Oklahoma Comprehensive Health Independence Plan

June 2008

Oklahoma Council of Public Affairs

O-CHIP

OKLAHOMA COMPREHENSIVE HEALTH INDEPENDENCE PLAN

Emphasizing Personal Responsibility and Individual Empowerment

June 2008

The following study was sponsored by the Oklahoma Council of Public Affairs and made possible through a grant from the State Policy Network. OCPA is the state’s premier free-market think tank, whose mission is to accumulate, evaluate, and disseminate public policy ideas and information for Oklahoma consistent with the principles of free enterprise, limited government, and individual initiative.

O-CHIP: Oklahoma Comprehensive Health Independence Plan

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The author wishes to thank Patrick L. Grewe, Travis K. Hughes, Melissa N. Mulkey, and Kurk C. Ziegler for their research assistance.

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O-CHIP: Oklahoma Comprehensive Health Independence Plan

Table of Contents Introduction .................................................................................................................................................................. 1 O-CHIP: Executive Summary ..................................................................................................................................... 3 O-CHIP Objectives ...................................................................................................................................................... 5 O-CHIP Proposal Converting a Spider Web into a Safety Net ............................................................................................................ 7 Quit destroying children’s futures and simply provide help ............................................................................ 7 Quit destroying hope and initiative and encourage personal development ................................................. 7 Apply the Laffer Curve .......................................................................................................................................... 8 Encourage the federal government to convert Medicaid to a block grant ................................................... 10 Opening the Way for Insurers to Add More Value ............................................................................................... 13 Remove existing regulations that do harm and avoid new ones .................................................................. 15 Reject mandates .......................................................................................................................................... 15 Reject community rating and guaranteed issue ...................................................................................... 16 Allow underwriting latitude ........................................................................................................................ 16 Publicize new policies ................................................................................................................................. 17 Encourage new insurance products ................................................................................................................. 17 Provide more value added for people with chronic illnesses ................................................................. 17 Encourage development of list billing services ....................................................................................... 19 Cover out-of-state residents who pay full cost ......................................................................................... 20 Encourage policies for guaranteed insurability ...................................................................................... 20 Encourage policies that combine health insurance and disability income ......................................... 21 Encourage temporary health insurance for appropriate situations ...................................................... 21 Encourage policies that combine long-term care with a life annuity .................................................... 21 Consider the role of nurse telelines and other services .......................................................................... 22 Transition Sooner Care to a private sector enterprise .................................................................................... 22 Anticipating Coming Trends .................................................................................................................................... 23 Anticipate and plan for the inevitable trend to defined contribution health benefits ................................ 23 Provide for one-time election to retain existing coverage .............................................................................. 30 Grasp the economic reasons for de-regulation of health insurance ............................................................ 31 Getting Everyone Access to Care in Ways That Make Sense ............................................................................ 37 Make health insurance affordable and attractive .......................................................................................... 37 Use a tiered system that considers both income and cost of health insurance ................................... 37 Allow the less fortunate to get the insurance that best suits their needs .............................................. 38 Provide incentives for getting health insurance .............................................................................................. 38 Provide a tax credit for families with health insurance ........................................................................... 39 Provide a tax credit for families with a non-dependent parent in residence ....................................... 39 Provide an additional tax credit for those who itemize deductions ...................................................... 39 Impress reality on those who would force others to pay their bills ............................................................... 40 Facilitate better debt collection by health care providers ...................................................................... 41 Require health insurance to play the lottery ............................................................................................ 42 Let freeloaders pay more of the taxes they would otherwise force onto others ................................... 42 Offer incentives to improve quality and reduce cost of long-term care ........................................................ 42 Fostering Wellness and Quality .............................................................................................................................. 45 Provide access to quality health care ............................................................................................................... 45 Design a standard policy as an option .................................................................................................... 45 Employ a high deductible ........................................................................................................................... 45 Use a Personal Health Account with debit card ....................................................................................... 45 Establish rules for general usage ...................................................................................................... 46 Establish rules for excess funds ......................................................................................................... 46 Encourage wellness expenditures ..................................................................................................... 46 Allow withdrawals for personal use by those who save taxpayer money ..................................... 46 Require preventive care for personal use withdrawals ................................................................... 47

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Recycle half of personal use withdrawals ......................................................................................... 49 Provide for smooth administration of Personal Health Accounts ................................................... 49 Cover mental illness .................................................................................................................................... 50 Curb abuse through meaningful audits and stricter eligibility determination .................................... 50 Increase emphasis on eligibility determination ............................................................................... 50 Strenghthen audit procedures ............................................................................................................ 51 Provide needed long-term care ......................................................................................................................... 51 Furnish nursing home benefits ................................................................................................................... 51 Continue home and community-based care ............................................................................................ 51 Place more emphasis on wellness and prevention ......................................................................................... 52 Encourage employer-sponsored and individual wellness programs .................................................... 53 Create safe harbors for employers encouraging wellness and fitness ................................................ 53 Ensure Oklahoma has enough doctors and other professionals to meet future needs ............................. 53 Assure adequate reimbursement to health care providers .................................................................... 53 Help rural Oklahoma attract needed physicians and other providers ................................................. 54 Educate health professionals in areas of greatest need ................................................................. 54 Grant scholarships to students likely to pursue health careers in rural Oklahoma .................... 56 Reform existing programs ................................................................................................................... 56 Establish funding for a new scholarship program ........................................................................... 56 Provide relief for rural physicians ...................................................................................................... 58 Explore greater utilization of physician assistants (PAs) and telemedicine ................................. 58 Emphasize rigor in high school curricula ......................................................................................... 58 Consider the potential impact of tort reform on cost and quality of health care ................................. 58 Consider the impact of tort reform ..................................................................................................... 58 Safeguard quality ................................................................................................................................ 58 Help patients become better consumers .......................................................................................................... 59 Provide audited performance data to consumers ................................................................................... 59 Inaugurate single audits for hospitals and nursing homes ................................................................... 60 Addressing Related Issues ...................................................................................................................................... 61 Utilize available technology .............................................................................................................................. 61 Encourage use of an accessible patient database ................................................................................. 61 Expand e-prescribing .................................................................................................................................. 61 Create a true health information exchange ............................................................................................. 61 Expand medical research .................................................................................................................................. 62 Coordinate health care programs .................................................................................................................... 62 Investigate the possibility of partnering with other agencies providing health services .................... 62 Coordinate and, where possible, integrate state health care programs .............................................. 63 Use TANF grants to help fund health care for the poor .......................................................................... 63 Improve county health services .................................................................................................................. 63 Provide health care rationally to inmates ................................................................................................. 64 Fully integrate mental health into comprehensive health care delivery ............................................... 64 How O-CHIP Achieves the Objectives for Health Care Reform ......................................................................... 67 Appendix A: Incentives for Family Stability and Work Provided by Existing Social Programs ................. A-1 Appendix B: Amount of Medicaid Assistance to Individuals and Families under O-CHIP ......................... B-1 Appendix C: Impact of Income Tax Changes Proposed in O-CHIP ............................................................... C-1

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O-CHIP: Oklahoma Comprehensive Health Independence Plan

Introduction When I asked Tom Daxon to take on the issue of health care reform in Oklahoma in August of 2007, neither of us fully realized the full scope of my seemingly simple request. I knew then that the issue was complex and intertwined, but I also knew of Tom Daxon’s excellent reputation as a fiscal analyst and his broad understanding of economic policy issues. He is an exceptional man and like most exceptional men can best be described using exceptional mathematics: Daxon is half accountant, half statesman, half economist and half historian. If anyone could find a way through the bureaucratic wilderness of our state’s health care system, he could do it. His charge was to create a health care policy study, one that was consistent with the free-market philosophy of OCPA, and one that would steer Oklahoma toward a health care system driven by market forces instead of more government regulations, price controls, mandates, and quotas. His work is entitled the Oklahoma Comprehensive Health care Independence Plan, or O-CHIP. Upon completing this study, I know Mr. Daxon feels a bit like the famous trailblazer Captain Meriwether Lewis (of Lewis and Clark) upon reaching the Pacific Ocean. He is glad this portion of the work is completed.

But his exploratory work has revealed how sweeping the full task of health care reform will be for the policymakers that follow. He has seen the conditions and understands the political challenges those policymakers will face in their efforts to reform health care, at least those that dare. Not all will dare.

Mr. Daxon also sees the great potential of this reform. Health care reform is a political subject of national scope in which states like Oklahoma may help lead the way back to rational, market-based policy. It is an opportunity for efficiencies of the market process to provide more abundantly for Oklahoma’s real health care needs, while still protecting the humanitarian sanctities within the health care profession.

The timing is fortuitous. Health care consumes ever-increasing percentages of federal and state budgets, and has rapidly O-CHIP: Oklahoma Comprehensive Health Independence Plan

become one of the most significant government finance issues for policymakers at nearly every level. The rhetoric of presidential politics has further elevated this issue in the minds of the American public. Health care is a top campaign issue, with each presidential contender trying to outmaneuver the other. O-CHIP offers a breakthrough in the current debate on health care policy.

O-CHIP challenges two premises of the current popular trend toward full-blown socialized health care: (1) All health care solutions must trend toward increasing government intervention; and (2) said intervention must come from the federal level of government. Over the past 50 years, health care has become an entitlement in the minds of many responsible citizens, as if it is truly an inalienable right in the classical sense. While OCPA and others have published many articles that refute this fundamental fallacy, Daxon’s work incorporates a different approach. It seeks to remove regulation of insurance markets and reempower consumers with the means of health care choice. By removing barriers to market forces and re-invigorating health care consumers with information and buying power, O-CHIP puts in place key catalysts of reform.

O-CHIP does not instruct citizens about the proper role of government in health care, as tempting as it may be given all of the supporting arguments and historical examples of colossal failures of governments that take control of a nation’s health care system. Instead, O-CHIP proposes a reform framework in which all citizens can take greater ownership of their own health insurance. Former Mayor of New York Rudy Giuliani spoke to America’s collective common sense when he said, “It’s your health — it should be your health insurance.” O-CHIP appeals to the same common sense, the same spirit of individual liberty and self-determinism.

There is another dimension to O-CHIP that is profound. It is a clear shift toward federalism.

Daxon recognizes that national solutions 1

are needed, but he also knows that not all national solutions emanate from Washington, D.C. As Justice Brandeis observed in the early 1900s, our system of federalism affords us 50 “laboratories of democracy,” each full of citizens who are very interested in their own well-being. The remedy for our health care challenges may well lie within reach of the states, yet paradoxically exceed the ability of the federal government, even with the massive organizational and financial resources at its disposal.

This issue exemplifies the great utility of federalism. Instead of a national health care policy imposed from Washington, alternative policy solutions should come from the states.

If left to the federal government, an inept and grotesque federal health care system is inevitable, made useless by its very size. If left to the states, the 50 “laboratories of democracy” would propose varying systems in order to meet the needs arising from the demographics and economics of each state.

Each of the states can evaluate the

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successes of others and copy them, or not.

Individuals and businesses will enjoy the positive health care policies in each state, or not. Health care service providers will stay in states with favorable public policy, or not.

The competitive market between the 50 states will reward good states and punish not-so-good states, as it should. Over time, all participants will benefit from the competitive environment, and the United States will retain the distinction of having the best medical care for the common man anywhere in the world.

Tom Daxon has once again come to the service of his state and nation. We are proud to publish his fine work, and encourage policymakers to consider it as a foundation upon which to base public policy for the benefit of our citizens, and as an example for other states to follow.

Hopper T. Smith President Oklahoma Council of Public Affairs

O-CHIP: Oklahoma Comprehensive Health Independence Plan

O-CHIP: Executive Summary O-CHIP is a comprehensive proposal with simple fundamental concepts: • Strengthen families and encourage their stability.

• Reward initiative.

• Deregulate insurance markets and open the way to more value-added products.

• Make health insurance affordable for every Oklahoman.

• Reward Oklahomans who acquire health insurance, penalize those who don’t.

• Reward participants who help the Medicaid program save money.

• Remove barriers to wellness and encourage preventive care.

• Empower patients to be better health care consumers.

• Achieve better coordination among statefunded health care programs.

Medicaid is one of several programs intended to assist low-income individuals.

The government also provides cash payments through the Temporary Assistance to Needy Families (TANF) program, food stamps, housing assistance, day care assistance, and earned income tax credit (EIC) to assist low-income families. These are referred to as the “safety net” meant to keep poor people from complete destitution.

Unfortunately, together, there is almost no coordination between the programs. The result is a series of programs which discourage family formation and stability, and stifle initiative. The proverbial safety net becomes a spider web that traps the poor, enabling other forces to rob them of a better life.

O-CHIP does not look the other way at these practices.

O-CHIP begins integrating eligibility thresholds. Families need not face dissolution to benefit financially. Individuals with hope and ambition aren’t held back by punitive arrangements. Once we establish a sensible framework to assist the poor, we can focus more effectively on health care issues. In fact, if we can get in place a comprehensive program to help the less fortunate in all respects, we will find that our O-CHIP: Oklahoma Comprehensive Health Independence Plan

health care problems are far more solvable.

When analyzing health care, we find that our present policies impact more than the poor. Health care costs continue to skyrocket relative to other sectors of our economy.

While most Americans report they are pleased with the health care they receive, many middle class families still struggle to obtain and pay for adequate health insurance.

O-CHIP recognizes that our health care system works best when everyone has health insurance or other non-government means to pay for care and addresses these concerns by the following: 1. Dramatically deregulating the health insurance market.

2. Providing assistance to those in need by helping them buy health insurance.

O-CHIP utilizes a tiered system of eligibility, rather than an “all-in” or “all-out” approach when providing assistance. O-CHIP does not provide assistance to those able to pay for their own care.

Many Oklahomans simply refuse to buy health care coverage, particularly those who are young and healthy. When a large portion of their premiums subsidizes the unhealthy, that refusal may be a prudent decision even if it effectively freeloads upon others.

By deregulating the health insurance market, O-CHIP will significantly lower health insurance premiums for most Oklahomans. Individuals will benefit from reduced health insurance premiums, and Oklahoma businesses will become more competitive.

O-CHIP also provides a safeguard to prevent citizens from being forced to pay higher premiums. Using the advantages of a free market, O-CHIP makes health insurance affordable to all Oklahomans while ensuring they understand the consequences of their own decisions to buy or not buy health insurance.

Those who refuse health insurance and have no other means to cover their health care bills create a cost burden for others.

Health care providers, especially hospitals, are forced to shift cost of care to responsible parties who pay their bills. O-CHIP favors 3

those who act responsibly and discourages freeloaders.

Oklahomans who maintain health insurance through their employer or a personal plan receive significant tax relief. Under O-CHIP, those without health insurance will pay higher taxes, find it more difficult to borrow money, and lose the right to play the lottery.

O-CHIP enlists Medicaid participants to help hold down costs. Providing audited information about quality and price will empower them to be better consumers.

Those who take advantage of this and spend wisely will help taxpayers. O-CHIP will reward them by allowing them to keep some of the savings they generate to use as they see fit.

Similarly, O-CHIP makes changes in the rules affecting long-term care. O-CHIP blocks many loopholes that now allow even prosperous families to foist the care of their elderly members on Oklahoma taxpayers.

Conversely, O-CHIP rewards families who

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help the state control costs.

O-CHIP addresses the need for new doctors and other health care professionals, especially in rural areas. To ensure that Oklahomans will have needed health care resources, O-CHIP funds local hospitals to provide medical school and other scholarships in exchange for service after graduation. Other enticements make these scholarships more attractive to prospective rural health care providers.

O-CHIP recognizes that healthy individuals require less costly health care. Accordingly, O-CHIP provides reasonable protection to employers who offer wellness and fitness programs to their employees.

Among other provisions, O-CHIP includes: • Funding medical research with an emphasis on maladies which disproportionately afflict Oklahomans.

• Encouraging greater use of life-saving technology.

• Fostering better design and coordination of health care programs.

O-CHIP: Oklahoma Comprehensive Health Independence Plan

O-CHIP Objectives • Provide Oklahomans greater ability to improve and maintain their own health.

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Good health avoids costly health care.

Foster more interest in wellness by employers and individuals.

Remove barriers to more effective programs for the chronically ill.

• Preserve and enhance health care markets and let them heal the sick.

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Do no harm to a system that, except for high cost, most Oklahomans perceive works well.

Encourage the continued development of “miracle” drugs, “miracle” equipment, and new, effective procedures to implement them.

Provide a stable and predictable business environment within which hospitals and other Oklahoma providers may pursue nationally recognized excellence.

Increase utilization of databases and technology to reduce errors and provide needed information to health care professionals on a timely basis.

Ensure the continued availability of doctors, nurses, pharmacists and other professionals throughout Oklahoma.

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Stop distorting the market for health care services and insurance.

Directly address the needs of the poor and medically needy.

• Reduce health care inflation.

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Facilitate greater consumer involvement.

Stop pouring money into ineffective programs.

• Ensure that public health needs do not continue to bankrupt hospitals.

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Remove barriers to greater insurance coverage.

Allow hospitals to collect bad debts.

• Curtail freeloading and de facto taxes on responsible citizens.

• Encourage family stability and work.

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Stop encouraging young women to abandon the fathers of their children.

Reward the hard working poor who take initiative to better themselves.

• Help rural Oklahoma maintain needed access to health care services.

• Create an environment that helps Oklahoma businesses to create more and better jobs.

• Assure all citizens access to a system which minimizes damage to the economy.

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O-CHIP: Oklahoma Comprehensive Health Independence Plan

O-CHIP Proposal

Converting a Spider Web into a Safety Net When considering programs to assist the less fortunate, policymakers sometimes focus on their pet projects. Such bias may result in unintended, sometimes tragic consequences for the people these programs are meant to help.

Accordingly, O-CHIP reviews the Medicaid program in terms of its role in the overall safety net of programs for the poor. Unfortunately, the structure that emerges is one that frequently destroys families and smothers initiative. What was meant to help instead does great harm.

In addition to Medicaid for needed health care, the poor can also access food stamps, federal housing, and day care. Other programs include Temporary Assistance to Needy Families (TANF) and the earned income credit (EIC) that is part of the tax code.

Unfortunately, there is very little coordination among all these programs. Programs designed to help often actually contribute to the very poverty, crime, and hopelessness they seek to alleviate. Changes needed to correct this deplorable cycle of despair are not complicated, as outlined below. But they are change.

Quit destroying children’s futures and simply provide help.

The most important asset in a child’s life is receiving the love and care of a secure, stable family. Having a father in the home is more important than money or social standing. Having a father in the home is more important than participating in a welldesigned social program.

A child from an intact family is less likely to become involved in crime, less likely to be a victim of violence, and more likely to excel in school than a child raised without a father in the home.1 This holds true even when we control the results for race, income, or the parents’ education level.

O-CHIP: Oklahoma Comprehensive Health Independence Plan

Under our existing welfare system, a poor woman who becomes pregnant will usually find that she benefits financially by not marrying her child’s father. The father’s income is considered in determining eligibility for government assistance that may be more financially valuable than his income.

O-CHIP applies no categorical requirements for eligibility determination. Subject to the income guidelines and the cost of health insurance, O-CHIP empowers everyone to receive the health coverage they need without excluding dad from the family.

Quit destroying hope and initiative and encourage personal development.

One who has watched a spider work its web in the evening light has witnessed a dreadful yet fascinating drama. Unsuspecting insects drawn to the light find themselves ensnared in a fatal embrace. The insect struggles to escape but very few do.

Meaning to design a safety net of many services to help the poor, have we instead created an ensnaring web? Rather than catch people falling on hard times, our safety “web” only further entangles them.

Predators in many guises wait to attack the unsuspecting victims. If we make Medicaid more efficient and effective but do not consider the safety web of which it is a part, we may design a program that effectively and efficiently removes Johnny’s tonsils before we send him to prison — literally.

The “safety net” designed to catch those falling on hard times becomes a snare thwarting those struggling to escape. Little coordination exists among the agencies involved to ensure seamless aid to the poor.

Some people fall through the cracks with no safety net to catch them. Others bounce around several nets that further ensnare them. Some nets or programs do serious harm. This is especially true when we consider the cumulative impact of the programs.

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Consider a single mother who wants to provide a better life for herself and her two children. Existing social welfare programs encourage her to desert her husband or never marry the father of her children in the first place. The temptation to leave her children’s father may be the most serious decision that current social policy encourages her to make, but it is not the only decision confronting her.

Assume that a motivated single mother is employed in an entry-level job that pays $7 per hour. Wanting the best for her children, she prudently signs up for all the available government programs that provide assistance. She uses the state’s day care program to help defray the cost of child care.

She signs up for food stamps to cover part of the cost of meals and incidentals. She participates in the federal housing program to improve their living conditions.

Now consider what happens when her boss rewards her initiative by offering a promotion and doubling of her wages to $14 per hour. What should be a cause for celebration becomes a disincentive. The young mother loses her food stamps, day care assistance, and most of her EIC. Her housing assistance is cut in half. What’s more, a bigger paycheck translates into higher withholding for Social Security, Medicare, and income taxes. She would actually be worse off than before her wages doubled.

The single mother offers a plausible excuse and turns down the offer. Her employer ups the ante to $15 an hour. Now, she stands to lose Medicaid benefits for her children and what remains of her EIC and housing subsidy. Her real income at $15 per hour, including the value of government benefits, would barely be 80% of what it is at $7 per hour. The fact that we tax her earned income but not her benefits makes it even worse.

The spider web is at work.

This fictional scenario is based on actual policies in place today. Because we don’t coordinate our social welfare programs, lowincome people on welfare who show initiative usually make themselves worse off, at least until they progress completely beyond eligibility for all government assistance.

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Appendix A provides additional details about this very serious problem.

While O-CHIP focuses on health care reform, the government’s primary health care assistance program, Medicaid, is currently a contributor to the problem.

O-CHIP makes needed reforms to Medicaid that begin to address these larger issues.

First, O-CHIP doesn’t ignore the presence of other social welfare programs in establishing its eligibility thresholds and criteria.

Rather, it considers the benefits from those programs when determining the level of a participant’s Medicaid benefits.

Second, by using a tiered system rather than an “all-in” or “all-out” approach, O-CHIP preserves benefits if a participant reaches a particular threshold. Changes in the amount of assistance occur gradually.

O-CHIP also recognizes that holding down a job entails expenses we should consider: employment taxes, income taxes, commuting, and possibly day care. O-CHIP excludes a portion of earned income when calculating the amount of assistance for which someone is eligible. In effect, O-CHIP uses an approximation of net income to determine the capacity of a participant to pay for insurance and health care.

O-CHIP’s provisions do not discriminate against family formation and cohesion. First, O-CHIP allows families headed by married couples to participate on the same basis as other families, but also considers the cost of working for a living. Under this plan, a single person or head of household may exclude 30% of what the IRS classifies as earned income up to $9,000 in determining the amount of assistance. The limit for a married couple is $18,000, regardless of which spouse earns the income.

While O-CHIP does not remove all disincentives to family formation and stability present in our current system, it does make noticeable improvements.

Apply the Laffer Curve.

Many conservatives understand that the Laffer Curve has a very real impact on investors who may consider that a 70% tax is too high and decide not to invest. What O-CHIP: Oklahoma Comprehensive Health Independence Plan

some fail to see is that we do the same were fully phased in, which took three years, thing, except even worse, in imposing de the economy took off and so did the facto rates in excess of 100% on our poorest government’s collection of revenue from its breadwinners. high-earning taxpayers who saw their top In the 1970s, a prominent economist federal rate chopped from 70% to 50%. famously drew a simple curve on a napkin While controversy swirled about whether and changed forever perceptions about the the rate reductions should have been role of tax rates in our economy. Art Laffer phased in, a provision that Prof. Laffer postulated that there are two tax rates at strenuously opposed at the time, and the which the government will collect no revenue fact that the eventual legislation that Confrom an income tax. The first rate is 0%. The gress passed carried reductions in lower other rate is 100%. Laffer noted that no one rates and a multitude of tax credits and is going to work if the government gets the other provisions unrelated to the theory entire gain from his or her efforts. behind the Laffer Curve, the result was that However, Laffer noted that with a rate of those in higher brackets actually paid more 1% the government will collect some revin taxes than previously, even with the lower enue. Similarly, the rates. Laffer was onto government may something! collect some revenue The terms “stagnaIt is a mistake to attempt to with a 99% rate, as tion” and “malaise” reform health care in an some workers may were often used to environment that looks decide that keeping describe the U.S. 1% of the fruits of economy at the time solely at health care to the one’s labors is better of Reagan’s inauguraexclusion of related issues. than nothing. Laffer tion and his early also postulated that years in office. The the government would focus was justifiably probably collect more revenue with a 2% upon getting the economy headed in the rate than a 1% rate, although probably not right direction again and creating new jobs. quite twice as much.

That led most policymakers to focus on the His theory evolved into the Laffer Curve, economy’s productive sector. which showed something approximating a However, if the theory behind the Laffer rainbow on a graph measuring revenue Curve is universal to human nature, it collections as tax rates went from 0% to follows that government confiscation of the 100%. fruits of human effort that approaches 100% Somewhere in the middle, Laffer argued, will stifle and extinguish that effort, whether was an income tax rate which would maxithe subject is an investor, a highly-compenmize revenue collection for the government. sated professional, or a low-skilled worker.

At the time Laffer’s theory entered into The withholding of a government benefit, public discourse, the top federal income tax such as food stamps, is not technically a tax. rate stood at 70%, and, considering state However, the result is the same. Losing the and local income taxes, many high earners ability to buy $100 worth of food by getting a were paying over three-fourths of their $100 raise sends the wrong signal to a lowearnings to government. Many policymakers income worker. We are telling that worker bought into the Laffer Curve and became that he or she won’t be any better off, at convinced that the government could reduce least not in the short term, as a result of his its onerous tax rates and actually collect or her own hard work and initiative. more revenue.

For workers with families who make less A newly elected Ronald Reagan was one than $12 an hour, we confiscate the fruit of of those policymakers. He proposed a their labor by withdrawing benefits they sweeping reduction in tax rates based previously enjoyed when not working and loosely on Laffer’s theory. Once the rate cuts taxing the money they do earn from their O-CHIP: Oklahoma Comprehensive Health Independence Plan

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own enterprise. Just as many observers were surprised at the response of high-income earners to lower tax rates, we should not be surprised at a burst of initiative of even greater magnitude from low-income workers whose effective tax rates often exceed 100% today. Placed in a more favorable environment, we might even see many of them cease to be low income.

As detestable as is our antipathy toward hard work and enterprise, the impact of our current policies on family formation and stability is even worse. Many observers believe we are seeing the creation of a permanent underclass as more children grow up never knowing a father.

The same policies that discourage work and initiative also discourage family formation and undermine those families that do manage to form by combining the gross income of both parents in determining eligibility and, in some cases, giving overt favoritism to families without a dad present in the home.

Absent federal action, it is outside the ability of O-CHIP to provide what we most need: a policy that assists the less fortunate without penalizing them for attempting to form stable families and provide a better life for themselves and their children. However, O-CHIP seeks to implement policies that help the less fortunate where possible.

Encourage the federal government to convert Medicaid to a block grant.

O-CHIP is intended to address Oklahoma’s health care needs without federal legislation. While O-CHIP recommends that the state seek Department of Health and Human Services waivers, it does not primarily seek passage of new federal laws. However, we must address the barriers the current system erects to creating an effective state-level strategy to help the poor and open doors for them.

One solution might be to convert Medicaid to a block grant. This was done on a smaller scale with welfare reform in the1990s when the federal government created TANF block grants to replace former 10

AFDC subsidies. Most observers consider this a signal success. A block grant would help the federal government budget its affairs with more certainty and allow innovative problem solving to emerge at the state level.

No one cares more about the poor and the sick in Oklahoma than those who live in Oklahoma. The federal government should stop interfering with states wanting to help their citizens. Nowhere is this need more evident than in health care.

Owing to the disjointed nature of federal programs for low-income citizens, an even better solution would be to combine all major social welfare programs and their funding and turn them over to the states in the form of a single large block grant that gives the states real latitude in developing new approaches to helping their less fortunate citizens overcome poverty. Several advantages to this approach would accrue: • Needs differ from state to state. State officials are closer to the problems the programs are meant to address and could be more effective than national officials.

• The glaring lack of coordination would lead state-based programs to organize in new and more efficient ways. It is difficult to envision how state officials could do a worse job coordinating TANF, Medicaid, food stamps, federal housing, WIC, etc. than bureaucrats do now in Washington, D.C. • Some Americans cynically think the real reason behind large social welfare programs is not to help the poor at all, but to maintain a vast welfare bureaucracy over which federal officials exert influence for the perks of office and through which contractors make handsome profits. This move would help dispel such notions and buoy Americans’ confidence in their leaders.

This reform is not put forward in the belief that federal bureaucrats have an insufficient sympathy for the needs of the poor. It is put forward on the observation that our current programs are not achieving the results that were originally envisioned for them and the thought that the lack of coordination between them and the relative isolation of O-CHIP: Oklahoma Comprehensive Health Independence Plan

policymakers may be two important reasons why. Give Oklahoma the latitude to assist our own less fortunate and we will do a better job.

If O-CHIP can only impart one idea to the debate on health care reform, it is this: It is a mistake to attempt to reform health care in an environment that looks solely at health care to the exclusion of related issues and expect significant progress. If we could develop a coordinated comprehensive policy to assist the less fortunate that would consider the needs for housing, food, health care, training, day care, etc. together, we would likely find that very few health care issues remain that will elude solution.

If we continue to approach health care issues on a stand-alone basis and fail to realize the impact of our failure to coordinate health care policy with other programs designed to assist the poor, our results will continue to disappoint us. We should focus on how best to assist the less fortunate as individuals and deregulate much of the rest.

Such a sweeping change in policy is beyond the reach of any state without

O-CHIP: Oklahoma Comprehensive Health Independence Plan

legislative action in Washington. Accordingly, O-CHIP focuses upon what Oklahoma policymakers can accomplish in the present environment, but with recognition of the underlying causes of our problems.

Interested observers will doubtless note that, at present, Oklahoma is “underserved” in the amount of federal assistance it receives for Medicaid relative to other states.

This might seem to mitigate against a block grant unless we first increase our Medicaid spending in order to get a larger “starting point” for a grant going forward.

Of course, this problem could be remedied by a block grant based upon some measure of relative poverty, irrespective of past spending. More to the point, regardless of the level of aid received, Oklahoma will benefit greatly by the removal of counterproductive rules and regulations under which it currently labors. We could do more, much more, with less as long as the federal government resists the temptation of overregulating the grant. We should expect other states to likewise improve their performance.

11

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O-CHIP: Oklahoma Comprehensive Health Independence Plan

Opening the Way for Insurers to Add More Value Current regulations distort the market for explore how this works. health care insurance and raise health care The essence of insurance is to measure costs. Government regulation of the insurand spread financial risk over a large group ance industry also results in essentially the exposed to that risk. Most people view this outsourcing of a tax. We can relieve many as a valuable service because they can pay existing ills in our health care system by a premium and know they have some reforming those regulations and letting protection against unexpected financial insurance professionals apply their skills. catastrophe. The policyholder knows that in This section explores how we can remove the event of a serious accident or unexexisting regulations that unwittingly raise pected illness, the insurer will provide the the cost of health insurance and prevent the funds to cover the costs associated with that development of valuable new insurance accident or illness. products.

As we’ve noted, insurers must collect At this point, we should briefly review a enough in premiums to cover their expendimajor reason why tures on behalf of health care costs are their insureds. From Allowing the market to work higher than they the majority of their should be and why Opolicyholders in any preserves flexibility while CHIP will reduce those given year, they will driving practice—by primary costs. collect more in premicare physicians, specialists, One reason health ums than they pay in hospitals, and pharmacists— care costs are higher claims. If actuaries do toward what works. is that too many their job of assessing people don’t have risk well, the insurer insurance and don’t will make a profit. At pay their health care bills. We often characthe same time, a competitive market where terize those without health insurance as insurers bid for the same policyholders will irresponsible, not pulling their weight. prevent any one insurer from overcharging.

However, if we look at the major uninHowever, when we’re talking about health sured group, younger workers in good insurance we’re talking about two relatively health, we also see that the cost of insurdistinct groups of people. The first are those ance isn’t perceived as worth the coverage who may have an accident or succumb to an received. Many young, healthy workers may illness which they do not currently suffer. be making a rational decision when forgoSomeone could wind up in the hospital as a ing health insurance. result of a skiing accident, or they could When government regulates the health suffer an unexpected heart attack or other insurance markets to reduce the cost of debilitating illness. They face a risk. The health insurance for those with established second group is composed of those who health care expenses, it must get the money have already had the debilitating illness or from somewhere. Government subsidies, have experienced another health crisis with courtesy of the taxpayers, are used in some continuing effects. cases. More commonly, the government puts We try to marry them under the rubric of the onus on insurers through rating bands, regulated health insurance, but we cannot mandates, high risk pools, and similar change the fact that they are two distinct provisions. things — the risk of something “unknown” In doing so, the government outsources vs. the existence of known costs. the imposition of a tax earmarked to assist When we add the cost of paying for those suffering from illness. Keeping in mind known events to the cost of paying for that an insurer must collect enough monies unexpected events, we change the equation. to pay its claims and cover its expenses, let’s To stay solvent, the insurer must still collect O-CHIP: Oklahoma Comprehensive Health Independence Plan

13

enough in premiums to cover its claims.

