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Office of Councilmember David A. Catania For Immediate Release: April 1, 2008 CATANIA INTRODUCES PLAN FOR UNIVERSAL HEALTH CAREHEALTHY DC ACT WILL EXPAND COVERAGE TO APPROXIMATELY 45,000 UNINSURED DISTRICT RESIDENTSToday, Councilmember David Catania (At-Large), joined by eight other Councilmembers, introduced a plan to provide health insurance to approximately 45,000 uninsured District residents. The “Healthy DC Act of 2008” will give uninsured individuals who earn too much to qualify for Medicaid or the D.C. Healthcare Alliance the ability to receive insurance for a modest premium of between $20 and $100 per month. “Healthy DC will be the most innovative method of achieving universal health care in the country,” said Catania. “We are very close to universal coverage thanks to our generous Medicaid and Alliance programs. Healthy DC is the next step in making sure that our residents have access to comprehensive health care.” Catania has been working with CareFirst BlueCross BlueShield, the region’s largest health insurer, to develop the benefit. The District’s share of the program cost is estimated at $21 million. CareFirst has proposed donating $5 million to the program and permitting beneficiaries to use its extensive network of physicians and specialists. “Healthy DC is based on the concept of shared responsibility,” explained Catania. “It is designed for residents who can afford to contribute to a health plan, but who cannot afford premiums of several hundred dollars per month.” The Act also proposes increasing the reimbursement rates paid by the District’s Medicaid program to equal those paid by the Medicare program. Currently, Medicaid reimburses physicians at a much lower rate than Medicare. The result is that many healthcare providers choose not to participate in the Medicaid program, leaving low-income residents with few options for care. “The lack of adequate Medicaid reimbursement rates has created an illusory benefit whereby Medicaid recipients have coverage but can’t see a doctor when they need to,” said Catania. “Increasing these rates will draw physicians and specialists back into our Medicaid program so that we can start tackling our city’s health disparities.” Catania plans to include the Healthy DC Act as part of the FY 2009 budget currently before the Council. The bill calls for an implementation date of June 1, 2009. Healthy DC
|
|
Income by Federal Poverty Guideline |
Premium* (Annual) |
Deductible* |
Healthy Behavior Deductible* |
|
200-299 % FPL |
$20 per month ($240) |
$750 |
$375 |
|
300-399 % FPL |
$61 per month ($732) |
$1,500 |
$750 |
|
400+ % FPL |
$100 per month ($1200) |
$2,500 |
$1,250 |
*As proposed by CareFirst
Accessible
Healthy DC will be available to any District resident who earns more than 200% of the federal poverty guidelines and is uninsured, regardless of pre-existing conditions or health status. This includes any resident who has gone without health coverage for 6 months prior to Healthy DC enrollment, or who had health coverage during that time period but lost it due to specific circumstances, such as:
Loss of employment;
Divorce or dissolution of marriage or domestic partnership;
Death of the primary beneficiary;
New employment that does not offer health insurance;
Change in student status; or
Loss of Medicaid or the DC Healthcare Alliance financial eligibility.
In addition, current CareFirst Open Enrollment subscribers will be eligible to join the Healthy DC Program.
Applicants will have to submit proof of District residency and financial status, such as the front page of a District tax return or a pay stub. In addition, applicants will be required to identify their employer and certify that they do not have access to employer-sponsored insurance.
Comprehensive
Healthy DC will be a comprehensive, commercial insurance product offered exclusively by CareFirst. Healthy DC is a new idea in benefit design that provides financial incentives for wellness and has no life-time benefit or prescription drug maximum. As proposed, the Program will include:
Comprehensive benefits that include primary and preventative care, hospitalization, maternity, mental health and substance abuse treatment;
Full coverage on all medical services after deductible; and
Low-cost generic pharmaceuticals.
Through a contract between the District and CareFirst, the Healthy DC Program will become available to eligible District residents on July 1, 2009. To ensure maximum enrollment, the District and CareFirst are proposing a joint outreach campaign designed to raise awareness about the importance of obtaining and maintaining health insurance and of the availability of the new Healthy DC Program. At the same time, CareFirst will maintain the Open Enrollment Program through June 30, 2009 to ensure that subscribers can have coverage through to Healthy DC’s implementation.
