1. Maryland Health Care Reform Alice Burton Chief of Staff Department of Health and Mental Hygiene February 5, 2007

2. Overview Background Impetus for expansion Working Families and Small Business Coverage Act of 2007 Getting it done

3. Maryland Health Policy Strengths Unique All-Payer Hospital Waiver finances over $800 million in uncompensated care Investments in data and transparency –Leader in report card development Medicaid has stable delivery system - HealthChoice –National leader in data driven rate setting –7 MCOs participate, covering 75% of Medicaid population –Systems and incentives to manage care and improve quality High Risk Pool (MHIP) – fills important gap in individual market

4. Health Insurance Coverage of the Nonelderly Maryland and the United States, 2004-2005 68% 5% 9% 3% 16% 61% 6% 13% 3% 18% Employment-based Direct purchase Medicaid Other Public Uninsured United States Maryland Source: Health Insurance Coverage in Maryland Through 2005, MHCC, January 2007

5. MD Small Business More Likely to Offer Insurance Than in Many Other States Still less than ½ offer insurance

6. Public Coverage (Effective 07/01/06) Note: This chart is for illustrative purposes only. Each coverage group has specific eligibility and some asset requirements, which are not shown. 200 100 300 133 40 Age 65 and Over+ 19610 Parents or disabled age 19 to 64 250 PW 185 Poverty Level: 1 person = $10,210 2 persons =$13,690 4 persons = $20,650 As of 1/24/2007 MCHP Premium MCHP Medicaid Primary Adult Care Program – 116% FPL Pregnant Women Medicare 300

7. Impetus for Expansion New Governor House leadership - call for expansion $1.5 Billion Budget Deficit – need for new revenues Massachusetts Effect Readiness

8. Adult Medicaid Eligibility, 2004-2005 Eligibility Maryland Massachusetts Vermont District of Columbia Maine Minnesota State 0 50 100 150 200 250 300 Eligibility (%FPL) Catamount Dirigo Commonwealth Maryland significantly trails leading states in Medicaid eligibility for parents Median Income 0 10 20 30 40 50 60 70 Income (thousands of dollars) Median Income and

9. State Small Business Initiatives - Lessons Significant subsidy needed for employers to begin to offer insurance Many initiatives attract self-employed or low-wage workers vs. small business groups Complex participation rules designed to target funding can stifle enrollment altogether Subsidy program operates in context of larger, competitive market Leaner benefit designs not likely to expand coverage, marketable benefit designs essential W/out subsidies or lower costs little reason to join exchange or pool.

10. Small Business Subsidy Initiative Tough Policy Issues Crowd-out Include self employed and low wage workers without access to insurance How narrowly to target subsidy Role for agents and brokers Relationship to rest of small group market

11. Working Families and Small Business Coverage Act Small business coverage initiative –Builds on current delivery and sales system –Simple design, easy access –Capped enrollment $30 million annual subsidy program for very small businesses –2-9 employees, low-wage, not previously offering –50% subsidy –Requires 125 plan –Any small business product w/wellness rider

12. Working Families and Small Business Coverage Act Expands Medicaid coverage for parents up to 116% FPL - July 2008 Expand Medicaid coverage to childless adults to 116% FPL – phase in coverage beginning July 2009 –Authority to cap enrollment & limit benefits –Expansion contingent upon availability of funds

13. Working Families and Small Business Coverage Act - Financing Already spending over $800 million on uninsured in hospitals Minimize impact on general fund through redistributed savings in uncompensated care All Payor Waiver provides mechanism to “recapture” savings to finance part of expansion –Hospitals continue to be paid full amount – funding shifts from uncompensated care to coverage Savings for all payers (employers and individuals) Maximize use of existing funding sources and potential surpluses (MHIP)

14. Health Care Quality Council Problem –High cost, low quality –In Maryland, public and private health care quality improvement initiatives are disparate and uncoordinated Goal –Leverage Maryland’s leadership in health care delivery to improve quality and affordability of health care for all Marylanders Solution – Health Care Quality Council: –Inventory public and private quality initiatives, prioritize and focus initiatives –Develop statewide plan for better management and prevention of chronic disease –Coordinate with other efforts to assure Health IT used effectively

15. Getting it Done Leadership, opportunity and readiness Realism Stamina Leaders – not too locked into ideas or ownership Buy-in from all key decision makers