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State of the State: The governor wants Illinois covered, stops short of mandating health insurance

Bethany Jaeger
WUIS/Illinois Issues
Gov. Rod Blagojevich's plan doesn't go as far as Massachusetts' new law requiring individuals to have health insurance and employers to provide it.

First he covered kids. Now he wants to cover adults. That's Gov. Rod Blagojevich's health insurance plan in a nutshell. 

He wants to offer a combination of public and private coverage to more than 1.4 million Illinois adults who lack insurance. He goes a step further, aiming to help millions of others who have employer-sponsored health insurance but have a hard time paying for it. Yet he stops short of mandatory insurance, at least for the next three years.

Supporters call this near-universal health care plan ambitious. Opponents say it overreaches. 

Indeed, Blagojevich's plan doesn't go as far as Massachusetts' new law requiring individuals to have health insurance and employers to provide it. Nor does he go as far as his own health care task force recommends. But details will need to be negotiated before patients, medical providers, insurance companies and health care advocates can be sure how far his plan intends to go.

The Adequate Health Care Task Force, a 29-member panel created by a 2004 state law, spent 18 months studying ways Illinois could provide affordable health care for all. Two recommendations — one that required majority agreement, the other a dissenting minority report — were issued in December 2006. 

Pieces of the panel's report appeared in the governor's Illinois Covered plan. 

For instance, Blagojevich aims to extend Medicaid eligibility to adults who don't have children and to individuals who return to work with disabilities. He would offer state rebates or subsidies to help people pay their monthly premiums. And insurance companies would be required to offer a state-guaranteed standard benefits package to small groups. Doctors would get incentives to serve Medicaid patients, an attempt to help the state capture more federal Medicaid dollars.

Other parts of the plan veer from the task force's goal, says Rep. Elizabeth Coulson, a Glenview Republican and task force member appointed by House Minority Leader Tom Cross of Oswego.

"I think that he's taken some of the good pieces of what the task force suggested," she says. "My concern is he has also added some things — because it was a consensus-building task force — we chose to not include." 

For instance, she says, he proposes "subsidizing a new middle-class program." 

The governor calls it his Choice option for small employers, their employees and others whose jobs don't include health benefits. Illinois would partner with private insurance companies to provide cheaper, more comprehensive policies that would be guaranteed regardless of health status. He would create a so-called statewide purchasing pool and require insurance companies to cover the minimum standard, although the details won't be known until legislation is introduced in the General Assembly.

Guaranteed insurance coverage is risky for the industry, but could be worked out, says Michael Murphy, a task force member and director of governmental affairs for UniCare insurance company. That would be comparable to "allowing an individual to buy property and casualty insurance for their home while it's on fire," he says. "People can go without insurance until a dramatic diagnosis and then go and buy insurance. Those kinds of things drive up costs."

Another moving part is the standard benefit requirement. "How are costs going to be managed?" Murphy says. He knows premiums would be capped at a percentage of income, so insurance companies want to know how the state could ensure that they don't lose out if they're required to charge premiums that are lower than the cost of providing the policies. "It was just one line in the news release, and we don't know what that means. So we're waiting to see the details."

But Murphy says what he has seen so far is that Blagojevich's plan differs slightly from what he's seen in other states.

While Blagojevich doesn't go as far as Massachusetts' mandate, he does go further than six other states that are aiming to help small businesses and their employees afford health insurance, according to the National Conference of State Legislatures, a nonpartisan group of lawmakers. Hawaii is unique in that it got an exemption from the feds to require that all businesses offer health insurance. That state also is considering a more radical plan to create a single state-run health insurance program for everyone.

Seven other states last year narrowed their focus to young adults, the fastest-growing uninsured population. The 18- to-24-year-old group is most likely to lack health insurance, according to the U.S. Centers for Disease Control and Prevention. The agency's 2005 National Health Interview Survey shows the group between 25 and 34 is the second-most likely to lack health coverage.

