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Citizens’ Health Care Working Group
Public Hearing and Meeting

Thursday, May 12, 2005
Crystal City, VA



Randy Johnson, the Chair of the Citizens’ Working Group (CWG), called the meeting to order as scheduled; all CWG Members were present. Highlights of the discussion for the day are presented below.

Building the Foundation: Private Health Insurance: Employer-Based Insurance and the Individual Market

Paul Fronstin, Employee Benefit Research Institute, “Employment Based Health-Benefits Among Mid-Sized and Large Employers”
Deborah Chollet, Mathematica Policy Research, “Small Group and Individual Coverage”

See Paul Fronstin’s Powerpoint Slides and CWG-provided Comments.
See Deborah Chollet’s Powerpoint Slides and CWG-provided Comments.
For a verbatim record of each speaker’s statements, see official Transcript.


Randy Johnson: In my experience, most employers who self-insure do so in order to be able to design a single plan for all their employees, regardless of where in the country they work. Would any particular standard rules/laws encourage employers to expand coverage? Chollet indicated that standardization would not change employer behavior regarding decisions to self-insure or not. Fronstin responded that he believes we are moving to some standardization regarding administrative costs but that there won’t be significant changes. In response to a follow-up question from Patricia Maryland, Chollet indicated that the problem of uninsured workers is primarily one affecting low-wage workers, regardless of the size of the firms for which they work.

Michael O’Grady: What are other solutions for increasing coverage for employees of small firms, where most growth in employment is taking place? Can we do more with administrative fixes? Chollet reiterated that the problem is how to get coverage for low-wage employees; those who need coverage but have the least income. Subsidies are needed; higher deductibles or scaled down products won’t work. The solutions are difficult and there may be no easy fixes.

Richard Frank: Are we spending effectively and at sufficient levels for administrative expenses? Fronstin indicated that the payment mechanisms are becoming more complex and this may drive up administrative costs. Chollet commented that since we don’t know the cost of care going in for services and may not know the quality of services that are delivered, it is difficult to address the problem of the appropriateness of administrative costs.

Hearing: Public Sector Initiatives to Expand Coverage

Linda Bilheimer, Robert Wood Johnson Foundation, “State Strategies to Expand or Maintain Health Care Coverage”

See Linda Bilheimer’s Powerpoint Slides and CWG-provided Comments. For a verbatim record of the speaker’s statements, see Transcript.

Matt Salo, National Governors’ Association

(No accompanying slides). For a verbatim record of the speaker’s statements, see Transcript.

The NGA has been developing a Medicaid reform proposal. The Governors are facing major health cost increases in their budgets. Medicaid covers 53 million people and will spend $330 billion in 2005. Medicaid is a significant source of state expenditures; adding in the Federal funds, it is the largest budget item in state budgets, driving out spending on other items. For example, while state spending on health care has been increasing, funding for education has been declining. Clearly, sacrificing the education of the future workforce of America is not desirable. So, addressing the challenge of Medicaid is a major issue for Governors.

During the past five years, Medicaid caseload grew 40%. This was partly the result of the counter-cyclical nature of the program. However, as the economy has been coming back, there has not been a reduction in the demand for Medicaid. This is because people are getting low-wage service jobs; or jobs in other inndustries that are less able to provide health care coverage. Most new Medicaid beneficiaries are women and children who are less expensive users of health care; however, with 15 million new beneficiaries, they are still expensive. States believe that reform is needed. The NGA is looking at possible changes in a broad way: the problem is not merely waste, fraud, and abuse, or inefficiency or lack of success. There are three major sources of the heath care funding problem:

• Health care is innately expensive, vastly exceeding wage increases. The United States spends more per capita and has lower health outcomes than other industrialized nations. Health care IT has not kept up with other industries; there is a need for E-prescribing. We need to look at patient safety, quality.

• Employer-provided health care coverage has eroded. The public sector has been picking up the slack. Employer tax credits are worth exploring. Also, Medicaid underfunds providers.

• There is no rational, well-thought through approach to long term care. Medicaid is the single largest payer of LTC; it pays 2/3 of all nursing home costs. Medicaid has become the country’s de facto LTC insurance program. States can’t continue to pay for this and the demographics will prevent this continuing. We need to find a better answer.

Solving the problem of growth in the costs of Medicaid is more important than addressing the future Social Security fund shortfall. It will bankrupt the system sooner than Social Security. The NGA is seeking to work with the Federal government to address the unsustainable path that we are on. Medicaid is not alone in this; as Medicaid goes, so goes the rest of the health care system. There are things that can be changed and improved. For example, cost sharing rules in Medicaid were written in 1982 and haven’t been updated since.

