Panel: Georgia Should Establish Health Insurance Marketplace
Mike KIein
Georgia should establish a small business health insurance marketplace outside the “additional layers of cost, complexity and rigidity” associated with federal health care reform mandates.
That is the recommendation from a twenty-five member committee appointed by Governor Nathan Deal. The political question will soon become: Should Georgia begin that process now or wait until after next summer’s anticipated U.S. Supreme Court health care reform decision?
The Georgia Health Insurance Exchange Advisory Committee report issued Monday proposed development of an exchange “through private or limited quasi-governmental means” as either a non-profit or public corporation. The report did not establish a timetable. A minority view said the 2012 Legislative Session should “authorize a basic structure for an individual health insurance exchange” that would be compatible with last year’s federal health care reform law.
Recommendations were released on the internet. Majority and minority reports, a planning options summary and names of committee members are on the Health Care Reform website. No news conference was held and Governor Deal did not release a statement.
Health insurance exchanges are mandated by federal health care reform legislation that President Barack Obama signed into law on March 23, 2010. Georgia is among 26 states that filed suit in federal court to overturn the law. Georgia must establish an exchange by 2014 if the law is upheld by the Supreme Court or a federal exchange would be imposed on the state.
The committee noted Georgia currently has three main options: “States may run a state-based marketplace, states may defer to the federal government to run a federal exchange, or states may opt into a state-federal partnership which is an option that has not been fully vetted, but at this time, would be structured as a federal exchange with limited state responsibilities included.”
The National Conference on State Legislatures maintains an extremely comprehensive website that tracks the health insurance exchange issue in all 50 states. The Conference says 13 states enacted exchange legislation in 2010 or 2011. Seventeen states including Georgia considered but did not pass legislation. Bills were pending in six states and the District of Columbia.
Florida is preparing to launch a small business insurance marketplace that would be established by the legislature but privately operated. Two states entered the insurance exchange marketplace before federal health care reform. Planning for Utah’s state-run insurance exchange began in 2005. Massachusetts created an exchange in 2006.
The advisory committee acknowledged “the political divisiveness surrounding reforms contained within the Affordable Care Act, exchanges notwithstanding.” It said additional regulations from Washington, the highly anticipated Supreme Court opinion and the 2012 Presidential cycle all “have the potential to dramatically alter the landscape of health reform as we view it today.”
The Committee made clear it prefers a state-controlled marketplace. “Growing federal control over traditionally-managed state health insurance markets only adds additional layers of costs, complexity and rigidity to needed change over time. Private sector competitors not bound by onerous federal restrictions will respond to market forces over time, adapting to change, while federally-restricted competitors will likely fail to do so due to lack of flexibility.”
Georgia’s advisory committee found that, “Rising health insurance costs is nearly universally identified as the biggest challenge for small businesses offering employer sponsored coverage.” It said about 20 percent of non-elderly Georgians have no health insurance. The committee reported, “Among all firms in Georgia regardless of size, less than half (approximately 47%) offer employer sponsored insurance as an option for employees.”
The committee proposed creation of a Georgia Health Insurance Marketplace Authority that would administer an exchange for businesses with at least two but fewer than 51 employees. The state uses the authority model to operate other businesses including the Georgia Ports Authority, the World Congress Center and Georgia Public Broadcasting.
Among other recommendations: The health insurance marketplace authority would have no regulatory authority, including rate setting; the authority could not prevent any qualified insurance company from offering its plans within the marketplace; and it would not have independent tax authority.
The authority would also ensure a level playing field for all companies, whether inside or outside the marketplace. Benefits would be the same and regional or statewide plans would be allowed to participate. The authority would have a seven-member board of directors.
The executive summary made clear, “Throughout the course of deliberation of the Advisory Committee, a core driver in decision-making and recommendation development was the critical need to ensure current state authority over the private health insurance market in Georgia remains fully intact and is not ceded to the federal government.”
(Mike Klein is Editor at the Georgia Public Policy Foundation)
Georgia Ranked 48th in Per Capita Personal Health Care Spending
Mike Klein
Georgia ranked 48th — third from the bottom nationally – beating out just Utah and Arizona – in a federal analysis of personal health care spending per capita, according to the Centers for Medicare and Medicaid Services (CMMS) at the U.S. Department of Health & Human Services. The report analyzed all spending, not just government budget expenses.