Some of the expenditures are no longer for unexpected events, but for known events.

As long as the known events are distributed randomly over those covered and everyone has about the same level of expenditures, there is still not a significant problem. Policyholders are paying more in, but they are also getting more in return. However, the level of health care expenditures is far from randomly distributed. Some people have very high levels of expenditures, while most have much lower levels.

If we further complicate this picture by limiting the premiums the insurer can charge to those with known costs, we embark on a road to dysfunctionality. Most policyholders have relatively low known costs but have to pay higher premiums so the insurer can cover the outlays for those with high known costs.

Since all other insurers are in the same situation, an insurer can raise rates on young, healthy policyholders paying the bills and not place itself at a competitive disadvantage. This allows the insurer to subsidize the premiums of those with known expenditures and remain competitive in the insurance market.

Those with known costs will almost certainly recognize that they are getting a good deal and want to purchase the insurance offered at subsidized rates. However, too many people availing themselves of this opportunity places a burden on other policyholders because the insurer is taking these costs and passing them on to younger, healthy insured policyholders.

What about the prospective policyholder whose known health care costs for the coming year are zero? That individual must decide if the cost of protection against something that might happen is worth the cost of protection plus a share of outlays incurred by those with high known costs. At some point, some of the healthy prospects will conclude that the policy isn’t worth the required premium. This road becomes a slippery slope.

The decision of a few healthy individuals to forgo health insurance puts the insurer in a greater bind. The insurer still has the 14

same amount of known costs to cover but fewer people to pay premiums. The insurer has no choice but to raise premiums even higher on those who remain in the pool.

Remember, those with high costs may complain about the higher premiums, but if they are rational, they aren’t about to drop their health insurance.

Now those with low costs must pay more than before. Fewer low cost people shoulder the load of paying their share for unexpected events as well as the known costs of policyholders remaining in the pool. But what do they get in return? Perhaps only the satisfaction of knowing that someone else with greater health needs is receiving care.

Some of these may decide that the rational thing to do is to drop coverage.

As more healthy individuals drop out of the insurance market, the cost of coverage increases even more. The cost of medical care also increases because those who can pay must cover their expenses and share the cost for those who pay little or nothing. At some point, the health insurance market becomes dysfunctional. Some observers maintain that many areas of the country are already in this situation.

Of course, when those without insurance get seriously ill, they still receive some medical care. And if the patient can’t pay the cost, someone else must. At this point, the insurer is off the hook, but the hospital is not. Like the insurer, the hospital must collect enough in fees to cover the cost of the care it provides. If some can’t pay, the hospital has no choice but to charge more to those who can.

Unless the hospital can get help covering these costs from someplace, such as the taxpayer, it will have no choice but to raise its rates. Higher hospital rates mean higher costs for insurers and that leads to still higher health insurance premiums. We find ourselves on a slippery slope, indeed.

The present system is not serving us well.

Given these alarming trends, it is no wonder that many are calling for a complete government takeover of health care or health insurance. We face three choices: • Ration health care. This is not an unreasonable response to our current situation.

O-CHIP: Oklahoma Comprehensive Health Independence Plan

The government determines what constitutes an adequate level of care and seeks to ensure that everyone has access to that level of care but no more, lest costs become too high.

• Require everyone to get health insurance.

This may require all healthy individuals who elected to forgo coverage to pay whether they personally get real value for their insurance or not.

• Allow health insurers to price their policies rationally and find a way other than insurance regulation to help those who are sick.

If we remove the known costs from the equation so an insurer insures against the risk of unexpected events only, we will see swift, dramatic improvements.

First, under O-CHIP, the healthy customer pays only a premium to cover the cost of unexpected events, i.e., a premium to cover his or her costs only. Premiums for healthy policyholders will decline significantly and quickly. More people will elect to buy health insurance because of the lower premiums.

Those who have remained in the health insurance market will also pay lower premiums because the insurer can spread the risk over more policyholders. When more people have insurance, costs of health care are reduced. With more patients covering their own care, hospitals no longer transfer costs of treating non-payers to those who pay their bills.

Making changes in the insurance markets will reduce the cost of coverage. Reform will also reduce the cost of health care, further reducing the cost of insurance.

There is also another side to the free market approach to health insurance, a great benefit awaiting every Oklahoman with a chronic illness that will be spelled out in more detail later.

Almost three decades ago, Ronald Reagan came to Oklahoma City when gasoline prices were skyrocketing, general inflation exceeded 10%, OPEC seemed invincible, and the beleaguered oil and gas industry was held in low esteem. Referring to the oil and gas industry, he boldly declared it was time to “turn the industry loose.” Sensing a political gaffe, his critics O-CHIP: Oklahoma Comprehensive Health Independence Plan

immediately pounced and accused Reagan of preparing to “turn the industry loose on the American people.”

In spite of this incident, Ronald Reagan won, and a wave of free market thinking invaded Washington, D.C. The energy crisis all but disappeared for the next quarter century.

The energy crisis in 1978 was not entirely dissimilar from the health care crisis today.

Well-intentioned government policies have put health insurance and, to some extent, even health care delivery itself in a choke hold. Rather than focus on the failings of state intervention, many critics cry greed and manipulation by insurers and providers.

Perhaps we should again “turn the industry loose” and allow it the freedom to solve our problems.

The following recommendations address how to marshal the innovative expertise of private insurers to solve the problems of health care finance. In making this proposal, OCPA is confident that the industry, if allowed to flourish, can accomplish far more than we can presently envision.

Remove existing regulations that do harm and avoid new ones.

We have created a series of regulations to assist some people in difficult circumstances. However, unintended consequences have resulted from these regulations, thus creating new problems. Fortunately, Oklahoma has not made as many mistakes in this area as most other states.

Oklahoma should avoid the policy errors of other states and reverse those we have enacted. Subsequent sections will cover how O-CHIP meets the needs the regulations were intended to address.

Reject mandates.

Many observers advocate coercing more employers to provide health insurance as a benefit for their employees. They see this as the principal means of expanding the amount of health insurance coverage.

However, such measures may impose crushing burdens on employers for little real gain in the number of insured. In addition, 15

many of our current problems result from the favorable tax treatment of employerprovided health insurance. It makes little sense to expand a part of the current policy mix that causes so many of our problems.

O-CHIP does not impose mandates on employers to provide health insurance nor does it penalize them for not doing so.

However, O-CHIP does make it easier for employers who want to offer employees assistance in obtaining coverage.

premiums. In raising those premiums, they convince more healthy people to go without coverage.

A superior approach is to let everyone be responsible for their own health care, provided the state assists those with unsustainable health care costs relative to their income. The need for health care services is far from uniform across the population.

Some people need and/or want more.

Others need very little.

There is no reason for the government to Reject community rating and guaranteed financially aid every person with aboveissue. average health care expenses any more Some argue for increased insurance than there is a need to assist everyone with regulation in the form of guaranteed issue above-average clothing expenses due to (requiring an insurer their size, taste, or to insure all comers, business/social regardless of undersituation. The governBallooning health care writing status) and ment should limit its costs are painfully community rating role to helping the (charging the same truly needy. evident to employers premium to all policyAs in so many offering health care holders regardless of areas, the principles benefits. their health). These of free choice and regulations would be personal responsibilunnecessary if we ity can work if alsimply provide access and assist those lowed to do so. The O-CHIP approach puts lacking adequate means to purchase health these principles into action and will result in insurance. some important benefits: A situation that vexes many policymakers • It reduces costs for all. is the refusal of many young, healthy people • It encourages those now freeloading on to buy health insurance. One major reason the system to become insured. for this could be that they find the insurance • It allows insurers to develop exciting new available to them is overpriced. As long as alternatives for the chronically ill. some individuals buy their own health insurance, even if coerced, those with better Allow underwriting latitude. underwriting evaluations will try to spend People engaging in unhealthy or irresponless because they receive less value than sible behavior are likely to incur more health they are paying for. Those more prone to care costs sooner than others. Good underillness and higher costs tend to overspend writing will identify the risks of future outlays since they are receiving more than they are for the insurer and charge an appropriate paying for. premium. Those most likely to incur higher Community rating only makes this probcosts will face higher premiums. lem worse as insurers shift some of the cost We can discourage unhealthy practices of claims from high-cost policyholders to by allowing insurers freedom to underwrite young, healthy policyholders who are coverage and making individuals responalready balking at the cost. Guaranteed sible for the health-related choices they issue forces insurers to accept high-cost make. Higher rates will be charged to those policyholders who do not otherwise meet who engage in unhealthy lifestyles, e.g., their underwriting criteria and leaves the smoking, obesity, and other behaviors that insurers with one alternative — to raise their typically lead to costly health issues.

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O-CHIP: Oklahoma Comprehensive Health Independence Plan

Most individual health insurance policies distinguish between smokers and nonsmokers and charge higher premiums to smokers. O-CHIP allows insurers to consider other criteria such as participation in highrisk activities or employment in high-risk occupations.

This approach would allow each individual to decide if the benefit of high-risk activities is worth the additional cost. They could still engage in high-risk activities, but they would no longer be able to make others pay for the costs that result from the decisions they make. The underwriters will identify those activities that lead to higher health care costs and price insurance products accordingly.

Similarly, insurers should have latitude in their product offerings to the extent practicable. For instance, an insurer may want to subsidize, or even provide, nicotine replacement therapy for tobacco users among their insureds. The insurer will realize greater profit if its insureds use less health care services. If those insureds who smoke do quit, they will use less.

Some observers recommend that the state mandate the use of evidence-based medicine by physicians. This system of treatment has an impressive history of providing costeffective care for patients. However, by introducing free market principles to health care, patients will have an incentive to hold down costs and they certainly have an incentive to seek effective care.

Similarly, an insurer may find it can offer a more economical policy if it gives preference to providers who adhere to the principles of evidence-based medicine. If it has to pay less to the providers, it has to extract less from its policyholders. Consequently, a potential policyholder will find that he or she can save money by agreeing in advance to get treated consistent with these practices, and at the same time be assured of treatment with practices shown to get results.

However, rather than attempting to find the very best approach at any one moment, O-CHIP seeks to establish a market where the best practices are constantly being developed and evaluated. This approach recognizes that the best approach today O-CHIP: Oklahoma Comprehensive Health Independence Plan

may not always work the best. O-CHIP accounts for positive, new developments while allowing Oklahomans to take advantage of what works best now.

Publicize new policies.

While O-CHIP will make it advantageous for many people who currently remain uninsured to get health insurance, it may take time for word of these changes and their impact to reach critical mass. O-CHIP would make a small appropriation to the Insurance Commissioner to publicize the changes and the opportunities they present.

Such notice should hasten the desired transition to the new system.

Encourage new insurance products.

The purpose of this section is not to trade our existing mandates for new, supposedly better mandates, but to free the insurance industry to develop the novel approaches that Oklahomans need. This means that it may be desirable to provide modest funding to “jump start� a new product or approach. It also means we should limit government interference in our private lives to the lowest level possible and gain the greatest freedom to manage our own lives.

Careful analysis is required to develop new insurance products which respond best to people’s needs. The key point is to make it profitable for insurers and others to innovate and respond. They will eventually develop better answers than will any legislative body or think tank.

The following possible starting points consider unmet needs often due to excessive regulation of the marketplace. O-CHIP provides the Insurance Commissioner with the specific authority and the financial means to bring these improvements about.

Provide more value added for people with chronic illnesses.

Many diseases require advanced specialized treatment. We should encourage the development of new products to meet the specific needs of the chronically ill. While these products would be under the supervi17

sion of the Insurance Commissioner, they and management including contact with will focus primarily on providing services to the patient to make sure directions are treat known conditions rather than insuring understood and followed. (In many cases, against the risk of new events. the insurer may choose to outsource this The chronically ill are not all alike. Those task to a physician, hospital, or even a who suffer from diabetes have different needs specialty enterprise dedicated to providfrom burn victims. Both have different needs ing this service.) than the person with mental illness. In most This approach seeks to provide the cases, the chronically ill need a comprehenpatient optimum care from skilled professive multi-disciplinary approach, yet one sionals current on the most promising unique to the particular illness. The ideal is options for recovery. The current system a team of highly skilled professionals working often focuses exclusively on avoiding costs, through an institution able to provide both especially short-term costs. The O-CHIP comprehensive and specialized care. approach is designed to direct superior care O-CHIP will encourage insurers to deto Oklahoma patients. velop tactics specifically designed for the Innovative individuals responding to the sufferers of a chronic desires of their cusillness. This does not tomers and relying O-CHIP recognizes that our sever a patient’s upon their own experirelationship with a ence may doubtless health care system works family physician. The take such a program best when everyone has family physician in directions we health insurance or other would bond with a cannot fully anticinon-government means to team of specialists to pate. However, it is give optimum care likely that an insured pay for care. while attending to the person, upon developpatient’s continuing ing a chronic illness, routine health needs. would be transferred by his or her insurer, at Such a team might include: the insurer’s cost, to the oversight of an • The patient’s primary care physician. insurer that specializes in the chronic illness.

• A physician or physicians who specialize O-CHIP would also direct the Insurance in treating patients with the illness.

Commissioner to develop performance • A hospital with the facilities needed for criteria that might be used in a system in effective treatment and access to other which caregivers and their insurers have a specialists in nursing, physical or occupafinancial stake in a favorable and costtional therapy, nutrition, mental health, efficient outcome for the patient. Insurers, etc., as required. hospitals, physicians, pharmaceutical • A pharmaceutical manufacturer that companies, and pharmacists should be able produces drugs that effectively address to assist the Commissioner in developing the condition being treated. such criteria.

• A pharmacist who interfaces with the Several promising approaches to health pharmaceutical manufacturer and concare delivery are emerging. In some situasults with the primary care physician tions, the pharmacist, often the health care about possible interactions with other professional with the most regular contact medications, including over-the-counter with a patient, assumes a more central role. products that may be taken for reasons The Asheville Project, organized around not directly related to the chronic illness. such an approach, demonstrated cost The pharmacist would also consult with savings and improved treatment for persons the patient about the proper administrawith diabetes.2 O-CHIP does not mandate either collabotion of any drugs. rative drug therapy management or evi• An insurer who can provide financing of dence-based medicine. However, it does the needed care and overall coordination 18

O-CHIP: Oklahoma Comprehensive Health Independence Plan

allow insurers to do so and pass on to their policyholders the anticipated savings and the comfort of knowing that sound practices will be used in their care. Allowing the market to work preserves flexibility while driving practice, by primary care physicians, specialists, hospitals, and pharmacists toward what works.

We must free these professionals from the necessity of viewing every sufferer of a chronic illness as identical to others with similar symptoms. In our overregulated environment, the truly sick are the ones the insurer wants to avoid because they invariably lose money providing them care.

Several states, including Oklahoma, have implemented “cash and counseling” programs to increase participant satisfaction and reduce cost. O-CHIP would give insurers the flexibility to use this approach while requiring approval of the Insurance Commissioner to ensure that patients are protected.

We are also learning that many of the ill and disabled can very effectively manage their own care if provided the resources to do so. O-CHIP empowers such patients by making those resources available directly to them. Under O-CHIP, we would probably see insurers offer incentives to encourage chronically ill customers to control costs while complying with treatment milestones because it would be in their economic interest to do so.

A major advantage of O-CHIP is that the sufferer of a chronic illness would receive superior care not currently available. Once O-CHIP is fully implemented, those buying insurance would thus prepay for the risk that they might contract a serious, costly illness.

This is a valid insurable risk. The Insurance Commissioner would assure the insured that the cost to them would not increase with the onset of an illness.

As will be discussed in more detail later, the state would implement these policies without causing an increase in anyone’s insurance premium or allowing an insurer to cancel anyone’s health insurance because someone covered gets sick.

Encourage development of list billing services.

O-CHIP: Oklahoma Comprehensive Health Independence Plan

Many small employers would like to offer their employees health insurance but do not because of the cost, administrative burden, and/or time involved in finding an appropriate insurer. A list billing service helps address these concerns.

Under list billing, an employer distributes an annual brochure from the Insurance Commissioner to employees that describes coverages available on an individual basis from various insurers. The brochure or accompanying materials provide guidance on premiums charged for the insurance described. However, the actual premium would be determined through the insurer’s underwriting process.

O-CHIP will direct the Insurance Commissioner to obtain input from small employers and their representatives in designing the brochure.

The employer would state the amount of employer assistance, if any. Employees could choose coverage options or elect to take any employer benefit offered in the form of additional taxable compensation.

Insurers would be allowed to charge an application fee to cover the cost of underwriting and discourage frivolous inquiries.

The list billing service would be provided by a payroll or similar service vendor who collects the premiums through withholding, remits the amounts due to the insurers, and complies with tax and employee reporting requirements on behalf of the employer.

O-CHIP would direct the Insurance Commissioner to contract for the development and maintenance of software that interfaces with both insurers and vendors providing list billing services. The Insurance Commissioner would also qualify insurance companies for participation in the arrangement. Part of the qualification would be system compatibility with the state’s software.

List billing addresses the employer’s concerns. All the employer needs to do is: • Select the amount of the monetary benefit to be provided to the employees.

• Distribute the list billing brochure to the employees.

• Forward employee responses to the list billing service.

List billing would provide employers a 19

known cost of the benefit. It relieves the burden of administration and relieves the employer of the need to find an insurer. In addition, list billing would allow Oklahoma employers to offer a benefit that otherwise similarly situated out-of-state competitors may not be able to match easily.

List billing would also offer employees a new benefit and empower them to choose how to use it. The employee can buy insurance from one of many different plans. An employee who already has health insurance, perhaps through a spouse, can convert the benefit to additional taxable compensation. Further, the employee who buys an insurance policy owns that policy, which provides more flexibility in future career decisions.

Many intricate federal rules govern the types of benefits that an employer can offer without creating taxable compensation for their employees. The state will need to consider these rules in crafting its policies.

For instance, each plan will require a sponsor. It may be possible for the list billing service provider to serve as plan sponsor — or perhaps the Insurance Commissioner.

Such issues still need to be addressed and definitely resolved.

Cover out-of-state residents who pay full cost.

Many economists have put forward proposals to allow insurance companies to sell policies across state lines. This approach can blunt the effect of onerous mandates adopted by well-meaning but overzealous state legislators. These mandates greatly increase the cost of health insurance, a major factor in the inability or refusal of many Americans to buy health insurance.

O-CHIP would encourage the Insurance Commissioner to negotiate compacts with other states to allow reciprocity in marketing to both states. Such compacts would be done under regular state rule making. This would provide that they become effective unless formally reversed by subsequent legislative action. Such a provision sends a message that Oklahoma insurers are ready to compete, and that Oklahoma is creating a 20

favorable environment for them and the businesses and the people they serve.

Encourage policies for guaranteed insurability.

Because of the health insurance environment, many people acting responsibly may find themselves without insurance or the ability to obtain it. If an insured employee or family member develops a chronic illness, the employee may be trapped, unable to leave a job. To maintain health coverage, the employee cannot resign to start a new business, retire early, or leave to have more family time.

What the employee needs is the ability to always be able to purchase health insurance at reasonable rates even if they leave their employer. Accordingly, O-CHIP directs the Insurance Commissioner to explore the feasibility of insurers providing coverage that guarantees an option to buy health insurance in future years at rates comparable to what the employee would pay if in otherwise good health.

The existence of such protection not only benefits those obtaining coverage to avoid the risk of becoming uninsured, it will also eventually reduce the number of insured in poor health who raise the premiums in group plans. For instance, if an employee buys protection against becoming “uninsurable” and a family member subsequently develops a costly health problem, that employee is no longer trapped in the employer’s group plan but may leave to pursue his or her career goals. Over time, some will leave who would otherwise stay.

Guaranteed insurability is not the same as guaranteed issue. With guaranteed insurability, the potential insured pays a risk premium to insure his or her insurability. In contrast, under guaranteed issue, without any consideration at all, a potential insured can require an insurer to issue a policy. The insurer loses money that must be recovered from other policyholders to maintain solvency.

Similarly, a child covered by guaranteed insurability who develops a chronic illness would be able to buy at standard rates upon becoming an adult. In either case, the employer’s group plan is relieved of a highO-CHIP: Oklahoma Comprehensive Health Independence Plan

cost member, reducing the plan’s overall cost and eventually its premiums.

Though there are far more questions posed than this proposal can answer, guaranteed insurability may be one means of addressing a serious flaw in our existing system that encourages employer-provided health insurance. O-CHIP directs the Insurance Commissioner to start the process of seeking a workable alternative.

Encourage policies that combine health insurance and disability income.

Under O-CHIP, employers who provide their employees with a comprehensive benefit package would retain the immunities of the current workers’ compensation system but would not be required to carry separate workers’ compensation insurance.

To qualify, the benefit package would have to include: • Health insurance on par with that provided by the new Medicaid program that covers costs up to $5,000,000 over the employee’s lifetime.

• Life insurance equal to 300% of the employee’s annual taxable wages up to $100,000. (Note that employer-paid premiums for insurance above $50,000 are taxable to the employee.)

• Accidental death and dismemberment insurance (AD&D) equal to 300% of the employee’s annual taxable wages up to $100,000.

• Short-term disability income protection of at least 60% of the employee’s average weekly wage for up to 26 weeks.

• Long-term disability income protection of at least 50% of the employee’s average weekly wage for up to five years or until age 65, whichever is longer.

• The employer would have to provide coverage to the employee without cost, except for payroll and income taxes, to qualify for the exemption. As an alternative, the employer would be able to provide the employee an allowance under a cafeteria plan that would cover the cost of the benefit package.

Employers who do not avail themselves of this option would remain subject to the current workers compensation system.

O-CHIP: Oklahoma Comprehensive Health Independence Plan

Disputes between employers and their injured employees sometimes arise when it is not clear that an injury was work related.

Under the O-CHIP approach, whether the injury occurred as a result of activity at the loading dock or the fishing dock will no longer matter since the injury would be covered regardless of the cause. However, an injury sustained before the employer elects to cover employees under O-CHIP provisions would be covered under the old system.

While the employer would have to provide additional coverages for employees, the employer is freed from the costly and highly acrimonious workers comp system. At the same time, employees gain the security of being covered for medical costs and lost income due to injury regardless of where the injury occurred.

Note that the beneficiary of a worker killed in an accident would receive both the life insurance and AD&D benefits equaling 600% of the worker’s annual taxable wages up to $200,000. Note also that the payments for disability income protection made on behalf of the employee would be taxable to the employee as would premiums on any life insurance coverage above $50,000.

Under O-CHIP, the disability income provisions of Social Security and SSI would be integrated into the disability income provisions to maximize the benefit to the injured employee without increasing costs to the employer.

Furthermore, the State of Oklahoma and its workers would also be likely to benefit directly by selecting this new plan for its own employees.

Encourage temporary health insurance for appropriate situations.

A large block of the uninsured is without coverage for only six months or less.

O-CHIP provides grant authority to the Insurance Commissioner to encourage insurers to offer health insurance on a temporary basis. Temporary health insurance would provide very basic coverage only and exclude all but minimal expenditures on pre-existing conditions. The term of the policy would be limited to six months.

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Many insurers offer some type of coverage and extensive efforts may not be necessary; however, O-CHIP permits the Insurance Commissioner and the Health Care Authority to work with insurers to develop a marketing strategy to provide this coverage for temporarily uninsured families and make its availability known.

Encourage policies that combine longterm care with a life annuity.

Former U.S. Treasury official Adam Warshawshy determined that underwriting efficiencies would exist for a product that combined insurance for long-term care with a life annuity. Such a product would be attractive to many citizens and benefit the state. An Oklahoman with long-term care insurance greatly reduces the likelihood that the state will bear the expense for that person’s nursing home services.

O-CHIP gives the Insurance Commissioner grant authority to encourage insurers to offer these products in Oklahoma. However, since insurers already appear to be considering offering this product, such grants may not be needed.

Consider the role of nurse lines and other services.

The Oklahoma Health Care Authority has established a telephone line so Medicaid recipients can consult a nurse about health issues. This service helps divert patients from emergency rooms which may not be appropriate for the patient. When the patient has a direct financial interest in getting less costly care under O-CHIP, telephone calls to the nurse line will likely increase.

However, since many private providers and insurers also provide this service, we should question whether the state should compete with them, especially when Medicaid participants become buyers of regular health insurance. Accordingly, the state will discontinue its nurse line services. Sooner Care, as a private concern, may provide this service to its policyholders. (See next section.)

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Transition Sooner Care to a private sector enterprise.

The state offers health care benefits to Medicaid participants through its Sooner Care program. Sooner Care is administered by the Health Care Authority and has gained a reputation as one of the country’s most innovative and effective Medicaid programs.

Sooner Care provides insurance and costcompetitive benefits to a population not generally served by private sector insurers. It has managed to do this while maintaining very low administrative costs. The state should capitalize upon the efficiencies the Health Care Authority has created.

Many current Medicaid recipients will want to maintain a relationship with Sooner Care. In addition, others would doubtless want to take advantage of the expertise and efficiencies Sooner Care offers. Rather than disband a valuable entity, O-CHIP will transition Sooner Care into an enhanced role as a private sector entity.

O-CHIP directs the Health Care Authority to develop a plan to convert Sooner Care into a private sector enterprise, either as a company or a trust. Sooner Care would sell its products to any willing buyer while existing insurers would be able to offer their products to the existing Medicaid population. The plan will include provisions for employees who transition to the new company to receive stock or similar equity. The new enterprise would also get authority to raise capital from investors.

O-CHIP will increase the number of people with health insurance, creating new demand for insurance services. Many of those new insureds will come from populations with which Sooner Care has experience. However, given the new demand, it is unlikely that Sooner Care’s emergence into the regular marketplace will displace existing companies.

However, any employees who do not transition to the new enterprise and are unable to find employment in another state agency would receive a generous severance package.

O-CHIP: Oklahoma Comprehensive Health Independence Plan

Anticipating Coming Trends Anticipate and plan for the inevitable trend to defined contribution health benefits.

Most people obtain health insurance coverage through their own or a family member’s employment. Due to dramatically rising health care costs and an increasingly litigious human resources environment, we have seen major changes in isolated instances which will inevitably lead to a flood of change.

Oklahoma policymakers observing the forerunners of these changes may wish they would stop but they won’t. Legislation to halt such changes will only delay the inevitable, and, in the meantime, some jobs will leave the state for more favorable locales. A better response is for Oklahoma to anticipate and plan for these changes to take advantage of their upside and mitigate their downside.

The major change on the horizon is a move to defined contribution plans for health care benefits. This section will attempt to show: • Why this change is starting to occur and will become more widespread.

• Important differences between defined contribution plans for health benefits and defined contribution plans for pensions.

• Some positive aspects of defined contribution health benefit plans.

• Some negative aspects of defined contribution health benefit plans.

• How public policy may be able to capture the positives and mitigate the negatives.

Under a defined contribution arrangement, the employer contributes a set, or defined, amount to a benefit plan. The employee then has the flexibility to use that contribution as best suits him or her. This is different than a defined benefit plan, where the employer sets or defines the actual benefit and then contracts to contribute enough resources to the benefit plan to fund the purchase of the benefit.

A defined benefit plan assures an employee of a particular benefit, regardless of any action the employee may take. However, it also robs the employee of any flexibility in O-CHIP: Oklahoma Comprehensive Health Independence Plan

crafting a benefit that he or she might find more valuable.

The terms “defined benefit” and “defined contribution” are more often applied to employer-sponsored pension arrangements.

Traditionally, most employers provided their employees with a pension if they met certain requirements for age and length of service.

The employer is required to make contributions to the pension plan to assure employees that benefits will be paid as promised.

The employee gets a certain, fixed retirement benefit in the form of a pension.

However, an employee with other sources of retirement income may prefer a different benefit. For example, if the employee dies before retirement, the employee’s heirs get nothing unless special provision has been made. The opportunity to make a large purchase, such as a vacation cabin, or to pay off all existing debt upon quitting work is made more difficult.

Under a defined contribution pension plan, such as a 401(k), the employee gets a defined amount paid into an account over which the employee has some control.

Depending upon the employee’s situation, he or she may invest the funds conservatively or more aggressively. In the event of the employee’s demise, the assets in his or her account pass to his or her heirs. Upon retirement, the employee may take a lumpsum payout, schedule a long-term payout of benefits, or purchase an annuity.

More commonly, the employee will elect some combination, depending upon his or her own unique situation and needs. A defined contribution retirement plan gives the employee far greater flexibility, but with it comes a degree of responsibility not present in the traditional defined benefit plan. An employee who invests irresponsibly or makes ill-advised expenditures upon retirement will find his or her later years more difficult.

With respect to health care benefits, under a defined benefit plan, the employer provides the employee with a paid or partially paid health insurance plan or membership in a health maintenance organization.

23

The employee has limited, if any, control over his or her actual benefit structure.

However, a defined contribution health care plan is an arrangement where the employer contributes a defined amount to an account for the benefit of the employee from which the employee provides for part of his or her own health care needs. Usually, an employee not wishing to use all of the employer contribution for health insurance may convert part of the contribution to taxable compensation.

We will revisit these principles later, but the important things to bear in mind are that under a defined benefit plan, the eventual benefit is fixed, the employee has little flexibility or control (and also very little risk or responsibility), and the employer makes all the critical decisions. Under a defined contribution plan, the amount of the contribution to the plan is fixed, the employee can make choices about how best to use that contribution given his or her own circumstances, and the employee makes many of the important decisions but also takes on the risk those decisions entail.

The cost of most benefits an employer provides is relatively uniform from employee to employee performing similar work. Consider paid vacation, for example. Two employees with the same pay in similar jobs will impose a predictable, uniform cost on the employer. The same is true for payroll taxes and most other benefits.

This changes significantly with health care. One employee’s health care costs may be minimal, while another employee performing the same job at the same pay may have very significant costs. In Oklahoma, it appears that about 15% of the workers account for nearly 85% of the typical employer’s health care claims.

Previously, these differences were not as prominent because health care in general was less expensive. It was also a common practice for an employer to provide health benefits through an insurance company.

Both of these factors are changing.

Ballooning health care costs are painfully evident to employers offering health care benefits. In contrast with what was generally true twenty years ago, most of today’s 24

businesses will self-insure for all but the very largest claims and only use an insurance company to process the claims.

These trends are compounded by recent court decisions on what constitutes workplace discrimination. Court rulings threaten to turn a trickle of movement toward defined contribution health benefits into a torrent.

At this writing, the judicial system has not yet taken a hard position that unhealthy citizens are protected as disabled. This would include such conditions as obesity and others likely to lead to higher health care outlays. However, some decisions already appear to be headed in that direction. More alarming are the numbers of attorneys eager to represent those citing discrimination due to their weight.

In dispensing benefits, the law generally holds that an employer must provide uniform benefits in a non-discriminatory manner to receive favorable tax treatment. Any employer who gives his employees a set amount of money for benefits elected through a cafeteria plan or similar arrangement clearly meets that test.

To better understand why defined contribution health benefits or similar arrangements are likely to spread rapidly, we may consider a hypothetical employer with twenty employees performing identical work for the same pay. In our example, each employee is paid $50,000 per year with the employer spending an additional $25,000 each on payroll taxes, employee expenses and benefits other than health care.

Next, we add health insurance to the mix with the employer self-insuring except for very large claims. A hypothetical list of employees and their costs is provided below.

The names are random but are organized alphabetically, with the highest costs associated with names appearing first and those with lower costs appearing last.

In our hypothetical example, the 15% of the employees with the highest medical costs to the employer (Adams, Barrett, and Cooper) account for 85% of the employer’s total health benefit spending, a ratio that mirrors the Oklahoma situation. Also note that our example omits the cost of insuring against extraordinary events.

O-CHIP: Oklahoma Comprehensive Health Independence Plan

NAME

PAY

EXPENSE

MED CARE

TOTAL

Adams Barrett Cooper Dutton Edinger Ferrier Gurski Hernandez Innes Johnson Kriedermacher Lavosier Murphy Nagy O’Toole Philos Queche Rietz Smith Thompson

$

50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000

$ 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000

$ 50,000 25,000 10,000 4,500 3,000 2,000 1,500 1,000 750 500 400 250 250 250 100 100 100 100 100 100

$

Total

$ 1,000,000

$ 500,000

$ 100,000

$ 1,600,000

As long as everyone does their accounting to spread the costs evenly among employees ($5,000 per employee for health care in our example), things are fine. Today, many employers still spread their costs evenly. However, as health care costs rise, once immaterial differences become significant. In our example, the total cost of employing Adams ($125,000) is 66% greater than the cost of employing Thompson ($75,100).

Now suppose that our employer faces fresh competition from a new entrant. The new entrant has a similar profile but offers a salary of $53,000 and a high deductible health insurance plan accompanied by a health savings account. Let’s say that the employer coverage contains a $5,000 deductible and a 20% co-insurance requirement for the next $25,000 with a loss limit of $10,000.

