This report identifies policy options for expanding access to health care coverage to reduce the number of uninsured residents.

Policymakers in most, if not all, states have been grappling with the issue of the uninsured for several years. And, while new census data shows Connecticut's uninsured rate (11%) is lower than the national average (16%), about 400,000 state residents are without coverage.

Most of the state's insured residents have employer-sponsored insurance (ESI), yet a third receive health care through public health insurance programs (e.g., Medicaid). Children's uninsured rates are relatively low compared to adult rates, in large part due to expansions in the public programs' child coverage.

Options for addressing the problem are myriad. They build on the nation's existing health insurance structure, which, as noted above, relies on ESI and publicly funded coverage. The options range from total public insurance—a single payer system in which the state is the insurer—to tax incentives to encourage individuals to buy health insurance. In between are options for lowering the cost of health insurance, requiring employers to offer insurance, expanding existing

public insurance programs to cover more people, and increasing the ability of publicly funded facilities like community and school-based health centers to serve more uninsured people.

Nearly 400,000 Connecticut residents were uninsured in 2004-2005. While most were white adults with incomes over the federal poverty level, one-fifth of the state's black population and one-fourth of its Hispanic population were uninsured. Table 1 compares Connecticut health insurance coverage data with national data for 2004 and 2005. Table 2 provides a breakdown of the uninsured population by age, poverty level, gender, and ethnicity. (The data do not tell the reader the extent to which the insured may be “underinsured,” due to prohibitive costs or limited service packages.)

State-funded reinsurance may reduce the price of private health insurance by having the state cover (i.e., reinsure) a portion of health insurer's high-cost claims. (Reinsurance is insurance for the insurer.) A state may cover claims in a certain cost corridor (e.g., claims between $25,000 and $100,000) or above a particular threshold amount (e.g., claims exceeding $20,000). When a state covers a portion of the claims, insurers can charge lower premiums.

New York. New York established a state-subsidized reinsurance program in 2001 called Healthy New York. It requires all HMOs to offer small employers two standard benefit plans (one with prescription drug coverage and one without) backed up by a state-funded reinsurance component. The reinsurance is funded mostly by tobacco settlement funds and tobacco tax revenues. When first implemented, the reinsurance covered claims between $30,000 and $100,000. The corridor was lowered to claims between $5,000 and $75,000 in 2003, because so few claims reached the higher corridor in the program's first two years. In its first year, Health NY's rates for small employers were 15% to 30% less than they would have been without the state-subsidized reinsurance. In 2003, the program reduced rates by another 17%.

More Information. More information on Health NY is available at http://www.HealthNY.com. See also, Katherine Swartz, Reinsurance: How States Can Make Health Coverage More Affordable for Employers and Workers, The Commonwealth Fund, July 2005, http://www.cmwf.org/usr_doc/820_swartz_reinsurance.pdf.

The current tax system favors ESI. The premiums an employer pays for its employees' benefit plan is tax deductible as a business expense. For employees, the amount that employers contribute toward health benefits is generally excluded from taxable income. Employees are also able to pay for their portion of the premium with pre-tax dollars.

Individuals who do not receive ESI benefits can deduct from their income tax only the portion of total health care expenses (including premiums) that exceed 7.5% of adjusted gross income. The deduction is allowed only for individuals who itemize.

States have expressed interest in (1) providing tax credits for the purchase of health insurance and (2) increased tax deductibility of (a) premiums for individual policies and (b) out-of-pocket expenses generally. Such tax incentives are meant to encourage individuals to obtain insurance by in effect lowering the cost of coverage. A tax credit or deduction could be capped, restricted to certain taxpayers (e.g., small businesses, previously uninsured individuals, low-income filers), or made available for certain benefit plans (e.g., comprehensive benefits, high-deductible health plans). Tax credits can be nonrefundable or refundable (i.e., even a person who owes no taxes receives the credit).

Colorado and Oklahoma provide individuals a tax credit for health insurance expenses. Kentucky, Michigan, and Pennsylvania exclude insurance premiums from personal income for tax purposes. South Carolina allows a deduction from taxable income for premiums. Idaho allows a business tax credit for any year during which the employer increases employment of new employees if the employees are eligible to receive health insurance. For information on how states are using tax incentives for encouraging the purchase of health insurance, see OLR Report 2005-R-0161.

