Preserving and Expanding Health Insurance

By Lt. Governor John C. Carney, Jr.

In the final weeks of the legislative session that ended on June 30th, members of the General Assembly heard and supported many ideas about how to use more than $250 million dollars in "surplus" revenue available for fiscal year 2006, which began July 1.

As former Secretary of Finance under Governor Carper, I know how difficult it can be to address different priorities in the budget. Tax cuts, road improvements, school construction and other high priority projects are always on the list of potential uses for "surplus" revenue. With more than 10 percent of our population living each day without health insurance, the circumstances of our uninsured and underinsured residents merit the attention of our elected officials in those debates over budget priorities.

This year the money was earmarked largely for new roads and transportation improvements, school construction and other capital projects. In addition, the Legislature and Governor approved a significant reduction in the state's gross receipts tax. This tax cut will mainly benefit the larger businesses in our state, including auto manufacturers, in Delaware, making them more competitive as they compete in the global marketplace.

While that is a good thing, the businesses that pay the gross receipts tax - those non-manufacturers that generate more than $80,000 in revenue per month or manufacturers who generate $1 million per month - make up a relatively small percentage of businesses in Delaware. Most of the small businesses in our state do not reach those thresholds. That means they don't pay a tax on their gross receipts and won't benefit from the reduced rate.

Many small businesses would, on the other hand, benefit from accessible, affordable health insurance and the General Assembly agreed to take a closer look at the costs associated with a publicly subsidized health insurance purchasing pool and an expansion of coverage under the Children's Health Insurance Plan (CHIP).

As I travel across Delaware and listen to the concerns of small business owners and sole-proprietors, it is clear to me that there is no bigger concern to them than the rising cost of health insurance. As premiums have risen 10 percent, 15 percent and 20 percent annually for some in recent years, continuing to pay for health insurance for themselves and their employees becomes a difficult monthly decision.

A statewide purchasing pool - as envisioned by Insurance Commissioner Matt Denn in S.B. 146, which was sponsored by Sen. Patti Blevins - would address the need to preserve coverage for those small businesses and individuals that are having trouble meeting the rising costs of health insurance from month to month. The basic idea is that by making insurance available to all individual Delawareans, you can create a pool large enough to lower premiums for everyone in the pool. Additionally, a reinsurance mechanism supported by public funds, would further lower premiums by insulating the insurance carrier from claims over a certain dollar amount.

A statewide purchasing pool would provide even the smallest businesses of one or two employees more affordable health insurance. After talking to many small business people around the state, I can tell you that there is no other expense that is a constant concern for them like health insurance. By making it affordable, the state would be providing those businesses a real competitive boost and helping them preserve coverage for thousands of employees.

The state also has an opportunity to help working people with incomes between 100 percent and 200 percent of the Federal Poverty Level who have an even tougher time purchasing health insurance. Although most of these people have jobs and work hard, many of their employers don't provide health insurance and they aren't eligible for government programs like Medicaid.

Expanding CHIP - which is now available to children who live in households with incomes between 100 percent and 200 percent of the Federal Poverty Level - to include the parents of those covered children, would help many low-income people finally gain access to health care. That would create a continuity of care that would benefit entire families.

The Delaware Health Care Commission, which I chair, has been working on finding alternatives to improve affordability and accessibility in health care for several years. The Commission is currently involved in a planning initiative funded by the federal government. A number of ideas for improving access to health insurance and for addressing the affordability of health insurance for small business have been evaluated as part of this planning process.

In its June meeting, the Commission voted to recommend that the Governor and the Legislature consider funding the two previously mentioned proposals - a statewide purchasing pool and an expansion of CHIP. At its recent strategic planning meeting, the Commission reaffirmed its support of these proposals.

I applaud the General Assembly for agreeing to take a hard look at proposals that address the health insurance needs of small business and the low-wage workers in Delaware. Although our state is ranked among the top states in the country in terms of the lowest percentage of uninsured people, our overall rank is little consolation to those without insurance.

The Office of Management and Budget has been tasked by the Legislature to assess the impact and benefits of these proposals. If our economic situation remains strong, these proposals should be made a top priority for funding next fiscal year.