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Healthcare Affordability and Availability:
Options for Expanding Access

The majority of individuals who are uninsured are:  a dependent or they work part-time and thus don't qualify for employer based coverage, or they work for an employer who does not offer healthcare insurance. Most government-subsidized programs such as Medicaid do not cover these individuals nor do they qualify for government subsidies, as they are not indigent. DE and most states have taken incremental steps to address these issues and experience demonstrates that Delaware is considered a leader in this regard.

Previously, we have funded expanding basic healthcare clinics in communities and schools. During former Governor Castle's era, we encouraged the opening of Nemours clinics downstate to provide essential healthcare coverage.  We then reformed small group insurance underwriting and renewal provisions (1992) which under certain conditions means medical pre-existing conditions are covered. We put in place measures to restrict very large renewal premium spikes on small group accounts when a covered person had a severe, chronic, or catastrophic illness or injury.  In lieu of starting a catastrophic risk pool, as did 26 other states, we implemented the federal HIPPA (Health Ins. Portability Act) act that mandates that individuals would have guaranteed insurability after their COBRA coverage expired or if they did not quality for federal COBRA protections).

Yet, after these changes, the subsequent 1990's HMO marketplace expansion, stiff competition, and eventual withdrawal of some senior HMO’s from the DE marketplace, affordability remains a critical issue.  So what should state government and policymakers do now?

First: recognize that "work-based enrollment" is one of the most effective tools for reducing the number of chronic uninsured. In my judgment, we need to expand several "proven" coverage options prior to considering and/or enacting untested, uncertain, costly government run and/or mandated universal healthcare plans.
 
Additionally, permitting uninsured individuals and/or current uninsured groups to procure taxpayer subsidized "state employee" group coverage is fraught with cost uncertainties which will create market turmoil and other unintended consequences. I favor other options that are tested and which have proven to reduce our chronic uninsured population. 

These options reflect a Delaware tradition of successful public-private partnerships that does not diminish nor impair the existing competitive marketplace, maintains broad choice offerings, and the competitive position of current insurers would be enhanced, leading to better choice and options. Mid-sized and larger employers who employ limited & fully self-funded financing options would thus be able to continue using a competitive marketplace and favorable tax preferred financing options.

We should continue our proven methods of reducing the uninsured population. By expanding our Medicaid coverage to uninsured, we reduce the hidden cost shifts currently paid by those insured in employer small to large group plans.

1. We should expand the Medicaid premium assistance or buy-in program such as the CHIP (Children's Heath Ins. Program);
2. The state should financially encourage public-private partnerships with several financially strong and sound health insurance companies thru a state-funded reinsurance mechanism;
3. The state should enact tax incentives to encourage coverage expansions. It would preferably be a credit rather than a deduction. A credit would be more cost  effective if piggybacked on a similar federal tax credit program;
4. The state could reduce the cost of private and group coverage's by mandating the offering of no frills/no-mandate individual and group health insurance in conjunction with high deductible catastrophic coverage (QHDP's);
5. The state should offer Health Savings Accounts in addition to their current employee benefit offerings. The creation of such a state offering would concurrently expand insurers offering of more competitive price reduction options to employers;
6. The state should provide legislation to permit larger group pooling or purchasing arrangements; but we must require strong, proper financial oversight. Prior experience with federally regulated MEWA's and METs (in the 1980's) proved unsound, so expanded state insurance department oversight is critical;
7. Review existing individual and small group reforms enacted in the 1990's to ensure they remain effective and compliance is occurring;
8. Broaden state continuation of coverage laws to ensure viable and affordable alternative to the federal HIPPA options currently available. This is where a state subsidized or buy-in option would materially and favorably impact the affordability options for uninsured individuals and small groups;  
9. Continue permitting limited expansion of other specified small "government" based groups the option to join the state employee healthcare plans. Premiums and claims data must be segregated and accounted for so the state and its valued employees do not become the "catastrophic risk pool" of choice for high risk individuals. This must be accomplished so as not to unduly interfere with the private sector and the 85% + of the employer plans currently in existence;
10. Expand existing government health insurance programs by: increasing the Medicaid income eligibility limits. Participation should not be free, but rather require an affordable contribution by the plan participants;
11. Consider a "pilot program" which makes available limited Medicaid or similar coverage to currently "uninsured" employer groups. This needs careful study so we can anticipate coverage offerings, subsidies costs, and the competitive effect on other non-eligible employers. It should target low-income uninsured individuals and vulnerable small businesses.
12. Gradually expand the State Children's Health Insurance Programs (SCHIP) by raising income eligibility limits, as affordable within budgetary constraints.
13. Make additional employer groups and eligible employees who cannot afford dependent coverage an expanded SCHIP program for eligible dependent children.  This would cover predominately pregnant women; parents of SCHIP- covered children, and childless adults. This is available thru the SCHIP 1115 waiver with the federal government. This would target low-income adults.
14. Expand outreach programs to eligible but not enrolled individuals whom have waived coverage for numerous reasons to ensure they have coverage. This targets eligible Medicaid individuals who for some reason are not enrolled but could be covered.
15. Reconsider a state catastrophic risk pool such as I have proposed several times in the last 10 years. It could replace, supplement the Federal HIPPA option or act as a public-private reinsurance partnership between the state and private sector. It could also become part of a tri-state risk pool healthcare compact. It would target subsidies to low-income uninsured individuals who do not quality for private sector coverage's or partial or fully federally funded health insurance programs.

We have two state universal type health insurance plan proposals pending. To date, no state has established such a plan. In 2002, Oregon voters soundly defeated such a universal health insurance ballot initiative by a 4 - to- 1 margin. Massachusetts also defeated a similar referendum. According to actuarial studies, the Oregon plan, which would have had simplified administration and be administratively less costly, would have most likely required a new payroll tax of up to 11.5% on business and an increase in personal income taxes. This is unacceptable.

Since no state, as of 2003, has enacted a universal health insurance plan, no valid or reliable or material evidence exists about the actual effects of this approach on market disruption, affects on insurer employment and financial investments, coverage rates and taxpayer costs. My judgement is that a single state enactment would be difficult, could encourage adverse selection from surrounding states, and would cause significant disruption to the current system of financing and vacillating healthcare delivery. 

The challenge before Delaware and other states, providers and the private insurers is to maintain a high quality healthcare delivery system adequately and equitably financed with less cost shifting from uninsured individuals and children, while expanding needed care to low income adults, children, and the uninsured and underinsured populations.  I believe the current employer based financed system combined with a limited public-private partnership aimed at the chronic uninsured population by expanding existing programs will get us there in a more predictable, certain, and stable manner while retaining the benefits of choice and competition, without unduly disrupting the current system nor new tax increases...and lots of unintended consequences.

* NSCL -March 2004 "State Options for Expanding Health Care Access", Item #6676-0005

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