Plan Enables Uninsured To Get Health Coverage
Initiatives like the nonprofit Kent Health Plan Corp., founders say, make it far easier for people who previously went without health coverage to access health care. Such initiatives also help small businesses retain employees and grow, and in the long run help control escalating costs by reducing the amount of uncompensated care provided annually.
“If there ever was a model to address the huge needs for health care coverage in our county, this model and others like it are viable answers,” Kent Health Plan President Charles Zech said. “This is a model that can and should become part of the fabric of health care delivery in Kent County.”
Launched Nov. 1, the Kent Health Plan is designed to provide basic, affordable health coverage to people and small businesses that are unable to afford it. The goal is to provide those businesses a source for health coverage until they are able to move on to a health insurer or HMO.
“We look at the product as being a bridge on their way to another commercial product,” Zech said.
Kent Health Plan presently covers about 2,500 residents previously enrolled in the State Medical Plan who are unemployed, indigent or chronically ill and have a monthly income of less than $276. The plan will expand Jan. 1 to provide health coverage to an estimated 2,500 low-income persons in Kent County — those who earn 150 percent of the U.S. poverty rate, which last year stood at $17,029 a year for a family of four — who do not qualify for any government-funded programs.
Both of the first two programs will focus largely on wellness and prevention, Zech said.
The largest target population of enrollees can begin enrolling in July, when the plan opens up to the working uninsured. That portion of the health plan will use premiums and co-pays from participating employers and employees, as well as funding from outside contributions that Kent Health Plan will use to leverage additional state and federal Medicaid funding.
Kent Health Plan directors are still formulating specifics of the product that employers without health insurance can buy, Zech said. The goal is to develop a product with a premium “in the neighborhood” of $150 a month for both the employee and employer.
Zech expects the plan to sign up about 200 subscribers a month in its first two years. The Kent Health Plan has participating agreements with all three hospitals in Kent County — Spectrum, Saint Mary’s and Metropolitan — and their affiliated primary care networks, as well as Cherry Street Health Services in Grand Rapids, Zech said.
Creation of the Kent Health Plan comes in an era of double-digit annual increases in health premiums resulting from the escalating cost of health care that forces many small business owners to go without insurance for themselves and their employees.
The Access to Health Care Coalition, a statewide group of health care and business interests, estimates that more than 1 million Michigan residents are without health coverage. About 75 percent of the individuals are working, typically in low-wage jobs, the coalition reported last spring.
The net result for hospitals across the state was $823 million in unpaid medical bills in 2000, much of which was generated by people without health insurance who visited hospital emergency rooms when they had a medical problem but couldn’t pay the bill. That’s about $150 million more than what went unpaid in 1999, according to the Michigan Health and Hospital Association.
Initial funding for the Kent Health Plan comes from a myriad of sources, including revenues from the state to care for the former recipients of the State Medical Plan and indigent patients. The plan is budgeted for revenues of $5.5 million in its first fiscal year, Zech said.
Providing a significant boost to the initiative was a $325,000 contribution from Kent County through the redirecting of state public health funds — a funding source that will continue annually — and a $685,000 one-time donation from the Michigan Department of Community Health from the state’s share of the federal tobacco settlement.
Kent County was one of 12 counties statewide that sought funding from the sate to launch health plans for the working uninsured. Five of them received funding, splitting about $5 million.
The new programs being launched this year are in addition to three similar initiatives in Muskegon, Ingham and Wayne counties that are designed to offer bare bones, inexpensive health coverage to the working uninsured.
Michigan Department of Community Health Director James Haveman sees such plans growing in popularity as health care costs and premiums continue to escalate. Using existing Medicaid funding, contributions from within the community, and premiums and co-pays charged to participants, the plans represent a viable alternative to calls for national health care, Haveman said.
“There’s some momentum that’s taken off from this kind of model,” Haveman said.
But a recent report questions whether the emerging trend toward leveraging Medicaid funds to subsidize health premiums for small businesses is having a significant affect on the number of uninsured people.
A study by the Center for Health System Change concluded that such programs have met with limited success and are forced to strike a delicate balance between the level of benefits offered and the available funding. The center, a nonpartisan health care think tank supported by the Robert Wood Johnson Foundation, says the study found that even a 30 percent premium subsidy does not lower premiums enough to lure large numbers of small businesses that cannot afford to offer employees health insurance into enrolling in a subsidized plan.
Despite the drawback, the center suggested that subsidized premium programs are an option to consider in a time of rising health costs that threaten employer-sponsored health plans.
One of the reasons small businesses are slow to enroll is a perception that even subsidized plans are still unaffordable. That perception stems from the fact that the plans are relatively new, the center said.
Enrollment may pick up once employers’ expectations change, said Lody Zwarensteyn, president of the Alliance for Health, a Grand Rapids health care planning agency that spearheaded efforts to form the Kent Health Plan. Subsidized plans are still better than the status quo and are more affordable than employers believe, Zwarensteyn said.
Enrollment will expand and the plans will begin to have an impact on the size of the uninsured population once they are better understood through education and, more notably, word of mouth.
“There’s an expectation — ‘I can’t afford it.’ How long does it take to turn that expectation around?” Zwarensteyn said. “You have to have people in the program and experience the program and tell other people; then it really takes off.”
While the state tobacco settlement seed money that helped Kent Health Plan won’t return, Medicaid funding used to support such health plans should remain secure, according to U.S Rep. Vernon Ehlers, R-Grand Rapids.
Concerns that Medicaid funding for programs like Kent Health Plan will erode in the future are unfounded, Ehlers said. The Medicaid funds are safe, he said.
“I don’t know any reason they wouldn’t be,” Ehlers said. “The federal government doesn’t pull the legs out of a program like this.”
Other factors contributing to the reluctance among small employers to embrace subsidized plans is the perception that they are temporary or vulnerable to funding cuts, the study by the Center for Health System Change stated.
Small businesses, particularly those that have never offered health insurance to employees, are also the toughest market to penetrate. Several companies collectively have relatively small employee groups, and many times only a small portion of a company’s workers are eligible to join a subsidized plan because they are already covered under a spouse’s health insurance.
“It is a very slow growth kind of process, but the reality is the niche is out there,” said Vondie Woodbury, project director for the Muskegon Community Health Project.
The community-based initiative was behind the drive to form Access Health, a health plan founded in 1999 that serves more than 300 small businesses in Muskegon County and is structured similarly to Kent Health Plan.
Despite the limitations of programs like Access Health and Kent Health Plan, backers say they represent a far better way to use Medicaid money in a way to cover more people.
“The challenge as a nation is to make our dollars go further and make them work for people who can afford to pay something,” Woodbury said. “That’s just good public policy.”