Options to Extend Health Coverage in Delaware

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Options to Extend Health Coverage in Delaware

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Key Background Observations

• Preponderance of uninsured are working families
  with incomes between 100 and 200 of poverty. We
  concentrate on these people.
• For these people, the challenge is to make
  coverage affordable. They will require subsidies.
• So federal and state governments will have to
  incur new financing if the problem is to be
  solved.
• We acknowledge we cannot solve the problem. At
  best, our approaches would cover about 1/4 of the
  96,000 uninsured.

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Background (cont.)

• No state has solved this problem, and no state
  can do it alone.
• Often there is a trade-off between cost and
  equity efforts to prevent crowd out result in
  treating people differently even though their
  need is the same.
• We consider these policies as if adopted
  separately, but if adopted together, they would
  have interactive effects that would change cost
  and take-up estimates.

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Background Federal Poverty Level
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Safety Net Support Limited Benefit PlanApproach

• Coverage program offering ambulatory benefits
• Services include primary care, prescription
  drugs, diagnostic procedures, and limited
  specialty care.
• Affordable for low-income individuals
• No premiums or annual deductible
• Nominal copayments for office visits and
  prescription drugs
• Cost is 100 state (no federal) unless special
  financing is used.

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Limited Benefit PlanTarget Populations

• Individuals age 19 to 64 with incomes between
  100 and 200 of poverty without regard to
  employment status not necessary to be a parent
  of a minor child.
• Income level above Medicaid level.
• Ages 19 to 64 because children have access to
  CHIP and seniors have access to Medicare.
• Eligibility based on income without regard to
  employment status. Individuals may be employed
  but health insurance is unavailable or not
  affordable.

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Limited Benefit PlanAdvantages

• Limited benefits (no acute care covered) makes
  coverage more affordable than full insurance
  allows limited dollars to cover more individuals.
  
• Encourages use of primary and preventive care
  before illness becomes serious, chronic or
  costly.
• Safety net system, such that we have with our CAP
  program, can receive payment for services.

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Limited Benefit PlanDisadvantages

• Continues reliance on hospitals to fund the cost
  of care for the uninsured (in part through
  cost-shifting).
• Availability of ambulatory care without premiums
  may reduce likelihood of low-income employees
  choosing to pay for employer-sponsored coverage.
• Requires disclosure of all household income.
• State funds not matched by employer or federal
  (unless Medicaid special financing is used).

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Limited Benefit PlanCost and Impact on Uninsured
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One-Third Share PlanApproach

• Affordable health care coverage for employees
  of low-wage businesses.
• Affordability achieved by
• Subsidization employer and employee together pay
  2/3 or less of the total cost of coverage.
• Streamlined benefits Coverage is less extensive
  than commercial insurance.
• For example, the scope of benefits is structured
  to level at which employer and employee shares of
  premiums are less than 50 each per month.

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One-Third Share PlanTarget Population

• Employees of low-wage businesses and their
  dependents
• Businesses
• Have not offered health insurance for a set
  period
• Have average (median) employee wages less than
  threshold (e.g., 10 per hour)
• Employees
• Work more than X hours per week
• Do not have access to Medicare, Medicaid, etc.

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One-Third ShareAdvantages

• Affordable health care is available to those that
  have not been able to afford it in the past.
• Causes new employer money to be contributed to
  employee health care.
• Employees use their available funds to purchase
  organized health care rather than to pay for
  services out-of-pocket as funds allow.

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One-Third ShareDisadvantages

• Establishing benefits and premiums is complex.
• The legal structure may be problematic if the
  coverage is less comprehensive than licensed
  insurance.
• Very intensive effort required to sign up
  businesses.
• Inequitable treatment of similarly situated
  businesses, and crowd-out potential.

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One-Third ShareCost and Impact on Uninsured
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SCHIP ExpansionApproach

• Through a new 1115 waiver, use S-CHIP funds to
  cover parents of minor children in families with
  incomes between 100 and 200 of poverty.
• New HIFA waiver authority allows flexibility in
  development of the scope of benefits and the
  amount of beneficiary cost-sharing (such as
  copayments and premiums).
• Possible component to subsidize
  employer-sponsored coverage when it is available.
  

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SCHIP Expansion Target Population

• Parents of minor children in families with
  incomes between 100 and 200 of poverty. (The
  children are eligible for Medicaid or S-CHIP.)
• Unlike Delawares Medicaid 1115 waiver, this
  excludes single individuals, childless couples,
  and parents of adult children.

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SCHIP ExpansionAdvantages

• Federal government pays 65 of the cost of
  coverage to the extent of Delawares unused SCHIP
  allocation.
• Under an 1115 waiver the state can secure federal
  funds while limiting the states financial
  obligation. (E.g. States can close
  enrollment.)
• Can use an existing administrative system.
• More children already eligible for Medicaid or
  CHIP will be newly enrolled.

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SCHIP Expansion Disadvantages

• Possible welfare stigma.
• Limited to parents of minor children.
• Availability of free coverage for significant
  number of full-time working parents may create
  greater incentives (than child-only coverage) for
  employers to drop existing private coverage.
• Key issue of what income levels are chosen and
  what the state does to coordinate coverage with
  employers.

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CHIP Expansion Cost and Impact on Uninsured
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Subsidized Purchasing PoolApproach

• Carriers to submit bids for a defined
  comprehensive, but not rich, benefit package,
  assuming normal-risk population.
• Pool negotiates with carriers and decides which
  health plans to offer, depending on the value.
• State, rather than insurers, absorbs cost of
  adverse selection and perhaps provides additional
  subsidy.
• Employers pay minimum of 50 of premium if no
  state premium subsidy, 33 if state subsidy.

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Subsidized Purchasing PoolTarget Populations

• Anyone (employee not offered coverage or an
  individual) with household income below 300 of
  poverty (approximately 53,000 for family of 4).
• Any firm with 10 or fewer employees.
• Any firm with average wage level of 10 per hour
  or less.
• (All values are for illustration and estimating
  purposes only subject to change.)

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Subsidized Purchasing PoolAdvantages

• Offers normal-priced coverage to populations that
  often have to pay substantially more than
  average, with choice of several plans.
• Provides a fair way of spreading the costs of
  covering high-risk people cost comes from state
  general revenues (the total population) unlike
  approaches which assess only insured plans and
  not self-insured employers/employees.

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Subsidized Purchasing PoolDisadvantages

• Need to craft provisions to prevent the pool from
  becoming merely a high-risk pool, which will be
  challenging.
• Merely making coverage available will not ensure
  that target populations will take advantage of it.

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Subsidized Purchasing PoolCost and Impact on
Uninsured