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 Granholms Plan

• Making Health Care affordable and Accessible in
  Michigan
• Step 1The Michigan First Healthcare Plan
• Step 2Advancing Health Information Technology
• Step 3Promoting 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