By Mike Shields
KHI News Service
TOPEKA, Feb. 5
Legislators across the country are looking for ways to extend health insurance coverage to more people while also reining in soaring health care costs.
Those two goals are seemingly at cross purposes. But Edmund Haislmaier of the Heritage Foundation says he has a plan that can do both. That”s one reason he has caught the ear of policymakers in various states, including Kansas where he will come this week to pitch his model for a “health insurance exchange.”
According to the Heritage Foundation, prior to rejoining the think tank in 2005 as a research fellow, Haislmaier worked as a health policy consultant. From 1994 to 1998 he was director of health care policy for Pfizer, the pharmaceutical giant. Before that, 1987-1994, he was senior policy analyst for health care issues at Heritage.
He has written numerous papers on health policy topics. Among the most recent is “The Massachusetts Approach: A New Way to Restructure State Health Insurance Markets And Public Programs.” He is on the board of directors of the National Center for Public Policy Research. He has a B.A. in history from St. Mary’s College of Maryland.
In an interview with the KHI News Service, Haislmaier said his “insurance exchange” plan was first developed for the District of Columbia insurance commissioner in 2003 and 2004 in response to George Washington University”s decision to end its health plan.
Haislmaier said the plan had been open to people outside the university and had been popular with self-employed professionals and others. When the plan was shut down, many of its participants were left with no good, affordable options for coverage and began complaining to the D.C. insurance commissioner who worked to put together an affordable alternative. That”s when Haislmaier got involved.
“So, being in the District of Columbia and very familiar with the federal (employees health care) plan, we thought, can”t we do something like that? Can”t we do a system where people have what the federal government has: choice, portability. That was the process that kind of got us started,” Haislmaier said.
He said after 18 months work, 27 drafts and much “consultation with stakeholders” the plan was complete. But it didn”t pass, he said, because it lacked support from the mayor and other D.C. officials.
Haislmaier said he was later asked to explain his plan to Massachusetts officials as they looked for a solution to the problem of a rapidly growing uncompensated care pool, which they had created using a federal Medicaid waiver. He said Massachusetts adopted his concept but made several changes and additions, which is what he expects most states will do with his plan. He described his model as a “template” for state-specific “variants.”
Haislmaier”s model legislation would require all currently uninsured persons to participate or establish $10,000 escrow accounts to cover their own medical costs. The Massachusetts Connector has mandates for individuals and employers, though Haislmaier called the employer mandates in Massachusetts political “window dressing” that could not withstand a court challenge should it come to that.
Key Kansas legislators, including Sen. Jim Barnett, R-Emporia, and House Speaker Melvin Neufeld, R-Ingalls, have said they dislike the idea of employer or individual mandates.
Haislmaier said a variant of his model could work without either kind of mandate. But a necessary element of his plan, he said, is an immediate and large pool of participants.
Without that, “you would have a problem because you need large pooling,” Haislmaier said. “The problem is the thing works fine once you get it up to 60 miles per hour. So there really is an important question of how you create that big bang of a large pool. An easy way to do that is to require state government get into it. In a state where state employees have one plan and not much choice, employees might like moving into a plan that has defined contribution and more choice.”
Some critics of the Haislmaier model are suspicious that its true purpose is to remove from employers the burden of offering and subsidizing health insurance for their workers.
Haislmaier said the current system of employer-based insurance is crumbling anyway and the question is whether policymakers will stand by and watch that system collapse or create an alternative that provides employers some incentives to continue offering health insurance.
He said his plan would spare businesses some administrative chores while allowing federal tax benefits for their workers to remain intact. He said it also would allow health insurance for employees of small employers who currently can”t afford to offer coverage.
He also said his plan is fundamentally different from current public health insurance programs because it is not an “open-ended” entitlement. Instead, the state can draw the line on how much it will subsidize premium payments for participants and participants then buy the best plan they can afford.
“This approach is fundamentally different than what states have been doing for the past 15 years, trying to plug the gaps (in health insurance coverage) through expansion of Medicaid or by raising eligibility of SCHIP,” Haislmaier said. “My whole point is that approach is all product focused. It doesn”t make sense that we”re trying to plug the gaps. We decided: Wait a minute, we”re going to change the basic parameters of the system and then we”re going to let other people in the private market figure out what the people need. So this changes the system in two fundamental ways. It organizes the insurance market and provides portable, continuous insurance, one market with a common set of rules for everybody. Then on the government subsidy side, it moves from subsidizing institutions to subsidizing people, which is going to be cheaper. Those are the two big system changes.”
Mike Shields is a staff writer for KHI News Service, which specializes in coverage of health issues facing Kansans. He can be reached at
mshields@khi.org
or at 785-233-5443, ext. 123.