Blagojevich's plan would extend from 23 to 29 the age at which young adults could stay on their parents' insurance plans.

Coulson agrees the state realistically can address the "young, invincible group of the uninsured" this session. However, rather than keeping young adults on their parents' plans, she says she would rather develop a minimum level of health insurance available at a relatively affordable amount, about $100 a month.

If the General Assembly approves the governor's plan as is, adults with no children would be eligible for Medicaid as early as January. The following July, middle-income people who make up to $80,000 a year in a family of four could get premium assistance through a rebate or state subsidy. The state-guaranteed insurance coverage would be phased in between 2009 and 2010.

Only then would the state consider putting a mandate on individuals and businesses, says Anne Marie Murphy, state Medicaid director for the Department of Healthcare and Family Services. "We'll certainly consider a mandate after three years, but you might need four," Murphy says, adding it would be like requiring car insurance and charging penalties for noncompliance. "We're in trouble if we don't have it. It's exactly the same idea."

Although the governor's plan wouldn't require businesses to offer health benefits, owners would have to pay a fee if they didn't pay at least 4 percent of their total payroll toward comprehensive benefits. That's similar to California Gov. Arnold Schwarzenegger's $12 billion plan that he announced in January. In Illinois, the tax would start in July 2008 and generate $1.1 billion to help cover premium subsidies.

While Blagojevich estimates that his plan, when fully implemented over three years, could cost $2.1 billion, the task force's proposal would carry a $3.6 billion price tag for the state and $1.5 billion for employers.

The proposals also differ in primary funding sources. Blagojevich's health plan is contingent on a so-called gross receipts tax on businesses. 

That idea faces strong opposition from the business community. 

Doug Whitley, president and chief executive officer of the Illinois Chamber of Commerce, says the governor's tax plan is misleading because it alleges businesses don't pay their fair share of state income taxes. 

"They are paying sales taxes and property taxes and payroll taxes and workers' compensation taxes and unemployment insurance taxes," Whitley says. "There is a huge tax burden that every corporation pays whether or not they have an income tax liability in any given year."

The increased minimum wage approved earlier this year would add insult to injury if a gross receipts tax and a health insurance payroll tax were enacted, he says.

"I think a better solution to the health care issue is to get more people working in Illinois so that their employers will be able to provide them with the kind of health coverage that they want and need and expect," he says. "It's in our interest to get more people off the uninsured rolls, but I'm not sure the governor's solution of making big government programs is the correct one." 

Kenneth Smithmier, president and chief executive officer of Decatur Memorial Hospital, also is on the health care task force and a member of the Illinois Hospital Association, which immediately endorsed the governor's plan. But Smithmier says hospitals and doctors need more information.

"There is a factor in the equation that's not being quantified yet that I think is very important for us to get to if we're going to have an objective, unemotional — or at least as unemotional as we can get — discussion about this," he says.

He says people who have insurance are paying higher premiums to compensate for one-third of the cost of caring for the uninsured. "If we start to get these uninsured people into some kind of insured plan, what does it do to slow down the upward pressure on health insurance premiums, therefore lessening the economic pressure on businesses and private citizens who pay for those health insurance premiums?"

Massachusetts is still working out similar details in the first three months of enforcing its new mandate. As of mid-March, the commonwealth still had to decide whether the most basic insurance plan would have to cover prescription drugs. Patient advocates argue yes. Businesses argue no, but they aren't bailing yet, says Brian Rosman, policy director of Health Care for All, a group that is promoting the new law.

Offering insight to Illinois, he says the burden of compromise rests on the governor's shoulders. "Is he powerful enough to politically negotiate among the various interests of the hospitals, the insurers, the advocacy groups and the business community to find something that's in everybody's interest, which is basically what happened here?" he says. "It's going to be a struggle." 

 


Bethany Carson can be reached at capitolbureau@aol.com.

Illinois Issues, April 2007

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