www.healthpolicy.ucla.edu

Dylan H. Roby, Ph.D.Research ScientistUCLA Center for Health Policy Research

June 10, 2008

This project was funded by the California Endowment

Using an Affordability Model to Evaluate Policy Proposals During California’s Health Insurance Reform Effort

Two Dueling Proposals

Governor Schwarzenegger (GHCP)• Pay or Play Provision (up to 4% employer payroll

fee)• Subsidies based on family income (up to 250% of

FPL)• Individual Mandate

Nunez/Perata (AB 8/SB 48)• Pay or Play Provision (7.5% employer payroll fee)• Purchasing Pool, guaranteed issue, and community

rating• Larger subsidies based on family income (up to

350% of FPL)• This bill passed the assembly and senate, but was

vetoed by the Governor Both included an incremental Medicaid/SCHIP

expansion

Predicting Potential Health Care Costs for California’s Families

• Recent Research ApproachesHadley and Holohan (Urban Institute)

• Based on 3-years of Medical Expenditure Panel Survey (MEPS) data

• Used in Massachusetts’ Reform

Kominski and Roby (UCLA)• Previous research used the above

approach and incorporated California Health Interview Survey (CHIS) data

• For these 2 projects, used MEPS subset of the insured in the Western U.S.

Using MEPS to Estimate Family Health Care Spending

• Household Survey• Uses NHIS respondent households• Western Region Subset• Pooling Multiple Years of Data (2002-2004)• Using California specific Inflators

CPI-U Medical Care Services (for actual services) and Employer Health Benefits Survey (for premiums)

• Several Components of MEPSHousehold Component

• Full Year Consolidated Data File• Jobs File• Person Round Plan Public Use File

Insurance Component

Two Separate Research Projects on Affordability

• California Budget Project (CBP)Three Stereotypical Family Structures

• Single person, Single parent with 2 kids, Married couple with 2 kids

Estimates of Spending for Each Family Structure

Represented 8 million insured households

• UC Berkeley Labor CenterFocused on providing estimates of spending

for all insured CaliforniansPoverty Bands (based around current

proposals for reform)

Source: Carroll D, Roby DH, Ross J, Snavely M, Brown ER, and Kominski GF. What Does It Take for a Family to Afford to Pay for Health Care. UCLA Center for Health Policy Research, 2007.

About 2.9 Million Californians With Family Income Above

250% FPL Are Uninsured or Insured in the Non-Group Market

Source: Jacobs K, Capozza K, Roby DH, Kominski GF, and Brown ER. Health Coverage Expansion in California: What Can Consumers Afford to Spend? UC Berkeley Labor Center and UCLA Center for Health Policy Research, 2007.

33%

55%

67%

74%

83%

4%

7%

8%

7%

9%

37%

20%

14%

8%

27%

18%

12%

11%

6%3%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

101% to 200% FPL

201% to 250% FPL

251% to 300% FPL

301% to 400% FPL

Over 400% FPL

Employer-Based Non-Employer-Based Public Uninsured

Proportion of Family Income Spent on Health Care Costs (Premiums and Out-of-Pocket Spending) for the Commercially Insured at the 50th Percentile (Median) of Health Care Costs, by Family Income, 2007

Source: Jacobs K, Capozza K, Roby DH, Kominski GF, and Brown ER. Health Coverage Expansion in California: What Can Consumers Afford to Spend? UC Berkeley Labor Center and UCLA Center for Health Policy Research, 2007.

7.3%4.7% 5.3%

3.2% 2.0% 2.9%

12.0%10.5%

8.1% 7.0%4.6%

6.8%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

101 to 200%FPL

201 to 250%FPL

251% to300% FPL

301% to400% FPL

Over 400%FPL

Overall

Employer-Based Non-Employer-Based

Proportion of Family Income Spent on Health Care Costs (Premiums and Out-of-Pocket Spending) for the Commercially Insured in the 90th percentile of Health Care Costs, by Family Income, 2007

Source: Jacobs K, Capozza K, Roby DH, Kominski GF, and Brown ER. Health Coverage Expansion in California: What Can Consumers Afford to Spend? UC Berkeley Labor Center and UCLA Center for Health Policy Research, 2007.

24.5%

15.7% 15.1%

10.2%7.2%

12.0%

45.7%

33.2%30.4%

19.1%

12.4%

26.4%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

101% to 200%FPL

201% to 250%FPL

251% to 300%FPL

301% to 400%FPL

Over 400%FPL

Overall

Employer-Based Non-Employer-Based

How were these two projects used?

• The CBP Report resulted in fairly wide media coverage It is easy to explain dollars.

• Labor Center brief Used by advocates Cited by the Legislative Analyst’s Office (LAO)

• After these two documents were published, a special session of the legislature was called. The main proposal (AB X1 1 – Nunez)

represented a compromise between the two dueling plans.

Compromise (AB X1 1 – Nunez)

• Medicaid/SCHIP expansionAdults would qualify for Medicaid with income of

up to 250% of FPLChildren would qualify for Medicaid/SCHIP with

income of up to 300% FPL• Broader subsidies and tax credits for higher income

groups (up to 400% FPL)• If a family (<250% of FPL) had to spend over 5% of

their family income there was an opt-out option.• Employer payroll tax

sliding scale (1% to 6.5%) depending on size of payroll

Summary and Conclusions

• The policy choices seemed to focus on

out-of-pocket premium contributions only

• MEPS data allows us to recognize that Non-Employer Based Insurance enrollees would pay substantially more for coverage

• Some families, even with higher incomes, may be susceptible to high costs

• MEPS offers a tool for estimating the burden of health care costs and can be tailored by income, family size, and region.