State Coverage Expansions: Opportunities and Challenges

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State Coverage Expansions Opportunities and
Challenges Jeremy J. Alberga Senior Manager New
Mexico State Planning Grant April 30, 2004
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Presentation outline

• State environmental scan
• State Planning Grant
• Overview
• Research
• Findings
• Expansion options

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Premiums Off the Charts
Sources Kaiser/HRET Survey of Employer-Sponsored
Health Benefits 1999, 2000, 2001 KPMG Survey of
Employer-Sponsored Health Benefits 1988, 1993,
1996.
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Whats Driving Cost Increases?

• New technology
• Hospital and physician spending
• Labor
• Cost-shift?
• Prescription drugs
• Consumer backlash to tightly controlled managed
  care plans
• More inclusive provider networks
• Underwriting cycle
• State benefit mandates?

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Challenges from all sides
State/Federal Partnership Who pays, who dictates
key parameters? E.g., long-term care, dual
eligibles.
Private market Drop in small employer coverage,
continuing premium increases
THE STATES
US health care system Increasing cost of health
care (rising hospital costs, technology, aging,
Rx, etc.) serious quality issues growing
uninsured
Other state obligations Massive budget deficits,
mounting security/public health commitments, K-12
education, etc.
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State environmental scan
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How are states reacting to Medicaid shortfalls?

• Cost containment
• Prioritizing populations
• Limiting benefit packages
• Bolstering the safety net
• Looking for fiscal relief

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Private trends affect number of uninsured

• 2000-2002 2.7 decrease in private offering 7m
  more uninsured
• Employers struggling with average 14 premium
  growth in 2003

Sources Urban Institute Census Bureau Current
Population Survey, 2001, 2002 Kaiser/HRET 2003
Employer Health Benefits Survey
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Understanding the uninsured Multiple solutions?
Eligible for public programs but not enrolled (
12 million)1
Poor but not eligible for public programs (10
million) 1
Moderate to high income (18.8 million) 2
lt100 FPL 10.1 million2
100-199FPL 12.1 million2
200-299 FPL 7.4 million2
300 FPL 11.4 million2
Adapted from NIHCM, 2002 with data from 1.
Urban Institute, 2001 2. U.S. Census Bureau,
Current Population Survey, 2002 Annual
Demographic Supplement
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HRSA State Planning Grants (SPG)Overview

• Grants for 1 year of approximately 1m to develop
  state plans to provide access to health insurance
  for all state citizens
• 42 awarded in 4 rounds thus far
• Recognition of the state role in health reform
  and expanding coverage
• Recognition of the differences in states
• Ability to inform the national discussion

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HRSA SPG Overview

• Expectations of Grantee States
• Research to understand the issues and problems of
  the uninsured
• Develop options to address the gaps in insurance
  coverage
• Report to HHS Secretary on the states work and
  findings

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Building public support and consensus

• SPG states involved stakeholders and the public
  to define the problem and localize solutions
• Steering committees
• Public hearings and town meetings
• Summits, regional seminars, position papers,
  advisory committees/stakeholder groups
• Websites and media

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Strategy Guiding principles

• Promote individual responsibility and
  self-reliance
• Solutions that work for all, not just uninsured
• Be incremental, preserve past gains
• Not increase cost-shift in the system
• Avoid replacing private with public coverage
• Highest ratio of insured per spent
• Maintain employers as the foundation and build on
  public private partnerships

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Quantitative research

• Research to improve understanding of the
  uninsured and employers
• Summarize existing data sets
• Assess public opinion in new surveys
• Of first 4 SPG rounds
• 36 of 42 states funded household surveys
• 21 of 42 states funded employer surveys or
  expanded MEPS-IC

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Quantitative research

• No major surprises on general characteristics
• Importance of state specific data in moving the
  policy process
• Ability to focus income, minority, age
• Regions/counties important given variation within
  states
• Breaks stereotypes about the uninsured
• Keeps the topic on the table

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Qualitative research

• Qualitative research to improve understanding of
  values, attitudes, and behavior - the ah-ha
  effect
• Focus groups with individuals, employers
  stakeholders
• Key informant interviews (legislators, employers,
  insurers, etc.)
• Of first 4 SPG rounds
• 27 of 42 states conducted focus groups with
  employers
• 29 of 42 with individuals

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Employer focus groups

• Cost first, but not only reason for not offering
• Strong support for purchasing pools, if better
  rates and accountability to employers
• Interested in subsidies/tax credits, if size and
  administrative burden right
• Value cost-containment/predictability
• Want more competition in marketplace
• Are skeptical about government programs

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Findings on the uninsured

• Uninsured not just low-income many above 250
  FPL
• Majority employed (70)
• Dont know about or have other problems with
  public programs they are eligible for
• Dont feel they need insurance (age 18-25)
• Not eligible for employer plan (min. hours)
• Could not afford employer premiums/cost-sharing

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Expansion options .some preliminary thoughts

• No silver bullet
• Multiple not single answer different strategies
  are required for different populations
• Access, not just insurance
• Importance of federal funding

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Expansion options

• Shift in short-term focus from expansion to
  maintenance
• Minor incremental changes
• Create plan for bigger things when economy
  improves, policy window opens

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Expansion options

• Target the uninsured below 200 FPL, such as the
  low-wage working uninsured
• Reach the eligible but not enrolled
• Cost sharing model with benefit limitations
• Less for more
• Subsidies and tax incentives for private
  insurance
• Medicaid/SCHIP, state employee buy-in programs

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Expansion options

• Target other niche populations
• Childless adults, parents, minorities, seasonal
  workers, temporarily unemployed
• Use new federal flexibility to control costs
  while expanding coverage
• Develop new commercial-like packages and cost
  sharing
• Caps and non-entitlement strategies

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Expansion options

• Low cost/no cost expansions
• Addressing niche populations
• Young adults through mandated college coverage,
  extending parental coverage past 18
• Administrative simplification
• Benefits simplification/comparison
• Small employer education
• Rate guides
• Insurance fairs
• Toolkits

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Expansion options

• Small group and individual market reform
• Pooling and reinsurance
• New policy designs
• Increased recognition of the importance of the
  safety net
• Medical home or virtual insurance

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HRSA SPG Expansions in 2003

• CA Employer mandate
• ID Voucher program for working uninsured
• IL SCHIP expansion for 20,000 children
• ME Dirigo Health for small business and
  low-income uninsured
• WY SCHIP expansion for 8,000 children

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Expansions How to get it done in difficult times

• Leadership and commitment from the top
• Stakeholder willingness to sacrifice at the table
  
• Employer pressure to solve cost-shift
• Employer willingness to partner with public
  sector
• Federal flexibility and money
• Infrastructure Solid data and policy analysis
• New benefit designs
• Setting priorities for smaller coverage gains as
  part of a bigger plan

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