MarylandHealth Care Reform

Alice BurtonChief of Staff

Department of Health and Mental Hygiene

February 5, 2007

Overview

• Background• Impetus for expansion • Working Families and Small Business

Coverage Act of 2007• Getting it done

Maryland Health Policy Strengths• Unique All-Payer Hospital Waiver finances over

$800 million in uncompensated care• Investments in data and transparency

– Leader in report card development• Medicaid has stable delivery system -

HealthChoice– National leader in data driven rate setting– 7 MCOs participate, covering 75% of Medicaid

population– Systems and incentives to manage care and improve

quality• High Risk Pool (MHIP) – fills important gap in

individual market

Health Insurance Coverage of the NonelderlyMaryland and the United States, 2004-2005

68%

5%

9%

3%

16%

61%

6%

13%

3%

18%

Employment-based

Direct purchase

Medicaid

Other Public

Uninsured

United StatesMaryland

Source: Health Insurance Coverage in Maryland Through 2005, MHCC, January 2007

MD Small Business More Likely to Offer Insurance Than in Many Other States

Still less than ½ offer insurance

Public Coverage(Effective 07/01/06)

Note: This chart is for illustrative purposes only. Each coverage group has specific eligibility and some asset requirements, which are not shown.

200

100

300

133

40

Age 65 and Over+

19610 Parents or disabled age 19 to 64

250

PW

185

Poverty Level:1 person = $10,2102 persons =$13,6904 persons = $20,650

As of 1/24/2007

MCHP Premium

MCHP

Medicaid

Primary Adult Care Program – 116% FPL

Pregnant Women

Medicare

300

Impetus for Expansion

• New Governor• House leadership - call for expansion• $1.5 Billion Budget Deficit – need for new

revenues • Massachusetts Effect• Readiness

Adult Medicaid Eligibility, 2004-2005

EligibilityMarylan

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Massa

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etts

Verm

ont

Distri

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Colum

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Minnes

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State

050

100150200250300

Elig

ibilit

y (%

FPL) Ca

tam

ount

Dirig

o

Com

mon

weal

th

Maryland significantly trails leading states in Medicaid eligibility for parents

Median Income010203040506070

Inco

me

(thou

sand

s of d

olla

rs)

Median Income and

State Small Business Initiatives - Lessons

• Significant subsidy needed for employers to begin to offer insurance

• Many initiatives attract self-employed or low-wage workers vs. small business groups

• Complex participation rules designed to target funding can stifle enrollment altogether

• Subsidy program operates in context of larger, competitive market

• Leaner benefit designs not likely to expand coverage, marketable benefit designs essential

• W/out subsidies or lower costs little reason to join exchange or pool.

Small Business Subsidy InitiativeTough Policy Issues

• Crowd-out • Include self employed and low wage

workers without access to insurance• How narrowly to target subsidy• Role for agents and brokers• Relationship to rest of small group market

Working Families and Small Business Coverage Act

• Small business coverage initiative – Builds on current delivery and sales system – Simple design, easy access– Capped enrollment

• $30 million annual subsidy program for very small businesses– 2-9 employees, low-wage, not previously offering – 50% subsidy – Requires 125 plan– Any small business product w/wellness rider

Working Families and Small Business Coverage Act

• Expands Medicaid coverage for parents up to 116% FPL - July 2008

• Expand Medicaid coverage to childless adults to 116% FPL – phase in coverage beginning July 2009– Authority to cap enrollment & limit benefits– Expansion contingent upon availability of

funds

Working Families and Small Business Coverage Act - Financing• Already spending over $800 million on uninsured

in hospitals• Minimize impact on general fund through

redistributed savings in uncompensated care• All Payor Waiver provides mechanism to

“recapture” savings to finance part of expansion– Hospitals continue to be paid full amount – funding

shifts from uncompensated care to coverage• Savings for all payers (employers and individuals)• Maximize use of existing funding sources and

potential surpluses (MHIP)

Health Care Quality Council• Problem

– High cost, low quality– In Maryland, public and private health care quality

improvement initiatives are disparate and uncoordinated• Goal

– Leverage Maryland’s leadership in health care delivery to improve quality and affordability of health care for all Marylanders

• Solution – Health Care Quality Council:– Inventory public and private quality initiatives, prioritize and

focus initiatives– Develop statewide plan for better management and

prevention of chronic disease– Coordinate with other efforts to assure Health IT used

effectively

Getting it Done

• Leadership, opportunity and readiness• Realism• Stamina• Leaders – not too locked into ideas or

ownership • Buy-in from all key decision makers