S. 1198 (Smith)

Name of new program
No provision

Target population(s)
Uninsured individuals and those who have incurred high unreimbursed out-of-pocket health care costs or have exhausted their Medicare or Medicaid coverage and any additional private insurance.

Eligibility
Separate demonstration projects would be developed for two categories of eligible individuals: (1) individuals who are not eligible for Medicare or Medicaid and who have exceeded $10,000 in out-of-pocket health care costs in a year or an adjusted amount based on the average out-of-pocket costs of individuals with catastrophic illnesses in a state for the year. In no case could the amount be less than $8,000 or more than $15,000 in out-of-pocket costs for the year, or individuals who have exhausted their eligibility for Medicare or Medicaid benefits and any additional private health insurance; and (2) uninsured individuals who lacked insurance coverage during the one year immediately prior to applying for coverage under the demonstration project and small businesses that have not offered employer-sponsored coverage within a one-year period.

Types of coverage
The demonstration projects for those individuals eligible under the first set of criteria would use state high risk pools, reinsurance mechanisms for small businesses, public or private arrangements for the provision of affordable coverage to cover catastrophic expenses, and any combination of such arrangements. In designing the projects for those individuals and small businesses eligible under the second set of criteria, the Secretary would be required to use a catastrophic insurance product administered by private health plans that is sold in both the individual and small group insurance markets. Such products would have to offer a deductible of not less than $5,000 for an individual ($7,500 for a family), a deductible that is indexed to the individual’s or family’s income, or an adjusted deductible amount based on the average out-of-pocket costs of individuals or families, but in no case lower than $2,500 for an individual ($5,000 for a family). The products would also have to include preventive health services based on the recommendations of the U.S. Preventive Task Force, including at least 1 primary care office visit. In addition, they would have to require reasonable co-insurance as determined by the state administering the demonstration project, in consultation with the Secretary.

Premiums
Not specified.

Government subsidiaries
The Secretary would be required to subsidize the private insurance catastrophic coverage offered through the demonstration projects to provide an affordable insurance product and could provide subsidies on a sliding scale to offer a more affordable product for individuals in the individual and group market earning below 200% FPL. In addition, the Secretary would be required to consider subsidizing the cost of such catastrophic product for small businesses by using reinsurance mechanisms or other public and private partnerships.

Financing
The Secretary would be required to expend not less than $50 million of total amount of unexpended Medicaid state disproportionate share hospital (DSH) allotments. Permits a state to contribute other public funds than otherwise obligated Federal funds, and an employer could contribute private funds, to a demonstration project funded under this section.

Effective date
Effective

Administration
At least 2 demonstration projects would be established under Medicare to provide coverage to the target group of individuals without Medicare or Medicaid but with high out-of-pocket costs or have exhausted their Medicare or Medicaid coverage and any additional private insurance.

At least 2 demonstration programs would be established under Medicaid to provide catastrophic coverage, including prevention benefits, to individuals who do not have health insurance coverage and qualifying small businesses.

Any remaining funds could be used for additional demonstration projects.

The Secretary of HHS would be required to ensure that the demonstration projects were conducted in a way that would, to the extent practicable, allow for comparisons of the information resulting from the evaluations. Demonstration projects would have to be completed by no later than 6.5 years after enactment. Starting 18 months before the end of the projects, the Secretary would be required to complete an evaluation of the projects to determine their effects on accessibility of coverage; the length of time individuals participated in and maintained coverage and, with respect to each geographic area of the demonstration project, the impact on the amount of charity or other uncompensated care furnished by providers participating in the projects; the impact of insurance rates in the commercial market; and the impact on the number of medical bankruptcies. The evaluations would also indicate whether the projects should be continued or modified, as the Secretary deemed appropriate.

A state seeking to participate in a demonstration would apply to HHS. In general, the Secretary would be required to consider the current structure of a state’s programs to assist individuals with catastrophic health care costs and those who are uninsured; determine what parameters for the demonstration project would be least intrusive to the state's existing structures; and consider the overall health status of the state, the age demographics of individuals with high health care costs and of uninsured individuals and the historical health care costs and efficiency of the state's health care system. Requires the Secretary to select as a demonstration project site the state in which (according to the Hospital Referral Region of Residence, 1994-1995, as listed in the Dartmouth Atlas of Health Care 1998) the largest metropolitan areas of the state had the lowest percentage of Medicare beneficiary deaths in a hospital when compared to the largest metropolitan areas of each other State and the percentage of enrollees who experienced intensive care during the last 6 months of life was 21.5 percent.

Other provisions in bill
Within 3 years of enactment, the Secretary would be required to submit to the Senate Committee on Finance and the House Committee on Ways and Means a preliminary report on the progress made in the demonstration projects. Not later than 30 months after the implementation of the demonstration projects, the Secretary, in consultation with the participants in the projects, would be required to submit to the congressional committees an interim report. Not later than the date on which all projects end, the Secretary would be required to submit to the congressional committees a final report including the results of the evaluation and recommendations for appropriate legislative changes.