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Modeling & Other Consultation

Bowen Garrett, Ph.D. Co-PI for UI Reinsurance Inst.Team Lisa Clemans-Cope, Ph.D. Research Associate Randall R. Bovbjerg, J.D. The Urban Institute. Modeling & Other Consultation.

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Modeling & Other Consultation

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  1. Bowen Garrett, Ph.D. Co-PI for UI Reinsurance Inst.Team Lisa Clemans-Cope, Ph.D. Research Associate Randall R. Bovbjerg, J.D. The Urban Institute Modeling & Other Consultation Presentation to Reinsurance Institute’s Kick-Off Meeting with States, Albany Marriott, NY, Tuesday, September 12, 2006 12 Sept. 2006 ; slide1

  2. Modeling the Effects of Reinsurance Programs • Goal: • Estimate effects of policy alternatives on • Health insurance coverage • Employer offer • Health care expenditures • State program costs • Major part of the overall Reinsurance Institute effort 12 Sept. 2006 ; slide2

  3. Overview of Modeling Steps • Create individual-level database representing a state’s non-institutionalized population • Demographics, employment, insurance coverage, health care expenditures, premiums • Specify alternative reinsurance policy options • Estimate effects reinsurance program • Premiums, employer offer, individual take-up, expenditures • Program costs • Report results 12 Sept. 2006 ; slide3

  4. Create Individual-Level, State-Specific, Baseline Database (1) • Start with national data from the Medical Expenditure Panel Survey (MEPS) • Provides individual-level demographic, employment, insurance coverage, and health care expenditure data for non-institutionalized population • Pool three years of data to obtain total N of about 100,000 • Adjust expenditures to be consistent with National Health Accounts and high-cost claims data • Re-weight national MEPS data to match state’s demographic, employment, and other characteristics as measured by the Current Population Survey (CPS) 12 Sept. 2006 ; slide4

  5. Example of Reweighting Procedure Results: New York (Family income) Source: Bovbjerg et al. (draft) 12 Sept. 2006 ; slide5

  6. Example of Reweighting Procedure Results: New York (Insurance coverage) Source: Bovbjerg et al. (draft) 12 Sept. 2006 ; slide6

  7. Create Individual-Level, State-Specific, Baseline Database (2) • Assign workers to synthetic employers, approximating the state’s establishment size/industry mix • Impute distribution of baseline premiums for group and individual coverage • Compute pure premiums • Apply loading factors with input from actuaries • Age the data to present or future year, based on projections • Database ready for simulating reinsurance programs 12 Sept. 2006 ; slide7

  8. Information from States (1) • Decision of modeling year • Projections of state demographic/economic changes between baseline data year and year to be modeled (for ageing of baseline database) • Data on firm size/establishment size of the employers within a state, by industry • Characteristics and premiums of typical existing health plans in their state (large group, small group, individual) 12 Sept. 2006 ; slide8

  9. Information from States (2) • Characteristics and premiums of state workers’ health plans • Other state heath plan and premium data if available • Description of regulations in the small group and individual insurance markets (to supplement NAHU reports) • Small group market details (to supplement GAO report) • Number of licensed carriers • Market share of each of the five largest carriers • Market share of all BCBS carriers 12 Sept. 2006 ; slide9

  10. Identify and Model Major Features of Alternative Reinsurance Policy Programs • In the case of Healthy NY: • Individual stop-loss reinsurance policy floor ($5,000) and ceiling ($75,000), with 10% coinsurance • Small employer eligibility criteria including 50 or fewer employees, 30% employees earn <$34,000 • Eligibility criteria including working in a non-offering firm, meeting income guidelines, worked in past 12 months • We cannot measure or model: • Whether a non-offering employer offered coverage in past 12 months • Certain reasons for having lost coverage (death of family member, termination/cancellation of COBRA coverage) 12 Sept. 2006 ; slide10

  11. Simulating Policy Effects (1) • Each policy scenario will include different changes in group and nongroup premiums • Will need to maintain manageable number of alternative scenarios for full analysis • We will establish best-guess estimates of the responsiveness of firm offer, group coverage take-up, and individual coverage take-up to changes in premiums • Based on economics literature on insurance demand • Responsiveness often summarized as elasticities – percent change in coverage due to a percent change in premiums 12 Sept. 2006 ; slide11

  12. Simulating Policy Effects (2) • We will simulate • Employers who switch their offer status due to the reinsurance program • Individuals in the database who switch their coverage status due to the program • For the newly insured, we’ll adjust expenditures upwards to reflect higher use among the insured • e.g., Hadley and Ruhter estimate that Medical spending on an uninsured adult in NY would increase from $1,279 to $2,430 if insured. 12 Sept. 2006 ; slide12

  13. Reporting the Results • Tally up changes in employer offer and individual coverage • By employer size • By income • By age/health status • Describe • Changes in aggregate health care expenditures • State program costs related to reinsured claims • Results reflect full phase-in • Repeat for manageable number of policy options 12 Sept. 2006 ; slide13

  14. Software Tool for States • We’ll provide each focus state with a software modeling tool near the end of the modeling phase that will • Report primary modeling results • Allow users to modify • Eligibility rules • Reinsurance design parameters • Certain model assumptions 12 Sept. 2006 ; slide14

  15. Key Modeling Limitations • Even with best information available, significant uncertainty remains in the magnitude of behavioral parameters • Model does not capture • Administrative costs • Certain policy details • Implementation issues 12 Sept. 2006 ; slide15

  16. Key Modeling Benefits • Uses a systematic approach to produce best-guess estimates of policy effects and costs • Highlights key uncertainties • Can be effective in providing a good understanding the relative benefits/costs of major program features • Eligibility rules, reinsurance thresholds, coinsurance levels • Highlights key trade-offs 12 Sept. 2006 ; slide16

  17. Parallel, Qualitative Consultation • Will stand ready to consult on other issues of design and implementation • much as done for this meeting, with more specifics • Necessarily state-specific, unpredictable in advance • Will base input on literature, existing expertise, plus limited additional research Note: In addition to offering focus states input on quali-tative issues, we will be calling to seek input from them 12 Sept. 2006 ; slide17

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