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SustiNet Policy Options: Cost and Coverage Estimates
SustiNet Partnership Board
November 18, 2010
Stan Dorn
Senior Fellow
The Urban Institute
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Overview Putting modeling results in perspective Overview of policy options and estimates More detailed analysis
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Part I
Putting Modeling Results in Perspective
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Methodological comments
Overview of Gruber Microsimulation Model Notes
Baseline reflects analysis of current spending, plus survey data Only goes through age 64 Does not consider new federal categorical grants, etc. Shows results in 2010 dollars, generally for 2014-2019
o 2017 is often used to illustrate effects after full implementation Cost savings from delivery system and payment reforms?
o Pessimistic scenario: no savingso Optimistic scenario: slows annual growth by 1 percentage point
Cf. Cutler/Davis, 1.9 percentage point in Medicare Modeling can yield good general estimates, not precise
and infallible predictions More inputs and model refinements can change estimates
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Part II
Overview of policy options and estimates
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Policy options
Ongoing1. SustiNet for current state populations2. Add Basic Health Program to SustiNet 3. Permit small employers, municipalities and non-profits to buy
SustiNet4. Offer SustiNet to other employers and individuals, including
through the exchange5. Gradually raise HUSKY payments to private levels
Short-term6. Expand HUSKY to cover more low-income adults, in 2012 and
2013
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Five general results for the five ongoing options
1. More than half of the uninsured receive coverage
2. Net state budget deficits improve with most of these options, primarily because of a large infusion of federal dollars
3. Small firms experience savings, mainly because they cover fewer workers
4. Many people enroll in SustiNet
5. Aggregate household purchasing power is largely unaffected
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Some key differences among options
Adding Basic Health (BH) Compared to subsidized coverage in the exchange, more
affordable for low-income adults, including HUSKY parents Additional state budget savings Federally-funded reimbursement rate increases for BH members
Raising HUSKY payment rates to private levels Whether the resulting costs exceed other savings depends on
SustiNet’s impact on health cost growth
Short-term: expanding HUSKY before 2014 Increases coverage in 2012-2013, but costly to the state
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How SustiNet options change cost and coverage, pessimistic and optimistic cost-savings assumptions: 2017 (except option 6, which shows 2013 results)
Uninsured gaining coverage(thousands)
Net changes to state spending (millions)
Employer savings (millions)
SustiNet members (thousands)
Pessimistic Optimistic Pessimistic Optimistic Pessimistic Optimistic Pessimistic Optimistic
Option 1: SustiNet for current populations
206 206 -$174 -$371 $485 $485 620 620
Option 2: Basic Health
207 207 -$224 -$418 $459 $459 650 650
Option 3: Offer SustiNet to small firms, municipalities, non-profits
207 209 -$224 -$425 $461 $466 786 815
Option 4: Offer SustiNet to all firms and individuals
207 209 -$224 -$427 $461 $498 944 1,011
Option 5: Raise HUSKY payments
207 209 -$32 -$244 $461 $498 944 1,011
Option 6: Early HUSKY expansion
59 59 +$153 +$103 $217 $217 600 600
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Note: for options 2-5, estimates are cumulative. For example, the effects shown for Option 2 assume implementation of both Options 1 and 2; Effects shown for Option 3 assume implementation of Options 1, 2 and 3; etc. Option 6 estimates assume no other policy changes. Netchanges to state spending incorporate revenue and outlay effects.
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Part III
More detailed cost and coverage estimates, by policy option
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SUSTINET FOR CURRENT STATE POPULATIONS
Option 1
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Policy details
Delivery system and payment reforms apply to Medicaid, HUSKY, and state employee/retiree coverage effective immediately
SAGA immediately moved into Medicaid Full implementation of the Affordable Care Act
(ACA) starting in 2014 General cost and coverage effects as described
earlier for most options
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Coverage effects, 2017 The number of uninsured falls from 376,000
to 170,000—a 55% drop Small firm ESI falls by 11%
Most of the affected small-firm workers (77%) go into the exchange, where the majority receive subsidies
Context: large-firm ESI is largely unaffectedo Rises by 0.6 percent
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Coverage of residents under age 65, with and without reform: 2017
Projection without reform
Public, 12%
Uninsured, 12%
Individual, 4%
ESI, 72%
Projection with reformTax
credits, 4%Public,
16%
Uninsured, 6%
Individual, 4%
ESI, 70%
Note: “Individual” coverage includes unsubsidized coverage in the exchange.
