Comprehensive Assessment of Reform Efforts: The COMPARE Initiative

1. Comprehensive Assessment of Reform Efforts: The COMPARE Initiative Elizabeth A. McGlynn, Ph.D. Associate Director, RAND Health November 16, 2009

2. Outline for Seminar • Background on COMPARE • Review of major bills in Congress • Analysis of HR 3962 • Cost containment: the next frontier

3. Steps Leading to COMPARE • We undertook a priority setting process with RAND Health Board of Advisors • Brainstorming session • Formal rating of 20 topics • Paragraph descriptions written for top 10 • Second round of rating 10 topics • Subgroup of RHBA & RAND Health staff assigned to further develop concept • RAND Board of Trustees and RAND Senior management engaged in a similar exercise • Reform of the health care system emerged from both processes as a high priority

4. The Status Quo $2T 47M 55%

5. Uncertainty Surrounds Likely Effects of Proposed Changes Disease management Prevention $??T Tort reform Comparative effectiveness CDHP Mandates Transparency HIT ?M Subsidies ??% P4P Medical home Tax breaks Nurse staffing ratios Expanded eligibility

6. We Considered Two Possible Options • Design a comprehensive plan for health reform • Develop a method for evaluating plans proposed by others What would you do?

7. COMPARE Goals • Provide the factual foundation for a national dialogue about health reform options • Facilitate the development of health reform policy options by public and private policy makers

8. Health Care Proposals May Recommend One or Multiple Policy Changes Examples Proposal A Single policychanges Proposal B Multiple changes • Employer mandate Reform medicalmalpractice law • Individual mandate • Medicaid/SCHIP expansion • Tax credits But it can be difficult to compare effects of different proposals

9. COMPARE Utilizes Multiple Methods to Examine Policy Options • We developed a new microsimulation model • Estimates effects of policy changes on spending, coverage, consumer financial risk and health • We conducted systematic reviews of the literature on prior experiences with and/or theory surrounding policy options • We made COMPARE results available online at www.randcompare.org: • Synthesize status quo • Summarize state and federal legislation • Analyze likely effects of different policy options

10. The COMPARE Dashboard Evaluates Policies Across Nine Dimensions

11. What Makes COMPARE Unique? • Modular • Multidimensional • Evidence-based • Transparent • Accessible • Adaptable

12. Outline for Seminar • Background on COMPARE • Review of major bills in Congress • Analysis of HR 3962 • Cost containment: the next frontier

13. Overview – Committees and Floor Debate HOUSE SENATE Energy & Commerce Ways & Means Education & Labor COMMITTEE PROCEDINGS Finance HELP Hearings Hearings Legislation Legislation Cost estimate Cost estimate Mark-Up Mark-Up Two Bills combined into One Three Bills combined into One Regular Order Reconciliation FLOOR CONSIDERATION Rules Committee sets terms for debate; confirmed by full House Debate terms negotiated Limited debate; no filibuster Filibuster Debate Debate Debate Cloture House-Senate Conference Committee Full House vote on Bill (simple majority to pass) Full Senate vote on Bill (simple majority to pass)

14. Overview – Conference House-Senate Conference Committee Conference Report HOUSE SENATE Regular Order Reconciliation Rules Committee sets terms for debate; confirmed by full House Limited debate; no filibuster Debate terms negotiated Filibuster Debate Debate Debate Cloture Full House vote on Bill (simple majority to pass) Full Senate vote on Bill (simple majority to pass) President signs or vetoes the bill

15. Major Options Under Consideration for Expanding Coverage of Uninsured • Expand eligibility for Medicaid (Medi-Cal) • Require employers to offer insurance (employer mandate) • Improve the functioning of health insurance markets • Require individuals to have coverage (individual mandate)

16. How Many Americans Lack Insurance? Insurance status in United States (2007) Uninsured 45.3million Insured252 million

17. What Are the Major Sources of Insurance Coverage? Employers are the largest source of insurance Employer-sponsored 186 Medicare 40 Medicaid/SCHIP 38 Non-group 28 People in millions

18. Who Are the Uninsured? A significant portion are low-income Over 400% FPL <100% FPL 300-400% FPL 200-300% FPL 100-200% FPL

19. Who Are the Uninsured? Nearly two-thirds are employed or their dependents Employedand theirdependents62%

20. Who Are the Uninsured? More than one in four has access to employer insurance Has access toemployerinsurance28%

21. Who Are the Uninsured? A similar proportion is eligible for Medicaid or SCHIP Eligible forMedicaid/ SCHIP28%

22. Comparison of Major Bills

23. Comparison of Major Bills (cont.) *age, family size, geography **age, family size, geography, tobacco use

24. Medicaid Eligibility

25. Eligibility for Medicaid Varies by Category of Eligibility Federal Poverty Line (For a family of four is $21,200 per year in 2008) Note: Medicaid income eligibility for most elderly and individuals with disabilities is based on the income threshold of Supplemental Security Income (SSI). SOURCE: Based on a national survey conducted by the Center on Budget and Policy Priorities for KCMU, 2009.

