MI-HEART ACT; CHILD COVERAGE S.B. 278, 280, & 283: COMMITTEE SUMMARY




Senate Bills 278, 280, and 283 (as introduced 2-27-07)
Sponsor: Senator Tom George (S.B. 278) Senator Alan Sanborn (S.B. 280) Senator Cameron S. Brown (S.B. 283)
Committee: Health Policy


Date Completed: 5-2-07

CONTENT
Senate Bill 278 would create the "Michigan Helping Ensure Affordable and Reliable Treatment (MI-HEART) Act" to do the following:

-- Create the MI-HEART Exchange to facilitate the availability, choice, and adoption of private eligible health coverage plans, as well as the purchase of health coverage products at an affordable price.
-- Prescribe the membership, powers, and duties of a board that would govern the Exchange.
-- Require the Exchange to offer eligible health coverage plans that had received its seal of approval.
-- Allow the Exchange, with the board's permission, to offer a health care plan that did not provide specific types of coverage otherwise required by law.
-- Allow all Michigan residents to apply to purchase health coverage through the Exchange.
-- Create the MI-HEART Program within the Exchange to provide subsidies to assist eligible individuals in purchasing health coverage.
-- Prescribe eligibility criteria for the Program.
-- Require the Exchange board to develop a plan for outreach and education designed to maximize enrollment of low-income uninsured residents in the Program.
-- Create the "MI-HEART Exchange Fund" and require premium contribution payments and surcharges to be deposited into the Fund.
-- Require the Exchange board to report annually to the Legislature and the Auditor General on Exchange activities, receipts, and expenditures.
-- Require the board to conduct an annual study of the Exchange and its enrollees and submit to the Legislature a report based on the data collected.
-- Require the board, by January 1, 2011, to report to the Governor and the Legislature on progress in achieving universal health coverage in Michigan.


The proposed Act would not take effect unless Federal matching funds were secured for its implementation.


Senate Bills 280 and 283 would amend the Nonprofit Health Care Corporation Reform Act and the Insurance Code, respectively, to require a policy or certificate to permit the continuation of hospital or medical care coverage for a child until he or she reached age 26, even if the child were no longer considered a dependent.

All of the bills are tie-barred to each other. They are described below in further detail.

Senate Bill 278

MI-HEART Exchange


 The Exchange would be created in the Department of Community Health (DCH).
The Exchange would be responsible for facilitating the availability, choice, and adoption of private eligible health coverage plans to individuals and groups and facilitating the purchase of health coverage products through the Exchange at an affordable price by individuals and groups. The Exchange would have to exercise its prescribed statutory duties, powers, and functions independently of the DCH Director.


The proposed Act would not take effect unless Federal matching funds were secured as necessary to implement the Act. The Exchange would have to begin offering eligible health coverage plans within 180 days after Federal matching funds were procured.

"Eligible health coverage plan" or "plan" would mean any individual or group contract, policy, or certificate of health, accident, and sickness insurance or coverage issued by a carrier that met the eligibility requirements established by the Exchange board and that was offered through the Exchange. The term would not include a contract, policy, or certificate that provided coverage only for dental, vision, specified accident or accident-only coverage, credit, disability income, hospital indemnity, long-term care insurance, Medicare supplement, coverage issued as a supplement to liability insurance, or specified disease insurance purchased as a supplement and not as a substitute for an eligible health coverage plan. "Carrier" would mean a health insurer, health maintenance organization (HMO), or Blue Cross and Blue Shield of Michigan (BCBSM).


Exchange Board; Executive Director


 The Exchange would be governed by a board consisting of the following 15 members:

-- The DCH Director or his or her designee.
-- The Director of the Department of Human Services or his or her designee.
-- The Commissioner of the Office of Financial and Insurance Services or his or her designee.
-- The Deputy Director for medical services administration or his or her designee.
-- Three members appointed by the Governor with the advice and consent of the Senate, including one who was a member in good standing of the American Academy of Actuaries, one health economist, and one who represented BCBSM.
-- Four members appointed by the Senate Majority Leader, including one employee health benefit specialist, one who represented HMOs, one who represented the general public, and one who represented medical providers.
-- Four members appointed by the Speaker of the House of Representatives, including one who represented small employers (defined below), one who represented health insurers, one who represented organized labor, and one who represented hospitals.


