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SustiNet Policy Options: Cost and Coverage Estimates

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SustiNet Policy Options: Cost and Coverage Estimates SustiNet Partnership Board November 18, 2010 Stan Dorn Senior Fellow The Urban Institute Bottom-line results Most ... – PowerPoint PPT presentation

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Title: SustiNet Policy Options: Cost and Coverage Estimates


1
SustiNet Policy Options Cost and Coverage
Estimates
  • SustiNet Partnership Board
  • November 18, 2010
  • Stan Dorn
  • Senior Fellow
  • The Urban Institute

2
Overview
  • Putting modeling results in perspective
  • Overview of policy options and estimates
  • More detailed analysis

3
Part I
  • Putting Modeling Results in Perspective

4
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
  • 2017 is often used to illustrate effects after
    full implementation
  • Cost savings from delivery system and payment
    reforms?
  • Pessimistic scenario no savings
  • 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

5
Part II
  • Overview of policy options and estimates

6
Policy options
  • Ongoing
  • SustiNet for current state populations
  • Add Basic Health Program to SustiNet
  • Permit small employers, municipalities and
    non-profits to buy SustiNet
  • Offer SustiNet to other employers and
    individuals, including through the exchange
  • Gradually raise HUSKY payments to private levels
  • Short-term
  • Expand HUSKY to cover more low-income adults, in
    2012 and 2013

7
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

8
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 SustiNets impact on health cost
    growth
  • Short-term expanding HUSKY before 2014
  • Increases coverage in 2012-2013, but costly to
    the state

9
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) Uninsured gaining coverage (thousands) Net changes to state spending (millions) Net changes to state spending (millions) Employer savings (millions) Employer savings (millions) SustiNet members (thousands) 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
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. Net changes to
state spending incorporate revenue and outlay
effects.
10
Part III
  • More detailed cost and coverage estimates, by
    policy option

11
SustiNet for current state populations
  • Option 1

12
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

13
Coverage effects, 2017
  • The number of uninsured falls from 376,000 to
    170,000a 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 unaffected
  • Rises by 0.6 percent

14
Coverage of residents under age 65, with and
without reform 2017
Note Individual coverage includes
unsubsidized coverage in the exchange.
15
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 exchange
  • Higher-cost scenario 1.88 billion
  • Lower-cost scenario 1.70 billion

16
Effects on state spending and revenue,
pessimistic scenario 2017 (millions)
17
Effects on state spending and revenue, optimistic
scenario 2017 (millions)
18
Net improvement to state budget, pessimistic
scenario 2014-2019 (millions)
Note budget totals include both outlay and
revenue effects.
19
Net improvement to state budget, optimistic
scenario 2014-2019 (millions)
Note budget totals include both outlay and
revenue effects.
20
Effect on employer costs
  • Small firm savings (0-100 workers)
  • 459 million in net savings
  • 6.2 cost reduction
  • No significant net effect on larger firms (101
    workers)
  • 26 million net savings
  • 0.2 cost reduction

21
Effects on small firm health costs 2017
(millions)
22
No significant net effect on household post-tax
purchasing power 2017
  • Pessimistic scenario
  • 421 million increase
  • 0.4 percent change
  • Optimistic scenario
  • 417 million increase in purchasing power
  • 0.4 percent change

23
Effects on household purchasing power,
pessimistic scenario 2017 (millions)
24
Adding the basic health program to SustiNet
  • Option 2

25
Policy details
  • Individuals affected (2017 projections)
  • 16,000 HUSKY parents, 133-185 FPL
  • 41,000 other adults lt 200 FPL who would
    otherwise be in the exchange
  • Adults 133-200 FPL
  • 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

26
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

27
Affordability of subsidized coverage in the
exchange
Premium and out-of-pocket costs for a single,
uninsured adult, at various income levels
qualifying for subsidies under ACA
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
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.
28
Other factors
  • Federal BH dollars exceed HUSKY costs. E.g., in
    2017
  • Pessimistic scenario, 22 million
  • Optimistic scenario, 37 million
  • HUSKY parents gt 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

29
Net state budget savings, SustiNet with and
without BH, pessimistic scenario 2014-2019
(millions)
Note budget totals include both outlay and
revenue effects.
30
Net state budget savings, SustiNet with and
without BH, optimistic scenario 2014-2019
(millions)
Note budget totals include both outlay and
revenue effects.
31
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

32
Permitting small firms, municipalities, and
non-profits to buy SustiNet
  • Option 3

33
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

34
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 coverage
  • A few more uninsured gain coverage

35
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)
  • Small firm coverage rises by 9,000, or 1.4
  • Number of uninsured falls by 2,000, or 1.2

36
Offering SustiNet to all individuals and firms,
within and outside the exchange
  • Option 4

37
Policy details
  • SustiNet offered inside the exchange to small
    firms and individuals
  • SustiNet follows the same rules that apply to
    other plans in those markets
  • SustiNet offered outside the exchange to large
    firms
  • To prevent adverse selection, premiums are
    experience-rated (or SustiNet acts as ASO)

38
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 purchase
  • Under optimistic scenario, employer premiums drop
    by an additional 35 million, or 0.3 percent

39
Many firms and individuals enroll in SustiNet
  Small firm enrollment Small firm enrollment Large firm enrollment Large firm enrollment Individual 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
40
Increasing husky reimbursement
  • Option 5

41
Policy details
  • By 2019, average HUSKY costs per capita average
    costs for large firm coverage in CT
  • 34.5 increase
  • Note federal law imposes some limits in going
    above Medicare rates
  • Phased-in starting in 2015

42
Effect of higher HUSKY reimbursement on net state
budget savings, pessimistic scenario
Note budget totals include both outlay and
revenue effects.
43
Effect of higher HUSKY reimbursement on net state
budget savings, optimistic scenario
Note budget totals include both outlay and
revenue effects.
44
Short-term Expanding husky in 2012 and 2013
  • Option 6

45
Policy details
  • In 2012-2013, HUSKY expands to 185 percent FPL
    for all adults
  • This eligibility is limited to parents under
    current law
  • Before 2014, federal government pays standard
    Medicaid match

46
Bottom-line effects
  • The number of uninsured falls by 59,000, or 16
  • That results from
  • 82,000 more people in HUSKY
  • 23,000 fewer recipients of ESI (a 1.1 drop)
  • State and federal spending rises

47
Effects of HUSKY expansion on federal spending
and state budget deficits, pessimistic and
optimistic scenarios about cost growth 2012-2013
(millions)
  2012  2012  2013  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
48
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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