Let’s also say that the new entrant employer contributes $2,000 per employee to a cafeteria plan which an employee may place in a health savings account. Of course, each employee has the option of making additional contributions to his or her health savings account from their own salary.

The new competitor advertises for employees. Absent other considerations, most O-CHIP: Oklahoma Comprehensive Health Independence Plan

125,000 100,000 85,000 79,500 78,000 77,000 76,500 76,000 75,750 75,500 75,400 75,250 75,250 75,250 75,100 75,100 75,100 75,100 75,100 75,100

employees are not going to leave an existing job for a 6% raise, although some will be enticed. However, there are always other considerations.

Suppose the new entrant’s office is more conveniently located. Suppose the manager of the new competitor is known favorably or has other affiliations or a culture that prospects would find especially enticing.

Let’s say that Adams, Queche, Reitz, Smith, and Thompson all find the new employer very promising and decide to investigate. What do they find? What is the impact of the difference in health care benefits?

With the new employer, Queche, Reitz, Smith, and Thompson would have health care costs of $100 per year for which they will receive $2,000. This amounts to a $3,000 raise and possibly another $1,900. Some of this may be converted to salary or other benefits, especially if the new entrant sets up a cafeteria plan. Queche, Reitz, Smith, and Thompson jump to the new entrant.

Adams faces a much different situation.

After hearing about the benefits offered by the new employer, he realizes that changing jobs will cost him at least $10,000 per year, and possibly more. He would receive an 25

initial $3,000 raise like the others, but for Adams, a $2,000 deposit in a defined contribution health care plan to cover $10,000 worth of health care costs is not a winner.

Adams stays with his existing employer while his healthy co-workers enjoy the equivalent of a $5,000 raise.

The distinction between pooling of risks and pooling of costs is evident in this example. The four employees who jump to the new entrant have almost no known costs. For them, the health insurance coverage offered by the new employer protects them against the risk that something unforeseen might happen.

Adams would also get protection against unforeseen developments. However, Adams faces something he doesn’t need to foresee

because it is already happening: $50,000 in known cost that must be covered. The value of health insurance is different for Adams than for his four former co-workers.

Let’s now assume that our original employer thinks they can maintain sales despite the competition if they replace the workers they’ve lost. They do some recruiting of their own and hire Andrews, Franklin, Kyle, and Pizarro, who, in keeping with our alphabetical system, face health care costs identical to Adams, Ferrier, Kriedermacher, and Philos. Our employer has just replaced $400 of medical expenses with $52,500.

An updated roster of employees and their costs for our original employer follows: A couple of quick calculations reveal that our original employer, with 20 employees

ORIGINAL EMPLOYER NAME

PAY

EXPENSE

MED CARE

TOTAL

Adams Andrews Barrett Cooper Dutton Edinger Ferrier Franklin Gurski Hernandez Innes Johnson Kriedermacher Kyle Lavosier Murphy Nagy O’Toole Philos Pizarro

$

50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000

$ 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000

$ 50,000 50,000 25,000 10,000 4,500 3,000 2,000 2,000 1,500 1,000 750 500 400 400 250 250 250 100 100 100

$

125,000 125,000 100,000 85,000 79,500 78,000 77,000 77,000 76,500 76,000 75,750 75,500 75,400 75,400 75,250 75,250 75,250 75,100 75,100 75,100

Total

$ 1,000,000

$ 500,000

$ 152,100

$ 1,652,100

Let’s also look at a similar cost profile for our new entrant: NEW ENTRANT NAME

26

PAY

EXPENSE

MED CARE

TOTAL

Queche Reitz Smith Thompson

$ 53,000 53,000 53,000 53,000

$ 25,000 25,000 25,000 25,000

$ 2,000 2,000 2,000 2,000

$ 80,000 80,000 80,000 80,000

Total

$ 212,000

$ 100,000

$ 8,000

$ 320,000

O-CHIP: Oklahoma Comprehensive Health Independence Plan

now costing $1,652,100, has an average cost per employee of $82,605. Meanwhile, our new entrant has four employees at a cost of $320,000, or an average cost of $80,000.

In our example, not only have the workers who switched to the new entrant come out ahead, but our new entrant has an approximately 3.3% cost advantage while offering its employees more money. With a 3.3% advantage in a competitive industry, the new entrant will begin winning accounts. In a market with significant price competition, the new entrant will win many new accounts.

Perhaps the next year, the new entrant may double its work force at our employer’s expense again. At some point, our employer may lose too many accounts and decide not to replace employees who leave.

We may think that our employer should investigate the new applicants thoroughly

and not hire Andrews. However, discrimination against someone with an illness is illegal unless the illness prevents that person from performing necessary job duties. Andrews may find a lawyer who rightfully sues our employer for discrimination, regardless of whether our employer can “afford” to hire Andrews or not. For the employer, the time alone in such litigation is costly.

We should also consider the impact of inflation. Let’s say that inflation is 4% for the general economy but 10% for health care.

These are reasonable assumptions given recent trends. Where does this put us? Our original employer’s costs for salary and expenses other than health benefits increase 4%, or $60,000. Our original employer’s health care costs increase 10%, or $15,210. Meanwhile, our new entrant’s

ORIGINAL EMPLOYER NAME

PAY

EXPENSE

MED CARE

TOTAL

Adams Andrews Barrett Cooper Dutton Edinger Ferrier Franklin Gurski Hernandez Innes Johnson Kriedermacher Kyle Lavosier Murphy Nagy O’Toole Philos Pizarro

$

52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000 52,000

$ 26,000 26,000 26,000 26,000 26,000 26,000 26,000 26,000 26,000 26,000 26,000 26,000 26,000 26,000 26,000 26,000 26,000 26,000 26,000 26,000

$ 55,000 55,000 27,500 11,000 4,950 3,300 2,200 2,200 1,650 1,100 825 550 440 440 275 275 275 110 110 110

$

133,000 133,000 105,500 89,000 82,950 81,300 80,200 80,200 79,650 79,100 78,825 78,550 78,440 78,440 78,275 78,275 78,275 78,110 78,110 78,110

Total

$ 1,040,000

$ 520,000

$ 167,310

$ 1,727,310

EXPENSE

MED CARE

TOTAL

NEW ENTRANT NAME

PAY

Queche Reitz Smith Thompson

$ 55,120 55,120 55,120 55,120

$ 26,000 26,000 26,000 26,000

$ 2,200 2,200 2,200 2,200

$ 83,320 83,320 83,320 83,320

Total

$ 220,480

$ 104,000

$ 8,800

$ 333,280

O-CHIP: Oklahoma Comprehensive Health Independence Plan

27

combined costs for salary and all expenses increase more slowly.

At this point, it may be helpful to provide details for our employer and the new entrant after accounting for a year’s worth of inflation: Note that the average cost for an employee for our original employer is now $86,366 and $83,320 for the new entrant, more than a 3.7% advantage. The gap has widened and will widen further if health care costs continue to rise faster than the general rate of inflation.

We should also note that the migration of low-cost employees to the new entrant does not result from any discrimination on the part of either employer. Rather, it results from self-selection on the part of the employees. If each acts in his or her own best interest, those with low health care costs will find the new entrant an attractive choice while those with high health care costs, like Adams, will not.

Without changes in public policy, this represents a bad trend for those with serious, costly illnesses. Let us also consider what options exist for O’Toole, with our original employer, and Smith, with the new entrant, if they fall prey to a devastating illness during the year.

In the short term, O’Toole is covered under a more traditional approach and fares better. After payment of minimal co-pays, most of O’Toole’s costs would be covered under a traditional plan. Though protected from the full brunt of the financial calamity, Smith must still come up with $10,000 out of pocket. The $1,900 that should remain in the health savings account from the previous year plus the $2,100 that should be available from the current year’s contribution reduce the cost from $10,000 to $6,000.

However, this is $6,000 more than O’Toole must pay.

If these health care costs result from an accident or illness with a prognosis of full recovery, both O’Toole and Smith have favorable long-term prospects. However, what are their prospects if the costs result from the onset of a chronic illness or they are unable to recover from an injury? Where do they find themselves?

By invoking their COBRA option, both can 28

continue coverage for another eighteen months even if forced to quit work. What happens at the end of that period? Neither has insurance or the prospect of finding any easily. An insurer will realize that they are no longer “in good health” and are therefore not candidates for standard individual health insurance policy at competitive rates.

O’Toole and Smith may face the prospect of having to continue to work even if they would rather not. Their goals change.

Instead of simply generating income, they must have help in covering medical bills. If O’Toole and Smith are married, perhaps their spouses would seek employment with health insurance benefits. Once again, the jobs offering health insurance may or may not be otherwise attractive to the spouses.

O’Toole and Smith will find their own employment options limited. Perhaps one of them always wanted to start a business. The burden of medical bills will make the realization of that dream more difficult. Perhaps one had planned to take a part-time job or leave the work force altogether to spend more time with the family. Such plans will be more difficult to realize without health insurance.

An employee facing unexpected circumstances must overcome obstacles created by the fact that the employer, rather than the employee, owns the health insurance policy.

Once the employment relationship is terminated, the employee may need to make some unpleasant choices. COBRA may grant a temporary reprieve, but unless circumstances improve, the former employee will eventually face some unpleasant decisions.

What we have examined thus far is a comparison between the traditional health care benefit plan offered by our original employer, and a high deductible plan coupled with a health savings account offered by our new entrant. While a high deductible plan with a health savings account is a move in the right direction, it is not a true defined contribution plan.

Under a true defined contribution plan, the employer contributes an amount of money to each employee to purchase their own health insurance plan. Under this approach, the employer gains the advanO-CHIP: Oklahoma Comprehensive Health Independence Plan

tage of further limiting its exposure to health care costs. However, employees gain protection in the event of an unexpected accident or illness. They no longer lose their insurance.

Existing federal rules make true defined contribution health plans very difficult to design if the employer wants to retain the tax advantages associated with health care benefits. Therefore, while some employers are implementing higher deductibles on their health plans, they cannot easily implement true defined contribution health care plans.

If they could, and if our new entrant chose to implement a defined contribution health care plan, the advantage the new entrant would enjoy over our original employer would expand. The new entrant’s workers would also gain. Under a true defined contribution health care plan, Smith would own his own insurance policy. Note, as discussed earlier, that under a defined contribution plan, the employer makes a contribution and the employee decides how to employ that contribution.

The premiums on Smith’s policy will only increase in line with overall health care inflation, not in line with Smith’s health care costs. Perhaps more important, Smith’s spouse need not seek employment solely to pay the family’s bills.

The example presented contains many assumptions to simplify the explanation of a complex situation. However, such assumptions are very evident in today’s economy. As options become available, workers will act in their own self-interests. Competitive factors will force employers to respond, and market forces will push them in the direction of defined contribution plans or less expensive high deductible plans. Our present system rests on an increasingly slippery slope.

The past few decades have witnessed a major shift from defined benefit pension plans to defined contribution plans for retirement. The new defined contribution plans offer employers predictable costs and generally simpler administration. Meanwhile, defined contribution plans offer employees greater flexibility and ownership of an asset that they can bequeath to their O-CHIP: Oklahoma Comprehensive Health Independence Plan

heirs. Younger workers also profit handsomely from the trend.

Absent unexpected developments, we will see a similar movement, and one perhaps even more pronounced, toward defined contribution plans for health benefits. While not offering workers an asset to include in their estates, defined contribution plans for health benefits can address unique needs.

Defined contribution health benefit plans offer employers major advantages. Perhaps most importantly, they give the employer predictable costs as they set a certain amount for the plan rather than leave the employer at the mercy of uncontrollable factors. An employer with a defined contribution health benefit plan will be unattractive to high-cost workers, thus reducing the employer’s overall costs relative to competitors.

Another increasingly important advantage for employers will be avoiding litigation over discriminatory hiring. In a defined contribution plan, the employer gives each worker the same amount and has no motive to do otherwise. Elaborate procedures to ensure that the employer does not discriminate against those who might be considered disabled are no longer necessary. The additional savings in overhead and the benefit of being able to focus on core business strategies are also doubtless substantial.

The major negative for defined contribution health benefit plans to employers is the higher underwriting costs they entail. In this respect, they are the opposite of defined contribution pension plans, where the cost of sophisticated actuarial modeling needed for defined benefit pensions is basically eliminated by adopting a defined contribution plan.

However, the cost of actuarial services actually increases under defined contribution health benefit plans. The actuary must consider each individual in more detail.

There is a different policy and an underwriting process for each worker. Our earlier example did not consider this, but the relative cost is less than the average difference in health care expenditures themselves and growing relatively smaller over time.

Defined contribution health benefit plans 29

are a winner for most employers. Costs are more predictable and decrease over time.

The risk of litigation is reduced. Even the added cost of hiring actuaries for more underwriting does not offset the positives.

Employees will also see positive changes from a conversion to a defined contribution health benefit plan. Most important, each worker will own his or her policy. No longer will an unexpected health crisis force unpleasant employment decisions dictated by the need to get insurance. The employee’s health insurance is also protected if the employer goes out of business as the policy belongs to the employee, not the employer.

Healthy employees would see an increase in real compensation, as our example demonstrates.

Without further action, the clear losers under the evolving system are unhealthy workers, or perhaps more often, workers with an unhealthy family member dependent upon them for health insurance. If an employer converted from an existing defined benefit health plan to a defined contribution plan, high-cost workers would face disaster.

If this happened in our example, Adams, Andrews, Barrett, and perhaps Cooper and Dutton would seek other employment with what is likely a dwindling number of employers providing traditional coverage in a benefit package.

Defined benefit health plans are so pervasive today that an employee finding his or her benefit plan terminated should have several alternatives. Businesses starting the trend toward defined contribution pension plans were generally new businesses adopting a new structure rather than existing businesses converting existing plans. The trend grew as the new plans became more common and their advantages more widely understood.

To protect people like Adams, Andrews, Barrett, and Cooper, the primacy of defined health benefit plans may be preserved through regulation. However, if Oklahoma takes such action and neighboring states do not, we can replace “original employer” in our example with “Oklahoma” and “new entrant” with “Texas.” As in our example, Texas would gain jobs at Oklahoma’s 30

expense, as would Kansas, Arkansas, or any other state that did not follow our lead.

If we attempt to legislate such a prohibition at the national level, the realities of a global marketplace will similarly lead to the export of jobs overseas.

While businesses improve general prosperity and provide experience and training along with many impressive benefits to employees and society, they do not make especially good social engineers. The government can best protect citizens with difficult health problems by doing so directly rather than burdening the business system with the task.

Fortunately, there is an approach that can protect high cost employees like Adams and Andrews from calamity while allowing Oklahoma employers and their workers to reap the benefits of a better system. The following section outlines this approach.

Provide for one-time election to retain existing coverage.

Uncoordinated efforts to help the less fortunate, over-regulation of the health insurance market, and ill-conceived tax preferences for employer-provided health insurance are creating our health care crisis. O-CHIP charts a way out that will maintain quality health care and accessibility to all Oklahomans. O-CHIP also includes special provisions to assure that no one employees health insurance premiums will increase as a result of these changes.

As already noted, the current regulatory framework forces insurers to overcharge healthy insureds to keep rates lower than for those with high health care costs. The result is more healthy workers shopping for health insurance find they are buying protection for themselves and subsidizing health care for others. Many avoid buying what for them is an overpriced product.

Oklahoma does not go as far as most states in this regard. Some states have almost completely destroyed the market for individual health insurance by enacting the extreme mandatory cross-subsidy: community rating.

The insurance industry has developed the O-CHIP: Oklahoma Comprehensive Health Independence Plan

concept of the high-risk pool so those with high health care costs may buy insurance at what are still high but generally more affordable rates. Most high-risk pools charge higher rates than for standard insurance, but still don’t force their full cost onto participants. Participants bear some of the cost. Most of it is paid through insurance regulation that forces insurers to shift some of that cost to other policyholders. The result is that healthy policyholders still find themselves overcharged but not by as much as under community rating.

For employers seeking to shift to a defined contribution plan or, pending federal regulatory reform, to a high deductible plan, O-CHIP would allow them to permit their employees to buy insurance at the rate they currently pay from a special high-cost pool that O-CHIP would create for this purpose.

The state would issue bonds to subsidize the pool so that insurers could offer coverage for less-than-normal charges. In effect, the bond proceeds would replace the subsidy that now comes from healthy policyholders.

Individuals would have a one-time opportunity window to sign up for insurance through the special high-cost pool. Those who sign up would have an individual insurance policy that they could retain until they qualify for Medicare. Premiums would not increase at all the first year, and any future increases would be limited to overall health care cost inflation. The insurer could not cancel the policy if the premiums are paid.

Any individual who did not sign up would need to get health insurance elsewhere or face the consequences of being uninsured.

In a de-regulated market, most people would be able to buy insurance for less than what it costs today. O-CHIP will empower individuals to make choices not currently available to them. However, O-CHIP also holds individuals, not the state, responsible for the choices they make. O-CHIP will permit every Oklahoman to afford health insurance.

Under O-CHIP, anyone who decides to remain uninsured and then suffers a serious health crisis will be able to receive medical attention. However, they will also face the very serious financial consequences of their decision.

O-CHIP: Oklahoma Comprehensive Health Independence Plan

The state can promote the need for individuals to obtain health insurance through public service announcements and notices in public facilities. The most effective public announcement is likely a sales representative selling a reasonably priced product that furnishes real value to its buyer.

O-CHIP will make this a reality.

Grasp the economic reasons for de-regulation of health insurance.

Our society declares its willingness to help those less fortunate. For those facing serious health issues and resulting high costs, we express that willingness by helping those who are sick to pay their medical bills.

The question is how we do this. When someone receives health care, someone has to pay. Who should pay? It would seem that if society wants to provide this assistance, it should also be willing to pay for it. However, that is not entirely our current practice.

As a society, we do provide Medicaid, a government program to assist those with low incomes. We fund public clinics and health programs. We also help many others by allowing them to show up at a hospital and receive treatment without paying for it. Of course, someone always pays. As previously noted, that “someone” is invariably the responsible citizen who maintains health insurance coverage or the taxpayer, or both.

What we are doing is proclaiming that everyone is assured of health care at the expense of those who act responsibly by getting health insurance. The responsible citizens pay for themselves, the less fortunate, and the irresponsible who don’t get health insurance. Figures 1–4 illustrate how we go about this through insurance regulation.

At present, about 15% of our employed population accounts for about 85% of our health care expenditures. The average health care expenditure on the part of the average person in the 15% group with high health care costs is about 32 times larger than the average health care expenditure on behalf of those in the larger, healthier group.

31

Suppose that the average health care outlay for our larger, healthier group is $500 per year, and the average health care outlay for our smaller but less healthy group is $16,000 per year. If we have a total population of 100, we have expenditures of $42,500 for the 85 healthiest people and $240,000 for the 15 least healthy people.

If our healthy people pay for their own expenditures, they would spend $500 each.

If our less healthy people pay for their own expenditures, they would each spend $16,000. However, the average expenditure for the entire group is $2,825.

Of course, not all the healthy people will incur exactly $500 in costs. Some will incur

more and some will incur less. In the same way, not all the less healthy people will incur $16,000; some will incur less and some will incur more – and two or three may incur considerably more. Health care expenditures are not randomly distributed. However, for purposes of illustration, we will declare that each of the healthy people incurs $500 and each of the less healthy $16,000. These amounts leads us to “85% of the cost among 15% of the people,” a good rule of thumb for health care cost distribution in Oklahoma.

Meanwhile, some may incur relatively little in one year (they would be in the healthy group that year) but incur significant costs in another year (when they would be in

COST Workers 85 Healthy 15 Unhealthy 100 Workers

32

Total $ 42,500 240,000 $ 282,500

Average $ 500 $ 16,000 $ 2,825

O-CHIP: Oklahoma Comprehensive Health Independence Plan

the unhealthy group). However, those with a chronic illness will likely be among the higher-cost individuals year after year.

If our healthy members pay for their own expenditures, they would spend $500 each.

If our less healthy members pay for their own expenditures, they would each spend $16,000. However, the average expenditure for the entire group is $2,825.

Health insurance is more than just cost

shifting; it also mitigates risk. The traditional role of health insurance was to protect against the possibility of future adverse events. So, we will need to add a premium to cover the risk of something presently unforeseen taking place. For purposes of our example, we will declare that the net present value of the cost of future outlays in excess of current outlays is $1,000 per person.

When we pool this risk together with the

COST Workers 85 Healthy 15 Unhealthy 100 Insured

Total $ 127,500 255,000 $ 382,500

known costs outlined in Figure 1, we have the following, as shown in Figure 2.

Now we are asking the healthy to subsidize the unhealthy. The average cost for everyone is $3,825. More precisely, the average cost is $3,825 — as long as everyone, healthy and unhealthy, stays in the pool. The unhealthy are enjoying a $17,000 O-CHIP: Oklahoma Comprehensive Health Independence Plan

Average $ 1,500 $ 17,000 $ 3,825

value for $3,825. They are likely to stay in the pool! However, what about the healthy?

They are paying $3,825 for a $1,500 value.

Unless someone else pays the bill, some of them will probably leave.

Let’s say that 25 of the 85 healthy members decide to leave. In effect, they are saying it is not in their interest to spend 33

$3,825 for $1,500 worth of insurance. Of course, many will reason that the value of protection against truly catastrophic costs is more than $1,500. However, some will

reason that it is worth something less than $3,825. If 25 of the healthy group members drop out, our revised pool looks something like Figure 3.

COST Workers 60 Healthy 15 Unhealthy 75 Insured 25 Uninsured

The pool has fewer participants, but those who have left took less than an average share of the total cost. Our unhealthy members are still getting a great benefit: $17,000 in value for $4,600 in cost (although not quite as good as previously with 100% participation). Now our remaining healthy members are paying even more in premium $4,600, but for no more value. We can 34

Total $ 90,000 255,000 $ 345,500

Average $ 1,500 $ 17,000 $ 4,600

reasonably suppose that some of the healthy people who would pay $3,835 for our health insurance product will not pay $4,600.

Let’s assume there are five such individuals. These five healthy members also decide to drop out, leaving us with only 70 members — 55 healthy and 15 unhealthy — to shoulder the load. Figure 4 illustrates the new situation.

O-CHIP: Oklahoma Comprehensive Health Independence Plan

COST Workers 55 Healthy 15 Unhealthy 70 Insured 30 Uninsured

Total 82,500 255,000 $ 337,500 $

Our average cost is now $4,821. The unhealthy members still come out way ahead while the healthy members come out far behind. Every time costs are added to the pool that are not distributed randomly across the population, we exacerbate the problem. As long as individuals are free to leave the pool (i.e., decline to buy health insurance), the problem worsens as costs are added.

This example is, admittedly, a gross oversimplification for many reasons. First, it omits entirely the need of the insurer to cover administrative costs and make a profit. It also omits the impact of investment earnings resulting when premiums for the risk portion of our example are invested in anticipation of their future use.

O-CHIP: Oklahoma Comprehensive Health Independence Plan

Average $ 1,500 $ 17,000 $ 4,821

In addition, the population does not easily divide into two homogeneous groups of healthy and unhealthy. The 15% incurring 85% of the costs differ among themselves, some incurring much larger costs than others. Similarly, the cost profile of the “healthy” 85% is far from uniform.

However, the underlying principles are on target. We do require the healthy who buy health insurance to pay more so those with chronic illnesses can pay less. And, it’s also true that many of the healthier members of our population are passing on the opportunity to buy health insurance when they don’t get it for “free” from an employer.

We have transformed insurance from protection against risk into the pooling of known costs. While the insurer protects 35

policyholders against the adverse consequences of unforeseen events, we also ask them to pay bills that we know will be incurred. We know that the insurer will, of necessity, pass those costs on to other policyholders. Through our system of insurance regulation, we effectively tax only those who behave responsibly to provide affordable health coverage for those with chronic illnesses.

Some have looked at this situation and determined that the answer lies in the government taking responsibility for all health care expenditures. This is basically the system used in Canada and most European countries today. It is true that monetary costs in those countries are generally lower.

It is also true that many Canadians and Europeans facing serious health issues go to extraordinary lengths to get medical treatment in the United States because this nation still maintains the semblance of a

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free market in health care. When someone’s life and future are on the line, many vote with their feet to leave a system of socialized medicine.

Others looking at our situation have suggested a system of mandatory, universal coverage to address our problems. While near universal coverage is necessary to obtain the best insurance rates, it is a system that invites government tinkering to the ultimate disadvantage of its citizens.

O-CHIP allows the markets to work. It will lead to significantly reduced costs. It places responsibility on each individual to obtain individual health insurance. It also provides the resources for each family to obtain health insurance coverage. O-CHIP is based on the premise that if society is going to grant every individual access to health care, then all of society, and not just the members who act responsibly, must pay for the cost.

O-CHIP: Oklahoma Comprehensive Health Independence Plan

Getting Everyone Access to Care in Ways That Make Sense O-CHIP assures that every Oklahoman can access the health care system as a paying customer. Rather than develop its own program, Oklahoma, through O-CHIP, would enable all Oklahomans to purchase private health insurance.

At the same time, O-CHIP takes into account the varying circumstances and needs of potential Medicaid participants.

Make health insurance affordable and attractive.

Rather than attempt to force programs on people, O-CHIP empowers people, giving them tools to solve their own health care problems as they think best. As explained below, O-CHIP is not a treatment regimen but a means for the medically needy to take responsibility for their own health care. It allows them to select an insurance product that will best fit their needs and provides financial assistance to those who need it.

By deregulating insurance, O-CHIP eliminates the high cost relative to value which causes many younger, healthier individuals to forgo coverage. O-CHIP makes health insurance affordable and of real value to every policyholder. This change holds special promise for many with mental illness, who may benefit from a more comprehensive approach to their health care.

This expansion of care should bring with it significant savings that will offset much of the additional cost.

Use a tiered system that considers both income and cost of health insurance.

In designing most social welfare programs, policymakers may assume that needs do not vary significantly between persons with similar income and family situations. This is not true in health care. In a given year, one person may need almost no health care while someone of the same age, sex, and family situation may need $100,000 or more in services. Accordingly, programs which determine eligibility to participate based upon income alone will neglect the O-CHIP: Oklahoma Comprehensive Health Independence Plan

requirements of many of the truly needy.

We earlier addressed the pernicious effects of the uncoordinated eligibility thresholds for social welfare programs.

These effects are compounded by the fact that some programs are largely “all-in” or “all-out.” Rather than a ramp to self-sufficiency, the programs become a cliff with a steep drop once eligibility ends.

Currently, Medicaid is primarily an “allin” or “all-out” system. Meanwhile, some families may need assistance but in an amount less than 100% of their health care bills. We should recognize that those with low income or high medical bills, or a combination of both, are “medically needy.”

O-CHIP targets the medically needy for help and provides assistance based upon an individual family’s need.

O-CHIP determines eligibility through a combination of income and health care needs. Using a tiered system of eligibility, it simply helps those who can’t afford adequate health care.

O-CHIP’s approach has another advantage. When policymakers hear of the plight of a family facing dire circumstances because of a particular malady, they often enact a program for everyone suffering to any degree from that particular illness. Such well-intentioned actions invariably squander resources. Not everyone afflicted by the malady will suffer to the same extent. Others suffering may have access to other resources and not require government assistance at all.

By offering help and defining the medically needy in terms of both income and health care costs, O-CHIP builds a defense against well-intentioned but inefficient single disease programs. O-CHIP empowers anyone suffering from any disease to receive help. Meanwhile, those with the resources to manage their own care do not receive assistance. Public needs are met.

The public purse is preserved.

To measure medical need, O-CHIP establishes health care poverty thresholds of 37

100% of the federal poverty level for a single female, 85% for a single male, 185% for a married couple and 170% for a head of household. O-CHIP will cover the entire cost of health insurance for any family with an income below the health care poverty threshold. For other individuals or families above that threshold, O-CHIP will cover the cost of insurance to the extent it exceeds 50% of the family’s income above the threshold.

The threshold for a married couple is higher than that for the head of a household. Health insurance is usually more expensive for adults and for adult females.

Many other O-CHIP provisions ensure that the needs of children are met.

Under O-CHIP, income is defined broadly and includes the following: • Non-taxable income.

• Government payments and the value of in-kind resources received in the way of food stamps, housing assistance, day care assistance, etc.

• 2% of assets on a monthly basis.

O-CHIP also provides for an exclusion of 30% of earned income but not more than $9,000 per adult worker per year. This exclusion is added to roughly offset the cost of working that includes Social Security and Medicare taxes, federal income taxes, state income taxes, the cost of getting to and from the job, day care, etc. This exclusion is also designed to replace the Oklahoma earned income tax credit.

The poverty thresholds for O-CHIP are higher than Medicaid currently uses because of O-CHIP’s broader definition of income. As noted earlier, we must use a broad definition of income that includes the value of government assistance if we are to move away from the perverse incentives in the current system that undermine family stability and discourage personal initiative.

At the same time, O-CHIP excludes a portion of earned income in recognition of the costs necessary to hold a job. Appendix B illustrates the amount of assistance O-CHIP would provide to families and individuals in various circumstances.

As discussed elsewhere, Medicaidfriendly estate planning has become something of a cottage industry, helping those 38

well off get the taxpayers to absorb the cost of any nursing home stays. However, such planning is not limited to those contemplating the last years. Students and others also game the system from time to time.

The state may want to consider a look back provision to require repayment of welfare, Medicaid, and other payments in the event that a recipient experiences a sudden and significant jump in income, such as at the completion of graduate school.

Allow the less fortunate to get the insurance that best suits their needs.

Rather than provide health care services directly to beneficiaries, O-CHIP generally helps those without private health insurance to obtain it. The market, not the state, would then determine reimbursement rates and other practices.

Initially, some services might be “carved out” of the new standard approach. These could include mental illness and care for the frail elderly, two groups with members who may need assistance in making appropriate decisions about their own health care. (Later sections address services for people with mental illness and the elderly.)

However, recent strides in the treatment of mental illness are allowing increasing numbers of people with mental illness to make decisions and manage their lives quite competently. We should not impose a bureaucracy where it is not needed but rather allow those with mental illness to manage their own affairs when they can do so.

Under O-CHIP, Oklahoma would retain only the minimum federal mandates from Medicaid, seeking waivers from the Director of the Center for Medicare and Medicaid Services (CMS) to allow for a free market approach.

Provide incentives for getting health insurance.

By deregulating health insurance, O-CHIP removes major barriers to its more widespread purchase. At the same time, individuals without coverage force their fellow citizens to foot the bill in the event they do need care. It follows that we should encourO-CHIP: Oklahoma Comprehensive Health Independence Plan

age everyone to acquire health insurance or otherwise be able to provide for their own care in the event they need it rather than burden their fellow citizens.

O-CHIP empowers every Oklahoman to buy health insurance. O-CHIP is also designed to provide tax relief to Oklahomans who carry health insurance and help the state reduce the cost of health care borne by taxpayers. In addition, O-CHIP makes several changes in Oklahoma’s tax system to facilitate better, less costly health care while reducing taxes and improving the tax system.

Provide a tax credit for families with health insurance.

O-CHIP will replace the existing standard deduction and personal exemption with a $250 per person tax credit for those covered by health insurance throughout the year.

O-CHIP would permit itemized deductions to the extent that they exceed the federal standard deduction.

Specifically, a family would be eligible for the credit for each dependent child with coverage. The taxpayer would receive the credit if the taxpayer and all dependent children are covered. This emphasizes the importance of obtaining quality health care access for children.

Under this provision, almost all taxpayers covered by health insurance would receive a tax break. Only a taxpayer with a very unusual set of circumstances would see an increase, unless he or she fails to get health insurance or otherwise provide for payment of medical expenses.

Married couples with dependent children would get major tax relief under O-CHIP. Because this is a credit rather than a deduction, it is friendlier to low-income taxpayers. No claims are made that this will stimulate new economic growth since it doesn’t reduce tax rates. However, other parts of O-CHIP do create a more favorable business environment and should encourage economic growth.

The proposed tax benefit would be available to anyone with health insurance in force through an employer-sponsored plan or an individually owned policy. This includes tribal members as long as the tribe O-CHIP: Oklahoma Comprehensive Health Independence Plan

agrees to pay Oklahoma hospitals for care the hospitals provide to its members.

A taxpayer who can provide a letter of credit or can assure that an unforeseen medical expense will not result in outlays by the state or cost shifting to the insured would be eligible for the credit. The Tax Commission would certify such arrangements.

The proposed system would make employers who offer health insurance to their employees more attractive. Employees would value the insurance more because it would directly reduce their taxes.

The special exemptions in current Oklahoma law for the blind and for low-income taxpayers over 65 would be retained. Appendix C contains examples of hypothetical taxpayers under O-CHIP compared to the existing tax system.

Provide a tax credit for families with a non-dependent parent in residence.

O-CHIP includes provisions to prevent the transfer of assets for the purpose of gouging fellow taxpayers to cover long-term care expenses. However, while some may scheme about how to milk taxpayers, other families help the state avoid long-term care outlays by caring for elderly family members.

