1. 1 Blueprint for Universal Coverage in New York Danielle Holahan, United Hospital Fund Cathy Schoen, The Commonwealth Fund December 18, 2006 THE COMMONWEALTH FUND

2. 2 Blueprint for Universal Coverage in New York Two-year collaboration of the United Hospital Fund and The Commonwealth Fund to explore and model approaches for achieving universal coverage –Five policy roundtable meetings with key stakeholders –Contracted with The Lewin Group to model coverage expansion options

3. 3 The Problem: New York’s Uninsured, Unstably Insured, and Underinsured 2.8 million New Yorkers are uninsured Many insured New Yorkers have unstable, uncertain, or increasingly unaffordable coverage Some currently insured New Yorkers lack meaningful access to care and financial protection

4. 4 51% 19% 15% Current Distribution Employer- Sponsored 9.7 m Distribution of Health Insurance Coverage New York State, 2006 Source: Lewin Group estimates based on 2005 Current Population Survey data trended forward to 2006. Note: Data include persons of all ages. “Medicare and Other Public” category includes dual eligibles and persons covered by CHAMPUS. Numbers may not sum to 100% due to rounding. 19.1 million people 2% 13%.5 m 3.6 m 2.5 m 2.8 m

5. 5 Composition of New York’s Uninsured 2.8 million uninsured 23% 36% 41% 1.0m 1.2 m 0.6m Source: Lewin Group estimates based on 2005 Current Population Survey data trended forward to 2006. Note: Data include persons of all ages. Numbers may not sum to 100% due to rounding.

6. 6 Principles for Reform Access and affordability for all Administrative simplicity Stability of coverage Shared responsibility Continuity with existing programs Choice Pooled risk Efficiency and quality

7. 7 Blueprint Building Blocks Public Programs –Simplification –Eligibility Expansion –Family Health Plus “Buy-In” Purchasing Entity –Administer the Family Health Plus “buy-in” –Make coverage available to individuals at group rates Mandates –Two versions of employer assessment for those not providing coverage –Individual mandate, with income protection

8. 8 The Lewin Group’s Health Benefits Simulation Model Household and employer data Predicts coverage impacts Estimates financial responsibility

9. 9 Key Modeling Assumptions The estimated impact of simplification of public program procedures is limited by the available evidence No waiting period to enroll into subsidized coverage The “Insurance Exchange” would provide a choice of coverage options. For modeling purposes, only a buy-in to Family Health Plus was estimated Employer Modeling: –Employers offer coverage to attract and retain workers –Some employers drop ESI or employees shift if other coverage would be more affordable –Incorporates public program changes

10. 10 Overview of Results Public program changes achieve a one-third reduction in the uninsured Significant subsidies are needed to gain participation and protection of low-income persons Universal coverage requires mandatory features –Employer mandates alone are not enough –Individual mandates are necessary for universal coverage

11. 11 Blueprint: Public Program Changes Simplification –Reform application and renewal procedures in order to enroll and retain those who are currently eligible but uninsured Family Health Plus Eligibility Expansion –Expand Family Health Plus (FHP) eligibility to 150% FPL for childless adults Family Health Plus Buy-in –Allow people with income between 150-300% FPL to buy-in to FHP with sliding scale premium assistance

12. 12 Results: Public Program Changes Combined Covers 840,000 previously uninsured New Yorkers Improves coverage for low-income New Yorkers The combined result of all public program changes is: –950,000 enroll in Medicaid/FHP with full premium support –1.5 million “buy-in” to Family Health Plus –Almost half of new Medicaid enrollees previously had private coverage –Almost three-quarters of Family Health Plus buy-in enrollees previously had private coverage Net Cost: $1.7b –Government: $4.8b state, $0.8b federal –Employers: -$4.4b –Families: $0.5b Potential Offsets: –State costs could be reduced if the federal government matched state spending for the Family Health Plus expansion and/or buy-in

