Health Insurance (09/07/2005)

Final
STAFF SUMMARY OF MEETING

HEALTH INSURANCE

Date:	09/07/2005	ATTENDANCE

Time:	09:16 AM to 04:32 PM	Green	X
		Johnson	E
Place:	HCR 0112	Keller	X
		McCluskey	X
This Meeting was called to order by		McElhany	X
	Senator Hagedorn	Penry	X
		Riesberg	X
This Report was prepared by		Shaffer	X
	Jessika Shipley	Boyd	X
		Hagedorn	X
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
Interim Committee on Health Insurance		-

09:17 AM

Senator Hagedorn discussed the agenda for the day, to discuss health plan options. He introduced Pam Hanes, Colorado Health Institute (CHI).

09:19 AM

Dr. Hanes introduced her discussion regarding the examination of health care coverage in Colorado and what options are available to provide a safety net for health care. She provided a handout to the committee (Attachment A). She presented information regarding access to health insurance and the status of the uninsured in Colorado. Recent census data indicates that 767,000 individuals are uninsured in the state. The small group market in the state also appears to be eroding with an increasing number of physicians unwilling to accept Medicaid or Medicare patients. Medical inflation is rising at five times the rate of general inflation. Senator Keller asked whether the federal government was planning on cutting reimbursement rates for Medicare again. Dr. Hanes indicated that such a change was under consideration, but action had not yet been taken.

09:33 AM

Dr. Hanes provided a map illustrating the distribution of the uninsured and the poor in the state (Attachment B). She presented a hypothetical picture of a low-income person who cannot afford health insurance. On average, employers who provide small group preferred provider plans pay approximately 60 percent of the premium and employees pay 40 percent when purchasing coverage for an entire family. For an individual plan, the employer typically pays 80 percent of the premium and the employee pays 20 percent. The number of participants in the small group market has dropped 3 percent between 2003-2004.

09:44 AM

Limited Benefit Plans. Dr. Hanes turned the discussion to possible options for addressing an individual's ability to access health insurance beginning with a discussion of limited benefit plans in the private market or "mandate lite." In states that provide these options, take up rates have been remarkably low. Colorado, however, has been quite successful. In Minnesota, there are no carriers offering the plan. In general, the cost savings of a limited plan are so small that carriers tend to not feel it is worth offering them. Representative McCluskey asked whether there is a relationship between rising cost in health care and limited savings from a mandate lite plan. Would the cost increases impact the efficacy in creating cost savings? Dr. Hanes indicated that generally the changes in mandates were relatively small cost changes. She indicated that the cost decreases were not enough to cause employers to switch plans and the costs were not low enough to cause uninsured individuals to purchase it.

10:05 AM

Dr. Hanes continued her discussion of limited benefits plans, but switched to discussion of public programs. She presented an overview of Maryland's program which has been in existence for 10 years. The program uses state general fund money and provides medical home care for extremely low-income and extremely ill Maryland residents. There is no cost sharing with participating individuals. These individuals are the most difficult to provide care for as they have multiple chronic conditions. They are 116 percent of the federal poverty level (FPL). Utah has a similar benefit package, but it provides a primary care benefit. The Maryland program has an aggressive quality improvement component and reports very high participant satisfaction. It is used as a stepping stone to being deemed permanently disabled and thus eligible for Medicaid. The state is anticipating expansion through a Medicaid waiver.

10:21 AM

The Utah program operates under a Medicaid waiver to provide publicly funded primary care with donated hospital and specialty care. Eligible individuals are 150 percent FPL who are not otherwise eligible for Medicaid, and cannot have access to any other type of health insurance. Utah has an enrollment fee as well as co-payments. The program is not focussed on the chronically ill, but that is generally who is participating. The goal of the program is Medicaid cost containment but it is too soon to tell whether that has been achieved.

