New Families USA study finds ‘All Kids' would add $87 million in new business activity and $30.7 million in new wages statewide

CHICAGO - Families USA, a non-partisan national health care policy organization, today released a new report finding that Governor Rod R. Blagojevich's All Kids program could generate $87 million in new business activity and nearly $31 million in new wages statewide in its first year of implementation.  The report was released today at a press conference in Chicago where Families USA, the Campaign for Better Health Care and the Chicagoland Chamber of Commerce endorsed the All Kids program.

 

According to the new Families USA study, All Kids will capture approximately $37 million from the federal government in matching funds for covering more children eligible for Medicaid and SCHIP and for speeding up the payment cycle for all doctors who treat children in the state's children's health insurance programs.  The $37 million in new federal funds from All Kids will have a direct impact on the state's economy, since the funds are used to pay doctors, hospitals, clinics and other health-related businesses.  Providers then use the payments they receive to buy goods and pay salaries which, in turn, adds more money to the economy that can be spent on other goods and services.  Using a U.S. Department of Commerce input-output model, Families USA found this ripple effect, also called the "multiplier effect", is estimated to generate $87,561,000 in new business activity and $30,769,000 in wages in the first year of All Kids. 

 

Health care is the second-fastest growing industry in Illinois, and among the fastest in the nation.  Over the past five years, the health care industry has created nearly 40,000 new jobs in Illinois. 

 

Another way the All Kids plan can have a positive impact on the state's economy is by stabilizing the cost of private insurance.  When uninsured individuals seek medical care, that treatment often comes only once they have become very ill and need expensive emergency care.  While the uninsured pay approximately 35% of their medical bills out of pocket, more than 40% ends up being absorbed by those who do have health insurance in the form of higher premiums.  In a report released in June of 2005, Families USA researchers found that premiums for families in Illinois who have insurance through a private employer are $1,059 higher due to the cost of health care for the uninsured.

 

"We have a moral obligation to give every child a chance to grow up healthy. One-quarter of a million kids in Illinois don't have that chance right now because their families can't afford health insurance.  We can remove that obstacle with the All Kids plan while pumping millions of dollars into our state's economy," said Gov. Blagojevich.  "I hope my colleagues in the General Assembly will look at the facts, including the promising findings presented in the Families USA report, and join me in making this plan a reality."

 

If the All Kids plan is approved, Illinois would become the only state in the nation to extend coverage to every uninsured child.  In Illinois, approximately 253,000 children are without health insurance.  Approximately half of Illinois' uninsured children come from working and middle class families who earn too much to qualify for programs like KidCare, but not enough to afford private health insurance.  The Governor's program would make comprehensive health insurance available to children, with parents paying monthly premiums and co-payments for doctor's visits and prescription drugs at affordable rates. 

 

"Under the leadership of Governor Blagojevich, Illinois has led the way in helping low-income families afford health insurance coverage while too many other states have been moving in the opposite direction," said Families USA Executive Director, Ron Pollack.  "The All Kids initiative offers the families of Illinois with a unique opportunity to provide affordable health insurance coverage to every child in the state."

 

"This historic initiative will extend help to all families -- including parents of children in middle-class families who have no affordable options," said Pollack.  "With more than $87 million in new business activity and more than $30 million in new job earnings expected as a result of the All Kids initiative, it proves that it is not only good for kids, but is good for the Illinois economy as well."

 

"Access to affordable health care coverage is the number one concern of businesses and their employees," noted Jerry Roper, President and CEO of the Chicagoland Chamber of Commerce.  "The All Kids program will address a major gap in many benefits plans by covering employees' children and we look forward to learning more about the proposals' details as they are developed in the legislature."   

 

"Too often the health care issue and debate around the need for affordable, accessible and quality health care for all children and everyone -- is thought to be mutually exclusive to the rest of our society and economy," said Jim Duffett, Executive Director of the Campaign for Better Health Care.  "In fact health care is now the central lynchpin for our society and economy.  It is a fundamental moral underpinning of our society - mutual shared opportunities and shared responsibilities." 

 

Participants in the new program will pay monthly premiums and co-payments for doctors visits and co-insurance for prescriptions, but unlike private insurance that is too expensive for so many families when no employer-subsidy is available, the rates for All Kids coverage will be based on a family's income.  The state is able to offer All Kids insurance coverage at much lower than market rates for middle-income families by leveraging the significant negotiating and buying power it already has through Medicaid.  Reinforcing this point, national healthcare experts from the Urban Institute found that Illinois' proposal is 54 percent cheaper than private health insurance and that the state's administrative expenses were considerably lower than other insurers.