Healthy DC is based on a shared responsibility model between the District, CareFirst, and the individual enrollee. CareFirst will provide the District with an affordable and unique plan that provides real financial incentives for wellness. Enrolled individuals will contribute an affordable amount towards their health costs. The District will subsidize the difference for those individuals who meet specific financial criteria. The District’s subsidy will be paid from the Healthy DC Fund, a fund dedicated to supporting and maintaining the Healthy DC Program.
To ensure that funds are continually available to support the Healthy DC Program, the District will amend the Healthy DC Fund establishment language to allow for additional monies to be deposited and utilized for its intended purpose. As proposed, these additional revenues stem from a variety of sources. The following chart depicts the sources of these revenues and the nature of their expenditure.
|
Revenues* |
|
|
Commercial Premium Tax |
$ 5,000,000 |
|
HMO Premium Tax |
$ 14,300,000 |
|
Individual Mandate Penalty |
$ 400,000 |
|
CareFirst Premium Tax |
$ 7,500,000 |
|
CareFirst Matching Contribution |
$ 5,000,000 |
|
Total Revenues |
$ 32,200,000 |
| Expenditures | |
| District Premium Subsidy | $ 21,000,000 |
| Medicaid Reimbursement Rate Increase | $ 10,000,000 |
| Program Administration | $ 600,000 |
| Total Expenditures | $ 31,600,000 |
Revenue estimates based upon available data.
*The Healthy DC Act of 2008 also proposes to increase the tax on a pack of cigarettes from $1 to $2. This increase is expected to generate between $15 and $19 million in additional revenues. These revenues may be used to supplement the DC Medicaid and Alliance programs.
Healthy DC will provide uninsured individuals with critical access to affordable, accessible, and comprehensive health insurance benefits. Access alone, however, is not enough. To meet the goal of universal health coverage by 2010, all qualified District residents must take on the responsibility of obtaining and maintaining health insurance.
Without health insurance, an individual receives less preventative care and has a higher mortality rate. In addition, the lack of insurance shifts health care costs to the community at large through the over-utilization of emergency rooms and higher levels of avoidable hospitalizations for manageable diseases. As such, once Healthy DC becomes available all District residents will be required to obtain and maintain health insurance coverage, subject to appropriate hardship waivers.
By implementing a city-wide requirement, the District will be able to better address poor health outcomes, such as high chronic disease rates, while also ensuring that limited health care dollars are supporting front end preventative care programs.
Estimates based upon blended analysis from the Urban Institute, Behavioral Risk Factor Survey, Current Population Survey and Medical Expenditure Panel Survey
Title I
The Healthy DC Program will provide eligible individuals with access to affordable and comprehensive health insurance.
The Program will include primary and preventative care, hospitalization, mental health, substance abuse, maternity, and prescription drug coverage.
The Program limits the premium for the coverage to no more than 3% of an individual’s gross income.
The Healthy DC Fund established by Title IV will subsidize the difference between the cost of the health insurance and the amount paid by the eligible individual.
The Mayor is authorized to enter into a contract with CareFirst to implement the Program.
Employers are required to report to the District on annual employee health expenditures.
Employers and insurance companies are prohibited from changing benefit packages or dropping coverage for individuals with the intention of shifting these individuals to the Program.
Title II
Beginning on July 1, 2009, all District residents over the age of 18 will be required to maintain continuous health insurance coverage.
Individuals will be assessed a penalty of at least $250 per year for non-compliance.
The Mayor may grant individual hardship waivers if compliance with the mandate would not be affordable or would violate religious beliefs.
Title III
By July 1, 2010, the District will increase the Medicaid fee-for-service reimbursement rates for speciality and primary care physician services to match the Medicare reimbursement rates.
Title IV
Amends the Healthy DC Fund to subsidize the Healthy DC Program and allow for additional revenues to be deposited.
Requires that the Fund maintain an annual minimum reserve balance equivalent to one year’s expenses of the Healthy DC Program.
Any funds not dedicated to the Healthy DC Program can be used to support Medicaid and the DC HealthCare Alliance.
