Insuring 100,000, plugging shortfall

$2 billion O'Malley initiative readied for Assembly

Sun Exclusive

October 24, 2007|By Laura Smitherman | Laura Smitherman,SUN REPORTER

The Maryland General Assembly will consider a $500 million health care proposal to extend medical coverage to more than 100,000 uninsured residents during the special session called by Gov. Martin O'Malley to tackle the state's fiscal problems.

The proposal, in a session that begins Monday, resurrects ideas from a bill that passed the House of Delegates last year but died in the state Senate. President Thomas V. Mike Miller, who opposed expanding social programs in the face of a looming budget shortfall, projected to be $1.7 billion in the next fiscal year, now says he would support a health care bill if it didn't add to the deficit.

Broad outlines of the health plan to be introduced by the O'Malley administration emerged yesterday. According to legislative leaders, it would expand Medicaid eligibility for adults and offer subsidies to small businesses at a cost of about $250 million a year in state money by the time the programs are fully implemented in 2012, with the rest coming from federal matching money.

But finances could jeopardize the plan. O'Malley hopes to raise $2 billion though a series of tax increases and, possibly, revenue from legalized slot machines. If any piece of that package failed in the General Assembly, more money for health care could evaporate.

O'Malley held a news conference with his Cabinet secretaries yesterday to urge passage of his budget solution and warned that deep budget cuts will be needed if legislators don't act.

"The cost of health care is just so high and the consequences on working families so great for them to not have coverage," said John M. Colmers, Maryland's secretary of health and mental hygiene. "As the governor said, `Doing nothing does not make sense.'"

Health care reform has emerged as a heated issue across the country, with the number of uninsured Americans rising - Maryland alone has nearly 800,000 - and the number of employers offering insurance declining. Many state legislators say they are compelled to act because of a lack of action on the federal level.

In a well-publicized showdown this month, congressional Democrats failed to muster the votes to override President Bush's veto of a $35 billion expansion of the State Children's Health Insurance Program, which covers families who earn too much to qualify for Medicaid but too little to afford private insurance.

Meanwhile, states have had mixed results in trying to enact universal health care proposals that include Medicaid expansions and other reforms. Massachusetts and Vermont approved such plans last year. States still considering plans include California, Pennsylvania and Wisconsin.

The Maryland plan was hatched with input from Colmers; Del. Peter A. Hammen, chairman of the House Health and Government Operations Committee; and Sen. Thomas M. Middleton, chairman of the Senate Finance Committee.

Hammen and Middleton said the plan would expand Medicaid eligibility for adults from the current threshold - 40 percent of the federal poverty level - to 116 percent, or about $12,000 a year for an individual and nearly $24,000 a year for a family of four and would provide subsidies for small businesses and incentives for wellness programs.

"We put all the pieces together and forged a consensus," said Hammen, a Baltimore Democrat. "The big goal that I wanted to accomplish was coverage of more people through Medicaid. We rank among the lowest in the nation in terms of our coverage for Medicaid. Being the richest state in the nation, we should be ashamed of ourselves."

Middleton and Hammen said some revenue would be redirected from the state's uncompensated-care fund, which reimburses hospitals in the state for treating the uninsured, to cover some of the cost.

Lawmakers have also debated doubling the existing tobacco tax of $1 per pack, which is included in O'Malley's package, to fund expanded coverage. Middleton, a Charles County Democrat, said that money would not be dedicated to health care because it's an unstable revenue source, declining from $211 million to less in later years if, as expected, fewer people were smoking.

Instead, Middleton said, the health plan would be paid for with general funds, the availability of which depends on how many of O'Malley's tax ideas are approved. "We've all gone into this with the understanding that if the revenues aren't there, then the program won't be there," he said.

House Speaker Michael E. Busch, an Anne Arundel County Democrat and advocate for an expansion of health care coverage, noted that the higher rates hospitals in the state charge to cover the cost of treating the uninsured add an estimated $1,000 to the yearly premium of the average private family health plan.

"That's three or four more times than any family of four would pay through the sales tax increase," Busch said, referring to O'Malley's proposal to raise the sales tax rate from 5 percent to 6 percent.

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