Gov Seeks Health Coverage For Uninsured

June 30, 2006
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LANSING — Studies have shown that without health insurance, people may forgo preventive services and delay seeking care until their health problems are advanced and more difficult to treat.

Nearly 1.2 million people in Michigan do not have insurance coverage, according to the Michigan Department of Community Health. Gov. Jennifer Granholm wants to combat that with a $1 billion Michigan First Health Care Plan she hopes to institute in the spring of 2007. It would be the first step in the governor’s three-pronged strategy of attack, which includes advancing health information technology and promoting healthy lifestyles.

About 15 people from the governor’s staff and the Department of Community Health Medicaid senior staff began working on the state-sponsored health insurance plan in December 2005, prior to the governor’s State of the State address in January, said Department of Community Health spokesman T.J. Bucholz.

“We believe this program, when it’s fully operational, would eventually insure 550,000, or roughly half of the uninsured,” Bucholz said.

According to the governor’s office, the Michigan First Health Care Plan will extend affordable health care to all Michigan citizens by:

  • Creating an affordable private market health care product for individuals and businesses;
  • Subsidizing care for those who can least afford it;
  • Creating incentives for businesses to offer coverage to their employees;
  • Reducing the overall cost of health care delivery by expanding technology and promoting healthy lifestyles.

To pay for the program, the governor is asking the federal government for a Section 1115 waiver that would allow the state to use $600 million in federal Medicaid funds and combine that with the $400 million in state revenues that is already used to cover the uninsured in Michigan. Purportedly, the state has saved the federal government millions of dollars by changing Michigan’s Medicaid prescription drug and fee-for-service plans to less costly options, so the waiver is a payback of sorts.

Managed care has been in place in Michigan since 1996, Bucholz pointed out, which over the course of the last nine years has saved the federal government roughly $2 billion in Medicaid funds. 

“The issue is that we spend about $400 million of state revenues to cover the uninsured,” Bucholz explained, “so we’re pointing to that $400 million figure in the budget and asking them to provide us with a match to meet that $1 billion figure. That’s how much the program would total in its initial inception.

“We’re not really sure exactly how much the program will cost us at this point of time; it could actually cost much more. We’re going to ask our partners in the private health industry — Blue Cross Blue Shield and others — for additional dollars to run the program. The $1 billion is just the combination of the state and federal contribution.”

Under the plan, the uninsured would have access to private sector insurance plans offered by a newly created exchange group that would administer the plan. Premium assistance would be provided on a sliding scale based on income. According to the governor, small businesses that can’t afford to offer health benefits could also take advantage of the “exchange” to purchase affordable health coverage for their employees.

Health insurance products offered by the exchange would rely on private sector approaches, including managed care with defined networks, benefits that are more comparable to employer-sponsored insurance and small group market plans, higher cost-sharing than Medicaid, and pre-tax treatment contributions to reduce cost.

According to the Michigan Department of Community Health, uninsured people with incomes below 200 percent of the poverty line would be eligible for coverage: a single person with an income of $19,140, for example, or a family of four with an income of $38,700. Uninsured people below 100 percent of the poverty level would pay “minimal” out-of-pocket costs. That category would include a single person who has an income of $9,570, for example, or a family of four with an income of $19,350. Cost sharing increases on a sliding scale between 100 percent and 200 percent of poverty.

Under the plan, the state would establish guidelines for benefit packages and co-pays. Then, private health insurance providers, HMOs and Blue Cross Blue Shield would design products to fit the guidelines, and people would choose the products that best match their needs. Packages would include preventive and primary care, hospital and emergency room care, mental health services and prescription drugs. As outlined, the Michigan First plan will rely on managed care principles “that have proven to be cost- and quality-effective.”

Will a resolution and subsequent legislative action be necessary for the program to fly?

“We’re fairly certain that some form of state legislative approval will be necessary,” Bucholz acknowledged. “What that will look like we don’t have all the details on at this point in time.”

In regard to the waiver, the state’s conversation with the federal government is continuing. Bucholz said the state’s next step is to wrap up its conversation with the federal government, submit a hard copy of the waiver request and receive approval on it, he said.

The waiver process has a much quicker turnaround these days. Bucholz said the way it works is that a state has to have conversations with the federal government to work out the details beforehand, then submits the formal paperwork for approval. 

“The discussions are ongoing, and we are committed to our April 2007 deadline for starting this program,” he said. “I can’t tell you that on April 1 we’re going to be able to enroll a half a million people. The project will have some phases, we believe. But eventually, the goal is to insure 550,000 people in a short period of time.”    

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