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Public sector outlays, 2017 State budget situation improves
Pessimistic scenario: $174 million gain Optimistic scenario: $371 million gain
More Federal dollars in Connecticut for Medicaid, HUSKY, and subsidies in the exchangeHigher-cost scenario: $1.88 billionLower-cost scenario: $1.70 billion
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Effects on state spending and revenue, pessimistic scenario: 2017 (millions)
$99
$12
($286)
$16 $16
Medicaid/HUSKY -current populations
Medicaid - newpopulations SAGA
Stateemployee/retiree
coverage Revenue
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Effects on state spending and revenue, optimistic scenario: 2017 (millions)
($25)
$12
($293)
($46)
$19
Medicaid/HUSKY -current populations
Medicaid - newpopulations SAGA
Stateemployee/retiree
coverage Revenue
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Net improvement to state budget, pessimistic scenario: 2014-2019 (millions)
18Note: budget totals include both outlay and revenue effects.
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Net improvement to state budget, optimistic scenario: 2014-2019 (millions)
19Note: budget totals include both outlay and revenue effects.
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Effect on employer costs
Small firm savings (0-100 workers)$459 million in net savings6.2% cost reduction
No significant net effect on larger firms (101+ workers)$26 million net savings0.2% cost reduction
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Effects on small firm health costs: 2017 (millions)
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No significant net effect on household post-tax purchasing power: 2017
Pessimistic scenario$421 million increase0.4 percent change
Optimistic scenario$417 million increase in purchasing power0.4 percent change
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Effects on household purchasing power, pessimistic scenario: 2017 (millions)
$419
$1,088
$85
($4)
$1,009
Wages Government benefits Premiums Out-of-pocket costs Taxes
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ADDING THE BASIC HEALTH PROGRAM TO SUSTINET
Option 2
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Policy details
Individuals affected (2017 projections) 16,000 HUSKY parents, 133-185% FPL 41,000 other adults < 200% FPL who would otherwise
be in the exchange o Adults 133-200% FPLo Newly legalized immigrants below 133% FPL
The BH option covers them through state contracts with health plans Minimum federal standards re benefits, costs, etc. Enrolled in SustiNet, with HUSKY costs and benefits
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Bottom-line results Most cost and coverage effects largely unchanged
by adding BH to SustiNet Adding BH
Maintains affordability for HUSKY parents and improves it for other low-income adults
Increases net state budget savings Increases SustiNet enrollment, hence its ability to reform
delivery system and payment Concern: provider payment levels
Can raise above HUSKY levels, using federal funds
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Affordability of subsidized coverage in the exchange
FPL Monthly income Monthly premium
Average out-of-pocket cost-sharing
150 $1,354 $54.15 6%
175 $1,579 $81.34 13%
200 $1,805 $113.72 13%
Premium and out-of-pocket costs for a single, uninsured adult, at various income levels qualifying for subsidies under ACA
Notes: Dollar amounts assume 2010 FPL levels. Out-of-pocket cost-sharing represents the average percentage of covered health care services paid by the consumer, taking into account deductibles, copayments, and co-insurance.
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Other factors Federal BH dollars exceed HUSKY costs. E.g., in 2017:
Pessimistic scenario, $22 million Optimistic scenario, $37 million
HUSKY parents > 133% FPL can move to federally-funded coverage without reducing access to care. Resulting additional state budget savings in 2017: Pessimistic scenario, $50 million Optimistic scenario, $47 million
Continuity of coverage and care More covered lives in SustiNet, hence more leverage to
reform delivery system and payment
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Net state budget savings, SustiNet with and without BH, pessimistic scenario: 2014-2019 (millions)
29Note: budget totals include both outlay and revenue effects.
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Net state budget savings, SustiNet with and without BH, optimistic scenario: 2014-2019 (millions)
30Note: budget totals include both outlay and revenue effects.
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Concerns about adults getting HUSKY rather than coverage in the exchange
Fewer health plan choices Fewer covered lives in the exchange
Shift in leverage from the exchange to the state as a direct purchaser of care
Lower reimbursement rates, hence less access to providers. But must use federal “surplus” on BH members.
