Health Plan for Children Offered

By MARY MASSINGALE STATE CAPITOL BUREAU

Gov. Rod Blagojevich is proposing an innovative health insurance program for children, regardless of income, and financed by shifting most of the state’s Medicaid population into an HMO-style system.

Leaders of the Democratic-controlled legislature are backing the $45 million proposal called "All Kids" for passage during the fall veto session that begins later this month. The new program would begin operation July 1, 2006.

The chief of the Illinois Department of Healthcare and Family Services said Wednesday the initiative would provide health-care coverage for an estimated 253,000 uninsured children while capitalizing on a national, more cost-effective trend to move Medicaid patients to a managed-care system with a primary physician.

"We’re very excited about this – it makes so much sense," HFS Director Barry Maram said.

The proposal sets up a program to pick up where the state’s low- income-eligible KidCare and FamilyCare programs leave off by offering "policies" covering children uninsured during the previous 12 months. Parents could purchase health insurance for their children with a primary physician, paying an income-based monthly premium expected to cost less than private insurance. Co-payments for physician visits, hospital stays and prescription drugs would apply except to preventive care. Annual out-of-pocket expenses would be limited to a maximum amount.

For example, a family of four with an annual income ranging from $40,000 to $59,999 would pay a monthly premium per child of $40, with a maximum total cost of $80 for two or more children. Co- payment for a doctor’s visit would be $10; emergency room visit, $30; prescription drugs, 5 percent of the cost; inpatient hospital stay, $100 per admission; outpatient services, 5 percent of the cost. There would be no deductible, and the maximum annual out-of- pocket expenses per child would be $500.

By comparison, a Blue Cross Blue Shield policy with a $250 deductible and a selection of doctors and hospitals would cost $63.50 a month, according to company spokesman Tony Rau. The policy would cover 80 percent of costs, with annual out-of-pocket expenses capped at $1,000.

The state would pick up the remaining costs of the All Kids program by shifting the 1.6 million adults, disabled and children in KidCare, FamilyCare and the traditional Medicaid program from a fee- for-service system into a mandatory managed-care program with a primary physician. The move would save an expected $56 million in the first year, state officials said. Senior citizens and the blind would not be shifted.

Most of the current Medicaid enrollees are required to find a physician who accepts Medicaid as payment. However, 29 states have used the "primary care case management" model for their Medicaid programs. Maram said the state could administer the program but may hire a contractor to do it.

The move to mandatory managed-care coincides with legislative rumblings of more than a year ago, when a bipartisan task force held hearings across the state. Consultants hired last spring by the Commission on Government Forecasting and Accountability reported managed care would save the state more than $96 million in the first year and up to $230 million in the fifth year.

Joel Menges is vice president of the Falls Church, Va.-based Lewin Group and one of the authors of the commissioned report. He applauded the potential move to Medicaid managed-care but threw up a red flag on a state-administered program.

"When the state administers the program, the state can become a target for lobbying efforts to soften the model," Menges said.

Rep. Frank Mautino, D-Spring Valley, is a member of accountability commission and served on the task force. He said he was "surprised" by Blagojevich’s proposal but noted that "managed care shows some promise of some savings to the state."

Maram said the report played no part in the proposals. "All Kids" and Medicaid managed-care are part of Blagojevich’s emphasis on affordable health care and repeated eligibility expansions of KidCare and FamilyCare, he said.

A Republican lawmaker and proponent of a Medicaid managed-care system, however, noted a potential pitfall of All Kids: Payments to doctors and hospitals would be at current Medicaid rates, which many medical providers say do not cover the costs of the services. That limits access to health care when doctors will not accept patients because of the low reimbursement, according to Sen. Dale Righter, R- Mattoon.

Some of the managed-care savings should be pumped back into Medicaid reimbursement rates, Righter said.

"Responsible government demands that you shore up the foundation of the system," he said.

The backing of House Speaker Michael Madigan, D-Chicago, and Senate President Emil Jones, D-Chicago, virtually assures passage during the veto session that begins Oct. 25, although changes to the state’s Medicaid system also would require federal approval.

Representatives for the legislative leaders rejected any political motive for the proposal, even as an election year looms.

"Any criticism would look silly," said Madigan spokesman Steve Brown. "This is close to the final step in the process."

Cindy Davidsmeyer of Jones’ office agreed.

"Those who want to argue politics lose that argument because the governor has consistently expanded health care beginning with KidCare, FamilyCare and now All Kids," Davidsmeyer said.