10:34 AM

Health Savings Accounts (HSAs). Dr. Hanes began a discussion of HSAs and a possible role for them in Colorado. HSAs provide a tax advantaged savings account for medical expenses. Both employers and employees may contribute to them but the account is owned by the individual and are then portable for employees as they move from one job to another. Accounts are interest-bearing and the amount sitting in the account can increase over time. The accounts must be paired with a high deductible plan that doesn't kick in at all until the deductible is reached. Dr. Hanes discussed estimates of reduction in health care spending by moving from standard health insurance plans to high-deductible health insurance plans. She pointed out the difference between accessing health care through an HSA versus how people are used to accessing care now. Individuals do not know how many physicians are available in their community nor do they have a way of knowing what the costs are or what cost differences are between providers. Dr. Hanes stated that the public education component of HSAs will affect the long-term efficacy of the programs. She indicated that the lack of transparency within the market is impacting what health insurance options are feasible.

11:07 AM

Health Reimbursement Arrangements. Dr. Hanes explained how HRAs work. These are accounts established by an employer for employee medical expenses. The employer determines how much money is placed in the account and there are no limits on the amount. There are approximately 2.6 million people nationwide covered by HRAs.

11:23 AM

Marilyn Wristmueller, Colorado Medical Society, presented concerns of the provider working group regarding consumer-driven health care (e.g. HSAs). Providers have experienced problems with reimbursement. Initially, providers were permitted to collect payment at the time of service, however, in the past several months, plans have instead established that individuals are not required to make payment until services have gone through the claims process. Providers are thus responsible for the entire cost until such point that payment for reimbursement is established. Ms. Wristmueller responded to questions from the committee.

11:34 AM

Vanessa Hanneman, Colorado Association of Health Plans, discussed the insurance providers' perspective about how HSAs are working.

11:37 AM

Travis Berry, representing the employer work group, responded to the points discussed in the CHI presentation. He provided a handout to the committee (Attachment C). The working group supports the idea of boosting community health networks in the state, whether through at primary and preventive care network as discussed by CHI. The working group sees HSAs as a way to restore consumer understanding of real costs, however, better access to cost and quality information available to consumers so they can make informed decisions. The groups see HRAs as a less attractive option.

11:50 AM

Carrie Curtis, Colorado Consumer Health Initiative, spoke about the benefits of maintaining the basic and standard plans in statute. The group believes the plans provide necessary information for consumers when they are making decisions about the types of health care they may choose. She provided a handout to the committee (Attachment D).

11:53 AM

A.W. Schnelbacher, AARP, discussed that group's perspective regarding HSAs, which they do not support.

11:56 AM

Betty Lehman, Autism Society of Colorado, also addressed the consumer perspective particularly with regard to secondary or tertiary health care systems, beyond just the primary care system. Specialty care is currently not capped in terms of cost, but there is little transparency to these costs. She noted that Colorado has some of the highest out-of-pocket costs for health care for families with children with chronic care needs in the United States.

12:00 PM

The chair indicated time available for public testimony.

12:00 PM -- Gary VanderArk, Colorado Coalition for the Medically Underserved, talked about the increase in individuals in the state who do not have health insurance.

12:03 PM -- Melissa Suadi, representing herself, spoke from the perspective of a self-employed health care provider and consumer. She provided a handout to the committee (Attachment E).

12:22 PM

Senator Hagedorn adjourned for lunch.

01:42 PM

Senator Hagedorn called the meeting back to order. Dr. Pam Hanes returned to continue her presentation on health care coverage options. The second section of her presentation began with a discussion about Medicaid. Her major focus for Medicaid was on eligibility expansions, provider participation, delivery system efficiencies, expansions or systems' improvement, and testing new models of reimbursement and delivery. Dr. Hanes spent some time discussing physician reimbursement rates and how physicians have many concerns about insufficiency. She then moved onto issues of delivery system efficiencies including 12-month eligibility, actuarially sound rates and competitive bidding. Representative McCluskey asked a question about selective contracting and how that affects the existing Colorado provider network. Dr. Hanes clarified that selective contracting is not necessarily a mechanism for bringing in out-of-state vendors to compete for the Medicaid population. She sees it as a way to create a competitive market within the existing Colorado network. Representative Riesberg asked if there are any states with a model that allows Medicaid services across state borders. Dr. Hanes responded that she is aware of a situation like that in Washington and Oregon.