Title V
The tobacco excise tax will increase from $0.05 per cigarette to $0.10 per cigarette.
Health Maintenance Organizations will be required to pay a 2.0 % premium tax.
Premium taxes for commercial health insurers will increase from 1.7 % to 2.0 %.
Premium taxes collected from this Title will be deposited in the Healthy DC Fund.
Tiitle VI
Beginning on July 1, 2009, health insurance companies in the individual market will not be able to deny a request for coverage.
Beginning on July 1, 2009, the premiums that an individual pays for individual coverage will be based upon the average cost of a large group, not on the individual’s age, gender or health condition.
The Healthy DC Program will provide accessible, affordable and comprehensive health insurance for eligible individuals.
To be eligible for the Program, an individual must:
Reside in the District for at least 6 months;
Earn more than 200 percent of the federal poverty level;
Not qualify for any other District or federal low-income health program; and
Be uninsured for 6 months prior to enrollment.
The 6 month uninsured requirement will not apply if the individual had insurance but lost coverage due to:
Loss of employment;
Death of a spouse, domestic partner, or family member who was the primary beneficiary;
Change in student status;
Change to new job that does not offer health insurance;
Separation, divorce, dissolution of domestic partnership;
Loss of eligibility for Medicaid or the Alliance; or
Loss of insurance due to the termination of a plan by a health insurer.
The 6 month uninsured requirement will also not apply if the individual has insurance on the individual market, including the Open Enrollment Program.
The Program provides comprehensive benefits, including primary and preventative care, hospitalization, mental health, substance abuse, maternity, and prescription drug coverage.
The Program sets affordability guidelines so that no individual pays more than 3% of gross income in annual premium costs and no more than 6% for all other costs. The Healthy DC Fund established by Title IV will subsidize the difference between the cost of the insurance and the amount paid by the eligible individual.
In order to implement the Program, the Mayor is authorized to enter into a contract with CareFirst by July 1, 2009.
Financial viability of the Program is protected through “crowd-out” prohibitions, including a required maintenance of efforts on the part of employers who provide health insurance to employees.
While much of the District’s population is enrolled in an employer-sponsored health plan, and another 182,000 individuals are covered under Medicaid or the DC HealthCare Alliance, approximately 45,000 individuals remain uninsured. Many of these uninsured are working District residents who are not offered or cannot afford employer-sponsored benefits and earn too much money to qualify for Medicaid or the Alliance. As a result, they often go without primary and preventative care, have poorer health outcomes, and over-utilize already stressed emergency rooms.
To address this critical gap in coverage, in 2006 the Council approved the Healthy DC Program with the goal of providing eligible individuals access to an affordable product on the private market. Title I of this legislation fully implements the Program and ensures that it best meets the needs of the District’s uninsured. Through a cost-sharing partnership with CareFirst, the District will make available a comprehensive and affordable private insurance product for eligible uninsured residents. Specifically, Healthy DC will be a commercial insurance product offered exclusively by CareFirst Blue Cross Blue Shield and will limit annual premium costs to 3% of gross income. In addition, the District will provide a sliding scale subsidy that is proportionate to an individual’s income in order to ensure that all residents can access the program.
Healthy DC represents a major advance towards the goal of universal healthcare by 2010. However, its success requires steps to protect the financial viability of the Program by protecting against “crowd out.” Crowd out occurs when private insurers and employers shift the responsibility for health coverage to a publicly sponsored program. Thus, Title I requires employers to maintain the same per employee health expenditures as the previous calendar year, subject to a hardship provision. Employers will be required to report these expenditures annually to the Mayor. Title I also prohibits individuals who have been insured within the previous 6 months from dumping their employer-based coverage in favor of Healthy DC. Violations of both requirements will result in financial penalties, which will be deposited into the Healthy DC fund.
In order to achieve the goal of universal coverage by 2010, the District must ensure that affordable and accessible health insurance is available to all District residents. Full implementation of the Healthy DC Program is a critical step in that direction.
Beginning on July 1, 2009, all District residents over the age of 18 will be required to maintain continuous health insurance coverage.
To determine compliance, individuals will be asked to certify that they maintained coverage as part of their annual income tax filings.