13. 13 51% 19% 15% 43% Current DistributionPost-Reform Employer- Sponsored 8.3 m Employer- Sponsored 9.7 m Distribution of Health Insurance Coverage, Before and After Reform: Combined Public Program Changes Note: “Post-Reform” scenario includes the combined administrative simplification, expansion of Family Health Plus to 150% FPL, and subsidized buy-in to Family Health Plus (150-300% FPL). “Medicare and Other Public” category includes dual eligibles and persons covered by CHAMPUS. Data include persons of all ages. Numbers may not sum to 100% due to rounding. 19.1 million people 2% 13% 2% 24% 8% 13% 10%.3 m 4.5 m.5 m 3.6 m 2.5 m 2.8 m 1.5m 2.5 m 2.0 m Medicaid/ FHP/CHP FHP Buy-In (through Insurance Exchange) Directly Purchased

14. 14 Employer- Sponsored Uninsured Medicaid/ SCHIP/FHP Coverage Shifts: Public Program Changes Combined Note: Includes coverage shifts for combined public reforms (administrative simplification, expansion of FHPlus to 150% FPL, and buy-in to FHPlus) compared with current law. FHPlus Buy-In Directly Purchased Change in number of persons (millions) 840,000 newly insured; 2.0 million remain uninsured

15. 15 State Family Federal Net Change in Spending by Payer: Combined Public Program Changes (in billions) Note: Net costs reflect change over current spending on health insurance. Employer billions Total Net Costs = $1.7b

16. 16 Coverage Mandates Mandates are necessary to achieve universal coverage and finance the expansion –2 million remain uninsured after public program changes –Employers realize significant savings without other provisions in place Individual mandate is necessary to assure take-up of coverage offered and ultimately to achieve universal coverage Employer requirements raise the revenue needed to help fund the coverage expansions

17. 17 Applying A Modified Massachusetts Model to New York

18. 18 Public Program Changes Simplification reforms, FHP expansion, FHP buy-in Purchasing Entity Buy-in and Insurance Exchange Individual Mandate Everyone in New York State is required to purchase health insurance –Mandate is enforced through the tax system –Individuals are auto-enrolled and charged the premium owed Income protection: –Persons with income below 400% FPL would pay no more than 8% of income –Persons with income above 400% FPL would pay no more than 10% of income Modest Employer Assessment Employers with 10+ workers that do not provide health insurance and contribute at least 60% of premium will be required to pay a modest assessment of $400/worker Employees could purchase coverage through a new “Insurance Exchange” with income protection Public Program Changes Combined with Individual Mandate and Modest Employer Assessment

19. 19 Results: Public Program Changes Combined with Individual Mandate and Modest Employer Assessment Covers 2.4 million of 2.8 million previously uninsured New Yorkers –Reach universal coverage with mandates Few employers are induced to offer coverage because the employer assessment for not offering coverage is small Raises $418 million in employer assessments Net Cost: $4.1b –Government: $5.5b state, $1.2b federal –Employers: - $3.2b Currently insuring employers: -$3.6b Currently non-insuring employers: $400m –Families: $0.6b

20. 20 51% 19% 15% 45% Current DistributionPost-Reform Employer- Sponsored 8.7 m Employer- Sponsored 9.7 m Distribution of Health Insurance Coverage, Before and After Reform: Public Program Changes Combined with Individual Mandate and Modest Employer Assessment Note: “Post-Reform” scenario includes administrative simplification, expansion of Family Health Plus to 150% FPL, subsidized buy-in to Family Health Plus (150-300% FPL), individual mandate, and modest employer assessment. “Medicare and Other Public” category includes dual eligibles and persons covered by CHAMPUS. Data include persons of all ages. Numbers may not sum to 100% due to rounding. 19.1 million people 2% 13% 2% 26% 12% 13% 2%.3 m 5.0 m.5 m 3.6 m 2.5 m 2.8 m 2.2 m 2.5 m.4 m Medicaid/ FHP/CHP Insurance Exchange + FHP Buy-in Directly Purchased

