The Health Resources and Services Administration (HRSA), an agency of the U.S. Department of Health and Human Services, contracted with AcademyHealth to study the practical experiences of a select group of States that have implemented affordable private and public coverage insurance products for low-income workers. AcademyHealth partnered with the Center for Health Program Development and Management (the Center) at the University of Maryland, Baltimore County to conduct the study. The analysis documents the design elements that are important for establishing and implementing a workable program. Design elements studied include population targeting criteria; service delivery system; program financing; benefit design, including cost-sharing; and program administration.

The HRSA State planning grant (SPG) program has been an important resource to States and U.S. territories looking to develop strategies to improve insurance coverage. Through its SPG program, HRSA annually awarded grants to States and territories to give them the resources to collect, analyze, and interpret State-level data on the uninsured and to use this information to develop plans for providing access to affordable health insurance. Since 2000, 47 States, the District of Columbia, and four territories have received grants. Beginning in 2004, the SPG funding was expanded to allow States to further refine and plan for implementation of pilot projects. However, funding for the SPG program was eliminated in the Federal FY 2006 budget. All of the States included in the study with the exception of New York received a HRSA SPG that helped them move toward implementation of an insurance pilot project.

SPG grantees have used grant funds primarily to:

• Collect and analyze data on uninsured individuals, businesses, and the marketplace
• Engage and build consensus among stakeholders
• Study options for expanding coverage

Some of the States that received grants through the SPG program have gone on to implement State coverage initiatives and a number of these programs will be discussed in this study. During the time period of these grants, States were undergoing tremendous budgetary pressures, which were often fueled by large increases in State Medicaid programs. This, combined with the fact that the State-specific studies funded through SPG confirmed that most of the uninsured residents are in families with full-time workers, led many States to implement programs that built on employment-based coverage. States were able to leverage limited public dollars with employer and employee contributions, generally through a publicly funded premium assistance or reinsurance program. In addition to the activities highlighted above, States used grant funds to develop premium and benefit structures, administrative and marketing strategies, and financing mechanisms. These design elements were critical in developing each of the programs.

In this study, we conducted an in-depth assessment of programs in six States—Arizona, Michigan, New Mexico, New York, Oklahoma, and Utah—to gain a better understanding of the design elements associated with successful programs. We focused on these States because each of them had implemented a public or private program to provide affordable insurance coverage for low-income workers. The programs studied are incremental attempts to address the serious problem of many uninsured workers. They were developed with limited funds and/or limited political will to address a full scale State health care reform program. None of the programs feature legislative mandates to require or penalize employers who do not offer health insurance or employees who do not participate in employer-sponsored insurance (ESI) programs.

In addition, State and program characteristics vary widely among the study group, thereby allowing States across the country to examine program elements and implementation strategies that may pertain to their particular circumstances. The following table illustrates some basic differences in health insurance coverage of the non-elderly populations in these States. Uninsurance rates range from a low of 13 percent in Michigan to a high of 24 percent in New Mexico. In addition, Michigan relies much more heavily on employer-sponsored insurance (67 percent) than New Mexico (50 percent). Utah has the lowest percentage of Medicaid enrollees (11 percent) and New York has the highest (19 percent).

Table 1: Basic Characteristics of Health Insurance Coverage by State

This paper is divided into programmatic sections, each of which will highlight similarities and differences among the six programs. Key sections will include program design, program financing, methods to keep the program affordable, and program administration. This part of the report will end with a lessons learned section. A case study describing each of the State programs in more detail can be found on pages 27 through 69.

To obtain the information necessary to complete the study, the Center first reviewed program literature, including studies, papers, and brochures. To obtain detailed programmatic descriptions, the Center interviewed key program staff and other pertinent stakeholders.

Key informants for all of the programs studied were committed to increasing insurance rates within the State (or in one case, county). In addition, they recognized that the problem has to be addressed at the State or local level because national solutions are not forthcoming. Finally, all of the programs worked with key stakeholders to develop administrative procedures that would work within their individual health care environments. In keeping with their commitment to the uninsured population in their area, programs changed administrative procedures that did not work or were inefficient.