01:56 PM

Dr. Hanes continued speaking about pilot programs to establish medical homes outside of managed care plans. She also discussed using new dollars that might become available as a result of the passage of Referendums C and D. She offered two things to consider. First, allocating to further health care expansions will build expansion groups into the Medicaid base. Second, over the past four years, the general fund growth for the Department of Health Care Policy and Financing increased $338 million, $102 million between 2004-05 and 2005-06. Dr. Hanes offered some new models of new models of reimbursement and delivery for testing. See handout for a list of those suggested models.

02:08 PM

Senator Hagedorn introduced the next portion of Dr. Hanes' presentation and said that he asked her to discuss these issues because he felt it was necessary to look at information from other states. Dr. Hanes began by discussing the California Health Insurance Act, which is a "pay or play" mandate, in which employers pay a fee to the state to cover workers under a state-sponsored plan or play by providing employee health benefits that meet a minimum standard. Hawaii has the only existing pay or play program in the country and it has been in effect since the early 1980s. ERISA causes problems with a pay or play mandate. There has been strong resistance to pay or play mandates from the employer community and organized labor. A referendum was added to the ballot in California and voters defeated the measure. Dr. Hanes also provided the example of Massachusetts' Roadmap to Coverage. She suggested that Massachusetts has done more through state policy mechanisms to offer health insurance coverage to more of its population than any other state. She pointed that out to show that Massachusetts and Colorado have different state policy environments. Massachusetts began with a goal of closing the gaps in the uncompensated care pool and the safety net system, which was $1.1 billion in 2004. They took a building block approach to expand coverage and access. They expanded their MassHealth program to cover 200 percent FPL for kids and parents and 133 percent FPL for childless couples. They offered tax credits, which developed a sliding fee scale up to 400 percent FPL. Other tools included a purchasing pool and reinsurance. Senator Keller asked what a purchasing pool entails. Dr. Hanes explained it allows small employers to come together in order to pool their risk. She finished her presentation with two suggestions for tackling the problem of uninsurance. First, invest in local community laboratories. Second, let community leaders, providers, and the consuming public test solutions that creatively bring together public and private resources to test out solutions to the cost and access conundrum.

02:34 PM

The providers group was represented by Dr. Chet Suard, Colorado Medical Society. He discussed his group's support for the goals of the HIFA waiver and his hope that there will be further discussion regarding how to meet those goals in another way. Representative Green asked how concerned the providers are about Medicare and Medicaid reimbursement rates. Dr. Suard replied that it is a concern, but that the goals of the HIFA waiver answered those concerns in a way that was encouraging to physicians. Charlie Hebeler, Colorado Dental Association, discussed some problems with dental participation in Medicaid. She reported some reduction in the administrative hassles that keep some dentists from participating in Medicaid. Problems of reimbursement rates and no-show appointments are still a great concern.

02:50 PM

Vanessa Hanneman, Colorado Association of Health Plans, returned to talk about the HIFA waiver. The insurers group wants to know what are the desired changes that require the HIFA waiver. Also, has the premise of revenue neutrality with the waiver been confirmed? She wondered if Colorado should accept a cap on federal contributions since the average Medicaid patient becomes sicker over time. Can Colorado's budget afford the loss of federal dollars? Ms. Hanneman emphasized that increasing access to health care is paramount and that requires cutting costs.

02:57 PM

Travis Berry discussed pay or play, saying that employers oppose the concept. He pointed out that large employers overwhelmingly offer health benefits and mandating participation does not work to increase coverage. He offered auto insurance as an example. Mr. Berry stressed the need for individual responsibility for health care coverage. He stated that employees need to have "skin in the game" and need to know the true cost of health care. Employers cannot carry the responsibility alone. He expressed support for the Massachusetts plan discussed by Dr. Hanes. In that plan, the employer subsidy recognizes an employer commitment. The plan encourages employees to participate in existing plans and it uses existing private policies rather than creating a state plan. Mr. Berry encouraged precise identification of a goal, controlling costs in addition to expanding coverage, and creating strong market-based incentives.