Most families willingly provide intergenerational assistance. In many cases, the recipient may be financially independent but still needs help to retain independence.

To reward and encourage such assistance, O-CHIP provides an additional $250 tax credit if a Medicare recipient was a fulltime resident in the taxpayer’s home during most of the year. Even if the elderly parent (or a close relative other than a spouse) does not qualify as the taxpayer’s dependent, the taxpayer still gets the credit.

If the elderly parent does qualify as the taxpayer’s dependent, the taxpayer would receive a second $250 tax credit for the elderly parent/dependent. In either case, O-CHIP rewards a family for caring for their elderly parents.

Provide an additional tax credit for those who itemize deductions.

O-CHIP also provides an additional credit of $125 for all taxpayers ($250 for those 39

married filing jointly) whose itemized deducImpress reality on those who tions exceed the federal threshold. would force others to pay their Without this provision, those who itemize bills. their deductions might see a tax increase.

This provision addresses an arcane but In addition to the possibility of significant troublesome glitch in the Oklahoma tax tort reform legislation (discussed in the code: the Oklahoma standard deduction is section on “Health Care Quality”), O-CHIP recommends other legal changes that will less than the federal standard deduction.

Under Oklahoma law, a taxpayer can help achieve the goal of putting quality itemize on the Oklahoma return only if they affordable health care within reach of all also itemize on the federal return. A few Oklahomans. These changes will also taxpayers itemize on the federal return even reduce the cost of health care for Oklahothough they would pay less federal tax if mans who act responsibly. they took the standard deduction so that Health insurance costs too much and they can itemize on the state return. If the health care itself costs more than it should.

One reason is that the existing system amount saved from itemizing on the state allows some to freereturn exceeds the additional taxes paid load off others, taking on the federal return, advantage of society’s Under O-CHIP, almost all the taxpayer comes self-imposed ethic to out ahead. So does not deny care. This taxpayers covered by the federal governproposal does not health insurance would ment, but at the include a legal manreceive a tax break. expense of the Okladate for individuals to buy health insurance. homa treasury.

O-CHIP ends that It does include some practice by providing measures to make it less desirable for those who can afford a tax credit and limiting itemized deductions health insurance to forgo buying it. The on the state return to the extent they exceed changes below will reduce cost shifting and the federal standard deduction. A few shift some costs back upon those who inflict taxpayers may see a very small increase in them in the first place. their Oklahoma income tax as a result of Some may question why O-CHIP does not this change: those with itemized deductions contain a legal mandate for individual or of roughly 90% – 100% of the standard employer-paid health insurance. In the case deduction amount who also know how to use of employers, such a mandate would create this tactic. numerous problems and lead to fewer jobs.

Those with 100% or more of the threshold In the case of individuals, states mandating will itemize on both federal and state rethe purchase of automobile liability insurturns. Those who aren’t very close to the federal threshold will find that they lose ance have 22% of their population uninsured vs. 25% uninsured in states without a more in federal tax by itemizing than they mandate. This is not the level of progress we gain at the state level. However, the addiseek. We will need to look elsewhere to tional credit for itemized filers ensures that make a significant dent in the number of they get a small break rather than a tax uninsured. increase if they get health insurance.

Mandates for automobile liability insurAs an alternative the legislature could ance are not very effective. Why would we increase the credit for having health insurthink they would magically be more effective ance coverage to an amount comparable to for health insurance? Enacting a legal the federal standard deduction and permandate for health insurance might even sonal exemption. Such a proposal is not create a false sense that we have solved the made because of the extreme budgetary problem when we have not. To impose legal pressure that it would create.

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O-CHIP: Oklahoma Comprehensive Health Independence Plan

mandates detracts from the need for the more effective measures outlined in this proposal.

Therefore, O-CHIP does not contain a formal, legal mandate for individuals to obtain coverage. Its provisions will be more effective than such a mandate at getting more Oklahomans under health insurance coverage.

Facilitate better debt collection by health care providers.

Those who do not maintain health insurance will lose the standard deduction and personal exemption they now enjoy while passing the cost of their own health care onto fellow taxpayers. They would also be ineligible for new tax credits offered to the insured. However, tax policy alone is unlikely to induce everyone who imposes their health care costs on others to change their ways.

Because of regulations requiring hospitals to provide services regardless of the patient’s ability to pay, those who don’t pay their bills simply transfer the cost of the services they receive to responsible parties who do pay their bills. Charges from hospitals and insurance companies are therefore higher than they would be if every treated patient paid for services received.

O-CHIP strengthens the ability of hospitals and other health care creditors to collect debts. Interestingly, some Oklahoma hospitals are now finding that their largest source of bad debts is patients who refuse to access a health savings account to pay for legitimate health care services.

As will be described later, O-CHIP provides a smart card linked to a personal health account (PHA) that will pay almost immediately when a participant uses PHA funds to obtain care. The amount of bad debts arising from O-CHIP non-payments from PHAs should be almost zero.

Under O-CHIP, hospitals that post standard fees would be allowed to place a lien against any property of a nonpaying patient, including a subordinate lien against a personal residence. However, such liens would not be allowed if the reason for nonpayment is simply a deficit in the patient’s PHA. O-CHIP: Oklahoma Comprehensive Health Independence Plan

In addition, hospitals and other providers could collect up to $1,000 in attorney fees if they are successful in litigation. (They would also have to pay up to $1,000 of the defendant’s legal fees if they lose.) This provision would eliminate much of the nuisance factor in collecting small accounts.

While these provisions will reduce the providers’ unpaid bills, the primary purpose is to induce creditors to determine if a prospective borrower has health insurance before extending credit. By strengthening the ability of hospitals to collect bad debts, the state encourages potential creditors to inquire if a prospective borrower of money for a house, car, or other major purchase has health insurance.

O-CHIP empowers every Oklahoman to buy health insurance. O-CHIP reduces the cost of most health insurance policies through deregulation and provides assistance to those still needing it to afford a policy. It also creates an expectation of responsibility, imposing a cost on those who fail to get health insurance and risk shifting the cost of their health care to their fellow citizens.

This is especially effective when we consider that a highly disproportionate share of those who can afford health insurance but choose not to buy are younger, healthier people. It is also the young who generally have the greatest need for credit as their consumption often exceeds their income during the period when that income and the expectation of future income levels are rising significantly.

At present, whether a prospective borrower has health insurance is usually not a factor in decisions to grant credit. O-CHIP will change that practice. Just as the home buyer must show proof of homeowner’s insurance to obtain a mortgage loan and a car buyer must similarly buy insurance to get a loan for a car, this provision will make it difficult to obtain credit without health insurance already in place.

This provision also gives Oklahomans who take responsibility for their own health care another advantage. Since O-CHIP will increase the percentage of those who have health coverage, it reduces the number of “medical” bankruptcies. This should have a 41

modest positive impact on consumer interest rates because of less underwriting risk. One reason that interest rates are generally higher in Oklahoma is that Oklahoma has more bankruptcies than most states.3 Require health insurance to play the lottery.

It would seem difficult to justify playing the lottery if one cannot provide for the basic necessities of life for his or her family. As long as lottery advocates do not encourage the poor to play the lottery irresponsibly, this provision should not arouse significant opposition despite the lottery issue’s high profile.

A ban on playing the lottery on those without health insurance could create a major burden for those selling lottery tickets.

Therefore, O-CHIP would allow someone without insurance to play, but require them to forfeit any significant winnings which can then be used for Medicaid.

Anyone claiming lottery winnings would have to provide proof of health insurance predating the purchase of the winning lottery ticket by at least six months for all family members and dependents. Lottery ticket vendors would have to prominently advertise this fact.

Under current law, lottery winners are already checked for back taxes and overdue child support. This provision would simply add securing proof of health insurance to the equation.

Let freeloaders pay more of the taxes they would otherwise force onto others.

Oklahoma provides health care for those who need it. Anyone seeking treatment at an emergency room will get some assistance.

So will those who visit an FQHC or receive an immunization at a county health department.

O-CHIP ensures that everyone can afford health insurance. It gives a tax break to those who provide for their own health care costs and thereby do not burden the public system or force others to pay higher insurance premiums.

Under O-CHIP, those who choose to forgo health insurance and place the cost of their 42

care in the hands of their fellow citizens will be required to pay something for that decision. The fee is designed to offset some of the costs of providing care if the freeloader becomes ill.

The mechanism O-CHIP employs is simple: The standard deduction and personal exemption are more than replaced by a tax credit for those who get health insurance. For those who push their risk onto others, however, the standard deduction and personal exemption are simply abolished.

Those without health insurance could still itemize their deductions to the extent they exceed the federal threshold.

O-CHIP allows state residents to forgo health insurance and stay within the law.

However, it does require those who would freeload on their fellow citizens to pay something for the privilege of doing so.

O-CHIP has limited the negatives to these three, but the state might want to consider others. For instance, it could issue a drivers license only to someone who can provide proof of health insurance.

Some maintain that paying extra so that others have the right to make costly decisions and defray that cost on others is part of living in a free society. The premises upon which O-CHIP is based reject this philosophy. Rather, O-CHIP is based on the premise that each of us should pay our way whenever possible and that we have a responsibility to pay for the results of our own decisions.

Offer incentives to improve quality and reduce cost of long-term care.

While O-CHIP gives the most attention to Medicaid provisions that address the needs of those not yet eligible for Medicare, Medicaid expenditures for those who do qualify for Medicare consume approximately 40% of Oklahoma’s Medicaid budget. The most cost-intensive portion of these expenditures is for long-term nursing home care.

Medicare covers many of the major health-related expenditures older adults are likely to encounter. However, Medicare generally does not cover routine nursing home care. The average annual cost of a O-CHIP: Oklahoma Comprehensive Health Independence Plan

nursing home stay in Oklahoma City and Under O-CHIP, an individual could make Tulsa now exceeds $45,000.4 This gap in a gift to an heir if either of the two following coverage falls to Medicaid programs to meet. conditions is met: Eligibility for assistance with nursing 1. The individual and his or her spouse home costs is based upon a combination of must own a prepaid long-term care insurincome and assets. Since retired individuals ance policy or have sufficient assets in trust may have little income but significant to cover most nursing home outlays; assets, they are required to “spend down” 2. The recipient of the gift assumes in their assets to become eligible for assistance. writing responsibility for the donor’s care in An elderly couple wanting to leave an the event the donor and his or her spouse estate may be unable to do so if they incur otherwise becomes eligible for long-term major nursing home outlays for which they care assistance under Medicaid. have not made provision. With increasing Similar rules would apply to transfers numbers of Oklahomans reaching the age between spouses. of Medicare eligibility, the demand for O-CHIP offers all Oklahomans the oppornursing home and other senior services is tunity to provide for their own needs as they also likely to grow. think best. It also Where cooperation makes it more difficult among family genfor freeloaders to shift O-CHIP favors those erations is achieved, responsibility for a family may find it themselves to other who act responsibly advantageous under taxpayers. and discourages current law for older Alternatively, the freeloaders. adults’ assets to be state would place a lien transferred to their on any property gifted heirs. Impoverishing that would be released themselves to qualify upon the death of the for state aid, the older adults anticipate their donor and his or her spouse, and the reimpossible future need for nursing home care bursement of any Medicaid payments the while preserving their estate. state made to benefit the donor or his or her This is done at the expense of taxpayers spouse. who themselves provide for their own famiUnder O-CHIP, the assets of a Miller Trust, lies. However, the practice is becoming or any trust in which the applicant for assisattractive. “Medicaid-friendly estate plantance has an interest, are included in deterning” has become a staple in the practice of mining the eligibility and level of benefits many financial planners and similar advisors. the state will provide. At the same time, OIn response, state governments (including CHIP also includes provisions to make it Oklahoma’s) provide for “look back” periods easier for families to help their elderly and other means to make the transfer of parents during a difficult period. assets in anticipation of nursing home needs These provisions include the following: less attractive. Complications arise when an • If an applicant has a long-term care older adult who can no longer live indepeninsurance policy in place, including a dently and needs nursing home care has a combination long-term care and life spouse who lives independently and reannuity policy as discussed previously, he quires no nursing home care. or she may shelter an amount equal to O-CHIP recognizes that the purpose of the amount of the policy from the state, Medicaid is to provide assistance to those and the assets will not be used in deterunable to provide for themselves. At the minations of eligibility or benefit levels. same time, O-CHIP also recognizes that • A participant who uses a nursing home Medicaid wasn’t designed to preserve the that charges less than the state-approved estates of Oklahoma residents at taxpayer rate will retain one-half of the savings expense. and may use it for any purpose.

O-CHIP: Oklahoma Comprehensive Health Independence Plan

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• A participant who obtains a reverse mortgage for the purpose of paying for nursing home expenses would be allowed to place 20% of the proceeds in a special fund that may be used for any purpose. In addition, the fund’s assets would be excluded from eligibility determination and spend down requirements.

• Contributions made by children to assist their parents would only be counted to the extent the contribution exceeds $25 per month, and then only 80% of the contribution would be counted.

• O-CHIP provides a tax credit to a family if a Medicare-eligible parent shares a

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home as a principal residence.

O-CHIP would follow the present policy of prohibiting the state from seizing the residence of a participant. The state could, however, place a lien against the residence that would be exercised when the residence was eventually sold or transferred, unless the state was repaid in the interim.

The last provision ensures that an ablebodied spouse may continue to live in the family home unmolested while the state assists with the nursing home bills of the spouse needing assistance. This provision heightens the likelihood that the state will eventually be reimbursed for its expenditures.

O-CHIP: Oklahoma Comprehensive Health Independence Plan

Fostering Wellness and Quality Provide access to quality health care.

Design a standard policy as an option.

Under O-CHIP, the state would reimburse an individual (or family) that obtains health insurance through his or her employer to the extent that the cost of the health insurance to the employee exceeds 50% of family income above the poverty threshold. Participants with assets would be required to meet “spend down” tests on assets they own before becoming eligible for assistance.

The section covering eligibility (“A tiered system…) addresses how income is measured for this purpose.

This provision will help preserve private coverage options in cases where a family headed by a low-income worker may be able to take advantage of a plan already available to them if they can get some assistance.

Those not covered by insurance made available through an employer would receive state financial assistance, where needed, to obtain their own insurance. The needs of those eligible for Medicare and those with a family member suffering from a chronic illness will also be addressed in later sections.

For employees without employer-provided insurance, the state would work with insurers to make certain a “default” or standard insurance policy is available. Participants would be required to contribute up to 50% of family income above the poverty threshold toward the cost of the policy, the same as with those obtaining health insurance through an employer.

Note that no participant is required to take the default plan. Rather, participants are empowered to choose what they think best.

Participants may elect to obtain other insurance coverage including a more traditional managed care arrangement. However, the participant alone would bear the additional costs.

The particulars of this plan are addressed below. The reader should note that the O-CHIP: Oklahoma Comprehensive Health Independence Plan

amount of O-CHIP assistance is dependent upon a combination of the participant’s family income and the cost of obtaining health insurance. Accordingly, a relatively high-income family would receive assistance if faced with crushing health care bills.

One other situation deserves mention.

What if an individual decides to remain uninsured until he has an unexpected health crisis and shows up in an emergency room for treatment? That individual will be responsible for his own bill and the hospital will have greater latitude than at present to collect it. We often sympathize with nonpayers because we know many fall through the cracks of our current system and simply can’t afford health insurance. O-CHIP eliminates that excuse.

Employ a high deductible.

The standard, or “default,” plan would provide broad coverage and carry an annual deductible of $4,800 plus an additional $600 for each dependent. In addition, each policy would have a 20% co-insurance provision once the deductible is met, not to exceed one-third of the deductible or $2,000, whichever is less. The standard plan would cover all expenses currently covered under Oklahoma’s Medicaid program.

The amounts of the deductible, co-insurance, and other particulars should be set after a competent underwriting evaluation has been performed. Such an evaluation is beyond the scope of this proposal. However, the important aspects of the particulars presented here are that we should end the bias toward family stability and reduce the bias toward personal initiative to the extent practicable in the current situation, without radical changes in the level of benefits currently paid to those currently taking part in social welfare programs for the less fortunate.

Use a Personal Health Account with debit card.

A funded Personal Health Account (PHA) would come with each policy. The annual amount deposited would be $1,800 for each 45

adult, $1,200 for the first dependent, and an additional $600 for each dependent. For families with children, each policy would contain a $600 difference between deposits into the PHA and the policy deductible.

Only health care providers registered with the insurer, wellness providers registered with the state, and the participant through the insurer could access funds in a PHA. O-CHIP prohibits arrangements which allow more liberal access to PHA funds.

The PHA is designed to pay for such routine care as visits to a doctor or dentist, routine pharmaceuticals, or other services like immunizations. The most common form of access would be through a debit card that the participant would present at the time of service. A fourteen-day delay between the time the card is presented and payment is made directly to the provider should afford opportunity to investigate any suspected fraudulent activity.

The Health Care Authority will adopt rules governing lost cards. These rules may impose a fee on participants losing a card.

Such a program can work well so long as the rules are simple and do not permit exceptions. The state must resist the temptation to add new provisions in future years without a meticulous investigation of the impact of such changes on the cost of the underlying system.

Establish rules for general usage.

The PHA may be used to pay for any health-related expenditure for which a deduction may be taken on a federal income tax return provided it is used only with a provider registered with the insurer. The insurer could incorporate providers registered with others, such as the Department of Health, if they choose to do so.

Note that a gap of $600 per policy exists between the deductible and the amount deposited annually into the PHA and there may also be an additional co-insurance requirement of up to $2,000. Expenses exceeding the balance in the account may be paid with deposits made in the following year.

Establish rules for excess funds.

O-CHIP will deposit more into the PHAs of 46

participants than they are likely to use. Excess funds may be carried forward or withdrawn for special purposes as outlined below.

Encourage wellness expenditures.

The new program would provide positive reinforcement for good health by allowing participants to use their PHAs for qualified wellness expenditures. These include joining a gym or sports program, or enrolling in a program for fitness or weight loss. Any wellness program could become qualified through application to and approval of the Health Care Authority. The Health Care Authority would establish rules for approval of a qualified wellness program.

A child in a family participating in the new Medicaid program might be able to afford to play soccer or basketball and reduce the demand on schools to provide physical education classes.

The premise that fitness and healthy living reduce expenditures on disease is gaining increasing acceptance. The general consensus is that poor lifestyle and diet are major contributing causes of premature diabetes and heart disease. Some Oklahoma employers now provide fitness and other wellness activities because it saves money on employee health benefit costs.

Allow withdrawals for personal use by those who save taxpayer money.

Some researchers conclude that an expansion of traditional Medicaid achieves few gains in preventive care.5 O-CHIP includes a unique provision to avoid that result.

Under O-CHIP, Medicaid participants would receive a PHA unless they are enrolled in a group plan or they choose a more traditional individual plan. Each participant would use the PHA to pay for health-related expenditures incurred before meeting the deductible under the plan. Certain wellness expenditures, as discussed above, are also permitted.

The insurance policy underlying the standard plan would not cover any item until the deductible is met. The annual deductible would be met by transfers out of the PHA and, if necessary, from personal funds.

O-CHIP: Oklahoma Comprehensive Health Independence Plan

Those enrolled in an employer or other group doesn’t spend as much on the fees themplan would not be required to have a PHA. selves, this practice has unintended conseThe state-sponsored plan will include quences which consume some of the apparprescription drug coverage. In many cases ent savings. drug therapy is superior to other treatment Since the fees a provider receives for regimens in both cost and effectiveness. As treating a Medicaid patient are lower, the outlined below, the opportunity for personal provider may be less interested in providing gain from the PHA provides participants a services at a time convenient for a Medicaid powerful incentive to keep drug costs low. participant to receive care. Limited office Each quarter, a participating family (or hours contribute to expensive emergency individual) could withdraw up to 10% of the room visits for simple primary care. balance in his or her PHA if each person With providers reimbursed at normal covered has obtained the preventive care insurance rates rather than lower Medicaid required for doing so. In addition, a particirates, some may find it profitable to adjust pant with a balance in the PHA sufficient to their practice hours to take in the more cover the yearly deductible could withdraw attractive fees. While the program pays 100% of the balance more to physicians, it in excess of that avoids many of the far deductible and use more expensive emerUnder O-CHIP, those without the withdrawal for gency room visits. health insurance will pay any lawful purpose.

The incentive prohigher taxes, find loans more O-CHIP makes vided under O-CHIP is difficult to obtain, and be participants respondirect and individual. prohibited from playing the sible for state health Those who can save state lottery. care spending on money by not accesstheir behalf and ing the health care rewards those who system when care is not succeed in controlling that spending. needed will have the opportunity to share in Some observers will doubtless balk at the savings they generate. such an arrangement, arguing that funds To be effective, the use of the withdrawal intended for health care should only be used is not limited to health care. Limiting withfor direct health care expenditures. However, drawals to use for future health care only all health care consumers are beleaguered greatly reduces the incentive’s value to those by rising health care costs. whose help we most need.

O-CHIP is based on the premise that we Some think that simply allowing particiought to do something effective to reduce pants to roll over their unused PHA balances excessive health care costs. indefinitely will accomplish the goal of The current Medicaid program offers involving more consumers. However, we participants little incentive to help control should consider how much value a healthy costs. As a result, participants too often visit 25 year old will attach to a free month in a emergency rooms for non-urgent care, fail to nursing home sixty years from now. O-CHIP inquire about the availability of generic rewards personal responsibility by providing drugs, and are perhaps less likely to deterimmediate and valuable compensation to mine if a proposed procedure or pharmaparticipants who help hold down costs. ceutical is necessary. In fact, a recent study found Medicaid recipients are even more Require preventive care for personal use likely than the uninsured to visit an emerwithdrawals. gency room for non-urgent care.6 By providing incentives and rewards to Another factor in the failure to restrain those who hold down health care costs, we costs is that providers get lower fees for risk having participants forgo needed treating Medicaid patients than for treating preventive care so they will have more funds the general population. While the state available for withdrawal. Therefore, particiO-CHIP: Oklahoma Comprehensive Health Independence Plan

47

pants would be required to obtain a minimum level of preventive care before making personal use withdrawals from a PHA. The Health Care Authority would establish the standards for required care through rulemaking. For a healthy adult or adolescent, this would only consist of a bi-annual physical and a visit to a dentist. The physical would include a hair-based drug test that must be passed before personal withdrawals of state funds are allowed. The state would pay for the drug test. Note that failure to pass the test does not end Medicaid coverage, only the ability of a participant to make a personal withdrawal from his or her personal health account.

O-CHIP uses a hair-based test for drug use because it is reputed to be more accurate, and to cover a longer period of possible use. Hair testing is also far less susceptible to “cheating” than more traditional tests. An evaluation of testing methods is beyond the scope of this proposal, other than to state a preference that the state should use a test that provides reliable results, even at a marginally higher cost.

Also beyond the scope of this proposal is the question of whether the state would require a participant who tests positive for drug use to enter a treatment program. As written, O-CHIP provides a strong incentive for a participant to act. The participant cannot make a personal use withdrawal without staying off drugs for an extended period of time.

Most drug abusers cannot reform themselves in the absence of some outside assistance. O-CHIP would make a substance abuse assessment a wellness expenditure. The Oklahoma Department of Mental Health and Substance Abuse Services (ODMHSAS) would be able to make other addiction treatment services available at subsidized rates. However, the participant would need to make at least a minimal indication, by asking for help, that he or she wants to overcome his or her addiction.

O-CHIP, as presently crafted, would not force individuals into an assessment or treatment they did not want without an order from a court of law or a parent. Similarly, O-CHIP does not shield those with an 48

addiction from the adverse consequences of their situation. O-CHIP’s approach is based upon the observation that addiction treatment is rarely effective unless the person addicted wants to change, and further, that motivation will more likely result when the addicted individual must deal with reality.

With regard to pregnancies, an expectant mother would be required to have monthly prenatal exams. After a birth, O-CHIP would only require such necessary care as immunizations and pediatric visits.

In addition, a participant must comply with physician-ordered treatment protocols ordered by a physician, including preventive drug regimens. A participant’s PHA will be charged for minimum care, whether obtained or not. Only those participants who have accessed all required care and complied with treatment protocols in the previous year would be allowed to make withdrawals for personal use from their PHA. The state would require participants to receive preventive care to make withdrawals for personal use and charge participants for the cost of that care even when not obtained.

This provides a strong incentive for participants to obtain needed preventive care.

Such preventive care helps keep future costs under control by preventing the onset of serious and costly disease.

In summary, O-CHIP permits personal use withdrawals for up to 10% of the PHA balance plus 100% of the balance in excess of the annual deductible if the following conditions are met: • The participant and each family member have been examined by a physician with appropriate tests for the participant’s age and condition.

- Bi-annual examinations only are required for those under age 40 in otherwise healthy condition.

- The examination will include a hair test for drug use which the participant must pass.

• The participant and each family member have been examined by a dentist.

• The participant and each family member has complied with any treatment protocols set out by his or her physician in the previous two years and the physician has O-CHIP: Oklahoma Comprehensive Health Independence Plan

attested to the compliance.

- The protocol will automatically include appropriate immunizations.

- The protocol will automatically include pre-natal visits.

• There are 30 days between the request for funds and disbursement.

share in the federal to state ratio of cost sharing, currently about 70%. This will make the provision somewhat less effective.

• The state could “pay” for withdrawals from TANF, a federal block grant.

• The state could hold the federal government harmless based upon actual results compared to a benchmark. The federal government would not be worse off and the state could still benefit from the savings achieved.

Recycle half of personal use withdrawals.

O-CHIP recycles an amount equal to any withdrawal for personal purposes back into the new Medicaid program. This acts as an effective 50% tax on any personal withdrawals from a PHA. This also corresponds to the Provide for smooth administration of requirement that a participant spend 50% of Personal Health Accounts. his or her income in excess of the medical The smooth operation of the PHA will need threshold disrequire a clean cussed earlier. system design and For instance, if a consistent adherence O-CHIP empowers patients participant has a to its rules. The state to obtain and act upon the $1,000 PHA balance at must not complicate information needed when the end of a quarter, the system by adding he or she could make mandates, no matter selecting the best health a $100 withdrawal and how well intentioned, care option for themselves. use it for any purpose. without first determinHowever, he or she ing the impact the would also have proposed change may another $100 transferred out of his or her have on the smooth operation of the PHA. PHA back into the Medicaid program. After PHAs would be maintained through an the withdrawal and the transfer, the particionline system that could only be accessed pant would have an $800 PHA balance by licensed health care providers, licensed remaining. (If Medicaid is paying for less wellness vendors, insurers, the Health Care than 100% of the cost of the PHA, the perAuthority, and auditors of the system. The centage amount transferred back to the participant would have “read only” access. program would be pro-rated.)

Money would be placed in a PHA for the Some have suggested that the federal benefit of a participant’s family by the government will not allow conversion of any insurer. The insurer would apply to the state federal funds to strictly personal use. If so, for any reimbursements due. perhaps the federal government should Each participant would receive a reconsider if it is really serious about reducing stricted-use debit card in conjunction with costs or is content to make a losing stand the PHA. Money could only be withdrawn upon meaningless principles. In addition, from a PHA by one of the following: while the 50% tax on personal withdrawals • A health care provider to whom the still allows for those personal withdrawals, it participant had presented the PHA card encourages participants to use the funds for at the time of service. wellness and prevention.

• A wellness vendor licensed by the state to If the federal government refuses to which the participant presented the PHA consider any change, there are several debit card. means of addressing their concerns: • The Health Care Authority to issue a • Use all taxes on PHA transfers to offset check to the participant for a personal the federal share. withdrawal and to transfer funds back to • Adjust the tax rate to equal the federal the Medicaid program.

O-CHIP: Oklahoma Comprehensive Health Independence Plan

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The state could further protect card security with smart cards containing identification of a unique personal characteristic of the participant. Use of the cards is restricted to only a few vendors and the participant stands to ultimately gain if the card is used prudently. This should provide considerable protection against such misuse as a participant “loaning” the card to a non-participant.

PHAs could not be accessed directly to pay judgments, nor would they be subject to liens or garnishments except for the benefit of health care providers.

A health care provider would note through “clicking” an on-line box that required preventive care and such related items as a negative drug test had been obtained. Any required preventive care not obtained by the due date would result in a notice to the participant and a hold on personal and wellness withdrawals placed on the account.

If care is not received within 60 days of the due date, the state would charge the account an amount equivalent to the preventive care. If the required preventive care is subsequently obtained, the hold would be removed from the account and another withdrawal made to pay for the preventive care. In other words, the participants would pay twice for the care if they were more than 60 days late in receiving it.

If the rules governing them are kept simple and are consistently enforced, the PHA system should work smoothly.

Cover mental illness.

O-CHIP would cover the treatment of mental illness and substance abuse. As a result, the need for many separate government-supported treatment programs would disappear. Given the nature of the illnesses, the state would maintain a vigorous Department of Mental Health and Substance Abuse Services to administer and coordinate all public programs.

Because insurance will now cover all physician-treated mental illness, ODMHSAS would no longer provide these services free of charge; they would recover their costs through fees to clients. ODMHSAS would also have the option to outsource these services when it is in the interest of patients 50

and the state to do so.

In making this transition, the state should take care to preserve the laudable data collection capabilities of ODMHSAS. Curb abuse through meaningful audits and stricter eligibility determination.

Increase emphasis on ligibility determination.

O-CHIP shifts the main burden for controlling costs to Medicaid recipients by empowering the recipients to make their own decisions and giving them a stake in the outcome. As a result, the Medicaid program will become more valuable to the participants. The participants will receive access to an improved health care system and the potential to share in the savings they help generate by successfully holding down costs.

As a result, unscrupulous individuals will have more incentive to qualify for Medicaid.

Consequently, the new Medicaid program must include safeguards to limit participation to those truly eligible. The state will also strengthen coordination of eligibility determination for various social welfare programs.

The need in this situation is analogous to verifying eligibility for the earned income (tax) credit (EIC). Penalties for misreporting income must be enforced. O-CHIP will direct a portion of Medicaid spending to ensure that Oklahoma has enough case workers to adequately review applications, as well as the tools to adequately verify information.

O-CHIP would encourage physicians, dentists, pharmacists and government offices to make available on-line application. This removes the stigma of having to go to the “welfare office” and also presents an opportune time to apply.

To properly publicize the availability of health insurance and the responsibility of each resident to provide for his or her own care, O-CHIP directs the Health Care Authority to work with the Tax Commission, the Lottery Commission, and motor licensing agents (often the first contact of a newly arrived resident with the state government) to provide appropriate notice.

Because O-CHIP makes it possible for Medicaid participants to purchase private O-CHIP: Oklahoma Comprehensive Health Independence Plan

insurance, the Insurance Commissioner would work with Oklahoma insurers to spread the word about the availability of benefits. We should note that, under O-CHIP, insurance agents will be serving their own interest in doing so.

Strengthen audit procedures.

O-CHIP will exert powerful influences even beyond the provisions in this section to reduce fraud. The best defense against fraud by providers is an alert group of customers. O-CHIP empowers Medicaid participants to become real consumers with a clear self-interest in avoiding unnecessary expenses.

One percent of Medicaid expenditures will be earmarked for pre- and post-auditing for fraudulent activity and other irregularities, including audits of published performance data. Hospitals and nursing homes serving Medicaid participants will also be required to have their auditors review the adequacy of internal controls to prevent fraud or to promptly bring such to the attention of appropriate parties.

(More detail about how O-CHIP streamlines the audits of hospitals is provided in a subsequent section.)

O-CHIP gives cash to participants who help hold down Medicaid costs. This incentive will result in more people seeking eligibility to participate. Therefore, the State should increase its review of the eligibility of applicants, including verification of income.

Under a traditional Medicaid program, the government’s considerable exposure to fraud rested primarily with unscrupulous or careless providers who over billed or billed for work they did not perform. Under O-CHIP, private insurance companies will administer benefits and provide assistance directly to participants. Accordingly, the major opportunities for fraudulent activity will shift from providers to program participants.

Under O-CHIP, the state will need to determine the extent of eligibility for participation. This will require something similar to a tax audit, especially where citizens with above-average income become eligible for assistance due to crushing health care bills.

O-CHIP also provides for audits of those O-CHIP: Oklahoma Comprehensive Health Independence Plan

who apply for assistance with long-term care. Long-term care is notorious for manipulation, much of it legal under current law, to make taxpayers pay for services patients could provide for themselves.

However, O-CHIP will tighten many of these provisions. A family will not be able to simply hire skilled professionals to manipulate the system to protect an estate. This is an unfair process which taxpayers who may not have a prospect of accumulating an estate are paying taxes to support. O-CHIP will have the state aggressively pursue recoveries from estates and diligently review applications for assistance to identify instances of abuse.

Provide needed long-term care.

Once citizens become eligible for Medicare, the cost of their care is for the most part federalized. The one major exception is nursing home care and or care provided to those living independently at less cost to the taxpayer.

While the needs of uninsured children seem to elicit greater attention, the cost of caring for those in their last years of life is the most expensive part of the Medicaid program.

Furnish nursing home benefits.

O-CHIP would generally retain existing nursing home services but with several provisions designed to help families who help the state control costs and prevent abuse of the system.

