STATE OF CONNECTICUT
OFFICE OF LEGISLATIVE RESEARCH
UNIVERSAL
HEALTHCARE
COVERING
THE UNINSURED
July 28, 2004
2004-R-0549
By: Janet L. Kamiinski, Associate Legislative Attorney
You asked what other states are doing to decrease the number of
uninsured and move toward universal health care.
SUMMARY
California, Maine, Hawaii, and Vermont each have
some form of universal health care designed to provide coverage to broad
segments of their population. These initiatives are described below.
Arkansas, Colorado, Florida, North Dakota, Texas, and Utah have laws
that permit insurers to sell basic health care plans that do not include
coverage for all the state-required mandated health benefits. These policies
cost less than those with the state mandates and are thought to increase access
to health care coverage.
Thirty-one states (including Connecticut) have created high-risk pools that provide coverage to individuals
who are otherwise unable to obtain insurance because of their health problems
and high utilization of insurance benefits.
Some states have considered tax credits or deductions to offset the
cost of health insurance. Some have also proposed legislation permitting
purchasing cooperatives that allow small employers to negotiate and purchase
insurance collectively, and presumably at lower rates than if they acted
independently.
Massachusetts is considering a constitutional amendment that would guarantee its
residents universal health care coverage.
UNIVERSAL HEALTH
CARE
According to the National Conference of State Legislatures (NCSL),
a number of state legislatures have considered health care reform affecting all
state citizens. Most of the proposals have been based on a “single-payer”
model, which consolidates all payers – Medicare, Medicaid, state programs, and
commercial insurers – into a single administrative structure.
In 2003, California and Maine enacted legislation designed to provide insurance coverage to
broad segments of their state populations that does not rely on a single-payer
system. Instead, these states have introduced an employer-based system of
universal health care. Hawaii has had a universal health care access law since 1974. Vermont introduced
the Vermont Health Access Plan in 2000. These programs are described below.
California
California’s governor signed
SB 2, the “Health Insurance Act of 2003,” on October 5,
2003. It uses an employer “play or pay” model that requires employers
with 20 or more employees to pay into a purchasing pool if they do not provide
health care coverage for their employees. The law applies to large employers,
those employing 200 or more persons, as of January 1, 2006. It applies to
medium employers, those with 20 to 199 employees, beginning on January 1, 2007.
Employers with 20 to 49 employees will not have to comply until a tax credit is
enacted.
Employees who are not provided health care through their employer
can obtain coverage from the State Health Purchasing Program. The program will
be funded through the employer fees and enrollee contributions, which cannot
exceed 20% of the employer fee. For an enrollee whose wages are less than 200%
of the federal poverty level, the contribution cannot exceed 5% of the employer
fee. The act authorizes a loan from the state’s general fund to pay for program
start up costs.
To be eligible for coverage, an enrollee must work at least 100
hours per month for an individual employer and have worked for that employer at
least three months. The insurance provided by the program may require copayments, coinsurance, and deductibles.
The act requires the Department of Health Services to implement a
state Medicaid (Medi-Cal) premium assistance program,
as long as federal financing is secured. The program would pay employer-based
health care premiums for those eligible for Medi-Cal.
Maine
Maine’s governor signed LD 1611, “An Act To
Provide Affordable Health Insurance to Small Businesses and Individuals and To
Control Health Care Costs,” on June 13, 2003. This law provides Maine’s residents
with expanded access to health care coverage in two ways. First, it expands the
state’s Medicaid program, MaineCare, by increasing
the eligibility income limits.
For those who do not qualify for MaineCare,
the law creates the Dirigo Health program, which
offers health care coverage primarily for employees of small employers and
uninsured individuals, with premium subsidies available to people with incomes
below 300% of the federal poverty level. Higher income individuals can buy into
the program by paying the full premium. Employers (1) are expected to
contribute up to 60% toward the premiums, with employees paying 40%, and (2)
must certify that at least 75% of employees working 30 hours or more per week
and without other coverage are enrolled in Dirigo
Health.
The law establishes a new agency to run Dirigo
Health with a governing board. The agency will determine the services and
benefits to be provided, as well as cost sharing obligations for participants,
such as premiums and copayments. The agency is
required to publicize the program and must contract with health insurance
carriers to provide the coverage. The program must be running by October 1,
2004.
A one-time federal payment via an enhanced Medicaid match will fund
Dirigo Health’s first year of operations. In
subsequent years, the state expects the program to be self-supporting through a
combination of additional Medicaid federal matching funds and “savings offsets”
that all state insurers are required to pay. The Dirigo
Health board will determine the offset amounts, which will be based on the
annual percentage of premiums collected by each insurer.
For residents with pre-existing conditions, the law creates a
high-risk pool and directs Dirigo Health to develop
disease management protocols for these enrollees.
Additional detail on Maine’s Dirigo Health is available in OLR’s
Research Report 2003-R-0494 (copy enclosed).
Hawaii
Hawaii’s Prepaid Health Care Act of 1974 requires all employers to offer
health care coverage (Haw. Rev. Stat. § 393-1, et seq.
). An employer must provide health care benefits for each employee who
works 20 hours or more a week (excluding seasonal employees). The employer must
pay for at least 50% of the premium, provided that an employee’s contribution
is no more than 1. 5% of his salary. The mandatory
health care benefits include hospital, surgical, medical, diagnostic
laboratory, maternity, and substance abuse benefits.
