Senate Democrats Propose Bringing Public Option, Insurance Exchange To Iowa

After a number of closed-door meetings, Iowa Democrats came forward Tuesday to introduce a new health care proposal. Elected officials hailed ideas having the government become a player in the insurance business and implementing direct competition with Main Street insurance agents. And to top it off, a promise to spend hundreds of millions of dollars on subsidies for insurance coverage. Iowans may be surprised to learn that this ceremony did not happen in the Rose Garden of the White House. It occurred within in the Iowa State Capitol.

Senate Democrats came forward with their proposal for health care reform during the 2010 legislative session. Unlike health care reform bills from previous years, SF 2092 just deals with a few issues. But like the other ideas, the initial proposal will cost the taxpayers a lot of money.

The centerpiece of the bill is a major expansion of the IowaCare program. Created in 2005 as a replacement to the State Papers program at the University of Iowa Hospitals and Clinics, IowaCare offers basic care to lower-income Iowans that are not eligible for Medicaid. Services are only available at UIHC and for Polk County residents, at Broadlawns Medical Center.

Under the Senate bill, IowaCare would be dramatically expanded by allowing Iowans earning up to 400 percent of poverty to sign up for what Senate Democrats are calling IowaCare Plus. Iowans earning between 200 and 300 percent would receive premium assistance from the state to pay for the coverage. Those earning between 300 and 400 percent would have to pay the full cost of coverage.

The cost of these changes are something that Senate Democrats don’t really want folks to worry about. Proponents say the bill is dependent on federal funding, but they don’t know how much it could cost. The non-partisan Legislative Services Agency is working on an estimate. Using consultant reports from previous proposals, it is very clear that hundreds of millions of dollars will be needed to subsidize coverage.

…the Democrat’s plan looks like the Iowa version of the public option.

To Iowans following the federal health care debate, the Democrat’s plan looks like the Iowa version of the public option.

The bill also represents a major expansion of the services provided by IowaCare. Currently, the program provides a basic level of care. Senate File 92 would add pharmacy and dental coverage to the program. Providing these services to IowaCare Plus means the state would also have to include them in the current IowaCare program. This is expected to significantly increase the cost of the program by hundreds of millions of dollars.

Another portion of the bill creates an Insurance Exchange, which could end up becoming a government-run insurance super agent. The bill would have the state establish an entity to provide insurance information to consumers and “To provide a portal where uninsured Iowans can receive assistance in obtaining health care coverage.”

It is the second part that concerns many insurance agents across Iowa. They view this proposal to as the first step to establishing the state of Iowa as an insurance agent. The goal of the bill’s proponents to create a Massachusetts-like exchange where the state “assists” lower-income Iowans in purchasing health care insurance. For the insurance agents of Iowa, that sounds a lot like what they do. And they also know they would be at an extreme competitive disadvantage if the state were to enter their business.

In an effort to build support for the bill, Senate Democrats claimed that the bill simply implements the recommendations of the Legislative Health Care Coverage Commission. But the Commission’s discussions on IowaCare never discussed turning the program into a Public Option. And there was little direction from the Commission’s work group of how the insurance exchange would work. Commission members who were able to read the bill didn’t see much connection from their recommendations to the Senate Democrats’ wish list.