O-CHIP would provide for a more seamless eligibility system, avoiding the spectacle of elderly individuals making special provision to impoverish themselves to become eligible for Medicaid, even if they may have more than limited income and assets.

Continue home and community-based care.

Many senior citizens can avoid going to a nursing home if they can receive some assistance with everyday living. Accordingly, home and community-based care programs designed to permit those formerly bound for nursing homes to live independently are growing in popularity.

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These programs dispatch a worker to an older adult’s residence to assist with tasks essential to helping the person live independently. These may include bathing and other hygiene, cleaning and housekeeping, and shopping and similar tasks essential to everyday life, but which are beyond what we normally think of as medical care. As a result, the older adult can often continue to live independently when they would otherwise need to be in a nursing home.

Policymakers have found that on a caseby-case basis, it is less expensive to provide such home and community-based care than to pay for round-the-clock nursing home care. While the difference in cost varies, depending on the level of service provided, home care is invariably less than the cost of nursing home care.

In addition, home and community-based care is usually popular with the participants.

The older adult receives assistance with burdensome and sometimes difficult chores while enjoying an independent lifestyle.

Many older adults also value the simple human interaction of a visit by a home health worker.

Most older adults value their independence and want to avoid living in a nursing home if at all possible. This presents a difficult challenge for the policymaker. The state will provide free nursing home care to an individual who qualifies. However, most older adults will do whatever they can to avoid living in a nursing home. They are therefore unlikely to seek nursing home assistance unless they have no choice.

Home and community services are another matter. Here, the government offers a service highly valued by recipients. The number of people desiring these services will greatly exceed the number of people seeking nursing home assistance. The state must take care to limit home and community services to those who would be in a nursing home at state expense without such services or it must prepare to commit significantly greater outlays to fund the program.

Another factor that complicates the relationship between nursing home care and home and community-based care is that home and community care is effective in 52

delaying the need for nursing home services. When the individual then deteriorates to the point where nursing home care is inevitable, the cost of caring for the individual in a nursing home will probably be higher.

Home and community-based care can provide a better quality of life for older adults who want to maintain their independence. It is also much less expensive than paying for nursing home care. The state should use the home and community-based option as an alternative to nursing home care whenever possible, but take care to avoid the creation of a new entitlement with far greater appeal than a nursing home stay.

The popularity of home and communitybased care makes it especially important for the state to adopt strong policies to prevent asset transfers and similar maneuvers resulting in state-provided free care for those able to provide for themselves.

Place more emphasis on wellness and prevention.

Many observers are encouraging governments to enact far-reaching wellness and prevention programs. While such approaches may have merit, no one wants to be healthy any more than the patient. The patient’s employer, wanting to get productive output in return for the wages and benefits for which it pays, also has a keen interest.

Accordingly, O-CHIP focuses upon giving employers greater latitude to act in their own self-interest in promoting wellness and prevention among their workforces. Other steps included in O-CHIP will allow a patient greater constructive interaction with a wellness and prevention expert: his or her own personal physician. Without a large increase in the size of government, we should expect to see improved health on the part of the Oklahoma population as a result.

Individual Oklahomans, who care more about their own health than any government agency will see to it.

The state may consider sponsoring public service announcements that encourage O-CHIP: Oklahoma Comprehensive Health Independence Plan

viewers to discuss the preventive services recommended by the U.S. Preventive Services Task Force. Once again, the person with the greatest interest in preventing disease is the patient. Whatever role the state assumes, it need not be extensive if we base our system upon free market principles.

Encourage employer-sponsored and individual wellness programs.

Some observers encourage expanding the population eligible for Medicaid to provide more preventive care and thus arrest the development of serious disease and costly treatment. However, studies indicate that traditional Medicaid expansion gains little in the way of more preventive care. We will need to look elsewhere to make the progress we are seeking.

At present, many employers are reluctant to endorse specific wellness activities because of the threat of litigation over vendors or activities it chooses for employees. O-CHIP would create a safe haven for any employer who provides assistance through any facility licensed by the Department of Health.

In addition, O-CHIP would specifically support employers who refuse to hire prospective employees solely on the basis that they smoke. They would be able to dismiss current employee smokers with appropriate notice. O-CHIP would encourage the Insurance Commissioner to seek appropriate adjustments in group health insurance premiums for employers taking such action.

Create safe harbors for employers encouraging wellness and fitness.

Oklahoma employers are doing more to promote wellness and fitness among their employees. While employers find health programs a good way to promote teamwork and improve working relationships, they see cost benefits as well. Healthy employees cost less to insure, take less sick leave, and are more alert on the job. Many employers conclude that the cost of providing fitness and wellness programs is more than offset by benefits to the bottom line.

Some employers do not offer fitness benefits for fear of abusive lawsuits. If we O-CHIP: Oklahoma Comprehensive Health Independence Plan

can remove the specter of multi-milliondollar judgments from dubious claims, more Oklahoma businesses would become actively involved in promoting wellness and fitness among their employees. It is not the goal to require that every Oklahoman exercise a certain amount each day. However, if employers find they can be more productive with a fit workforce, we should help them promote an activity that is beneficial to both personal health and profits.

Ensure Oklahoma has enough doctors and other professionals to meet future needs.

Assure adequate reimbursement to health care providers.

To control rising health care costs, some budget analysts offer a simple solution: cut provider fees. If we reduce payments by one third, we certainly save money on paper.

However, we soon find those we depend on to provide services may cut back.

We can then institute some “traps” to make providers “play,” even with inadequate pay. These methods rarely work for extended periods and may even drive providers to other states offering more favorable environments. Those who depend on Medicaid increasingly find that when providers are squeezed, they must drive farther for care, endure longer waits, and even find some therapies rationed.

The author is a former Director of Finance for the State and is familiar with this technique, knowing how beguiling it is when the budget deadline looms and the budget still doesn’t balance. However, traps rarely work other than in the very short term, and even then, with some negative consequences.

Students of economics will recognize the simple laws of supply and demand at work.

Yet some observers seem to think that health care is different. These observers believe health care is somehow magic and defies universal economic principles.

The author rejects that line of reasoning and, in fact, believes many problems with health care financing today are caused by our refusal to recognize that the economics 53

of health care are like those for other goods and services. Market clearing mechanisms can work quite well if we allow them to do so.

O-CHIP throws the issue of provider reimbursement rates into the lap of providers, patients, and insurance companies, where it belongs.

The state will no longer set rates which then cease to be a matter of direct contention between the state and its health care providers. The objective is to pay what providers require to provide the services consumers will purchase.

However, the state may need to consider restrictions on the ability of providers to include non-health “freebies� with their care.

This allows them to bid up costs by essentially bribing Medicaid beneficiaries to pay higher fees and effectively kick back some of those fees in the form of non-health benefits.

For instance, an enterprising insurance entrepreneur might offer 100 gallons of free gasoline with each health insurance policy as an inducement to buy his insurance.

Such an approach by providers would threaten the effectiveness of the provision to allow Medicaid participants to make personal withdrawals from their PHAs. A related issue is the practice of some providers to give larger discounts from their standard charges to those with insurance.

Predictably, some are calling for regulations to deter this practice. The trial bar is again stirred to exert itself on behalf of those it considers offended.

We should realize that insurers and others perform a service to their customers when they negotiate a reduced price for their members. We should be careful not to embrace regulations that would halt this practice, resulting in higher costs for all. A system in which insurers publish their prices and the prices they have negotiated for their customers provides needed transparency.

We should also realize that hospital finances must consider not only the fee charged, but the amount of the charges ultimately collected. Several O-CHIP provisions will reduce the number of uninsured and help hospitals collect legitimate charges more easily. O-CHIP will not only lead to reasonable rates for hospitals but 54

also to more realized revenue, important relief for institutions struggling to keep their doors open.

Help rural Oklahoma attract needed physicians and other providers.

Educate health professionals in areas of greatest need.

Many observers see a serious shortage of physicians and other health professionals on the horizon. Some rank Oklahoma as one of the states likely to experience an even greater need than the country as a whole.

Many rural communities are already struggling to attract and retain physicians.

One solution to combat this shortage is to expand the College of Medicine and the College of Osteopathy to graduate more doctors. However, only about one-half of OU Medical School graduates remain in Oklahoma to practice after graduation. The numbers for the OSU School of Osteopathy are higher, but a significant percentage still chooses to practice in another state.

Rather than expand the number of students alone, Oklahoma should look at other options. Studies show that a high number of new physicians begin their careers where they served their residency. Placing more resources into better residency programs may be superior to simply graduating more students.

We may also gain some efficiency in the way physicians practice. Some have noted that any newly created slots for new medical students will likely be filled by students who would not be admitted today. Oklahoma may risk diminished quality in its doctors if we simply increase the number of new medical students.

Rural communities face unique challenges. Many, already fighting economic decline, find it difficult to attract and retain physicians. These Oklahoma communities may also face shortages in such areas as nursing, pharmacy, dentistry, optometry, etc.

The changing demographics of our patient base and our workforce indicate labor problems throughout the health care fields.

In an attempt to gain a better understanding of the attitudes of medical students O-CHIP: Oklahoma Comprehensive Health Independence Plan

toward practice in Oklahoma, and espeto medicine that weighed heavily in their cially rural Oklahoma, OCPA conducted decision making process. Conversely, some informal interviews with students making students not considering a career in medidecisions about their futures. New insights cine said they received no encouragement to gained provided some understanding of take courses in biology or chemistry in high students’ willingness to enter the medical school, nor did a guidance counselor or field in the first place and their attitudes teacher ever encourage them to consider a about the possibility of practicing outside health care field as a career. the metropolitan areas.

The medical students ranged from 2nd to th We met with seven students at the Univer4 year students. Though they have already sity of Oklahoma College of Medicine to decided on a medical career, some have yet discuss their intended career paths and to settle on a specialty. Their comments their willingness to consider practicing in proved interesting, especially with regard to Oklahoma and especially in rural Oklathe possibility of a rural practice. Most were homa. In addition, we interviewed 20 underconsidering Oklahoma because of a combigraduate honor students at Oklahoma nation of family relationships, general Christian University familiarity with the concerning their state, and the low cost attitudes toward the of living.

O-CHIP provides medical profession.

However, several The majority of students cited assistance to rural the 20 undergraduOklahoma’s failure to hospitals in ates at Oklahoma enact meaningful tort several ways.

Christian had reform legislation as a planned to pursue negative factor. All medicine at some were familiar with the point, and six are issue and found it planning to apply for medical school admisdiscouraging to contemplate a legal process where they are not confident that decisions sion. In addition to these six, one student will be just or fair. The added cost of higher plans to become a pharmacist and a second malpractice insurance premiums and the is considering a career in optometry. A third distraction of defending oneself with peris looking at graduate studies in public haps unwanted notoriety are hardly factors health, perhaps combined with a PA prowhich make Oklahoma attractive. gram for use in foreign missions.

While most of the medical students see Several issues came up repeatedly themselves eventually practicing in Oklaamong those who elected not to pursue a homa, the possibility of practicing in rural career in medicine. The long period of study Oklahoma was less appealing. This was required was a major issue raised by some. especially discouraging as some of the A concern about the ability of a practicing students had previously intended, or at least physician to have enough family time was were willing to seriously consider, practicing another. The ability of a spouse to find a in a rural area. Several factors persuaded professional opportunity was a considerthem to head in a different direction. ation when the students were asked about The lesser degree of professional collegithe possibility of becoming rural physicians. ality in rural communities where fewer Each student is on a distinctive odyssey. physicians practice was mentioned. The Deciding upon a career path is a highly inability to realistically pursue certain individualized process and many of the specialties in a rural setting was also a students’ comments were profoundly unique concern. In addition, some wondered about and personal. Still, some patterns emerged employment prospects or other opportunities from the discussion. for a spouse who is also a highly skilled Several of those heading to medical professional. However, the biggest issue school had a mentor and/or other exposure O-CHIP: Oklahoma Comprehensive Health Independence Plan

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with rural Oklahoma among the medical students in our discussion was the quality of life of a rural physician — or their perception of that life.

Concerns extend beyond long hours and lack of relief from being on call almost continuously. Many noted that physicians have no anonymity in a smaller community.

The experience related by one medical student during a rural rotation is instructive.

The local newspaper published the medical student’s picture shortly after he arrived in town and people began actively seeking him out for advice during off hours. One evening, the student went to a local track to work out.

He admitted that one reason he selected the track was because his cell phone would not work there and he could thus avoid having to take calls.

However, just as he started to run, he was approached by a local resident who recognized him from the earlier newspaper photo and began quizzing him about a personal health issue. While the student said he realized that his responsibility as a physician is to be available to patients and assist them, he found the constant attention and public persona unappealing.

The medical students also commented on programs offered by the Physician Manpower Training Commission (PMTC). PMTC offers to help defray some of the costs of medical school in exchange for a graduate’s commitment to practice for at least a time in a rural area. However, students must commit to the program before most have made a decision on a medical specialty.

One program includes a “claw back” provision where a student must pay back three times the amount of the original loan if he or she doesn’t honor his or her commitment to practice in a rural setting. Many feel this is too great a risk to consider participating.

Also, many students change their ideas about how they want to specialize after completing their rotations. They fear being locked into a field that they later find is not their favorite. They don’t want to have to make such a commitment which carries significant penalties. Most, even some otherwise open to considering a rural practice, look for other ways to finance their 56

medical education.

While such informal interviews do not represent a scientific survey, they do provide insight into the thinking of bright young people making career decisions and decisions about Oklahoma today.

Accordingly, O-CHIP includes several provisions to ensure that trained health care professionals are available to meet future Oklahoma needs.

Grant scholarships to students likely to pursue health careers in rural Oklahoma.

O-CHIP provides for reform of existing programs as well as new approaches to attracting outstanding students into health care professions.

Reform existing programs.

O-CHIP will make 3rd and 4th year medical students eligible to participate in PMTC loan programs. It would also make the penalty for students who enroll in the 1st year only 120% of principal plus interest for failure to complete the program so long as the student practices medicine full time someplace in Oklahoma. These changes are designed to offer more flexibility to medical students who may not otherwise be ready to participate in the programs immediately.

Establish funding for a new scholarship program.

• O-CHIP will divert 0.2% of Medicaid expenditures into a program that allows each county to contract with a local hospital or hospitals to offer scholarships in return for service following graduation and certification. O-CHIP would allocate one-half of the funds evenly on a per county basis and one-half according to the number of Medicaid participants residing in each county.

The program provides a small subsidy to ensure that professionals are available in future years to provide services to Medicaid recipients. The funding formula targets funds to the areas of greatest Medicaid needs.

Areas with higher Medicaid populations obviously need assistance. Rural areas face special challenges in attracting O-CHIP: Oklahoma Comprehensive Health Independence Plan

health care professionals, as already noted in this section. In addition, rural areas in Oklahoma tend to have higher percentages of Medicaid participants among their residents.

O-CHIP puts money where it may be used most effectively by channeling aid through a local hospital. A local hospital will understand local needs and have better knowledge of local students than an official in Oklahoma City.

O-CHIP engenders more community awareness of needs and career opportunities by using the local community’s institutions. O-CHIP provides hospitals the ability to craft tailored programs to meet unique needs rather than having to depend solely upon PMTC. Hospitals in smaller towns would be more likely to sponsor prospective family practitioners and general surgeons.

Larger hospitals in urban areas could offer scholarships to those pursuing needed specialties. Hospitals would be allowed to supplement any scholarships offered with their own funds so long as they complied with scholarship rules.

At the same time, the county government provides oversight on the hospital’s administration of the program.

• At its option, the local hospital could contract with PMTC to administer its scholarship program for which PMTC could charge a reasonable fee.

This provision allows a hospital to seek outside assistance if it does not want to administer its own program.

• The local hospital would select a student for the program who is studying full time in a health care field including medicine, dentistry, optometry, pharmacy, and dietetics. Students studying to become mental health professionals would also be eligible. At its option, the hospital could select a student pursuing a degree as a physician assistant, or in nursing, physical therapy, or other non-graduate program. However, students studying business, law, etc. would not be eligible even if they plan careers in health care.

• Any student accepted into a health care academic program would be eligible, O-CHIP: Oklahoma Comprehensive Health Independence Plan

including out-of-state students. However, a non-resident student would have to attend school in Oklahoma.

This provision gives local hospitals maximum flexibility to meet local needs.

The important thing is not where the student getting the scholarship is from, but where the student will practice after graduation. This will allow a niece, nephew, grandchild of a resident, a former resident, the spouse or in-law of a resident, or someone else known to the county to be eligible so long as they have an interest in pursuing a health care profession in the county.

• The scholarship would cover all tuition, fees, and books, and provide an allowance for living expenses while a student is in school.

The program must be generous to attract students and overcome existing obstacles.

• The student would provide eighteen months of service in return for a full year of educational expenses. Residency would not count as service provided, nor would the student receive additional assistance. This approach is similar to the ROTC program that has worked well for the armed forces.

• The hospital would be responsible for all health care needs of the county, not just physicians and nurses, but also dentists, optometrists, pharmacists, etc.

In larger counties with multiple hospitals, there is less likelihood of shortages of dentists, optometrists, pharmacists, etc.

The need for a local hospital to take responsibility for areas normally outside its purview would be likely in small counties with only a few health care professionals.

• In the case of a county without a local hospital within the county, the county would be permitted to contract with a hospital outside the county to spend its allotment in return for maintaining access to health care services.

Counties without hospitals still have Oklahoma citizens with health care needs within their borders. Someone will have to meet those needs. This provision would 57

allow a county without a local hospital to look outside its own borders to make sure that a non-county hospital would be attentive to the needs of citizens living in a county without a hospital.

Provide relief for rural physicians.

O-CHIP would provide a subsidy up to $75,000 per year to a group of three or more rural hospitals that band together and add some of their own money to hire or contract with a physician to provide relief on a regularly scheduled basis to physicians on call in their communities. This measure is designed to provide relief from demanding schedules that prevent many prospective doctors from even considering a rural practice.

As mentioned during our survey, the demanding pace of medical practice and the challenge of maintaining a vibrant family life is a major deterrent for many prospective doctors, particularly in rural areas. The job of a relief physician will itself be highly demanding and may not attract a willing provider for more than a relatively brief period.

Explore greater utilization of physician assistants (PAs) and telemedicine.

One alternative to increasing the number of physicians is to make better use of their time. For this reason, more attention is being placed on employing physician assistants.

O-CHIP would direct the Health Care Authority to conduct a study of how hospitals and physicians can optimize use of PAs and recommend steps for Oklahoma to take in training additional PAs. Long considered by some policymakers to hold significant promise for helping beleaguered rural health professionals, telemedicine at last seems to be reaching critical mass, thanks to the efforts of the Oklahoma State University Center for Health Science. Telemedicine can provide needed consultation by specialists to the patient.

This approach holds promise for improving the quality of care available in a rural area and assisting rural physicians.

Emphasize rigor in high school curricula.

Oklahoma has debated increasing the 58

rigor in school curriculum for several years, and some progress is being made. As the interviews with undergraduate honor students indicated, we may not be exposing capable students to the coursework needed to pursue a medical career. The subject deserves serious debate apart from any impact on health care and is not further developed here.

Consider the potential impact of tort reform on cost and quality of health care.

Consider the impact of tort reform.

Tort reform is a much discussed topic in Oklahoma. The existence of what many providers consider a system of “jackpot justice” has led some physicians to withdraw from practice, especially those serving highrisk and poor patients. As a result, many patients have difficulty finding the medical services they need.

The purpose of this proposal is not to address tort reform. We would note, however, that change in the system would undoubtedly reduce health care costs by increasing the supply of providers in the state and curtailing unnecessary testing as part of a “defensive medicine strategy.” Tort reform, regardless of what happens with Medicaid, is likely to remain a hotly debated topic.

Safeguard quality.

The state may restrict frivolous lawsuits or take other steps to restore balance to the legal arena, as OCPA has recommended elsewhere. We should explore whether other measures would be desirable to ensure high-quality care for patients. The state could consider the following: • Annual published audited performance reports for hospitals and nursing facilities, as discussed below.

• More rigorous continuing professional education for all health care professionals holding state licenses.

• Periodic peer reviews of health care professionals not employed by hospitals or others subject to performance audits.

The peer review itself would not be public, but disclosure would be made that one had been performed and by whom.

O-CHIP: Oklahoma Comprehensive Health Independence Plan

Help patients become better consumers.

Services (DHHS) at the federal level.

The information would also be placed in a performance report following a standard O-CHIP takes steps to ensure that Oklaformat and audited according to generally homans not only have access to health care, accepted governmental auditing standards but to quality health care.

(GAGAS) by an independent auditor. In most cases, this audit would be performed Provide audited performance data to in conjunction with the audit of the hospital consumers. or nursing home’s financial statements.

The state will require a performance audit Unless otherwise required, the institution of each Oklahoma hospital and nursing would not be required to publish its finanhome with the findings made public. O-CHIP cial statements. will direct the Health Care Authority, in The hospital would publish its perforconsultation with consumers, insurers, and mance report with the auditor’s opinion. The providers, to establish meaningful, consisreport would include the comparative data tent reporting formats for hospitals and required, accompanied by an auditor’s nursing homes. report. The auditor will For example, also report on whether many observers the hospital has conbelieve that a By deregulating the healthtrols in place that give hospital should insurance market, O-CHIP reasonable assurance disclose infection that patients will be will significantly lower rates for its patients billed solely for work health insurance premiums according to the performed and at for most Oklahomans. standards of the appropriate rates.

Center for Disease In a similar vein, the Control. Already, Oklahoma Hospital Pennsylvania is moving forward with such a Association is promoting a much needed requirement using unaudited data.7 project among its members to bring greater In establishing the reporting formats and transparency to the pricing of services. the data elements to include in the reports, While recognizing the need for available the state must take care to avoid giving information about pricing to help consumers hospitals an incentive to decline high-risk make prudent choices, O-CHIP is presently patients. High-risk procedures are more silent on this issue and awaits the results of likely to fail. We should not want to subtly the Hospital Association’s admirable effort. encourage hospitals and physicians to O-CHIP also envisions a very limited decline high-risk patients because an report or brief statement from physicians unfavorable outcome would negatively indicating whether they subscribe to certain impact a performance report. protocols or procedures outlined by the The information submitted by each Health Care Authority. Included is “evihospital and nursing home would be availdence-based medicine.” The physician able to the public online and also in pubreports would be available but not subject to lished form. Such access allows individuals audit. contemplating services from the respective This provision may present an opportunity hospital or nursing home, as well as approfor insurers to provide an important service. priate government agencies, to review the At present, much of the public doesn’t data for themselves. consider a health insurance policy to be This empowers patients to obtain and act worth the money, especially a younger, upon the information needed when selecting healthy individual buying at non-group the best health care option for themselves. rates. In the current environment, those with Most of the required data are already insurance not only receive assistance in provided in reports to the state agencies and paying their bills, they often have lower bills the Department of Health and Human O-CHIP: Oklahoma Comprehensive Health Independence Plan

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due to the insurer’s ability to negotiate favorable rates.

Some observers have decried the large disparities often found between the amount an insurance company pays for health care services and the amount an individual without health insurance pays for the same service. The author is not defending every pricing practice of every hospital. However, in our economy, we commonly recognize the advantages of volume purchasing.

By establishing networks with negotiated prices, the insurer performs a valuable service for policyholders. Their policyholder benefits even when they haven’t yet met their annual deductible. If the networks can be established on not only price but also quality, the insurer performs an even more valuable service. O-CHIP is contemplating the traditional insurance function and the function of a buying club where members know they are getting a good price from a capable provider if they stay in the network.

Insurers can also provide a valuable service by giving their policyholders access to information on other health care providers as a value-added feature of their product.

Insurers may expand on the information provided through the single audit process for hospitals and nursing homes explained in the next section.

Inaugurate single audits for hospitals and nursing homes.

Since hospitals must have their financial statements examined, they are increasingly becoming audit targets. Hospital financial statements are carefully examined and subject to audit by the DHHS Inspector General. Under DHHS contract, oversight of the medical necessity of care is provided by the Oklahoma Foundation for Medical Quality.

Concerned that some providers are making improper charges, DHHS plans to unleash recovery audit contractors on hospitals across the country. Some hospitals already note the inordinate amount of time

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required by audit concerns. The added presence of what is essentially a bounty hunter will add to that burden. The emerging situation is not unlike what once existed with audits of state and local governments.

Before Congress passed the Single Audit Act in 1984, state and local governments were besieged by multiple auditors. They were subject to audit by every federal agency that provided them with a grant.

Each grant carried compliance rules, and the feds rightly wanted assurance that their grant recipients were adhering to those rules.

The system also entailed much needless duplication, with auditors from different agencies reviewing the same document. In fact, situations arose where auditors fought each other for access to the same document at the same time.

The Single Audit Act ended duplication but also ensured that all federal grants were subject to audit. Under the Act, only one audit is performed. That one audit examines the financial statements, reviews internal controls, checks compliance with applicable rules and regulations, and provides reports upon which all interested parties subsequently rely.

O-CHIP would direct the Health Care Authority to seek a waiver whereby all auditing of a hospital or a nursing home that so elects would be performed by an independent auditor as part of a single audit. The auditor would report on performance data and whether effective controls are in place to assure that patients receive proper billing.

Medicaid would pay for the cost of the additional audit from earmarked funds as outlined in a previous section. Consumers can rely on audited data the hospitals and nursing homes publish. By performing the audit in conjunction with other audit work, O-CHIP significantly reduces the cost and assures the federal government that the auditing will be accomplished.

O-CHIP: Oklahoma Comprehensive Health Independence Plan

Addressing Related Issues Utilize available technology.

Many knowledgeable observers believe our health care delivery system can achieve better results with the improved application of information technology. The federal government provides some grants to hospitals and other health care providers to develop new software and integration techniques.

O-CHIP will leverage these resources by providing a state subsidy of 20% of any federal cash grants received for information technology development. This will allow Oklahoma providers to bid for projects they might not otherwise afford.

For instance, an Oklahoma hospital intending to put $400K of its own resources into a project to obtain a $600K federal grant would have to put up only $280K. The state would contribute $120K (20% of the federal $600K). Any health care provider receiving such funds would agree to make any products developed available to other Oklahoma health care providers at cost.

Appropriate regulations to keep the Oklahoma program consistent with federal requirements might be needed.

Improved application of information technology holds significant promise for improved health care through accessible patient databases, e-prescribing, and health information exchange systems. Each is considered below.

Encourage use of an ccessible patient database.

As health care services have become more complex, one problem a patient often faces is lack of access to personal information critical to a physician’s informed decision making. Privacy concerns have made providers reluctant to forward information to other professionals providing services to the same patient.

Meanwhile, nearly every individual faces the possibility of needing urgent care in a location where the only source of care is from professionals unfamiliar with the patient’s medical history. Patients who move from one location to another may be surprised to learn that their new physician,

absent action by the patient, has no access to the files of the patient’s former physician.

To address this critical need, the state would contract with a private company to maintain a medical database. Patients could then make sure that all their health care providers have immediate access to accurate information about their medical history, including current treatment regimens. For all participants in the Medicaid program wishing to participate in the central database, the new Medicaid program would pay for entering and storing medical information.

Access to the database would be limited to registered health care providers from whom the patient seeks services. The system would deny all others access, even with the patient’s permission. Just as society has acted to protect the privacy of communication between physicians and their patients, the database would not be available for employers or insurers, or in court actions.

Employers like Wal-Mart, Intel, Dell, and British Petroleum are moving to establish employee medical databases to improve the quality of services to their employees. Several vendors, from which the state could request proposals, have already developed competing products.

Expand e-prescribing.

Some observers estimate that as many as 7,000 deaths annually would be prevented by eliminating medication errors.8 The software to eliminate most of these errors is available.

O-CHIP would direct the Health Care Authority to promote its use and seek federal grants for physicians, dentists, and pharmacists who would otherwise find the technology’s adoption too costly. O-CHIP would provide state money to supplement any amounts received from the federal government.

Physicians and pharmacists, who may be hesitant about adopting an unfamiliar system, would obtain partial immunity from damage claims for negligence in using eprescription practices.

Create a true health information exchange.

The University of Pittsburgh Medical

O-CHIP: Oklahoma Comprehensive Health Independence Plan

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Center (UPMC) appears to have successfully pioneered the integration of health information systems with actual treatment. UPMC has developed systems to allow information to follow the patient through the system. As reported, the goal is highly integrated, interactive delivery of patient information that moves with the patient.9 O-CHIP would provide funding for Oklahoma hospitals to adopt similar systems and also to provide for exchange of information among providers when required.

• 20% to investigating treatment for diseases that disproportionately afflict lowincome individuals (e.g., mental illness).

• 20% to furthering understanding and investigating treatment for diseases where Oklahoma research is now considered cutting edge on a national level (e.g., lupus).

O-CHIP would also direct the Health Care Authority to consider means of incorporating validated research findings into treatment protocols and disseminating the information to providers.

Expand medical research.

Coordinate health care programs.

The Health Care Authority would allocate 1% of Medicaid expenditures for medical research on disease and other conditions disproportionately afflicting Oklahoma’s Medicaid population (e.g., diabetes afflicts a disproportionate share of Native Americans). Research would be conducted by the OU Health Sciences Center, the Oklahoma Medical Research Foundation, and possibly other Oklahoma institutions.

Certain population groups are more prone to particular diseases than others.

This provision would assure that diseases somewhat unique to Oklahoma’s population would receive the attention of researchers.

Such conditions as mental illness and addiction which particularly afflict lowincome citizens would receive attention.

The Health Care Authority would determine which diseases and conditions are most common among the Medicaid population and contract with researchers to conduct research on means to cure the disease or suppress its debilitating symptoms. Initial research monies would be allocated for these purposes: • 20% to investigating ways to enhance the role of public health policy in preventing disease.

• 20% to investigating the effectiveness of wellness and preventive care regimens which may include research in special equipment dedicated to wellness and prevention efforts.

• 20% to investigating treatment for diseases to which Oklahomans are particularly prone (e.g., diabetes).

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Oklahoma should be able to improve the quality of its health care programs through better coordination. In addition, several opportunities to save money present themselves. The state can fund O-CHIP in part by capturing and redirecting those savings.

Investigate the possibility of partnering with other agencies providing health services.

The Indian Health Service (IHS) seems to face a perpetual funding crisis. Senator Tom Coburn recently pointed out that per capita health care expenditures by the IHS are about half those for federal prisoners.10 Some tribal leaders admit that they are simply unable to meet the health care needs of their members.

Without adequate health insurance, many tribal members are unable to access quality health services that may be available nearby. At the same time, where available, facilities providing services to non-tribal members at a profit would gain additional resources to pursue their mission.

Few diseases are limited by racial boundaries. It makes little sense to require a tribal member to bypass non-Indian facilities close to home to receive care at an IHS facility farther away. At the same time, a non-tribal member living near an IHS facility is unable to use it even though the facility could make a profit on the service that it could then use for outreach to tribal members.

O-CHIP directs the Health Care Authority and the Insurance Commissioner to meet O-CHIP: Oklahoma Comprehensive Health Independence Plan

with tribal leaders and others to explore the possibilities of greater cooperation between state and tribal programs. The state should attempt to fashion its health care reforms in a manner that respects tribal sovereignty and supports the efforts of Oklahoma tribal leaders to improve health care for their members.

Coordinate and, where possible, integrate state health care programs.

Oklahoma funds many programs to promote public health and particular health services. O-CHIP calls for better of coordination of some of these programs. It will require future study to determine how these programs might be more closely aligned or consolidated for mutual benefit.

While O-CHIP calls for repositioning some health care programs, it is beyond the scope of this proposal to recommend a complete realignment. However, the state should consider such an effort which is consistent with O-CHIP’s goal of improving health care for Oklahomans.

The federal government provides assistance to the states in the form of “disproportionate share “ (DSH) payments. These payments offset part of the cost of care hospitals provide for which they are not compensated. Under O-CHIP, the amount of such uncompensated care should decline dramatically. The state would attempt to apply most or all of its DSH payments to cover the cost of its revamped Medicaid program.

Similarly, the federal government provides funding for federally qualified health centers (FQHCs) to divert the uninsured from high-cost emergency rooms to lower-cost clinics. As the number of uninsured decreases, the need for separately subsidized FQHCs will decline. Accordingly, the state should attempt to fold FQHC subsidies into its revamped Medicaid program.

Use TANF grants to help fund health care for the poor.

The medically needy are defined to generally include those eligible for TANF. Under O-CHIP, TANF recipients would receive additional funds for personal use.

First, all Medicaid recipients receive a tax O-CHIP: Oklahoma Comprehensive Health Independence Plan

credit that eliminates any income tax for which a low-income family is liable. Second, the PHA, to which Medicaid recipients would have access, allows participants to convert some of its excess funds to personal use.

Since O-CHIP replaces some funds now flowing through TANF, it is appropriate to allocate some TANF funding to O-CHIP. O-CHIP requires participants to pass a rigorous drug screening test at least biannually. The particular test contemplated is testing the subject’s hair samples.

