Massachusetts’ plan, a bipartisan effort, attempts to spread the cost of coverage among the government, employers and individuals. It requires that those who lack coverage and earn more than 300 percent of the poverty level purchase a private plan, some of which would be state-subsidized and others that would be offered on a sliding scale of affordability from insurers receiving incentives from the state to offer such plans. Those who don’t buy an "affordable" plan (a benchmark not yet determined) when such a plan exists will lose their personal state tax exemption, estimated to be around $150. Employers with more than ten employees who do not offer coverage will be taxed $295 per employee annually. The total cost of the plan is estimated to be $1.2 billion over three years and requires $125 million in new state spending.

Massachusetts developed its plan in part because the state faced a July deadline by which it needed to demonstrate that it was working to increase coverage or risk losing $385 million in federal Medicaid funding. But it was also an attempt to bring those, mainly young people who think of themselves as healthy and not in need of coverage, into the financial fold that supports coverage for those who do.

Soon after Massachusetts approved the legislation, Vermont passed a similar bill. It established a state insurance plan, Catamount Health, carried by private insurers and supported by a rise in the state’s cigarette tax and, like Massachusetts, a $365 per employee annual tax on employers that do not offer health benefits.

A year before Massachusetts unveiled its individual mandate plan, however, Maryland had already made its own attempt to cover at least some of the state’s uninsured, one that would shift focus from individuals to employers.

Maryland’s legislation required employers with more than 10,000 employees to either allocate at least eight percent of their payroll expenses for health benefits or contribute an equal amount to the state’s program covering the poor. The law, known unofficially as the "Wal-Mart Law" since the retailer was the state’s only business with more than 10,000 employees, was an attempt to curtail the state’s Medicaid spending of $4.6 billion by transferring costs to employers. But this summer, a federal judge overturned the law, writing that states are not permitted to impose health mandates on employers under the federal Employee Retirement Income Security Act. The state plans to appeal the ruling.

Pennsylvania’s Attempts

The Governor has been working to expand coverage by growing the existing state program for uncovered children, the Children’s Health Insurance Program (CHIP), according to Amy Kelchner, press secretary for the governor’s Office of Health Care Reform. CHIP coverage is currently available free of charge to those families ineligible, because of income, for Medicaid, but who earn less than 200 percent of the federal poverty level; subsidized coverage is available for those with incomes of 200 to 235 percent of that level. Kelchner says that of the 133,000 uninsured children in Pennsylvania, all but 25,000 are already eligible for coverage as part of CHIP or Medicaid. (Kelchner says those that are eligible for these programs but who remain uncovered are so either because parents incorrectly assume they don’t qualify economically, don’t know about CHIP, are between jobs and will soon have coverage, or simply refuse to participate in government programs.) Rendell’s proposal, Cover All Kids, sought to raise the subsidized CHIP income ceiling from 235 percent of the poverty level to 350 percent. It also proposed allowing families with incomes above 350 percent the opportunity to purchase CHIP benefits at the state-negotiated rate. To ensure that this expansion doesn’t prompt employers to eliminate coverage for their employees, the proposal stipulates that enrollers—except those already enrolled or who have lost a job—must demonstrate a six-month period without insurance.

Both state houses approved the plan, amended to lower the income maximum from 350 percent of the federal poverty level to 300 percent ($60,000 for a family of four). Families earning above this limit can purchase coverage, as originally proposed, but only if they can prove coverage was denied for a pre-existing condition, private coverage would cost more than 10 percent of the family’s income or more than one and a half times the state’s monthly cost.

Kelchner says Cover All Kids will be funded with by $10 million of federal funds and $4 million of state funds, which were proposed as part of the budget. She says the program will also continue targeted advertising in areas identified as having low participation rates among those eligible with the goal of spreading word of income eligibility requirements.

And though Kelchner has "nothing specific [to say] on expanding Adult Basic"—the state’s program covering adults in need—the Harrisburg-based Patriot-News reported in June that the AdultBasic waiting list had fallen from 127,000 to 40,000.

