Michigan First Healthcare Plan Overview

1. Michigan First Healthcare PlanOverview Janet Olszewski, Director Department of Community Health February 1, 2006

2. Michigan First Healthcare Plan • Goals: • Provide access to affordable health care coverage to more than half of a million uninsured Michigan citizens • Reduce health care costs • Meet goals without expanding state spending

3. Health Care Cost Drivers • Too many people do not have insurance coverage- • 1.2 million in Michigan • Uninsured get care in ERs and hospitals once their medical problems have become severe • We all pay • Employer premium subsidy ($274/person and $730/family) • Grant programs • Bankruptcies

4. Health Care Cost Drivers • Health care does not use information technology extensively • Increases administrative costs • Redundant diagnostic tests because information not available at point of care • Increases opportunities for medical errors and lowers quality of care • Potential for 20% cost savings ( ONCHIT, 2005)

5. Health Care Cost Drivers • Lifestyle ( Obesity, physical inactivity and smoking) • CDC estimates that 23 percent of employer premiums for those over 40 can be attributed to the costs of obesity and sedentary lifestyles • CDC attributes 8 percent of the cost of care to smoking

6. Governor Granholm’s Plan • Making Health Care affordable and Accessible in Michigan • Step 1…The Michigan First Healthcare Plan • Step 2…Advancing Health Information Technology • Step 3…Promoting Healthy Lifestyles

7. Michigan First Healthcare Plan • People currently get coverage through 1 of 2 doors: • Employer – paid for through a combination of employer and employee contributions • Government programs – Medicare and Medicaid

8. Employer Based Coverage Non Elderly ( Under Age 65)

9. Medicaid Caseload 1,482,300January 2006 2004 1999 2000 2001 2002 2003 2005 2006

10. Michigan First Healthcare Plan • 1.2 million people in Michigan cannot walk through either door • Need a third door

11. Michigan First Healthcare Plan • Goals: • Protect and expand health care coverage • Reduce trend in health care cost growth • Improve business competitiveness

12. Michigan First Healthcare Plan • Principles: • No big government program • Public/Private Partnership • Market approach • Promote a culture of health insurance • Reinforce personal responsibility

13. Michigan First Healthcare Plan • Method: • Section 1115 waiver • Use federal Medicaid funds to cover uninsured as has been approved for other states

14. Who Will Be Eligible? • Uninsured people with incomes below 200% of poverty line • Single person - $19,140 • Family of four - $38,700 • Uninsured people below 100% of poverty will pay minimal out of pocket costs • Single person - $9,570 • Family of four - $19,350 • Cost sharing increases on a sliding scale between 100% and 200% of poverty

15. How will the Michigan First Health Care Plan Work? • State will establish guidelines for benefit package and out of pocket costs for consumers • Health insurers, HMOs and Blue Cross will design products to fit the guidelines • People will chose products that best meet their personal/family needs

16. How Will the Michigan First Health Care Plan Work? • Packages will include: • Preventive and primary care • Hospital care • Emergency Room Care • Mental Health services • Prescription drugs • Rely on managed care principles to maximize quality and efficiency

17. Michigan First Healthcare PlanWaiver Financing Structure Paul Reinhart Department of Community Health February 1, 2006

18. Financing Summary • Necessary state match will come from funds already spent in Michigan on health care for the uninsured • Federal funding will come from: • Federal funds Michigan has saved the federal government in the past • Funds the federal government would have spent without this waiver

19. State Match Financing Strategy • We will build on financing mechanisms already approved by the federal government and in use in Michigan • We will import strategies they have approved in other states • If necessary, we will propose new strategies unique to Michigan

20. Financing mechanisms already approved by the federal government and in use in Michigan

21. Adult Benefit Waiver

22. Adult Benefit Waiver

23. Build on ABW Approach by • Utilizing the over $400 million already spent by state and local governments on health care for the uninsured • Leverages $530 million in federal funding

24. Import Match Strategies Used in Other States • Waivers recently approved in other states • Florida • South Carolina • California • Iowa • Massachusetts • New York • “Costs Not Otherwise Matchable” • “Certified Public Expenditures”

25. Match Strategies Unique to Michigan • Utilize health care spending on the uninsured by private, non-profit entities

26. Federal Funding • Savings from prior and future years • Federal “budget neutrality”

27. Managed Care Reduced Federal CostsPer-Person Cost Growth Fee-for-Service and Health Plans Fee-for-Service Health Plans

28. Michigan Medicaid CaseloadDHS Projection Projection* 1999 2000 2001 2002 2003 2004 2005 2006 2007 *Department of Human Services, October 2004, October 2005

29. Financing Summary • Necessary state match will come from funds already spent in Michigan on health care for the uninsured • Federal funding will come from: • Federal funds Michigan has saved the federal government in the past • Funds the federal government would have spent without this waiver