Healthcare Coverage Reform Initiative Resources

State Coverage Initiatives Coverage Institute Proposal Narrative State: Ohio

While Ohio has a lower uninsured rate than in many other states, 1.2 million Ohioans were uninsured in 2004, according to the Ohio Family Health Survey. Available data indicates that since 2004 more Ohioans have lost coverage and this trend is expected to continue into the future. The increasing number of uninsured Ohioans is caused by rising health insurance rates for individuals and employers, Ohio’s weak economy, the ongoing loss of manufacturing and other jobs at firms that offer health insurance, the poor health of many Ohioans and an aging population. The ability to address the challenge of the uninsured requires taking steps to reduce health care costs and health insurance premium rates while improving the health of all Ohioans in an economy that is struggling.

Profile of Ohio’s uninsured population

The 2004 Ohio Family Health Survey allows Ohio to develop a much more accurate and detailed understanding of its health coverage situation than is possible using the Current Population Survey. This household survey, which followed upon a 1998 version, gathered responses from almost 40,000 adults and almost 15,000 children living in those households. Only California has a larger state level household survey. Its sample size allows for both state and county level estimates of Ohio’s uninsured population.

Data from this survey produces the following profile of Ohio’s uninsured children for 2004:

• 5.4% of Ohio children were uninsured in 2004 (157,000 children), down from 9.8% in 1998
• This decline in uninsured children reflects the expansion of Medicaid/SCHIP coverage to 200% of poverty, simplification of the eligibility process and energized outreach efforts
• Most of Ohio’s uninsured children live in families with incomes below 200% of poverty, the eligibility level for SCHIP coverage. They should be eligible for existing Medicaid coverage, if they applied.

Data from the Ohio Family Health Survey produces the following profile of Ohio’s uninsured adult population:

• 12.5% of Ohio adults were uninsured in 2004 (1,069,000), up from 11.7% in 1998. This increase occurred even with an expansion of Medicaid coverage to 100% of poverty for parents, which provided coverage to an additional 70,000 Ohio adults
• 15.2% of working age adults were uninsured. Employer-sponsored plans covered 63.5% of working age adults and government-sponsored programs covered another 15% of this population
• 11.2% of employed Ohioans under the age of 65 reported being uninsured (553,000), with 60% of them reporting being uninsured for one year or longer
• 6.7% of workers under the age of 65 whose firms offered health insurance coverage reported being uninsured, while 35.3% of non-elderly workers whose firms did not offer insurance reported being uninsured
• The uninsured rate decreases steadily as non-elderly workers get older, ranging from 22.9% for 18-24 year olds to 6.3% for 45-64 year olds
• Adults with less than a high school education had a much higher rate of being uninsured (19.5%) compared to high school graduates (14.5%)
• The uninsured rate for adults varies by income, ranging from 26.0% for those with incomes at or below poverty to 10.7% for those in families with incomes between 201 and 300% of poverty to 4.7% for families with incomes above 300% of poverty
• The uninsured rate varies by region of Ohio, ranging from a high of 14.7% for adults living in Appalachia to 11.2% for adults living in the rural non-Appalachian counties. The adult uninsured rate for metropolitan areas was 12.6%
• Independently employed (27.7%) and employees of small business (17.4%) experience the highest rate of being uninsured
• The uninsured rate for independently employed non-elderly individuals is higher than the uninsured rate for adults under age 65 who are not working (27.7% to 23.4%)

Description of existing state coverage programs

Ohio’s primary government sponsored health coverage program is Medicaid. Ohio Medicaid’s income eligibility standards are generally as follows:

• Uninsured children up to 200% of the federal poverty level (FPL)
• Pregnant women up to 150% FPL
• Adults with children (“Parents”) up to 90% FPL
• Some elderly adults and people with disabilities up to 64% FPL for individuals and up to 75% FPL for couples

Individuals in the elderly and disability eligibility category have a spend-down option. Qualified individuals can use certain medical expenses to offset their level of income to qualify for Medicaid. These individuals are eligible only on a month-to-month basis unless they show ongoing medical expenses that will make them eligible on a regular basis.

The State of Ohio administers other smaller, targeted government-sponsored health coverage programs that offer coverage assistance. One program is aimed at children with special health care needs and is operated by the Bureau for Children with Medical Handicaps at the Ohio Department of Health. It offers assistance to families with incomes up to 185% of poverty, including those with insurance, or families with incomes above 185% who can meet the program’s spend-down requirements. Another program operated by the Ohio Department of Job and Family Services is called Disability Medical Assistance Program. This program targets very low-income adults who have a chronic health condition that lasts longer than a year.

Ohio does not currently have a high risk pool. The Ohio Department of Insurance has done a study on a high risk pool and legislation is expected to be introduced soon to create one.

