Oregon turns to private-sector coalition for help in expanding employer coverage with CHIP funds
Purchasing group is tapped to administer insurance subsidies
Oregon officials think they have found a way to use Children’s Health Insurance Program (CHIP) funds to provide family coverage and still meet the federal government’s test that such coverage doesn’t redirect any CHIP money away from kids.
If they’re right, Oregon will become the only state besides Massachusetts that is successful in covering uninsured parents through employer-sponsored insurance with CHIP money.
The plan centers on using the state’s sole health insurance purchasing cooperative and an existing state program, the Family Health Insurance Assistance Program (FHIAP), to administer insurance subsidies.
"Our hope is, if we make it affordable and it is significantly easier to administer, we’ll have some businesses sign up," says Oregon Health Council executive director Bob DiPrete. The council has been working with Associated Oregon Industries to craft a CHIP plan amendment recently submitted to Health Care Financing Administration (HCFA) officials.
The heart of the plan is subsidies offered for private insurance at 70%, 80%, or 95% of the employee’s share of the premium. Like FHIAP, the subsidy initiative will target families beyond Medicaid eligibility—100% of poverty for most persons, 133% of poverty for children under 6, and pregnant women up to 170% of poverty.
About 8% of Oregon’s children in the targeted population, approximately 20,000, are uninsured. The state hopes the latest expansion will cover about 2,000 by April 2001.
"Even though it doesn’t promise real large numbers, as a percentage of uninsured children, it’s worth doing," says Mr. DiPrete. He notes that, in addition to the relatively low number of uninsured children, Oregon also has the advantage of a higher-than-average percentage of employers who offer insurance to their employees, with about 72% of state residents receiving health insurance through work.
Administrators in the state-only program will be responsible for determining eligibility and processing the premium subsidy. The 6,000-member Associated Oregon Industries will have the same relationship it does with all its member businesses and employees, including brokering plans and facilitating communication with agents.
Significantly, the subsidy will be paid to the employee, not the employer. The employer deducts the cost of the premium from an employee’s paycheck, as with any other insured employee, and a carefully timed subsidy to the employee’s home essentially replaces the lost income. It’s the same technique used in FHIAP since the program’s implementation in July 1998.
"We want to maintain the privacy and dignity of people on the program," says Mr. DiPrete. The risks of this approach have proven minimal. The state expects to recoup in full the only premiums paid in error to date—the equivalent of three months’ premium paid to someone with Medicaid coverage as well as FHIAP coverage.
HCFA is likely to focus on three issues in its evaluation of Oregon’s application, says Mr. DiPrete:
• Cost-effectiveness. As with all CHIP plans, Oregon’s program can cover parents only if family coverage costs no more than covering all children individually. Oregon’s Medicaid-style CHIP coverage for one child soon will cost about $84 per child per month in federal funds, or about $115 total when the state match is added, says Mr. DiPrete. He predicts that, for families with three or more children, family coverage is likely to cost no more than covering the children individually.
• Cost-sharing. Oregon officials are trying to figure out how to meet HCFA’s requirement that, for families over 150% of poverty, cost-sharing is not to exceed 5% of income. For families below that, Medicaid cost-sharing limits apply. The current plan is to buy a supplemental policy to cover all out-of-pocket expenses except for a very modest copay.
• Employer contribution. A letter from HCFA to state health officials in February 1998 said employer subsidies could be used only when the employer contributed 60% of the premium or its "equivalent" to ensure that employers continue to pay a "meaningful share" of the costs of the program.
HCFA and Oregon officials will negotiate the minimum employer contribution that will be required, Mr. DiPrete says.
Contact Mr. DiPrete at (503) 378-2422, ext. 402.
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