State Coverage Initiatives Workshop for State Officials August 3-4, 2006 Conrad Hilton Hotel

1. Session 3: Coverage MandatesPanelist: Jerry RussoDepartment of Economics University of Hawaiirusso@hawaii.edu State Coverage Initiatives Workshop for State Officials August 3-4, 2006 Conrad Hilton Hotel Chicago, Illinois Sponsored by the Robert Wood Johnson Foundation’s State Coverage Initiatives Program Conducted by Academy Health State Coverage Initiatives Workshop for State Officials

2. Labor Market Impacts of Hawaii’s Employer Mandate Gerard Russo Department of Economics University of Hawaii russo@hawaii.edu

3. University of Hawaii Research TeamHawaii State DOH HRSA SPG • Gerard Russo, Ph.D. • Sang-Hyop Lee, Ph.D. • Lawrence Nitz, Ph.D. • Katerina Sherstyuk, Ph.D. • Thamana Lekprichakul, Ph.D. • Rui Wang, Ph.D. Candidate • Jaclyn Lindo, Ph.D. Student • University of Hawai`i at Mānoa • http://www.soc.hawaii.edu/HI_coverage/ State Coverage Initiatives Workshop for State Officials

4. Institutional Partners & Collaborators • Health Resources & Services Administration, State Planning Grant Program • Hawaii State Department of Health • Hawaii Institute for Public Affairs, Hawaii Uninsured Project • Hawaii Health Information Corporation • Robert Wood Johnson Foundation, AcademyHealth, State Coverage Initiative • University of Minnesota, State Health Access Data Assistance Center • University of Hawaii, Social Science Research Institute State Coverage Initiatives Workshop for State Officials

5. Prepaid Health Care Act of 1974 (Mandatory ESI): Main Features • Private-Sector Employees: 20+ Hour Rule • Employee Contribution to Premiums Limited to 1.5% of Wages • Family Coverage is Optional • Exempt workers: • Part-time workers working less than 20 hours per week • Low-earning workers earn less than 86.67 times minimum wage per month (2006: $6.75 x 86.67=$585; 2007: $7.25 x 86.67=$628.) • Government employees, self-employed, commission-only workers, seasonal workers, family workers • Collective bargaining contracts are exempt. • Congressionally granted ERISA exemption State Coverage Initiatives Workshop for State Officials

6. Hawaii Adults Age 19-64by Sector of Employment State Coverage Initiatives Workshop for State Officials

7. Summary of Survey Findings • Hawaii has more private-sector employees with Employer Sponsored Insurance (ESI). • More employees have their own ESI. • Fewer employees have ESI from their spouse. • Employees’ Contributions subject to 1.5%-of-Wages-Rule • Single Coverage Mandatory-Family Coverage Optional • Hawaii has more part-time employees working fewer than 20 hours per week. • Most pronounced for low-wage employees and employees without ESI. • 20-Hour Rule State Coverage Initiatives Workshop for State Officials

8. Employee Contributions as a Percent of Family Coverage Premiums by Average Wage of Work Force: Hawaii and United States, MEPS-IC 2004 SOURCE: Agency for Healthcare Research and Quality, Center for Financing, Access and Cost Trends, Medical Expenditure Panel Survey-Insurance Component. State Coverage Initiatives Workshop for State Officials

9. Employee Contributions as a Percent of Single Coverage Premiums by Average Wage of Work Force: Hawaii and United States, MEPS-IC 2004 SOURCE: Agency for Healthcare Research and Quality, Center for Financing, Access and Cost Trends, Medical Expenditure Panel Survey-Insurance Component. State Coverage Initiatives Workshop for State Officials

10. Percent of Private-Sector Non-Collective Bargaining Employees with their own ESI: CPS ASEC 1988-2005 State Coverage Initiatives Workshop for State Officials

11. Percent of Private-Sector Non-Collective Bargaining Employees with Spouse’s ESI:CPS ASEC 1988-2005 State Coverage Initiatives Workshop for State Officials

12. Percent of Private-Sector Non-Collective Bargaining Employees with no ESI:CPS ASEC 1988-2005 State Coverage Initiatives Workshop for State Officials

