The ABCs of Children’s Health and Federal Reform: Understanding the Potential Impact of PPACA Jean Marie Abraham, Ph.D. Division of Health Policy & Management School of Public Health University of Minnesota October 15, 2010

Outline Access to Coverage by Children –Why is it important for children’s health? –What are the attributes of uninsured children and their families? –How will the coverage expansion and mandate parameters under PPACA affect them? Burden of Health Care Costs –How should we think about health care spending, underinsurance, and burden? –How might PPACA provisions likely affect these outcomes? Care Provision –What is the potential effect of expanding coverage on demand for care by previously uninsured children? –What are some other PPACA provisions likely to affect children’s receipt of health care and outcomes?

PPACA: The Process 6/09-9/09 11/09-12/09 March 2010

Widespread Impact Uninsured Individuals who buy health insurance on their own People with employer-sponsored insurance Medicare beneficiaries Healthcare providers Health insurers Taxpayers

Access to Coverage by Children

Why is insurance important? Financial Access to Care –Preventive care for children Well-child visits –Assessing development –Administering immunizations –Educating parents and children about safety, lifestyle, and development –Acute care More timely access –Potential for reduced morbidity Asthma, Mental health, Diabetes

Children’s Insurance Status, 2008 Source: 2009 ASEC Supplement to Current Population Survey - KCMU/Urban Institute Analysis.

Children’s Demographics by Full-year Uninsured Status Full-year UninsuredNot Full-year Uninsured Age 0 to 5*19.2%31.6% Age 6 to 12*34.5%36.7% Age 13 to 18*46.3%31.8% Female47.7%48.9% White79.8%75.6% Black12.6%16.4% Asian4%4.5% Hispanic*38.9%20% Live in married household*60.5%66.9% Number of household members*3.794 Source: Author’s analysis of Pooled MEPS Household Component * Indicates statistically different in multivariate analysis of Prob(FY uninsured)

Children’s Household Income Source: Author’s analysis of MEPS Household Component

Coverage Expansion in 2014 Medicaid –Expand eligibility to all individuals in families earning less than 133% FPL –Children Current eligibility varies by state, ranging from 100% FPL to 300% FPL 20 states directly affected –Adults Eligibility varies by pregnancy, working parents, childless adults (not covered in 45 states) –CBO projected net increase of 16 million by 2019

Coverage Expansion in 2014 Exchanges –Organized marketplace for individually purchased and small employer coverage –Functions Certify qualified health plans (e.g., marketing, provider choice, quality) Determine open enrollment period Review premium rate increases Standardize enrollment process Provide employers with price and quality information on available plans in standard format Create a web portal to shop

Coverage Expansion in 2014 Exchange-based premium assistance credits –Individuals with family incomes of 133% FPL– 400% FPL who do not have an offer of employer-sponsored insurance –Subsidies based on a sliding-scale 3%-9.5% of income is maximum dollar amount families would pay for coverage Tied to the “Silver plan” (70% actuarial value) –Premium rating reforms Modified community rating Guaranteed issue and renewability – CBO projects a net increase of 24 million in Exchanges

Individual Mandate in 2014 U.S. citizens and legal residents must have qualifying health coverage Tax penalty the greater of $695 per year up to 3 times that amount for a family or 2.5% of household income Phased in through 2016 Exemptions –Financial hardship waiver if lowest cost plan is more than 8% of income –< 3 month gaps –Religious objections, –Prisoners –Undocumented immigrants

Increased Regulation of Private Insurance (2010) No lifetime limits on benefits No ‘unreasonable’ annual limits No exclusions or delays in coverage for particular services for children with pre- existing conditions Require qualified health plans to provide certain preventive services with zero cost- sharing.

Burden of Health Care Spending for Families with Children

Spending on Health Care Types –Medical care and Premiums Research literature –Underinsurance “Adequacy” of coverage Spending on medical care relative to income –Financial Burden Spending on medical care and insurance premiums relative to income Challenges –No consensus on measurement –Heterogeneity by family attributes and over time

Underinsurance Kogan et al., NEJM, 2010 –National Survey of Children’s Health in 2007 –Stated response regarding Does child’s health insurance offer benefits or cover services that meet his or her needs? Does child see providers he/she needs? How often are costs reasonable, conditional on answering that they pay money for care? –Findings 22.7% of U.S. children underinsured –Older, Hispanic, Private Insurance, Special Needs Of those underinsured –11.6% had no preventive care visit –32% reported difficulty obtaining referrals for needed care (among those who needed them)

Financial Burden Banthin, Cunningham, and Bernard, Health Affairs, 2008 –Methods MEPS Doesn’t restrict to families with children High out-of-pocket burden as spending more than 10% of after-tax family income on medical expenses and premiums –Findings 17.0% of employer-based population in 2004

PPACA Provisions Affecting Burden Privately Insured –Exchange-based enrollment OOP cost-sharing subsidies for families earning less than 200% FPL Higher income levels may obtain coverage given the mandate, but face increased burden –Family of 4 making 300% FPL ($66,000) paying $6,270 for a family coverage plan. –Employer-based coverage Annual real growth in premiums is about 5% Cost-sharing provisions are increasing Financial burden will likely continue to rise given existing trends and because of increased regulation on benefit design

Provision of Medical Care

Increased demand for services How much additional care will uninsured children demand once they get coverage? –Evidence from state coverage expansions of Medicaid and CHIP (Buchmueller et al. 2005) Outpatient visits (Banthin & Selden, 2003; Currie, 2000; Marquis & Long, 1995) –+1 visit per year on average Inpatient utilization –Small demand response »Medicaid eligibility raises the probability of inpatient hospitalization by 4%

Potential increase in children’s demand for medical care given PPACA Hofer, Abraham, and Moscovice (working paper, 2010) –Estimate an empirical model of utilization for primary care visits using MEPS –Predict impact of the coverage expansion on visits Overall increase in U.S. in 2019 –23.3 million visits (7.5% increase) »20 million by adults »3.3 million are visits by children Large state variation –5,900 additional primary care providers

Other Provisions Affecting Care Medicaid –Medicaid payment rates increased in 2013/2014 to Medicare levels Improve access –Quality Measurement Program Compare provider performance –Pediatric Accountable Care Organization Demonstration Alignment of providers’ incentives across continuum of care

Other Provisions Maternal, Infant, and Early Childhood Home Visitation Programs (Sec. 2951) –Statewide needs assessment –State grants

Other Provisions School-based health centers (Sec. 4101) –Comprehensive primary health services during school hours to children and adolescents and 24 hour on-call system –$50 million/ year for –Priority communities High barriers to access High per capita numbers of children who are uninsured, underinsured, or enrolled in public insurance

Concluding Remarks PPACA is going to “change the game” –Coverage expansion will improve financial access for over 7 million full-year uninsured children –Population-specific burden effects –Expected increase in demand for care Uncertainty regarding implementation and impact –Administrative rule-making –State government responses –Insurers, Providers, and Consumers –Constitutionality of the mandate and Medicaid expansion Coverage first, cost second approach

Resources on PPACA Official Federal government website – Kaiser Family Foundation – Democratic Policy Committee (U.S. Senate) – U.S. Chamber of Commerce –

Thank you! Jean Marie Abraham, Ph.D. Division of Health Policy and Management School of Public Health University of Minnesota Phone: (612)