By Lauren Kolojejchick-Kotch, former staff member
Last week, a bipartisan group of state senators – Sen. John McCollister, Sen. Kathy Campbell, and Sen. Heath Mello – unveiled a new health coverage bill. It would make affordable health coverage accessible to 77,000 uninsured Nebraskans who cannot afford insurance.
The Transitional Health Insurance Program (T-HIP) uses the private health insurance market to help 77,000 working Nebraskans gain access to health care. 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 used this approach.
“Every Nebraskan needs to be able to afford health coverage, but too many of our hard-working friends and neighbors have been left out of our health care system,” Sen. McCollister said.
Sarah Palmer is one of the Nebraskans who would benefit from this program. Sarah fell into the health coverage gap when she moved to part-time work to take care of her father, who had Parkinson's disease. Shortly after, she was hospitalized herself and quickly racked up sizable medical bills. A situation familiar to many others here in Nebraska and elsewhere. Sarah said she doesn’t want an entitlement, but she needs a little bit of help.
An overwhelming number of the 77,000 Nebraskans without access to health care work in jobs that either do not offer insurance benefits or do not pay enough to allow workers to access insurance on their own. For those who are not working, the bill provides for referrals to job training and job placement services, as well as health coverage. T-HIP further addresses this by requiring that enrollees contribute at least 2% of monthly household income to help pay health insurance premiums. It increases co-payment for non-emergency ER use to $50.
Uncompensated care has declined by 16% in states such as Iowa, Arkansas, and Indiana that have expanded access to health care. This is especially critical for rural hospitals, 35% of which operate at a financial loss. A recent study by the University of Nebraska Medical Center estimates that an approach similar to that included in the Transitional Health Insurance Program will reduce by 72% the amount of uncompensated care provided by Nebraska health care providers.
This bill is especially important for rural Nebraska’s economy, built almost exclusively on small businesses and their employees. Fewer than half of Nebraska’s small business employees are employed by firms offering employer-sponsored health insurance. That leaves the majority of workers to pay the premium and other out-of-pocket costs for health insurance coverage. That money is not available to cover other important expenses, which harms the local economy.
The Rand Corporation found that a state decision to reject federal funding to expand access to health insurance will also increase premiums an estimated 8-10% in that state's individual market. Here in Nebraska, that means we’ll all pay more on our premiums when we deny affordable coverage to 77,000 of our fellow Nebraskans.
Rebecca Gould, Nebraska Appleseed Executive Director and Center for Rural Affairs board member, explained that this plan is good fiscal policy and good health policy. It will create 10,000 jobs in Nebraska, bring approximately $2 billion taxpayer dollars back to Nebraska, and do the right thing for 77,000 of our friends and neighbors.
Transitional Health Insurance Program Act talking points
The Transitional Health Insurance Program Act uses the private health insurance market to help 77,000 working Nebraskans gain access to health care. 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 used this approach.
- The Rand Corporation found that a state decision to reject federal funding to expand access to health insurance will increase premiums an estimated 8-10% in that state's individual market.
- 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.
Failing to expand access to health insurance forces health care providers to provide uncompensated care. Without an insurance payer or individual to pay for care, providers have to write off the costs as either bad debt or charity care. Insurers ultimately shift the cost to their policyholders through higher premiums.
- Consumers pay a “hidden health tax” on their insurance premiums to cover a portion of the bad debt and charity care for the services provided to others. According to Families USA, in 2009, each family’s health insurance premium was $1,000 greater due to bad debt and uncompensated care cost-shifting by health care providers.
- Data show that bad debt/charity care has declined by 16% 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.
- A recent study by the UNMC Center for Health Policy estimates that an approach similar to that included in the Transitional Health Insurance Program will reduce by 72% the amount of uncompensated care provided by Nebraska health care providers.
- The Transitional Health Insurance Program further addresses this by requiring that enrollees must contribute at least 2% of monthly household income to help pay health insurance premiums and increases copayment for non-emergency ER use to $50.
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.
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% 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.
A lack of mental health services and substance abuse treatment is a primary cause of reoffending and recidivism and a return to jail or prison. The Transitional Health Insurance Program will save additional state and county dollars that have already been invested or will be invested in corrections reform. The Nebraska taxpayer and public safety, as well as those in the corrections population, will all benefit.
- The Transitional Health Insurance Program would make it possible to leverage federal Medicaid dollars to pay for 90% or more of the cost of necessary mental and physical health treatments to prevent individuals from entering an institution and to help them re-enter their communities.
- According to the Nebraska Department of Correctional Services, Nebraska correctional facilities are currently over 160% of capacity. At an estimated cost of $28,182 annually for each offender, this is becoming a significant strain on the state’s and county budgets.
- Health Affairs estimates 90% of those spending time in jail or prison are uninsured.
- An approach such as that found in the Transitional Health Insurance Program would help keep nearly 400 people from returning to Nebraska prisons in one year and would result in gross savings to the state’s correctional budget of nearly $11 million annually.
