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Transcript of Web-assisted Teleconference
State and Local Efforts to Close the Gaps Between Public and Private Insurance Coverage
Addressing the Needs of the Uninsured in a Challenging Economic Environment
On March 13, 2002, the second session of this teleconference was held by the Agency for Healthcare Research and Quality (AHRQ) and the Council of State Governments.
The transcript follows for the second session, "State and Local Efforts to Close the Gaps Between Public and Private Insurance Coverage." Select for the Streaming Audio for the session (Length, 1 hour, 19 minutes; 9.7 MB).
Cindy DiBiasi: Good afternoon. Welcome to "Addressing the Needs of the Uninsured in a Challenging Economic Environment." This is a series of three Web-assisted audio conferences for State and local health policymakers sponsored by the User Liaison Program within AHRQ, the Federal Agency for Healthcare Research and Quality and by the Council of State Governments.
My name is Cindy DiBiasi and I will be your moderator for today's session entitled "State and Local Efforts to Close the Gaps Between Public and Private Insurance Coverage." This is the second event of this Web-assisted audio conference series on the uninsured in these difficult times. As you are well aware, at a time of rising health care costs, growing unemployment and shrinking State budgets, any gains made over the past few years in addressing the problem of the uninsured are at risk of being reversed. Rising unemployment could mean the loss of employer-based health insurance for thousands of Americans while shrinking State revenues and budget deficits may limit the ability of public programs to provide coverage for individuals and families who would otherwise be insured. Given these factors, many State and local governments are struggling to maintain or at least minimize any decrease in the level of resources available to help the uninsured and are searching for ways to maximize the effectiveness of the scarce resources they do have.
Let me tell you about each of the calls in this audio conference series. Today's event will explore State and local efforts to close the gaps between public and private insurance coverage. Panelists will highlight the opportunities available for States to use existing public programs to address the needs of the uninsured and provide examples of strategies State and local governments are using to provide coverage to otherwise uninsured individuals including how to design public/private partnerships.
On yesterday's call, "Trends in the Uninsured: Impact and Implications of the Current Economic Environment," we looked broadly at the size and characteristics of today's uninsured population and also discussed the important health-related and economic consequences of being uninsured. We also examined efforts by individual States to better understand specific circumstances in their own jurisdictions in order to design more effective approaches to address the needs of the uninsured.
On tomorrow's call we will discuss State efforts to stretch scarce resources to design effective, affordable benefit packages. We will hear firsthand from a State struggling with this issue and hear from health services researchers on the potential for cost sharing and innovative benefit management models to control costs and encourage appropriate utilization of services.
Today we are going to take a closer look at State and local efforts to close the gaps between public and private insurance coverage in the current economic environment. In the studio with me I have the following experts who will be participating in our discussion:
- Theresa Sachs is technical director of the Family and Children's Health Programs Group within the Centers for Medicaid and Medicare services.
- Vickie Gates is the director of the State Coverage Initiative and vice president of the Academy for Health Services Research and Health Policy.
- Vondie Woodbury is the director of the Muskegon Community Health Program in Muskegon, Michigan.
Before we begin our discussion I have a few housekeeping items to take care of. If at any point during this event you have Web-related technical difficulties, please use the "Tell" function to contact tech support. If you are listening on the phone, press "*0" at any time to be connected to technical assistance. If at any point in time you experience difficulty with the audio stream or if you experience an uncomfortable lag time between the streamed audio and the slide presentation, please feel free to access the audio by your phone at 1-888-868-9080. Give the password "uninsured audio conference."
Later in the call our panel of experts will also be taking your questions. There are three ways you can communicate your questions to us. If you are on the phone, please dial "14" to indicate you have a question and dial "#" to exit the queue. You may E-mail us your question at firstname.lastname@example.org. You may also directly type your question in the messaging field and hit "enter." Please note that your sent message will not appear in the chat box.
If you prefer not to use your name when you communicate with us that is fine, but we would like to know what State you are from and the name of your department or organization so please indicate that regardless of the way in which you transmit your question.
We will also have audiotapes of this Web-assisted audio conference series available for purchase after all three events are completed and I will give further details about this at the end of today's show.
Resource and followup information regarding this program will be available in a few weeks on the CSG Web site at www.csg.org. Click on the "health policy" link on the left side of the homepage and follow instructions from there. You can also request copies of the slides presented in this series by sending an E-mail message to email@example.com. Please indicate whether you would like the slides for the entire series or just specific presentations.
Finally, an archive of these events will also be available on the AHRQ/ULP Web site. The URL is www.ahrq.gov/news/ulpix.htm.