Terry Stoller, Medimetrix, “Lessons from Community-Based Initiatives to Expand Coverage and Improve Care Delivery”

See Terry Stoller’s Powerpoint Slides and CWG-provided Comments. For a verbatim record of the speaker’s statements, see official Transcript.


Montye Conlan: A lot of Florida’s economy depends on tourism which, in turn, employs many low-wage service employees. Do we need to diversify the economy to address health insurance as well as help to empower Medicaid beneficiaries? Salo responded that there are already organizations whose focus it is to look out for beneficiaries (Families USA, etc). States must balance their budgets and currently they have little interest in raising taxes to fund public programs; but Medicaid tends to be the last item cut because of the Federal matching and it is also an economic development issue. But, States are finding that continued growth in Medicaid is unsustainable.

Frank Baumeister & Joseph Hansen: Please comment on NGA’s position on prescription drugs. According to Salo, Governors believe Medicaid pays too much for prescription drugs. It is unclear how to reduce this. States can’t operate a “closed formulary” – they can’t refuse to cover specific drugs. They can have preferred drug lists but cannot prohibit specific drugs. Nor can they decide on how much co-payments should be. Bilheimer commented that there is a tremendous amount of variability across the country.

Richard Frank: I’d like to see the NGA position papers for review. Preferred drug lists are actually quite effective. States are litigating with pharmaceutical corporations and getting quite a bit of information through this process about what the real costs are. This will be helpful. Bilheimer indicated that use of drugs has grown as a result of new therapies for disabling conditions such as AIDS and mental illness. Thus Medicaid has seen a broadening of its disabled population for which it pays for services or pharmaceuticals.

Montye Conlan: The “Healthy Kids” program in Florida was successful and became a national model. The program provided coverage for kids who were not Medicaid-eligible and screened and made referrals for Medicaid-eligibles.

Salo calls Medicaid the “Frankenstein of the health care system,” since it has been cobbled together over time and picks up coverage for a wide range of different populations with different care needs.

Michael O’Grady: In the welfare-to-work program, we’ve encouraged former welfare recipients to get jobs. These are likely to be low-paying jobs. These are people who will have difficulty affording health insurance. We’re not an employer-mandate country. Given that, what is realistic about what we can encourage employers to do, what’s viable? Stoller gave an example, in Jacksonville, FL, of an employer of low-wage employees with a generous benefit plan for full time employees. The employer agreed to provide some coverage; partnering with local providers who realized that they already provided care for the population. This project, funded with a local tax levy, is targeted at about 1,600 individuals. The effort, which includes the for-profit facilities, seeks to level the playing field for the providers. Bilheimer commented that a discussion is emerging regarding what constitutes a “minimum benefit package” and its potential role in expanding coverage. States are also considering whether they can create purchasing cooperatives that would be financially viable. Right now, the average premium for an employer health plan for a family policy is roughly equivalent to the minimum wage. Therefore, to make it worth providing health care coverage, an employer must basically double the minimum-pay worker’s productivity in order to reach the break even point.

Montye Conlan: Beneficiary groups may need additional representation and advocacy activity within their individual states in order to succeed at obtaining legislative changes.

Hearing: Private Sector Initiatives to Expand Coverage

Ken Sperling, CIGNA, “National Health Access” Program
Anthony Tersigni, Ascension Health, “Private Initiatives to Expand Coverage”

See Ken Sperling’s Powerpoint Slides and CWG-provided Comments.
See Anthony Tersigni’s Powerpoint Slides and CWG-provided Comments [and speaker's prepared comments].
For a verbatim record of each speaker’s statements, see Transcript.


Michael O’Grady discussed with Ken Sperling a number of questions concerning his proposed plan’s design details, implementation expectations, how different levels of the plan would operate, and the administrative costs implied.

Catherine McLaughlin sought clarification regarding the populations to whom the plan would apply. Sperling indicated that an initial coalition of 60 companies would participate. He also clarified that the plan applied to employees ineligible for other health care coverage; it would also apply to the dependents of the covered employees. While the coverage under this new plan may still be out of reach for many employees, it will provide an option not currently available.

Richard Frank: Regarding the Ascension Health access model and the creation of special districts: would there be special levies on property taxes? And if so, how would one avoid problems associated with levies on low-income districts? Tersigni agreed care is needed to fund the activities and avoid hurting poor districts.

Joseph Hansen: Regarding the HR Policy Association, if the rates are related to age, what would they be? Sperling indicated that for a 50-60 year old individual, it could be $500 per month but this was still better than not being able to obtain insurance at all.

Michael O’Grady: How do Ascension-developed projects work? Tersigni indicated that the facilities develop collaborative partnerships with other public and private providers and work to create a more seamless continuum of access and care for the individuals being served.

