[Congressional Record Volume 140, Number 146 (Saturday, October 8, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: October 8, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
           SECTION 115 MEDICAID DEMONSTRATION PROGRAM WAIVER

  Mr. GRAHAM. Mr. President, I rise today to express great concern 
about a potential problem that the State of Florida is having in 
obtaining full approval of its section 1115 Medicaid demonstration 
program waiver from the Department of Health and Human Services. On 
February 9, 1994, Florida submitted its Florida Health Security waiver 
to the Department of Health and Human Services. This Medicaid waiver 
would, if fully approved and enacted, provide 1.1 million additional 
Floridians with insurance coverage up to 250 percent of the poverty 
level. The program's participants would buy a standard benefit offered 
through a Community Health Purchasing Alliance and receive, according 
to their income, a premium discount to make the package affordable.
  On September 14, 1994, after 7 months of negotiations, HHS granted a 
conditional waiver approval to allow Florida to implement the State's 
proposed reforms. By granting this important request, Florida would be 
allowed to use Medicaid funds to provide insurance premium discounts to 
working, uninsured Floridians traditionally ineligible for Medicaid.
  Mr. President, there are many positive aspects of Florida Health 
Security. First and foremost, let me reemphasize that this waiver 
program would allow an additional 1.1 million Floridians to obtain 
health insurance coverage--thereby reducing the State's uninsured rate 
by over 40 percent. Moreover, of the 2.7 million Floridians presently 
without health insurance, 1 million are children. With the plan's 
requirement that 80 percent of the enrollment spaces be reserved for 
lower-income, uninsured families, children could disproportionately 
benefit from this initiative.
  In addition, this waiver would eliminate the all-or-none approach of 
Medicaid by creating a sliding scale of contributions for those above 
the Medicaid poverty threshold and up to 250 percent of poverty. At 
present, Medicaid's all-or-none approach creates the perverse incentive 
of encouraging people to remain unemployed and in poverty in order to 
continue to have health care coverage. Florida's approach would clearly 
help get people off welfare and be a much fairer system that what we 
have now.
  The waiver also allows Florida and the Federal Government better 
control over the costs of the Medicaid program. Since 1982, Florida has 
had its Medicaid program increase from $1 to $7 billion. In the years 
from 1990 through 1993, Florida saw its Medicaid budget expand by 30 
percent, 26 percent and 19 percent, respectively. Instead, over the 5-
year period of Florida's waiver program, costs would be controlled and 
managed through the increased use of case management and managed care 
in the private sector. Through these savings, the State and the Federal 
Government will be able to provide coverage to over 1 million 
previously uninsured Floridians without spending additional revenue.
  In short, Florida's Health Secretary program would expand access and 
health coverage without raising taxes, control costs, and break the 
categorical link between health care and welfare.
  To implement this program, Florida Health Security will utilize the 
already successfully established Community Health Purchasing Alliances, 
which have reduced premiums for participating small businesses by 10-50 
percent this year. As a result of this, private health plans will be 
integrally involved in this Florida Health Security program.
  In fact, under Florida Health Security, accountable health 
partnerships would submit bids on premium rates for the standard 
benefit plan, with a portion of the premium to be paid by Medicaid. 
Insurance agents would be directly involved in the process due to the 
fact that they are an integral part of any system relying in whole or 
in part on private health insurance coverage.
  Unfortunately, HHS and the Department of Justice have expressed 
concern that payments to insurance agents by accountable health plans 
might violate the Social Security Anti-Kickback Statute. Clearly, the 
1977 Anti-Kickback Statute was not intended or was even contemplated to 
apply to programs like Florida's demonstration project.
  For example, I understand the Family Support Act of 1988 creates a 
Medicaid wrap-around option allowing States to use Medicaid 
funds to pay a family's expenses for premiums, deductibles, and 
coinsurance for health care coverage offered by an employer.
  Moreover, as the State argued while pursuing this waiver, since 
insurance companies use insurance agents, the purchase of insurance and 
the payment of premiums of necessity results in the payment of a 
commission to an insurance agent. This is also true when Medicaid funds 
health maintenance organizations [HMO's], the Medicare Risk Program and 
various State plans relating to areas such as the enrollment of 
Medicaid eligibles in group health plans.
  Through the section 1115 Medicaid demonstration project waiver 
process, Florida is attempting to, for the first time, use Medicaid 
funds to purchase private health insurance on a wide scale. However, by 
mistakenly applying the Anti-Kickback statute beyond its intended scope 
to insurance agent commissions, the Departments of Justice and Health 
and Human Service would effectively kill the demonstration. As noted 
beyond, insurance agents are an integral part of the existing health 
insurance system.
  For example, it is estimated that Medicaid only enrolls one of every 
two potential eligibles. The intent of Florida waiver plan is to expand 
access and health insurance coverage to an additional 1.1 million 
Floridians through the private health insurance system. In order to 
maximize the 42,000 insurance agents already in place in Florida to 
market those plans rather than creating a whole new State bureaucracy 
that would be much less effective at reaching potential eligibles.
  I am deeply concerned that the Department of Health and Human 
Services's decision would effectively preclude 1.1 million uninsured 
Floridians from receiving health insurance coverage next year. If that 
is the case, I would appreciate any help I could get. Would Senator 
Rockefeller be willing to offer the people of Florida help in resolving 
that dispute?
  Mr. ROCKEFELLER. My friend from Florida, Senator Graham, it is indeed 
my understanding that the State of Florida has been a leader on major 
initiatives to expand health care coverage and lower health care costs. 
I believe that we will be able to learn a lot from Florida's 
experiences, and may, at some point, be able to apply those lessons at 
the national level. Because of Governor Chiles' leadership and 
commitment at the State level and your own long-term interest on health 
issues, small businesses in Florida are benefiting from health reforms 
already implemented.
  I am hopeful that a mutually agreeable arrangement can be worked out 
with the Department of Health and Human Services and the Department of 
Justice and your own home State of Florida on the issue of payments to 
insurance agents. I will do what I can to facilitate a successful 
resolution of this matter.

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