The Mayor will be able to waive this requirement for individuals if compliance would result in an economic hardship or a religious violation.
Individuals will be assessed a penalty of at least $250 per year for non-compliance, which the Mayor may also waive pursuant to regulations.
An estimated 45,000 District residents are currently uninsured and often suffer poor health outcomes because they lack a regular source of care. These individuals often seek care only during a medical emergency, increasing hospital emergency room utilization rates and uncompensated care expenditures. These costs are passed on to the insured population in the form of higher insurance premiums and to the government in the form of higher expenditures for safety net programs.
Title II requires all individuals to have health insurance beginning in 2009. This requirement will improve health outcomes for District residents, ease the burden of rising health coverage costs, and move the District closer to the goal of universal coverage by 2010.
The District would not be the only jurisdiction to require individuals to have health insurance. In 2006, Massachusetts was the first state to move toward universal coverage by requiring all residents over the age of 18 to maintain health coverage in 2007. By utilizing the income tax process to monitor compliance and assess penalties, Massachusetts has minimized the administrative burden of this requirement. Since passage, Massachusetts has enrolled over 70% of its uninsured population and spurred other states to action. Today, more than 20 states are considering individual mandates as part of universal coverage initiatives.
In order for an individual mandate to be an effective component of universal coverage, individuals must be able to access affordable health coverage through the private market or public programs. Critical market reforms included in Title VI will help to improve access and affordability in the private insurance market. Full participation in the Healthy DC program as envisioned in Title I, coupled with enrolling all of our residents currently eligible but not enrolled in DC HealthCare Alliance and Medicaid Programs, will ensure that all uninsured individuals have comprehensive health coverage for the first time in the history of the District of Columbia.
By July 1, 2010, the District will increase the Medicaid fee-for-service reimbursement rates for speciality and primary care physician services to match the Medicare reimbursement rates.
In order to achieve the goal of universal health coverage by 2010, the District must ensure that medical care is affordable and accessible to all residents. This includes taking steps to adequately support our provider community. Having insurance is one thing; being able to access health services when needed is another. Title III takes an important step to align critical Medicaid fee-for-services rates with those of the federal Medicare program.
The Medicaid fee-for-service program serves low-income individuals who are elderly, disabled, and developmentally disabled. Currently, the program’s primary and specialty physician reimbursement rates are approximately 50% of what Medicare pays. Given these low reimbursement rates, it is difficult to recruit and retain physicians who are willing to participate in the program. As a result, many insured individuals cannot access necessary services, including critical preventative and chronic disease care. They often delay or forego treatment, or are forced to rely on already over-crowded emergency rooms. Not only does this lead to poorer health outcomes for these insured District residents, but it drives up the cost of the overall health care system.
Title III’s increase of Medicaid fee-for-service speciality and primary care physician rates is an up-front investment in the health of the District. Higher reimbursement rates will draw more physicians into the Medicaid program and provide enrollees with greater access to care. Title III will increase investment in primary care and also help reduce unnecessary emergency room visits thereby improving overall health outcomes in the District.
Amends the Healthy DC Fund as established in the Budget Support Act of 2006 in order to support the new Healthy DC Program.
The Fund will be nonlapsing.
The Fund will not revert to the District’s General Fund.
The Fund will maintain an annual minimum reserve balance equivalent to one year’s expenses of the Healthy DC Program.
Any funds not dedicated to the Healthy DC Program may be used to support Medicaid and the DC HealthCare Alliance.
The purpose of the Healthy DC Fund is to provide a continual revenue source to implement and support the District’s Healthy DC Program. The Fund is designed to permit flexibility by accepting revenue from various sources. Specifically, the Act states that monies collected from employers and insurance carriers found to be in violation of Title I, fines collected against individuals not in compliance with the mandate set forth in Title II, and additional tax revenue generated from Title V will be deposited into the Fund.
To ensure that revenues collected for the purpose of supporting the health care programs are not utilized for other non-health related purposes, this title specifies that monies deposited into the Healthy DC Fund shall remain in the Healthy DC Fund. Furthermore, the Fund will maintain a minimum balance sufficient to support costs for the Healthy DC Program for a full year at all times. By establishing a secure Fund, this title helps to ensure that the Healthy DC Program is not compromised due to funding limitations in the future.
