Three-Way Split

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Medical Economics Feature - December 2005  

By  Ken Ortolon
Senior Editor  

Guidry News Service co-owner Linda Guidry was diagnosed with breast cancer in 1999. She and her husband had started their small business just a few years earlier. Health insurance for themselves, much less for their few employees, was not affordable.

While Ms. Guidry was able to pay for her care, her treatment created a serious financial burden. "I've gotten excellent care, and my prognosis has always been very good," she said, "but we just can't afford for that to happen again."

Help may be on the way for the Guidrys and thousands of other small businesses owners and employees in Galveston County. The University of Texas Medical Branch at Galveston (UTMB) recently sought federal approval to offer an innovative, low-cost health plan that uses government and private dollars to provide health care benefits to low-income workers throughout the county.

If approved, UTMB hopes to offer its "Three-Share Program" to between 3,000 and 5,000 Galveston County residents early next year. And early discussions with small business owners, employees, and local physicians make UTMB officials expect the program will be a hit. 

Dividing Into Thirds  

It's called three-share because premiums are divided three ways - the employer pays a third, the employee pays a third, and a third-party (usually a governmental entity) pays the rest.

Three-share or multi-share programs now operate in several states, including Florida, Michigan, West Virginia, and Ohio. Access Health, launched by the Muskegon Community Health Project in Muskegon, Mich., in 1999, is a three-share pioneer. Executive Director Vondie Moore Woodbury says it has helped save tax dollars by getting low-income workers out of Medicaid and other safety net programs. Health Access has about 1,500 enrollees, with premiums of $148 per month split among employers, employees, and the state of Michigan.

The UTMB program would be the first three-share plan in Texas. Barbara Breier, PhD, director of the UTMB Center to Eliminate Health Disparities, says the program would not compete with commercial insurers. It would cover those who have some resources to pay for health care but not enough for traditional coverage.

"It's aimed at small businesses, primarily those that employ 20 individuals or fewer. Businesses would qualify if they have not offered commercial insurance to their employees in the last 12 months. We don't want individuals to abandon their commercial product for this product."

Benefits would include 12 primary care and 20 mental health visits per year, limited pharmacy benefits, hospitalization, and x-ray and laboratory services. Hospitalization would be capped at $50,000 per year or $250,000 lifetime. 

The kicker is that only services offered within Galveston County and provided by physicians within UTMB's HMO network would be covered. The network is not limited to UTMB faculty physicians, but includes physicians throughout Galveston County.

Still, at a proposed $150 per month, the Three-Share Program would cost substantially less than most group health plans. The employer and employees would pay $50 each. The third share would come from Children's Health Insurance Program (CHIP) funds.

Federal law allows local governments to use unexpended CHIP dollars to cover low-income working families of children enrolled in CHIP and working adults without dependent children whose incomes are at or below 200 percent of the federal poverty level. That is currently $38,700 for a family of four.

Texas Health and Human Services Executive Commissioner Albert Hawkins approved UTMB's request to use CHIP funds for the Three-Share Program in September and forwarded it to the U.S. Centers for Medicare & Medicaid Services. 

Getting On Board  

Working with local chambers of commerce and the Galveston County Medical Society, UTMB has conducted extensive surveys to gauge interest in the program among local small business owners, employees, and physicians. So far, the feedback has been very positive, Dr. Breier says. "Eighty-two percent of the businesses surveyed responded very positively."

Most of those surveyed have been "mom and pop" businesses, such as print shops, dry cleaners, plumbers, electricians, day care centers, car washes, and other small operations that traditionally pay low wages and have not previously offered health benefits. To be eligible, a business must be located within Galveston County and its employees' median income must be less than $50,000 per year.

Bob Trask, owner of a real estate office in League City, says he is very interested in offering the program to his 23 employees.

UTMB Eyes Program to Cover the Working Uninsured

"In the real estate industry we don't really have a good health product that's available at a reasonable cost," he said. "This was a very exciting thing to me because it looked like something that my realtors could be covered by that would not be prohibitive as far as cost is concerned."

Ms. Guidry says she's interested in the program not only because she and her husband would have coverage, but also because it could help them recruit and retain employees. "We're at a point now where we really would like to keep at least one beat reporter and an editor on staff at all times, but if people are looking for work they're looking for something where they will have some benefits," she said. "That seems to be the most important thing that people are looking for."

The Galveston physician community also appears to support the plan. Endocrinologist Kevin McKinney, MD, who is on the UTMB faculty and serves as president of the Galveston County Medical Society, says the UTMB plan "is something we're pleased to see."

For community physicians, the primary concern with the program is that they have access to patients. UTMB has assured them they will if they join the HMO network.

Dr. McKinney says the proposed physician reimbursement rate of 115 percent of Medicaid is not great, but it is better than nothing. "A lot of people provide care in their offices for free," he said. "They feel an obligation to provide that care. This will at least put something … into their practice to help offset the cost of providing unsponsored care."

Ken Ortolon can be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by email at  Ken Ortolon.  


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