21. 21 43% 24% 10% 45% Post Reform: Public ChangesPost-Reform: Public Changes, Individual Mandate, Modest Employer Assessment Employer- Sponsored 8.7 m Employer- Sponsored 8.3 m Distribution of Health Insurance Coverage, Before and After Reform: Public Program Changes Alone Compared with Public Program Changes, Individual Mandate, and Modest Employer Assessment Note: “Public Changes” includes the combined administrative simplification, expansion of Family Health Plus to 150% FPL, and subsidized buy-in to Family Health Plus (150-300% FPL). “Medicare and Other Public” category includes dual eligibles and persons covered by CHAMPUS. Data include persons of all ages. Numbers may not sum to 100% due to rounding. 19.1 million people 2% 13% 2% 26% 12% 13% 2%.3 m 5.0m 1.5 m 4.5 m 2.5 m 2.0 m 2.2m 2.5 m.4 m Medicaid/ FHP/CHP Insurance Exchange Directly Purchased 8% FHP Buy-In (through Insurance Exchange) Directly Purchased.3m

22. 22 Coverage Shifts: Public Program Changes, Individual Mandate, and Modest Employer Assessment Note: Includes coverage shifts for combined public reforms (administrative simplification, expansion of FHPlus to 150% FPL, and buy-in to FHPlus), modest employer assessment, and individual mandate compared with current law. Change in number of persons (millions) 2.4 million are newly insured; 390,000 remain uninsured Employer- Sponsored Uninsured Medicaid/ SCHIP/FHP FHPlus Buy-In Directly Purchased

23. 23 Net Change in Spending by Payer: Public Program Changes, Individual Mandate, and Modest Employer Assessment (in billions) Note: Includes costs for combined public reforms (administrative simplification, expansion of FHPlus to 150% FPL, and buy-in to FHPlus), modest employer assessment, and individual mandate. Net costs reflect change over current spending on health insurance. billions Total Net Costs = $4.1b State Family Federal Employer

24. 24 Public Program Changes Combined with Individual Mandate and Employer Pay-or-Play

25. 25 Public Program Changes Simplification reforms, FHP expansion, FHP buy-in Purchasing Entity Buy-in and Insurance Exchange Individual Mandate Everyone in New York State is required to purchase health insurance –Mandate is enforced through the tax system –Individuals are auto-enrolled into coverage and charged the premium owed Income protection: –Persons with income below 400% FPL would pay no more than 8% of income –Persons with income above 400% FPL would pay no more than 10% of income “Pay-or-Play” Employer Requirement Employers with 10+ workers would be required to pay an 8% payroll tax. A credit would be given to employers that provide health insurance and contribute at least 60% of premium. Employees could purchase coverage through a new “Insurance Exchange” with income protection Public Program Changes Combined with Individual Mandate and Pay-or-Play

26. 26 Results: Public Program Changes Combined with Individual Mandate and Pay-or-Play Covers 2.4 million of 2.8 million previously uninsured New Yorkers –Reach universal coverage with mandates Compared with an individual mandate alone or modest employer assessment, more employers offer ESI with the pay-or-play assessment Raises $1 billion in employer assessments Net Cost: $4.1b –Government: $4b state, $1b federal –Employers: -$0.6b Currently Insuring Employers: -$1.7b Currently Non-insuring Employers: $1.1b –Families: -$0.3b

27. 27 51% 19% 15% 49% Current DistributionPost-Reform Employer- Sponsored 9.3 m Employer- Sponsored 9.7 m Distribution of Health Insurance Coverage, Before and After Reform: Public Program Changes Combined with Individual Mandate and Employer Pay-or-Play Note: “Post-Reform” scenario includes administrative simplification, expansion of Family Health Plus to 150% FPL, subsidized buy-in to Family Health Plus (150-300% FPL), individual mandate, and pay-or-play assessment. “Medicare and Other Public” category includes dual eligibles and persons covered by CHAMPUS. Data include persons of all ages. Numbers may not sum to 100% due to rounding. 19.1 million people 2% 13% 1% 25% 9% 13% 2%.3 m 4.8 m.5 m 3.6 m 2.5 m 2.8 m 1.8 m 2.5 m.4 m Medicaid/ FHP/CHP Insurance Exchange + FHP Buy-in Directly Purchased

