New Mexico Health Choices Market-based universal coverage.

New Mexico Health Choices

Market-based universal coverage

An unhealthy cycle

Employers and individuals have seen premiums increase

10-20% a year since 2000

Around 400,000 New Mexicans have no health insurance

Doctors and hospitals are forced to overcharge

some patients to make up for those who cannot pay

NM Health Choices 1.3 - LHHS 3

Why so many uninsured?

Low-wage jobs, seasonal, contract and part-time work, rural unemployment, prevent many New Mexicans from getting medical insurance.

Premiums are not affordable

Employment-based insurance cannot reach everyone

Many just don’t want to pay for health insurance

Family medical insurance costs $10,000 – one quarter of a typical household income. Businesses that offer high benefits get higher costs, less profit than their competitors.

100,000 uninsured say they’re healthy or have access to healthcare anyway. Some businesses believe that health insurance is not their responsibility.


So then health insurance must be…

Small tax rebates, purchase pools, high deductibles are not enough. Individual payments must be scaled with personal income. Businesses must pay less for PT/short-term workers.

Affordable

Benefits should survive changes in job situations and family status, even local economic downturns.

Separate from employment

Everyone already has a right to healthcare: now everyone must have an obligation to pay their fair share.

Required

Concepts


Proposal goals

Health insurance for all New Mexicans

Bringing public spending under control

Improving healthcare quality & safety

Fair financing

Reducing premiums and administrative costs

Phasing out employer-based insurance

Limiting the role of government

Helping businesses and our economy

… and Feasibility

Improving consumer choice & cost awareness

NMHC Score


Market-based universal coverage

means everyone gets health insurance.

Universal Coverage

Market-Based

means consumers purchase their own health insurance plan from commercial carriers.

A balanced mix of existing public funds, mandatory employer and individual contributions, and voluntary supplements makes the system flexible and affordable.

Proposal solution


The proposal is NOT…

A single payer plan. The government does not decide benefits, administer claims, set provider prices or interfere with facility budgets.

An entitlement program. The government does not make qualitative benefit commitments which can easily cost more than predicted. Benefits are known dollar amounts, determined annually based on revenue projections.

Simply universal access to care, which can be achieved with a safety net of public facilities or indigent care funds. Universal coverage grants everyone rightful access to all our high-quality healthcare facilities, without needing any government intervention.

A complete solution to rising costs. Other initiatives focusing on quality of care, public health research & education, IT, administrative costs, medical recruitment etc., must complement this plan.


How does it work?

Employer Healthcare

Contribution

Individual Healthcare

ContributionExisting State + Federal

Funds

Statewide Healthcare Account

Personal HSAs

Insurers Health Plans

Disabled, Long-term care & Special programs

Allocated non-cash credit+ Personal dollars


Benefit allocation

Money collected for healthcare financing is redistributed to individuals in the form of non-cash credits to purchase commercial health insurance.

Standard benefit allocations would allow buying low-cost HMO-type plans or higher-deductible indemnity plans.

Low-income families need a higher benefit allocation to buy more comprehensive, low-coinsurance plans. When possible they should enroll in Medicaid to maximize federal funding.

Individual choices: buying a basic plan at no additional cost; upgrading coverage by paying supplements; or getting a cheaper high-deductible plan and placing the difference in a tax-free Healthcare Savings Account.


Source: US Census Bureau, CPS March 2004, NM Population 0-64 by household income


Enrollment

An annual benefit enrollment period is held before the start of the fiscal year

A central web site or portal, printed materials, phone lines, the press and local volunteer groups help insurance buyers compare plans side by side.

Enrollment is tracked in a central database to ensure that everyone is assigned the correct credit amount, and has selected a plan or is automatically enrolled in one.

Monthly updates track new and departed residents and other changes.


