Last week, I attended a meeting of the State Coverage Initiative (SCI), an effort that has taken shape over the past two years under the leadership of Insurance Commissioner Kim Holland to develop a plan to extend health insurance coverage to a sizable segment of the 640,000 Oklahomans who are currently uninsured. The meeting reached a consensus on adoption of the SCI strategic plan, which lays out a blueprint for expanding coverage.
The cornerstone of the plan would be a gradual expansion of Insure Oklahoma, the public-private partnership which provides subsidized employer-based coverage for working adults, along with a public product for eligible adults without access to employer coverage. The program, which is funded by a portion of tobacco tax revenues approved by voters in 2004, has now grown to cover just under 20,000 Oklahomans, which is about half of the capacity under existing revenues. The principal SCI recommendation is to generate new revenues by assessing a dedicated fee on all health insurance claims paid by health insurers in Oklahoma. It is estimated than an initial 1 percent fee would generate $78 million that, along with matching federal funds, could insure an additional 80,000 Oklahomans. If and when 75 percent of the target population is reached, the assessment would increase.
The main argument advanced by the SCI leadership in favor of the new health care assessment is the need to confront the enormous cost-shifting that currently takes place in paying for health care for the uninsured. As Commissioner Holland stated in a recent op-ed:
One billion dollars each and every year. That’s how much it costs to provide health care to the citizens of Oklahoma who do not or cannot pay for the care they need and receive. That’s $1 billion that is added to the medical bills and insurance premiums of those who do pay. Imagine what would happen if this $1 billion hidden tax were eliminated — health care costs would be reduced, and health insurance premiums would be reduced.
Medicaid Director Mike Fogarty stressed the urgency in adopting the new health care assessment, arguing that based on current rates of growth, enrollment caps may soon need to be imposed on the Insure Oklahoma program. However, Senator Brian Crain, who chairs the Senate Health appropriations committee, reiterated his staunch opposition to the proposal for a new revenue assessment. The SCI report was adopted notwithstanding Senator Crain’s opposition – with Commissioner Holland repeating that “consensus does not mean unanimity” and making the case that the proposed assessment is the best, and at this point only, option on the table – but his stance does suggest the huge political hurdles that lie ahead.
There are real uncertainties about how large of a dent the SCI plan, if implemented, would make in reducing the number of uninsured Oklahomans. It has taken Insure Oklahoma over two years to reach the 20,000 enrollment mark, and it is simply unclear whether a premium assistance program for employees has the capacity to grow exponentially in the years ahead, even if fully funded.
In addition to expanding Insure Oklahoma through a targeted assessment, the SCI plan includes several other components:
- It endorsed creation of lower-cost commercial health plans targeting younger adults through the waiving of mandated benefits, as was recently enacted by HB 2026. This approach is unlikely to have any real impact on expanding coverage as insurers already enjoy considerable flexibility in the individual market and limited-benefit plans have proven unpopular with consumers;
- It added a recommendation that OK Policy has strongly advocated to extend Medicaid coverage to all adults with incomes below the poverty level. Currently, Medicaid extends to less than 40 percent of the poverty level, and this population of very-low income adults is unlikely to be able to afford any of the cost-sharing obligations required of Insure Oklahoma
- The group weighed recommending an individual health insurance mandate, in conjunction with guaranteed issue of coverage, but stopped short. Instead, they are calling for a variety of strategies to “induce” Oklahomans to purchase coverage, stating that “the failure of these strategies will require policymakers to consider mandating that all individuals secure health insurance”.
If solving the uninsured crisis through adoption of new revenue streams will be hard, solving it without new revenue is impossible. The SCI plan, which builds incrementally from the foundations of the current health care system, represents a realistic, middle-ground approach to tackling this huge and urgent issue. We hope the report receives full and fair consideration and can serve as the basis for legislative action in 2010.