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The ABCs of Children’s Health and Federal Reform: Understanding the Potential Impact of PPACA

The ABCs of Children’s Health and Federal Reform: Understanding the Potential Impact of PPACA. Jean Marie Abraham, Ph.D. Division of Health Policy & Management School of Public Health University of Minnesota October 15, 2010. Outline. A ccess to Coverage by Children

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The ABCs of Children’s Health and Federal Reform: Understanding the Potential Impact of PPACA

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  1. The ABCs of Children’s Health and Federal Reform: Understanding the Potential Impact of PPACA Jean Marie Abraham, Ph.D. Division of Health Policy & Management School of Public Health University of Minnesota October 15, 2010

  2. Outline • Access to Coverage by Children • Why is it important for children’s health? • What are the attributes of uninsured children and their families? • How will the coverage expansion and mandate parameters under PPACA affect them? • Burden of Health Care Costs • How should we think about health care spending, underinsurance, and burden? • How might PPACA provisions likely affect these outcomes? • Care Provision • What is the potential effect of expanding coverage on demand for care by previously uninsured children? • What are some other PPACA provisions likely to affect children’s receipt of health care and outcomes?

  3. PPACA: The Process 6/09-9/09 11/09-12/09 March 2010

  4. Widespread Impact • Uninsured • Individuals who buy health insurance on their own • People with employer-sponsored insurance • Medicare beneficiaries • Healthcare providers • Health insurers • Taxpayers

  5. Access to Coverage by Children

  6. Why is insurance important? • Financial Access to Care • Preventive care for children • Well-child visits • Assessing development • Administering immunizations • Educating parents and children about safety, lifestyle, and development • Acute care • More timely access • Potential for reduced morbidity • Asthma, Mental health, Diabetes

  7. Children’s Insurance Status, 2008 Source: 2009 ASEC Supplement to Current Population Survey - KCMU/Urban Institute Analysis.

  8. Children’s Demographics by Full-year Uninsured Status Source: Author’s analysis of 2003-2007 Pooled MEPS Household Component * Indicates statistically different in multivariate analysis of Prob(FY uninsured)

  9. Children’s Household Income Source: Author’s analysis of 2003-2007 MEPS Household Component

  10. Coverage Expansion in 2014 • Medicaid • Expand eligibility to all individuals in families earning less than 133% FPL • Children • Current eligibility varies by state, ranging from 100% FPL to 300% FPL • 20 states directly affected • Adults • Eligibility varies by pregnancy, working parents, childless adults (not covered in 45 states) • CBO projected net increase of 16 million by 2019

  11. Coverage Expansion in 2014 • Exchanges • Organized marketplace for individually purchased and small employer coverage • Functions • Certify qualified health plans (e.g., marketing, provider choice, quality) • Determine open enrollment period • Review premium rate increases • Standardize enrollment process • Provide employers with price and quality information on available plans in standard format • Create a web portal to shop

  12. Coverage Expansion in 2014 • Exchange-based premium assistance credits • Individuals with family incomes of 133% FPL– 400% FPL who do not have an offer of employer-sponsored insurance • Subsidies based on a sliding-scale • 3%-9.5% of income is maximum dollar amount families would pay for coverage • Tied to the “Silver plan” (70% actuarial value) • Premium rating reforms • Modified community rating • Guaranteed issue and renewability • CBO projects a net increase of 24 million in Exchanges

  13. Individual Mandate in 2014 • U.S. citizens and legal residents must have qualifying health coverage • Tax penalty the greater of $695 per year up to 3 times that amount for a family or 2.5% of household income • Phased in through 2016 • Exemptions • Financial hardship waiver if lowest cost plan is more than 8% of income • < 3 month gaps • Religious objections, • Prisoners • Undocumented immigrants

  14. Increased Regulation of Private Insurance (2010) • No lifetime limits on benefits • No ‘unreasonable’ annual limits • No exclusions or delays in coverage for particular services for children with pre-existing conditions • Require qualified health plans to provide certain preventive services with zero cost-sharing.