Could raise reimbursement. In 2017, increase of at least 7-13 percent
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PERMITTING SMALL FIRMS, MUNICIPALITIES, AND NON-PROFITS TO BUY SUSTINET
Option 3
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Policy details and modeling constraints Policy: certain employers can buy SustiNet for
their employees Can begin as early as 7/1/2012 Small firms, small municipalities, and small nonprofits:
same rules as small group market Option to buy commercial-style benefits Larger municipalities: to avoid adverse selection,
experience-rated premiums (or act as ASO) Modeling does not show specific effects on
municipalities and non-profits
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Bottom-line results
Most cost and coverage totals are unchanged
SustiNet serves many small firms If SustiNet slows cost growth
A few more small firms offer coverageA few more uninsured gain coverage
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More details Many small firms buy SustiNet. In 2017:
Pessimistic scenario: 136,000 covered lives, or 24% of small-group market
Optimistic scenario: 166,000 covered lives, or 29% of small group market
Net coverage impact of small firm option, 2017: Under pessimistic scenario, no net coverage effects Under optimistic scenario (SustiNet slows cost growth):
o Small firm coverage rises by 9,000, or 1.4%o Number of uninsured falls by 2,000, or 1.2%
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OFFERING SUSTINET TO ALL INDIVIDUALS AND FIRMS, WITHIN AND OUTSIDE THE EXCHANGE
Option 4
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Policy details SustiNet offered inside the exchange to
small firms and individualsSustiNet follows the same rules that apply to
other plans in those markets SustiNet offered outside the exchange to
large firmsTo prevent adverse selection, premiums are
experience-rated (or SustiNet acts as ASO)
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Bottom-line results
In addition to small firms, large firms and individuals enroll in SustiNet
Very few other effects, beyond the previous option for small firm purchaseUnder optimistic scenario, employer
premiums drop by an additional $35 million, or 0.3 percent
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Many firms and individuals enroll in SustiNet
Small firm enrollment
Large firm enrollment
Individual enrollment
Covered lives
Share of small firm coverage
Covered lives
Share of large firm coverage
Covered lives
Share of individual market
Pessimistic scenario
136,000 24% 126,000
8% 32,000 14%
Optimistic scenario
164,000 29%
165,000
10% 33,000 15%
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INCREASING HUSKY REIMBURSEMENT
Option 5
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Policy details
By 2019, average HUSKY costs per capita = average costs for large firm coverage in CT34.5% increaseNote: federal law imposes some limits in
going above Medicare rates Phased-in starting in 2015
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Effect of higher HUSKY reimbursement on net state budget savings, pessimistic scenario
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Note: budget totals include both outlay and revenue effects.
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Effect of higher HUSKY reimbursement on net state budget savings, optimistic scenario
43Note: budget totals include both outlay and revenue effects.
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SHORT-TERM: EXPANDING HUSKY IN 2012 AND 2013
Option 6
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Policy details In 2012-2013, HUSKY expands to 185
percent FPL for all adultsThis eligibility is limited to parents under
current law Before 2014, federal government pays
standard Medicaid match
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Bottom-line effects
The number of uninsured falls by 59,000, or 16%
That results from:82,000 more people in HUSKY23,000 fewer recipients of ESI (a 1.1% drop)
State and federal spending rises
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Effects of HUSKY expansion on federal spending and state budget deficits, pessimistic and optimistic scenarios about cost growth: 2012-2013 (millions)
2012 2013
Pessimistic scenario
Optimistic scenario
Pessimistic scenario
Optimistic scenario
Change in federal spending
$434 $423 $452 $417
Increase in state budget deficit
$139 $123 $153 $103
State outlays $143 $128 $158 $109
State revenue increases
$4 $5 $5 $6
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Conclusion and summary Similarities among ongoing options
Cover more than half of the uninsured In most cases, improve state budget picture Achieve modest savings for small firms
Differences between ongoing options BH: more affordable for low-income adults, more state savings, but smaller
provider networks and fewer plan choices than in exchange Offering SustiNet to new populations increases SustiNet enrollment (hence
clout in achieving delivery system reforms), may yield modest savings, offers a new choice for buyers, but takes work
Raising HUSKY payment improves access; whether costs exceed other savings depends on the effectiveness of SustiNet reforms
Short-term HUSKY expansion covers many uninsured, but costs money
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