1. UllmanView Graph # 1 OVERVIEW Background and Basics of Cost-Sharing Designing Premiums Analysis of Impacts of Four States’ Premium Policies Implications for CHIP

2. UllmanView Graph # 2 BACKGROUND Traditionally, Public Insurance (Medicaid) Was for the Poor and Was Free As Government Programs Expand to Serve Uninsured People in Working Class Families, Then Issues of Cost- Sharing Become More Relevant Premiums Have Been Used in Family-Based Expansion Programs, Like Tenncare or Washington's Basic Health Plan, and Are Now Being Permitted in CHIP Programs

3. UllmanView Graph # 3 Sliding Scale Premium: Amount Paid by the Person to Purchase Insurance; Some People Pay More - Premiums affect whether a person gets insurance coverage in the first place - Reduces participation and government share of cost Copayment: Amount Paid by the Person to Get Specific Medical Services (e.g., Office Visit or Prescription Drugs) - Copayments affect whether an insured person gets a specific service, affect health care utilization - Reduces cost per covered person BASICS OF COST-SHARING

4. UllmanView Graph # 4 Reduces Government Cost, Both by Sharing Burden and Lowering Participation Targets Assistance and Subsidies to the Poorest May Reduce Problems of Welfare and Medicaid Dependency May Reduce Crowd-Out May Reduce Stigma ADVANTAGES OF PREMIUMS

5. UllmanView Graph # 5 Lowers Participation Might Lead to Adverse Selection Requires More Administrative Effort Might Break Up Coverage, If People Enter and Exit When They Can Afford DISADVANTAGES OF PREMIUMS

6. UllmanView Graph # 6 May Reduce Unnecessary Medical Care Use Can Be Tailored to Accomplish Specific Purposes, e.g., High Copayment for ER, but None for Preventive Services Can Supplement Provider Payments ADVANTAGES OF COPAYMENTS

7. UllmanView Graph # 7 Barrier to Care Can Reduce Use of Cost-Effective Services Harder for Provider, Could Reduce His/Her Payment DISADVANTAGES OF COPAYMENTS

8. UllmanView Graph # 8 RAND Health Insurance Experiment: Generally, Copayments Reduced Medical Utilization and Expenditures, but Did Not Affect Health Status. Among Low-Income People, Copayments Associated with Higher Blood Pressure Prescription Drugs: Copayments Reduce Drug Use, Could Increase Hospitalization Costs Tenncare: Many Went Without Medication Because of Drug Copayments RESEARCH ON COPAYMENTS

9. UllmanView Graph # 9 DESIGN OF PREMIUM STRUCTURES How Low and How High? Progressivity Stairsteps Fixed Dollars or Fixed Percentages? Equity for Individuals and Families

10. UllmanView Graph # 10 PREMIUM STRUCTURE TYPES

11. UllmanView Graph # 11 PREMIUM STRUCTURE TYPES (cont.)

12. UllmanView Graph # 12 PREMIUM STRUCTURE TYPES (cont.)

13. UllmanView Graph # 13 USE OF EQUAL PERCENTAGE SUBSIDIES FOR FAMILIES AND INDIVIDUALS

14. UllmanView Graph # 14 Tenncare: Sliding Scale Premiums Between 100 and 400% of FPL, Full Premiums Above 400%; Copayments (Sec. 1115 Project) Hawaii QUEST: Sliding Scale Premiums Between 100 and 300% of FPL (Sec. 1115 Project) Washington Basic Health Plan: Sliding Scale Premiums Between 0 and 200% of Poverty, Free for Children Thru Medicaid Expansion (State Funded) Minnesotacare: Sliding Scale Premiums for Families With Children Between 0 and 275% of Poverty, for Childless Adults Between 0 and 135% of Poverty FOUR STATES WITH FAMILY EXPANSIONS - 1995

15. UllmanView Graph # 15 MONTHLY PREMIUMS BY POVERTY LEVEL, 1995

16. UllmanView Graph # 16 MONTHLY PREMIUMS BY POVERTY LEVEL, 1995 (cont.)

17. UllmanView Graph # 17 Rate = # Participants / # Uninsured People Eligible, Based on Income Counts of People Enrolled at Different Income Levels Reported by States for a Month in 1995 Used Three-Year Merged Current Population Survey Data to Estimate Number of Uninsured in Each State in 25% of Poverty Cells Pooled Data for Minnesota, Wisconsin and Hawaii, Discarded Tennessee Data Estimated Preliminary Weighted Regression Model ESTIMATING PARTICIPATION RATES

18. UllmanView Graph # 18 ESTIMATED PARTICIPATION FUNCTION, BASED ON THREE STATES, 1995

19. UllmanView Graph # 19 As Premiums Rise, Participation Levels Fall Even When Free, Some Do Not Participate There Is No "Right" Level for Premiums Trade-Off Between Budget and Participation Goals, As Well As Perception of What Seems "Fair" MAIN FINDINGS OF ANALYSIS

20. UllmanView Graph # 20 Includes Children Only, People May Be More Willing to Insure Children Other Factors Matter Too: Publicity, Ease of Application, Type of Benefit Package Interactions With Medicaid Federal Rules on Premiums and Copayments Constrain Choices CHIP MIGHT BE DIFFERENT

21. UllmanView Graph # 21 If Medicaid Expansion, Then Follow Medicaid Rules, Essentially Banning Cost-Sharing If CHIP-Only, Then Premiums in Families Below 150% of Poverty Must Not Exceed "Nominal" Levels, Related to Medically Needy Rules - Modest copayments permitted If CHIP-Only, Then Total Cost-Sharing in Families Above 150% of FPL Must Not Exceed 5% - No copayments on preventive services Total Cost-sharing Hard to Monitor WHAT ARE COST-SHARING RULES IN CHIP?

22. UllmanView Graph # 22 Do Market Research, Run Focus Groups and Occasional Participant Surveys Identify Size of Potential Target Population Monitor Income of Participants and Premiums Paid Can Tinker With Premium Levels Over Time MONITORING PREMIUMS