Philadelphia representatives Kathy Manderino (D) and John Taylor (R) introduced legislation this spring that mirrored Maryland’s attempts to shift the burden of coverage on large employers. The bill requires businesses with more than 10,000 employees to invest at least nine percent of its payroll on coverage or pay the state the difference. That money, the Fair Share Health Care Fund, would help support CHIP and AdultBasic. The bill would appear to face an uphill battle, given the judicial response to Maryland’s similar law.

One piece of legislation, known as the Balanced and Comprehensive Health Act, would create a single payor system, providing coverage to every state resident. (Massachusetts and Vermont acknowledge that their individual mandate systems would still leave a small portion of their populations uncovered). If passed, the bill would establish the Pennsylvania Health Care Plan, administered by the Pennsylvania Health Care Agency it would create, to provide a single benefits package that would include coverage for all health care needs, including preexisting conditions but excluding elective or cosmetic procedures. Participants would have no copayments and could choose a service provider. Such administrative consolidation, supporters argue, would lower the overall costs of covering Pennsylvanians when compared with the current system of private and public programs, whose administrative costs, they say, consume 20% of provider revenue.

The program would cost $40 to $45 billion, according to Steven Larchuk, Esq., chairperson of the Pennsylvania HeatlhCare Solutions Coalition and the legislation’s primary author. Funding would come from a 10% Heath Care Levy payroll tax and 3% Wellness Tax on personal income, revenue that Larchuk says would amount to $45 to $50 billion.

Larchuk says the legislation—and formation of the Coalition—was the result of an October 2004 conference of health care reform advocates. At that conference, attendees concluded that reform was unlikely to occur unless someone drafted an actual proposal for consideration by the state legislature.

Larchuk says the single payor legislation is the state’s best opportunity to expand coverage to an estimated uninsured population of one to 1.5 million, and a population of another million with what Larchuk calls inadequate coverage. These numbers, he says, are growing faster than existing government programs. But even if those programs were expanded, their lack of a comprehensive solution would leave many issues unresolved, Larchuk believes.

"A comprehensive approach [like the Act] also demands that you solve the medical malpractice crisis and adopt a strong system to encourage a culture of wellness so we can shrink the need for health care as a means of controlling its costs," he says.

The single payor legislation attempts to address these points. It seeks to eliminate malpractice insurance premiums for providers by establishing for individuals the choice of an administrative no-fault program by providing benefits to those injured by care, regardless of provider negligence, or a fault-based plan that would allow those same individuals to seek compensation through the judicial system, with the plan paying the legal costs of providers and compensation, if ordered, with limits of $3 million per claim and $6 million per year. (The plan’s supporters claim that such universal coverage will also reduce the risk-based costs associated with workers compensation, automobile and homeowners insurance, thereby reducing premiums for such coverage.)

In the pursuit of establishing a "culture of wellness," it includes provisions that would elevate physical education to the level of core subject in schools and work to identify and eliminate environmental health risks. The Act also includes a $1,000 annual tax rebate for volunteer emergency responders.

Larchuk is as critical of an individual mandate plan as he is of relying solely on the expansion of government plans, describing the former as "a mirage." He says that Massachusetts hasn’t accepted that the insurance industry is part of the problem, and that if carriers were able to develop a variety of products at affordable prices, they would have.

Larchuk describes the Maryland’s employer mandate approach as a "feel-good but do-nothing measure" that would make little headway in solving a larger problem.

"These sort of minimalist measures do more harm that good because they distract from the larger problem," he says.

Larchuk says that the Comprehensive and Health Reform Act bills will be reintroduced in the new legislative session in January 2007 and could be passed by fall of that year to take effect in January 2009.

Senator Jim Ferlo (D-Pittsburgh), the Senate bill’s sponsor, says there’s a desire by members of both state houses to address the growing problem of the uninsured. He says, however, that there is a disconnect between constituents hoping for dramatic reform and a legislature that he describes as "ground down by inertia." Ferlo believes a solution can be found in the elimination of the for-profit private insurance element. With few cosponsors attached to the bill, however, he believes the most politically feasible means of expanding coverage, and what will likely occur, is a growing of existing government programs—a move Ferlo supports but one that, he says, does not fully address the problem.

