Health Care Reform News Around the Nation for the Week of Dec. 8
A decline in smoking rates in Colorado has led to a decline in cigarette tax revenue that is used in part to fund state health insurance programs, the Denver Rocky Mountain News reports.
In 2004, the state increased the cigarette tax by 64 cents per pack with the goal of using the revenue for health care and tobacco education. The tax generated $169.6 million in the first year, but revenue has fallen for two straight years and budget forecasts project revenue to decline to $135.5 million in fiscal year 2012 -- a 20% drop before accounting for inflation.
State legislators say that they anticipated the decline in revenue and that most of the new money was allocated in yearly grants that can be reduced without much impact.
However, 46% of the cigarette tax revenue is used to expand enrollment in public health insurance programs, such as Medicaid and the State Children's Health Insurance Program.
The state Department of Health Care Policy and Financing, which oversees Medicaid and SCHIP, currently has a reserve of $91.4 million but expects it will be completely depleted by July 2012 if it continues to provide services at the current level.
The law also specifies percentages of revenue that must go toward programs such as public health insurance, community clinics and anti-smoking programs, which prevent the state from cutting smoking cessation program grants while keeping the same amount of money in place for Medicaid and SCHIP as revenue declines, according to the Rocky Mountain News.
State Sen. John Morse (D-Colo.) said the state could reduce the income eligibility level to reduce costs but that would reverse years of expanding eligibility (Sealover, Denver Rocky Mountain News, 12/3).
The hotline Florida Medicaid beneficiaries must call to switch health plans continues to be understaffed and consistently busy, according to the consumer advocacy group Florida CHAIN, Florida Health News reports.
In a release, CHAIN said that because of the problems, "many beneficiaries are facing a disruption of essential care." According to CHAIN, the state Agency for Health Care Administration, which oversees Medicaid, has known about the problem since the state began using a new vendor four months ago but has failed to adequately address the problems.
The group called on AHCA Secretary Holly Benson to:
- Suspend automatic enrollment of Medicaid beneficiaries into HMOs until the problems are resolved;
- Prioritize enrollment for beneficiaries who face the greatest barriers to care; and
- Establish an online enrollment process to allow beneficiaries "to bypass the log-jammed phone system."
EDS, which operates the Medicaid information systems and the hotline, said it would look into the problems (Florida Health News, 12/2).
The current economic recession has led to record-high enrollment levels in Kentucky's Medicaid program, which is placing the state in a "dire" financial situation, according to state Rep. Jimmie Lee (D), co-chair of the Kentucky Legislature's Medicaid oversight committee, the Louisville Courier-Journal reports.
Program enrollment is increasing by about 3,000 beneficiaries monthly, more than double what state officials had projected.
Every 3,000 beneficiaries cost the state about $11.4 million annually, and the state faces a projected $456 million revenue shortfall. To close the gap, the state must either increase revenue or decrease spending to cover its share of the deficit cost, which is $55 million.
Increasing revenue would mean either raising taxes or a temporary increase in the federal Medicaid funds, according to state Medicaid Commissioner Elizabeth Johnson.
Spending reductions would mean either cutting services, reducing provider payments or reducing eligibility.
Health advocates have suggested increasing the state's 30-cent-per-pack cigarette tax to increase revenue (Yetter, Louisville Courier-Journal, 12/3).
Last week, Louisiana Department of Health and Hospitals Secretary Alan Levine and state House members -- as well as physicians and representatives from hospitals, insurers and Louisiana State University -- met for an out-of-session briefing to discuss Gov. Bobby Jindal's (R) plan to expand and increase the cost-effectiveness of Medicaid by enrolling beneficiaries in managed care plans, the New Orleans Times-Picayune reports.
Under the "Louisiana Health First Plan," managed care pilot programs would be established in New Orleans, Baton Rouge, Lake Charles and Shreveport.
Medicaid beneficiaries would work with state-approved counselors to choose between two or more private health plans. Insurers would be paid a flat monthly fee per beneficiary, which would vary depending on beneficiaries' health.
Plans then would negotiate fees with doctors, hospitals and other providers in the network and collaborate to provide coordinated care. Eventually the plan would expand coverage to 106,000 uninsured state residents.
Jindal and his advisers have said the current state Medicaid program is financially untenable as costs rise faster than inflation. The program spends about $6.7 billion annually through a fee-for-service model.
The plan would be funded by asking the federal government to excuse debt owed by the state for past overspending and by redirecting money that now goes to LSU Charity Hospital System for treating uninsured patients. The plan also would generate savings through better coordinated care(Moller, New Orleans Times-Picayune, 12/2).
State Rep. Rick Nowlin (R) said Jindal's plan to use $350 million in one-time federal dollars to fund the program means that at "some time in the future we will have to replace that money with state funds" (Shuler, Baton Rouge Advocate, 12/2).
