A Cure for What Ails Us?

Breaking down Gov. Rendell's ambitious health-coverage plan.

by Tom Namako and Doron Taussig

Illustration by Matthew Smith

Pulling surgical staples out of your boyfriend's head. Yanking a tooth out of your mouth with vinegar as a sterilizer. Breaking a leg and ending up homeless.

Welcome to health care in Pennsylvania.

Lately, Americans have been growing more and more dissatisfied with the state of our health care system. Between Michael Moore's Sicko and the leading Democratic presidential candidates � all of whom have committed to major health care reform � there seems to be a national movement toward universal coverage. There's a chance that Pennsylvania will be in the vanguard of this development.

On the cover of this week's City Paper

This fall, the state Legislature will consider Gov. Rendell's "Cover All Pennsylvanians" plan, which aims to eliminate the existence of the uninsured by reducing health-insurance costs so everyone can afford to buy into a plan. (You can read it at www.ohcr.state.pa.us.)

But health care is a complex and contentious issue, and neither the bill's passage nor its success is guaranteed. We consider in this issue the current state of health care here in Pennsylvania and address, in plain English and classic Q&A style, some of your likely questions about how Gov. Rendell's plan would work (if it were to pass the Legislature).

So brace yourself � this might sting a little.

Not exactly. Cover All Pennsylvanians (CAP) is a somewhat misleading name. Gov. Rendell has concocted a plan that would offer cheap insurance to people who are presently uninsured. It wouldn't be mandatory, so it wouldn't be universal.

Basically it means that the government is going to offer to subsidize your purchase of private insurance so you can get it cheap.

Here's how it works: You choose a participating insurer (it's too early yet to say what your options will be). Based on your income, you pay the insurer a monthly fee � anywhere from $10 if you're single and make under $10,200 up to a maximum of $280 if you're single and make more than $30,600. The government will cover the difference between your monthly payment and what the insurer would normally charge, and you'll receive that company's "basic" coverage: checkups, emergency care, prescriptions, emergency dental and other services.

The state figures out a household's total income by looking at the federal poverty level, which changes with the number of people making money in your home. Rendell's office still hasn't figured out how much each person would pay, but preliminary numbers for 2007 look like this:

1) If you live in a home that brings in up to $20,420 total, there aren't any monthly payments. You would be responsible for normal co-payments for doctor visits and prescriptions;

2) If you live in a home that makes between $20,420 and $30,630 a year, each person would pay a monthly amount that is yet to be determined;

3) If your household makes more than $30,630, each person would pay about $280 each month;

4) If your employer offered you health care through Rendell's plan, you could expect to pay as much as $70 per month.

Yes. You'll pay your fee, and the government will pay the rest.

Rendell's plan includes four main funding strategies. The first, and most controversial, is new taxes. The governor wants to impose new levies on the 35 percent of businesses in Pennsylvania that don't offer coverage to their employees. The first year's taxes will be modest, but will increase every year the business doesn't offer health care to its workers. The fourth year, the business will have to pay 3.5 percent of every employee's salary to help pay for CAP.

The second is federal funding. Amy Kelchner, spokeswoman for Rendell's Office of Health Care Reform, says the program hopes to get $200 million in its first year. There's lots of money the feds are willing to grant programs like this, Kelchner says. The catch is that it could take several months for approval.

The third strategy is redirecting $31 million that Pennsylvania won in a lawsuit against tobacco companies to CAP.

The fourth is to reduce health-care costs. Rendell would like to ban smoking from all public places, which he says will create a healthier population. He'd like to amend state laws so that certain services now performed by doctors (expensive) can be performed by nurses (less expensive). And he'd like to change the state's policy on medical errors and hospital-acquired infections. Say you're in the hospital for a tonsillectomy, and you get an unrelated infection from a nurse because he or she didn't wash his or her hands. Right now, your insurance company pays for your prolonged hospital stay. Rendell's bill would force the hospital to pay for it. The risk here is that hospitals will be less inclined to keep patients longer. The benefit is lower insurance costs � Rendell's Office of Health Care Reform says these changes could save the system at least $3.4 billion a year.

The total cost to run the insurance program the first year is an estimated $600 million, and the Rendell administration thinks his funding plan can cover it. But to answer your question: There's no way to know at this point.

Not really � insured people aren't eligible. If you're the guy paying a $1,300-a-month premium, getting into the plan involves taking advantage of a loophole. You would have to take a gamble by dropping out of your current plan, and being uninsured for either 90 or 180 days, depending on your income. Then, you'll be eligible for CAP.

Oh yes. Rendell actually introduced CAP to the Legislature this past spring but it never reached a full vote. Opponents include smallbusiness owners, who don't like the new tax on businesses that don't offer health coverage, and hospitals, which stand to lose money both by paying for hospital-acquired infections, and because of the smoking ban and changes in training required to perform certain services.

It's too early to say how specific votes will shake out, but these are powerful lobbies. House Speaker Dennis O'Brien, who represents parts of Northeast Philly, has said that the bill would have to change a lot to gain approval from the legislature. Rendell himself says he thinks the chances of passage are 50-50.

Kelchner, the plan's spokesperson, says that if the House and Senate passed CAP and Rendell signed it into law tomorrow, she hopes it would be up and running by July � or about a year from approval. That is, of course, if all of the funding is in place.

In the 1990s, Tennessee, Oregon, Hawaii and Washington state all experimented with some form of government coverage. In all four cases, the states' funding mechanisms proved insufficient. Unlike the federal government, states can't run a deficit during economic downturns, and the programs were either eliminated or drastically scaled back.

More recently, Maine, Vermont and Massachusetts all introduced state-subsidized insurance plans. The first two, like Rendell's plan, involve private insurers and aim to cover only people without insurance. The Massachusetts program is mandatory � everyone in the state has until the end of this year to sign on, or face penalties. California and Illinois are currently considering proposals to get involved in health insurance.

The Rendell plan is a hodgepodge of all these others, and more.

Touchy subject. This month, The Washington Monthly published a story arguing that "providing health care for all citizens is one of those tasks, like national defense, that the states are simply unequipped to manage." It cites a litany of difficulties that state health initiatives have encountered and concludes that, if state plans are doomed to fail, states shouldn't even try because their failure will squelch any hope for a national plan.

The story has come under attack from other proponents of government insurance. Nathan Newman, of the Progressive States Network, posted a response on the blog Talking Points Memo arguing that states' records are better than the article suggests, and that in the past 15 years, states have provided insurance to millions who didn't previously have it. But Newman begins with the premise that national insurance will never happen.

Really, there's no way to know. Consider these four scenarios:

1) State plans fail, and the federal government decides government insurance doesn't work;

2) State plans fail, and the federal government decides it needs to step up and do something;

3) State plans succeed, and the federal government decides government insurance does work; or

4) State plans succeed, and the federal government decides it should leave health care to the states.

All of them seem logical, right? It just depends on who's in the federal government. Maybe the important point to note is that the states are responding to increased demand that government do something.

There's a mixed record. The states that've recently experimented with these plans are doing much better than their predecessors. But it's still up to debate � and frankly, up to the presidential election � to determine whether this is going to help or hinder the movement for a nationwide insurance plan. It really all depends on how much you think the government should be involved with reducing costs in a private market. And you can't argue with the idea that, if this plan becomes law, there will be hundreds of thousands of people in Pennsylvania who won't have to choose between buying food and buying a bottle of antibiotics.

(tom.namako@citypaper.net)

(doron.taussig@citypaper.net)