Insurance offering requirements

All products are community-rated with no cherry picking. To maximize choice, savings and economic benefits there may be:

Offer presentation requirements (geographic zones, price categories, disclosures, add-ons)

Minimum and maximum out-of-pocket costs Anonymous claim utilization reports for public health

analysis and to help track/manage costs Uniform penalties for costly behavior Standardized, rapid enrollment procedures Limits on advertising and marketing expenses New Mexico-based personnel requirements

Funding


ALL NUMBERS ARE PRELIMINARY ESTIMATES

271 271

1,935 2,041

471 472

1,0491,418

430555

102128

736709138 91

798660192150

153

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Before After

Services paid by the uninsured

Copays and deductibles

Voluntary premium supplements

Individually purchased insurance

Personal Healthcare Contribution

Employee share of premiums

Business Healthcare Contribution

Business employers

State & local employers

State savings

State & local programs

State Medicaid

Federal Medicaid

Federal grants to hospitals & other

Indian Health Service

($ million)Before & After Healthcare Funding in NMFY 2006 proj. excluding Medicare, federal employees & military


Existing funding sources

Medicare funding and benefits are unchanged Medicaid federal funding ($1.9 billion + $0.7 billion in

state funds) is our largest resource and must be preserved or expanded. New revenues and centralized enrollment allow the state to maximize existing waivers or request new ones.

Some state health program funds can be redirected to the Statewide Healthcare Account. Some city & county money is freed for tax cuts or local use.

Federal grants & IHS funds: TBD (est. small cut)



Business Healthcare Contribution

Recommended: a fixed dollar amount per employee hour with rates tiered by company size. For example:- Private & non-profits under 100 employees: $1.00- 100-499 employees: $1.15- 500+ employees: $1.30- State & local governments: $1.50Yields $1.9 billion (incl. $0.5 billion from governments)

Optional: index these amounts for inflation Alternative 1: a percentage rate on total payroll (6%-7.50% tiered

rates would yield the same revenue). Helps low-wage employers, but discourages businesses from raising wages.

Alternative 2: a low percentage of gross income (revenue minus cost of goods sold). Helps labor-intensive industries, but may be more difficult to put in place.



Individual Healthcare Contribution

Medicare & other federal beneficiaries are exempt. Recommendation: low flat percentage of total personal

income with low-income exemption (insufficient data). Next best: 3% flat adjusted gross income tax on all

residents except under 100% of FPL = $650 mil (exemption cost $70 mil)

Optional: cap on income tax (e.g. $3000, cost $120 mil) Alternative: based on taxable income with higher

progressive rates (e.g. 0% under $11,000, 6% above yields same revenue as 3% AGI with exemption)



Possible revenue complements

The following are options, not recommendations.

General sales tax: 1% raise yields $320 million Alcohol/tobacco taxes: increasing cost of alcohol and

tobacco products by 25% yields $100 million Repealing 50% capital gains exemption: $25+ million Property taxes: not recommended Oil & gas windfall may help cover short-term costs of

transition, not ongoing costs


Other Proposal Benefits


Anticipated savings

Estimated savings of $400 million, or 6% of non-Medicare spending, include:

Reduced overhead in state programs Reduced benefit administration costs for employers Reduced insurance plan administration Reduced provider administration (eligibility, COB) Reduced broker commissions

They are hard to quantify, but let’s not forget: Physical & mental health benefits for formerly uninsured



Information technology opportunities

Electronic verification of benefits and treatment authorizations Routing claims through a common clearinghouse, potentially:- Populating electronic health records of willing patients- Automating real-time public health data collection- Better detecting fraud based on utilization patterns- Analyzing cost drivers to anticipate demand, develop targeted

provider and public education efforts- Encouraging electronic claims, reducing errors & data entry

by auto-populating patient info from enrollment

Having a single enrollment system and unique patient identifier can facilitate industry-led healthcare IT initiatives

= Huge potential for less cost & better care


Economic development benefits

Healthcare is already the largest employer and B2B customer in many areas of the state.

Greatly reduced uncompensated care will help doctors stay in New Mexico.

Higher demand will drive increased hospital investment. An expanding healthcare infrastructure will help attract

retirees, their pensions and their families. Reduced healthcare costs, risks and hassles will help

attract large and medium-size businesses, with a multiplier effect on local small businesses.

Healthcare coverage reduces personal bankruptcies It improves workforce mobility and productivity


What’s next?

Validate economic models, update cost estimates. Set up advisory groups for stakeholders to refine the proposal

and help solve technical issues (insurance product design, Medicaid integration, revenue collection, Indian and rural health issues, information technology).

Governments, legislators, employers, providers, insurers, brokers, tribes, unions, consumers, retirees should be involved.

Prepare for a public education campaign.

Objective: developing consensus legislation by 2007

2005-2006: Creating & funding a non-profit organization to:

New Mexico Health Choices Initiative


We can do this!

New Mexico Health Choices Market-based universal coverage.

Documents

Transcript of New Mexico Health Choices Market-based universal coverage.