The members first appointed to the board would have to be appointed within 30 days after the bill took effect. Appointed members would serve for terms of four years or until a successor was appointed, whichever was later; of the members first appointed, however, three would serve for one year, four for two years, four for three years, and four for four years.


If a vacancy occurred, it would have to be filled for the unexpired term in the same manner as the original appointment. An appointed member would be eligible for reappointment. The Governor could remove a member for incompetence, dereliction of duty, malfeasance, misfeasance, or nonfeasance in office, or any other good cause.


The first board meeting would have to be called by the DCH Director, who would serve as the chairperson. After the first meeting, the board would have to meet at least monthly, or more frequently at the call of the chairperson or if requested by eight or more members.


Eight members would constitute a quorum for the transaction of business at a board meeting. An affirmative vote of eight members would be necessary for official board action. The board would be subject to the Open Meetings Act and the Freedom of Information Act.


Board members would serve without compensation, but could be reimbursed for their actual and necessary expenses incurred in the performance of their official duties as board members.


The chairperson would have to hire an executive director to supervise the administrative affairs and general management and operations of the Exchange and serve as its secretary. The executive director would have to receive a salary commensurate with the duties of the office. He or she could appoint other officers and employees of the Exchange necessary to its functioning. With the board's approval, the executive director would have to do all of the following:

-- Plan, direct, coordinate, and execute administrative functions in conformity with the policies and directives of the board and the proposed Act.
-- Employ professional and clerical staff as necessary.
-- Report to the board on all operations under his or her control and supervision.
-- Prepare an annual budget and manage the administrative expenses of the Exchange.
-- Undertake any other activities necessary to implement the powers and duties under the proposed Act.


Plan of Operation


 The board would have to develop a plan of operation for the Exchange. The plan would have to establish procedures for the Exchange's operation, for communication with the executive director, for the enrollment of individuals and groups in plans, and for appeals of eligibility decisions.
The plan also would have to establish and manage the following:

-- A system of collecting and depositing into the MI-HEART Fund all premium payments made by, or on behalf of, individuals obtaining health coverage through the Exchange, including any payments made by enrollees, employees, unions, or other organizations.
-- A system for remitting premium assistance payments to carriers.
-- A system for remitting premium contribution payments to carriers.


The plan of operation would have to establish a plan for publicizing the existence of the Exchange and its eligibility requirements and enrollment procedures; develop criteria for determining that certain health coverage plans would no longer be made available through the Exchange; and develop a plan to remove the seal of approval from certain health coverage plans.


In addition, the plan of operation would have to develop a standard application form for individuals and groups seeking to purchase health coverage through the Exchange, and for eligible individuals seeking a premium assistance payment, that included information necessary to determine an applicant's eligibility under the proposed Act, previous and current health coverage, and payment method.

("Eligible individual" would mean an individual who was a Michigan resident who met prescribed eligibility requirements. "Resident" would mean a person living in the State, including a qualified alien under the Federal Personal Responsibility and Work Opportunity Reconciliation Act, and a person who was not a U.S. citizen but was otherwise permanently residing in the U.S. under color of law, provided that the person did not move into the State for the sole purpose of securing health coverage under the MI-HEART Act.

"Premium contribution payment" would mean a payment made by a MI-HEART enrollee or employer toward an eligible health coverage plan. "Premium assistance payment" would mean a payment of health coverage premiums made by the board to a plan on behalf of a MI-HEART enrollee who was an eligible individual.)


Exchange Board Duties


 The board would have to determine each applicant's eligibility for purchasing health coverage offered by the Exchange, including eligibility for premium assistance payments. The board also would have to review annually the publication of the income levels for the Federal poverty guidelines and devise a schedule of a percentage of income for each 50% increment of the Federal poverty level at which an individual could be expected to contribute that percentage of income toward the purchase of health coverage, and examine any contribution schedules, such as those set for government benefits programs. The report would have to be published annually. Before publication, the schedule would have to be reported to the House and Senate standing committees on appropriations, health, and insurance issues.
Additionally, the board would have to do all of the following:

-- Seek and receive any funding from the Federal government, State departments or agencies, private foundations, and other entities.
-- Create and publish each year the MI-HEART consumer price schedule, and a premium schedule.
-- Enter into interdepartmental agreements.
-- Contract with professional service firms as necessary and fix their compensation.
-- Contract with companies that provide third-party administrative and billing services for health coverage products.
-- Adopt bylaws for the regulation of its affairs and the conduct of its business.
-- Adopt and alter an official seal.
-- Maintain an office at a place or places the board designated.
-- Sue and be sued in its own name.
-- Approve the use of its trademarks, brand names, seals, logos, and similar instruments by participating carriers, employers, or organizations.