Drug screening will be administered as part of the required physician visit. The test will determine whether the subject has used banned substances during the 60–90 day period preceding the test. In other words, to receive the full benefit now available under TANF, a subject must abstain from drug use for at least one 90 day period every two years. This requirement is consistent with TANF program objectives.

Improve county health services.

A combination of state aid and county tax revenue support the 69 of the state’s 77 counties that operate a county health department.

Among the valuable services performed by county health departments are educating the public about important health issues, coordinating immunization programs to assure that children are properly vaccinated against serious preventable diseases, and providing or coordinating programs to fight the spread of serious diseases. Two major programs that county health departments deliver are Women, Infants and Children services (WIC), and childhood immunizations.

While Washita County lacks a county health department, the local hospital provides WIC services and immunizations for county residents under contract with the Department of Health.

The Washita County approach utilizes economies of scale and improves the quality of health care through greater interaction between patients and providers. A WIC participant in Washita County needing additional intensive services will be placed in the care of professionals currently providing care at the hospital. The patient benefits 63

from a more seamless transition which leads to improved results.

Under O-CHIP, more immunizations will be covered by Medicaid and therefore eligible for an increased federal match. At the same time, O-CHIP directs more resources to the center of a community’s health care infrastructure, the local hospital.

Accordingly, the state should consolidate county health departments into local hospitals wherever it promises improved services at lower cost.

In achieving these efficiencies, it is likely that most county health department personnel currently providing services could be transferred and employed by the local hospital. When this is not the case, O-CHIP would provide a generous severance package to any displaced workers.

Provide health care rationally to inmates.

The state may also realize savings in providing health care for its prison population. Since inmates in state prisons are not Medicaid eligible, the cost of their care falls squarely on state and local government.

However, it’s possible for the state to provide adequate health care for inmates, realize significant savings, and simultaneously help rural hospitals remain viable.

To deliver health care services to inmates, the Department of Corrections generally employs its own staff of physicians and nurses working in clinics inside the prisons.

Meanwhile, most Oklahoma prisons are located near rural hospitals with available capacity.

The state can realize savings and the rural hospitals gain additional revenue if the local hospitals contract with the Department of Corrections to manage and staff prison clinics. The state should address the redundancy of two clinics in close proximity when the state is strapped for funds to maintain prisons and keep rural hospitals afloat. The Department of Corrections has negotiated standard fees with hospitals, a beginning which it should expand further.

The ruling of the Oklahoma Supreme Court that counties are responsible for the health care of their inmates highlights a 64

similar problem. The most efficient way to address this problem is to encourage counties to use local providers for inmate health care. A move toward county clinics within the jails will only lead to excessive costs.

Fully integrate mental health into comprehensive health care delivery.

The Department of Mental Health and Substance Abuse Services (ODMHSAS) provides an array of mental health services to Oklahomans through a network of community mental health centers. By restructuring these activities, the state would make more of them eligible for the new Medicaid coverage and federal help with funding. At the same time, the state can improve the quality of its services to people with mental illness.

The ability of modern medicine to effectively treat mental illness has increased dramatically. Disorders considered debilitating twenty years ago are now treated to allow individuals to live relatively normal lives and contribute to their communities.

With therapy and medication, more people with mental illness are now holding responsible jobs and paying taxes.

Traditionally, Oklahoma’s model of providing mental health services has centered on state institutions and mental health centers. Those who needed services were referred to the appropriate location where they received treatment as resources permitted. The mental health effort was organized around ODMHSAS’s institutional framework.

O-CHIP would continue the transition that has begun in Oklahoma’s mental health system to a model centered on individuals with mental illness. Funded directly through Medicaid, the patient would purchase services as needed from ODMHSAS or other providers. This change would qualify most mental health services to individuals for federal funding through Medicaid.

The key development that makes such a transition timely is the progress made in treating mental illness. In the past, people with mental illness needed a caretaker to oversee treatment decisions. With proper attention, many of those same people with mental illness can now make their own O-CHIP: Oklahoma Comprehensive Health Independence Plan

decisions regarding their care. O-CHIP would permit them to do so.

It is possible that some state jobs will disappear as new treatment patterns replace old ones. When employees are not transferred to another job within ODMHSAS or a private provider, O-CHIP would provide an appropriate severance package.

O-CHIP: Oklahoma Comprehensive Health Independence Plan

As with Sooner Care, ODMHSAS may find it advisable to spin off some of its activities into the private sector. While O-CHIP does not mandate this, the progress O-CHIP brings may necessitate such changes. The state should be prepared to assist its mental health workers with such transitions.

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O-CHIP: Oklahoma Comprehensive Health Independence Plan

How O-CHIP Achieves the Objectives for Health Care Reform This proposal began by enumerating O-CHIP objectives. Now that the detailed proposal has been outlined, we would do well to see if the proposal achieves the objectives outlined. In this section, we will also attempt to place into context some current health care controversies.

• Provide Oklahomans greater ability to improve and maintain their own health.

– Good health avoids costly health care.

In several instances, O-CHIP effectively encourages more responsible behavior through participation in wellness activities and provision of preventive care.

Employers who want to promote wellness with their employees will enjoy legal immunity if they utilize licensed facilities. Medicaid participants can enjoy a portion of the savings they help the state generate if they obtain required preventive care. These steps should lead to a healthier Oklahoma population with fewer uncontrolled chronic illnesses which lead to higher health care costs.

– Permit more interest in wellness by employers and individuals.

Many employers are expressing strong interest in wellness and fitness programs for their employees and can justify the related expenditures through fewer work days lost to illness and a more alert workforce. O-CHIP removes legal barriers to establishing wellness programs. In addition, by allowing Medicaid participants to make wellness expenditures from a personal health account, O-CHIP encourages Medicaid participants to engage in wellness activities.

– Remove barriers to more effective programs for the chronically ill.

O-CHIP allows insurers and their business partners to profitably serve those with such chronic illnesses as diabetes, auto-immune diseases, O-CHIP: Oklahoma Comprehensive Health Independence Plan

mental illness, cancer, etc. O-CHIP also provides financial assistance to those unable to afford new improved services.

• Preserve and enhance health care markets and let them heal the sick.

– O-CHIP does no harm to a system that works well for most Oklahomans. O-CHIP imposes few additional regulations while it removes many others. While O-CHIP provides consumers with helpful information about providers’ medical practices, it also allows experimentation based upon the professional judgment of a health professional in consultation with the patient.

– Encourage the continued development of “miracle” drugs, “miracle” equipment, and new, effective procedures to treat illnesses afflicting Oklahomans.

O-CHIP does not rely on the importation of patented drugs or other de facto patent infringements to control health care costs. It preserves the pipeline that is bringing many dramatic innovations to treat and cure disease.

– Provide a stable and predictable business environment within which hospitals and other Oklahoma providers can pursue nationally recognized excellence.

The constant demands of developing better techniques for patient care and charging appropriately for services are a daunting business challenge. The state should not add uncertainty over uncompensated care and regulation to that burden if we expect our providers to expand and enhance their services.

O-CHIP provides the stability and predictability needed.

– Encourage the greater use of databases and technology to reduce errors and provide needed information to health care professionals on a timely basis.

O-CHIP provides grant support to 67

“jump start” greater adoption of promising information technology.

– Ensure the continued availability of needed doctors, nurses, pharmacists and other professionals throughout Oklahoma.

O-CHIP provides aid directly to students pursuing health careers in exchange for service following graduation. It also provides assistance to make medical careers in Oklahoma more attractive to students. The state concentrates aid to those who will actually use their skills to serve Oklahomans for part of their careers.

O-CHIP also provides assistance to rural hospitals for obtaining relief from round-the-clock on-call demands for emergency room service.

• Assure that all can access the health care system with minimal damage to the economy.

– Do not continue to distort the market for health care services and insurance.

Existing policies force up the cost of insurance for most of our population and drive many people out of the insurance market. This happens when costs from the sick are transferred to the healthy and costs are spread only among the healthy that obtain health insurance. Requiring hospitals to transfer costs from those without health insurance to those with insurance also contributes to the problem. O-CHIP curtails these practices, thus reducing the cost of health insurance.

We must keep in mind that governments are by nature political instruments which base decisions on political considerations. For those who want government to be responsive to the electorate, this is a good thing. The situation changes dramatically when decisions become personal.

Most Oklahomans want to control their own health care. When the government rations health care, as it invariably must when contending with limited resources and excessive demands, it must make rationing decisions based upon political consider68

ations. The desires of the individual may conflict with the values expressed in the collective political will.

If we are going to have government control health care, we should get on with designing the best possible rationing system. OCPA is far from convinced that government control is inevitable or even desirable. Hence, this effort to reform. We should remove the market distortions found in health care to build a system that cares for the sick and continues to roll back the frontiers of treatable disease.

– Address the needs of the poor and the medically needy directly.

O-CHIP does not further complicate an already complex system designed to help the poor. Rather, it identifies those needing assistance in a consistent manner, determines a reasonable measure of the assistance needed, and provides it directly to the poor.

• Reduce health care inflation.

– Facilitate greater consumer involvement.

O-CHIP presents consumers with new information about provider performance and encourages insurers to negotiate advantageous pricing on their policyholders’ behalf. O-CHIP also creates a framework in which consumers benefit through making prudent choices about their health care and requires them to spend some of their own dollars to execute those choices.

– Stop pouring money into ineffective programs.

Despite the fact that traditional Medicaid has consistently failed to achieve its advocates’ objectives, many still want to expand it. While expansion may lead to a net loss in the number of uninsured, such progress will come with a price. Traditional Medicaid expansion will crowd out some private insurers, leaving a much smaller increase in the portion of our citizens with health insurance than we might at first expect to result.

Fortunately, recent reforms approved by the legislature and implemented by the Oklahoma Health Care Authority O-CHIP: Oklahoma Comprehensive Health Independence Plan

have begun pointing the state in a more positive direction. O-CHIP attempts to build upon the progress we are making.

O-CHIP is put forward with the belief that we need to unleash the ability of providers, insurers, and consumers to bring a needed revolution in this marketplace. O-CHIP gives insurers greater freedom to develop new products.

Consumers are empowered to make important decisions. Providers will find their ability to use creative skills strengthened. Providers will also discover that they must pursue successful courses of treatment or face the discipline of the market.

• Assure that public health needs do not continue to bankrupt hospitals.

– Remove barriers to greater insurance coverage.

Perhaps no aspect of the 2007 SCHIP debate has received more attention than the high number of Americans without health insurance. O-CHIP addresses this problem decisively. First, some background on this complex problem.

Medical care without health insurance — health insurance is a public good.

A common misunderstanding in our society is that people without health insurance cannot receive health care.

This is simply not true. Unlike many policymakers who should know better, most of the uninsured understand this.

The author is not arguing that the care the uninsured receive is always adequate or optimum, but it is care nonetheless. The difference is the manner in which the uninsured receive their care.

Almost everyone who shows up at a hospital emergency room receives medical treatment.

Another common misunderstanding is that federal law requires hospitals to treat all comers in their emergency rooms. Technically, this is not true.

Emergency rooms are designed to stabilize and evaluate those who appear. It is often as expensive to provide an evaluation as to provide treatment. Therefore, a desperate O-CHIP: Oklahoma Comprehensive Health Independence Plan

uninsured parent will take a sick child to an emergency room confident that a professional will see them.

However, the hospital that treated the sick child must recover the cost of providing that care. This creates a problem because the one who must cover these costs is the patient who acts responsibly and pays his or her bills through insurance or other means.

People without insurance literally push some of the cost of their care onto others.

Even healthy people have accidents or develop illnesses that may lead to expensive health care bills. If an individual does not buy health insurance or maintain sufficient personal assets to cover a major medical event, he or she will push his or her costs onto fellow citizens who get sick.

When that fellow citizen with insurance gets sick, he and/or his insurer, will pay for the cost of the care received plus additional costs so the hospitals can also recover lost income. Almost any Oklahoma community hospital that tries to eat the cost of all the care it gives away will have to close its doors.

Oklahoma law requires that anyone wanting to drive on Oklahoma roads must maintain an insurance policy to pay for damages resulting from possible accidents. This requirement prevents a driver from imposing the cost of an accident he causes onto others. In the very same way, someone failing to obtain health insurance forces some of the costs of that decision on others.

Some argue whether state mandates for liability driving insurance are really effective. That is beside the point.

Everyone who can must provide for his own care so the state can help those who can’t. Accordingly, this proposal creates an environment in which coverage will become nearly universal without imposing a legal mandate.

Who are the uninsured and why don’t they have insurance?

Before attempting to solve the prob69

lem of the uninsured, we should understand why some people don’t obtain health insurance. More than a superficial look shows many reasons why people are uninsured. While this is far from a homogeneous population, we can classify some of the major reasons to provide more insight.

The most common means of getting insurance is through an employersponsored plan. By some measures, 90% of those with health insurance are covered through their employer. However, for the self-employed, the unemployed, or employees of businesses that do not offer health insurance (usually low-wage industries), there may be impediments to obtaining coverage. A well-crafted government policy could overcome these obstacles with minimal damage to the overall health system or the economy.

Studies show that a major portion of the uninsured are only without health insurance for six months or less — 45% of the uninsured, according to one federal study. Some recent studies provide a smaller figure, indicating that more of the uninsured are uninsured for longer periods. The temporarily uninsured may only lack coverage when between jobs or perhaps starting a business. They may be in a probationary period with a new employer until benefits are conferred. COBRA has lessened some of these problems but has not eliminated them.

This is still a major problem. A temporarily uninsured person may have an accident or contract a debilitating illness during the uninsured period and incur substantial health care costs. If he or she is unable to pay for their care, those costs are almost always shifted to more responsible individuals and taxpayers.

For the majority, the cost of coverage is simply too high and a rational, selfinterested decision is made to forgo health insurance. These individuals or families fall into three general categories: the working poor, the chronically 70

ill, and “the invincibles.” We will examine each category separately.

A low-income family without employer-provided insurance may find that basic living costs consume limited resources, leaving nothing to buy health insurance or cover basic preventive health care. The family may also consider that they can go to an emergency room in the event of a health crisis. They still receive some care, but lack access to a higher standard of care that would come through an ongoing relationship with a physician.

Even if a member of a low-income family has a job that offers health insurance, the cost of participation may exceed the income left over after buying food and housing and providing for other basic needs. The family may think it best to decline coverage.

The traditional Medicaid structure focuses primarily on the low-income family, many of whom qualify for Medicaid.

An individual with a chronic illness faces different problems in obtaining care. Treatment for chronic illnesses is often expensive and an indication that future costs are likely. Accordingly, most insurers will deny coverage on an individual policy to an applicant with a chronic illness or restrict the coverage so aggressively that the policy has only limited value.

An individual suffering from a chronic illness may not suffer from low income.

However, the cost of health care may consume or exceed an individual’s income. The individual then makes a rational decision to forgo a limited insurance policy or find that no insurer will offer him or her coverage at any price.

The following example demonstrates the situation: Smith has an income of $15,000 per year and health care costs of $500.

Jones has an income of $50,000 per year and health care costs of $40,000.

Other things being equal, Jones, despite having three times Smith’s inO-CHIP: Oklahoma Comprehensive Health Independence Plan

come, has a more pressing need for help. After health care costs, Smith has $14,500 while Jones has only $10,000.

O-CHIP recognizes the need of the person with a chronic illness to have coverage. O-CHIP deregulates much of the health insurance market to provide incentives to insurers and providers to develop new, more effective coverages for the chronically ill. Meanwhile, O-CHIP provides direct financial assistance to the chronically ill who need it to be able to afford those new coverages.

The “invincibles” category encompasses young adults who think they are healthy. They don’t buy health insurance because it’s not in their budget and they don’t expect to need it in the near future. They consider themselves invincible.

The “invincibles” view almost anything they spend on health insurance as excessive unless the underwriting costs of a policy cover only the unlikely event of a serious accident or illness.

Insurance regulations generally add costs to the policies available for this group to generate the resources to buy down the price of policies for more costly groups.

According to the Census Bureau, 31% of the uninsured are between 18 and 24 and 57% are between 18 and 34. Many in this age group also have lower incomes. A number of them have made what appears to be a rational decision to forgo health care coverage because they don’t see the value for money spent. By contrast, only 15% of the uninsured are over 45.

As we see, the reasons why individuals are without health insurance vary widely. A government policy drafted without consideration of the underlying causes won’t solve the problem of too many uninsured and could make things worse.

O-CHIP addresses each major cause of lack of health insurance.

A shrinking but still large share of the uninsured are only temporarily uninO-CHIP: Oklahoma Comprehensive Health Independence Plan

sured. Therefore, O-CHIP directs the Insurance Commissioner to work with private insurers to provide health insurance for a limited period of time.

O-CHIP also provides subsidies to encourage such product offerings initially if the Insurance Commissioner thinks that is required.

O-CHIP addresses reasons the working poor are without coverage by removing categorical requirements for Medicaid and providing assistance to those who currently find themselves slightly above the coverage threshold.

When discussing insurance coverage for the chronically ill, many immediately opt to essentially “tax” the healthy that do obtain coverage — either through rating bands or forced participation of insurers in “high-risk pools” — to subsidize lower premiums for the otherwise uninsurable.

While a chronic illness may not present an insurance risk, it does present a known cost. Current policy may provide the chronically ill with lower-cost insurance, but it also deprives them of specialized coverage or services that might be more valuable.

O-CHIP provides for the development of new insurance products to provide insurance to the chronically ill for unknown events and for services to help them manage their illness.

For instance, a product for a diabetic might include a “hot line” to discuss symptoms, specialized medication, or dietary decisions. The hot line would be staffed by people expert in diabetes. A consortium of an insurer, a pharmacy, a physician, and perhaps a hospital and/ or pharmaceutical company could provide the service.

Will such a service cost a diabetic more than an existing policy not designed for a diabetic? Probably. O-CHIP will consider costs and income in making an eligibility determination and provide financial assistance to those who need it.

One difficulty is that many chronically ill have managed as prudently as pos71

sible under the current system. O-CHIP will provide for a transition in which those currently in a high-risk pool or benefitting from rating bands would have the option to remain where they are.

The last major group of the uninsured, the “invincibles,” contrast markedly with the chronically ill. Just as insurers hope to avoid the chronically ill, they covet the “invincibles” because they pay more in premiums than they consume in benefits. However, policymakers should ask if this may be the reason so many of them forgo health insurance.

By avoiding the mistake of loading other costs onto this group, O-CHIP creates a market in which the “invincibles” will find it in their personal interest to buy health insurance.

The best way to get this group insured is to provide them with a product that is reasonably priced in accordance with their own personal needs.

O-CHIP does this by allowing those who buy insurance to bear only the costs associated with their own likely need to use it. We shouldn’t treat the uninsured with contempt because of a perception that they are not doing their share for the common good. From their viewpoint, we are asking them to make a charitable contribution instead of investing in a policy that is in their own best interest.

Lastly, O-CHIP encourages the availability of a product that insures an individual in the future and reduces the number of the chronically ill who lack coverage. By encouraging more widespread adoption of wellness practices, O-CHIP reduces future health care costs by delaying or eliminating the onset of chronic illness.

– Allow hospitals to collect bad debts.

O-CHIP makes it easier for hospitals and other health care providers to collect amounts due by providing a debit card in conjunction with the O-CHIP PHA and granting the ability to attach a debtor’s property to recover amounts due for services.

While these steps may make it more 72

difficult for the uninsured who encounter a health crisis, O-CHIP also provides financial assistance to all who need it to purchase coverage. Oklahoma hospitals have historically exercised restraint in collecting bad debts. We could expect the use of the new powers given to them to be limited in practice.

• Curtail freeloading and de facto taxes on responsible citizens.

A major cause of the high cost of health care and health insurance is the large number of people who freeload off the system. The cost of providing care for those who don’t pay their bills is shifted to those who do pay.

As we have seen, a number of people currently freeload because they lack the resources to provide for themselves and have no other choice. Others decide buying insurance isn’t worth the cost. For someone with limited health care needs and few assets to protect, available options are often unreasonably priced.

Our current regulatory environment has enabled freeloading. Forcing health care providers and insurers to shift the cost of caring for the uninsured to the insured has driven up costs, especially for those not likely to file a claim. Using a largely “in” or “out” system that considers only income fails to provide assistance to many chronically ill who need help to obtain health care coverage.

O-CHIP addresses these issues by removing the major barriers in obtaining health insurance. By freeing underwriters to measure risk, O-CHIP will dramatically cut health insurance costs for the young and healthy. This removes the principal reason many of them go without health insurance. A tiered system of eligibility considers both income and health care needs and eliminates categorical requirements, thus assuring that all who need assistance will have it.

After removing the barriers many face in buying health insurance, O-CHIP then provides tax benefits to only those O-CHIP: Oklahoma Comprehensive Health Independence Plan

who obtain health insurance. Freeloaders will find it more costly to continue sponging off others. Not only will they lose tax benefits and be unable to play the state lottery, they also face the risk of paying steeper premiums should their health unexpectedly deteriorate.

With O-CHIP, freeloaders will find it more difficult to freeload and still come out ahead.

• Encourage family stability and work.

– Stop bribing young women to abandon the fathers of their children.

Under O-CHIP, a man and woman are better off remaining married. This is a critical improvement over the existing system.

– Reward hard-working poor people who take initiative to better themselves.

O-CHIP alone does not completely solve this problem. However, O-CHIP greatly reduces the penalty a low-wage employee faces by accepting a promotion. O-CHIP also encourages reform at the federal level that would allow Oklahoma to properly address this issue.

• Help rural Oklahoma maintain needed access to health care services.

O-CHIP is designed to help all Oklahomans lead healthier lives and gain better access to quality, affordable health care.

Some of its provisions, while not necessarily aimed at rural communities, will have a disproportionately positive effect on rural areas.

A hospital is an essential component of a vibrant community. It fulfills a critical need and serves as a focal point for other important services. Physicians are more likely to practice in a town with a hospital. Because a hospital attracts skilled professionals, it enhances the cultural life of a community.

Oklahoma health care providers who serve the Medicaid population have complained loudly about their treatment until the legislature provided funding with which the Health Care Authority could improve reimbursement rates. These rates have traditionally been far below those paid by private insurance and even those paid by Medicare. Fortunately, the O-CHIP: Oklahoma Comprehensive Health Independence Plan

Health Care Authority has been able to increase rates to providers in recent years, but Medicaid still pays less than private insurance.

The impact of low reimbursements falls most heavily upon rural hospitals. At present, those without outside support are the ones that struggle the most financially. Many rural communities are concerned that they will lose their hospital altogether.

Despite the lower Medicaid reimbursement provisions and the large number left uninsured by the present system, major urban hospitals are generally profitable.

The same is not true of many rural hospitals. O-CHIP provides assistance to rural hospitals in several ways: – O-CHIP will lead to a higher proportion of Oklahomans having insurance coverage. A disproportionate share of the uninsured live in rural Oklahoma.

By significantly reducing the number of uninsured, O-CHIP helps rural hospitals and other rural providers disproportionately.

– O-CHIP replaces the current state system with private insurance, resulting in better reimbursements for hospitals and other providers treating the Medicaid population. Rural hospitals especially benefit because of higher percentages of Medicaid participants living in Oklahoma’s rural areas.

– O-CHIP provides funding for health care scholarships aimed specifically at rural areas. These provisions will help attract needed professionals to rural areas and also provide new opportunities for students from those areas.

– By encouraging local hospitals to provide some services now provided by county health departments, O-CHIP improves the quality of care and provides an additional funding source for the local hospital – By looking to local hospitals to provide services to nearby correctional institutions, O-CHIP improves care for the inmates and provides a new source of revenue for the hospitals providing the service.

73

In summary, O-CHIP helps hospitals serving rural communities to prosper. This is the single most important step that health policy can take to contribute to the economic health of rural areas.

O-CHIP provisions which reward nursing home residents for finding lower-cost care should benefit nursing homes providing the lower-cost care. Because operating costs tend to be lower in rural Oklahoma, this should give a small advantage to rural facilities and the providers that serve their residents.

• Create an environment that encourages Oklahoma businesses to create more and better jobs.

Like all states, Oklahoma depends upon its employers to create jobs for its citizens. The employers provide the economic engine that drives the economy, and without them the economy stalls. A state failing to consider the impact of any reform proposal on its employers before implementing it may find its economy and citizens overwhelmed by serious unintended consequences.

Most people with health insurance receive it through their employer. People associate employment with the benefit of having health insurance. A growing number of economists and others are questioning whether this relationship is best. For many policymakers, having more employers provide health coverage is still the starting point for a discussion of universal coverage, short of a complete government takeover.

In this vein, many policymakers want to impose outright mandates on employers to provide health insurance to their employees. Others stop short of a mandate, but want to pressure employers into offering health insurance. This proposal does not include or encourage mandates upon employers.

When a state imposes a mandate, each employer must determine if it can absorb the higher cost. This is usually done by passing the mandate’s higher costs on to their customers as higher prices. If all the employer’s competitors are in state and face the same mandate, an employer can 74

usually raise prices to cover the added costs.

However, if employers face out-of-state competition, they will find themselves at a competitive disadvantage if they must pay for health care benefits. Their costs have gone up while their competitors’ have not.

Any single mandate, even one as farreaching as requiring health insurance, is unlikely to force the immediate movement or closure of any but the most marginal business.

However, even if the employer does not close or move, the mandate will impact the employer’s margins and financial health. The business may not grow as fast as its competitors, and over time its balance sheet may deteriorate. It may become a takeover target and lose many of its most highly compensated jobs.

Whether it involves a mandate for health insurance or other important business development issues, Oklahoma should take every reasonable step to assure the most favorable business climate possible.

In addition, the high cost of providing health care benefits is likely to force many employers to scale back or cancel plans to expand and create new jobs.

When we consider that many people who might want to fill those jobs may have their health care needs met by another source (the employee’s spouse may have coverage through his or her job), we realize that we are wiping out opportunities for many Oklahomans to improve their situation.

Under O-CHIP, Oklahoma employers gain. Most employers want to provide benefits for their employees and, generally speaking, it is in their own selfinterest to do so. In most industries, highly valued employees are more likely to accept and maintain employment when they are well compensated.

Thanks to our tax laws, health insurance is a part of compensation that employers can offer cost effectively. O-CHIP strengthens the employers who provide insurance for their employees and thus holds down the cost of health insurance.

O-CHIP also makes it possible for more O-CHIP: Oklahoma Comprehensive Health Independence Plan

employers to offer coverage. O-CHIP’s new list billing services make it easier for employers to offer coverage. Employees owning the policies find their coverage more valuable.

Employers already providing health insurance gain. Their employees enjoy an added tax break so they receive more value from the employer-provided insurance than at present. Since the employer’s objective is to provide costeffective compensation, the employer also gains by offering greater value to employees at no additional cost.

While O-CHIP does not mandate employers to provide health insurance, it does make it more attractive for an employee to work for an employer who does. O-CHIP simplifies the process of employers offering cafeteria plans.

Employers wanting to provide health insurance find it easier and more advantageous to do so. Meanwhile, O-CHIP creates an environment that gives patients greater control over their care and accommodates employer experimentation with more flexible and portable benefits.

Endnotes Patrick F. Fagan, Robert E. Rector, Kirk A. Johnson, Ph.D., and America Peterson, “The Positive Effects of Marriage: A Book of Charts,” <www.heritage.org/Research/ Features/Marriage/index.cfm>.

2 C.W. Cranor, B.A. Bunting, D.B. Christensen, “The Asheville Project: long-term clinical and economic outcomes of a community pharmacy diabetes care program,” American Pharmacists Association (Washington, D.C.), 2003, March-April, 43(2):173-84.

3 Morgan Quitno Press using data from Administrative Office of the U.S. Courts, “Table F-2, U.S. Bankruptcy Courts” (press release, December 1, 2006).

4 The MetLife Market Survey of Nursing Home and Assisted Living Costs, October, 2007.

5 Robert Kaestner, Lisa Dubay, and Genevieve Kenney, “Managed care and infant health: an evaluation of Medicaid in the US,” Urban Institute, <www.urbaninstitute.org/publications/1000830>, April 1, 2005.

1

O-CHIP: Oklahoma Comprehensive Health Independence Plan

John S. O’Shea, M.D., “The Crisis in America’s Emergency Rooms and What Can Be Done,” Backgrounder #2092, The Heritage Foundation, December 28, 2007.

7 Martha Raffaele, AP Writer, “Pa. hospital report more than 30,000 infections in 2006,” York Daily Record, April 10, 2006.

8 The Institute of Medicine as cited by the Center for Health Transformation in press release dated December 13, 2007.

9 “Better Medicine Through Technology,” Information Age, December 4, 2006.

10 “Dr. Coburn’s Amendments to fix the broken Indian Health Care System (Amendment 4034),” website of Senator Tom Coburn <coburn.senate.gov>, February 14, 2008.

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O-CHIP: Oklahoma Comprehensive Health Independence Plan

APPENDIX A

Incentives for Family Stability and Work Provided by Existing Social Policy The charts on the following three pages, prepared by economist Mickey Hepner of the University of Central Oklahoma, show: • The approximate effective marginal tax rate for a single mother with two children; • The approximate family resources available after taxes and day care expenses; and • The relative advantages of marriage, cohabitation, and remaining single.

Chart 1 illustrates the family resources (by source) at different wage levels for the mother. The first bar represents the family’s total resources when the mother is not working. The second bar reflects the value when the mother earns the minimum wage ($5.85 per hour) while working part time. The remaining bars assume the mother is working 40 hours per week. The noticeable decline in resources that occurs for the

O-CHIP: Oklahoma Comprehensive Health Independence Plan

default scenario at $16 per hour is due to the loss of eligibility for the childcare subsidy program—leaving the mother to assume the full cost of childcare.

Chart 2 converts the information from Chart 1 into effective marginal tax rates.

These effective tax rates include not only federal and state taxes, but also the reduction in benefits associated with higher incomes.

Chart 3 examines the family’s total resources under three different family structures: the parents remain single and live apart (or clandestinely cohabit), the parents openly cohabit, and the parents get married.

As explained more fully in the body of this study, the current network of major social welfare programs, often referred to as the “safety net,” actually provides strong disincentives for stable families or for work and initiative.

A-1

Chart 1 A-2

O-CHIP: Oklahoma Comprehensive Health Independence Plan

Chart 2 O-CHIP: Oklahoma Comprehensive Health Independence Plan

A-3

â&#x20AC;&#x153;Single Cohabit-Marriedâ&#x20AC;? Comparison

Chart 3 A-4

O-CHIP: Oklahoma Comprehensive Health Independence Plan

APPENDIX B

Amount of Medicaid Assistance to Individuals and Families in Various Circumstances under the O-CHIP Proposal as Outlined The following charts are provided to give readers a better understanding of the actual amount of assistance that O-CHIP would make available to people in different situations and how that assistance is related to assistance from other government programs.

We should bear in mind that while such charts may be useful analytical tools, the poor are not carbon copies of each other.

Many have unique situations that may impact their eligibility and amount of assistance and for which these charts do not account. For example, a participant may be unemployed and then work several jobs in succession during a single year. The jobs may have different pay scales and some may offer health benefits while others do not. As noted in the text, the state must take care to properly determine eligibility and the amount of assistance under O-CHIP. For those who are unaccustomed to the cumulative impact of these programs, the amounts presented may seem surprising.

Families and individuals with relatively higher incomes are eligible for some assistance while some with relatively lower incomes receive less than full assistance.

This results from including the value of government benefits in personal resources and from providing some accounting for the fact that, due to wide variations in health care costs among people, need is far from uniform financially.

These anomalies could be minimized by either by reducing the threshold at which participants are expected to help pay for benefits or by requiring a higher percentage of income above the threshold to be used to pay for benefits. As presently drafted, O-CHIP requires participants use 50% of their income above the threshold to help pay for

O-CHIP: Oklahoma Comprehensive Health Independence Plan

health insurance. A higher percentage, say 75%, could be used, but readers are cautioned to be aware of the impact such a change may have on incentives for work and personal growth.

Readers should also be aware that the cost of living in Oklahoma is generally less than the national average. It may therefore be possible to reduce the threshold and maintain benefits comparable with other states.

Of course, we could also minimize these anomalies by discouraging family stability, discouraging personal initiative, and continuing with the current model of insurance regulation that drives up costs and leads many to forgo health insurance altogether.

Note that the charts assume that all participants get the maximum level of benefits available to someone at their income level.

For various reasons, not all do so.

The costs used in the charts that follow are based upon a rough approximation using published insurance premiums for coverage that includes a health insurance policy with a high deductible and co-insurance requirements without maternity coverage. The coverage would include dental and vision care. The package would also include a deposit to a personal health account (PHA) as discussed in the text.

The categories given in the charts (good health, fair health, and poor health) are also rough approximations included to give the reader an understanding of the interaction of need with benefits offered. Note that a few individuals may incur costs that far exceed even those shown for â&#x20AC;&#x153;poor healthâ&#x20AC;? if they have a chronic illness that requires intense or costly therapy.