Some states, including Arkansas and North Dakota, are permitting insurance companies to sell policies without all of the benefits they mandate. In many cases, these mandate exemptions are allowed only for certain types of policies (e.g., small employer plans, a state-designed catastrophic plan). Proponents of such policies argue that eliminating some or all of the mandated benefits reduces the cost of an insurance policy, allowing more employers and individuals to purchase coverage.

Arkansas. The Arkansas Health Insurance Consumer Choice Act (House Bill 1632 in 2001) permits insurers to provide an optional individual or group benefit plan that does not provide coverage for some or all of the state mandated health benefits.

North Dakota. North Dakota House Bill 1226 (2001) allows insurers to sell basic health insurance policies, in both the individual and group markets, that do not provide coverage for the following state mandated benefits: off-label drugs, group coverage of substance abuse, mammograms, temporomandibular joint or craniomandibular disorders, prostate specific antigen tests, foods and food products used to treat inherited metabolic diseases, dental anesthesia and hospitalization, pre-hospital emergency services, and optometric services. People can obtain coverage for these mandated benefits on an optional basis by paying an additional premium for each.

Group purchasing arrangements permit different employers or individuals to join together to purchase health insurance or negotiate provider discounts on behalf of their members (e.g., purchasing cooperatives, multiple employer arrangements, association health plans). Proponents of these arrangements believe they lead to expanded coverage by offering members more plan choices and reduced premiums through lower administrative costs, increased risk spreading, and collective negotiating power.

CBIA Health Connections. CBIA (Connecticut Business and Industry Association), a Connecticut statewide private business organization, launched its purchasing cooperative, Health Connections, in 1995. Health Connections is designed for companies with three to 100 employees. The program gives employers a choice of plans from leading health care companies (CIGNA HealthCare, ConnectiCare, Health Net, and Oxford Health Plans). CBIA is the sole administrator for the program.

As of October 1, 2006, 5,847 employer groups (member companies) are participating in CBIA Health Connections. The program covers 48,151 employees and 40,155 dependents, for a total of 88,306 covered lives. (These numbers do not reflect prior groups that have since terminated.)

More Information. For more information, see Mila Kofman's “Group Purchasing Arrangements: Issues for States,” State Coverage Initiatives Issue Brief (Academy Health, Washington, D.C.) 4, no.3 (April 2003), http://www.statecoverage.net/pdf/issuebrief403.pdf. Also, see OLR Report 2006-R-0005.

To increase the number of people covered by individual health insurance policies, a number of states have enacted individual market reforms to make it easier for people to qualify for and maintain coverage. The reforms include guarantee issue, rate restrictions, coverage elimination riders, and pre-existing condition limitations.

Guarantee Issue. Some states require insurers that sell individual policies to issue coverage under all or some products to any person or certain categories of people without regard to their health or risk status (“guarantee issue”) (California, Idaho, Maine, Massachusetts, Michigan, Minnesota, New Jersey, New York, Ohio, Oregon, Rhode Island, Utah, Vermont, Washington, West Virginia).

Rate Restrictions. In many states, like Connecticut, premiums for individual health insurance vary based on a person's health status, but some states prohibit this practice or limit rates. A few states require pure community rating so that premiums cannot vary by health status, age, or gender (New Jersey, New York, and Vermont). Some states require adjusted community rating, meaning a community rate is determined and then adjusted for certain factors, such as a person's age (Maine, Massachusetts, Oregon, and Washington). Other states impose health status rate bands that limit the amount by which premiums can vary because of health status (Idaho, Iowa, Kentucky, Louisiana, Minnesota, Nevada, New Hampshire, New Mexico, South Dakota, and Utah).

Coverage Elimination Riders. In many states, an insurer may permanently exclude coverage for certain health problems disclosed on an individual's policy application by issuing a policy amendment called an elimination rider. Some states prohibit elimination riders (California, Idaho, Indiana, Kentucky, Maine, Massachusetts, Michigan, Minnesota, New Jersey, New York, Oregon, Vermont, and Washington).