Georgia personal health care spending at $5,467 per capita in 2009 was well below the $6,815 national average. Ten-of-twelve southern states were below the national average. Alabama ($6,272) joined Georgia in the bottom ten states as did two of the most populous states — Texas ($5,924) and California ($6,238). Most New England states were above average.
Personal health care spending annual growth rates have declined, measured at 6.4 percent during the 1998 to 2004 period and 4.7 percent during the 2005 to 2009 period. CMMS said annual growth rate is not the only measure of health care cost impact on the overall economy.
“Despite the slower overall spending growth during the recession, health care consumed an incrementally larger share of the nation’s resources at a historic pace,” CMMS said. Personal health care spending reached 14.8 percent of national GDP in 2009. Between 2007 and 2009 every region’s health care spending share grew faster than during the 2001 recession.
The Southeast took a hard hit. “In the most recent recession, the Southeast and Southwest regions experienced the largest increase in the share of state GDP accounted for by personal health care spending. These two regions have the lowest per capita income and experienced some of the largest declines in per capita state GDP of any region over this period.”
CMMS defined the category as “the total amount spent to treat individuals with specific medical conditions, but excludes expenditures resulting from government administration, net costs of health insurance, government public health activity, non-commercial research, and investment in structures and equipment.” Aspirin counts. Bricks and bureaucrats do not count.
The Centers for Medicare and Medicaid Services said states near the bottom generally have high numbers of uninsured and low per capita incomes. The analysis noted, “Income appears to have an important and positive relationship with health spending.” Massachusetts reported the highest personal health care spending per capita — $9,278, well above the $6,815 national average – but it also has one of the highest income levels per capita.
The Kaiser Family Foundation State Health Facts project says one-in-five Georgians – more than 1.8 million – have no health insurance. Georgia income per capita is about 15 percent below the national average. Georgia has high official unemployment– 9.9 percent vs. 9.0 percent nationally – which matters because employers still provide most health insurance.
Poverty is also associated with low personal health care spending and the report described a link between “larger shares of Hispanic residents, who are more likely to be uninsured compared to other Americans,” according to the Centers for Disease Control.
States including Georgia are on edge about their health care policies and investments as they await next year’s U.S. Supreme Court opinion on the validity of 2010 federal health care reform, the Patient Protection and Affordable Care Act, sometimes known as ObamaCare.
Thursday the Georgia Health Insurance Exchange Advisory Committee is expected to report its findings to Governor Nathan Deal. Federal health care reform requires that states must have an exchange in place by 2014. States that do not start an exchange will be forced to swallow a federally run exchange. Georgia accepted a $1 million planning grant but it also is among 26 states that sued the federal government to overturn the health care reform law.
Back to the CMMS report: Georgia ranked 49th in Medicaid personal health care spending. The national average was $6,826 per enrollee; Georgia reported $4,835 per enrollee, down from five years earlier when the state average was $5,532. Medicare personal health care spending per capita averaged $10,365 nationally two years ago; Georgia reported $9,836 per capita.
Annual spending growth in physician and clinical services in the Southeast grew by 7 percent between 1998 and 2004 when the region led the nation but slowed to 3.2 percent from 2004 to 2009. That was the slowest regional growth rate and one full percentage point below the national average.
The average annual per capita growth for prescription drugs was down significantly during the 1998 to 2004 and 2005 to 2009 reporting periods, averaging 12.5 percent and 4.6 percent. The decline was linked in part to the recession and increased use of generic drugs. Medicare Part D implementation in 2006 increased prescription drug spending by seniors.
The report said states with higher personal health care spending per capita generally had higher per capita income and larger elderly populations. States on the lower end of the health care spending curve had younger populations, lower incomes and less access to health insurance.
“If these trends persist, these states would be most likely to have the greatest potential number of people eligible for the Medicaid expansion or exchange coverage,” CMMS concluded. Georgia estimates federal health care reform could force 650,000 more people into the Medicaid system which already is the fastest growing segment of annual state expense.
(Mike Klein is Editor at the Georgia Public Policy Foundation)
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