Eligible Health Coverage Plans


 The Exchange could offer to individuals and groups only eligible health coverage plans that had received the Exchange seal of approval. Each eligible health coverage plan offered through the Exchange would have to contain a detailed description of benefits offered, including maximums, limitations, exclusions, and other benefit limits. A health coverage plan could not be offered through the Exchange if the plan excluded an individual from coverage because of race, color, religion, national origin, sex, sexual orientation, marital status, health status, personal appearance, political affiliation, source of income, or age.


The Exchange would have to offer a variety of health plans, including at least one that provided for a high deductible with only catastrophic coverage. Eligible health coverage plans receiving the seal of approval would have to meet all requirements of health coverage plans required under State law, rule, and regulation. In order to satisfy the goal of universal health care coverage in this State, however, the board could permit the Exchange to offer a health care plan that did not provide for the following specified coverage or offerings required under certain sections of the Insurance Code and the Nonprofit Health Care Corporation Reform Act:

-- Prosthetic devices to maintain or replace the body parts of an individual who has undergone a mastectomy or the removal of a body part due to illness or injury.
-- Mental health services provided by the DCH or a county community mental health board when appropriate services cannot be delivered otherwise, or if the provider is designated by a court order.
-- Hospice care.
-- Breast cancer diagnostic, outpatient treatment, and rehabilitative services, and breast cancer screening mammography coverage.
-- Drugs used in antineoplastic therapy.
-- Routine obstetrical and gynecologic services.
-- Pediatric services for a dependent minor.
-- Programs to prevent the onset of clinical diabetes; related equipment, supplies, and educational training; and related pharmaceuticals.
-- Off-label drug use.
-- Obstetrical and gynecologic services performed by a physician or a nurse midwife.
-- Inpatient, outpatient, and intermediate substance abuse treatment.


In determining the coverage or offerings that did not have to be provided in a health coverage plan offered through the Exchange, the board would have to determine whether real cost savings would be achieved so that the variety of health coverage plans available through the Exchange and their affordability were maximized.


The Exchange seal of approval would have to be assigned to an eligible health coverage plan that the board determined satisfied the provisions of the proposed Act, provided good value to residents, and provided quality medical benefits and administrative services.


The board could withdraw an eligible health coverage plan from the Exchange only after notice to the carrier.


The Exchange could apply a surcharge to all eligible health coverage plans. A surcharge could be used only to pay actual administrative and operational expenses of the Exchange and so long as the surcharge was applied uniformly to all eligible health coverage plans offered through the Exchange. A surcharge could not be used to pay any premium assistance payments.


Each carrier participating in the Exchange would have to furnish reasonable reports the board determined necessary to enable the executive director to carry out his or her duties under the proposed Act.


MI-HEART Program; Premium Subsidies


 For the purpose of reducing the number of uninsured individuals in Michigan, the MI-HEART Program would be created within the Exchange. The board would have to administer the Program in consultation with the DCH and the Department of Human Services.


The Program would have to provide subsidies to assist eligible individuals in purchasing health coverage. Subsidies could be paid only on behalf of an eligible individual who was enrolled in an eligible health coverage plan, and would have to be made under a sliding-scale premium contribution payment schedule for enrollees, as determined by the board. Eligibility for premium assistance payments would have to be determined as provided in the proposed Act. After consultation with representatives of any carrier eligible to receive premium subsidy payments, representatives of eligible small employers, representatives of hospitals that served a high number of uninsured individuals, and representatives of low-income health care advocacy organizations, the board would have to develop a plan for outreach and education that was designed to reach low-income uninsured residents and maximize their enrollment in the MI-HEART Program.

("Uninsured" would mean a resident who was not covered by a health insurance or coverage plan offered by a carrier, a self-funded health coverage plan, Medicaid, Medicare, or a medical assistance program.)


The board would have to procure eligible health coverage plans for the Program that included all of the following:

-- Wellness services.
-- Inpatient services.
-- Outpatient services and preventive care.
-- Prescription drugs.
-- Medically necessary inpatient and outpatient mental health services and substance abuse services.
-- Emergency care services.