Pre-existing Condition Limitation. Individual insurance policies often exclude coverage for pre-existing conditions. Many states have restricted (1) the time period insurers may look back before the policy's purchase for evidence of a pre-existing condition and (2) the length of the coverage exclusion for such conditions. Connecticut has a 12-month maximum look-back period and a 12-month maximum exclusion period. Nationally, maximums range from six months for both look back and exclusion to no limits at all.

Some states are revising their definition of dependent as a way of increasing access to health care insurance. States are, for example, raising the age at which coverage terminates for a dependent child, providing continued coverage for dependent children of a certain age, or including additional people in the definition (e.g., grandchildren).

Dependent Age. Historically, a dependent child's coverage ends at age 19 or, if a full-time student, 23. Several states, including Colorado and Massachusetts, have increased the age at which dependent status ends.

Effective January 1, 2006, Colorado law requires insurers to offer parents, for additional premium if applicable, dependent coverage for children who are under age 25 (even if not enrolled in an educational institution), unmarried, and financially dependent on or shares the same legal address as their parents (Colo. Rev. Stat. § Ch. No. 322).

Massachusetts' 2006 health care reform law permits dependents to stay on their parent's coverage for two years past the policy's loss of dependent status age, or until age 25, whichever comes first (HB 4850).

Continuation of Coverage. New Jersey law requires health benefit plans to offer insureds continued coverage for certain dependents until their 30th birthday (P.L. 2005, c. 375). To qualify as a dependent for purposes of the law, a person must be a plan subscriber's child (by blood or law) who is (1) less than 30 years old, (2) unmarried, (3) without a dependent, (4) a New Jersey resident or enrolled as a full-time student at an accredited higher education institution, and (5) not covered under any other plan. A plan may require an additional premium for the continued coverage from either the plan subscriber or the dependent child.

Grandchildren. At least five states include “grandchild” in their dependent definition, making it mandatory for insurance policies to cover these children (Maryland, Minnesota, New York, Texas, Wisconsin).

Maryland law considers a grandchild a policyholder's dependent if the child is in the court-ordered custody of the grandparent policyholder, financially dependent on the grandparent, unmarried, and within the policy's dependent age limitation (MD. Ins. Code Ann. § 15-403).

Minnesota law requires a grandchild be covered immediately from birth under a grandparent's policy if the child is financially dependent on and living with the grandparent from birth, up to age 19 (Minn. Stat. § Ch. No. 62A.042).

An employer mandate requires employers to offer their employees health insurance. Under a pay-or-play approach, employers must offer insurance or pay a tax, which goes toward off setting the cost of providing coverage to the uninsured. Hawaii is the only state that requires employers to provide insurance. The requirement was granted an exemption from ERISA (Employee Retirement Income Security Act) since it predated the federal law. States that attempt an employer mandate face court challenges alleging ERISA violations.

Maryland. Maryland enacted a pay-or-play system. Its Fair Share Health Care Fund law requires employers with 10,000 or more employees to spend at least 8% of their total payroll on employee health care, or pay the difference into a state-controlled fund. Several states considered similar acts in 2006. On July 19, 2006, a U.S. District judge struck down the Maryland law, stating that it was preempted by ERISA.  

Massachusetts. Effective October 1, 2006, the Massachusetts health care reform act imposes a fair share surcharge up to $295 per year, per employee, on employers of 11 or more full-time employees that do not offer their employees a group health plan to which they make a fair and reasonable premium contribution. The act also requires all such employers to adopt and maintain “cafeteria” or “Section 125” plans, which allow employees to use pre-tax dollars for health plans.

The Massachusetts health care reform act requires all residents age 18 and over to have health insurance by July 1, 2007 and penalizes those who do not. Residents failing to meet the mandate risk losing their personal exemption for the 2007 tax year. Starting January 1, 2008, the penalty equals up to 50% of the minimum insurance premium a person would have paid to purchase coverage.

States may either require or give preference to firms that offer their employees health insurance when awarding state contracts.

San Francisco. On July 1, 2001, San Francisco's Health Care Accountability Ordinance went into effect. The ordinance, the first of its kind nationwide, requires employers doing business with the city to provide health care coverage for their employees. Contractors that provide services to the city and county or enter into leases with them comply if they do one of the following: (1) offer employees health plan benefits that meet minimum standards; (2) make payments ($2 per employee per hour, capped at $80 per work week) to the Department of Public Health (DPH) to help offset the costs of services for uninsured workers; or (3) participate in a health benefits program developed by DPH.

