This article appeared in the February/March 2008 issue of States in Action: A Bimonthly Look at Innovations in Health Policy
Despite the threat of an economic downturn, some states are moving forward with coverage expansions. In this issue, we highlight three states that have taken different approaches to reduce the number of uninsured in environments with limited public funds. A new program in New Jersey enables families with income above 350 percent of the federal poverty level (FPL) to purchase for their uninsured children a plan similar to those offered through the State Children's Health Insurance Program (SCHIP). Indiana is implementing a major coverage expansion for low-income adults who are not eligible for traditional Medicaid, using a model that provides personal accounts to enrollees and promotes wellness and individual responsibility. Through a new lottery system, Oregon will enroll thousands of poor, uninsured adults in its Standard Oregon Health Plan, in which enrollment had been frozen since 2004.
New Jersey: Low-Cost "Buy-in" for Uninsured ChildrenUnder an innovative public–private collaboration, New Jersey families with incomes greater than 350 percent of the FPL can now buy coverage for their uninsured children, similar to the plans offered through SCHIP. Through an agreement between the New Jersey Department of Human Services and the private insurer Horizon NJ Health, families with incomes that exceed current SCHIP eligibility limits (e.g., $74,200 annual income for a family of four) may enroll their uninsured children in the NJ FamilyCare Advantage health plan. [
1] The premiums are based on rates negotiated by the state as part of the NJ FamilyCare Program, the state's SCHIP.
"This new NJ FamilyCare program will offer all New Jersey families the opportunity to have the same peace of mind—at a cost much lower than private health insurance rates," said Human Services Commissioner Jennifer Velez.
The benefits are the same as for SCHIP recipients; they include well-child and other preventive services, hospitalization, physician visits, laboratory and X-ray services, prescription drugs, and mental health services. Monthly premiums are $137 for a family with one child, $274 for a family with two children, and $411 for a family with three or more children. These premiums are below market rates for comparable commercial insurance, but more than the publicly subsidized premiums for SCHIP-eligible families.[
2] To prevent currently insured families from dropping private coverage, children must be uninsured for at least six months before they are eligible for the buy-in program. Families with more than one child must enroll all of their children.
The buy-in program is budget neutral to the government, though state negotiating power has played an important role in keeping the premiums down. The cost of providing the reduced rates will be absorbed by Horizon NJ Health. Because there is no federal funding, the program is not bound by recent federal restrictions on Medicaid and SCHIP eligibility expansions.
About 50,000 to 60,000 uninsured children are eligible for the buy-in, though a Rutgers University study projects that only about 15,000 children will enroll. [
3] Applications were being accepted as of January 2008.
New Jersey's buy-in program was legislated as part of the part of the 2005
Family Health Care Coverage Act (SB 2236), which also included a Medicaid expansion to parents with income up to 115 percent of the FPL in September 2006, increasing to 133 percent of the FPL in September 2007. New Jersey joins a number of other states that offer buy-in options under SCHIP or Medicaid expansion programs.[
4]
References [
1] Horizon NJ Health is an independent licensee of the Blue Cross and Blue Shield Association.
[
2] For example, premiums for SCHIP-eligible families with income between 300 to 350 percent of the FPL are $125 per month (
http://www.njfamilycare.org/pages/whatItCosts.html).
[
3] According to State Senator Joseph Vitale (E-Middlesex),
http://www.app.com/apps/pbcs.dll/article?AID=/20071219/NEWS/712190315; D. Belloff and M. S. Marquis,
Full-Cost Buy-In Options for Optimizing Coverage Through NJ FamilyCare, State of NJ Department of Human Services in Collaboration with Rutgers Center for State Health Policy, April 2006.
[
4] WI, IL, and PA offer similar buy-in programs that aim to reach universal coverage for children. Other states that have offered full-cost buy-in options are CT, FL, MN, NH, NY, NC, RI, and WA (Belloff and Marquis, 2006).
<
back to top>
Indiana First to Expand Medicaid Coverage via Health AccountsIndiana is the first state to implement a major Medicaid coverage expansion using a health savings account model. The Healthy Indiana Plan (HIP), which began January 1, 2008, is designed to cover up to 130,000 uninsured residents. [
1]
HIP is open to any Indiana resident ages 19 to 64 who earns less than 200 percent of the FPL, has been uninsured for at least six months, is a U.S. citizen, does not have access to employer-sponsored health insurance, and is not eligible for Medicaid or Medicare. Indiana's existing Medicaid program, called Hoosier Healthwise, restricts income eligibility for non-disabled adults to no more than 22 percent of the FPL—nearly the lowest coverage limit in the U.S. HIP is intended to fill the gap in coverage between Medicaid and private insurance.
HIP provides a Personal Wellness Responsibility (POWER) Account valued at $1,100 per adult per year to pay medical costs. Contributions to the account are made by the state and each participant. Participants pay into the account on a sliding scale up to 5 percent of gross family income, with monthly contributions ranging from $0 to $85 for childless adults and $0 to $105 for a family of four.[
2] Up to half of the participant's contribution may be paid by an employer withholding after-tax payroll dollars on the participant's behalf. A new state trust fund contributes any difference between the individual's contribution and $1,100. The trust fund is financed by an increase in cigarette taxes, expected to contribute $129 million for HIP in 2008 and $144 million in 2009.
