This research is funded in part through a U.S. Health Resources and Services Administration, State Planning Grant to the Hawaii State Department of Health, Prime Contract No. 1 P09 OA 00046-01. Sub-Contract Research Corporation of the University of Hawaii, Project No. 659075. Research conducted by the University of Hawaii, Social Science Research Institute in collaboration with the Hawaii State Department

of Health, Hawaii Institute for Public Affairs/Hawaii Uninsured Project and the Hawaii Health Information Corporation.

Expansion of Public Insurance for Adults:

SCHIP and Medicaid/QUEST

Gerard RussoSang-Hyop Lee

Lawrence NitzUniversity of Hawai`i at Mānoa

Hawai`i Coverage for All ProjectTechnical Workshop III

23 May 2003

This research is funded in part through a U.S. Health Resources and Services Administration, State Planning Grant to the Hawaii State Department of Health, Prime Contract No. 1 P09 OA 00046-01. Sub-Contract Research Corporation of the University of Hawaii, Project No. 659075. Research conducted by the University of Hawaii, Social Science Research Institute in collaboration with the Hawaii State Department

of Health, Hawaii Institute for Public Affairs/Hawaii Uninsured Project and the Hawaii Health Information Corporation.

POLICY SCENARIO:SCHIP Adults

Extend State Children’s Health Insurance Program eligibility to the

parents of children aged 0-18 years residing in households with incomes

less than or equal to 200% of the Federal Poverty Line.

Rev. 22 May 2003 Preliminary results. Not for quotation, citation nor further dissemination.

Social Security Amendments

Medicare: Title XVIII of the Social Security Act 1965

Medicaid: Title XIX of the Social Security Act 1965

SCHIP: Title XXI of the Social Security Act 1997

Rev. 22 May 2003 Preliminary results. Not for quotation, citation nor further dissemination.

SCHIP FMAP

Federal Medical Assistance Percentage (FMAP)

FFY 2002 69.44% FFY 2003 71.14%

Rev. 22 May 2003 Preliminary results. Not for quotation, citation nor further dissemination.

Adult SCHIP Demonstration States

Arizona Minnesota New Jersey Rhode Island Wisconsin

Rev. 22 May 2003 Preliminary results. Not for quotation, citation nor further dissemination.

Econometric Model: Multinomial Logit Mutinomial Logit to Estimate the Probability of Coverage Three Categories

Uninsured Private Insurance & Other Medicaid QUEST

Predictor Variables Age Sex Income County Race/Ethnicity Health Status (some models) Employment Status (some models)

Rev. 22 May 2003 Preliminary results. Not for quotation, citation nor further dissemination.

Methodology for Predicting the Effect of Changing Eligibility

Step I: Estimate multinomial logit model on a sample of adults with eligible children where the adults are also eligible (i.e., 0-100% FPL).

Step II: Estimate multinomial logit model on a sample of adults with eligible children where the adults are ineligible (i.e., 100-200% FPL).

Step III: Predict with Model I and Model II with the characteristics of the target population (i.e., adults with SCHIP children 100-200% FPL).

Rev. 22 May 2003 Preliminary results. Not for quotation, citation nor further dissemination.

Economic-Demographic Analysis of Adult SCHIP Expansion

How many additional adults are potentially eligible for free medical assistance under the SCHIP Expansion from 100% to 200% FPL? 35,756 adults based on CPS 1996-2002

Of the newly eligible adults, how many are expected to be enrolled in SCHIP? (Take-Up) 7831 adults based on model estimate CPS 1996-2002

Of the newly enrolled SCHIP beneficiaries, how many are expected to have switched from private to public insurance? (Crowd-Out) 4255 adults based on model estimates CPS 1996-2002

How many adults will become newly insured? 3576 adults based on model estimates CPS 1996-2002

Rev. 22 May 2003 Preliminary results. Not for quotation, citation nor further dissemination.

Econometric Prediction of Insurance Coverage Change due to Adult SCHIP Expansion: CPS 1996-2002

Prediction

Ineligible

Prediction

Eligible

Change

Uninsured 14.0% 4.0% -10.0%

Private Insurance

80.2% 68.3% -11.9%

Public Insurance

5.8% 27.7% +21.9%

Total 100% 100% 0%

Rev. 22 May 2003 Preliminary results. Not for quotation, citation nor further dissemination.

Econometric Prediction of Insurance Coverage Change due to Adult SCHIP Expansion: CPS 1996-2002

Prediction

Ineligible

Prediction

Eligible

Change

Uninsured 5006 1430 -3576

Private Insurance

28,676 24,421 -4255

Public Insurance

2074 9905 +7831

Total 35,756 35,756 0

Rev. 22 May 2003 Preliminary results. Not for quotation, citation nor further dissemination.

Incurred Per Capita Expenses 2001: Uninsured SCHIP Adults Age 19-64, 100-200% FPL

Emergency Room & Hospital Discharge

$388

Private Physician Offices ?