State Rep. Herbert Dixon (D) said, "Why do we need to act now when a comprehensive federal plan is forthcoming" in the form of an overhaul proposed by President-elect Barack Obama and Democratic congressional leaders (New Orleans Times-Picayune, 12/2).
The Massachusetts health insurance law has led to about 440,000 newly insured state residents, but the demand for primary care physicians has outpaced the supply, NPR's "All Things Considered" reports.
The law, passed in 2006, requires most state residents to be covered either through a state-subsidized plan, an employer-sponsored plan or an individual policy.
Primary care doctors are leaving the field in part because insurers, Medicare and Medicaid pay less for primary care than for visits to specialists.
According to NPR's "All Things Considered," the trend could raise health care costs, as people unable to see PCPs often visit emergency departments and let small medical problems grow into larger, more costly problems (Brown, "All Things Considered," NPR, 12/1).
Blue Cross Blue Shield of Michigan is urging the state Legislature to pass legislation that would give the insurer more flexibility in setting premium rates and reduce government regulation, the Wall Street Journal reports.
The insurer said that without the changes, increasing per-member costs will lead to financial troubles. As the state's insurer of last resort, BCBS is exempt from $80 million to $110 million in state and local taxes annually in exchange for providing affordable health coverage to all applicants, including those rejected by private insurers.
The firm claims that as more people in the state have lost their jobs or employer-sponsored insurance, the number of BCBS policyholders has doubled in the past two years. It says that because it cannot reject any applicants, its per-member costs are four times those of private insurers.
BCBS says the company likely will have a $166.5 million loss on individual products in fiscal year 2008 and a $264 million loss in FY 2009.
In addition, BCBS is asking that other insurers be charged a "cherry-picking" penalty for rejecting applicants who end up with BCBS -- which would go to BCBS to help fund their coverage.Â
A version of the firm's proposal was passed last year by the state House and another -- from which some of the more "dramatic" proposals were removed -- was passed this spring in the Senate, the Journal reports. A vote on a final version could be taken this week (Fuhrmans/Martinez, Wall Street Journal, 12/4).
Last week, state budget officials released a two-year economic projection that showed that the state is facing a budget deficit of between $4.5 billion and $6 billion, which could result in cuts to health care and other programs, the Minneapolis Star Tribune reports.
State Department of Human Services spending increased by 14% in the last budget.
State Senate Taxes Committee Chair Tom Bakk (D) said, "That spending somehow has to get under control. Health care is going to bankrupt this state."
Possibilities for increasing revenue include a 75-cent-per-pack increase in the state cigarette tax, which would yield an estimated $300 million, or a $1.8 billion across-the-board spending cut (Lopez, Minneapolis Star Tribune, 12/3).
New Jersey will provide $44 million for six hospitals that provide care for uninsured and low-income residents in an effort to protect the facilities from having to cut services or close, state Health and Senior Services Commissioner Heather Howard announced Wednesday, the Newark Star-Ledger reports.
Health department spokesperson Donna Leusner said the state received applications from 13 hospitals that together requested $144 million from the Hospital Stabilization Fund.
The fund was created in the current fiscal year to direct state charity care funds toward hospitals that provide the most services to uninsured and low-income residents.
To receive the money, the hospitals must agree to rules that ensure they are managing their finances well, take steps to enroll uninsured state residents in Medicaid and FamilyCare -- the state's version of SCHIP -- and appoint a state government representative to their boards for the duration of the grant (Livio, Newark Star-Ledger, 12/4).
The current economic recession has led to an increase in Medicaid enrollment and the program is on pace to grow by nearly 20,000 beneficiaries, or by 13%, by the end of this fiscal year, the Salt Lake Tribune reports.
To cover the increased enrollment, the state Department of Health is estimating that it will need $14 million in supplemental funding.
According to the Tribune, without the additional funding, the agency will be forced to cut services, beneficiaries, eligibility or provider payments (Rosetta, Salt Lake Tribune, 12/4).
On Friday, the state Health Care Authority was slated to begin limiting enrollment in the Basic Health Plan, the state's subsidized health insurance program that currently covers 105,000 low-income residents, the AP/Seattle Post-Intelligencer reports.
The cost-cutting measure will be conducted over the next seven months and it is expected to reduce enrollment by 7,700 beneficiaries. Under the plan, enrollment in the program will be limited to one new resident for every two residents who drop off the program, according to authority Director Steve Hill.
The move is intended to generate savings of at least $6.7 million during the current fiscal year. The cuts are a part of the emergency spending reduction initiative recently ordered by Gov. Chris Gregoire (D).The Health Care Authority also plans to eliminate the Health Insurance Partnership, which helps small businesses in the state offer health plans to workers (AP/Seattle Post-Intelligencer, 12/3). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.