Pittsburgh Association of Health Underwriters

Hopefully you have had a chance to read the e-mail I sent to you on October 22^nd recapping the trip 12 PGH-AHU members made to Harrisburg on October 17^th for our State Day on the Hill.  In that e-mail I detailed our efforts with respect to the expansion of CHIP.  Unfortunately in the days that followed the CHIP expansion bill did move forward and was passed.   The Governor signed the bill late last week.   Below you will find a brief summary of the expanded CHIP. 

Monthly premiums will be based on a family's income:

• $0 a month per child for a family earning less than 200% of the federal poverty level.

• $36 a month per child for a family earning 200% -250% of the federal poverty level ($45,000 - $50,000 for a family of four);

• $50 a month per child for a family earning 250% -275% of the federal poverty level ($50,000- $55,000 for a family of four); and

• $57 a month per child for a family earning 275% -300% of the federal poverty level ($55,000-$60,000 for a family of four).

Families earning above 300% of the federal poverty level ($60,000 for a family of four) that are unable to find or afford private health insurance coverage for their children would be permitted to purchase coverage at the state cost as long as they meet certain eligibility requirements.  These families must show that coverage was denied due to a pre-existing condition, the cost of private coverage totals more than 10 percent of the family's annual income or the cost of private insurance is one and a half times (150%) more than the state monthly per child cost for Cover All Kids

A key concern raised during the negotiation process was the possibility of parents dropping their private health insurance coverage in order to purchase the "Cover All Kids" plan.  To discourage this, the program has a waiting period that requires families show that their child has not had coverage for the last six months, unless the child is two years of age or less.  This "go bare" period is not required for infants, children who have lost coverage because of a parent's job loss or kids that are moving from another public insurance program.

The original language proposed by the Governor’s office would have expanded eligibility up to $70,000.  Monthly premium levels are also higher than originally proposed.   The final bill also contains tougher language regarding the issue of “crowd out” that hopefully will help reduce its prevalence.  

As you can imagine CHIP expansion was a very politically charged issue.  I thought you would be interested in seeing responses that two of our members received from State Representatives they met with, one a Republican and the other a Democrat.    

The following response was received by a PAHU member from the central part of the state from State Representative Steve Nickol (R-York), a member of the House Insurance Committee.

“We met when you visited Capitol Hill the other week with a delegation of health underwriters.  One of the subjects of concern was the Governor's Cover All Kids initiative.  When the House Republican Caucus met on the initiative, we learned that the Senate and House Leadership had agreed to pass the Governor's initiative as part of final budget negotiations in early July, 2006. The agreement, however, was not a blank check, and a number of changes were made to the Governor's original proposal.  Among the changes:  

• The uninsured period required for qualification was originally up to six months, and that has been changed to not less than six consecutive months.  

• For the premium assistance program, there was no prescribed uninsured period, and in the final bill children will have to meet the uninsured period.

• A subsidy cap had been proposed for family incomes 350% of poverty level and families with higher incomes could buy into the program.  In the final bill, the subsidy cap is 300% of  poverty, and families over this level would have to demonstrate hardship to be able to buy into the program.

• Premium payments levels were hiked, with the maximum for the subsidized program rising from $32 in the Governor's Plan to $57 in the final plan.

• The final plan is now also subject to a sunset clause forcing the General Assembly to revisit the program or it will expire in Dec. 2010.

The above were not all the changes, but I think covered the major ones.  I am still quite concerned over the direction of Cover All Kids, but with Leadership having agreed to run the legislation its success was virtually assured.  Few legislators are going to vote against insuring low income children a handful of days before the General Election.  At least the General Assembly was able to get some concessions before approving the program.  A firm uninsured period should help buffer the issue of crowd out. Hopefully, this information will be of some interest.”

The following was the response received by PGH-AHU member, Bob Nelson, from State Representative Mike Veon (D-Beaver), the House Minority Whip. 

“Expanding healthcare coverage to families has been one of my goals as a legislator from the beginning. State-sponsored health insurance programs such as the CHIP plan enable thousands of children to have adequate healthcare coverage that otherwise would not. In reference to your letter, no system can be perfect and there are indeed some flaws in these much-needed programs. Recently, the House of Representatives passed the “Cover All Kids” legislation, which greatly expands the level of coverage available to millions of children around the Commonwealth. With this in mind, this legislation provides for a go-bare provision, making individuals eligible only if they have been without coverage for six months. This particular provision was intended to deal with the concerns you raised in your e-mail. As always, your opinion will be respected and considered. I will urge my fellow colleagues in the General Assembly to consider the issues you pointed out to me.”

I believe it is particularly important that as health insurance agents we do two things with respect to CHIP expansion.  First, we should not encourage employees to drop their employer-sponsored coverage in favor of CHIP enrollment.   It remains to be seen how vigilant the Department of Insurance will be in monitoring the proposed enrollment of individuals who have not met the six month waiting period.   Second, we should keep notes regarding any known cases of crowd-out that can be compiled and used later, if necessary, to demonstrate that the problem is real.   I don’t expect you to turn your clients in if they choose to encourage crowd-out on their own.  However, anonymous records would be helpful.  

If you have any questions or comments regarding CHIP expansion please contact me.   Our association will continue to work hard to protect the interests of the public and our hard working members like you.   It is a very interesting and challenging time for our industry.  Thank you for your support.

Doug Moore

PGH-AHU Legislative Chair