Description of Ohio’s private health insurance markets

As with most states, Ohio’s private health insurance markets can be broken down into three categories: (1) the individual market, which insures over 450,000 Ohioans; (2) the large group market, which includes many self-insured plans shielded from state regulation by ERISA; and (3) the small group market, which includes mostly insured plans subject to state guaranteed issue and rating rules.

Based on data from various sources, it has been estimated that Ohioans fell into the following categories in terms of their health insurance coverage in 2004:

Individual coverage	480,249	4.3%
Small group (2-50) coverage	1,026,026	9.1%
Large group insured coverage	2,018,145	17.9%
Large group self-insured coverage	3,445,580	30.6%
Uninsured	1,282,000	11.4%
Medicaid	1,266,000	11.2%
Medicare	1,523,000	13.5%
Military	220,000	2.0%
Total population	11,270,000	100%

With respect to the individual market, Ohio has an open enrollment system as its alternative mechanism under HIPAA. Insurers offering coverage in the individual market must hold open enrollment annually and accept all individual who apply up to a limit established by law. Open enrollment rates are capped, but the caps are so high that people with health conditions are charged very high rates. Generally, people in good health can get affordable coverage outside of open enrollment, and people in poor health are denied coverage in the regular market, making open enrollment the only option. The fact is that open enrollment rates for people in poor health are extremely high and unaffordable. As a result, in 2005, insurers reported only 1,800 people with open enrollment coverage.

With respect to the small group market, consistent with HIPAA, all carriers offering small group coverage must generally accept every small group that applies. Premium rates for small groups are subject to rating bands that limits the ability of a company to vary rates based on the health status of workers. Rates cannot vary because of the health-status of a group by more than forty percent from the company’s midpoint rate for the same or similar coverage. A five percent low claims discount is also allowed. Importantly, the small group rating rules do not limit the extent to which rates can be raised from year to year because of increasing health care costs. As a consequence, rates in the small group market have increased at double-digit rates for the past decade, which will most likely continue in the future. As a result, fewer and fewer small groups are offering coverage in Ohio.

Based on our understanding of Ohio’s health insurance markets derived from internal and external sources, we are confident of the following market conditions:

• Health care costs and health insurance premiums in the private insurance markets are rising at double-digit rates and will continue to do so for the foreseeable future without intervention.
• Fewer Ohioans will be insured in the private insurance markets as health insurance costs continue to rise.
• In the individual market, affordable coverage is simply not available for individuals who have health problems. While Ohio’s open enrollment requires insurers to offer coverage, the premium rates are not affordable for people in poor health.
• Employer sponsored coverage is available both on an insured and self-insured basis, but premium rates continue to rise, making coverage increasingly unaffordable, particularly for small businesses.
• As to employer sponsored coverage, a smaller percentage of employees are taking up coverage because of increased cost sharing requirements. This is especially true of employees in low wage jobs.
• Employers are reducing benefits by raising employee contributions, copayments, deductibles and cost sharing requirements.
• Consumer driven health plans, including plans tied to HSAs, are becoming more prevalent, although they represent a small percentage of the market.
• Wellness programs and “healthy living” incentives are becoming more prevalent in large, self-insured plans. Insured plans sold to small businesses and individuals have been slower to adopt these innovations.
• Individuals and employers are moving away from HMO coverage toward PPO coverage.
• Self-insured employer plans are more innovative in terms of strategies to reduce health care costs.

Vision for the future

During the 2006 campaign, Governor Ted Strickland identified health and health care reform as a critical feature of his Turnaround Ohio proposal. He laid out a vision that includes expanding health coverage to all children, reducing the number of adult uninsured in half by 2011, building the technological infrastructure to allow for the exchange of health information throughout all areas of Ohio, and improving the overall health of Ohioans by attacking the causes of poor health through an emphasis on prevention. His first budget, released in February, laid out the initial steps to achieve this vision.

The State Coverage Initiatives 2007 Coverage Institute’s call for participants comes at an opportune moment for Ohio. For the first time in more than a decade, there is broad-based, bi-partisan interest in pursuing health coverage expansion. Governor Strickland is not alone in emphasizing the importance of meaningful health reform. Serious discussions on health care access and affordability are taking place in the Ohio General Assembly. Both the business and community advocacy communities are exploring public-private strategies to expand coverage and control costs. The challenge for Ohio is translating that interest into a detailed, acceptable proposal that creates an affordable and sustainable reform path for individuals, employers and government.

Over the next several months, Governor Strickland’s Administration intends to reach out and talk with the Ohio General Assembly, all key stakeholders and the public about concrete proposals to provide meaningful access to coverage for all Ohio’s uninsured. The Coverage Institute can be an important part of that process. The opportunity for Administration leaders, legislative leaders and key stakeholders to work together at the Coverage Institute to discuss and evaluate reforms in a facilitated, team-based process will only improve Ohio’s ability to develop and adopt an effective, comprehensive plan.

