STATE RESIDENT EXECUTIVE SUMMARY

State Resident-Based Health Insurance (SRHI) addresses the failures of the current U.S. health care system by combining features of both public and private systems: insurance plans will still be operated privately, but plans will be negotiated by the states according to state regulations. SRHI successfully meets the objectives outlined in Kathleen O'Connor's "Health Care Magna Carta of Rights and Responsibilities." SRHI is a decentralized system in which the federal government delegates responsibility to and oversees the states, thus setting central standards while offering local flexibility. Under SRHI, everyone will have access to adequate preventive, diagnostic, and therapeutic services that will be provided using traditional outlets such as primary care providers as well as a network of public health centers. Features of SRHI such as computerization of hospital systems and evidence based guidelines for the lowest-premium plans ensure greater efficiency and cost-effectiveness, thus lowering the cost and increasing the quality of health care.

SRHI is modeled after the Federal Employees Health Benefits Program (FEHBP) and will build upon each state's en~ployee benefits plan. The federal government will collect income taxes, payroll taxes, and general revenue; distribute money to states and territories; and regulate SRHI in each state. The state governments will use federal money, revenue from state taxes, and premium contributions of residents and businesses to support a state-based system of insurance. The states will negotiate with health insurers to provide a number of health insurance plans from which state residents can choose.

Employers will pay a percentage of the premium of each of their employees designated as the primary policyholder based on the employee's employment time status. The amount each employer contributes per employee will be calculated by each state based on the medianly priced premium and prorated for employees working less than full-time. Small businesses, as defined by each state, can apply to receive subsidies for premium payments.

Residents will choose one of the state negotiated plans. Residents will pay a premium; they will pay a larger premium if they select a more expensive plan. Each resident will be responsible for a sliding-scale co-payment that is reflective of income. Unemployed residents who are not the spouse or child of an employed resident will select from among the plans offered in the state, but will not have the benefit of an employer contribution to their premium. Impoverished families and individuals, whether or not they are employed, may receive state assistance with paying their premiums and deductibles but will have less plan choice than other residents. During an implementation period of seven years, Medicaid and Medicare will be eliminated and their populations will be integrated into the SRHI system.

SRHI is therefore a solution to the problems of the current health care system that ensures everyone access to health care services through health insurance coverage.

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