The states and the federal government must work in tandem to cover the 48 million Americans who lack health care coverage. The federal government's role should be to provide the basic financing and to give states the flexibility and responsibility to lower the number of uninsured and improve health outcomes. The states must ensure that everyone has a chance to choose from competing health plans at group rates, as Massachusetts, California, and other states have done for small businesses.
The Progressive Policy Institute has outlined a three-part national plan consisting of subsidies for coverage based on a sliding scale, voluntary purchasing groups, and individual responsibility for securing coverage. A complete description of this plan is available in the articles listed below. States can move immediately to advance this agenda by taking the following steps:
Create a state-level roadmap to make health care affordable for all. Massachusetts is the first state to require that all of its residents have health insurance. Through penalties and incentives, the new legislation promises to significantly reduce the number of uninsured in the state. The Massachusetts "Connector" will create affordable options for workers who do not receive job-based coverage. The new law will also strengthen job-based coverage by reducing the burden on employers and by stemming the rising cost of insurance. Even for states that have higher rates of uninsured than Massachusetts, it is important to set that as a goal and create a road map for its achievement. For example, West Virginia established a commission to come up with a plan for covering all citizens by 2010.
Similarly, the Colorado Blue Ribbon Commission for Health Care Reform has recommended a plan for shared responsibility by individuals, employers, and the government for health care coverage. The plan includes individual mandates that call for all Coloradans to have health insurance or face a tax penalty. The plan also awards financial assistance to low and middle-income workers in the form of subsidies. Finally, similar to the "connector" plan in Massachusetts, this plan encourages small businesses and individuals without insurance to choose their own coverage through a "connector" or purchasing pool. The pools connect individuals and small businesses to the group insurance market, fostering choice and competition among plans to improve quality and keep costs down.
Establish a state-level tax credit or subsidy. A key first step is to make coverage more affordable through subsidies based on need. For example, states can offer tax credits to workers through employers, even if the employer does not pay for coverage. In choosing between a tax credit or premium subsidy, states should aim to get coverage to workers in the most direct way possible, which for most people is through the workplace. On the one hand, a tax credit requires little bureaucracy, unlike the State Children's Health Insurance Program (SCHIP) and Medicaid. But on the other hand, a subsidy can be put directly toward job-based or individual coverage and still qualify for federal matching funds through Medicaid or SCHIP. Montana State Auditor John Morrison has won legislative approval for both approaches: a tax credit to help small business that are struggling to continue covering their employees and a premium subsidy that can draw down a federal Medicaid match to help very small businesses (2 to 9 employees) offer coverage for the first time. These employers typically have lower health insurance coverage rates, higher costs, and a greater number of lower-wage workers than larger businesses. Named Insure Montana, the program also incorporates Montana Gov. Brian Schweitzer's proposal for a purchasing pool so that businesses that lack coverage can use their premium subsidy to negotiate a lower price for insurance. Insure Montana serves 1,400 businesses and 8,000 Montanans.
Maryland Governor Martin O'Malley(D) has won enactment of a program similarly aimed at very small employers (2 to 9 employees). For employers with wages under $50,000 that begin to offer coverage, the legislation would match half the contributions of the employer and employee up to $1,000 for each employee. The legislation would also expand Medicaid for very poor adults. Maryland currently covers adults earning only 40 percent or less of the poverty level. Together, the two provisions would cover about 100,000 of Maryland's 800,000 uninsured.
Similarly, the Wisconsin Senate has approved a plan called "Healthy Wisconsin: Your Plan, Your Choice," that is based on the principle of public financing for private coverage. It would offer everyone a choice of health plans similar to the Federal Employees Health Benefits program, which covers federal workers and members of Congress. Financed by a payroll tax, the bill would enable consumers to choose among competing health plans. Consumers would receive a credit or voucher equal to the cost of a low-priced plan. They would then pay the full additional cost of a more expensive plan. This economic incentive for cost control would be much stronger than under today's job-based coverage regime.
Give small employers and individuals a menu of health plan choices. Even if employers do not offer coverage, they may want to let employees pay for coverage through the paycheck withholding process if someone makes it easy to do. Similarly, buying health insurance on your own is a daunting task. People need a safe and secure place where they can readily compare choices and choose the best coverage for themselves. A menu created by the state or a voluntary purchasing group can do that and more. The new Connector program in Massachusetts serves as an excellent model. It pools together workers from across the state, including self-employed workers, and creates a marketplace for affordable insurance options. Employers are encouraged through incentives to pay into the Connector for their employees, even if they can only pay a small percentage of the cost.
Under the leadership of Gov. John Baldacci, Maine created a health care program, Dirigo (Latin for "to lead," which is the state's motto). It provides premium subsidies on a sliding scale to help employees afford coverage at work. It offers a voluntary purchasing pool for both individuals and employees at firms without coverage. The pool currently offers one health plan, but could offer additional choices over time. It lets low-income workers who are eligible for Medicaid sign up for coverage at work rather than through a public assistance office. Dirigo's financing is under stress, but changes to financing are inevitable since health care spending often outpaces general inflation.
Prevent erosion of coverage and fill gaps in existing programs. Due to budget shortfalls, many states have been slashing benefits and eligibility for Medicaid. In contrast, under the leadership of Illinois Gov. Rod Blagojevich, Illinois has maintained and even expanded coverage under Medicaid despite severe budgetary shortfalls. Illinois has been able to maintain and enhance its coverage through cost-saving measures that treat Medicaid more like private insurance coverage. The state applied utilization reviews to ensure that patients receive the appropriate care. Illinois has saved millions by promoting the use of generic drugs, capping drug prices, and increasing drug rebates. The expansions in coverage mean than all working parents living in and near poverty now have coverage as their children already have had through Medicaid and SCHIP. Moreover, Illinois was able to pass a bill for the AllKids program, slated to begin in July 2007, which will cover all of the state's children through income-based payments from parents and a relatively modest contribution from the state.
