Peachcare Taskforce Releases Initial Assessment of Options for Saving Peachcare

February 23, 2007

Atlanta, GA) – Lt. Governor Casey Cagle today praised the work of the Senate’s PeachCare Task Force and released an initial outline of some of the reform proposals the group considered.

 “The current PeachCare budget is over $176 million out of balance, due to the defective formula currently in place for federal funding.  Governor Perdue and Speaker Richardson have done an excellent job of confronting that challenge head-on and fighting hard for a fix to the federal formula,” said Lt. Governor Cagle.

 “The PeachCare Task Torce spent hours sifting through actuarial data, and consulting with the Department of Community Health and the private-sector CMOs that manage the program.   Chairman Goggans, Senator Hill, Senator Seabaugh, Senator Tate, Senator Williams and the staff of the Senate Budget and Evaluation Office spent hour after hour working on this issue, and their fast response under tight time constraints is deeply appreciated,” Cagle continued.

 “The reality is that the state cannot afford to make up a shortfall this large, and if the federal government does not step forward, we will be confronted with some very hard choices.  As legislators, we have a responsibility to look at options in light of this reality, and engage the people of Georgia in a conversation on saving PeachCare.  The work our Task Force did in considering specific proposals has provided an ideal starting point for this conversation,” added Task Force Chairman Greg Goggans.

“While each Task Force member has different opinions about how best to structure the program, the membership was unanimous in expressing their desire to make sure every citizen of our state understands the challenge we face as realistically as possible.  Each of us may ultimately advocate different directions and levels of government involvement as we debate reform, but we all agreed that getting the facts out on various reform proposals was absolutely critical,” Goggans continued.

Following are several specific scenarios the Task Force considered, along with some of the basic supporting data on each of them:

Step One:  The first step examined considers raising premiums to 1.5% of household income for all participants in the program, and assumes eligibility at current levels.  Currently, premiums range from .7% of income to 1.7% of income up to 235% of the federal poverty level, with children under the age of six exempted entirely.  The task force considered adopting a uniform premium set at 1.5% of income, and instituting a $25 co-payment for emergency room visits to encourage patients to seek more affordable treatment options for non-emergency problems.  The task force also believes that by negotiating cooperatively with the CMOs, we can create additional savings.  Presuming we take these steps, the projected impact would lower the PeachCare deficit from $176 million to roughly $100 million.

Step Two:  In the second scenario, the Task Force considered the impact of several additional steps to reduce the remaining deficit.  Specifically, it considered including basic dental coverage in the plan (exams, x-rays, preventative care), but making comprehensive dental and vision care an optional add-on to the basic PeachCare plan.  Depending on negotiations with CMOs and the availability of funding for the state share, resulting premiums for dental and vision coverage would range from $10 to $15 per month.  In essence, this would provide the same kind of coverage that recipients in employer-provided plans receive for dental and vision.

Step Three:  In the third scenario, the Task Force looked at the option of shifting the poorest children in the PeachCare program into the Medicaid program, specifically by raising the threshold for Medicaid in Georgia to cover up to 125% of the federal poverty level.  These children would pay no premiums, and only nominal co-pays, just as current Medicaid recipients do.  This step would lower costs to the state, and provide free coverage to the poorest children currently enrolled in PeachCare.  And, the overall number of beneficiaries receiving coverage at no cost would remain essentially stable, since scenario one would apply premiums to higher-income beneficiaries under the age of six.

Summary:  Taking all three of these steps would result in a projected deficit of less than $10 million.  The Task Force also considered the additional step of encouraging increased utilization of generic drugs.  Although actuarial data were not immediately available to provide an estimated savings for that possibility, it would most likely eliminate the remaining deficit.