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Perata Health reform Plan: Toward Universal Health Care for California:
A Proposal for Expanding Coverage and Controlling Costs
Key Elements:
Eligibility: All working Californians and their dependents.
This represents 4.2 million of the 6.6 million who are estimated to be
uninsured at some time during the year. The remaining uninsured population
would continue to be covered by the current safety net.
Health Insurance “Connector.” The Managed
Risk Medical Insurance Board (MRMIB) would be responsible for establishing
the “Connector” and administering the program. The Connector
would act as a purchasing pool for the uninsured.
Like the model used by CalPERS, the Connector would develop standards
for coverage and negotiate favorable rates by leveraging its purchasing
power. Participating employees would be offered a choice of health plans
that provide comprehensive health coverage including medical, hospital
and prescription drug benefits. In addition, employers (especially small
employers), and individuals that wish to purchase coverage through the
Connector would be able to do so.
- Choice of Plans. In this model, contracting health
plans would compete on the basis of cost and quality, meaning providers
could not fashion plans to attract only healthy individuals. The Connector
would establish ground rules for health plans so consumers can make
informed choices. Employees would be able to choose selected plans arrayed
in three tiers: Plans offered in the first tier would be high quality
and low cost and would require modest member co-pays (e.g., HMO type
plans), while plans in the higher-level tiers (e.g., PPO type plans)
would require members to pay more.
- Cost Containment. Participating health plans would
be required to cap administrative costs and profits and implement evidence-based
practices that will control growing health care costs. These include
preventative care, case management for chronic diseases, promotion of
health information technology, standardized billing practices, reduction
of medical errors, incentives for healthy lifestyles, appropriate patient
cost sharing and rational use of new technology.
- Medi-Cal Managed Care Buy-in. To assure affordability,
the Connector would be allowed to “buy in” on a negotiated
basis to Medi-Cal managed care plans. These plans now provide coverage
for more than 3 million Medi-Cal recipients at significantly lower rates
than the commercial health insurance market. By leveraging the state’s
purchasing power, the Connector would obtain low-cost coverage.
- Underwriting standards. Contracting plans would
be required to provide guaranteed issue and community rating. Individuals
with pre-existing medical conditions who cannot get health insurance
now or who are effectively priced out of the market would be able to
get coverage through the Connector.
Financing.
- Trust Fund: A Health Insurance Trust Fund would
be established. Employer contributions and employee fees would be collected
by EDD and deposited into the Trust Fund. Any other dedicated revenues
would also be deposited in the Trust Fund. These funds would be used
by the Connector to buy health coverage for eligible Californians.
- Pay or Play for Employers. All employers would be
required to spend a certain percentage, yet to be determined, of social
security wages (adjusted on a sliding scale basis) for employee health
insurance costs. Employers who choose NOT to provide health insurance
could elect to pay an equivalent amount (adjusted for risk) to the Trust
Fund. Employee contributions equal to a certain percentage of payroll,
as yet to be determined, would be collected by the employer.
Maximize Federal funds.
Maximizing federal funds will help defray the cost of the program. This
would be accomplished by expanding eligibility for parents and children
up to 300% of the federal poverty level (FPL). The Connector would pay
the non-federal share of cost for the expansion. This may require a federal
waiver.
- Medi-Cal Expansion for Parents. The state would
submit a Medicaid state plan amendment to the federal government to
increase Medi-Cal (1931b) coverage for working parents from 100% of
the FPL to 300% of the FPL. This would cover about 1.2 million uninsured
parents.
- Healthy Families Expansion for Children. The state
would increase Healthy Families coverage for children from 250% of the
FPL to 300% of the FPL. This would cover about 58,000 uninsured children.
Individual Mandate.
All working Californians and their dependents would be required to have
a minimum health coverage policy. The minimum coverage benefit level would
be determined by MRMIB.
- Enforcement through the Tax Code: All taxpayers
would be required to show proof of health coverage. If proof of insurance
is not provided, the individual’s tax is computed without the
benefit of the personal exemption credit or dependent credit.
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