Federation of Connecticut Taxpayer Organizations

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