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Analysis: Hulshof hopes to tap hospitals for Missouri health plan

Sunday, August 31, 2008 | 9:10 p.m. CDT; updated 11:44 a.m. CDT, Thursday, September 3, 2009

JEFFERSON CITY – To expand health coverage to the uninsured, Republican gubernatorial candidate Kenny Hulshof wants to dip deep into the money now paid to hospitals as reimbursement for their charity care.

He's following a financial strategy first employed by GOP Gov. Matt Blunt — pledging to increase the government's role in providing health insurance largely by redirecting existing dollars.

Hospitals got on board with Blunt's plan, though it ultimately failed in the House. The assumption for their support was that a reduction in government payments for uninsured patients would be offset by payments from a greater number of patients having health insurance.

But hospitals would have more at stake under Hulshof's plan.

As of yet, the Missouri Hospital Association hasn't endorsed it. Nor has it endorsed a rival plan by Democratic gubernatorial candidate Jay Nixon.

As outlined last week, Hulshof's HealthMAX proposal would cost an estimated $590 million when fully implemented.

It would offer subsidies and tax incentives for lower-income Missourians to buy high-deductible insurance plans coupled with health savings accounts. The state would set up a legal framework giving people multiple choices of plans from multiple insurers. Anyone could purchase insurance through the new pool.

The math would work like this:

  • The state would pay $50 million from its general revenues, attracting a match of an estimated $82 million in federal money, to subsidize the premiums of low-income Missourians.
  • An additional $23 million in state tax incentives would go to those Missourians a step higher on a yet-undefined income scale.
  • Participants would be expected to pay about $11 million in co-payments for their health care.
  • A user fee for HealthMAX participants would generate about $5 million.

That still leaves $419 million to be covered somehow. Hulshof's campaign says the bulk of that would come by redirecting money the state currently pays hospitals for treating the uninsured. The remainder would be covered by expected growth in hospital taxes.

As background: Hospitals pay the state a tax equal to about 5.5 percent of their net revenues from patients, insurers and the government-funded Medicaid and Medicare programs. Last year, that amounted to $864 million.

The state uses that to draw down additional federal money through the Medicaid program. Last year, Missouri got $1.2 billion.

Most of that pool of money is then paid back to hospitals for treating Medicaid patients or the uninsured.

Last year, hospitals got $492 million for providing care to the uninsured - money known in government-talk as "disproportionate share hospital" money, or DSH payments.

Blunt sought to redirect $159 million of such money to his Insure Missouri plan of government-subsidized health insurance. His plan also would have directed an assumed growth of $189 million in hospital tax revenues to Insure Missouri.

Hulshof's plan lacks such specifics. But if Hulshof were to bank on a similar tax growth as Blunt did, he would be left to redirect $230 million from hospitals' uninsured payments to his new HealthMAX proposal.

Daniel Landon, the Missouri Hospital Association's senior vice president of governmental relations, said Hulshof's campaign never discussed with the organization how much money it wants to redirect.

"Obviously, we are going to be interested in ensuring that as DSH payments are reduced, there is a directly proportional increase in the amount of people who are covered by insurance," Landon said. "So we don't end up using all of our uninsured money to cover a small number of people."

Hulshof projects that his subsidies and tax incentives could help provide insurance to about 200,000 of the more than 700,000 Missourians now lacking it. He hopes the program would be such a good deal that the remaining 500,000 would choose to buy insurance through it on their own.

Nixon's plan is geared at restoring Medicaid coverage to an estimated 110,000 who lost it as a result of Republican cuts in 2005 and at reversing the benefit reductions made to several hundred thousand others. He also wants to give the families of 150,000 children without insurance the option of being covered through a government-run health care program.

But Nixon takes a different approach from Hulshof. Nixon proposes to spend $265 million annually in general state revenues, which would draw down an additional $431 million in federal Medicaid money. His plan doesn't depend on shifting any of the uninsured payments away from hospitals.

Republicans cast Nixon's plan as risky to taxpayers, claiming its $265-million hit on general revenues will become unaffordable as it grows over time.

By contrast, Hulshof's plan "is a little bit of a risky thing for hospitals," said Tim McBride, a professor in Washington University's School of Social Work, who focuses his research on economics and health policy and has been an adviser for Nixon's campaign.

Hulshof spokesman Scott Baker says his candidate, if elected governor, is willing to negotiate on the details of his plan.

"This is a proposal that Kenny's putting forth to further the discussion," Baker said. "That's what a leader does - puts out ideas and potential solutions to the challenges, and that's what this is."

 


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