Primary Care Facilities ?

Pharmaceuticals, etc. ?

TOTAL $388

Rev. 22 May 2003 Preliminary results. Not for quotation, citation nor further dissemination.

Economic Cost Analysis

What is the expected direct expenditure per newly enrolled beneficiary? $3000 Burden to Federal Taxpayers $2134 Burden to State Taxpayers $866

What is the current total medical expenditure by all sources per uninsured adult residing in SCHIP households 100-200% of FPL? $388

Rev. 22 May 2003 Preliminary results. Not for quotation, citation nor further dissemination.

Economic Cost Analysis (cont.)

What is the cost per newly insured adult? Cost to Federal Taxpayers Cost to State Taxpayers Cost to Society as a Whole

What is the total cost of the SCHIP expansion? Cost to Federal Taxpayers Cost to State Taxpayers Cost to Society as a Whole

Rev. 22 May 2003 Preliminary results. Not for quotation, citation nor further dissemination.

Burden to Federal and State Taxpayers

Direct Cost of SCHIP Expansion $3000*7831=$24,493,000 Federal Share 71.14%: $2134*7831=$16,711,354 State Share 28.86%: $866*7831=$6,781,646

Direct Cost per Newly Insured Adult $6849 Federal Cost per Newly Insured Adult $4873 State Cost per Newly Insured Adult $1976

Rev. 22 May 2003 Preliminary results. Not for quotation, citation nor further dissemination.

Net Cost to Society as a Whole

Cost of Newly Insured Adults $3000*3576.

$10,728,000

Less Current Medical Expenses $388*3576.

$1,387,488

Net Cost $9,340,522

This research is funded in part through a U.S. Health Resources and Services Administration, State Planning Grant to the Hawaii State Department of Health, Prime Contract No. 1 P09 OA 00046-01. Sub-Contract Research Corporation of the University of Hawaii, Project No. 659075. Research conducted by the University of Hawaii, Social Science Research Institute in collaboration with the Hawaii State Department

of Health, Hawaii Institute for Public Affairs/Hawaii Uninsured Project and the Hawaii Health Information Corporation.

Policy Scenario:Medicaid/QUEST Adults

Extend Quest eligibility to adults with incomes less than or equal to 200% of the Federal Poverty

Line

Rev. 22 May 2003 Preliminary results. Not for quotation, citation nor further dissemination.

Medicaid/QUEST FMAP

Federal Medical Assistance Percentage (FMAP)

FFY 2003 58.77%

Rev. 22 May 2003 Preliminary results. Not for quotation, citation nor further dissemination.

Where we are now: Distribution of Insurance in 2001, BRFSS Survey

Class Num. Percent

Uninsured 134 7.84

Insured 1470 85.96

Medicaid 106 6.2

Rev. 22 May 2003 Preliminary results. Not for quotation, citation nor further dissemination.

Two models

Test Case: Compute a predictive equation on the 0% to 100% FPL population Estimate the distribution of insured among the

100%-200% FPL population using this equation Base Case: Compute a predictive Equation

on the entire sample Estimate the distribution of insured among the

100% -200% FPL population

Rev. 22 May 2003 Preliminary results. Not for quotation, citation nor further dissemination.

Predictions of changing Medicaid ceiling to 200% of FPL

Predicted vs. Actual Rates of Coverage

(pooled 2000 and 2001 data, BRFSS)

Coverage Method:Prediction

Eligible*PredictionIneligible^ Actual

Uninsured 8.9 3 7.84

Insured 81.2 92 85.96

Medicaid 9.9 5 6.2

*Prediction Target Group Eligible: Fit model over the population <100% FPL, then predict over the means of the 100%-200% FPL population.

^Prediction Target Group Ineligible: Fit model over the entire population and predict over the means of the 100%-200% FPL population.

Rev. 22 May 2003 Preliminary results. Not for quotation, citation nor further dissemination.

Implications for Changing Adult Eligibility

From the ideal base case, raising the eligibility floor to 200% FPL brings the Medicaid coverage from 5% to 9.9%

The same change in eligibility also raises the percentage of uninsured from 3% to 8.9%

10.8% of the target population will switch from private or other health insurance to Medicaid

Rev. 22 May 2003 Preliminary results. Not for quotation, citation nor further dissemination.

Problematic Issues

The whole population model may not be the best indicator of the base case for the 100% to 200% FPL household’s insurance decision

The multivariate logistic regression for the 0% to 100% FPL population may identify behavioral patterns unrelated to the policy difference—the zero monetary cost of Medicaid coverage

Rev. 22 May 2003 Preliminary results. Not for quotation, citation nor further dissemination.

Open Questions

How can we more cleanly separate the economic decision to acquire a particular health insurance coverage from other motivations or experiences in the target population?

Do systematic differences in the underlying surveys lead to different results in the CPS and BRFSS?