"I’m not going to object to any reform that at least insures more people," Ferlo says. "But without a comprehensive approach, we’re really just running from the issue and hiding heads in the sand."

And though he recognizes that his bill may not ultimately be successful, he believes it’s introduction is a necessary step in encouraging a dialogue on the problem.

"We need a model bill that can be out there for public debate," Ferlo says. "Change isn’t going to happen in a vacuum. We need to be able to say this is our plan, and let the legislature, the governor, candidates and the public react to it."

Governor Rendell currently has no position on the single payor proposal, according to Kelchner. She says that two years ago the administration received a Health Resources and Services Administration grant of close to $1 million to study Pennsylvania’s uninsured population situation and used those funds to bring together 100 stakeholders—including physicians, hospitals and quality assurance specialists—to analyze possible solutions. That grant has since been extended and the group is now compiling its recommendations for the Governor’s review, according to Kelchner. She says the results should be released within the next several months.

Stakeholder Views

The House Insurance Committee is holding hearings around the state to explore stakeholders’ positions on the issue of the uninsured, and the physician and hospital community has come out in support of individual mandate programs similar to Massachusetts’.

Mark A. Piasio, M.D., president of the Pennsylvania Medical Society, says that group believes the choice of insurance—at least which plan to buy—should be an individual one. He also believes it’s something that should be portable and not linked to employment, saying there’s no other area in which employers decide exclusively what employees have. That may suggest that the Society would support a single payor proposal, but Piasio says that monopolies stifle innovation and cites Medicare, the Veterans Affairs system, and cites single payor health plans in Canada and the United Kingdom as examples on situations in which decreased competition has resulted in what he sees as ineffective solutions, based primarily on both the long waiting lists for care and low reimbursements for providers that are associated with those systems.

Piasio believes that instead, a deregulated as opposed to a highly-regulated insurance system would benefit Pennsylvanians, who because of significant restrictions on insurers he says lack the diversity of plan choices that Massachusetts is hoping will spring up in that state. He says that an insurance system isn’t effective if healthy people opt out, as he believes they’re likely to do when not presented with choices they believe are appropriate for them; a market-driven approach, he believes, in which people can see the value of what they’re buying and pay with their own money will bring those healthy people willingly into the fold and help support the less fortunate.

Piasio does, however, take issue with certain elements of the Massachusetts plan, including the implementation of a purchasing requirement before a diverse set of products are available and a fine on businesses not covering employees that’s cheaper than providing coverage would be. But that plan is most in keeping with the Society’s philosophy. It has no position on employer mandate plans like that of Maryland, and believes, according to Piasio, that the administration’s attempt to expand existing programs is simply a stopgap measure that offers poor reimbursement for providers and doesn’t address what he sees as the true driver of health care costs—technology development.

The PMS’ national counterpart, the American Medical Association, feels similarly about individual mandate approaches—at its June Annual Meeting it voted to support "individual responsibility" as a means of expanding coverage to the nation’s uninsured.

Like the PMS, the AMA believes single payor plans result in long waits for care and delays of diagnosis, according to Ardis Hoven, M.D., a member of the group’s Board of Trustees. The market-based health insurance system shouldn’t be eliminated, Hoven says, but instead changed to eliminate the regulations that would allow coverers to offer more plans, giving individuals more choice. And though it is supportive of an individual mandate system, the plan put forth by the Association differs from that of Massachusetts’. Its proposal suggests raising to 500 percent of the federal poverty level the ceiling for individuals eligible for tax credits or other financial support; individuals and families with earnings above this level would be required to carry at least catastrophic coverage and evidence-based health care.

The insurance industry is likewise unsupportive of a single payor program that would replace a market-driven approach that Sam Marshall, president of the Insurance Federation of Pennsylvania, describes as "a system that works reasonably well for many Pennsylvanians."

Like Hoven, Marshall says that instead of eliminating the private carrier element from the equation with what he calls a "government monopoly," the government should instead step in to regulate that industry in a way that would expand coverage. He says doing so requires primarily a means of holding down costs.