Premium assistance payments would have to be made as provided in the proposed Act and under a schedule set annually by the board in consultation with the DCH. The schedule would have to be published annually. If the executive director determined that the amount in the Fund was insufficient to meet the projected costs of enrolling new eligible individuals, he or she would have to impose a cap on enrollment in the Program and notify the board, the Governor, and the House and Senate standing committees on appropriations, health, and insurance issues.


The Program would have to provide that an enrollee with a household income that did not exceed 100% of the Federal poverty level was responsible only for a copayment toward the purchase of each pharmaceutical product and for use of emergency room services in acute care hospitals for nonemergency conditions equal to that required of enrollees in the Medicaid program. The board could waive copayments upon a finding of substantial financial or medical hardship. No other premium, deductible, or other cost sharing could apply to an enrollee described in these provisions under the Program.


The Program would have to provide that an enrollee with a household income that exceeded 100% of the Federal poverty level but did not exceed 200% of the Federal poverty level was not responsible for a premium contribution payment that exceeded 5% of his or her gross family income.


An uninsured individual would be eligible to participate in the MI-HEART Program if all of the following conditions were met:

-- An individual's or family's household income did not exceed 200% of the Federal poverty level.
-- The individual had been a Michigan resident for the previous six months.
-- The individual was not eligible for any government program, Medicaid, Medicare, or the State Children's Health Insurance Program (SCHIP).
-- The individual's or family member's employer had not provided health coverage in the last six months for which the individual was eligible.
-- The individual had not accepted a financial incentive from his or her employer to decline the employer's subsidized health coverage plan.


An individual who was an employee of a small employer would be eligible to participate in the Program if all of the following conditions were met:

-- At least 75% of the employer's eligible employees seeking health care coverage through the employer were covered under an eligible health coverage plan.
-- The employer paid at least 33% of the premium contribution payment.
-- The employer agreed to participate in a payroll deduction program to facilitate premium contribution payments by employees who would benefit from deductibility of gross income under Federal regulations.
-- The employer agreed to make available in a timely manner for confidential review by the executive director any of the employer's information, documents, or records that the Exchange reasonably determined were necessary to determine compliance with the proposed Act.
-- The individual's or family's household income did not exceed 200% of the Federal poverty level.
-- The individual had been a Michigan resident for the previous six months.
-- The individual was not eligible for any government program, Medicaid, Medicare, or SCHIP.

("Small employer" would mean any person, firm, corporation, partnership, limited liability company, or association actively engaged in business that, on at least 50% of its working days during the preceding and current calendar years, employed at least two but not more than 50 eligible employees. In determining the number of eligible employees, companies that were affiliated companies or that were eligible to file a combined tax return for State taxation purposes would be considered one employer. "Eligible employee" would mean an employee who worked on a full-time basis with a normal workweek of at least 30 hours. The term would include an employee who worked on a full-time basis with a normal workweek of 17.5 to 30 hours, if an employer so chose and if this eligibility criterion were applied uniformly among all of the employer's employees and without regard to health status-related factors.)


All Michigan residents could apply to purchase health coverage through the Exchange. An applicant would have the right to receive a written determination of eligibility and, if eligibility were denied, a written denial detailing the reasons for the denial and the right to appeal any eligibility decision, provided the appeal was conducted pursuant to the process established by the board.


The Exchange would have to enter into interagency agreements with the Department of Treasury to verify income data for participants in the Program. The written agreements would have to permit the Exchange to provide a list of individuals participating in or applying for the Program, including any applicable members of their households, who would be counted in determining eligibility, and to furnish relevant information, including name, Social Security number, if available, and other data required to assure positive identification. The Department of Treasury would have to give the Exchange information on the cases of identified people, including name, Social Security number, and other data to ensure positive identification, name and identification number of employer, and amount of wages received and gross income from all sources.


MI-HEART Exchange Fund


 The bill would create the MI-HEART Exchange Fund within the State Treasury. Premium contribution payments and surcharges collected by the Exchange would have to be deposited into the Fund. The State Treasurer could receive money or other assets from any source for deposit into the Fund, and would have to direct its investment. The Treasurer would have to credit to the Fund interest and earnings from Fund investments. Money in the Fund at the close of the fiscal year would remain in the Fund and would not lapse to the General Fund. Fund money could be spent only as provided in the proposed Act.




