Broader Health Coverage May Depend on

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January 20, 2004

NY TIMES

Broader Health Coverage May Depend on LessBy MILT FREUDENHEIMWith the number of uninsured Americans rising to new heights, some policy makers and influential health care experts are saying that the best way to give health coverage to more people is to give some people less.Experiments in several states are establishing stripped-down packages of basic benefits intended to be affordable for employers and uninsured workers, including young, middle-class people who have dropped out of the health insurance pool. Some officials say that government health benefits could be extended to more people, too, if the benefit package were narrower.The idea is one of several ways that state officials, hemmed in by tight budgets and impatient with the federal government, are striving to address the consequences of 43 million Americans' going without health coverage. Many health policy experts and business groups say that medical care for the uninsured ultimately adds to costs for everyone who pays for health care.What the proposals have in common is that, one way or another, they call on consumers and employers to share the burden of extending coverage, rather than relying on fresh doses of government money. "The states are really thinking about the people who are left out. That is something new in this debate," said Wilhelmine Miller, staff director of a study issued last Wednesday by the National Academy of Sciences that urges President Bush and Congress to press for universal insurance coverage by 2010. Among other proposals, the report says that the federal government should establish "a uniform minimum level for coverage and benefits."The basic-coverage notion is being tested in Utah, Oregon and Idaho and by counties in several other states. It is also at the core of a plan that Gov. Robert L. Ehrlich Jr., a Republican, will be presenting to Maryland's Democratic-led Legislature this week.While the specifics will be worked out with lawmakers, Governor Ehrlich's plan would cut the coverage that the state requires all private insurance plans to provide. For example, insurers might no longer have to cover repeated attempts at in vitro fertilization. Hospital and doctor charges for inpatients would still have to be covered, as well as preventive measures like inoculations.Dr. John Mendelsohn, president of the M. D. Anderson Cancer Center in Houston, a leading research and treatment institution, favors the basic-coverage concept. So does Dr. William McGuire, chief executive of the UnitedHealth Group, the nation's biggest health insurer. UnitedHealth's foundation is backing studies to foster discussion about what a basic insurance plan should include.Maryland, which has been debating universal health care proposals for several years, is trying to come to a bipartisan consensus on a number of incremental steps toward that goal, according to Nelson J. Sabatini, the state's secretary of health and mental hygiene.Besides a stripped-down benefits package, Maryland is planning a carrot-and-stick approach to try to persuade tens of thousands of uninsured middle-class residents to obtain coverage. People who do not do so could lose certain state income tax deductions and exemptions, while there would be tax credits to make insurance more attractive to young, healthy people.Thirty-eight percent of Maryland's 690,000 uninsured residents have annual incomes above $55,200, and 186,000 of the uninsured earn more than $73,600, according to Mr. Sabatini. "We want to make health care affordable and to get people to do the socially responsible thing," he said.More than 6 in 10 of Maryland's uninsured are low- or middle-income people who are not eligible for Medicaid and other government health plans, and officials say these people are a natural constituency for a basic insurance policy. Among them are thousands who work on Chesapeake Bay fishing boats, said Larry Simns, a bay boat captain who is president of the Maryland Watermen's Association."They wait until they are pretty near dead before they go to a doctor," he said.Yet proposals like those in Maryland draw strong opposition on many fronts.If states spend money or give up tax revenue to lure the middle-class uninsured at a time when Medicaid programs are being cut, "they can be seen as taking away benefits from some lower-income people and transferring them to some who are at least better off," said Anne K. Gauthier, vice president of the Academy for Health Services and Research in Washington, a nonprofit group.Some research shows that consumers overestimate the risk of serious health problems and so might not be drawn to insurance that they think would leave them unprotected. And providers of specialized care, like chiropractors, can be counted on to urge their patients to demand coverage of such services. "It will be controversial," said Casper Taylor, a former Democratic speaker of Maryland's lower house who is working with Mr. Sabatini on the governor's plan. "Maryland has a high number of mandated benefits. We are schizophrenic about it - on the one hand screaming about making health care affordable, and on the other hand we keep adding mandated benefits."Some experts warn that cutting back mandated benefits will neither yield enormous savings nor slow the increase in costs associated with medical advances. "There is very little in health care that you can trim off," said John Sheils, a health policy expert at the Lewin Group, a consulting firm based in Falls Church, Va., that has advised health care advocacy groups in several states. "If you develop a new procedure that does some good," he added, "ultimately all the insurers are going to have to recognize it and pay for it."Dr. McGuire of UnitedHealth said the decision about what to cover is "a terribly complex issue.'' "The definition of essential or basic coverage has to be made in the academic community," he said. "Science has to be involved."Experts also note that state tax credits and penalties have only a slight impact on many uninsured people, who typically pay little in state taxes. Still, Oregon has taken steps to expand its Medicaid rolls by limiting the range of benefits provided under the program, and Utah is making primary health care available to about 20,000 uninsured residents in the form of a basic benefit. In Washington, the Senate majority leader, Bill Frist, Republican of Tennessee, and a Republican task force are working on a federal initiative, including tax credits, to help trim the number of people without insurance. President Bush is expected to propose an initiative for the uninsured in his State of the Union speech tonight, White House advisers said."Given the American preference for private rather than public spending and the aversion to taxes and to mandates of any sort, that leads us to trying a variety of incremental approaches," said Ms. Gauthier, who tracks state health care initiatives for the Robert Wood Johnson Foundation.Besides the basic-coverage proposals, states are experimenting with a number of efforts to reduce the ranks of the uninsured.Maine plans next month to ask for bids from private insurers interested in administering an insurance plan for employees of small businesses, along with self-employed people and those without company health plans. The plan will initially be open to small businesses, the self-employed and other individuals. Employers would have to cover up to 60 percent of the cost; for low-income workers, the premium will be subsidized by redirecting money that insurers now pay to cover charity care. While areas like dental and eye care would be omitted, the plan will offer standard benefits, according to Trish Riley, director of Gov. John Baldacci's office of health policy and finance.California took another route last year when Gov. Gray Davis, shortly before he was forced out of office, signed legislation requiring businesses with 50 or more workers to provide insurance or pay into a pool to cover the uninsured. Business groups opposed to the California law have threatened suits and sponsored petitions seeking a state referendum to overturn it.In New York, the politically influential health care workers union, 1199/S.E.I.U., and the Greater New York Hospital Association are proposing a $3,000 tax on employers for each worker they do not insure, with a smaller tax for small businesses that pay low wages. The money would be used to extend coverage, through various state programs, to a million uninsured people. The health savings accounts authorized in the new Medicare law, effective in 2006, may provide a market-oriented way to lure some of the more affluent uninsured to obtain coverage.The savings accounts can be combined with low-premium, high-deductible insurance, a potentially attractive formula for people who want to decide for themselves how much treatment they need, in the view of James Frogue, a health care expert at the American Legislative Exchange Council, which he said is a bipartisan group of state legislators who advocate free market policies."There will always be somebody rationing our care," Mr. Frogue said. "The question is who is going to do it."http://www.nytimes.com/2004/01/20/business/20care.html?th= & pagewanted=print & position=