High-risk pools are state programs that make insurance coverage available to people who cannot obtain it in the commercial market, usually because of pre-existing conditions. Thirty-three states, including Connecticut, run a high-risk pool. Most include a pre-existing condition coverage exclusion period ranging from three to 12 months (Connecticut's is 12 months). States are considering ways to expand high-risk pools to more individuals by broadening eligibility criteria.

Employer-sponsored insurance (ESI) rates have continued to decline, but the uninsured rate for children has actually fallen over the last several years due in large part to state expansions in Medicaid and SCHIP. According to the Urban Institute, even states that experienced the greatest declines in ESI did not experience children's coverage losses, largely because of the strength of state-administered public coverage (The Role of Medicaid and SCHIP as an Insurance Safety Net, Urban Institute, August 2006).

The latest reports from DSS show that almost 400,000 state residents (about 12% of the population) receive primary care health insurance from the Medicaid, HUSKY B, or SAGA programs at a cost of just over $1 billion in FY 06. (Medicaid expenditures were generally eligible for a 50% federal match; SCHIP spending, a 65% match. SAGA is entirely state-funded.)

Table 3 shows the number of enrollees in each program and state spending in FY 06. Unless otherwise noted, the enrollment figures are as of October 2006.

Table 3. Connecticut's Public Health Insurance: Enrollment and Expenditures, FY 06

Sources: DSS Active Assistance Units Report for August 2006, September 2006; Medicaid Managed Care Council monthly enrollment data, October 2006; Office of Fiscal Analysis

[1] The HUSKY A spending for FY 06 is an aggregate figure that covers both children and adults. The state pays managed care organizations capitated rates for each covered member which vary based on age, region of the state, and other factors.

Medicaid. For the last 40 years, the federal-state Medicaid program has provided access to low- or no-cost primary health care to the state's poorest residents. Medicaid is an entitlement and, as such, any one who meets its eligibility criteria must be covered. In Connecticut, the vast majority of recipients have been low-income children, but in recent years the program was expanded to include some of their parents. Historically, Connecticut has been one of the more generous states in terms of covering children—in 1997, when the HUSKY program was created, children up to age 19 in families with income up to 185% of the federal poverty level (FPL) were already eligible for fully subsidized care.

While eligibility standards are relatively generous for children, they are quite strict for poor elderly, blind, or disabled residents. And unless they are caretaker relatives of children, younger, non-disabled residents are essentially shut out from the program.

Federal law sets the income limits for aged, blind, and disabled (medically needy) residents. They are old and tied to family welfare benefits, which in Connecticut have not been raised in many years. Many individuals qualify for this program only after they “spend down” their excess income on unpaid medical bills.

SCHIP. In the late 1990s, many states lagged far behind Connecticut in terms of child coverage. This prompted Congress to pass the State Children's Health Insurance Program (SCHIP) law in 1997, which provided a block grant to states to reduce the number of uninsured children. Because the state's child Medicaid eligibility was so liberal (e.g., relatively high income limit and no asset test), the state created a separate SCHIP program for families with higher incomes. HUSKY B provides subsidized health care to families with incomes between 185% and 300% of the FPL.

All families must pay nominal co-payments that are capped at $650 annually; families with incomes between 235% and 300% of the FPL (Band 2) pay monthly premiums as well ($30 per child, $50 family cap). Families with income above 300% of the FPL (Band 3) can buy into HUSKY B by paying monthly premiums averaging $200 per child. HUSKY B families with incomes under 300% of FPL who have children with special physical or behavioral health care needs can get extra coverage (HUSKY Plus) for their children.

Expansion Options. States wishing to cover more individuals and families with federal financial support can expand coverage using provisions in federal law. These range from Medicaid 1115 and SCHIP waivers to Medicaid state plan amendments, which are somewhat easier. Newer federal Health Insurance Flexibility and Accountability (HIFA) waivers give states the most flexibility, including the ability to require more cost sharing than the regular programs allow.

SCHIP offers a 65% match in Connecticut, compared to Medicaid's 50%. While many states typically spend their SCHIP allotment, Connecticut has not and is expected to have over $17 million in surplus federal SCHIP funds in FFY 07 that could be tapped for an SCHIP expansion.