The law is possible because of a statutory exemption from the
federal Employee Retirement Income Security Act of 1974 (ERISA). ERISA
regulates employee benefit plans, including life, health, disability, and
pension plans. Employers are not required to provide employee benefits under
ERISA, but if they do, they must meet ERISA requirements for plan
participation, funding, and vesting, as well as plan administration standards
for reporting, disclosure, and fiduciary duties. While ERISA was being debated
in Congress, legislators successfully amended it to exempt the Hawaii Prepaid
Health Care Act, thus allowing Hawaii to require employers to provide health
care coverage to their employees (29 U. S. C. § 1144(b)(5)). Because no other
state has this ERISA exemption, no other state can establish such a program.
Vermont
Vermont
Health Access Plan. Vermont’s Public Act 1995-14 authorized the Vermont Health Access
Plan (VHAP). The legislation increased the state cigarette tax by $ 0. 24 to
fund the state’s share of the program cost. It also raised revenue by assessing
hospitals and nursing homes for the program’s first three years.
VHAP has three components: (1) funding health care services for
lower-income residents whose access to care is limited, in part, by their lack
of insurance; (2) providing a prescription drug benefit to lower income elderly
or disabled residents on Medicare; and (3) implementing a managed care delivery
system to improve access, service coordination, and quality of care for program
beneficiaries.
Any uninsured adult age 18 or older with income below 150% of the
federal poverty level (FPL) may be eligible for VHAP coverage. Parents and
caretaker-relatives with incomes under 175% of FPL may also be eligible.
Elderly or disabled individuals with incomes under (1) 175% of FPL may be
eligible for pharmacy coverage through the VHAP-pharmacy program and (2) 225%
of FPL may be eligible for state-funded pharmacy coverage.
A fee-for-service program called VHAP-Limited provides basic
benefits for a person’s first month or two of coverage. VHAP-Limited coverage
runs until the person is added to the state’s managed care program, called
Primary Care Plus (PC-Plus). PC-Plus coverage includes doctor visits,
prescriptions, specialist visits, emergency room care, inpatient hospital care
resulting from an emergency or urgent care admission, outpatient care,
laboratory tests and X-rays, family planning, mental health and substance abuse
services, and home health care.
Depending on a person’s income, he may have to pay a program fee
every six months. Copayments apply for most services.
VHAP covers about 50% of prescription costs.
2005 Vermont State
Health Plan. Pursuant to Public Act
2003-53, the Vermont Department of Health is developing a state health plan
that must be delivered to the legislature by January 15, 2005. The plan must (1) include health promotion, health protection,
nutrition, and disease prevention priorities for Vermont; (2) identify
resources available and needed for achieving the health goals; and (3) identify
those areas of the state that need additional resource allocation.
LOWER COST
POLICIES
Concern exists in many states that the number of state insurance
mandates affects an individual's and small employer's ability to purchase
health insurance. As a result, policymakers are returning to "bare-bones"
legislation to combat escalating premiums, especially in the small employer
market. However, proponents of these bills face very strong opposition.
Although supporters of bare-bones legislation believe that stripping away
mandated benefit requirements will help lower health insurance premiums,
opponents believe that these policies will not offer the necessary coverage
individuals need.
Arkansas, Colorado, Florida, North Dakota, Texas, and Utah have laws
that permit insurers to sell basic health care plans that do not include
coverage for all the state-required mandated health benefits.
HIGH RISK POOLS
According to NCSL, 31 states (including Connecticut) have created medical high-risk pools that are nonprofit
associations offering special state-supported insurance products. Coverage is
provided to individuals who are otherwise unable to obtain insurance because of
their health problems and high utilization of insurance benefits. NCSL reports
that proponents of pools believe they allow the insurance market to keep prices
more affordable for everyone by divesting themselves of these high-risk
individuals.
NCSL found that even though pool coverage premiums are quite high
(up to twice what a healthy person would expect to pay for similar coverage
elsewhere), actual health care costs for the enrollees can equal twice the
premium charged. As a result, the pools require subsidies. For example, in
2002-2003, premiums collected from pool enrollees nationally paid for 57% of
costs, while states had to fund the other 43% (NCSL LegisBrief,
Vol. 12, No. 23, April/May 2004).
OTHER STATE
OPTIONS
NCSL reports that in 2003 states introduced other measures designed
to provide health insurance coverage to more people. At least 12 states
introduced legislation establishing tax credits or deductions to offset the
cost of health insurance premiums (Colorado, Florida, Georgia, Hawaii, Indiana, Massachusetts, Missouri, Montana, New Mexico, New York, Pennsylvania, and Vermont). At least eight states introduced legislation establishing
purchasing alliances or cooperatives (Arkansas, Colorado, Montana, New York, Tennessee, Texas, Utah, and Wisconsin) (NCSL State Health Policy
Brief, Vol. 4, No. 4, October 2003). Purchasing alliances or cooperatives allow
small employers to negotiate and purchase health insurance collectively,
enjoying similar bargaining power as large employers.
On July 14, 2004, Massachusetts’ lawmakers voted 152 to 41 in favor of a constitutional amendment
that would guarantee its residents universal health care. The proposal was
initiated by a citizens’ petition signed by more than 71,000 registered voters.
If the legislature approves the amendment again next session, it will appear on
the November 2006 election ballot.
JK: ro