Center supports Transitional Health Insurance Program

February 8, 2016
Health and Human Services Committee of the Nebraska Legislature
Room 1510, State Capitol
Lincoln NE 68509
Attn: Legislative Bill 1032

Re: Center for Rural Affairs Statement of Support 
 
The Center for Rural Affairs is a private non-profit, established in 1973 and based in Lyons, Nebraska. The Center works to promote social and economic justice, environmental stewardship, and strengthen rural communities. A significant part of this work is engaging with people about the decisions that affect the future of their communities and the quality of their lives. These communities are directly affected by access to health care and the economic consequences that follow.

I. The Transitional Health Insurance Program is based on a proven model. 

Referred to as “premium assistance,” this approach enables families with too much income to qualify for traditional Medicaid coverage, but not enough to qualify for premium assistance tax credits, to purchase private market health insurance plans. Several states, including Arkansas, Iowa, and Indiana, have successfully utilized this approach. 

• Iowa’s use of premium assistance to expand access to health care has helped reduce insurance costs. Recent analysis shows that average health insurance premiums in Nebraska border counties are up to 4.2% greater than the average monthly premiums in Iowa border counties. 
• According to the Kaiser Family Foundation, Arkansas cut its uninsured rate among non-elderly adults nearly in half between 2013 and 2014. This reduction, the second largest nationally, was realized in large part due to the coverage pathway offered through the private option.
• The Arkansas Hospital Association (AHA) reports that hospitals are experiencing a dramatic drop in uninsured patients and uncompensated care costs. In 2014, inpatient visits by uninsured patients dropped 48.7%, uninsured emergency room visits by 38.8%, and uninsured outpatient clinic visits by 45.7% (compared to 2013). Hospitals also experienced gains in financial stability, with uncompensated care losses falling by 55.1%, or $149 million, from 2013 to 2014.
• Data show that bad debt/charity care has declined by 16 percent in states such as Iowa, Arkansas, and Indiana that have expanded access to healthcare. This is especially critical for rural hospitals, 35% of which operate at a financial loss. 

II. An overwhelming number of the 77,000 Nebraskans without access to healthcare work in jobs that either do not offer insurance benefits or do not pay enough to allow workers to access insurance on their own. 

The Transitional Health Insurance Employment Program is designed to overcome this. It does so by referring enrollees to employment and education opportunities, and  provides education and skills training targeted at specific state workforce needs. This also helps boost the local economy. 

• The University of Nebraska at Kearney finds reducing healthcare costs for the lowest income group in the state would result in an increase of $1,100 in discretionary income per enrollee in an expanded Medicaid program, or $88 million in aggregate for all potential expansion enrollees. 
• This enhanced discretionary income results statewide in the creation of 800 jobs, creation of $32 million in additional income, and generation of $4.9 million in state and local tax revenue. 
• With rural Nebraska representing 35.6 of the state’s estimated 2014 population, those benefits can be extrapolated to 285 jobs in rural communities and $11.4 million in additional income in rural areas due to the economic activity from enhanced discretionary income. 
• States expanding Medicaid have witnessed substantially faster growth in healthcare jobs than those states that have not expanded. According to data from the U.S. Bureau of Labor Statistics, healthcare and social assistance jobs grew over 30% faster between December 2013 and December 2014 for states that implemented Medicaid expansion than states that did not. 

III. Rural Nebraska’s economy is built almost exclusively on small businesses and their employees. 

With fewer than half of Nebraska’s small business employees employed by firms offering employer-sponsored health insurance, the majority of workers must pay the premium and other out-of-pocket costs for health insurance coverage. This crowds out other uses for discretionary income, harming the local economy.

• Health care expenditures correlate with income - lower income means a higher percentage of income devoted to health care. The poor and near-poor spend the highest percentage of their income on health care - 7.5% for the lowest income group, 7.9% for the second lowest. 
• Many families experience difficulties in paying medical expenses. Harvard University found that 60 percent of bankruptcies had significant medical debt. 
• A recent study in the Journal of Public Economics found that a 10% increase in Medicaid coverage resulted in an 8% reduction in bankruptcies. 
• The University of Nebraska at Kearney found that a plan such as the Transitional Health Insurance Program would save a total of $142.7 million in savings from averted bankruptcies through 2019-2020. Based on 2013 bankruptcy filings in Nebraska, 195 bankruptcies would have been averted in 2013 had Nebraska expanded access to health insurance.

IV. Concluding Remarks
 
For three years our elected officials have put politics before people. We have sat back as neighboring states experienced improved health outcomes by making healthcare accessible to the working poor. The Transitional Health Insurance Program is based on a proven model that will help rural Nebraska achieve its promise. We urge the committee to advance this bill. 
 
Respectfully submitted,

Johnathan Hladik