A basic commercial benefit package covers medical costs that exceed $1,100. Preventive benefits are free up to $500 annually. HIP provides a financial incentive for enrollees to receive state-recommended preventive services: if all age and gender appropriate preventive services are completed, then all POWER Account funds remaining at the end of the year (including state and individual contributions) roll over and offset the next year's contribution; if not, then only the individual's contribution rolls over (not the state's).
HIP, which required a federal waiver and will receive federal matching funds, is one component of Indiana's 2007 "Check-Up Plan." The Check-Up Plan also includes a Medicaid expansion for pregnant women with incomes up to 200 percent of FPL; an extension of SCHIP coverage for children in families with income up to 300 percent FPL (pending); expanded child immunizations, provider payment increases; tobacco cessation and other health initiatives; extension of dependent coverage to age 24; a small business qualified wellness program tax credit; and a tax credit for small employers to establish Section 125 plans.
References [
1] HIP is not considered an entitlement, and total enrollment is limited by available funding.
[
2] Participant contributions are capped at: 2 percent of the individual's annual household income if the household income level is below 100 percent of the FPL, 3 percent if income is between 100 percent and 125 percent of the FPL, 4 percent if income is between 125 percent and 150 percent of the FPL, and 5 percent if income is between 150 percent and 200 percent of the FPL.
<
back to top>
Oregon Lottery Opens Enrollment After 3-Year Freeze For the first time since freezing enrollment in 2004, Oregon's Department of Human Services has begun enrolling new members into its Oregon Health Plan Standard (OHP Standard) program. The program, which provides a limited benefit package for low-income adults who do not qualify for traditional Medicaid, had stopped enrolling new members due to severe budgetary shortfalls. [
1] To ensure fairness in the application process, the state began a reservation list on January 28 and invited uninsured individuals to submit their names. Beginning in March, 3,000 names will be randomly chosen each month to receive an application to enroll in the program. Currently, OHP Standard serves 18,000 members; administrators aim to reach an average enrollment of 24,000 members.
When the OHP Standard benefit package was created through a Section 1115 waiver in February 2003, the goal was to expand coverage to the non-traditional Medicaid population—parents and adults without dependent children—but provide fewer benefits. At that time, the program covered approximately 90,000 individuals with income below 100 percent of the FPL. Under the new waiver, Oregon planned to incrementally expand eligibility to higher income levels.
Because of budget shortfalls, the planned expansion did not occur. Instead, a number of policies led to a precipitous decline in enrollment. These included cost-sharing and premium requirements imposed on all enrollees, and disenrollment with a six-month "lock-out" for failure to pay premiums. In addition, one month after its implementation, the state eliminated dental care, medical supplies, outpatient mental health, and outpatient chemical dependency services from the benefit package, reducing the program's appeal. One year after implementation, the legislature eliminated state general funds as a funding source for the program, leading to the freeze in 2004, with enrollment at 24,000. [
2] Through attrition, enrollment has further declined to 18,000 individuals.
Oregon has since established a new funding source for OHP Standard—a tax on hospitals and health plans—thereby permitting the state to build membership back to 24,000. Since the state anticipates that there will be greater demand than funding will permit, it selected the lottery as the fairest way to carry out further enrollment. Karen House, Oregon's Department of Human Services Medical Program Manager, explains: "According to an independent evaluation, the random selection process provides the most equitable method to enroll new clients, given that many more people qualify than the number of openings available."
The OHP standard program no longer requires copayments, and premiums have been eliminated for the lowest-income enrollees, making it a more attractive option for uninsured individuals. The benefit package includes chemical dependency services, mental health services, and limited dental services.
Eligible individuals may request to be placed on a reservation list either in person at a Department of Human Services (DHS) office or by telephone, internet, e-mail, fax, or mail. The list will be closed on February 29. Names will be drawn at random, and those individuals will receive an application from the DHS, which must be returned within 30 days. Plan eligibility will be verified from those applications. In an effort to publicize the reopening of the OHP Standard program to new enrollees, the state embarked on a comprehensive outreach and awareness campaign. In addition to making materials about the reservation list and lottery available at DHS offices, county health departments, and most major hospitals and clinics, the state also mailed brochures to 330,000 households that already receive DHS benefits, and sent other promotional materials to more than 1,800 community partners. Materials were printed in 10 languages to further expand the campaign's reach. While DHS regrets that it will not be able to enroll all who may qualify for OHP Standard, it believes it is making an impact on the number of uninsured through this process.
| For More Information | | Contact: Karen House, OHP Medical Program Manager, (503) 945-6254 |
|
References [
1] A number of factors contributed to the economic downturn that resulted in budget shortfalls, including a rising unemployment rate and a 19 percent decline in personal income tax revenues between 2002 and 2003 (J. Oberlander,
Health Reform Interrupted: The Unraveling of the Oregon Health Plan, Health Affairs Web Exclusive, December 19, 2006).
[
2] Memo from Office of State Senator Avel Gordly, Senate District 23, January 13, 2008,
http://www.leg.state.or.us/gordly/newsletter_011408.htm.