In addition to supporting the Healthy DC Program, the Fund is designed to assist the District’s other lowincome health benefit programs. Funds that are not committed to the Healthy DC Program may be made available to Medicaid and the DC HealthCare Alliance.
Health Maintenance Organizations (HMOs) will be required to pay a 2.0% premium tax.
The tax shall not apply to HMO premiums for Medicaid, the DC HealthCare Alliance or any other federal health benefit programs.
HMOs will continue to pay real estate taxes and insurance regulatory fees.
The tobacco excise tax will increase from $0.05 per cigarette to $0.10 per cigarette.
Premium taxes for commercial insurers, including CareFirst, will increase from 1.7% to 2.0%.
Premium taxes collected from this Title will be deposited in the Healthy DC Fund.
HMOs were originally structured to help insurance companies control their overall costs. The early HMOs generated smaller funds from their members’ premium rates than did insurance companies, and as such, HMOs were not subject to premium taxes to protect their viability. Thirty-five years later, HMOs and insurance companies have virtually identical roles in our health care system, yet HMOs continue to be exempt from premium taxes in some jurisdictions. To address this imbalance, over twenty states have acknowledged these market changes and have enacted legislation to apply a premium tax on HMOs. For example, Maryland applied a 2.0% premium tax on HMOs in 2004.
Premium taxes on HMOs allow states to directly invest in their health care systems. At present, the District does not apply premium taxes to HMOs. The bill creates a uniform 2.0 % tax on all health insurance carriers regardless of their business classification. The revenue generated from these taxes will be deposited into the Healthy DC Fund to support program operations.
In addition to establishing equal tax regulation among health insurance carriers and HMOs, the legislation will increase the District’s tobacco excise tax from $.05 per cigarette to $.10 per cigarette. The adverse affects of smoking are well-known. The District’s Department of Health currently administers smoking cessation and prevention services, but we can do more to discourage smoking. According to the American Lung Association DC, of the 19 states that increased their tobacco excise tax between 20042005, all experienced a drop in cigarette pack sales and an increase in revenue. By increasing the cigarette tax, the District will join many other states that have used an increase in the cigarette tax to deter our residents from smoking while simultaneously investing in health care.
Our neighbors, Maryland and Virginia, have increased tobacco excise taxes in recent years. This additional excise tax will effectively raise the tax on a pack of cigarettes from $1 to $2 in the District.
Beginning on July 1, 2009, no application for individual health coverage can be denied by a health insurance company.
Beginning on July 1, 2009, the premiums that an individual pays for individual coverage will be based upon the experience of a large group, not any one particular individual.
All individual health insurance policies issued prior to July 1, 2009, shall continue in force until renewal.
In order to achieve universal coverage by 2010, every District resident must be able to access health coverage. This is not possible if insurance companies are allowed to deny individuals because they are too sick, too old, or too risky. Beginning in July 2009, insurance companies will be required to offer coverage to all individual applicants, a practice known as “guaranteed issue.”
Prohibiting denials of coverage is only part of the equation. District residents must also be able to afford the health coverage that they are approved for. Currently, many individuals cannot afford individual health coverage because the premium price is highly weighted to account for the individual’s gender, age, health status or occupation. As a result, older and sicker individuals are often priced-out of coverage. To adjust for this imbalance, beginning in July 2009 the premium price offered for health coverage on the individual market will be based upon a “community rate” and not that of a particular applicant. The community rate is the annual cost of the entire pool divided by the number of people covered in the pool. Community rating does not allow for particular traits– such as gender, age, health status or occupation – to be used in price calculations, resulting in a simple and affordable rate to many individuals.
These market reforms provide a critical foundation for the proposed legislation and are necessary to support the goal of universal coverage by 2010. Other states, including New York, New Jersey, Massachusetts, Vermont and Maine, have used similar tools to promote universal coverage. By guaranteeing issue and charging all individuals the same amount for insurance, coverage through the individual market – including the Healthy DC Program–would always be available and affordable.
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