Randy Johnson: What is Ascension doing to advance interoperability of IT? Tersigni indicated that they are consulting closely with David Brailler (National Coordinator for Health Information Technology,, of the Department of Health and Human Services) on these issues while they also proceed to work on coordinated record-keeping. Tersigni indicated that the IT work is essential in order to assure effective quality care. Michael O’Grady observed that while it was useful to work with the National Coordinator; facilities needed to proceed rapidly on their own as well to establish and pursue IT-related initiatives.

Montye Conlan: Regarding the slide illustrating the patient who went to a second emergency room on the same day; what would happen to them? Tersigni indicated that the system would work to find the right place for the patient and would work to establish a “medical home” and work to identify a physician who would accept responsibility for the patient.

Dorothy Bazos: What does “establishing a medical home” mean? Tersigni explained that there is no “assignment” per se; however, individual physicians are asked to accept a specific number of patients who need care.

Randy Johnson: Asked for additional clarification regarding the HR Policy Association plan. Sperling responded that small employer insurance coverage is very volatile and their plan may address this problem.

Christine Wright: How would it be possible to apply what Ascension or HR Policy Association proposes to the for-profit hospital sector? Tersigni indicated that Ascension activities can only be applied to its own activities. Sperling indicated that they believe their approach provides a means by which businesses could make insurance available without burdening themselves.

Therese Hughes also asked for clarification regarding the HR Policy Association plan. Sperling indicated that the 1.3 million employees eligible for the new program, across the 60 companies participating in the plan, are only the individuals to whom the companies are not currently offering other insurance to; however, because some of these employees may have other sources of insurance, through a spouse, for example; the expectation is that only about 10-15% of the individuals will choose coverage under the new plan.

Richard Frank: What would be the cost implications of the Ascension approach if applied more broadly? What do you do about various situations in which not everybody is “pulling his weight”? Tersigni indicated that at the 12 sites they are working in, they have gotten everybody to participate. CWG Members commented that, in some markets, it may be more difficult to get a coalition to stay together because good will alone will not always succeed. Mike O’Grady agreed that although there will be a problem with some free-riders, non-profits have a role in serving those who are not covered so there may be a greater willingness among them to provide the care needed. Tersigni indicated that, in the Ascension project, facilities are not sharing funds but rather are sharing the needed care so that “the partners have their fair share of the burden.”

Working Group Meeting

Jon Comola and Marsha Comstock, Wye River Group on Health Care, briefly presented some thoughts about the work of the Citizens’ Health Care Working Group in carrying out its statutory responsibilities and how they might assist in this work. Their web site is

Their February 9, 2005 correspondence with Larry Patton, AHRQ regarding the CWG activities is attached (see Correspondence).

Summary of April 11-12, 2005 Meeting in Rockville, MD

Therese Hughes and Montye Conlan provided corrections to the Summary from the April 11-12, 2005 meeting of the Citizens’ Health Care Working Group. The Members agreed to be listed by name, without affiliation. Richard Frank requested that future summaries provide clearer indication of the subjects discussed. The April summary was accepted as modified with the above corrections.

Next Series of Hearings

(See Slides)

The CWG discussed possible dates and locations for field hearings. Richard Frank suggested that the field hearings focus on various populations using the resources and reflecting the particular realities of each site chosen, as well as addressing health care issues not net sufficiently explored. Michael O’Grady recommended that the sufficient attention be given to assuring balance at the hearings, making sure that individuals from all sides are consulted and engaged in participating. Further, the schedule of sites and participants needs to be considered sufficiently flexible so that if a particular site or participant were unavailable, necessary adjustments could be made as needed. Joe Hansen pointed out that travel time needs to be considered as well as the actual hearing dates, when scheduling the hearings.



Randy Johnson, Chair
Catherine McLaughlin, Vice Chair
Frank J. Baumeister, Jr.
Dorothy A. Bazos
Montye S. Conlan
Richard G. Frank
Joseph T. Hansen
Therese A. Hughes
Brent C. James
Patricia A. Maryland
Rosario Perez
Aaron Shirley
Deborah R. Stehr
Christine L. Wright
Michael J. O’Grady


George Grob, Executive Director
Andy Rock
Caroline Taplin
Ken Cohen


Paul Fronstin, Employee Benefit Research Institute
Deborah Chollet, Mathematica Policy Research
Linda Bilheimer, Robert Wood Johnson Foundation
Matt Salo, National Governors’ Association
Terry Stoller, Medimetrix
Ken Sperling, CIGNA
Anthony Tersigni, Ascension Health
Jon Comola, Wye River Group on Health Care
Marsha Comstock, Wye River Group on Health Care

Editor’s note: The Citizens’ Health Care Working Group is an independent body whose members were selected by the Comptroller General of the United States. The Agency for Healthcare Research and Quality provides administrative support as directed by the Medicare Modernization Act.

For more information, contact the Working Group at (301) 443-1502.

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