 

Through All Kids, a family with two children that earns between $40,000 and $59,999 a year will pay a $40 monthly premium per child, and a $10 co-pay per physician visit. A family with two children earning between $60,000 and $79,999 will pay a $70 monthly premium per child, and a $15 co-pay per physician visit.  However, there will be no co-pays for preventative care visits, such as annual immunizations and regular check ups and screenings for vision, hearing, appropriate development or preventative dental.  These premiums for middle-income families are significantly more affordable than typical private insurance premiums of $100 to $200 a month, or $2,400 per child annually.

 

The state will cover the difference between what parents contribute in monthly premiums and the actual cost of providing health care for each child, expected to be $45 million in the first year, with over $57 million in savings generated by implementing a primary care case management and disease management model (PCCM/DM) for participants in the state's FamilyCare and All Kids health care programs.  The savings are over 25 percent higher than the first year costs.  Under this new and improved health care delivery system, participants will choose a single primary physician who will manage their care by ensuring they get immunizations and other preventative health care services and avoid unnecessary emergency room visits and hospitalizations.  This also means that since one doctor is coordinating care, unnecessary duplication of diagnostic tests or conflicting prescriptions that may interact poorly can be avoided.  Patients with chronic conditions like asthma or diabetes will have a single care manager to make sure they are getting the treatments and ongoing care they need to avoid acute care.  Primary care physicians will make referrals to specialists for additional care or tests as needed. 

 

Over the past two and a half years, the Blagojevich Administration has worked to expand health coverage for low-income, working parents and their children.  Since January of 2003, 170,000 more children in Illinois received health insurance, and Illinois is now ranked as the second best state in the nation by the Kaiser Family Foundation for providing health care to children who need it (Illinois is also now the top ranked state in the nation for providing health care to adults who need it).

 

Despite these gains, there are still uninsured children in every corner of the state.  Based on adjusted 2003 Census data, approximately 253,000 children in Illinois do not have health insurance. Twelve percent of children in Cook County, the state's most populated county, are uninsured.  In Pulaski County at the southern tip of Illinois, nearly 15% of children lack health coverage.  In St. Clair County, 9.3% of children do not have health insurance.  In Sangamon County, home to Illinois' capitol, 8.6% of kids are not insured.  Even in suburban DuPage County, one of the twenty-five wealthiest counties in the United States, 7.2% of children have no health insurance.  

 

The Governor's All Kids program would offer children access to comprehensive health care, including doctor's visits, hospital stays, prescription drugs, vision care, dental care and medical devices like eye glasses and asthma inhalers.

 

Research shows that uninsured children suffer because they do not have access to adequate medical care.  For example:

 

·                    The Kaiser Family Foundation found that uninsured children are 70% less likely than children with insurance to receive medical care for conditions like ear infections, and 30% less likely to receive medical attention when they are injured. 

 

·                    A National Health Interview Survey found that 59% of uninsured children did not see a doctor for a check-up in the past year and 38% of children have no regular place to go for medical care.  These factors put uninsured children at higher risk for hospitalization or missed diagnoses of serious conditions.

 

By ensuring patients get adequate preventative care on the front end, fewer people will need expensive specialized care or emergency care for critical conditions.  In children, preventative care is especially important.  For example, infants with stomach flu (gastroenteritis) who receive appropriate primary care can avoid being hospitalized for dehydration.  Providing a timely exam and appropriate antibiotic treatment for children with ear infections (otitis media) can prevent chronic ear problems, loss of hearing and the need for surgically placed tubes to relieve fluid build up.  Treating children with bronchitis or minor lung infections in a primary care setting can help to avoid more expensive hospitalization treatment of pneumonia, including intravenous antibiotics and respiratory treatments.  And early identification and appropriate treatment of children who have chronic illnesses, such as asthma, will result in fewer expensive emergency room and inpatient care visits.     

 

Twenty-nine other states, including North Carolina, Oklahoma, New York, California, Texas, Pennsylvania and Louisiana, have realized significant savings by using this model for their Medicaid programs.  Based on independent analyses, the Department of Healthcare and Family Services conservatively estimates the state will save more than $57 million in the first year by implementing the PCCM/DM model in all HFS health programs but those that serve seniors and the blind.  Another analysis commissioned by the Illinois General Assembly earlier this year conducted by the Lewin Group estimated savings significantly higher than the state's more conservative estimates.

 

Evidence shows that in addition to lacking adequate medical care, children without health insurance are at a disadvantage in the classroom.  For example:

 

·                    According to a Florida Healthy Kids Annual Report in 1997, children who do not have health coverage are 25% more likely to miss school. 

 

·                    A California Health Status Assessment Project on children's health published in 2002 found that children who recently enrolled in health care saw their attendance and performance improve by 68%. 

 

·                    And a 2002 study in Vermont entitled Building Bridges to Healthy Kids and Better Students conducted by the Council of Chief State School Officers showed that children who started out without health insurance saw their reading scores more than double after getting health care.