B-1

B-2

O-CHIP: Oklahoma Comprehensive Health Independence Plan

42

32

22

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000

190 -

190 -

-

-

-

-

Income Federal Considered EIC TANF

1,296 -

1,296 -

1,296 -

4,692 3,216 1,752 312 -

4,692 3,216 1,752 312 -

4,692 3,216 1,752 312 -

-

-

-

13,178 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000

13,178 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000

12,988 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000

Food Housing Day Care Total stamps Assistance Assistance Resources

10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400

10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400

10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400

O-CHIP FPL* Threshold

1,389 1,658 2,676 3,706 5,300 10,300 20,300 30,300 40,300 50,300

1,389 1,658 2,676 3,706 5,300 10,300 20,300 30,300 40,300 50,300

1,294 1,658 2,676 3,706 5,300 10,300 20,300 30,300 40,300 50,300

50% of Excess

4,261 4,261 4,261 4,261 4,261 4,261 4,261 4,261 4,261 4,261

4,236 4,236 4,236 4,236 4,236 4,236 4,236 4,236 4,236 4,236

4,074 4,074 4,074 4,074 4,074 4,074 4,074 4,074 4,074 4,074

Cost If Health Good

2,283 2,014 996 -

1,650 1,381 363 -

1,416 1,052 34 -

Prelim.

Amount of Asst.

69,000

51,000

69,000

51,000

69,000

51,000

147,000

43,000

31,000

111,000

30,000

21,000

95,000

25,312

17,812

121,000

22,748

16,748

91,000

20,230

15,730

71,000

18,461

15,461

147,000

43,000

31,000

111,000

30,000

21,000

95,000

25,312

17,812

121,000

22,115

16,115

91,000

19,597

15,097

71,000

17,828

14,828

147,000

43,000

31,000

111,000

30,000

21,000

95,000

25,312

17,812

121,000

21,786

15,786

91,000

19,268

14,768

71,000

17,404

14,404

B-2

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Single Female in Good Health

O-CHIP: Oklahoma Comprehensive Health Independence Plan

B-3

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52

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000 190 -

190 -

-

Income Federal Considered EIC TANF

1,296 -

1,296 4,692 3,216 1,752 312 -

4,692 3,216 1,752 312 -

13,178 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000

13,178 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000

Food Housing Day Care Total stamps Assistance Assistance Resources

10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400

10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400

O-CHIP FPL* Threshold

1,389 1,658 2,676 3,706 5,300 10,300 20,300 30,300 40,300 50,300 65,300 80,300

1,389 1,658 2,676 3,706 5,300 10,300 20,300 30,300 40,300 50,300 65,300 80,300

50% of Excess

6,071 6,071 6,071 6,071 6,071 6,071 6,071 6,071 6,071 6,071 6,071 6,071

4,755 4,755 4,755 4,755 4,755 4,755 4,755 4,755 4,755 4,755 4,755 4,755

Cost If Health Good

5,521 5,252 4,234 3,204 1,610 -

3,354 3,085 2,067 1,037 -

Prelim.

Amount of Asst.

147,000 186,000 225,000

171,000

69,000

141,000

43,000 51,000

111,000

31,610 31,000

95,000

28,516 22,610

121,000

25,986 21,016

91,000

23,468 19,986

71,000

21,699

225,000

18,968

186,000 171,000 18,699

147,000

69,000

51,000

141,000

43,000

31,000

111,000

30,000

21,000

95,000

26,349

18,849

121,000

23,819

17,819

91,000

21,301

16,801

71,000

19,532

16,532

B-3

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Single Female in Good Health

B-4

O-CHIP: Oklahoma Comprehensive Health Independence Plan

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22

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000

190 -

190 -

-

-

-

-

Income Federal Considered EIC TANF

1,296 -

1,296 -

1,296 -

4,692 3,216 1,752 312 -

4,692 3,216 1,752 312 -

4,692 3,216 1,752 312 -

-

-

-

13,178 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000

13,178 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000

12,988 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000

Food Housing Day Care Total stamps Assistance Assistance Resources

10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400

10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400

10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400

O-CHIP FPL* Threshold

1,389 1,658 2,676 3,706 5,300 10,300 20,300 30,300 40,300 50,300

1,389 1,658 2,676 3,706 5,300 10,300 20,300 30,300 40,300 50,300

1,294 1,658 2,676 3,706 5,300 10,300 20,300 30,300 40,300 50,300

50% of Excess

6,512 6,512 6,512 6,512 6,512 6,512 6,512 6,512 6,512 6,512

6,523 6,523 6,523 6,523 6,523 6,523 6,523 6,523 6,523 6,523

6,229 6,229 6,229 6,229 6,229 6,229 6,229 6,229 6,229 6,229

Cost If Health Good

3,944 3,675 2,657 1,627 33 -

2,739 2,470 1,452 422 -

2,206 1,842 824 -

Prelim.

Amount of Asst.

69,000

51,000

69,000

51,000

69,000

51,000

147,000

43,000

31,000

111,000

30,033

21,033

95,000

26,939

19,439

121,000

24,409

18,409

91,000

21,891

17,391

71,000

20,122

17,122

147,000

43,000

31,000

111,000

30,000

21,000

95,000

25,734

18,234

121,000

23,204

17,204

91,000

20,686

16,186

71,000

18,917

15,917

147,000

43,000

31,000

111,000

30,000

21,000

95,000

25,312

17,812

121,000

22,576

16,576

91,000

20,058

15,558

71,000

18,194

15,194

B-4

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANC to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Single Female in Fair Health

O-CHIP: Oklahoma Comprehensive Health Independence Plan

B-5

62

52

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000 190 -

190 -

-

Income Federal Considered EIC TANF

1,296 -

1,296 4,692 3,216 1,752 312 -

4,692 3,216 1,752 312 -

13,178 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000

13,178 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000

Food Housing Day Care Total stamps Assistance Assistance Resources

10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400

10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400

O-CHIP FPL* Threshold

1,389 1,658 2,676 3,706 5,300 10,300 20,300 30,300 40,300 50,300 65,300 80,300

1,389 1,658 2,676 3,706 5,300 10,300 20,300 30,300 40,300 50,300 65,300 80,300

50% of Excess

9,772 9,772 9,772 9,772 9,772 9,772 9,772 9,772 9,772 9,772 9,772 9,772

7,381 7,381 7,381 7,381 7,381 7,381 7,381 7,381 7,381 7,381 7,381 7,381

Cost If Health Good

10,061 9,792 8,774 7,744 6,150 1,150 -

5,968 5,699 4,681 3,651 2,057 -

Prelim.

Amount of Asst.

147,000 186,000 225,000

171,000

69,000

141,000

44,150 51,000

111,000

36,150 32,150

95,000

33,056 27,150

121,000

30,526 25,556

91,000

28,008 24,526

71,000

26,239

225,000

23,508

186,000 171,000 23,239

147,000

69,000

51,000

141,000

43,000

31,000

111,000

32,057

23,057

95,000

28,963

21,463

121,000

26,433

20,433

91,000

23,915

19,415

71,000

22,146

19,146

B-5

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Single Female in Fair Health

B-6

O-CHIP: Oklahoma Comprehensive Health Independence Plan

42

32

22

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000

190 -

190 -

-

-

-

-

Income Federal Considered EIC TANF

1,296 -

1,296 -

1,296 -

4,692 3,216 1,752 312 -

4,692 3,216 1,752 312 -

4,692 3,216 1,752 312 -

-

-

-

13,178 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000

13,178 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000

12,988 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000

Food Housing Day Care Total stamps Assistance Assistance Resources

10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400

10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400

10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400

O-CHIP FPL* Threshold

1,389 1,658 2,676 3,706 5,300 10,300 20,300 30,300 40,300 50,300

1,389 1,658 2,676 3,706 5,300 10,300 20,300 30,300 40,300 50,300

1,294 1,658 2,676 3,706 5,300 10,300 20,300 30,300 40,300 50,300

50% of Excess

15,515 15,515 15,515 15,515 15,515 15,515 15,515 15,515 15,515 15,515

15,668 15,668 15,668 15,668 15,668 15,668 15,668 15,668 15,668 15,668

14,846 14,846 14,846 14,846 14,846 14,846 14,846 14,846 14,846 14,846

Cost If Health Good

10,590 10,321 9,303 8,273 6,679 1,679 -

7,094 6,825 5,807 4,777 3,183 -

5,367 5,003 3,985 2,955 1,361 -

Prelim.

Amount of Asst.

69,000

51,000

69,000

51,000

69,000

51,000

147,000

44,679

32,679

111,000

36,679

27,679

95,000

33,585

26,085

121,000

31,055

25,055

91,000

28,537

24,037

71,000

26,768

23,768

147,000

43,000

31,000

111,000

33,183

24,183

95,000

30,089

22,589

121,000

27,559

21,559

91,000

25,041

20,541

71,000

23,272

20,272

147,000

43,000

31,000

111,000

31,361

22,361

95,000

28,267

20,767

121,000

25,737

19,737

91,000

23,219

18,719

71,000

21,355

18,355

B-6

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Single Female in Poor Health

O-CHIP: Oklahoma Comprehensive Health Independence Plan

B-7

62

52

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000 190 -

190 -

-

Income Federal Considered EIC TANF

1,296 -

1,296 4,692 3,216 1,752 312 -

4,692 3,216 1,752 312 -

13,178 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000

13,178 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000

Food Housing Day Care Total stamps Assistance Assistance Resources

10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400

10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400 10,400

O-CHIP FPL* Threshold

1,389 1,658 2,676 3,706 5,300 10,300 20,300 30,300 40,300 50,300 65,300 80,300

1,389 1,658 2,676 3,706 5,300 10,300 20,300 30,300 40,300 50,300 65,300 80,300

50% of Excess

24,577 24,577 24,577 24,577 24,577 24,577 24,577 24,577 24,577 24,577 24,577 24,577

17,883 17,883 17,883 17,883 17,883 17,883 17,883 17,883 17,883 17,883 17,883 17,883

Cost If Health Good

28,221 27,952 26,934 25,904 24,310 19,310 9,310 -

16,421 16,152 15,134 14,104 12,510 7,510 -

Prelim.

Amount of Asst.

147,000 186,000 225,000

171,000

78,310

141,000

62,310 60,310

111,000

54,310 50,310

95,000

51,216 45,310

121,000

48,686 43,716

91,000

46,168 42,686

71,000

44,399

225,000

41,668

186,000 171,000 41,399

147,000

69,000

51,000

141,000

50,510

38,510

111,000

42,510

33,510

95,000

39,416

31,916

121,000

36,886

30,886

91,000

34,368

29,868

71,000

32,599

29,599

B-7

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Single Female in Poor Health

B-8

O-CHIP: Oklahoma Comprehensive Health Independence Plan

42

32

22

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000

190 -

190 -

-

-

-

-

Income Federal Considered EIC TANF

1,296 -

1,296 -

1,296 -

4,692 3,216 1,752 312 -

4,692 3,216 1,752 312 -

4,692 3,216 1,752 312 -

-

-

-

13,178 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000

13,178 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000

12,988 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000

Food Housing Day Care Total stamps Assistance Assistance Resources

8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840

8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840

8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840

O-CHIP FPL* Threshold

2,169 2,438 3,456 4,486 6,080 11,080 21,080 31,080 41,080 51,080

2,169 2,438 3,456 4,486 6,080 11,080 21,080 31,080 41,080 51,080

2,074 2,438 3,456 4,486 6,080 11,080 21,080 31,080 41,080 51,080

50% of Excess

3,672 3,672 3,672 3,672 3,672 3,672 3,672 3,672 3,672 3,672

3,039 3,039 3,039 3,039 3,039 3,039 3,039 3,039 3,039 3,039

2,710 2,710 2,710 2,710 2,710 2,710 2,710 2,710 2,710 2,710

Cost If Health Good

2,092 1,823 805 -

2,067 1,798 780 -

2,000 1,636 618 -

Prelim.

Amount of Asst.

69,000

51,000

69,000

51,000

69,000

51,000

147,000

43,000

31,000

111,000

30,000

21,000

95,000

25,312

17,812

121,000

22,557

16,557

91,000

20,039

15,539

71,000

18,270

15,270

147,000

43,000

31,000

111,000

30,000

21,000

95,000

25,312

17,812

121,000

22,532

16,532

91,000

20,014

15,514

71,000

18,245

15,245

147,000

43,000

31,000

111,000

30,000

21,000

95,000

25,312

17,812

121,000

22,370

16,370

91,000

19,852

15,352

71,000

17,988

14,988

B-8

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Single Male in Good Health

O-CHIP: Oklahoma Comprehensive Health Independence Plan

B-9

62

52

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000 190 -

190 -

-

Income Federal Considered EIC TANF

1,296 -

1,296 4,692 3,216 1,752 312 -

4,692 3,216 1,752 312 -

13,178 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000

13,178 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000

Total Food Housing Day Care stamps Assistance Assistance Resources

8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840

8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840

O-CHIP FPL* Threshold

2,169 2,438 3,456 4,486 6,080 11,080 21,080 31,080 41,080 51,080 66,080 81,080

2,169 2,438 3,456 4,486 6,080 11,080 21,080 31,080 41,080 51,080 66,080 81,080

50% of Excess

6,910 6,910 6,910 6,910 6,910 6,910 6,910 6,910 6,910 6,910 6,910 6,910

4,743 4,743 4,743 4,743 4,743 4,743 4,743 4,743 4,743 4,743 4,743 4,743

Cost If Health Good

3,902 3,633 2,615 1,585 -

2,586 2,317 1,299 269 -

Prelim.

Amount of Asst.

147,000 186,000 225,000

171,000

69,000

141,000

43,000 51,000

111,000

30,000 31,000

95,000

26,897 21,000

121,000

24,367 19,397

91,000

21,849 18,367

71,000

20,080

225,000

17,349

186,000 171,000 17,080

147,000

69,000

51,000

141,000

43,000

31,000

111,000

30,000

21,000

95,000

25,581

18,081

121,000

23,051

17,051

91,000

20,533

16,033

71,000

18,764

15,764

B-9

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Single Male in Good Health

B-10

O-CHIP: Oklahoma Comprehensive Health Independence Plan

42

32

22

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000

190 -

190 -

-

-

-

-

Income Federal Considered EIC TANF

1,296 -

1,296 -

1,296 -

4,692 3,216 1,752 312 -

4,692 3,216 1,752 312 -

4,692 3,216 1,752 312 -

-

-

-

13,178 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000

13,178 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000

12,988 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000

Food Housing Day Care Total stamps Assistance Assistance Resources

8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840

8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840

8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840

O-CHIP FPL* Threshold

2,169 2,438 3,456 4,486 6,080 11,080 21,080 31,080 41,080 51,080

2,169 2,438 3,456 4,486 6,080 11,080 21,080 31,080 41,080 51,080

2,074 2,438 3,456 4,486 6,080 11,080 21,080 31,080 41,080 51,080

50% of Excess

5,333 5,333 5,333 5,333 5,333 5,333 5,333 5,333 5,333 5,333

4,128 4,128 4,128 4,128 4,128 4,128 4,128 4,128 4,128 4,128

3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500

Cost If Health Good

4,343 4,074 3,056 2,026 432 -

4,354 4,085 3,067 2,037 443 -

4,155 3,791 2,773 1,743 149 -

Prelim.

Amount of Asst.

69,000

51,000

69,000

51,000

69,000

51,000

147,000

43,000

31,000

111,000

30,432

21,432

95,000

27,338

19,838

121,000

24,808

18,808

91,000

22,290

17,790

71,000

20,521

17,521

147,000

43,000

31,000

111,000

30,443

21,443

95,000

27,349

19,849

121,000

24,819

18,819

91,000

22,301

17,801

71,000

20,532

17,532

147,000

43,000

31,000

111,000

30,149

21,149

95,000

27,055

19,555

121,000

24,525

18,525

91,000

22,007

17,507

71,000

20,143

17,143

B-10

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Single Male in Fair Health

O-CHIP: Oklahoma Comprehensive Health Independence Plan

B-11

62

52

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000 190 -

190 -

-

Income Federal Considered EIC TANF

1,296 -

1,296 4,692 3,216 1,752 312 -

4,692 3,216 1,752 312 -

13,178 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000

13,178 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000

Food Housing Day Care Total stamps Assistance Assistance Resources

8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840

8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840

O-CHIP FPL* Threshold

2,169 2,438 3,456 4,486 6,080 11,080 21,080 31,080 41,080 51,080 66,080 81,080

2,169 2,438 3,456 4,486 6,080 11,080 21,080 31,080 41,080 51,080 66,080 81,080

50% of Excess

11,450 11,450 11,450 11,450 11,450 11,450 11,450 11,450 11,450 11,450 11,450 11,450

7,357 7,357 7,357 7,357 7,357 7,357 7,357 7,357 7,357 7,357 7,357 7,357

Cost If Health Good

7,603 7,334 6,316 5,286 3,692 -

5,212 4,943 3,925 2,895 1,301 -

Prelim.

Amount of Asst.

147,000 186,000 225,000

171,000

69,000

141,000

43,000 51,000

111,000

33,692 31,000

95,000

30,598 24,692

121,000

28,068 23,098

91,000

25,550 22,068

71,000

23,781

225,000

21,050

186,000 171,000 20,781

147,000

69,000

51,000

141,000

43,000

31,000

111,000

31,301

22,301

95,000

28,207

20,707

121,000

25,677

19,677

91,000

23,159

18,659

71,000

21,390

18,390

B-11

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Single Male in Fair Health

B-12

O-CHIP: Oklahoma Comprehensive Health Independence Plan

42

32

22

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000

190 -

190 -

-

-

-

-

Income Federal Considered EIC TANF

1,296 -

1,296 -

1,296 -

4,692 3,216 1,752 312 -

4,692 3,216 1,752 312 -

4,692 3,216 1,752 312 -

-

-

-

13,178 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000

13,178 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000

12,988 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000

Food Housing Day Care Total stamps Assistance Assistance Resources

8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840

8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840

8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840

O-CHIP FPL* Threshold

2,169 2,438 3,456 4,486 6,080 11,080 21,080 31,080 41,080 51,080

2,169 2,438 3,456 4,486 6,080 11,080 21,080 31,080 41,080 51,080

2,074 2,438 3,456 4,486 6,080 11,080 21,080 31,080 41,080 51,080

50% of Excess

11,979 11,979 11,979 11,979 11,979 11,979 11,979 11,979 11,979 11,979

8,483 8,483 8,483 8,483 8,483 8,483 8,483 8,483 8,483 8,483

6,661 6,661 6,661 6,661 6,661 6,661 6,661 6,661 6,661 6,661

Cost If Health Good

13,346 13,077 12,059 11,029 9,435 4,435 -

13,499 13,230 12,212 11,182 9,588 4,588 -

12,772 12,408 11,390 10,360 8,766 3,766 -

Prelim.

Amount of Asst.

69,000

51,000

69,000

51,000

69,000

51,000

147,000

47,435

35,435

111,000

39,435

30,435

95,000

36,341

28,841

121,000

33,811

27,811

91,000

31,293

26,793

71,000

29,524

26,524

147,000

47,588

35,588

111,000

39,588

30,588

95,000

36,494

28,994

121,000

33,964

27,964

91,000

31,446

26,946

71,000

29,677

26,677

147,000

46,766

34,766

111,000

38,766

29,766

95,000

35,672

28,172

121,000

33,142

27,142

91,000

30,624

26,124

71,000

28,760

25,760

B-12

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Single Male in Poor Health

O-CHIP: Oklahoma Comprehensive Health Independence Plan

B-13

62

52

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000 190 -

190 -

-

Income Federal Considered EIC TANF

1,296 -

1,296 4,692 3,216 1,752 312 -

4,692 3,216 1,752 312 -

13,178 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000

13,178 13,716 15,752 17,812 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000

Food Housing Day Care Total stamps Assistance Assistance Resources

8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840

8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840 8,840

O-CHIP FPL* Threshold

2,169 2,438 3,456 4,486 6,080 11,080 21,080 31,080 41,080 51,080 66,080 81,080

2,169 2,438 3,456 4,486 6,080 11,080 21,080 31,080 41,080 51,080 66,080 81,080

50% of Excess

29,610 29,610 29,610 29,610 29,610 29,610 29,610 29,610 29,610 29,610 29,610 29,610

17,810 17,810 17,810 17,810 17,810 17,810 17,810 17,810 17,810 17,810 17,810 17,810

Cost If Health Good

22,408 22,139 21,121 20,091 18,497 13,497 3,497 -

15,714 15,445 14,427 13,397 11,803 6,803 -

Prelim.

Amount of Asst.

147,000 186,000 225,000

171,000

72,497

141,000

56,497 54,497

111,000

48,497 44,497

95,000

45,403 39,497

121,000

42,873 37,903

91,000

40,355 36,873

71,000

38,586

225,000

35,855

186,000 171,000 35,586

147,000

69,000

51,000

141,000

49,803

37,803

111,000

41,803

32,803

95,000

38,709

31,209

121,000

36,179

30,179

91,000

33,661

29,161

71,000

31,892

28,892

B-13

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Single Male in Poor Health

B-14

O-CHIP: Oklahoma Comprehensive Health Independence Plan

42

32

22

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000

340 -

340 -

-

-

-

-

Income Federal Considered EIC TANF

2,460 1,308 192 -

2,460 1,308 192 -

2,460 1,308 192 -

5,028 3,876 2,412 912 -

5,028 3,876 2,412 912 -

5,028 3,876 2,412 912 -

-

-

-

14,828 15,684 16,604 18,412 21,000 28,000 42,000 62,000 82,000 102,000

14,828 15,684 16,604 18,412 21,000 28,000 42,000 62,000 82,000 102,000

14,448 15,684 16,604 18,412 21,000 28,000 42,000 62,000 82,000 102,000

Food Housing Day Care Total stamps Assistance Assistance Resources

25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900

25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900

25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900

O-CHIP FPL* Threshold

1,050 8,050 18,050 28,050 38,050

1,050 8,050 18,050 28,050 38,050

1,050 8,050 18,050 28,050 38,050

50% of Excess

9,306 9,306 9,306 9,306 9,306 9,306 9,306 9,306 9,306 9,306

8,493 8,493 8,493 8,493 8,493 8,493 8,493 8,493 8,493 8,493

7,882 7,882 7,882 7,882 7,882 7,882 7,882 7,882 7,882 7,882

Cost If Health Good

9,306 9,306 9,306 9,306 9,306 8,256 1,256 -

8,493 8,493 8,493 8,493 8,493 7,443 443 -

7,882 7,882 7,882 7,882 7,882 6,832 -

Prelim.

Amount of Asst.

60,000

42,000

60,443

42,443

61,256

43,256

138,000

48,256

36,256

102,000

39,306

30,306

86,000

35,218

27,718

112,000

31,910

25,910

82,000

29,490

24,990

62,000

27,134

24,134

138,000

47,443

35,443

102,000

38,493

29,493

86,000

34,405

26,905

112,000

31,097

25,097

82,000

28,677

24,177

62,000

26,321

23,321

138,000

46,832

34,832

102,000

37,882

28,882

86,000

33,794

26,294

112,000

30,486

24,486

82,000

28,066

23,566

62,000

25,330

22,330

B-14

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Married w/o Children in Good Health

O-CHIP: Oklahoma Comprehensive Health Independence Plan

B-15

62

52

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000 132,000 162,000

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000 132,000 162,000 340 -

340 -

-

Income Federal Considered EIC TANF

2,460 1,308 192 -

2,460 1,308 192 5,028 3,876 2,412 912 -

5,028 3,876 2,412 912 -

14,828 15,684 16,604 18,412 21,000 28,000 42,000 62,000 82,000 102,000 132,000 162,000

14,828 15,684 16,604 18,412 21,000 28,000 42,000 62,000 82,000 102,000 132,000 162,000

Total Food Housing Day Care stamps Assistance Assistance Resources

25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900

25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900

O-CHIP FPL* Threshold

1,050 8,050 18,050 28,050 38,050 53,050 68,050

1,050 8,050 18,050 28,050 38,050 53,080 68,050

50% of Excess

15,363 15,363 15,363 15,363 15,363 15,363 15,363 15,363 15,363 15,363 15,363 15,363

11,167 11,167 11,167 11,167 11,167 11,167 11,167 11,167 11,167 11,167 11,167 11,167

Cost If Health Good

15,363 15,363 15,363 15,363 15,363 14,313 7,313 -

11,167 11,167 11,167 11,167 11,167 10,117 3,117 -

Prelim.

Amount of Asst.

138,000 177,000 216,000

162,000

67,313

132,000

54,313 49,313

102,000

45,363 42,313

86,000

41,275 36,363

112,000

37,967 33,775

82,000

35,547 31,967

62,000

33,191

216,000

31,047

177,000 162,000 30,191

138,000

63,117

45,117

132,000

50,117

38,117

102,000

41,167

32,167

86,000

37,079

29,579

112,000

33,771

27,771

82,000

31,351

26,851

62,000

28,995

25,995

B-15

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Married w/o Children in Good Health

B-16

O-CHIP: Oklahoma Comprehensive Health Independence Plan

42

32

22

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000

340 -

340 -

-

-

-

-

Income Federal Considered EIC TANF

2,460 1,308 192 -

2,460 1,308 192 -

2,460 1,308 192 -

5,028 3,876 2,412 912 -

5,028 3,876 2,412 912 -

5,028 3,876 2,412 912 -

-

-

-

14,828 15,684 16,604 18,412 21,000 28,000 42,000 62,000 82,000 102,000

14,828 15,684 16,604 18,412 21,000 28,000 42,000 62,000 82,000 102,000

14,448 15,684 16,604 18,412 21,000 28,000 42,000 62,000 82,000 102,000

Food Housing Day Care Total stamps Assistance Assistance Resources

25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900

25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900

25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900

O-CHIP FPL* Threshold

1,050 8,050 18,050 28,050 38,050

1,050 8,050 18,050 28,050 38,050

1,050 8,050 18,050 28,050 38,050

50% of Excess

13,993 13,993 13,993 13,993 13,993 13,993 13,993 13,993 13,993 13,993

12,486 12,486 12,486 12,486 12,486 12,486 12,486 12,486 12,486 12,486

11,325 11,325 11,325 11,325 11,325 11,325 11,325 11,325 11,325 11,325

Cost If Health Good

13,993 13,993 13,993 13,993 13,993 12,943 5,943 -

12,486 12,486 12,486 12,486 12,486 11,436 4,436 -

11,325 11,325 11,325 11,325 11,325 10,275 3,275 -

Prelim.

Amount of Asst.

64,436

46,436

65,943

47,943

138,000

52,943

40,943

102,000

43,993

34,993

86,000

39,905

32,405

112,000

36,597

30,597

82,000

34,177

29,677

62,000

31,821

28,821

138,000

51,436

39,436

102,000

42,486

33,486

86,000

38,398

30,898

112,000

35,090

29,090

82,000

32,670

28,170

62,000

30,314

27,314

138,000

63,275

102,000

50,275 45,275

86,000

41,325 38,275

112,000

37,237 32,325

82,000

33,929 29,737

62,000

31,509 27,929

28,773 27,009

25,773

B-16

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Married w/o Children in Fair Health

O-CHIP: Oklahoma Comprehensive Health Independence Plan

B-17

62

52

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000 132,000 162,000

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000 132,000 162,000 340 -

340 -

-

Income Federal Considered EIC TANF

2,460 1,308 192 -

2,460 1,308 192 5,028 3,876 2,412 912 -

5,028 3,876 2,412 912 -

14,828 15,684 16,604 18,412 21,000 28,000 42,000 62,000 82,000 102,000 132,000 162,000

14,828 15,684 16,604 18,412 21,000 28,000 42,000 62,000 82,000 102,000 132,000 162,000

Food Housing Day Care Total stamps Assistance Assistance Resources

25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900

25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900

O-CHIP FPL* Threshold

1,050 8,050 18,050 28,050 38,050 53,050 68,050

1,050 8,050 18,050 28,050 38,050 53,080 68,050

50% of Excess

25,386 25,386 25,386 25,386 25,386 25,386 25,386 25,386 25,386 25,386 25,386 25,386

17,474 17,474 17,474 17,474 17,474 17,474 17,474 17,474 17,474 17,474 17,474 17,474

Cost If Health Good

25,386 25,386 25,386 25,386 25,386 24,336 17,336 7,336 -

17,474 17,474 17,474 17,474 17,474 16,424 9,424 -

Prelim.

Amount of Asst.

138,000 177,000 216,000

162,000

77,336

132,000

64,336 59,336

102,000

55,386 52,336

93,336

51,298 46,386

112,000

47,990 43,798

82,000

45,570 41,990

69,336

43,214

216,000

41,070

177,000 162,000 40,214

138,000

69,424

51,424

132,000

56,424

44,424

102,000

47,474

38,474

86,000

43,386

35,886

112,000

40,078

34,078

82,000

37,658

33,158

62,000

35,302

32,302

B-17

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Married w/o children in fair health

B-18

O-CHIP: Oklahoma Comprehensive Health Independence Plan

42

32

22

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000

340 -

340 -

-

-

-

-

Income Federal Considered EIC TANF

2,460 1,308 192 -

2,460 1,308 192 -

2,460 1,308 192 -

5,028 3,876 2,412 912 -

5,028 3,876 2,412 912 -

5,028 3,876 2,412 912 -

-

-

-

14,828 15,684 16,604 18,412 21,000 28,000 42,000 62,000 82,000 102,000

14,828 15,684 16,604 18,412 21,000 28,000 42,000 62,000 82,000 102,000

14,448 15,684 16,604 18,412 21,000 28,000 42,000 62,000 82,000 102,000

Food Housing Day Care Total stamps Assistance Assistance Resources

25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900

25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900

25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900

O-CHIP FPL* Threshold

1,050 8,050 18,050 28,050 38,050

1,050 8,050 18,050 28,050 38,050

1,050 8,050 18,050 28,050 38,050

50% of Excess

32,738 32,738 32,738 32,738 32,738 32,738 32,738 32,738 32,738 32,738

28,459 28,459 28,459 28,459 28,459 28,459 28,459 28,459 28,459

25,095 25,095 25,095 25,095 25,095 25,095 25,095 25,095 25,095 25,095

Cost If Health Good

32,738 32,738 32,738 32,738 32,738 31,688 24,688 14,688 4,688 -

28,459 28,459 28,459 28,459 28,459 27,409 20,409 10,409 409 -

25,095 25,095 25,095 25,095 25,095 24,045 17,045 7,045 -

Prelim.

Amount of Asst.

77,045

59,045

80,409

62,409

62,738 71,688 84,688 100,688

53,738 59,688 66,688 76,688

116,688

58,650

51,150

138,000

55,342

49,342

86,688

52,922

48,422

102,000

50,566

47,566

138,000

67,409

55,409

102,000

58,459

49,459

96,409

54,371

46,871

112,409

51,063

45,063

82,409

48,643

44,143

72,409

46,287

43,287

138,000

64,045

52,045

102,000

55,095

46,095

93,045

51,007

43,507

112,000

47,699

41,699

82,000

45,279

40,779

69,045

42,543

39,543

B-18

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Married w/o Children in Poor Health

O-CHIP: Oklahoma Comprehensive Health Independence Plan

B-19

62

52

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000 132,000 162,000

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000 132,000 162,000 340 -

340 -

-

Income Federal Considered EIC TANF

2,460 1,308 192 -

2,460 1,308 192 5,028 3,876 2,412 912 -

5,028 3,876 2,412 912 -

14,828 15,684 16,604 18,412 21,000 28,000 42,000 62,000 82,000 102,000 132,000 162,000

14,828 15,684 16,604 18,412 21,000 28,000 42,000 62,000 82,000 102,000 132,000 162,000

Total Food Housing Day Care stamps Assistance Assistance Resources

25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900

25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900 25,900

O-CHIP FPL* Threshold

1,050 8,050 18,050 28,050 38,050 53,050 68,050

1,050 8,050 18,050 28,050 38,050 53,080 68,050

50% of Excess

65,479 65,479 65,479 65,479 65,479 65,479 65,479 65,479 65,479 65,479 65,479 65,479

42,701 42,701 42,701 42,701 42,701 42,701 42,701 42,701 42,701 42,701 42,701 42,701

Cost If Health Good

65,479 65,479 65,479 65,479 65,479 64,429 57,429 47,429 37,429 27,429 12,429 -

42,701 42,701 42,701 42,701 42,701 41,651 34,651 24,651 14,651 4,651 -

Prelim.

Amount of Asst.

