Perdue caught in middle with insurance plan

ATLANTA - Gov. Sonny Perdue readily concedes that his new plan to help reduce the number of Georgians without health insurance is a first step.

But that worries both those who are likely to be the initiative's strongest supporters and its harshest critics.

Advocates for the state's 1.7 million uninsured - 18 percent of the population - question the impact of helping about 30,000 employees of small businesses buy health coverage.

"The people of Georgia are ready for big solutions to their big problems," said Linda Lowe, an Atlanta-based consumer health advocate.

On the other hand, fiscal conservatives in the General Assembly are concerned that the Republican governor's first step eventually could lead to just what Lowe is calling for: something much bigger.

Rep. Earl Ehrhart, R-Powder Springs, warned that it could evolve over time into another entitlement program like PeachCare for Kids, which Georgia lawmakers recently had to bail out of a temporary federal funding shortfall.

"What happens when the money dries up?" asked Ehrhart, chairman of the House Rules Committee. "Who's going to pay for it then?"

The initiative, unveiled by Perdue last week, would allow sole proprietors in Georgia or businesses with 50 employees or fewer to purchase subsidized health insurance for their workers.

To be eligible, employees would have to work at least 20 hours a week and earn incomes less than 300 percent of the federal poverty level, or $62,000 a year for a family of four.

No mandate

Unlike Massachusetts, which enacted a law last year requiring every resident of the state to have health insurance, Perdue's program would be voluntary.

"The employer can choose to participate, and the health plans interested in offering the program can choose to come in," said Rhonda Medows, commissioner of the state Department of Community Health, which would administer the program.

The one requirement would be that participating insurance companies offer a "benchmark" plan with the same coverages teachers and state employees receive.

Other options would include a cheaper, more basic plan, an even less expensive high-deductible plan and a "specialty" plan tailored for people with multiple chronic diseases.

Perdue said he would ask the legislature for $20 million next year to launch the initiative on July 1. The state will seek $30 million in matching federal funds.

But those public dollars would account for only one-third of the cost. The rest would come from participating employers and employees.

No one argues with the need for such a program. A recent survey by the state chapter of the National Federation of Independent Business found that fewer than half of Georgia's small businesses are providing insurance coverage to their employees.

Wrong target

Some are questioning whether the initiative is aiming at the right groups.

Ehrhart said helping middle-income workers in small businesses buy health insurance does nothing for teachers and state employees, who were just hit last week with news that their premiums will be going up 10 percent in January.

"They make half the money these people make, and they're being left out," he said. "I can't sell that to the teachers I represent."

House Minority Leader DuBose Porter, D-Dublin, said Perdue's plan also wouldn't help low-income Georgians on Medicaid and even has the potential to do them harm.

He noted that the governor is banking on using savings from his Medicaid cost-cutting initiatives to help cover the publicly funded portion of the proposal.

"The money from this has to be picked up somewhere," Porter said. "Are you hurting people who are more vulnerable?"

Others are wondering whether the governor's plan will be effective for the group it is purporting to help.

Tim Sweeney, health policy analyst for the Georgia Budget and Policy Institute, said collecting two-thirds of the program's cost from the private sector and only one-third from the state and federal governments may force participating insurance companies to set premiums too high.

"It all comes down to how realistically affordable it will be," he said.

Spreading the risk

But Kirk McGhee, executive director of the Georgia Association of Health Plans, said increasing the number of Georgians with access to health coverage should drive down premiums for everyone.

"By having more people in the insurance pool, it will help the market," he said.

As for the small percentage of uninsured Georgians the governor's plan would cover, Sen. Judson Hill noted that what Perdue is proposing is essentially a pilot project.

Hill, R-Marietta, is pushing a plan of his own that would offer tax breaks to uninsured people willing to buy private health insurance as an alternative to employer-based coverage.

He said the governor's initiative dovetails well with his plan because, while Perdue is targeting middle-income workers, Hill's incentives are aimed at those making more than $60,000 a year.

The governor is going to have to overcome some strong reservations among his fellow Republicans in the legislature that his pilot project - if unchecked - could grow out of control.

During a presentation by Medows to a group of lawmakers on Thursday, Sen. Chip Pearson, R-Dawsonville, asked whether the state could yank the public money from the program "if it took off, at some point, down the road."

But Hill said the cost of not doing something to reduce the number of uninsured - just in bills for unnecessary emergency-room care - could end up higher than what either he or Perdue envision.

"I strongly oppose entitlements," Hill said. "(But) I've got an open mind. We need to be open to new ideas."

SideBar: At a glance

Here are key provisions in a health insurance initiative proposed by Gov. Sonny Perdue:

' Eligible businesses

Sole proprietors or companies with 50 or fewer employees

' Eligible employees

Work 20 hours or more a week and earn less than 300 percent of the federal poverty level, or $62,000 for a family of four

'Plan options

' Benchmark plan offering the same coverages as the State Health Benefit Plan for Georgia teachers and state employees

' Basic plan, with fewer benefits than the benchmark at lower premiums

' Health savings account, a high-deductible plan offering catastrophic coverage

' Specialty plan for those with multiple chronic diseases

' Cost

1⁄3 public dollars, divided into $20 million in state funds and $30 million in federal funds

1⁄3 from participating businesses

1⁄3 from participating employees