INDIANAPOLIS (November 17, 2006) - Governor Mitch Daniels today proposed a simple yet innovative health plan that would provide health insurance coverage for more than 100,000 Hoosiers, reduce smoking rates -- especially among kids -- and immunize more Indiana children. The health initiatives would be funded by an increase in the state's cigarette tax.

Support for the plan already has been expressed by a number of organizations, including the Indiana State Medical Association, the Indiana Minority Health Coalition, Methodist Hospitals (Gary and Merrillville), Clarian Health Partners and the Indiana Tobacco and Cessation Prevention Executive Board. U.S. Secretary of the Health and Human Services Michael Leavitt also applauded the governor's idea. (Complete comments at end of news release.)

The Governor's Plan for a Healthier Indiana would lead to:

• Protection of children from the dangers of smoking and other diseases
• Preventive care for more Hoosiers
• Peace of mind for thousands of Hoosiers who currently have no health insurance, and
• Personal responsibility to take control of health care decisions

"Indiana can't be a healthy state with the second highest rate of smoking in the country, and we can't lower our smoking rate when we sell some of the cheapest cigarettes in America," said Daniels.

Specifically, the governor has proposed a plan that would:

• Initiate an aggressive smoking cessation and reduction campaign, aimed especially at reducing the number of kids who smoke. The plan would provide $24 million more annually to the Indiana Tobacco and Prevention Cessation Trust Fund (IPTC) for local tobacco cessation and reduction programs. This amount, plus the current budget of $11 million, would bring IPTC funding to the level recommended by the Centers for Disease Control.
• Assure that children are fully immunized by age 2 with $11 million to expand access to vaccinations.
• Establish a program that offers health insurance to 100,000 or more low-income Hoosiers.

The plan would be funded by an increase in the state's cigarette tax - which is currently 55 1/2 cents per pack and the 36th lowest rate in the country -- and a variety of federal funds. The governor suggested an increase of at least 25 cents, but will ask the legislature to determine the precise amount. The number of uninsured who could receive coverage would go up dependent upon the size of the cigarette tax increase. With a 25-cent increase, it is estimated up to 120,000 people could receive coverage. With a 50-cent increase, about 200,000 could receive coverage.

"We've balanced the budget already through spending reductions and no tax increases. That will continue to be our approach," said Daniels. "Any new proceeds should go to promote the health of Hoosiers and for no other purpose."

The governor's three-part health insurance coverage plan would help Hoosiers who can least afford coverage. It would be available to those who earn less than 200 percent of the federal poverty level and who are without employer-sponsored health insurance.

"Everyday, Hoosiers all across Indiana are worried about how a health event they are not prepared to deal with financially could turn their lives upside down," said Daniels. "This plan is a start to give many more people protection and peace of mind while fostering more personal responsibility to make good decisions."

Here's how the plan would work:

• Each eligible Hoosier would receive preventive care of up to $500 annually, including physicals, smoking reduction, diabetes screening and other services.
• A $1,100 Personal Wellness Responsibility Account - or POWER account - would be established for each eligible person to use for medical costs, such as physician visits, prescriptions and diagnostic exams. Each account would be built with a combination of personal monetary contributions of up to 5 percent of gross income (the higher one's income, the higher the contribution) and state contributions. The POWER account would be controlled by the participant. If all recommended preventive services have been completed and more than $500 remains in the account at the end of each year, the individual can withdraw the excess funds or roll them over to the next year.
• Each person would be provided with $300,000 of annual insurance coverage with up to $1 million of lifetime coverage.

Because participants will control how they spend their preventive and POWER accounts, they will have more interest in finding services at the best possible price and search for better information about those services.

"I certainly share the values and vision expressed so well by Governor Daniels," said Michael Leavitt, Secretary of the U.S. Department of Health and Human Services. "I applaud his commitment and creativity to help address the compelling issue of the uninsured. I am enthusiastic about working with him to develop his ideas into action through flexibility now available through Medicaid and exploring the potential of a budget neutral waiver. We intend to move aggressively on the proposal."

An estimated 14.3 percent of Indiana's population, more than 550,000 individuals, currently has no health insurance, according to U.S. Census Bureau statistics.

To provide coverage to 120,000 Hoosiers, the total cost would be about $480 million, and would be paid with these funds: $95 million of cigarette tax proceeds, $80 million of individual contributions, $50 million from the Disproportionate Share Hospital Program (DSH) and $255 million in expected federal funds.

If the cost of cigarettes was raised by 50 cents per pack, coverage could provided to about 200,000 people using $172 million from cigarette tax revenue; $132 million from individual contributions, $50 million DSH and $446 million in expected federal funds.

If the plan receives approval by the General Assembly, the proposed effective date would be January 1, 2008.

A link to the governor's presentation may be found at this link:

A link to the fact sheets and other supporting documents may be found at this link:

"Regarding the idea behind the POWER account, a cooperative relationship between the state and individuals to tackle the problems that face public health is a must. By getting individuals engaged in their own health care decisions, these accounts make consumers better shoppers. This, in turn, will reduce health care costs.

