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Pipkin aims at health care crisis

Proposal would allow insurance carrier choice

Friday, Nov. 25, 2005

A state senator has proposed an alternative health care system in which Marylanders would choose an insurance carrier without requiring involvement by their employers while avoiding an expansion of government.

‘‘This plan is a consumer-driven plan, rather than government-driven or employer-driven,” said its chief proponent, Sen. E.J. Pipkin (R-Dist. 36) of Stevensville.

Pipkin calls the plan CHOICE, for Consumer Health Open Insurance Coverage.

Under CHOICE, individuals would select plans that must cover hospital, surgical, ambulatory patient and prescription drug charges. Companies could tailor coverage with different benefit packages and co-payment schedules, which would be approved by the Maryland Insurance Administration.

Employers could continue to help employees pay for coverage. Participants also would be eligible for tax credits of $500 for an individual and $1,000 for a family — an effort to make the plan appealing to the uninsured.

Age-adjusted rates would be offered. Younger, and presumably healthier, participants would be charged less than older, and presumably sicker, participants.

The program would replace the small-group market coverage, where the state tries to provide health care to small companies.

Glenn E. Schneider, executive director of the Maryland Health Care Initiative, an advocacy group, criticized the plan because it eliminates consumer protection, leading to cut-rate, but high-cost, health coverage.

Schneider’s organization has proposed increasing the state’s cigarette tax a dollar to $2 a pack to provide health coverage to the uninsured. No lawmaker has signed on to the plan, he said.

Pipkin’s plan would: *Allow individuals to select plans that must cover hospital, surgical, outpatient and prescription drug charges. *Include tax credits of $500 for an individual and $1,000 for a family. *Offer age-adjusted rates. *Replace small-group market coverage for small businesses. *Eliminate regulation of health service expansion, or certificates of need. *Kill state agency that sets hospital rates by 2008.

Pipkin said he would offer the proposal in the 2006 General Assembly as a substitute for the so-called Fair Share Health Care Act bill, which would require companies with at least 10,000 employees to spend 8 percent of their payroll on employee health care benefits.

Gov. Robert L. Ehrlich Jr. (R) vetoed that measure — dubbed the Wal-Mart bill because it targeted the retail giant — but supporters are lining up votes for an override at the start of the 2006 legislative session.

‘‘I believe absolutely the Fair Share bill is a bridge to nowhere for Maryland health care,” Pipkin said.

He restated what critics have zeroed in on: The number of employees will gradually diminish to include all businesses and the amount of the coverage will gradually increase.

‘‘Eventually we will have state-run health care, one slice at a time,” Pipkin said.

One of the Wal-Mart bill’s main opponents, Maryland Business for Responsive Government, has worked on the sidelines to get a proposal like Pipkin’s offered, said its executive director, Robert O.C. ‘‘Rocky” Worcester.

‘‘We just want to get the discussion going. There’s no discussion of alternatives” to the Wal-Mart bill, Worcester said.

Schneider faulted the tax credit portion of Pipkin’s plan because credits have not been effective in expanding health coverage for the uninsured. Uninsured individuals tend to have lower incomes and cannot afford a tax credit that would not arrive for a year after the expense, he said.

However, Michael Freeman, executive vice president of the Healthcare Leadership Council, a trade group in Washington, disagreed. He said Congress in 2002 provided health care tax credits to workers who lost jobs to international trade agreements. The credits have helped those workers find coverage, he said.

‘‘You’re really looking at tax credits to close the gap, not pay the whole bill,” Freeman said.

Pipkin’s proposal also envisions eliminating the state’s power to decide where health facilities can be built and what hospitals can charge.

The Maryland Health Care Commission requires health organizations to acquire a ‘‘certificate of need” before expanding services. The system is supposed to prevent providers from passing on the costs of unneeded services to patients.

Critics say it prevents innovation. Shady Grove Adventist Hospital in Rockville lost a fight with the commission to build a satellite emergency care center in Germantown. The legislature overruled the commission, and the center is proceeding.

‘‘It’s time for the certificate of need process to go. It’s outlived its usefulness,” Pipkin said.

The state Health Services Cost Review Commission sets hospital rates, artificially keeping them high to cover the cost of care to the uninsured. Pipkin’s plan would allow the HSCRC to sunset in two years.

Abolishing the commission would endanger hundreds of millions of federal aid, Schneider said. Medicare has agreed to these higher charges so eliminating the commission would threaten the flow of dollars from Medicare, he claimed.

Pipkin dismissed the criticism.

‘‘It’s a myth perpetuated by people who want to keep the status quo,” he said.

Other states have moved away from rate control without losing the money, Pipkin said.

Nancy Fiedler, a spokeswoman for the Maryland Hospital Association, said the organization would see elimination of the HSCRC and the CON process as a step toward higher health care costs.

Senate Finance Chairman Thomas McLain Middleton, a strong supporter of the Wal-Mart bill, said he had not seen Pipkin’s proposal and reserved judgment on whether it would be an alternative.

‘‘I’m willing to look at anything that will help improve the growing number of uninsured and underinsured Marylanders,” said Middleton (D-Dist. 28) of Waldorf.

‘‘If it’s a viable proposal then it will certainly get its due consideration,” he said.

Ehrlich spokesman Henry P. Fawell said the governor has not taken a position on the Pipkin plan.