The goal of Maine's Dirigo Health was to ensure universal coverage by 2009. While focused primarily on covering employees of small employers and their dependents, the program includes a Medicaid expansion authorized by a comprehensive state waiver. But instead of the state separately contracting with an insurer, the way state Medicaid agencies typically procure benefits, the state uses Anthem as a single carrier for all residents. Medicaid eligible residents receive the services that are in the Anthem package while the state provides the wraparound services that Medicaid requires but are not in the package. Maine also provides Medicaid coverage of childless adults (income up to 125% of the FPL).

While numerous states have used the more flexible HIFA waivers to expand coverage, those that have attempted to cover childless adults using SCHIP funds have been criticized (see SCHIP: HHS Continues to Approve Waivers that Are Inconsistent with Program Goals, General Accountability Office, January 2004 at www.gao.gov)

Since the Medicaid medically needy income limits are in federal law, the state cannot change them. But it could increase the amount of unearned income it disregards when determining eligibility. It could also create a new Medicaid eligibility group that would allow these individuals to receive assistance if their incomes are as high as 100% of the FPL.

Premium Assistance. Many low-income workers would like to obtain coverage under their employer's health plans, but the cost-sharing requirements often make it prohibitive. States can use Medicaid or SCHIP funds to pay a portion of the employee's share of the premiums. One way they can do this is by getting a federal waiver. States can also use Medicaid's Health Insurance Premium Payment (HIPP) program but this option has been used by a relatively small number of beneficiaries. And states getting SCHIP waivers can receive the higher (65%) federal match.

In 2004, NCSL indicated that 14 states were using premium assistance in their Medicaid programs while 10 did so in their SCHIP programs. NCSL reported that the HIPP programs had not generated much interest, in part because of the administrative burden of running them. They suggest that these burdens are less onerous under the HIFA waivers.

Rhode Island adopted its RIte Share program in 2001 as the premium assistance piece of its combined Medicaid/SCHIP waiver program. The state pays the premiums for families with incomes up to 150% of the FPL with a sliding premium scale for families up to 250% of FPL. Families under 150% of the FPL comprise 90% of participants. A 2004 report on the program estimated net savings of $23.06 per member per month.

When designing premium assistance programs, states need to decide a number of things, such as whether to make enrollment mandatory. And premium assistance presents challenges to states. These include “churning,” that is, families moving on and off program eligibility due to myriad factors (e.g., job change), lack of information about the availability of ESI, and ESI plans with prohibitive cost sharing or limited benefits.

While Medicaid and SCHIP have provided health care access to the state's low-income children and a relatively small number of their caretaker relatives, childless individuals without insurance cannot benefit from these programs. In Connecticut, the SAGA medical assistance program helps them by offering community health center-based health care to people with very low incomes (less than $500 per month). Because it is state-funded, SAGA's eligibility limits could be raised to serve more individuals, and DSS could try to get the federal Medicaid program to cover some of the costs which, historically, it has not. (In 2003, the legislature restructured SAGA from a fee-for-service model to a community health center model. It directed DSS to seek a HIFA waiver to get federal funds for the program. But concerns about Medicaid becoming a federal block grant stymied this effort.)

According to NCSL, several states with state-only-funded medical assistance programs have higher income limits. For example, both Pennsylvania and Washington operate managed care programs to uninsured individuals up to 200% of the FPL, with beneficiaries paying monthly premiums. Pennsylvania uses tobacco settlement funds for part of the program's costs. And in Minnesota, childless adults with incomes up to 175% of the FPL pay monthly premiums and the state has

leveraged federal funds (SCHIP) to pay a portion of the costs. (In 2004, Minnesota received federal Medicaid and SCHIP funds for about 75% of program enrollees.)

Provider Participation. While Medicaid, SCHIP, and SAGA have made insurance available to more state residents, the availability alone has not guaranteed access to needed services. For example, beneficiaries have had a difficult time receiving dental services, despite their being part of the benefit package available in all programs. This is due in large part to the low reimbursements the programs pay healthcare providers. Without an adequate number of providers, program beneficiaries may forego preventive care and ultimately use more costly care in hospital emergency rooms (ERs), or use ERs to receive basic care.