13. Probability Density of Non-Collective Bargaining Private-Sector Employees by Hours Worked Per Week: CPS ASEC 1995-2005 .3 .2 Density .1 0 0 20 40 60 80 100 Hours Worked Hawaii U.S. 49 States & DC sample size=528,284 Hawaii sample size=6,450 State Coverage Initiatives Workshop for State Officials

14. Probability Density of Employees with ESI by Hours Worked per Week: CPS ASEC 1988-2005, Private-Sector Non-Collective Bargaining .6 .4 Density .2 0 0 20 40 60 80 100 Hours Hawaii US Hours Worked per Week by Employees with ESI from their own Employer: Hawaii vs. US 49 States & DC sample size=373,275 Hawaii sample size=5,151 State Coverage Initiatives Workshop for State Officials

15. Probability Density of Employees without ESI by Hours Worked Per Week: CPS 1988-2005, Private-Sector Non-Collective Bargaining .6 .4 Density .2 0 0 20 40 60 80 100 Hours Hawaii U.S. Hawaii sample=1,354 49 States & DC sample=174,833 20 hour effect State Coverage Initiatives Workshop for State Officials

16. Probability Density of Private-Sector Non-Collective Bargaining Employees by Hours Worked per Week—Hawaii vs. US: High-Wage Employees, CPS Basic Monthly Survey 1994-2005 .02 .015 Density .01 .005 0 0 20 40 60 80 100 Hours US HI Hours Worked per Week by High-Wage Employees: Hawaii vs. US State Coverage Initiatives Workshop for State Officials

17. Probability Density of Private-Sector Non-Collective Bargaining Employees by Hours Worked Per Week—Hawaii vs. US: Low-Wage Employees, CPS Basic Monthly Survey 1994-2005 .02 .015 Density .01 .005 0 0 20 40 60 80 100 Hours US HI Hours Worked per Week by Low-Wage Employees: Hawaii vs. US State Coverage Initiatives Workshop for State Officials

18. Percent of Private Establishments that Offer Health Insurance by Average Wage of Work Force: Hawaii and United States, MEPS–IC 2003 SOURCE: Agency for Healthcare Research and Quality, Center for Financing, Access and Cost Trends, Medical Expenditure Panel Survey-Insurance Component. State Coverage Initiatives Workshop for State Officials

19. Percent of Private Establishments that Offer Health Insurance by Average Wage of Work Force: Hawaii and United States, MEPS-IC 2004 SOURCE: Agency for Healthcare Research and Quality, Center for Financing, Access and Cost Trends, Medical Expenditure Panel Survey-Insurance Component. State Coverage Initiatives Workshop for State Officials

20. Family Premiums Hawaii 6.34% US 9.85% Single Premiums Hawaii 5.43% US 8.96% Estimated Annual Nominal Growth Rates: MEPS-IC 1996-2004UH Non-Linear Discrete-Time Estimates State Coverage Initiatives Workshop for State Officials

21. Average Family Premiums in Hawaii and US: 1996-2004 MEPS-IC Actual2005-2007 UH Projection State Coverage Initiatives Workshop for State Officials

22. Family Premium Trend Line: Hawaii and US 1996-2007, University of Hawaii EstimatesBased on MEPS-IC 1996-2004 State Coverage Initiatives Workshop for State Officials

23. Average Single Premiums in Hawaii and US: 1996-2004 MEPS-IC Actual2005-2007 UH Projection State Coverage Initiatives Workshop for State Officials

24. Single Premium Trend Line: Hawaii and US 1996-2007,University of Hawaii EstimatesBased on MEPS-IC 1996-2004 State Coverage Initiatives Workshop for State Officials

25. Summary of Experimental Results • Sherstyuk, et al. (2006) forthcoming in Economic Inquiry. • Without a Employer Mandate • There is some behavioral inefficiency in labor market matching and insurance coverage. • With a Employer Mandate • Coverage increases overall. • Labor market sorting between part-time and full-time. • Increases coverage among those who should be insured, but otherwise would be uninsured. • Causes some workers to be over-insured. • Partial Mandate is superior to a Full Mandate • 20-hour rule is a labor market safety valve. State Coverage Initiatives Workshop for State Officials

26. Mahalo! This research is funded in part by U.S. Department of Health and Human Services Health Resources & Services Administration State Planning Grant Hawaii State Department of Health. State Coverage Initiatives Workshop for State Officials