Councilmember David Catania Healthy DC Program and Legislation PreviewApril 1, 2008

PRESS RELEASE

Office of Councilmember David A. Catania

1350 Pennsylvania Avenue, NW, Suite 110, Washington, D.C.
20004

For Immediate Release: April 1, 2008

Contact: Ben
Young

http://www.davidcatania.com

CATANIA INTRODUCES PLAN FOR UNIVERSAL HEALTH CARE

HEALTHY DC ACT WILL EXPAND COVERAGE TO APPROXIMATELY
45,000 UNINSURED DISTRICT RESIDENTS

Today, 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.

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Healthy DC

Program and Legislation Preview

Introduced Tuesday April 1, 2008

John A. Wilson Building

Table of Contents

Healthy DC Program Preview


Healthy DC Act of 2008 Legislation Summary 


Healthy DC Act of 2008 – Title I Summary 


Healthy DC Act
of 2008 – Title II Summary 


Healthy DC Act of 2008 –
Title III Summary 


Healthy DC Act of 2008 – Title IV
Summary 


Healthy DC Act of 2008 – Title V Summary 


Healthy DC Act of 2008 – Title VI Summary


Healthy DC Act of 2008 Legislation As
Introduced

Proposal Preview

In order to achieve the goal of universal health
coverage by 2010, the District must ensure that health insurance is
affordable and accessible to all residents. To do so, the District
will have to undertake a comprehensive review of the current insurance
market, promote individual responsibility for maintaining coverage,
and look to employers to maintain their current commitments to their
workers. In addition, there must be full implementation of the Healthy
DC Program as established in the Fiscal Year 2007 Budget Support Act
of 2006 (A16-0476).

Designed to reach those uninsured District residents
who do not qualify for Medicaid or the DC Healthcare Alliance, Healthy
DC was established to provide a low-cost insurance product to eligible
District residents. The information below provides a preview of the
proposed Program.

Healthy DC: Affordable, Accessible, and Comprehensive

Through a cost-sharing partnership between the District
and CareFirst Blue Cross Blue Shield, Healthy DC will provide
affordable, accessible, and comprehensive health insurance benefits
for District residents.

Affordable

For eligible individuals, Healthy DC premiums will cost
no more than 3% of their gross income. The District will provide a
sliding scale subsidy that is proportionate to income to cover any
remaining premium cost. All other costs associated with participating
in the program will not exceed 6% of an individual’s gross income.
In addition, CareFirst has proposed reducing individual deductibles by
50% if enrollees select a medical home, take a health risk assessment,
and comply with prescribed disease management programs.

*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.

Implementation

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.

Funding

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.

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.

Shared Responsibility

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.

Healthy DC Cost-Sharing

Current Health Insurance Coverage
in the District of Columbia

Estimates based upon blended analysis from the Urban
Institute, Behavioral Risk Factor Survey, Current Population Survey
and Medical Expenditure Panel Survey

Healthy DC Act of 2008 Legislation Summary

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.

Healthy DC Act of 2008
Title I

• 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.

Purpose

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.

Healthy DC Act of 2008 Title II

• 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.

Purpose

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.

Healthy DC Act of 2008 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.

Purpose

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.

Healthy DC Act of 2008 Title IV

• 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.

Purpose

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.

Healthy DC Act of 2008 Title V

• 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.

Purpose

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.

Healthy DC Act of 2008 Title VI

• 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.

Purpose

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.