Michigan has increased the number of dentists serving Medicaid-eligible children by making a statewide dental contractor (DeltaDental) responsible for the coverage. For more information about this program, see OLR Report 2006-R-0549.

The Department of Public Health (DPH) identifies parts of the state where residents are underserved by medical professionals and attempts to recruit additional primary care providers using a number of strategies, including a loan repayment program.

Recruiting and Retaining Beneficiaries—Contradictory Policies. While HUSKY A enrollment rose substantially after the 1997 law passed, HUSKY B enrollment has risen more slowly. One reason may be the drastic cuts in recent years in funding for outreach to ensure that all eligible children and parents are covered.

Moreover, numerous state level policy changes may have adversely affected coverage gains. For example, the state halved the amount of transitional Medicaid families could receive (federal law now imposes the same limits on coverage), lowered and subsequently raised the income limits for caretaker relative coverage, placed cost-sharing requirements on beneficiaries who previously were exempt and then rescinded them, and eliminated continuous eligibility for children in HUSKY A.

The new federal Deficit Reduction Act of 2005 contains numerous (generally optional) family Medicaid provisions that, if implemented in Connecticut could make obtaining coverage more difficult for some. For example, states can (1) provide a reduced benefit package, (2) impose cost sharing on benefits provided to certain children, and (3) deny coverage to families when cost-sharing obligations are not met.

Uncompensated care (UCC) represents the charges for which hospitals do not receive reimbursement. It generally includes a hospital's free care and bad debt. Free care is care which a hospital provides knowing in advance that it will not be reimbursed.  Bad debt occurs when the hospital learns after providing and billing for the care that it will not be reimbursed fully for its services. In addition to bad debt and free care, Connecticut's definition of UCC includes undercompensated care associated with government payers (e.g., Medicare, Medicaid).

In Connecticut, UCC costs increased by 3.7% to $170 million in hospital FY 05, according to the Office of Health Care Access (OHCA). But because statewide hospital net patient revenue grew at a faster rate (7.1%), UCC comprised a slightly smaller portion of total patient care in FY 05 as compared to FY 04 (2.9% vs. 2.8%; “Connecticut Office of Health Care Access Announces FY 2005 Hospital Financial Performance,” OHCA Press Release, Sept. 20, 2006).

Indigent Care and Free Bed Funds. Patients at Connecticut's hospitals are treated regardless of their ability to pay, with the exception of nonemergency care (e.g., elective and cosmetic surgery). Many hospitals make indigent care (health services to the poor or those unable to pay) and free bed funds available for patients that meet their eligibility criteria. While free care programs and eligibility requirements vary among hospitals, the following uniform standards exist:

1. all third party resources must be exhausted prior to completing the charity care application,

2. eligibility for all medical assistance is initiated with a patient application and proof of income,

3. the basis for the charity care level is the annual Federal Poverty Level (FPL) income guidelines, and

4. patients up to 100% of the FPL qualify for full charity care from all hospitals, as long as all third party resources are exhausted.

Many hospitals administer numerous funds that have specific qualifying criteria that restrict their use by the general public. PA 03-266 (CGS §19a-509b) requires hospitals to post publicly a description of each hospital bed fund and explain how patients can apply for it.

Disproportionate Share Program. The Disproportionate Share Hospital Program (DSH) is a joint federal-state program designed to reimburse hospitals for care provided to a high volume of Medicaid and other low-income patients. Connecticut has several DSH programs and accounts for specific hospital groups. The largest account is for general uncompensated care. But there are also specific DSH accounts for urban distressed hospitals, the state veteran's hospital, and the children's hospital. In addition, funding for SAGA clients is also channeled separately through a DSH account. The Department of Social Services (DSS) administers the majority of Connecticut's DSH programs.

In FY 05, DSH payments for the state's acute care hospitals totaled $161,318,472, which is a 0.2% increase over FY 04 DSH payments (“Funding of Hospital Care,” Legislative Program Review and Investigations Committee (PRI) Staff Briefing Paper, September 21, 2006).