03:09 PM

Carrie Curtis discussed the expansion of Medicaid and some possible options. Senator Hagedorn invited the consumers group to come back at the next meeting and discuss Medicaid expansion options in greater detail. Ms. Curtis accepted that invitation. Julia Greene, Colorado for Health Care, presented a proposal on the Colorado Fair Share Act (Attachments G, H, and I), which is basically a pay or play mandate. Her fair share proposal requires large for-profit companies to spend a certain percentage of their payroll toward health care for their employees or to pay the difference of what they do not pay into the state Medicaid fund. Ms. Greene explained that a program like the one she proposed would facilitate a solution to the problem of cost-shifting Medicaid expenses onto the insured. She pointed out that employer-sponsored health insurance coverage dropped 7% between 1998 and 2003. She provided an example of a similar bill that was passed in Maryland. The committee discussed various aspects of the proposal, including specific details of the Maryland bill and how those could be compared with the situation in Colorado.

03:40 PM

Dr. Allan Jensen, Colorado State Association of Health Underwriters, discussed the need for a toolbox for dealing with problems of uninsurance. He stressed that there is a large amount of mischaracterization about the numbers of the uninsured and what options might be used to get those people covered. He also stressed the need for reliable cost and quality information to be made available to consumers. He sees a downward trend in costs. He also agreed with Mr. Berry's characterization that employees need to have "skin in the game" for them to value their benefits. Dr. Jensen pointed out that many people rarely see a doctor so they should not have to pay a lot of money for something they do not use.

03:57 PM

Kelli Stahlman, Family Voices, talked about individual responsibility for health care costs. She pointed out that there is a gap created by low-income people who are uninsured, but are not eligible for Medicaid. She stressed the need to balance individual responsibility with individual capacity to contribute. Ms. Stahlman discussed the fact that most medical crises are not something for which a family can plan.

04:06 PM

Senator Hagedorn explained the process by which bill proposals will be introduced and chosen. He offered a list of ideas (Attachment J) to discuss and opened the floor for comments on each of the ideas:

1. Health Assurance Districts - Health assurance districts were created by the Rural Healthcare Delivery Act of 2001. This proposal would expand them to include all counties, not just rural. They would be able to blend with Health Services Districts. The proposal creates an opportunity to make use of sales tax and increase the mill levy cap beyond two miles. It subsidizes health insurance and facilities, to make health care more affordable. (Hagedorn)
2. A modified version of SB 05-237 which would make small group insurance more attractive to small businesses. It would provide more affordable health insurance through sharing risk cost. (Keller)
3. Reinsurance targeting a "band" in major medical plans that have no more than a $5000 deductible. This would make a major medical policy more affordable through sharing of the risk (Hagedorn)
4. 1115 Medicaid waiver - A Utah PCN (preventative care network)-like plan or a Maryland-like plan for the uninsured. It provides more affordable primary and preventative care, and leverages state money for additional federal dollars. It would expand the Medicaid populations. (Hagedorn)
5. Leverage state money for addition federal dollars - This involves an expansion of community health clinics and drawing down more federal dollars. It would create expanded access for the uninsured and possibly some insured Coloradans. (Hagedorn)

6. "The Pueblo Study" - Colorado Health Institute would undertake and cover the cost of the study. It would be state-sanctioned and would direct the Division of Insurance regarding (some proprietary) data for the study. If plans do not cooperate, DOI is to extrapolate the data from what they do have. The goal is to answer questions regarding modified community rating. (Hagedorn)
7. Premium subsidy - The state would pay a portion of an individual's health insurance premium for a specific basic managed care model and an HSA product. Plans must be standardized and open to all carriers. This would specifically identify the population to receive the benefit (i.e. individuals who cannot afford employer-provided insurance co-pays and have been uninsured for at least one year). The purpose of the subsidy of premiums in this case would be to get the uninsured on a health insurance plan. (Hagedorn)
8. Network adequacy - A study to look at the par/non-par issue and balance billing. Division of Insurance input would be needed. (Hagedorn)
9. Protection of business group of one (BG1) plans if "basic" and "standard" provisions sunset.
10. Some sort of tax credit. (Riesberg)
11. Preventative care only policy available to small businesses and having the premium subsidized by state funds - combination of 4 and 7 (Shaffer)

04:33 PM

Senator Hagedorn adjourned the meeting.