Daniels unveils health-care proposal

INDIANAPOLIS | Gov. Mitch Daniels laid the groundwork Friday for next year's legislative health-care debate, rolling out a plan to insure up to 200,000 low-income adults by leveraging a cigarette tax hike.

The Republican governor did not say exactly how high he wants to raise the state's 55.5-cent-per-pack tax but said a 25-cent increase would provide coverage for 120,000 Hoosiers. A 50-cent hike, which would vault Indiana above Illinois' 98-cent rate, would be enough to insure 200,000 adults.

"We are not here to talk about taxes or revenue. We are here to talk about health," Daniels told an Indianapolis audience of state officials, health care professionals, lawmakers and anti-smoking advocates. "The higher the price of tobacco, the more people we can cover."

The initiative focuses on making preventive care, including mammograms, prostate exams and routine physicals, available to the working poor, who otherwise might not see a doctor until a serious ailment steers them to an emergency room.

Hoosiers who earn up to double the federal poverty line -- $40,000 for a family of four -- would be eligible for coverage, provided they are willing to make a tax-free co-payment of up to 5 percent of their annual income.

The proposal, the governor stressed, is not a comprehensive solution to Indiana's health-care woes, which are marked by high obesity and smoking rates and an uninsured population that exceeds 870,000, according to federal estimates.

The fate of the plan rests largely with state lawmakers, who were loathe to entertain a cigarette-tax hike when the governor suggested one earlier this year.

"I would not be adverse to even a dollar increase," said state Rep. Charlie, Brown, a Gary Democrat who expects to be named House Public Health Committee chairman when the General Assembly hold its annual organizational meeting next week.

House Minority Leader Brian Bosma, R-Indianapolis, said he believes bipartisan support could be found for a cigarette-tax hike if the proceeds are dedicated solely to health care.

House Speaker Pat Bauer, D-South Bend, called the governor's plan "a starting point" for debate but said lawmakers also must consider solutions to lower costs for those who have insurance but are struggling with the high premiums and prescription drug costs. Aside from those concerns, Democrats would like to see a solution that addresses Indiana's entire uninsured population.

Daniels proposes using the cigarette-tax revenue and participant co-pays to leverage federal Medicaid dollars, meaning the plan also would require federal approval and probably wouldn't take effect until January 2008.

The governor would use $24 million of the new cigarette money to more than triple spending on smoking cessation programs and allocate another $11 million to boost Indiana's rate of infant immunization, which currently ranks 12th worst in the nation.

Beyond those earmarks, a 25-cent cigarette tax increase would generate $95 million, enough to support a $480 million health-care network for 120,000, Daniels said. A 50-cent hike would bring in $172 million, which when matched with co-pays and existing state and federal dollars, translates to a $800-million program to insure 200,000 enrollees.

The governor's emphasis on preventive care drew praise from Methodist Hospitals, which sees a constant stream of uninsured patients at its Northlake Campus in Gary.

"The whole health-care delivery system is broken and needs to be fixed," said Ed Charbonneau, Methodist's interim president and CEO. "We applaud the governor and support the governor's effort to take a step in fixing the whole system. Conceptually, we support what he's doing but certainly recognize it as being one piece of a major puzzle."

As a so-called "safety-net" hospital for the uninsured, Methodist has endured a severe financial strain that is exacerbated by a slow reimbursement system administered by the state. Daniels wants to shift $50 million from the statewide hospital reimbursement system to his insurance plan.