Marshall believes that can be accomplished in one of two ways—through tough government regulation or through increased competition. He says attempts to do so through the former always fail, and believes the latter is the only means of accomplishing the feat. Marshall says that the regional Blue’s dominance in the state makes difficult smaller carriers’ attempts to infiltrate the market and, through competition, negotiate lower rates with providers. He says that instead government should be working on regulations that promote such competition, which in turn fuels not only lower costs but technological development.

While Marshall doesn’t believe that a single payor solution is the answer, he also doesn’t think a Massachusetts-like individual mandate approach alone is a solution.

"The solution isn’t going to be entirely market-driven or entirely government driven," he says. "It needs to be a combination: market-driven for the people who can afford coverage, and government-driven for those who can’t."

David Straight, executive director of the Employer’s Medical Access Program—a central Pennsylvania coalition of business united to negotiate and purchase health insurance in—agrees that holding down costs is the primary concern in expanding coverage. Straight, like Marshall, believes that’s best achieved through competition and favors a combination of market- and government-driven initiatives—he supports expansions of CHIP and AdultBasic.

The EMAP, however, has been working to expand access to health care in an additional way, one that takes insurance and coverage out of the mix. The group’s been a major sponsor of free clinics in Johnstown and Somerset County, and plans to continue supporting this alternate form of health care access.

The Hospital & Healthsystem Association of Pennsylvania’s (HAP) testimony before the House Insurance Committee supported creation of a statewide health insurance exchange through which individuals and small businesses would be presented with a variety of coverage plans.

HAP noted that the Massachusetts reforms amount to a significant change in health policy, shifting traditional premium subsidy and provider reimbursement structures to the benefit of both parties. While more than $600 million of state and federal dollars were going to Massachusetts hospital systems in 2005 to reimburse them for the costs of providing hospital services to the uninsured, HAP said, under the new law, the monies previously targeted as a direct subsidy of uncompensated hospital costs will be used to fund the new health insurance premium assistance program.

At the same time, HAP noted, the Massachusetts plan substantially improves payments to hospitals and physicians under the state’s Medicaid program to ensure that those payments more accurately reflect the cost of providing care to Medicaid patients and to address the loss of revenue from the direct subsidy. In sum, HAP testified, the Massachusetts law "seeks to mainstream low-income individuals and families into private health care coverage" and "seeks to convert the current de facto provider safety net into a consumer safety net, while still recognizing the need for adequate and appropriate provider payments under the state Medicaid program."

HAP was cautious about the employer mandate concept, and said further study of the Massachusetts experience with it is merited to evaluate the impact of this provision on the business climate and economic development.

In its testimony to the committee, Highmark said that employers must maintain a central role in the health care financing system, but cautioned that if the state mandates employers provide coverage it could jeopardize the state’s ability to retain and attract employers. Instead, Highmark advocated providing incentives, such as tax credits, to encourage employers to offer coverage.

Highmark also told the committee that any program to expand access to coverage must also address ways to curb rising health care costs, such as pay-for-performance programs, disease management programs, health promotion and wellness.

Highmark said it supports an individual mandate for health insurance coverage that could be phased-in over a defined period, allowing time for the public sector and the private market to modify existing programs or develop new ones. As to whether Pa. should subsidize programs for low-income residents, Highmark noted that the state already subsidizes health care programs for low-income people through Medicaid, AdultBasic and CHIP and that the real issue isn’t whether they should be subsidized, but how to sustain the current level of funding in an unpredictable environment. Highmark said that the state must identify more permanent and stable sources of funding to help expand access to the uninsured.

Independence Blue Cross supports Highmark’s position, and according to an online policy position statement said it believes that "no program to expand health insurance coverage will succeed unless we address the root cause of the growing number of uninsured—rising health care costs and utilization," which it expects to be a primary issue on the state’s legislative agenda in January.

Rick Spece—a representative of House Insurance Committee Minority Chair Anthony DeLuca—said overall, stakeholders are suggesting that a solution will involve first a better utilization of existing funds as well as future preventative care in the form of wellness programs. The hearings also demonstrated, Spece says, a sense that all stakeholders are recognizing the need for dialogue and a give-and-take approach to the problem.