, 2013, As Medicaid programs and providers prepare to cover more patients in 2014, the Act requires states to pay primary care physicians no less than 100 percent of Medicare payment rates in 2013 and 2014 for primary care services. The increase is fully funded by the federal government.

Increasing Access to Medicaid: Effective January 1, 2014, Americans who earn less than 133 percent of the poverty level (approximately $14,000 for an individual and $29,000 for a family of four) will be eligible to enroll in Medicaid. States will receive 100 percent federal funding for the first three years to support this expanded coverage, phasing to 90 percent federal funding in subsequent years.

Access to Insurance Options, Subsides, and Public Programs on the Exchange: Effective January 1, 2014, Starting in 2014 if your employer doesn’t offer insurance, you will be able to buy insurance directly in an Exchange -- a new transparent and competitive insurance marketplace where individuals and small businesses can buy affordable and qualified health benefit plans.  Exchanges will offer you a choice of health plans that meet certain benefits and cost standards.  Starting in 2014, Members of Congress will be getting their health care insurance through Exchanges, and you will be able buy your insurance through Exchanges too.

Help with Purchasing Private Insurance: If you can’t find affordable, quality coverage, you’ll have new options and help purchasing insurance.  Starting in 2014, people will be able to buy cheaper coverage through the “exchange”—one-stop shopping access point for insurance. Exchanges will also set standards to keep insurers honest and provide value for premium dollars. If you earn up to roughly $88,000 a year (family of four), you’ll be eligible for new premium tax credits to help you afford coverage.

And much, much more!


Historic Social Change

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.


Congress Makes History

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.

Medicaid Plays a Critical Role in Illinois's Economy: A New Report by the Center for Tax and Budget Accountability

Medicaid is a vital safety net for Illinois residents who cannot afford increasingly expensive private health insurance and fills the gap in employer-provided insurance for the growing ranks of the unemployed and their families. But a recent report by Heather O’Donnell, of the Center for Tax and Budget Accountability (CTBA), Medicaid Plays a Critical Role in Illinois’ Economy, reveals the tremendous additional impact that Medicaid dollars have in bolstering our economy. The report shows that Medicaid not only provided health care coverage to 2.6 million Illinoisans (over half of whom were children) in 2008, it also supported “wages, employment, business income, consumer spending, state tax revenue, and overall economic output.”

The Medicaid program is financed by both the state and federal government. In fiscal year 2008, 53% of the total funding for Medicaid came from the federal government. Under the federal American Recovery and Reinvestment Act (ARRA), states receive increased federal funding through December 2010 to help during the recession. The CTBA report explains that, with this enhanced federal share, if Illinois cuts Medicaid spending by $10 million, it will actually lose $16.2 million in federal matching funds.  

But that would only be the beginning of the impact of such a cut. Medicaid spending reimburses health care providers, and then providers pay employees’ wages. The employees then purchase goods and services in the local economy. According to the CTBA report, Illinois’s 2009 state and federal Medicaid spending resulted in approximately $46 billion in additional business activity and supported about 385,742 jobs. This would mean that a cut of just $10 million in state Medicaid spending would result in an estimated loss of more than $80.4 million in business activity and $27.6 million in lost wages across Illinois.  

This positive ripple effect of Medicaid spending means cuts to Medicaid programs would hurt the Illinois economy, increase unemployment, and prolong the recession. Cuts to Medicaid would not only deprive people of health coverage and health care, but also exacerbate the financial strain felt by businesses and workers and cause Illinois’ economy to further deteriorate. 


The Health Insurance Reform Finish Line:

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. 

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. 

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. 


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.

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. 

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. 

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. 

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. 

Homestretch 6: Paying for it and the impact on the deficit

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.

Homestretch 4 - The Exchange, public option and CO-OPs

[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.]

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 planSenate 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.

Homestretch Part 3: Affordability Measures

[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%. 

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:


Senate Finance Committee

Senate HELP Committee

H.R. 3200**

































 *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.  


Senate Finance Committee

Senate HELP Committee

H.R. 3200**

Standard 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

HMO-style Managed Care is Not the Way to Balance the Budget

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.