UCC is the largest of the DSH programs and is available to all hospitals except John Dempsey because it is state-operated. UCC funding for FY 05 totaled $62.5 million, a 7% increase from 2004 (PRI Briefing Paper). The program reimburses hospitals based on a formula that recognizes a portion of uncompensated care and underpayment by government health programs. (The government underpayment amount is based on the proportionate amount of care each hospital provides to Medicare, Medicaid, and other government payers.) The UCC program is state-funded through General Fund appropriations and is federally reimbursable under Medicaid at 50%.

Each state is allocated an amount under the federal Medicaid program, based on DSH payments in prior years. The formula for the UCC program is in state law and calculated by OHCA based on hospitals' audited financial statements. In short, hospitals are reimbursed for amounts of uncompensated care each provides as a portion of the total UCC provided by all hospitals, as well as underpayments. The total amount cannot exceed the federal DSH allotment to the state.

Community health centers (CHCs) are nonprofit organizations whose main purpose is to provide comprehensive primary care services to low-income, uninsured, and underinsured people of all ages. Interdisciplinary teams of health care professionals, including primary care physicians, nurse practitioners, certified nurse-midwives, physician assistants, dentists, dental hygienists, and mental health professionals work in CHCs. The state's CHCs were initially established in the 1960s. Since their inception, CHCs have evolved in number, size, and scope of services. Currently, 12 centers in Connecticut provide care at over 50 different sites around the state. Health center staff help match patients with programs (e.g., SAGA, HUSKY, Medicaid, and Women Infants and Children (WIC)) and assist them in completing the respective application processes.

With the number of uninsured individuals increasing, more Connecticut residents, including middle class families who cannot afford the cost of insurance premiums, are turning to CHCs to meet their family's medical, dental, and social services needs. Funding additional CHCs is another way to expand access to health care.

Scope of Services. CHCs provide the following services: primary care, prenatal care, dental services, mental health counseling, immunizations, nutrition counseling and assessment, HIV education and prevention, AIDS family social services, case management, school-based clinics, family planning, homeless support services, substance abuse counseling and referrals, pharmacological screening, 12-step programs, domestic violence prevention, senior abuse screening, migrant health care, cancer and other health screenings, diabetes management, childbirth classes, neonatal home visits, breast-feeding classes, asthma treatment, early education support services, and flu clinics.

People Served. Individuals from over 150 municipalities made over 830,000 visits to Connecticut's CHCs in 2005, according to the Connecticut Primary Care Association (CPCA). The number of patients has steadily increased by more than 18,000 a year. CPCA reports that one in every 17 Connecticut residents, more than 200,000 people, received their health services at CHCs in 2005.  Nearly one-third of those patients were uninsured, and many were from working families whose jobs either did not offer health coverage or, if they did, the employees could not afford the premiums (CPCA 2006 Position Paper).

More than 65% of CHC patients are at or below the poverty level.  Over one-third of CHC patients are children, while another 25% are women aged 20 to 44. Legislative changes made in 2003 to SAGA added thousands of uninsured individuals to CHC patient rolls (PA 03-3, June 30 Special Session).

Funding. CHC funding comes from a variety of public and private sources. According to the National Association of Community Health Centers, CHCs receive about half of their funds from state and local sources, such as Medicaid, state and local funds, and the SCHIP (HUSKY in Connecticut). The rest comes from federal grants, Medicare, and patients themselves.

The FY 07 General Fund appropriation for CHCs is $5,031,725.

Federally Qualified Health Centers (FQHCs). FQHCs are CHCs that receive federal funding and meet specific federal criteria, including those governing the services they provide.  FQHCs provide their services to anyone regardless of ability to pay and charge for services on a sliding-fee scale basis.

FQHCs can provide low-cost prescription drugs. Section 340B of the federal Public Health Services Act requires drug manufacturers to enter into agreements with the federal Department of Health and Human Services (HHS) to provide outpatient drugs to covered entities at discounted prices. The law specifically includes FQHCs as covered entities. Generally, the prices are as good as those paid by state Medicaid agencies. An FQHC must adhere to certain requirements to receive the discounted pricing. It must (1) be the purchaser and owner of the covered drugs and (2) dispense these drugs only to patients of the health center.

Most of the state's CHCs are designated as FQHCs.