Board Reports & Studies


 The Board would have to keep an accurate account of all Exchange activities and all of its receipts and expenditures, and would have to report annually at the end of the fiscal year to the Governor, the House and Senate standing committees on appropriations, health, and insurance issues, and the Auditor General. The Auditor General could investigate the Exchange's affairs, severally examine the Exchange's properties and records, and prescribe methods of accounting and the rendering of periodical reports in relation to projects undertaken by the Exchange. The Exchange would be subject to annual audit by the Auditor General.


Within two years after the Exchange began operation and every year after that, the board would have to conduct a study of the Exchange and the people enrolled in it and submit to the Governor and the House and Senate standing committees on appropriations, health, and insurance issues a written report on the Exchange's status and activities based on data collected in the study. The report would have to be available to the general public upon request. The study would have to review all of the following for the immediately preceding year:

-- The operation, administration, and costs of the Exchange.
-- The number of MI-HEART enrollees in the MI-HEART Program and the total amount of premium assistance payments made.
-- How the Exchange met its goals.
-- What health coverage plans were available to individuals and groups through the Exchange and the experience of those plans.


The experience of the plans would have to include data on the number of enrollees in the plans, plans' expenses, claims statistics, and complaints data. Health information obtained under the proposed Act would be subject to the Federal Health Insurance Portability and Accountability Act or regulations promulgated under it.


By January 1, 2011, the board would have to report to the Governor and to the House and Senate standing committees on appropriations, health, and insurance issues on progress in achieving universal health coverage in this State. The report would have to examine any trends in the number of uninsured individuals in Michigan since the proposed Act took effect and types and costs of health coverage available. The report also would have to make recommendations on methods to achieve universal health coverage in Michigan, including whether health coverage should be mandated and how a mandate would be implemented and enforced.

Senate Bills 280 and 283

The bills would require a policy or certificate to permit the continuation of hospital or medical care coverage for a child until he or she reached age 26, even if the child were no longer considered a dependent. Coverage under the bills would have to be provided at the same rate as that charged for dependent child status.


Senate Bill 280 would apply to a BCBSM certificate delivered, issued for delivery, or renewed in Michigan that provided for hospital or medical care coverage for dependent children. Senate Bill 283 would apply to a policy, certificate, or contract delivered, issued for delivery, or renewed in Michigan that provided for hospital or medical care coverage or reimbursement for hospital or medical care for dependent children.


If the MI-HEART Exchange board determined that certain sections of the Insurance Code and the Nonprofit Health Care Corporation Reform Act should be waived as provided in the proposed MI-Heart Act, then those sections identified by the board would not have to be provided or offered in an eligible health coverage plan. ("Eligible health coverage plan" would mean that term as defined in the proposed Act.)


The Insurance Code requires all HMO contracts to include, at a minimum, basic health services. Under Senate Bill 283, this requirement would not apply to HMO contracts that were eligible health coverage plans offered through the Exchange under the proposed MI-HEART Act.


Proposed MCL 550.1409b & 550.1409c (S.B. 280)
MCL 500.3519 et al. (S.B. 283)


Legislative Analyst: Julie Cassidy FISCAL IMPACT Senate Bill 278


Implementation of the bill would be contingent upon Federal approval of the proposed Michigan First Healthcare Plan. Negotiations on the structure and financing of this program are currently in progress and it is not certain how much State or local financial effort would be necessary to operate the MI-HEART Exchange. Financial resources would need to be devoted to the operation of the Exchange for a number of administrative functions outlined in the bill. The fiscal impact associated with operating the Exchange would be determined by the scale of the Michigan First program and the amount of Federal money available for administrative functions.


Increasing the number of residents of the State with health coverage would likely reduce the amount of uncompensated care provided by publicly operated health facilities. Reducing the amount of uncompensated care provided in the State would likely lead to a marginal reduction in the cost of health benefit rates, including those offered by State and local governments.

Senate Bills 280 and 283


Increasing the number of young adults eligible for inclusion on their parent's health insurance would likely lead to an indeterminate increase in health benefit cost for employers, including State and local governments that provide health coverage.


To the extent that the bills reduced the number of uninsured in the State, Michigan could see a small indeterminate decrease in Medicaid expenditure.


Fiscal Analyst: David Fosdick

Analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent. sb278,280,283/0708