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July 25, 2006

Health Care for All Debate Gets Real

Crossposted from Progressive States

Last week, the San Francisco Board of Supervisors voted to create a health care plan to provide health care coverage for the 85,000 uninsured residents of that city, adding to the sense that 2006 became the year when the debate on health care for all became real in a range of states.

Maryland kickstarted a national debate on employer responsibility for health care costs, Vermont and Massachusetts enacted new plans that each promised significantly expanded health care coverage, and Illinois finalized details on its AllKids program to provide affordable health care for all children in that state.

And it was a year when serious campaigns in both California and Wisconsin to create integrated universal health care systems moved forward, emphasizing how states aren't waiting for the federal government to shake up our health care system.

San Francisco's Landmark Law

The ordinance approved by the San Francisco Board of Supervisors is the first law to pull together all the elements that might actually achieve universal health coverage in a jurisdiction-- combining existing state and federal insurance funds, money already being spent on the uninsured showing up at public facilities, a solid employer contribution to cover costs, and reasonable fees paid by consumers based on their ability to pay.

It's estimated that covering the 85,000 uninsured in the city will cost $200 million per year:

• A large chunk of that amount will come from the $104 million already spent by the city at city clinics and hospitals -- with the goal that the new system will contain costs better compared to the present disorganized and costly emergency care emphasis of most current help to the uninsured.
• Along with consumer premiums and copayments, additional funds for the new system will come from a new requirement that employers not providing health care pay into the public system. The legislation requires businesses with more than 50 employees to contribute $1.60 per hour worked by employees beginning in July, 2008. Businesses with from 20 to 50 workers would pay $1.06 per hour starting July, 2009. The ordinance caps employer contributions at $180 per month per worker.

It is still unclear how expensive premiums will be, although a key part of the ordinance requires that coverage be offered regardless of preexisting medical conditions. And the largest limitation on the plan is that all medical care will be provided only at city facilities, so no coverage under the plan will be available for health care needed when out-of-town.

Still, San Francisco's plan looks like it should be a solid model for policymakers looking to deliver health care for all.

Vermont and Massachusetts both billed their plans as aiming for universal coverage. The Vermont plan has far clearer standards for heatlh care affordability and, while the Massachusetts plan had important provisions expanding coverage, it also has elements that policymakers probably should reject, especially the individual mandate Governor Romney insisted be part of the plan.

Vermont: The Vermont "Catamount Health" law subsidizes private sector health plans that meet the following criteria (and if they don't do so within a couple of years for the state to directly create the plans):

• Health care subsidies will be offered to all uninsured up to 300% of the poverty line ($29,400 for individuals, $60,000 for family of four).
• For Vermont citizens below 200% of the poverty line and who don't qualify for Medicaid, premiums will be $60 per month.
• For those between 200%-300% of the poverty line, premiums will be $90-$135 per month.

As part of paying for the plan, the law includes an assessment on employers not providing health care of $355 per year, a low amount and not much of a deterrent to employers dropping coverage, but it at least establishes the principle of employer accountability. The law also cuts existing premiums for Medicaid and the state child health care programs dramatically-- a 50% cut in premiums for child health for example.

The Vermont Legislature has put together a very good analysis of the its plan here.

Massachusetts: The Massachusetts plan enacted this Spring is a complex amalgam of program changes, including:

• expansions of the existing state Medicaid and child health care programs
• the creation of a "Health Insurance Connector" to promote more affordable health plans in the state and subsidies for citizens who earn up to 300% of the poverty line
• a small employer mandate of $295 per employee, along with a "free rider surcharge" on employers whose employees repeatedly use public health care facilities
• an individual mandate that could impose crushing health care costs on workers making as little as $30,000 per year

The clearest gain for coverage from the law is the expansion of existing Medicaid and SCHIP child health programs, including expanding coverage tp all children up to 300% of the poverty line. The big question mark is whether the "affordable" plans promised for the rest of the population will actually be delivered, since press accounts indicate that premiums may cost hundreds of dollars per month -- a prohibitive amount for many who may not qualify for subsidies but might be forced to buy a policy under the state's proposed individual mandate. In many ways, the bill passed in the Massachussetts state house last fall is a better model, with stronger employer responsibility and no individual mandate.

The Maine Experience: The track record of expecting private insurance companies to deliver affordable plans, even with subsidies, is not particularly encouraging. Maine created its Dirigo Health Reform Act in 2003 with similar expectations of enrolling tens of thousands of uninsured Mainers but the private insurance plans proved so expensive that only those qualifying for heavy state subsidies have generally signed up-- with only 5000 people previously uninsured joining the Maine plan. Reforms to improve the Maine law were blocked by conservative Maine lawmakers this year, so the Governor has appointed a commission to try to explore alternatives.

But the Maine experience emphasizes why even talking about individual mandates, as in Massachusetts, makes no sense until affordable health plans have been developed for all state residents.

By expanding coverage for children, Massachusetts this year joined New Jersey, Connecticut, Maryland, New Hampshire, and Vermont which had already extended subsidized coverage to kids in families at 300% of the poverty level or higher.

Taking a step farther, Illinois enacted the AllKids program last year to extend health care coverage to children throughout Illinois. State officials this year finalized the table of premiums for families and launched the program on July 1-- and the results are an impressive model for affordability:

• A family of four making up to $2500 per month ($30,000 per year) would pay no monthly premiums to cover two children.
• A similar family making $2500-$3333 per month (40K/yr) would pay only $25 per month for two children.
• And families making $3334-$8333 per month (up to 99K/yr) would pay a sliding scale from $40 to $100 per month per child-- with increasing premiums for families making more.

What is impressive about the Illinois program is that it converts health care from a quasi-poverty program to a general health plan for all kids, much as Medicare is a general plan for the elderly. Which means that working families will no longer face the dilemma of a raise at work potentially meaning the loss of affordable health coverage for their children.

Exact funding sources for the AllKids program has to be worked out, but if there was a strong employer contribution included, there's no reason a similar model could not be extended to coverage of working adults, with a sliding scale of premiums for all families and with employers picking up part of those premiums.

In fact, a few states like California and Wisconsin are actively debating proposals that would include all state residents within an integreted health care system.

California: Last year, California's State Senate approved SB 840, a Canadian-style "single payer" health plan, to create a single health care system for that state. While the bill is an exploratory proposal and doesn't include a funding mechanism, the goal is that once employer, consumer and government funds are combined, no new revenues will be needed. Supporters suggest that a single 12% payroll fee paid jointly by employers and employees combined with existing state funds would be enough to replace all existing insurance premiums.

Wisconsin: This year, Sen. Russ Decker (D-Schofield) and Rep. Terry Musser (R-Black River Falls), introduced SB 698, a plan to provide coverage for all working families in the state, including the 500,000 current residents without health insurance. The idea is to create an integrated plan that could better contain costs and deliver an affordable plan, including offering the same low-cost plan to small as to large firms, which would be financed jointly by employers and employees.

While neither plan is near final passage, they add to the models for states moving towards universal coverage around the country.

Most of these plans built on previous efforts that had expanded coverage in those states over many years. But what they have in common is an understanding that our current heatlh care system is not just punishing to working families but also incredibly wasteful.

What is clear is that any viable solution will combine a more rational allocation of funds currently spent by governmenta, a fair contribution to costs from all employers, and contributions from families based on their ability to pay.

Posted by Nathan at July 25, 2006 02:12 PM