Now I think we are ready to discuss State and local options for addressing the problem of the uninsured in today's challenging environment and we will start with Theresa Sachs to begin our discussion today.
Theresa, can you describe the role public programs like Medicaid and SCHIP play in helping States address the problem of the uninsured?
Theresa Sachs: Sure Cindy, thank you. States can always cover more of their low-income uninsured by increasing the size of either their Medicaid State program or their SCHIP program. Of course, the limitations of the Medicaid and SCHIP programs are that people have to fit into a certain eligibility category. So to the extent that States have uninsured populations that they want to cover who fit into those categories, they can expand their program. They also have to come up with State matching funds to pull down the Federal matching funds. But those are some of the ways through using just the straight programs that States can increase coverage. The last way is also through house reform demonstrations. What we have referred to some of our Section 1115 demonstration programs. States can obtain waivers of requirements of both the Medicaid and SCHIP programs to cover additional populations including those who might not fit into one of that standard eligibility categories such as childless adults, for example.
Cindy DiBiasi: Now I understand that the Centers for Medicare & Medicaid Services (CMS) has announced some new flexible waiver approaches for Medicaid and SCHIP and I know our audience is very interested in this subject considering the financial pressures on States today. Can you tell us a little bit about this new flexibility?
Theresa Sachs: Sure. When I referred to Section 1115 health reform demonstrations, we do have a new initiative called the Health Insurance Flexibility and Accountability or HIFA initiative, which is a Section 1115 approach. There is the possibility to combine Medicaid and SCHIP funding and statutory waivers in order to implement coverage expansions. Some of the features of the HIFA flexibility are that States can make adjustments in benefits to some of their covered populations. They can also make adjustments in cost sharing and there is a more flexible approach to using employer-sponsored insurance which I think is very relevant to our theme today of bridging some of the gaps between public and private coverage. Those are some of the more flexible features of this new HIFA initiative.
Cindy DiBiasi: There seems to be a general impression that HIFA is all about cutting benefits provided to some in order to expand coverage to others. A little bit of robbing Peter to give to Paul, I guess. Can you speak to that?
Theresa Sachs: Well I am glad you asked about that because I do hear that a lot. I really think it is the case that there really is an awful lot more to HIFA than what you have described. It is true that States can make adjustments in benefits and cost sharing under the HIFA initiative but we still have some of the same tools available at our disposal that we have traditionally used in Section 1115 demonstrations to pull more people into the programs. For example, we have what we call "pass-through expansions" and all that means is to the extent a State could have covered a population using their Medicaid State plan if they choose to do it in a demonstration. The cost of that population sort of counts on both sides of the budget neutrality equation. That would be a case where they wouldn't need to cut someone's benefits in order to pay for someone else. States can also through the HIFA initiative as they can with other Section 1115 demonstrations redirect disproportionate share hospital or disproportionate share hospital (DSH) funds to cover more of the uninsured. They can still accrue managed care savings through these demonstrations and also there is the possibility of using SCHIP funding in new ways to cover more people.
Cindy DiBiasi: Why don't we stop here. Just pause for a minute and let's start defining some of the acronyms we are throwing around like SCHIP for example.
Theresa Sachs: SCHIP is the State Children's Health Insurance Program, which was enacted a few years as kind of a separate program from Medicaid where States could cover more uninsured children.
Cindy DiBiasi: The idea of accessing the unspent SCHIP funds that you talked about, it sounds intriguing. How does that work under HIFA?
Theresa Sachs: Well under the HIFA initiative, States are going to be able to, and I will get to this later because we have actually approved a couple of States where this is the case, States will be able to cover some non-traditional populations using their unspent SCHIP allocation. States can cover parents, as is the case in a couple of States already. Pregnant women, even childless adults which is really the new, one of the new features under HIFA is that we will allow the use of unspent SCHIP for childless adults. Of course, I want to point out that children are always protected. States are already using part of their SCHIP allocation of course to cover children and we want the children to continue to be covered first even if States do these demonstrations.
Cindy DiBiasi: I also understand that employer-sponsored insurance is an important component of HIFA but States can already provide premium assistance for low-income working people through Medicaid and SCHIPs, so what is so different about doing premium assistance in HIFA?
