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Running Up a Bill

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Robert Perkins (left) is vice president of public policy for AstraZeneca, which sponsored a series of meetings to find ways of serving the uninsured. Former state insurance commissioner Matt Denn says bills that would help low-income consumers have been buried in the House of Representatives, at the urging of the insurance lobby. Photograph by Christian Kaye If not in Delaware, where?

That was the unspoken question for a diverse group of stakeholders who convened at the Chase Center in Wilmington in June 2007. Made up of community leaders, government officials, corporate executives, healthcare providers, small business owners, a few policy wonks and a couple of hired consultants, the group united for the Delaware Public Policy Institute Uninsured Summit Series.  

The panel was both encouraged and challenged by the knowledge that Delaware, with its small population—840,000—is the ideal place to formulate a solution to the healthcare crisis. Thus the question: If not in Delaware, where?

With more than 105,000 residents—one in eight—without health insurance, the state is slightly lower than the national average, but the problem is worsening. From 2004 to 2006, the number of uninsured jumped 31 percent. Workers in businesses with fewer than 25 employees, the self-employed, young adults, and Hispanics are represented disproportionately. Sussex County is especially hard hit, as are industries such as construction, where three in 10 workers are without health coverage.

The rising cost of care is outpacing wages and salaries, making it too expensive for workers to buy or for employers to provide insurance. Small businesses that do offer insurance find that many employees choose not to participate. Some need the money for necessities such as rent. Others, especially the young, choose things like new cars over insurance.

In October 2007, the second meeting of the DPPI Uninsured Summit Series focused on two uninsured populations: those eligible but not enrolled in public programs, and the low-income work force. Summit participants were buoyed by research revealing that 27,431 Delawareans were eligible for existing low-cost public programs but had not enrolled.

“They are the low-hanging fruit that can easily be added to the system,” says John H. Taylor Jr., executive director of the Delaware Public Policy Institute. “That would take care of close to one-fourth of the problem.”

There are several reasons why people don’t take advantage of existing programs, Taylor says. “Some are destitute and just outside the system and will never be picked up. They are the medical homeless.”

Another problem is communications, according to a report prepared as a result of the summits. It notes that “many people are unaware of these programs, or do not realize they may be eligible.”

“Second,” wrote Jack Meyer and Sharon Silow-Carroll of Health Management Associates, “despite some valiant efforts to simplify the application process in many states, applying for Medicaid or SCHIP (State Children’s Health Insurance Program) can still be formidable. Assembling documentation to establish eligibility may require considerable work, or documents may not be accessible. Going to a welfare office and waiting in line to see a clerk may require taking half a day off work, with serious consequences for a low-income person.” Language and transportation are other barriers.

The report recommends capturing this population, many of them children, via automatic enrollment and “presumptive eligibility,” based on information from such sources as the Food Stamps program. If children are receiving Food Stamps, their family income almost certainly will qualify them for SCHIP.

A “very preliminary” estimate of cost to the state for this recommended step puts the tab at about $1 million a year for 25 new staff people for “outreach, screening for eligibility and enrollment” and other tasks.

Thanks to the former state insurance commissioner, new Lieutenant Governor Matt Denn, some of these tasks are underway. With Denn’s urging, a new law was passed that authorizes school districts to provide Delaware Health and Social Services with a child’s eligibility information for the free or reduced-price meal or free milk program, and DHSS will then send information about SCHIP and Medicaid to the children’s parents. (Monthly premiums for SCHIP are $10 to $25. There are no monthly premiums for Medicaid, only drug co-pays, capped at $15 a month. Those under 21 and pregnant women are not charged.)

The second target—low-income workers—is “the heaviest lift,” according to Robert Perkins, vice president of public policy for AstraZeneca Pharmaceuticals, which sponsored the Uninsured Summit.

The report recommends creating a basic coverage plan for these workers using private and public resources. Says Perkins, “That would capture another 20 percent or so of the uninsured.”

The cost of that recommendation depends on many variables, such as the degree of participation by employer and employee, state contributions, and participation by nonprofit organizations and foundations.

Page 2: Running up a Bill continues…

 

Combined, the two proposals that resulted from the Uninsured Summit Series could cover nearly half of the 105,000 uninsured Delawareans.

Since he became insurance commissioner in 2005, Denn has proposed two bills aimed at the health insurance problem. One would set up statewide health insurance purchasing pools that would allow small businesses and families to get the same price advantage as larger businesses. Initially, the state would have to subsidize the pool so that it is significant enough to have bargaining power with insurance companies.

“Otherwise,” says Denn, “the healthiest people in the pool will always be able to get a less expensive rate by buying on their own, so what happens is you’re always losing your healthiest people and you’re left with a pool of less healthy people, where rates are going to be much higher.

“Our estimate was that to get the pool to the size where you would see some advantages, it would cost about $13 million a year in state money. To put that into perspective, we spend about $500 million a year on the state’s share of Medicaid programs—which we should pay, but we don’t find the $13 million unreasonable.”

Denn’s other proposal would allow the state to regulate health insurance rates. “We’re one of only 10 states that doesn’t allow the state insurance department to look at what health insurance companies are charging and, if it’s excessive, to turn it down. We regulate rates for other types of insurance, and we’ve had some pretty good success keeping them under control. Since I took office, auto insurance rates in Delaware have largely been flat. Same for Workers’ Compensation premiums. We actually cut those by 20 percent last year. So we know if we’re given the authority, we can control the growth in the rates.”

Both of Denn’s bills passed the Senate but have been withheld from a vote in the House. “The health insurance lobby—the biggest lobby in Dover—has been able to keep them from coming up for a vote,” he says. With changes in the new General Assembly, the bills should be addressed. “And if they’re heard, they will pass,” Denn says. “Very few people will vote against these bills if they have to vote on the record.”

Now that the DPPI Uninsured Summit Series has completed its work, Perkins speaks of creating “a critical mass of interest in this issue” by briefing the General Assembly and generating interest through publicity and public meetings.

He suggests that the governor and legislature change the spending patterns of the recent past. He cites a June op-ed piece in The News Journal by Eleanor D. Craig, associate professor of economics at the University of Delaware and former chairwoman of the Delaware Economic and Financial Advisory Council. In it, Craig points out that, since 2000, Delaware’s operating expenditures from the General Fund have grown by 5.4 percent a year—more than twice the rate of inflation.

“Governing is about choosing,” says Perkins. “This state has spent at twice the rate of inflation. My question is, on what?”

He and many others are hoping the new government chooses to spend on health insurance, an expense to employer and employee that is dragging down the entire economy.

“I don’t know what’s going to happen if health insurance keeps going at this rate,” says Tim Boulden, co-owner of Boulden’s One Hour Heating and Air Conditioning, Boulden Propane and Boulden Plumbing, in Newark. “It’s getting harder and harder to be a small business owner. It’s unfortunate for the entire country. The American dream is getting harder and harder to achieve.”  

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