149,429 165,429 189,429 216,000

129,429 144,429 162,000

92,429

119,429

95,479 104,429

86,479

117,429

91,391

83,891

133,429

88,083

82,083

99,429

85,663

81,163

109,429

83,307

80,307

216,000

86,651

177,000

94,651 110,651

76,651

162,000

81,651

69,651

132,000

72,701

63,701

126,651

68,613

61,113

142,651

65,305

59,305

96,651

62,885

58,385

106,651

60,529

57,529

B-19

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Married w/o Children in Poor Health

B-20

O-CHIP: Oklahoma Comprehensive Health Independence Plan

42

32

Age 22

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000

4,010 4,710 4,160 3,100 2,050 -

4,010 4,710 4,160 3,100 2,050 -

4,010 4,710 4,160 3,100 2,050 -

768 -

768 -

768 -

Income Federal Considered EIC TANF

3,192 2,340 1,404 -

3,192 2,340 1,404 -

3,192 2,340 1,404 -

4,752 3,684 2,412 1,008 -

4,752 3,684 2,412 1,008 -

4,752 3,684 2,412 1,008 -

8,220 -

8,220 -

8,220 -

27,942 21,234 21,976 21,608 23,050 28,000 42,000 62,000 82,000 102,000

27,942 21,234 21,976 21,608 23,050 28,000 42,000 62,000 82,000 102,000

27,942 21,234 21,976 21,608 23,050 28,000 42,000 62,000 82,000 102,000

Food Housing Day Care Total stamps Assistance Assistance Resources

39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220

39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220

39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220

O-CHIP FPL* Threshold

1,390 11,390 21,390 31,390

1,390 11,390 21,390 31,390

1,390 11,390 21,390 31,390

50% of Excess

13,595 13,595 13,595 13,595 13,595 13,595 13,595 13,595 13,595 13,595

12,782 12,782 12,782 12,782 12,782 12,782 12,782 12,782 12,782 12,782

12,171 12,171 12,171 12,171 12,171 12,171 12,171 12,171 12,171 12,171

Cost If Health Good

13,595 13,595 13,595 13,595 13,595 13,595 12,205 2,205 -

12,782 12,782 12,782 12,782 12,782 12,782 11,392 1,392 -

12,171 12,171 12,171 12,171 12,171 12,171 10,781 781 -

Prelim.

Amount of Asst.

70,781

52,781

72,205

54,205

138,000

53,595

41,595

102,000

45,645

36,645

88,205

42,703

35,203

112,000

41,571

35,571

82,000

39,329

34,829

64,205

44,537

41,537

138,000

102,000

71,392 87,392

52,782 53,392

112,000

44,832 40,782

82,000

41,890 35,832

63,392

40,758 34,390

38,516

34,016 34,758

43,724

40,724

138,000

52,171

40,171

102,000

44,221

35,221

86,781

41,279

33,779

112,000

40,147

34,147

82,000

37,905

33,405

62,781

43,113

40,113

B-20

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Married with 2 Children in Good Health

O-CHIP: Oklahoma Comprehensive Health Independence Plan

B-21

62

52

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000 132,000 162,000

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000 132,000 162,000 4,010 4,710 4,160 3,100 2,050 -

4,010 4,710 4,160 3,100 2,050 768 -

768 -

Income Federal Considered EIC TANF

3,192 2,340 1,404 -

3,192 2,340 1,404 4,752 3,684 2,412 1,008 -

4,752 3,684 2,412 1,008 8,220 -

8,220 27,942 21,234 21,976 21,608 23,050 28,000 42,000 62,000 82,000 102,000 132,000 162,000

27,942 21,234 21,976 21,608 23,050 28,000 42,000 62,000 82,000 102,000 132,000 162,000

Total Food Housing Day Care stamps Assistance Assistance Resources

39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220

39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220

O-CHIP FPL* Threshold

1,390 11,390 21,390 31,390 46,390 61,390

1,390 11,390 21,390 31,390 46,390 61,390

50% of Excess

19,651 19,651 19,651 19,651 19,651 19,651 19,651 19,651 19,651 19,651 19,651 19,651

15,455 15,455 15,455 15,455 15,455 15,455 15,455 15,455 15,455 15,455 15,455 15,455

Cost If Health Good

19,651 19,651 19,651 19,651 19,651 19,651 18,261 8,261 -

15,455 15,455 15,455 15,455 15,455 15,455 14,065 4,065 -

Prelim.

Amount of Asst.

138,000 177,000 216,000

162,000

78,261

132,000

59,651 60,261

102,000

51,701 47,651

94,261

48,759 42,701

112,000

47,627 41,259

82,000

45,385 41,627

70,261

50,593

216,000

40,885

177,000 162,000 47,593

138,000

74,065

56,065

132,000

55,455

43,455

102,000

47,505

38,505

90,065

44,563

37,063

112,000

43,431

37,431

82,000

41,189

36,689

66,065

46,397

43,397

B-21

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Married with 2 Children in Good Health

B-22

O-CHIP: Oklahoma Comprehensive Health Independence Plan

42

32

22

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000

4,010 4,710 4,160 3,100 2,050 -

4,010 4,710 4,160 3,100 2,050 -

4,010 4,710 4,160 3,100 2,050 -

768 -

768 -

768 -

Income Federal Considered EIC TANF

3,192 2,340 1,404 -

3,192 2,340 1,404 -

3,192 2,340 1,404 -

4,752 3,684 2,412 1,008 -

4,752 3,684 2,412 1,008 -

4,752 3,684 2,412 1,008 -

8,220 -

8,220 -

8,220 -

27,942 21,234 21,976 21,608 23,050 28,000 42,000 62,000 82,000 102,000

27,942 21,234 21,976 21,608 23,050 28,000 42,000 62,000 82,000 102,000

27,942 21,234 21,976 21,608 23,050 28,000 42,000 62,000 82,000 102,000

Food Housing Day Care Total stamps Assistance Assistance Resources

39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220

39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220

39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220

O-CHIP FPL* Threshold

1,390 11,390 21,390 31,390

1,390 11,390 21,390 31,390

1,390 11,390 21,390 31,390

50% of Excess

19,840 19,840 19,840 19,840 19,840 19,840 19,840 19,840 19,840 19,840

18,333 18,333 18,333 18,333 18,333 18,333 18,333 18,333 18,333 18,333

17,172 17,172 17,172 17,172 17,172 17,172 17,172 17,172 17,172 17,172

Cost If Health Good

19,840 19,840 19,840 19,840 19,840 19,840 18,450 8,450 -

18,333 18,333 18,333 18,333 18,333 18,333 16,943 6,943 -

17,172 17,172 17,172 17,172 17,172 17,172 15,782 5,782 -

Prelim.

Amount of Asst.

75,782

57,782

76,943

58,943

78,450

60,450

138,000

59,840

47,840

102,000

51,890

42,890

94,450

48,948

41,448

112,000

47,816

41,816

82,000

45,574

41,074

70,450

50,782

47,782

138,000

58,333

46,333

102,000

50,383

41,383

92,943

47,441

39,941

112,000

46,309

40,309

82,000

44,067

39,567

68,943

49,275

46,275

138,000

57,172

45,172

102,000

49,222

40,222

91,782

46,280

38,780

112,000

45,148

39,148

82,000

42,906

38,406

67,782

48,114

45,114

B-22

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Married with 2 Children in Fair Health

O-CHIP: Oklahoma Comprehensive Health Independence Plan

B-23

62

52

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000 132,000 162,000

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000 132,000 162,000 4,010 4,710 4,160 3,100 2,050 -

4,010 4,710 4,160 3,100 2,050 768 -

768 -

Income Federal Considered EIC TANF

3,192 2,340 1,404 -

3,192 2,340 1,404 4,752 3,684 2,412 1,008 -

4,752 3,684 2,412 1,008 8,220 -

8,220 27,942 21,234 21,976 21,608 23,050 28,000 42,000 62,000 82,000 102,000 132,000 162,000

27,942 21,234 21,976 21,608 23,050 28,000 42,000 62,000 82,000 102,000 132,000 162,000

Food Housing Day Care Total stamps Assistance Assistance Resources

39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220

39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220

O-CHIP FPL* Threshold

1,390 11,390 21,390 31,390 46,390 61,390

1,390 11,390 21,390 31,390 46,390 61,390

50% of Excess

31,233 31,233 31,233 31,233 31,233 31,233 31,233 31,233 31,233 31,233 31,233 31,233

23,321 23,321 23,321 23,321 23,321 23,321 23,321 23,321 23,321 23,321 23,321 23,321

Cost If Health Good

31,233 31,233 31,233 31,233 31,233 31,233 29,843 19,843 9,843 -

23,321 23,321 23,321 23,321 23,321 23,321 21,931 11,931 1,931 -

Prelim.

Amount of Asst.

177,000 216,000

89,843 105,843

81,843

162,000

71,233 71,843

132,000

63,283 59,233

121,843

60,341 54,283

138,000

59,209 52,841

91,843

56,967 53,209

102,000

62,175

216,000

52,467

177,000 162,000 59,175

138,000

81,931

63,931

132,000

63,321

51,321

102,000

55,371

46,371

97,931

52,429

44,929

113,931

51,297

45,297

83,931

49,055

44,555

73,931

54,263

51,263

B-23

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Married with 2 Children in Fair Health

B-24

O-CHIP: Oklahoma Comprehensive Health Independence Plan

42

32

22

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000

4,010 4,710 4,160 3,100 2,050 -

4,010 4,710 4,160 3,100 2,050 -

4,010 4,710 4,160 3,100 2,050 -

768 -

768 -

768 -

Income Federal Considered EIC TANF

3,192 2,340 1,404 -

3,192 2,340 1,404 -

3,192 2,340 1,404 -

4,752 3,684 2,412 1,008 -

4,752 3,684 2,412 1,008 -

4,752 3,684 2,412 1,008 -

8,220 -

8,220 -

8,220 -

27,942 21,234 21,976 21,608 23,050 28,000 42,000 62,000 82,000 102,000

27,942 21,234 21,976 21,608 23,050 28,000 42,000 62,000 82,000 102,000

27,942 21,234 21,976 21,608 23,050 28,000 42,000 62,000 82,000 102,000

Food Housing Day Care Total stamps Assistance Assistance Resources

39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220

39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220

39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220

O-CHIP FPL* Threshold

1,390 11,390 21,390 31,390

1,390 11,390 21,390 31,390

1,390 11,390 21,390 31,390

50% of Excess

44,819 44,819 44,819 44,819 44,819 44,819 44,819 44,819 44,819 44,819

40,540 40,540 40,540 40,540 40,540 40,540 40,540 40,540 40,540 40,540

37,176 37,176 37,176 37,176 37,176 37,176 37,176 37,176 37,176 37,176

Cost If Health Good

44,819 44,819 44,819 44,819 44,819 44,819 43,429 33,429 23,429 13,429

40,540 40,540 40,540 40,540 40,540 40,540 39,150 29,150 19,150 9,150

37,176 37,176 37,176 37,176 37,176 37,176 35,786 25,786 15,786 5,786

Prelim.

Amount of Asst.

69,226 77,176 95,786 111,786

60,226 65,176 77,786 87,786

151,429

84,819 103,429

85,429

115,429

76,869 72,819

119,429

73,927 67,869

135,429

72,795 66,427

95,429

70,553 66,795

105,429

75,761 66,053

147,150 72,761

131,150 111,150

80,540

68,540

101,150

72,590

63,590

99,150

69,648

62,148

115,150

68,516

62,516

91,150

66,274

61,774

81,150

71,482

68,482

127,786

66,284

58,784

143,786

65,152

59,152

97,786

62,910

58,410

107,786

68,118

65,118

B-24

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Married with 2 Children in Poor Health

O-CHIP: Oklahoma Comprehensive Health Independence Plan

B-25

62

52

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000 132,000 162,000

7,000 10,500 14,000 17,500 21,000 28,000 42,000 62,000 82,000 102,000 132,000 162,000 4,010 4,710 4,160 3,100 2,050 -

4,010 4,710 4,160 3,100 2,050 768 -

768 -

Income Federal Considered EIC TANF

3,192 2,340 1,404 -

3,192 2,340 1,404 4,752 3,684 2,412 1,008 -

4,752 3,684 2,412 1,008 8,220 -

8,220 27,942 21,234 21,976 21,608 23,050 28,000 42,000 62,000 82,000 102,000 132,000 162,000

27,942 21,234 21,976 21,608 23,050 28,000 42,000 62,000 82,000 102,000 132,000 162,000

Food Housing Day Care Total stamps Assistance Assistance Resources

39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220

39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220 39,220

O-CHIP FPL* Threshold

1,390 11,390 21,390 31,390 46,390 61,390

1,390 11,390 21,390 31,390 46,390 61,390

50% of Excess

77,559 77,559 77,559 77,559 77,559 77,559 77,559 77,559 77,559 77,559 77,559 77,559

54,782 54,782 54,782 54,782 54,782 54,782 54,782 54,782 54,782 54,782 54,782 54,782

Cost If Health Good

77,559 77,559 77,559 77,559 77,559 77,559 76,169 66,169 56,169 46,169 31,169 16,169

54,782 54,782 54,782 54,782 54,782 54,782 53,392 43,392 33,392 23,392 8,392 -

Prelim.

Amount of Asst.

106,667 109,609 117,559 136,169 152,169 168,169 184,169 208,169 232,169

100,609 105,559 118,169 128,169 138,169 148,169 163,169 178,169

105,535 99,167

103,293

216,000

162,000

99,535

185,392

140,392

108,501

161,392

125,392

98,793

145,392

115,392

105,501

129,392

105,392

86,832

77,832

94,782

83,890

76,390

113,392

82,758

76,758

95,392

80,516

76,016

82,782

85,724

82,724

B-25

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Married with 2 Children in Poor Health

B-26

O-CHIP: Oklahoma Comprehensive Health Independence Plan

42

32

22

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000

4,296 4,296 4,188 3,756 3,312 -

4,296 4,296 4,188 3,756 3,312 -

4,296 4,296 4,188 3,756 3,312 -

-

-

-

Income Federal Considered EIC TANF

2,796 1,944 1,008 -

2,796 1,944 1,008 -

2,796 1,944 1,008 -

4,980 3,504 2,040 192 -

4,980 3,504 2,040 192 -

4,980 3,504 2,040 192 -

10,932 9,792 8,904 8,532 -

10,932 9,792 8,904 8,532 -

10,932 9,792 8,904 8,532 -

30,004 30,036 30,140 29,980 24,312 31,000 51,000 71,000 91,000 111,000

30,004 30,036 30,140 29,980 24,312 31,000 51,000 71,000 91,000 111,000

30,004 30,036 30,140 29,980 24,312 31,000 51,000 71,000 91,000 111,000

Food Housing Day Care Total stamps Assistance Assistance Resources

29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920

29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920

29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920

O-CHIP FPL* Threshold

42 58 110 30 540 10,540 20,540 30,540 40,540

42 58 110 30 540 10,540 20,540 30,540 40,540

42 58 110 30 540 10,540 20,540 30,540 40,540

50% of Excess

9,323 9,323 9,323 9,323 9,323 9,323 9,323 9,323 9,323 9,323

9,143 9,143 9,143 9,143 9,143 9,143 9,143 9,143 9,143 9,143

8,861 8,861 8,861 8,861 8,861 8,861 8,861 8,861 8,861 8,861

Cost If Health Good

9,281 9,265 9,213 9,293 9,323 8,783 -

9,101 9,085 9,033 9,113 9,143 8,603 -

8,819 8,803 8,751 8,831 8,861 8,321 -

Prelim.

Amount of Asst.

69,000

51,000

69,000

51,000

69,000

51,000

147,000

51,783

39,783

111,000

42,635

33,635

95,000

46,773

39,273

121,000

45,353

39,353

91,000

43,801

39,301

71,000

42,285

39,285

147,000

51,603

39,603

111,000

42,455

33,455

95,000

46,593

39,093

121,000

45,173

39,173

91,000

43,621

39,121

71,000

42,105

39,105

147,000

51,321

39,321

111,000

42,173

33,173

95,000

46,311

38,811

121,000

44,891

38,891

91,000

43,339

38,839

71,000

41,823

38,823

B-26

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Head of Household (Female) with 2 Children in Good Health

O-CHIP: Oklahoma Comprehensive Health Independence Plan

B-27

62

52

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000 4,296 4,296 4,188 3,756 3,312 -

4,296 4,296 4,188 3,756 3,312 -

-

Income Federal Considered EIC TANF

2,796 1,944 1,008 -

2,796 1,944 1,008 4,980 3,504 2,040 192 -

4,980 3,504 2,040 192 10,932 9,792 8,904 8,532 -

10,932 9,792 8,904 8,532 30,004 30,036 30,140 29,980 24,312 31,000 51,000 71,000 91,000 111,000 141,000 171,000

30,004 30,036 30,140 29,980 24,312 31,000 51,000 71,000 91,000 111,000 141,000 171,000

Total Food Housing Day Care stamps Assistance Assistance Resources

29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920

29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920

O-CHIP FPL* Threshold

42 58 110 30 540 10,540 20,540 30,540 40,540 55,540 70,540

42 58 110 30 540 10,540 20,540 30,540 40,540 55,540 70,540

50% of Excess

12,141 12,141 12,141 12,141 12,141 12,141 12,141 12,141 12,141 12,141 12,141 12,141

10,112 10,112 10,112 10,112 10,112 10,112 10,112 10,112 10,112 10,112 10,112 10,112

Cost If Health Good

12,099 12,083 12,031 12,111 12,141 11,601 1,601 -

10,070 10,054 10,002 10,082 10,112 9,572 -

Prelim.

Amount of Asst.

147,000 186,000 225,000

171,000

70,601

141,000

54,601 52,601

111,000

45,453 42,601

95,000

49,591 36,453

121,000

48,171 42,091

91,000

46,619 42,171

71,000

45,103

225,000

42,119

186,000 171,000 42,103

147,000

69,000

51,000

141,000

52,572

40,572

111,000

43,424

34,424

95,000

47,562

40,062

121,000

46,142

40,142

91,000

44,590

40,090

71,000

43,074

40,074

B-27

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Head of Household (Female) with 2 Children in Good Health

B-28

O-CHIP: Oklahoma Comprehensive Health Independence Plan

42

32

22

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000

4,296 4,296 4,188 3,756 3,312 -

4,296 4,296 4,188 3,756 3,312 -

4,296 4,296 4,188 3,756 3,312 -

-

-

-

Income Federal Considered EIC TANF

2,796 1,944 1,008 -

2,796 1,944 1,008 -

2,796 1,944 1,008 -

4,980 3,504 2,040 192 -

4,980 3,504 2,040 192 -

4,980 3,504 2,040 192 -

10,932 9,792 8,904 8,532 -

10,932 9,792 8,904 8,532 -

10,932 9,792 8,904 8,532 -

30,004 30,036 30,140 29,980 24,312 31,000 51,000 71,000 91,000 111,000

30,004 30,036 30,140 29,980 24,312 31,000 51,000 71,000 91,000 111,000

30,004 30,036 30,140 29,980 24,312 31,000 51,000 71,000 91,000 111,000

Food Housing Day Care Total stamps Assistance Assistance Resources

29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920

29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920

29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920

O-CHIP FPL* Threshold

42 58 110 30 540 10,540 20,540 30,540 40,540

42 58 110 30 540 10,540 20,540 30,540 40,540

42 58 110 30 540 10,540 20,540 30,540 40,540

50% of Excess

13,907 13,907 13,907 13,907 13,907 13,907 13,907 13,907 13,907 13,907

13,606 13,606 13,606 13,606 13,606 13,606 13,606 13,606 13,606 13,606

13,072 13,072 13,072 13,072 13,072 13,072 13,072 13,072 13,072

Cost If Health Good

13,865 13,849 13,797 13,877 13,907 13,367 3,367 -

13,564 13,548 13,496 13,576 13,606 13,066 3,066 -

13,030 13,014 12,962 13,042 13,072 12,532 2,532 -

Prelim.

Amount of Asst.

71,532

53,532

72,066

54,066

72,367

54,367

147,000

56,367

44,367

111,000

47,219

38,219

95,000

51,357

43,857

121,000

49,937

43,937

91,000

48,385

43,885

71,000

46,869

43,869

147,000

56,066

44,066

111,000

46,918

37,918

95,000

51,056

43,556

121,000

49,636

43,636

91,000

48,084

43,584

71,000

46,568

43,568

147,000

55,532

43,532

111,000

46,384

37,384

95,000

50,522

43,022

121,000

49,102

43,102

91,000

47,550

43,050

71,000

46,034

43,034

B-28

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Head of Household (Female) with 2 Children in Fair Health

O-CHIP: Oklahoma Comprehensive Health Independence Plan

B-29

62

52

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000 4,296 4,296 4,188 3,756 3,312 -

4,296 4,296 4,188 3,756 3,312 -

-

Income Federal Considered EIC TANF

2,796 1,944 1,008 -

2,796 1,944 1,008 4,980 3,504 2,040 192 -

4,980 3,504 2,040 192 10,932 9,792 8,904 8,532 -

10,932 9,792 8,904 8,532 30,004 30,036 30,140 29,980 24,312 31,000 51,000 71,000 91,000 111,000 141,000 171,000

30,004 30,036 30,140 29,980 24,312 31,000 51,000 71,000 91,000 111,000 141,000 171,000

Food Housing Day Care Total stamps Assistance Assistance Resources

29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920

29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920

O-CHIP FPL* Threshold

42 58 110 30 540 10,540 20,540 30,540 40,540 55,540 70,540

42 58 110 30 540 10,540 20,540 30,540 40,540 55,540 70,540

50% of Excess

19,183 19,183 19,183 19,183 19,183 19,183 19,183 19,183 19,183 19,183 19,183 19,183

15,364 15,364 15,364 15,364 15,364 15,364 15,364 15,364 15,364 15,364 15,364 15,364

Cost If Health Good

19,141 19,125 19,073 19,153 19,183 18,643 8,643 -

15,322 15,306 15,254 15,334 15,364 14,824 4,824 -

Prelim.

Amount of Asst.

147,000 186,000 225,000

171,000

77,643

141,000

61,643 59,643

111,000

52,495 49,643

95,000

56,633 43,495

121,000

55,213 49,133

91,000

53,661 49,213

71,000

52,145

225,000

49,161

186,000 171,000 49,145

147,000

73,824

55,824

141,000

57,824

45,824

111,000

48,676

39,676

95,000

52,814

45,314

121,000

51,394

45,394

91,000

49,842

45,342

71,000

48,326

45,326

B-29

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Head of Household (Female) with 2 Children in Fair Health

B-30

O-CHIP: Oklahoma Comprehensive Health Independence Plan

42

32

22

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

$ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000

4,296 4,296 4,188 3,756 3,312 -

4,296 4,296 4,188 3,756 3,312 -

4,296 4,296 4,188 3,756 3,312 -

-

-

-

Income Federal Considered EIC TANF

2,796 1,944 1,008 -

2,796 1,944 1,008 -

2,796 1,944 1,008 -

4,980 3,504 2,040 192 -

4,980 3,504 2,040 192 -

4,980 3,504 2,040 192 -

10,932 9,792 8,904 8,532 -

10,932 9,792 8,904 8,532 -

10,932 9,792 8,904 8,532 -

30,004 30,036 30,140 29,980 24,312 31,000 51,000 71,000 91,000 111,000

30,004 30,036 30,140 29,980 24,312 31,000 51,000 71,000 91,000 111,000

30,004 30,036 30,140 29,980 24,312 31,000 51,000 71,000 91,000 111,000

Food Housing Day Care Total stamps Assistance Assistance Resources

29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920

29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920

29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920

O-CHIP FPL* Threshold

42 58 110 30 540 10,540 20,540 30,540 40,540

42 58 110 30 540 10,540 20,540 30,540 40,540

42 58 110 30 540 10,540 20,540 30,540 40,540

50% of Excess

32,240 32,240 32,240 32,240 32,240 32,240 32,240 32,240 32,240 32,240

31,457 31,457 31,457 31,457 31,457 31,457 31,457 31,457 31,457 31,457

29,915 29,915 29,915 29,915 29,915 29,915 29,915 29,915 29,915 29,915

Cost If Health Good

32,198 32,182 32,130 32,210 32,240 31,700 21,700 11,700 1,700 -

31,415 31,399 31,347 31,427 31,457 30,917 20,917 10,917 917 -

29,873 29,857 29,805 29,885 29,915 29,375 19,375 9,375 -

Prelim.

Amount of Asst.

63,227 72,375 88,375 104,375

54,227 60,375 70,375 80,375

64,769 73,917 89,917 105,917

55,769 61,917 71,917 81,917

65,552 74,700 90,700 106,700

56,552 62,700 72,700 82,700

122,700

69,690

62,190

147,000

68,270

62,270

92,700

66,718

62,218

111,000

65,202

62,202

121,917

68,907

61,407

147,000

67,487

61,487

91,917

65,935

61,435

111,000

64,419

61,419

121,000

67,365

59,865

147,000

65,945

59,945

91,000

64,393

59,893

111,000

62,877

59,877

B-30

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000

$ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Head of Household (Female) with 2 Children in Poor Health

O-CHIP: Oklahoma Comprehensive Health Independence Plan

B-31

62

52

Age

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000

7,000 10,500 14,000 17,500 21,000 31,000 51,000 71,000 91,000 111,000 141,000 171,000 4,296 4,296 4,188 3,756 3,312 -

4,296 4,296 4,188 3,756 3,312 -

-

Income Federal Considered EIC TANF

2,796 1,944 1,008 -

2,796 1,944 1,008 4,980 3,504 2,040 192 -

4,980 3,504 2,040 192 10,932 9,792 8,904 8,532 -

10,932 9,792 8,904 8,532 30,004 30,036 30,140 29,980 24,312 31,000 51,000 71,000 91,000 111,000 141,000 171,000

30,004 30,036 30,140 29,980 24,312 31,000 51,000 71,000 91,000 111,000 141,000 171,000

Food Housing Day Care Total stamps Assistance Assistance Resources

29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920

29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920 29,920

O-CHIP FPL* Threshold

42 58 110 30 540 10,540 20,540 30,540 40,540 55,540 70,540

42 58 110 30 540 10,540 20,540 30,540 40,540 55,540 70,540

50% of Excess

47,348 47,348 47,348 47,348 47,348 47,348 47,348 47,348 47,348 47,348 47,348 47,348

36,372 36,372 36,372 36,372 36,372 36,372 36,372 36,372 36,372 36,372 36,372 36,372

Cost If Health Good

47,306 47,290 47,238 47,318 47,348 46,808 36,808 26,808 16,808 6,808 -

36,330 36,314 36,262 36,342 36,372 35,832 25,832 15,832 5,832 -

Prelim.

Amount of Asst.

153,808 186,000 225,000

171,000

87,808

141,000

89,808 105,808

77,808

117,808

80,660

71,660

121,808

84,798

77,298

137,808

83,378

77,378

97,808

81,826

77,326

107,808

80,310

77,310

225,000

86,832

186,000

94,832 110,832

76,832

171,000

78,832

66,832

141,000

69,684

60,684

126,832

73,822

66,322

147,000

72,402

66,402

96,832

70,850

66,350

111,000

69,334

66,334

B-31

NOTE: On each chart, the above assumes participation in all eligible programs. Not every Medicaid participant will participate in every other program, and in some cases the Adjusted Total Resources will be more. *FPL denotes Federal Poverty Level

10,000 15,000 20,000 25,000 30,000 40,000 60,000 80,000 100,000 120,000 150,000 180,000

$ $ $ $ $ $ $ $ $ $ $ $

Earned Income

AMOUNT of MEDICAID ASSISTANCE to INDIVIDUALS and FAMILIES in VARIOUS CIRCUMSTANCES Head of Household (Female) with 2 Children in Poor Health

B-32

O-CHIP: Oklahoma Comprehensive Health Independence Plan

APPENDIX C

Impact of Income Tax Changes Proposed in O-CHIP The text outlines changes in Oklahoma’s income tax structure designed to provide tax relief to those who acquire health insurance and to require some payment by those who forgo health insurance and thereby force others to incur additional costs. The following charts show the impact of these income tax changes on various representative taxpayers.

Examples are given for various types of families • Married filing jointly with four dependent children • Married filing jointly with two dependent children • Married filing jointly with no dependents • Head of household with three dependent children

O-CHIP: Oklahoma Comprehensive Health Independence Plan

• Head of household with one dependent child • Married filing jointly with no dependents but with whom a non-dependent parent lives, thus qualifying for an additional tax credit under O-CHIP • Single taxpayer under 65 • Married filing jointly over 65 and covered

by Medicare • Single taxpayer over 65 and covered by Medicare The examples also include different levels of income from $15,000 to $120,000 and different levels of expenditures qualifying for treatment as itemized deductions on Schedule A of the federal income tax return.

C-1

C-2

O-CHIP: Oklahoma Comprehensive Health Independence Plan

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C-3

C-4

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C-5

C-6

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C-7

C-8

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C-9

C-10

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C-11

C-12

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C-13

C-14

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C-15

C-16

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C-17

C-18

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C-19

C-20

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C-21

C-22

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C-23

C-24

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C-25

C-26

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C-27

C-28

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C-29

C-30

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C-32

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C-33

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C-35

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C-37

C-38

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C-39

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About the Author Tom Daxon (B.A. in economics, M.S. in geography, Oklahoma State University) is a Certified Public Accountant who served as Secretary of Finance and Revenue for former Oklahoma Governor Frank Keating. Mr. Daxon also served as the director of the Office of State Finance, where he was responsible for preparation of the state budget, financial reporting and accounting, and information services.

From December 1994 through March 1995, Mr. Daxon served as the Interim Treasurer for the Orange County, California Treasurer’s office, following the County’s filing for bankruptcy. He was responsible for implementing controls in the Treasurer’s office and advising county officials on financial issues. Prior to the assignment with Orange County, Mr. Daxon was the Manager of Quality Assurance for Arthur Andersen & Company, for a major engagement with the Resolution Trust Corporation (RTC). His team eliminated a nationally publicized backlog of unreconciled accounts and worked with outside auditors to obtain the RTC’s first clean audit opinion. He was also responsible for special projects relating to privatization in state and local government for Arthur Andersen. He was previously a principal in Arthur Andersen’s Washington, D.C. office, with firmwide responsibilities.

In 1978, Mr. Daxon was elected Auditor and Inspector of Oklahoma. When Mr. Daxon inherited this office, it had been placed on probation by its federal oversight agency. The office achieved dramatic improvement under his leadership. He raised the number of CPAs/CIAs on staff from 1 to 26 while cutting the total staff from 126 to 81. He formed an investigative unit that exposed questionable practices in certain tag agencies and at the Department of Human Services.

He cooperated with federal officials in exposing the county commissioner scandal. He introduced modern auditing techniques that included operational reviews of audited agencies and financial reporting in accordance with generally accepted accounting principles, leading Oklahoma to become the first state to issue comprehensive GAAP-basis general purpose financial statements, using its own staff.

OCPA Trustees Blake Arnold

Tom H. McCasland III

Mary Lou Avery

David McLaughlin

Lee J. Baxter

Lew Meibergen

Steve W. Beebe

Lloyd Noble II

John A. Brock

Robert E. Patterson

David R. Brown, M.D.

Russell M. Perry

Oklahoma City Oklahoma City

Duncan Enid

Lawton Duncan Tulsa

Enid

Tulsa Tulsa

Oklahoma City

Edmond

Aaron Burleson

Bill Price

Altus

Oklahoma City

Paul A. Cox

Patrick Rooney

Josephine Freede

Melissa Sandefer

Kent Frizzell

Robert Sullivan

John T. Hanes

Lew Ward

Ralph Harvey

William E. Warnock, Jr.

John A. Henry III

Gary W. Wilson, M.D.

Henry F. Kane

Daryl Woodard

Robert Kane

Daniel J. Zaloudek

Oklahoma City Oklahoma City

Oklahoma City Norman

Claremore

Tulsa

Oklahoma City

Enid

Oklahoma City Oklahoma City Bartlesville

Tulsa

Edmond Tulsa

Tulsa

Tulsa

OCPA Adjunct Scholars Will Clark, Ph.D.

Andrew W. Lester, J.D.

University of Oklahoma

Oklahoma City University (Adjunct)

David Deming, Ph.D.

David L. May, Ph.D.

Bobbie L. Foote, Ph.D.

Ronald L. Moomaw, Ph.D.

Kyle Harper, Ph.D.

Ann Nalley, Ph.D.

E. Scott Henley, Ph.D., J.D., D.Ph.

Bruce Newman, Ph.D.

University of Oklahoma

University of Oklahoma (Ret.)

Oklahoma City University

Oklahoma State University

University of Oklahoma

Oklahoma City University (Ret.)

James E. Hibdon, Ph.D.

Cameron University

Western Oklahoma State College

Stafford North, Ph.D.

University of Oklahoma (Ret.)

Oklahoma Christian University

Russell W. Jones, Ph.D.

Michael Scaperlanda, J.D.

University of Central Oklahoma

University of Oklahoma

Andrew C. Spiropoulos, J.D. Oklahoma City University

OCPA Fellows

Steven J. Anderson, MBA, CPA Research Fellow

J. Rufus Fears, Ph.D.

Dr. David and Ann Brown Distinguished Fellow for Freedom Enhancement

Patrick B. McGuigan, M.A. Research Fellow

J. Scott Moody, M.A. Research Fellow

Wendy P. Warcholik, Ph.D. Research Fellow

OCPA Legal Counsel

DeBee Gilchrist Oklahoma City

OCPA Staff

Hopper T. Smith / President Brett A. Magbee / VP for Operations Brandon Dutcher / VP for Policy Margaret Ann Hoenig / Director of Development Sandra Leaver / Event Coordinator Marilyn Davidson / Marketing Manager Forrest Claunch / Operations and Special Projects Clara Wright / Receptionist

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