High Level Commitment

The momentum for reform has been building in Ohio. The passage of health reform legislation in several states sparked interest among policy makers and stakeholders in Ohio. The Massachusetts reform showed the possibility of bi-partisan support for such an effort.

Because of the unacceptable number of Ohioans who have no health insurance and the growing interest in health reform activities around the country, community, government and business leaders in Ohio have been actively discussing changes to Ohio’s health care system, health insurance markets and safety net programs to make affordable coverage available to all Ohioans. This has included the involvement of non-partisan organizations such as the Health Policy Institute of Ohio (HPIO) holding forums to bring diverse stakeholders together to learn about and discuss health coverage expansion efforts. HPIO forums have analyzed coverage issues in the small group market, explored the Massachusetts Initiative and Florida’s Medicaid reform proposal, and brought diverse stakeholder groups together to discuss, “Where do we go from here?”

At the same time, Ohio held a gubernatorial election. Both candidates advanced major health reform proposals as part of their campaigns. Such discussion had been absent during the past several gubernatorial elections.

In the summer of 2006, consumer advocates worked to develop a health reform expansion proposal to offer to both candidates. This proposal seeks a public-private partnership to expand coverage to more Ohioans, seeking to reinforce the existing employer-based system of coverage, along with expanded government programs for low-income adults.

This interest in reform has intensified since the November 2006 election. Governor Strickland is moving his health care agenda forward on two fronts. The first front is through the FY 2008-2009 budget. His budget proposal called for expanding Medicaid coverage to all children in families with incomes below 300% of poverty and allowing a buy-in option for families with uninsured children at incomes above 300% of poverty. His budget also created a Medicaid coverage expansion for working adults with disabilities under the federal Ticket to Work option and returning the Medicaid income eligibility to 100% of the Federal Poverty Level for parents. Ohio's budget is not final as of this SCI proposal. The final status of expansions will not be known until early July.

The second front aims to finalize a larger health expansion proposal by early 2008. Since Governor Strickland took office in January, an interagency team has been assembled to develop a comprehensive plan that will achieve the goals of Turn Around Ohio, which include reducing the number of uninsured adults by at least 500,000 by 2011. The Governor has given the Ohio Department of Insurance the lead in developing the market reforms and any health exchange. The Governor created the "Healthy Ohio" initiative in the Ohio Department of Health to emphasize the importance of healthy lifestyles, disease prevention and care coordination as part of the comprehensive approach to expanding coverage. The Department of Aging is responsible for creating a unified long-term care budget that maximizes the effective use of these funds, while ensuring Ohioans the availability of a robust, high-quality continuum of long-term care services. The Ohio Department of Job and Family Services has responsibility to implement all Medicaid expansions and to find and encourage people to enroll for coverage. The Governor’s proposed budget also includes $500,000 to engage contractors and conduct studies to help create a successful health reform plan.

Although a comprehensive set of health reforms tailored to Ohio are currently being developed, the following components are being considered:

• A quasi-public agency, a healthcare exchange, to coordinate the linkage of pre-tax dollars of workers and employers so that individuals may purchase portable, private sector insurance products
• A high risk pool
• Individual and group insurance market reform
• A reinsurance program to alleviate and spread costs and to reduce reliance on underwriting for profit
• Wellness, prevention, chronic care and disease management programs
• Healthy lifestyle incentives and programs
• Programs targeted at the young invincibles
• Tax incentives
• Subsidies toward the purchase of private coverage for low income Ohioans through Ohio Medicaid
• Enrollment of additional Medicaid eligible population
• Federal matching funds for existing state expenditures on healthcare for the uninsured through the application and approval of an 1115 waiver

The Administration is also pursuing several strategies to enhance the value of health spending including several efforts to promote better adoption of health information technology and exchange of health information. Such strategies include the Governor’s Broadband Ohio Initiative and Ohio’s Medicaid Transformation grant proposal.

Members of Ohio’s General Assembly are also actively working on developing a health reform strategy for Ohio. The Ohio House created a brand new committee in 2007, the House Committee on Healthcare Access and Affordability. This committee, headed by Representative Jim Raussen (R), is currently in a learning and exploration phase, hearing testimony from various invited speakers on issues relating to access, cost and quality. The Senate Health Committee is now holding a similar set of hearings to educate its committee members. Representative Raussen has reported his interest in drafting a reform proposal by this fall.

Several newly elected Democratic members have introduced or are preparing to introduce legislation to expand coverage to at least all adults with incomes below 200% of poverty. Two of the proposals call for universal health coverage, one through a single payer approach and one through a Massachusetts style approach.