Theresa Sachs: Well, you are correct that it is a very important component of HIFA. There is a priority of this policy to the extent possible using employer-sponsored insurance where it is available. You are also correct that States could have been doing that under their straight Medicaid program or under their CHIP program. Under HIFA we have tried to be more flexible. We have heard from States for many, many years that it is very difficult to implement premium assistance under Medicaid and SCHIP using the traditional policy because of the need to provide wraparound benefits so that everyone gets exactly the same benefit package to do kind of the same thing with cost sharing to make sure that no one is liable for more than the ordinary cost sharing. In HIFA for the expansion populations and for some of the optional populations, not for the mandatory Medicaid populations, States can do premium assistance without the requirement to monitor every benefit package and to do wraparound and to monitor cost sharing quite so closely. Also we have made the cost-effectiveness test under HIFA much more simple. So we really do believe that it will be easier for States to do this.
Cindy DiBiasi: Many States are facing a financial crisis in this present environment. They may not be thinking of expansions contrary to what the HIFA model would suggest. Can you sum up ways that you think HIFA can help States in these difficult times?
Theresa Sachs: You are very right that States are now finding themselves in circumstances that I think we could not foresee when we rolled out the HIFA initiative. We do understand and are very sensitive to the fact that States find themselves in very difficult circumstances. I do think given the amount of activity that I am seeing on HIFA and the number of questions that I am getting that States do still have some segments of their low-income population that they are interested in reaching out to if they can do so in a way that helps them in their fiscal situation. I think HIFA gives States very good tools to sort of rearrange or redesign some of their programs within limits of course, that will allow them to perhaps redesign benefit packages so that they do free up some funding to cover additional populations. I realize that not every State is thinking of expanding right now, but given the level of activity I think States are still seeing that there is something in it for them.
Cindy DiBiasi: Before we turn to our other speakers who are going to discuss their responses to these circumstances, can you briefly tell us what HIFA proposals CMS has already approved?
Theresa Sachs: Sure. We have two proposals approved so far. The States of Arizona and California have both done expansions and I think it is worth pointing out relevant to your question earlier about is HIFA just a way to reduce benefits. Neither one of those programs involves a benefit reduction to any population. In the State of Arizona, they will be covering a population of childless adults up to 100 percent of poverty and parents of Medicaid and SCHIP kids between 100-200 percent of poverty using unspent SCHIP funding and Medicaid funding if the SCHIP runs out. In California they will be covering parents of Medicaid and SCHIP kids up to 200 percent of poverty also using some of their unspent SCHIP allocation.
Cindy DiBiasi: Theresa, how can participants ask specific questions and get more information about HIFA?
Theresa Sachs: CMS has established a HIFA mailbox. There is an E-mail address that you can use to transmit specific questions and the address is HIFA@cms.hhs.gov.
Cindy DiBiasi: We are going to get back to you in the question and answer period in a few moments. But first let's turn to Vickie Gates. Vickie, let's start with the big picture. What is the context in which most States are looking at the issue of the uninsured right now?
Vickie Gates: Right now they are looking at it, Cindy, in a very challenging context. You have already referred to the fact that many States have revenue reductions. Well, in fact it is the majority of States. Forty-five as of February have failed to meet their revenue projections. At the same time, we have got 28 States that have got serious expenditure problems. In many cases that is Medicaid. It creates, I think, a very difficult environment for States to be thinking about expansion, but at the same time, in spite of this and the other complication which is of course, rising cost in health care which affects not only the States but really affects private employers also in the whole ability to keep your private base healthy at the same time you consider how to create these bridges.
States still are thinking about how to do more with what they have. They are both worrying about how do they maintain what they have got, but they are also really trying to say are there low costs? Are there no costs? Are there creative options that we can come up with that will make a difference in serving the uninsured?
I think there is just one other thing I would really like to point out about the current environment for States and it is a really important issue because it is an important political issue. There are 36 governors who are up for elections and States are struggling right now to deal with redistricting. This means that in addition to economic uncertainty many States are struggling with political uncertainty. We are still seeing innovation. I have to echo Theresa's point. We are sponsoring a series of small-group consultations for States on HIFA waivers and creative options that may be available and we have got States, in fact we are over-subscribed, we are doing three instead of two.
Cindy DiBiasi: Great. With what options do you see the States considering or pursuing?
Vickie Gates: I think they are looking at the same things they have looked at for a period of time and I want to talk just a little bit about kind of the track record on what States have looked at as well as what the implications are currently. States always are reviewing their public programs, their Medicaid programs. These are the programs that have made the most difference in covering the uninsured. The interest in public-private partnership, how to create a good linkage with employer-based insurance, is still a major State issue. We don't have the answer yet. I am going to talk about that in a little bit more detail later I hope. States are also right now I think going back to an area that they really felt successful in the early ‘90's. Insurance reforms, the marketplace, because the marketplaces are experiencing some really, some increasing difficulties. They are losing insurers. They are having more concentrated markets and there are States now in fact that are rethinking reforms that they implemented during the ‘90's and looking for ways to guarantee a competitive marketplace.