Hold government programs accountable for performance.
Today's Medicaid and SCHIP require states to comply with a long list of federal rules in order to receive federal financing. Creating a performance-based system requires federal legislation, but states can start today by requiring state health care agencies to report their performance in terms of reductions in the number of uninsured, access to health care services, and improved health status for targeted populations. Greater accountability for results would spur innovation in public programs.
States like Massachusetts, Maine, Montana, and Illinois have demonstrated that regardless of fiscal situations, states can become leaders in the effort to cover uninsured Americans by expanding coverage while preserving choices for patients.
Katie Donohue and David Kendall, "Health Coverage for All: States Lead the Way," Progressive Policy Institute, October 16, 2007,
http://www.ppionline.org/ppi_ci.cfm?knlgAreaID=111
&subsecid=137&contentid=254475
"State of the States," State Coverage Initiatives, January, 2008 Robert Wood Johnson Foundation,
www.statecoverage.net
David B. Kendall, "Massachusetts Raises the Bar for Health Care Reform," Front and Center, Progressive Policy Institute, April 17, 2006,
www.ppionline.org/ppi_ci.cfm?knlgAreaID=111
&subsecID=137&contentID=253823
Maine's Dirigo Health
www.dirigohealth.maine.gov
Montana House Bill 667, 2005
http://data.opi.state.mt.us/bills/2005/BillHtml/HB0667.htm
Montana State Auditor John Morrison, A Healthy Start Toward A Healthier Montana, Office of the State Auditor, Februay 1, 2005
http://sao.mt.gov/news/20050201GuestEditorial.html
Laura Smitherman, "Senate OKs Health Care Bill,"
Baltimore Sun, November 10, 2007:
http://www.baltimoresun.com/news/health/
bal-md.health10nov10,0,2381206.story
"New Dem of the Week: Martin O'Malley,"
Democratic Leadership Council, October 26, 2007:
http://www.dlc.org/ndol_ci.cfm?kaid=104
&subid=116&contentid=254484
Jeff Lemieux et al., A Progressive Path Toward Universal Coverage, Progressive Policy Institute, December 2000
www.ppionline.org/ppi_ci.cfm?kaid=111
&subid=137&contentid=2813
David Kendall, et al., A Performance-Based Approach to Universal Health Care, Economic and Social Research Institute, November 2002
www.ppionline.org/ppi_ci.cfm?contentid=251284
&knlgAreaID=111&subsecid=137
Sharon Silow-Carroll and Tanya Alteras, HRSA State Planning Grant Update: A Review of Coverage Strategies and Pilot Planning Activities, Commonwealth Fund, April 2005
http://www.commonwealthfund.org/publications/
publications_show.htm?doc_id=274289
HRSA Planning Grants, State Coverage Initiatives, Robert Wood Johnson Foundation
http://www.statecoverage.net/hrsa.htm
Insure Montana
http://www.insuremontana.org/
Kaiser Family Foundation, StateHealthFacts.Org
www.statehealthfacts.org/cgi-bin/healthfacts.cgi
Ed Neuschler and Rick Curtis, Use Of Subsidies To Low-Income People For Coverage Through Small Employers, Health Affairs, May 21, 2003
http://content.healthaffairs.org/cgi/gca?ck=nck&allch=
&SEARCHID=1112591975429_3287&AUTHOR1=neuschler
&JOURNALCODE=&FIRSTINDEX=0&hits=10&RESULTFORMAT=
&gca=healthaff%3Bhlthaff.w3.227v1
Ed Neuschler and Rick Curtis, Premium Assistance: What Works? What Doesn't?, Institute for Health Policy Solutions, April 2003
www.ihps.org/pubs/2003_Apr_PA_What_Works.shtml
Jill Rosenthal and Cynthia Pernice, Dirigo Health Reform Act: Addressing Health Care Costs, Quality, and Access in Maine, The Commonwealth Fund, June 2004
www.cmwf.org/publications/publications_show.htm?doc_id=230647
Maine Health Forum, Dirigo Health, Franklin Community Health Network
www.mainehealthreform.org/SearchResults.asp?cid=4
Katie Donohue and David Kendall, Health Coverage for All: States Lead the Way, October 16, 2007
http://www.ppionline.org/ppi_ci.cfm?contentid=254475&knlgAreaID=111&subsecid=137
"Colorado Blue Ribbon Commission" PPI Health Policy, December 6, 2007
http://www.ppionline.org/ppi_ci.cfm?contentid=254530
&knlgAreaID=111&subsecid=900033
"Bold Badgers" PPI Health Policy Wire, August 3, 2007
http://www.ppionline.org/ppi_ci.cfm?contentid=254407
&knlgAreaID=111&subsecid=900033#item3
Anne Marie Murphy, Ph.D.
Governor's Director of Health Care Programs
100 W. Randolph Street
Suite 16-100
Chicago, IL 60601
312-814-2121
Erin McGowan-Fincham
Senior Policy Advisor
Montana State Auditor John Morrison
840 Helena Ave
Helena, MT 59601
406-444-4613
emcgowan@state.mt.us
David Kendall
Senior Fellow for Health Policy
Progressive Policy Institute
4021 Heritage Way
Missoula, MT 59802
(406) 543-2265
(772) 679-0652 (fax)
dkendall@ppionline.org
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