Establishes an alternative benefits demonstration program and creates health opportunity accounts

4 Co-sponsors

• John J. Bonacic
• Kemp Hannon
• Owen H. Johnson
• Frank Padavan

Title of bill

An act to amend the public health law, in relation to establishing an alternative benefits demonstration program and creating health opportunity accounts

Summary of provisions

Section 1. Creates a new Title 5-B of the elder law to create the Interagency demonstration acts office, to examine and make recommendations with respect to opportunities to create demonstration programs under federal waivers. Members include the director of the office of aging, the commissioner of the department of health, and the commissioner of the office of temporary and disability assistance.

Section 2 - Effective Date

Justification

The DRA requires the Secretary of HHS to establish a demonstration program under which up to 10 states may provide under their Medicaid programs (including a plan operating under a statewide 1115 waiver) for qualified alternative benefits (a high deductible plan and a health opportunity account (HOA) for eligible population groups in one or more areas of the state. Demonstrations would begin January 1, 2007. Secretarial approval of a demonstration would be conditioned upon the demonstration meeting specified criteria, including providing incentives for preventive services and access to negotiated provider payment rates.

The approach incorporates key components of health savings accounts (HSAs) authorized in the Medicare Modernization Act (MMA) into a new Medicaid demonstration pilot. Under the pilot, states could allow participating beneficiaries to self-direct a pre-funded account for medical care, rollover unspent balances, and retain a portion of account funds after leaving Medicaid to spend on medical care, health insurance, job training and tuition expenses.

Allow demonstrations in three to ten counties, which participate voluntarily, under which:

* The persons eligible would be working poor who are eligible for Medicaid or other similar programs, e.g., Family Health Plus (mandatory exclusion of individuals age 65 or older, or who are disabled. pregnant, or receiving terminal care or long-term care. * Participation would be voluntary. * Participants can spend their accounts on services they choose. * Annual deductibles would be 110% of the annualized amount of contributions to the HOA. * The state would provide the maximum contribution of $4,500 ($2,500 for the parent and $1,000 for each of the children) to the family's Health Opportunity Account. The deductible would be set at the maximum level: $4,950 (110 percent of the state's contribution). * When spending reaches the deductible, standard Medicaid kicks in, i.e., standard Medicaid coverage kicks in when the family reaches the $4,950 expenditure point. * Beneficiaries keep remaining balances when they are no longer eligible for Medicaid. * An advisory committee helps in implementation.

Prior legislative history

S.6987 of '06 - Aging, Finance

Fiscal implications

To be determined, however, the federal cost in 2007 is estimated by CBO at $10 million, expanding to $15 million in 2008, 2009 and reaching $25 million by 2011. State costs based on this fiscal would be minimal, if any.

Effective date

Immediately.