The National Medicaid Congress Strategies for Addressing the Uninsured June 14, 2007 Scott Keefer Director Center for Policy and Research America’s Health Insurance Plans

Recent Trends in Health Insurance Premiums Federal Employees Health Benefits Plan Mercer National Health Expenditures Kaiser Family Foundation

National Health Expenditures vs. GDP Growth Nominal GDP

for Congress to address next year? Providing access to affordable health care is the top domestic priority. Question: Which of the following issues would you say should be the top domestic priority for Congress to address next year? Providing access to affordable health care Improving the quality of our educational system Combating illegal immigration Fighting crime & drugs Cutting taxes Reducing the deficit Protecting the environment

… with Americans agreeing regardless of their party affiliation. Percent saying Congress and state legislatures should do more to extend health insurance coverage Question: Recognizing the importance of many other problems as well as efforts to cut the federal budget deficit, over the next five years do you think Congress and the state legislatures should do more, do less, or do about the same on extending health insurance coverage to the uninsured?

Growth In Uninsured: Low-Middle and Moderate Incomes 2004 2005 Uninsured (millions) Total Population 43.5 44.8 Children 7.7 8.1 Uninsured Rates 14.9% 15.3% Low Income 24.1% 24.2% Low-Moderate Income 19.2% 20.1% Middle Income 12.3% 13.3% Source: U.S. Census Bureau; revised estimates at www.census.gov .

Health Costs Outpace Median Income in Long Run National Per Capita Health Expenditures as a Percentage of Median Household Income Key Issue: Long-standing trend of household health premium costs exceeding income growth is at the heart of the uninsured problem and will lead to greater levels of uninsured in the future absent policy change. Sources: Income, Poverty, and Health Insurance Coverage in the United States: 2004, Census Bureau, Table A-1, and CMS National Health Expenditure Data (www.cms.gov).

Employee Take Up Rates Are Falling Percentage of Employees of Large Employers Accepting Offer of Health Insurance Coverage 87% 81% Source: Agency for Healthcare Quality and Research.

Insurance Coverage Status by Firm Size Probability of Public Insurance or Lack of Insurance Inversely Related to Firm Size Public Insurance Uninsured Source: Notes, Employee Benefit Research Institute, Vol. 26, No. 10, October 2005, Figure 3.

U.S. Job and Health Insurance Turnover Average Number of Jobs Held by U.S. Workers Between the Ages of 18 and 40 10.5 Number of Americans Switching Private Health Insurance Plans Annually ~35 Million (17%) Sources: U.S. Bureau of Labor Statistics and “Health Insurance Switching: Choice or Circumstance?”, Peter J. Cunningham and Linda Kohn, Health Affairs, May/June 2000

Involuntary Insurance Switching Is Common Reasons Cited for Health Insurance Switching Two-thirds of switches are involuntary. Source: “Health Insurance Switching: Choice or Circumstance?”, Peter J. Cunningham and Linda Kohn, Health Affairs, May/June 2000

Short Uninsurance Spells Are Common Length of Uninsurance Spells, 1996-99 Millions 84.8 Million Persons Were Uninsured at Some Point 10.1 Million Were Always Uninsured Source: “Battery-Powered Health Insurance? Stability in Coverage of the Uninsured,” Pamela Farley Short and Deborah R. Graefe, Health Affairs, November/December 2003

AHIP Proposal to Expand Health Insurance to All Americans SCHIP up to 200% FPL Medicaid up to 100% FPL Child Health Credit up to 300% FPL Universal Health Account with subsidies up to 400% FPL State Performance Grant

AHIP: Reauthorize and Expand SCHIP Increase SCHIP funding to help states cover projected shortfalls (at minimum funding to cover all children to 200 percent of FPL) Improve the environment for Premium Assistance Provide incentive funding for improving quality

AHIP: New Health Tax Credit for Children Encourage parents to maintain coverage for their children Proposal: $200 per child / $500 per family

AHIP: Tax-Free Universal Health Account Tax-free individual contributions Federal subsidies up to 400% FPL Employer contributions Pays for any type of health insurance Promotes portability Promotes continuity of coverage Serves as a “125”

AHIP: State Performance Grant Program $50 billion seed money over 10 years to assist states in expanding access States would submit plans to achieve coverage goals: Ensure affordable coverage Ensure availability of coverage Establish Medicaid to FPL Improve quality and reducing costs Establish healthy living incentives

tell me if you support or oppose each idea. For each proposal, majority support extends to Americans of each party. Ranked by Percent “Support” Rep Ind Dem Giving a federal tax credit to low and moderate income parents 83% 65% 63% 75% 54% 66% 59% 83% 75% 67% 69% 64% 88% 89% 77% 68% 82% 65% Increasing funding for health insurance program for children Providing grants from the federal government Having the federal government match contributions Giving federal tax deduction for purchase of private insurance Expanding the federal government’s Medicaid program Establishing a tax-free Health Account for all Americans Question: Now I am going to read some different ideas that some people have proposed for providing health care coverage for people who are currently uninsured. Would you please tell me if you support or oppose each idea.

State-Based Reform: Massachusetts Massachusetts Uninsured by Income (as a % of poverty) Medicaid-eligible but not enrolled Outreach Mandatory enrollment < 100% 106,000 Individual Mandate to Carry Health Insurance > 300% 204,000 Affordable Products Sliding Scale Premium Subsidies Insurance Connector 100%-300% 150,000 Affordable Products Insurance Connector Total Uninsured Population = 460,000 (7.2% of total) Total Population = 6,400,000 Source: Presentation to the Medicaid Commission by Governor Mitt Romney, January 26, 2006

Schwarzenegger Proposal Individual Mandate with Subsidies Medi-Cal or SCHIP to 300% of Poverty for Kids Subsidies under 250% of Poverty Purchasing Pool Employers With 10+ Workers: Coverage or “In Lieu” Fee of 4% of Payroll Increased Medi-Cal Reimbursement “Coverage Dividend:” 4% of Revenues for Hospitals; 2% for Physicians Section 125 and HSA Contribution Improvements Cost, Quality, Wellness Provisions

Environment for Reform is Less Predictable than Recent History State-Based Reforms SCHIP Reauthorization and Funding Bush Standard Deduction Proposal 2008 Presidential Positioning Hang Ups: Coverage First vs. Reform as a Pre-Condition? All-At-Once vs. Framework for Continuous Progress? Altman’s Law? (2nd Favorite Alternative is Status Quo) Public vs. Private or Public/Private Partnership? Employer System vs. Individualized Private System? Expansive Minimum Benefits vs. Affordability