"The ability for individuals to have coverage for preventive care and many other services, reduces disparities in the minority community. This population typically does not have easy access to health care, and by assisting these individuals with access to services early on instead of going to the emergency room when their disease or condition is in a late stage, disparities will be greatly reduced."

Nancy Jewell
President & CEO
Indiana Minority Health Coalition

"The Indiana State Medical Association commends Governor Daniels for starting the complex discussion about how to provide health coverage for our state's uninsured. The governor's proposal incorporates two measures the physician community has long supported: coverage for preventive care and an increase in the state's cigarette tax. The ISMA leadership looks forward to working with the administration, members of the legislature and others to create the most efficient program possible and ensure quality health care for people all across Indiana."

Vidya Kora, M.D.
President
Indiana State Medical Association

"We are grateful to Governor Daniels and Secretary Roob for their bold leadership and vision on proposing to make real progress in reducing the number of uninsured Hoosiers. They are committed to expand health care coverage, which is good for the working poor who can't afford to purchase health insurance, good for small businesses which struggle to be in a position to provide benefits for their employees, and good for the economic vitality of our state. I look forward to working with Governor Daniels and Secretary Roob to promote their creative efforts to provide health care coverage for the uninsured and vulnerable in our state."

Matt Gutwien
President & CEO
Marion County Health and Hospital Corporation

"Clarian Health shares Governor Daniels' vision to expand health insurance coverage for thousands of low-income Hoosier families who currently do not have access to employer-sponsored coverage. This plan incorporates innovative elements promoting personal responsibility, enabling preventive care and encouraging greater transparency among health care providers-all of which will contribute to improved health outcomes for Hoosiers."

Daniel F. Evans, Jr
President & CEO
Clarian Health Partners Inc.

"The nation's health care delivery system is broken and must be fixed. We applaud Governor Daniels' initiative aimed at providing insurance coverage for more than one hundred thousand currently uninsured Hoosiers. Conceptually, we support the program, recognizing that it is one piece of a much needed comprehensive health care overhaul."

Ed Charbonneau
President/CEO
The Methodist Hospitals (Gary and Merrillville)

"Indiana Tobacco Prevention and Cessation and our statewide network of over 1,600 local organizations involved in tobacco prevention applauds Governor Daniels' proposed cigarette tax increase because raising the price of cigarettes is a smart and proven public health solution to reduce smoking. The governor's plan to dedicate a portion of this tax to fully fund tobacco prevention and cessation at the level recommended by the Centers for Disease Control is a breath of fresh air for all Hoosiers."

Karla Sneegas
Executive Director
Indiana Tobacco Prevention and Cessation

"The Indiana Health and Hospital Association is pleased with Governor Daniels announcement today and looks forward to further development of the program that will provide health insurance coverage for Indiana citizens."

Ken Stella
President
Indiana Health and Hospital Association

"The Indiana Primary Health Care Association supports plans like the governor's that increase access to medical services and place an emphasis on preventive care."

Lisa Winternheimer
President and CEO
Indiana Primary Health Care Association

"The Indiana Immunization Coalition is pleased that Governor Daniels has included childhood immunizations as a key element of his health care initiative. Vaccines represent one of the best investments in public health, not only protecting the individual immunized, but the community as a whole. We look forward to working in partnership with the governor to achieve a common goal...saving children's lives."

Kelly Zachrich
Indiana Immunization Coalition

"I commend Governor Daniels on his newly released Plan for a Healthier Indiana. The plan addresses some of the most important - and costly - health care issues affecting Americans. This innovative approach seeks to protect children, encourage preventive care, provide health coverage for the uninsured and emphasize personal responsibility in making health care decisions. I am particularly pleased that the governor has prioritized reducing tobacco use, as the government is unduly burdened with the high costs of treating smoking-related illnesses. I share the governor's view that Medicaid reform is one of the most important issues in health care today, which is why I launched my Medicaid Makeover initiative."

Tommy G. Thompson
Secretary (former)
U.S. Department of Health and Human Services

"The Indiana Chamber applauds the concept outlined in The Governor's Plan for a Healthier Indiana because assistance in providing health insurance coverage for working Hoosiers is simply the right thing to do.

"Businesses and employees who already have insurance would also benefit as a result of the program. When the number of uninsured is lowered, the amount of uncompensated care provided by Indiana hospitals and health facilities will also decline. In turn, this reduces the cost shift to employers and employees with private insurance."

Kevin Brinegar
President
Indiana Chamber of Commerce

"I certainly share the values and vision expressed so well by Governor Daniels. I applaud his commitment and creativity to help address the compelling issue of the uninsured. I am enthusiastic about working with him to develop his ideas into action through flexibility now available through Medicaid and exploring the potential of a budget neutral waiver. We intend to move aggressively on the proposal."

Michael Leavitt
Secretary
U.S. Department of Health and Human Services