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Uncovered Worker Pool: Coverage & Costs

Uncovered Worker Pool: Coverage & Costs. Gerard Russo Sang-Hyop Lee Lawrence Nitz University of Hawai `i at M ānoa Hawai`i Coverage For All Project Technical Workshop IV September 26, 2003. POLICY SCENARIO.

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Uncovered Worker Pool: Coverage & Costs

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  1. Uncovered Worker Pool: Coverage & Costs Gerard Russo Sang-Hyop Lee Lawrence Nitz University of Hawai`i at Mānoa Hawai`i Coverage For All Project Technical Workshop IV September 26, 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.

  2. POLICY SCENARIO • Imposition of an individual mandate for the self-employed and part-time workers under a publicly-sponsored, privately-financed, privately-underwritten insurance pool. Preliminary results. Please do not quote.

  3. Design Features • Mandatory • Mandatory: without selectivity • Single Coverage • Family coverage to be modeled later. • Private • Financing • Premiums • Federal Tax Deductions Preliminary results. Please do not quote.

  4. Sub-Cases for Self-Employed & Part-Time Worker Health Insurance Scenario Preliminary results. Please do not quote.

  5. Uninsured Adults Age 19-64: BRFSS 2001 Preliminary results. Please do not quote.

  6. Uninsured Self-Employed Adults Age 19-64: BRFSS 2001, CPS 1996-2002 Preliminary results. Please do not quote.

  7. Uninsured Self-Employed and Uninsured Part-Time Employees, Adults Age 19-64: CPS 1996-2002 Preliminary results. Please do not quote.

  8. Persons Covered • How many self-employed and part-time workers will be targeted under this initiative? • 58,360, Based on CPS 1996-2002 • Of those covered, how many previously had health insurance? • Switching from private to private • Will the switch be to a more extensive plan or less extensive plan? • How many self-employed and part-time workers will seek full-time employment to avoid the individual mandate? • How many self-employed persons will become newly insured? • 58,360, Assuming 100% Compliance and No Avoidance Preliminary results. Please do not quote.

  9. Cost • What is the expected total expenditure per year per self-employed and part-time worker insured? • What is the current expenditure level for medical services for uninsured self-employed persons? • What is the economic cost (benefit) accruing to • Federal Taxpayers • State Taxpayers • Health Care Providers • Households with Self-Employed and Part-time Workers • Others Preliminary results. Please do not quote.

  10. Incurred Per Capita Expenses 2001:Uninsured Self-Employed Adults Age 19-64 Preliminary results. Please do not quote.

  11. Per Capita Expenses: US 2001 Preliminary results. Please do not quote.

  12. Tax Issues • What proportion of this cost will be borne by federal taxpayers via federal tax deduction for self-employed health insurance purchase? • Adjustment to gross income • 2002: 70%*Marginal Tax Rate • Scheduled to rise to 100% • How many newly insured self-employed persons will avail themselves of the SE Health Insurance Deduction? • 20%? Preliminary results. Please do not quote.

  13. SE Health Insurance Deduction:Federal Marginal Tax Rate • Medicare Hospital Insurance (HI) Federal Payroll Tax • 2.9% Wage Tax (1.45% + 1.45%) • Social Security: Old Age Security and Disability Insurance (OASDI) Federal Payroll Tax • 12.4% Wage Tax (6.20% + 6.20%) • Federal Income Tax • 15.0% for a typical household • TOTAL FEDERAL MARGINAL TAX RATE • 30.3% Preliminary results. Please do not quote.

  14. Cost of Single Coverage Per Year:Based on 58,360 persons Preliminary results. Please do not quote.

  15. Possible Refinements • Effective Tax Rates: Household Specific • Estimate Moral Hazard Effect • Medical Expenditures Incurred by the Uninsured Self-Employed and Part-Time Workers: Extend to All Hawaii Provider Types • Premium Rates: Self-Employed/Part-Time Specific • Bring Estimates Forward in Time: 2003, 2004 • Extend Analysis to Family Coverage • Voluntary Plan with Selectivity and Subsidy • Equilibrium adjustment of employment and self-employment. Preliminary results. Please do not quote.

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