28. 28 43% 24% 10% 49% Post Reform: Public Changes Post-Reform: Public Changes, Employer Pay-or-Play and Individual Mandate Employer- Sponsored 9.3 m Employer- Sponsored 8.3 m Distribution of Health Insurance Coverage, Before and After Reform: Public Program Changes Alone Compared with Public Program Changes, Individual Mandate, and Employer Pay-or-Play Note: “Public Changes” includes the combined administrative simplification, expansion of Family Health Plus to 150% FPL, and subsidized buy-in to Family Health Plus (150-300% FPL). “Medicare and Other Public” category includes dual eligibles and persons covered by CHAMPUS. Data include persons of all ages. Numbers may not sum to 100% due to rounding. 19.1 million people 2% 13% 1% 25% 9% 13% 2%.3 m 4.8m 1.5 m 4.5 m 2.5 m 2.0 m 1.8m 2.5 m.4 m Medicaid/ FHP/CHP Insurance Exchange Directly Purchased 8% FHP Buy-In (through Insurance Exchange) Directly Purchased.3m

29. 29 Coverage Shifts: Public Program Changes Combined with Individual Mandate and Pay-or-Play Note: Includes coverage shifts for combined public reforms (administrative simplification, expansion of FHPlus to 150% FPL, and buy-in to FHPlus), individual mandate, and employer pay-or-play compared with current law. Change in number of persons (millions) 2.4 million newly insured; 360,000 remain uninsured Employer- Sponsored Uninsured Medicaid/ SCHIP/FHP FHPlus Buy-In Directly Purchased

30. 30 Net Change in Spending by Payer: Public Program Changes Combined with Individual Mandate and Pay-or-Play (in billions) Note: Includes costs for combined public reforms (administrative simplification, expansion of FHPlus to 150% FPL, and buy-in to FHPlus), individual mandate, and employer pay-or-play. Net costs reflect change over current spending on health insurance. billions Total Net Costs = $4.1b State Family Federal Employer

31. 31 Overview of Results Public Program Changes Alone Public Program Changes with Individual Mandate and Modest Employer Assessment Public Program Changes with Individual Mandate and Employer Pay-or-Play Uninsured -800,000-2,400,000 Medicaid/FHP 1,000,0001,400,0001,300,000 FHP Buy-In/ Insurance Exchange 1,500,0002,200,0001,800,000 Employer -1,500,000-1,100,000-400,000 Net State Spending $4.8 billion$5.5 billion$4 billion Note: Numbers do not sum to totals because directly purchased coverage is not shown.

32. 32 The Net Cost of Universal Coverage in New York Total health care spending in New York today is $156 billion The estimated net cost of universal coverage, approximately $4 billion, would increase spending by 2.6% Additional state revenues would be needed Financing Options include: Reallocate spending on the uninsured from institutional subsidies toward coverage –In 2005, New York state and local governments spent $1.3 billion on uncompensated care –The federal government spent $942 million in federal matching payments on bad debt and charity care for the uninsured* Maximize federal financial participation: –Family Health Plus expansion for childless adults –Family Health Plus buy-in to 300% FPL Lower insurance administrative costs in the Exchange could also result in savings *Source: R.R. Bovbjerg, S. Dorn, J. Hadley, J. Holahan, D.M. Miller, “Caring for the Uninsured in New York: What Does it Cost, Who Pays, and What Would Full Coverage Add to Health Care Spending?” Urban Institute, October 2006.

33. 33 Universal Coverage Reduces inequity and inefficiency in the health care system Provides a foundation for making large-scale improvements Allows improved access Links payments to people rather than institutions Insurance Exchange could be a vehicle for driving cost control and quality improvement