Cindy DiBiasi: What are the States doing with respect to their Medicaid programs?
Vickie Gates: HIFA is the big action in, 1115 waivers are still the big action, but they have had some other options that have kind of created a base for where we are right now. The easiest one for many States has been an option that came with Section 1931 of the Temporary Assistance for Needy Families Act. I hate to throw out sections all the time. But it basically allows States to think about disregarding income, particularly for working parents. We have had about half of the States have actually made more insurance available to working parents who have been transitioning into jobs as a result of Welfare Reform.
SCHIP, I think, has been one of the most interesting areas that States have worked in and the reason is not just because it has led to every State having a program. It is really the first time that the Federal government gave the States a new way to do business, created new options. They said you can run a Medicaid program, you can run a separate program, and you can have some different options on benefit packages. We'll look at the Consumer Assessment of Health Plans (CAHPS®); we will look at doing things differently. This got an enthusiastic reception from the States.
The other thing I think that I want to say about SCHIP is I think SCHIP created a bit of a culture change in States. SCHIP made outreach all right. SCHIP made people think differently about how you market a public program. SCHIP led to programs called things like "Peachcare" instead of "Medicaid." I think it made a huge difference in terms of covering kids.
Waivers are probably the big area now, particularly States trying to figure out, can these waivers give us more flexibility to create better partnerships with employers? Can they give us more flexibility on the benefits side so that we can in fact craft something? One of the words that I am hearing a lot when I talk to States now is "sustainable" and "unsustainable" when they look at their Medicaid programs.
I guess the last thing I'd throw out is an area that in spite of the tough economic times, we still have some States that really are engaged in that, the State-only program. That is the program where you really want to do something and you are willing to put 100 percent State money up because you are so firm on how you want to design a program. States have typically done this to serve populations that didn't fit or that they couldn't create a waiver program for. They may go back and rethink some of these programs now that HIFA is available. An example would be the basic health plan in Washington State. A major program that provides the policy somewhat like [unclear] insurance and serves a large number of low-income working uninsured.
Cindy DiBiasi: Let's talk a little bit about what States are doing in trying to close the gaps between public and private sector coverage.
Vickie Gates: As I have said, this is the area that States are increasingly interested in and there are really good reasons for looking at this. They want to try and leverage private funding. They certainly don't want public coverage to be responsible for pushing out private coverage. When funds are scarce, you really want to make sure that you have maximized everybody else's dollar, not just your own.
So there are a series of things that I think of as kind of responding to some of these gap issues. One of them is high-risk pools. The medically uninsurable. It is a small option but it does fill a gap in the marketplace and make an option available to people who can't get insurance otherwise. The issue that many people are concerned about trying to find an answer to is how do we improve the employer offer rate? How do we get those employers who aren't invested to actually come into the marketplace?
States are trying a number of things. You have States like Massachusetts, which is looking at direct subsidies to employers. You have a State like New York, which has developed a program to both create a new benefit package with lower mandates, theoretically lower costs, but also to buy a segment of the risk to try and make it less expensive, therefore more attractive. Tax credits for employers have always been a popular option. But there is a real difficulty of marketing to and getting small employers involved in these programs. I will have to tell you by some personal experience, they are a very suspicious group about public programs. One of the question they always ask is "Will this program be 2 years from now when I have employees who expect me to provide this coverage?"
The last two things I want to just briefly talk about, premium subsidies. Make it possible for people to buy, States are doing that. States are saying if we can't provide money, can we open up a pool? Can we take something that we already have, State employee coverage, SCHIP coverage and make it possible for other people to buy it? It is a big variety.
Cindy DiBiasi: You talked a little bit about this. What have been the major issues and challenges that States have been facing when they are considering or when they are actually implementing these changes?
Vickie Gates: I think it would be unrealistic to say right now that funding and what I call fear of commitment, I know that sounds like you are entering into a marriage, but when a legislature and a governor make decisions to provide a major expansion of health care coverage, they really are worried about what does this mean for them 5 years down the road, 2 years down the road. It is regarded as a very serious commitment, so they want to move slowly and want to be sure they understand what the dynamics are likely to be. Funding, of course, that is self-explanatory.