The Administration and Ohio General Assembly are not pursuing health reform alone. They are hearing increasingly strong constituent calls to pursue reform. One key stakeholder group promoting the need for reform is Ohio’s business community. They have identified health costs as their number one concern. The business community is interested in identifying health reform efforts that will both expand coverage and help ensure the affordability and sustainability of coverage for both government and employers.

The Ohio Business Roundtable identified health care reform as its number one priority in 2007, which underscores the intensity of corporate interest around health reform. This group, consisting of CEOs of Ohio’s largest business enterprises, is engaged in a process to assess the health and health care situation of Ohio and develop reform recommendations. The Ohio Business Roundtable intends to work closely with the Strickland Administration and the Ohio General Assembly during this process, especially as potential reform opportunities emerge.

To assist these reform discussions, the Health Policy Institute of Ohio has sponsored a project to estimate total health care spending in Ohio, including the amount of spending by and for Ohio’s uninsured population and the amount of spending it might take to cover all of the uninsured. Jack Meyer and Jack Hadley produced this report. Jack Meyer and Associates also have developed a primer on health reform that outlined the primary options for reform available to Ohio policymakers. In addition, HPIO, the Ohio Business Roundtable, and the Administration all agree on the value of creating a micro-simulation model that would allow for effective assessment of the costs and effects of different reform options, which would be made available to all Ohio policymakers.

All of these efforts show a growing energy and excitement around reform. Increasingly, these efforts express an understanding that any major expansion effort must also work toward transforming health and health care in Ohio. They also show the need to engage in meaningful, constructive dialogue and to develop answers to critical questions that will help shape a final policy proposal. Examples of these questions include what is affordable, what are the best ways to finance any reform effort, and what are the real costs and benefits of different policy options?

Ohio would be an excellent member of the Coverage Institute. Ohio has an environment ripe for bi-partisan initiatives as demonstrated by the House version of the budget recently passing without a dissenting vote.

Ohio also has many unique resources that help in understanding the challenges of Ohio’s uninsured. The Ohio Family Health Survey provides a volume of detail unsurpassed by most states. This survey can be a model for other states.

Ohio’s consumer advocacy and business community are also devoting substantial resources to bring their respective constituencies together to help forge workable health reform strategies.

In addition, Ohio’s demographic makeup makes it very representative of the nation overall. Ohio has several large urban communities, a dynamic growing suburban population, extensive Appalachian counties, and a large number of non-Appalachian rural communities. In addition, Ohio has a growing immigrant community of people from throughout the world, though its growing Hispanic population is not even close to what Southwestern states face.

Finally, Ohio’s strategic approach includes pursuing substantial health reform expansion through a comprehensive reform approach that emphasizes enhancing the value of health spending and improving the overall health of Ohioans through prevention. This comprehensive approach is essential to create sustainable, affordable health care, especially with the growing challenge to entitlement health coverage programs from an aging population.

Breadth, Depth, and Influence of Proposed State Team

The State Coverage Initiative Coverage Institute offers Ohio a useful mechanism to promote collaboration in the development of an Ohio health reform strategy. The people who have agreed to participate underscore the importance of this undertaking and reflect the broad-based support that will be required to pass comprehensive reform. The members of Ohio’s team include:

Janetta King	Policy Director for Governor Ted Strickland
Cristal Thomas	Ohio’s Director of Medicaid
Cindy Burnell	Director of the Office of Healthy Ohio at the Ohio Department of Health
Doug Anderson	Interim Asst. Director of Health Coverage Policy at the Ohio Department of Insurance
Tom Niehaus	State Senator (R) and member of the Senate Finance and Financial Institutions Committee
Shirley Smith	State Senator (D) and ranking member of the Senate Health Committee
Jim Raussen	State Representative (R) and Chairman of the House Committee on Healthcare Access and Affordability
Sandra Williams	State Representative (D) selected by the House Democratic Leadership to participate
Nicholas Lashutka	Director of Government Relations for the Ohio Business Roundtable
John Burandt	Health Systems Division Director, Service Employees International Union, District 1199
Col. Owens Senior	Attorney, Legal Aid Society of Southwest Ohio
Bill Hayes	President of the Health Policy Institute of Ohio

Bringing this diversity of people together to work as a team is the best hope to create an acceptable reform proposal that will have sufficient bi-partisan policymaker and stakeholder buy-in. Because of Ohio’s continuing difficult fiscal and economic situation, such support will be necessary for any reform proposal that requires additional spending and for any reform proposal to focus on containing health spending to create an affordable and sustainable health system.

Doug Anderson, Interim Assistant Director of Health Coverage Policy at the Ohio Department of Insurance has been selected as the Team Leader and primary contact for the Coverage Institute. He can be reached at (614) 719-1579 or douglas.anderson@ins.state.oh.us.