26. Medicaid Eligibility for Working Parents Varies by State NH VT WA ME MT ND MN MA OR NY SD WI ID RI MI CT WY PA NJ IA NE OH IN DE NV IL IL WV UT VA MD CO KS MO KY CA NC DC TN OK SC AR AZ NM AL GA MS TX LA AK FL HI 20-49% FPL (14 states) 50- 99% FPL (20 states) > 100% FPL (17 states including DC) US Median Eligibility = 68% FPL: $11,968 per year *The Federal Poverty Line (FPL) for a family of three in 2008 is $17,600 per year. SOURCE: Kaiser Commission on Medicaid and the Uninsured, Where are States Today: Medicaid and State-FundedCoverage Eligibility Levels for Low-Income Adults. October 2009.

27. The Effect of Medicaid and SCHIP Expansions on Coverage Depends on Eligibility Eligibility Based on Income Relative to the Federal Poverty Level (FPL)

28. Impact on States Will Depend on Portion of Costs for Newly Eligible Borne by Feds NH VT WA ME MT ND MN MA OR NY SD WI ID RI MI CT WY PA NJ IA NE OH IN WV DE NV IL IL UT VA VA CO MD KS MO KY CA NC DC TN OK SC AR AZ NM AL GA MS TX LA AK FL HI 71+ percent (6 states) 62 to <71 percent (19 states including DC) 51 to <61 percent (12 states) 50 percent (14 states) SOURCE: Federal Register, November 28, 2007 (Vol. 72, No. 228), pp 67305-67306, at http://edocket.access.gpo.gov/2007/pdf/07-5847.pdfand correction for North Carolina at Federal Register, Friday, December 7, 2007 (Vol. 72, No. 235), p. 69285, at http://edocket.access.gpo.gov/2007/pdf/C7-5847.pdf.

29. Employer Participation

30. On Average, Employers Contribute 83% of Premium Costs for Individuals Source: Kaiser/HRET Survey, 2009

31. Most Employees Work for Large Firms that Already Offer Coverage

32. Outline for Seminar • Background on COMPARE • Review of major bills in Congress • Analysis of HR 3962 • Cost containment: the next frontier

33. What Is Our Contribution? • Transparency around the numbers • Assumptions • Design choices • Analytic methods • Objective source • Insights about unintended consequences • Broader perspective on policy effects

34. Key Features of HR 3962 • New insurance “Exchange” created • National (Health Choices Administration) • States may create separate exchanges (or multi-state exchanges) • Private companies and public plan offer policies meeting minimum benefit standards • Exchange eligibility limited to those without employer offers or Medicaid eligibility • Exchange-eligible individuals with incomes up to 400% Federal Poverty Level can receive subsidies for premiums and out-of-pocket expenses

35. Key Features of HR 3962 (cont.) • Medicaid eligibility expanded to all persons with incomes < 150% FPL • States with more generous eligibility must maintain prior levels • Employers required to offer insurance coverage and subsidize premiums • 72.5% for individuals, 65% for family • Automatic enrollment of eligible individuals • Exempts firms with payroll < $500K • Penalty for failure to comply: 8% of payroll for firms with payroll > $750K

36. Key Features of HR 3962 (cont.) • Require everyone to have insurance (individual mandate) • Options include: employer, Medicaid, Medicare, other government, individual • Penalty for failure to comply: 2.5% of adjusted gross income

37. We’ve Analyzed the Likely Effects of This Legislation on Three Dimensions • Coverage • Spending • Consumer financial risk

38. Effect of Different Subsidy and Penalty Levels on Reducing Uninsured

39. Newly Insured Obtain Coverage Through Employers, Medicaid, Exchange

40. Uninsured in 2019 Are Younger Than Status Quo Projections Without Reform

41. Uninsured in 2019 Are Relatively Healthier than Status Quo Projections Self-reported health status

42. Uninsured in 2019 Are “Wealthier” than Status Quo Projections

43. We’ve Analyzed the Likely Effects of This Legislation on Three Dimensions • Coverage • Spending • Consumer financial risk

44. House Bill Increases National (Personal) Health Spending by 3.6%

45. House Bill Would Increase Cumulative Medicaid Spending by 11.2%

46. Individual Penalty Payments Would Total $42.7B From 2010-2019

47. Employer Penalty Payments Would Total $103B From 2010-2019

48. We’ve Analyzed the Likely Effects of This Legislation on Three Dimensions • Coverage • Spending • Consumer financial risk

49. Outline for Seminar • Background on COMPARE • Review of major bills in Congress • Analysis of HR 3962 • Cost containment: the next frontier

50. U.S. Health Spending Increasing Rapidly 5,000,000 2008 4,500,000 Total Expenditures 4,000,000 Total Private 3,500,000 Total Public 3,000,000 Spending Federal ($ millions) 2,500,000 State & Local 2,000,000 1,500,000 1,000,000 500,000 0 1965 1975 1985 1995 2005 2015 Source: Centers for Medicaid Services, Health and Human Services, “National Health Expenditures Accounts, 1965–2017.