I think the other thing right now that is really difficult and I know there will be a lot more discussion of this is these set of conferences [unclear]. New benefit designs and looking and finding the right place on the continuum for cost sharing are very complicated issues. They are very difficult to look at the population. To make the decision about what is appropriate in terms of eliminating benefits and to make the decision about what is appropriate and cost sharing.
The increase in costs that are generally out there in the marketplace are really having a chilling effect because part of what, and I can give you what I think is really a good example of how this hits a very important constituency. In Vermont in a small-employer focus group, they were raising a series of possible programs to get more employers involved in providing health care insurance. There was a bit of a backlash with a comment that in fact maybe you are not looking at the right problem, you have got to think about cost right now. Until we can have some surety and some feeling that we understand what is going on in cost, it is difficult for us to tell you what is the program that is going to make us decide to offer health care coverage. So you have to be realistic about cost as a barrier.
I think more States are having more trouble with providers, provider support, and provider participation. You have seen people leave Medicaid plans; it is a reality. This is one that I hope that, that Theresa has talked about it, is going to help. Administrative complexity. These programs have been very difficult to administer and very difficult to get people into. So make it simpler and make it easier to market and get people involved.
Cindy DiBiasi: Are there any important health research findings that you think can be useful in helping States consider their options?
Vickie Gates: I think there is a lot of research out there that States are using now and they are doing what always happens when you talk about research, they are saying let's peel another layer off the onion. We found something out, it rates another question. They are struggling with affordable coverage and what a lot of States are beginning to say is there is something more complicated here than just being able to say it is 5 percent or it is this guideline. There is also something about the way people look at insurance and the values that they have about insurance. In fact, one State came up with what I thought was a fascinating idea. Let's look at two groups equal in socioeconomic status, but who made the decision to put part of their resources into insurance or who made the decision not to. Let's look at some of these more complicated issues.
States are struggling to understand what really motivates employers. How do you really get them into it? Particularly when they are probably, and we ought to be realistic, more realistic about this, there is a group of small employers that is probably going to be extremely tough to get into. If you look at a recent experience in New York, they had a very generous subsidy and were very disappointed. So we have got a lot of challenges there, a lot of learning. Crowdout, the relationship between the markets.
I think more and more States are wondering about uncompensated care and the safety net and how they should combine that with insurance options, how they should support the safety net, where those two things actually bridge together and I think all of us really would like to see more information about the real links between health care coverage and health status. What difference it actually makes. Because believe it or not, there are lots of people out there who believe that whether you have health insurance coverage or not, you will get the care that you need.
Cindy DiBiasi: Are there any early insights or lessons learned to be gleaned from States' experiences so far in their efforts to address the issue of the uninsured in this current economic environment?
Vickie Gates: I think there are some lessons. I am not sure they provide answers, but one of the things that States are increasingly saying is there is no silver bullet. We have learned that. We know we are going to have to have multiple strategies in order to be able to do this. They are learning the political difficulties, particularly the political difficulty of shifting resources between populations. Sometimes it takes that to take advantage of HIFA, that the right benefit design and cost sharing or research issues that they are also very fundamentally political issues and value issues.
I think that they are also learning that in spite of all the research that we have had, the uninsured are still stereotyped. Given the number of States who have done research and have talked about the light bulbs and the aha's, when someone finally gets it, most of the uninsured are connected to the workforce. So we should never, I think, make too many assumptions about what people know when they analyze this issue.
The other thing that I think is obvious, the uninsured lack political leverage.
The other thing that I don't think you can ever overestimate, I think communities have maybe done the best job of this. They are learning collaboration is important. You have got to work with the Federal government. That is an absolutely key partnership. You need to work with your communities, you have got to collaborate with your providers, and you have your constituency groups. It is an old lesson, it is always true. Collaborate, communicate.
Cindy DiBiasi: How can participants get more information about the State coverage initiatives?
Vickie Gates: We have a very active Web site. It has got lots of information both about the programs we run, but it also has lots of information about what States are doing about coverage and includes some State-specific information. We have a special section on State reports. So if you are interested specifically in what one State is doing, it is also a resource for you in addition to the broad picture.
Cindy DiBiasi: We are going to be coming back to you in just a few moments. So far we have talked about programs at the State level; however, much important work to address the needs of the uninsured is being carried out at the local level. Today we are going to highlight an innovative community-level program that is seeking to extend health care coverage to the working uninsured. Vondie Woodbury is here to talk to us about that. Access Health has been getting a lot of national attention as an innovative model in providing affordable health insurance to the working uninsured. Vondie, what are the key aspects of this program and what makes it unique?
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