Issues in Estimating the Coverage and Cost Impacts of Public Insurance Expansion John Holahan November 10, 2004

Establishing the Baseline Eligibility – State-specific rules applied to Current Population Survey Enrollment – CPS, as adjusted for Medicaid undercount –Issues – how much of an undercount, how to adjust Need to Grow the Baseline to Reflect Current Law and Current Economy Eligibility – did rules change? Enrollment – estimate effect of rules change on enrollment – estimate effect of demographic or economic change

Need to Organize Population by Important Variables 1)Key demographics – children, parents, childless adults; income 2)Current coverage – employer sponsored, non group, Medicaid/SCHIP, other government, uninsured 3)Current eligibility for public coverage –Need to separate from those currently ineligible

Take Up Rates – How will Behavior Change in Response to New Policy Uninsured – previously ineligible – use take- up models to estimate share of new eligibles that would enroll –Previously eligible Non Group – previously ineligible –Previously eligible ESI – employer dropping –Firm drops –Firm continues to offer – employee dropping »Use crowd out literature

Other Issues Behavioral responses – To premiums – participation and price elasticity literature – To different benefit packages – To higher provider payments, access – To reduced stigma – To firewalls

Cost Per Person Medicaid cost per capita is high because of adverse selection and health status, broad benefits and low rates Expansion population will likely be healthier; benefit package may be better, provider payment rates higher Estimate equation to explain relationship between expenditures and health status, type of insurance coverage and other factors Use health status coefficients to adjust Medicaid cost per enrollee Adjust for administrative costs and inflation

Table 1 Incremental Reform Alternative Options for Expanding Medicaid/SCHIP All Adults to 100% Parents to 200% All Adults to 200% Baseline Uninsured11.6m22.9m Take Up of Subsidy6.2m5.4m14.4m Previously ESI.4m1.1m2.4m Previously Non Group.8m.5m1.8m Previously Uninsured5.0m3.8m10.2m Cost to Government$16.2b$11.2b$34.1b Crowd Out Rate

Table 2 Incremental Reform Expand Coverage to All Adults to 200% FPL ChildrenParents Non Parents All Government Cost$3.0b$8.9b$22.2b$34.1b Cost Per Insured$1,389$2,478$2,579$2,376 Cost Per Newly Insured $2,472$3,596$3,535$3,422

Table 3 Incremental Reform Expand Coverage to All Adults to 200% FPL ChildrenParents Non Parents All Medicaid/SCHIP2.1m3.6m8.6m14.4m ESI-.7m-.1m-1.0m-2.4m Non Group-.2m-.3m-1.3m-1.8m Uninsured-1.2m-2.6m-6.3m-10.2m Take Up of Subsidy6.7%18.9%29.1%17.8% Previously ESI9.0%10.9%12.9%10.9% Previously Non Group25.5%45.6%49.0%44.1% Previously Uninsured24.4%50.5%49.9%44.3%

Table 4 Incremental Reform Expand Coverage to 200% FPL Effects by Income < All Take Up of Subsidy3.4m3.0m4.7m3.3m14.4m Previously ESI.3m.4m.8m1.0m2.4m Previously Non Group.4m.6m.4m1.8m Previously Uninsured2.7m2.2m3.3m1.9m10.2m Cost to Government$8.9b$7.7b$12.0b$5.6b$34.1b Crowd Out Rate