State Action. CHCs are found in all 50 states and U.S. territories. Thirty-two states provide funding. Some states' budget problems resulted in cutting the level of dedicated financing for health centers. Every state has cut Medicaid somewhat in the past few years with a significant impact on CHCs' operating capacity. Medicaid is the single most important source of revenue for CHCs; any cutbacks to eligibility and benefits, coupled with a rising number of uninsured patients, will result in reduced revenue and less ability to provide care.

According to NCSL, studies on cost-effectiveness show that money invested in health centers reduces Medicaid expenditures and national health care spending. For example, in 2003, the average cost of serving one health center patient annually was about $479. This was 10 times less than average per capita spending on personal health and $250 less than the average cost of care at a medical office (“Community Health Centers: An Update,” NCSL LEGISBRIEF, January 2005).

More Information. More information on Connecticut's CHCs is available from the Connecticut Primary Care Association at http://www.ctpca.org and the Department of Public Health at http://dph.state.ct.us/BCH. Additional information on CHCs generally is at http://www.ncsl.org/programs/health/communityhc.htm.

School-based health centers (SBHCs) are comprehensive primary health care facilities located in a school or on school grounds. SBHC services are aimed at, but not limited to, students who do not have access to a family physician or whose families have little or no health insurance. They serve students in grades pre-K through 12. SBHCs emphasize prevention, as well as the early identification and treatment of physical and mental health concerns.

Connecticut licenses these centers as outpatient clinics (Connecticut Public Health Code §§ 19-12-D45 to D53). They are staffed by multidisciplinary teams of pediatric and adolescent health specialists, including nurse practitioners, physician assistants, social workers, physicians, and in some cases, dentists and dental hygienists.

A SBHC is not the same as the school nurse's office. School nurses and SBHCs work together and school nurses often refer students to SBHCs. SBHC services are confidential, and parents must sign a permission form in order for students to receive services.

The first Connecticut comprehensive SBHC, the Body Shop, was established in 1981 at New Haven's Wilbur Cross High School. It is still in operation. It was created in partnership with the New Haven Board of Education, the Fair Haven Community Health Clinic, Yale-New Haven Hospital Adolescent Medicine Department, and the Robert Wood Johnson Foundation. A few years later, Bridgeport established the first state-funded SBHC with an initial grant of $50,000.

Connecticut funds 69 SBHCs in 21 communities. (This includes a few in the planning stages.) They operate under a variety of management models that include boards of education, local health departments, human service and mental health agencies, hospitals, and community health centers.

Services. SBHCs provide:

1. treatment of acute injuries and illnesses (e.g., colds, infections, sore throats, and skin problems);

2. routine checkups;

3. physical examinations;

4. immunizations;

5. prescription and dispensing of medications;

6. diagnosis and treatment of sexually transmitted diseases;

7. nutrition counseling and weight management;

8. crisis intervention;

9. individual, family, and group counseling;

10. oral health screening and, at some sites, full dental care;

11. referral and follow-up for specialty care; and

12. health education.

Funding. SBHCs operate with a combination of public and private dollars, including Maternal and Child Health Block Grant funds; state General Funds; local, private, and foundation funds; and community agency contributions. SBHCs are also able to bill Medicaid and HUSKY plans for services provided to students covered by these plans. The state appropriation for SBHCs for FY 07 is $7,676,461.

Legislation—Ad Hoc Committee. PA 06-195 (§ 51) requires the DPH commissioner to establish an ad hoc committee to assist in examining statutory and regulatory changes to improve health care through access to SBHCs. The committee, which is currently meeting, must focus on improving school-based resources, facilitating access to SBHCs, and identifying or recommending appropriate fiscal support for operational and capital activities.

More Information. More information on Connecticut's SBHCs is at http://www.dph.state.ct.us/bch/Family%20Health/sbhc_fact_sheet.html. Also, see the Connecticut Association of School Based Health Centers (CASBHC) at http://ctschoolhealth.org.

For a chart comparing health care reform legislation in Massachusetts, Vermont, and Maine, see Connecticut Health Policy Project, Issue Brief No. 27, July 2006 at http://www.cthealthpolicy.org/briefs/issue_brief_27.pdf.

For a collection of OLR Reports on universal healthcare and health care reform, see http://cgalites/olr/universalhealth.asp.

JLK/JK/RC:dw