  15. Burden of Health Care Spending for Families with Children

  16. Spending on Health Care • Types • Medical care and Premiums • Research literature • Underinsurance • “Adequacy” of coverage • Spending on medical care relative to income • Financial Burden • Spending on medical care and insurance premiums relative to income • Challenges • No consensus on measurement • Heterogeneity by family attributes and over time

  17. Underinsurance • Kogan et al., NEJM, 2010 • National Survey of Children’s Health in 2007 • Stated response regarding • Does child’s health insurance offer benefits or cover services that meet his or her needs? • Does child see providers he/she needs? • How often are costs reasonable, conditional on answering that they pay money for care? • Findings • 22.7% of U.S. children underinsured • Older, Hispanic, Private Insurance, Special Needs • Of those underinsured • 11.6% had no preventive care visit • 32% reported difficulty obtaining referrals for needed care (among those who needed them)

  18. Financial Burden • Banthin, Cunningham, and Bernard, Health Affairs, 2008 • Methods • 2001-2004 MEPS • Doesn’t restrict to families with children • High out-of-pocket burden as spending more than 10% of after-tax family income on medical expenses and premiums • Findings • 17.0% of employer-based population in 2004

  19. PPACA Provisions Affecting Burden • Privately Insured • Exchange-based enrollment • OOP cost-sharing subsidies for families earning less than 200% FPL • Higher income levels may obtain coverage given the mandate, but face increased burden • Family of 4 making 300% FPL ($66,000) paying $6,270 for a family coverage plan. • Employer-based coverage • Annual real growth in premiums is about 5% • Cost-sharing provisions are increasing • Financial burden will likely continue to rise given existing trends and because of increased regulation on benefit design

  20. Provision of Medical Care

  21. Increased demand for services • How much additional care will uninsured children demand once they get coverage? • Evidence from state coverage expansions of Medicaid and CHIP (Buchmueller et al. 2005) • Outpatient visits (Banthin & Selden, 2003; Currie, 2000; Marquis & Long, 1995) • +1 visit per year on average • Inpatient utilization • Small demand response • Medicaid eligibility raises the probability of inpatient hospitalization by 4%

  22. Potential increase in children’s demand for medical care given PPACA • Hofer, Abraham, and Moscovice (working paper, 2010) • Estimate an empirical model of utilization for primary care visits using 2006-2007 MEPS • Predict impact of the coverage expansion on visits • Overall increase in U.S. in 2019 • 23.3 million visits (7.5% increase) • 20 million by adults • 3.3 million are visits by children • Large state variation • 5,900 additional primary care providers

  23. Other Provisions Affecting Care • Medicaid • Medicaid payment rates increased in 2013/2014 to Medicare levels • Improve access • Quality Measurement Program • Compare provider performance • Pediatric Accountable Care Organization Demonstration • Alignment of providers’ incentives across continuum of care

  24. Other Provisions • Maternal, Infant, and Early Childhood Home Visitation Programs (Sec. 2951) • Statewide needs assessment • State grants

  25. Other Provisions • School-based health centers (Sec. 4101) • Comprehensive primary health services during school hours to children and adolescents and 24 hour on-call system • $50 million/ year for 2010-2013 • Priority communities • High barriers to access • High per capita numbers of children who are uninsured, underinsured, or enrolled in public insurance

  26. Concluding Remarks • PPACA is going to “change the game” • Coverage expansion will improve financial access for over 7 million full-year uninsured children • Population-specific burden effects • Expected increase in demand for care • Uncertainty regarding implementation and impact • Administrative rule-making • State government responses • Insurers, Providers, and Consumers • Constitutionality of the mandate and Medicaid expansion • Coverage first, cost second approach

  27. Resources on PPACA • Official Federal government website • www.healthcare.gov • Kaiser Family Foundation • www.kff.org • Democratic Policy Committee (U.S. Senate) • www.dpc.senate.gov • U.S. Chamber of Commerce • http://www.uschamber.com/healthcare.htm

  28. Thank you! Jean Marie Abraham, Ph.D. Division of Health Policy and Management School of Public Health University of Minnesota Email: abrah042@umn.edu Phone: (612) 625-4375

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