Health Reform Across the States: Increased Insurance Coverage and Federal Spending on the Exchanges and Medicaid

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Health Reform Across the States: Increased Insurance Coverage and Federal Spending on the Exchanges and Medicaid Health Reform Across the States: Increased Insurance Coverage and Federal Spending on the Exchanges and Medicaid Timely Analysis of Immediate Health Policy Issues March 2011 Matthew Buettgens, John Holahan and Caitlin Carroll Summary With the enactment of the Health Care and Education differences, ranging from 7.1 percent in New England Reconciliation Act of 2010 on March 30, 2010, the Patient to 10.3 percent of the nonelderly in West North Central Protection and Affordable Care Act (ACA) became law, states. The variation reflects differences in income fundamentally changing health insurance and access to distribution and the level of ESI coverage. health care in the United States. Using the Urban Institute’s • Under the ACA, exchange subsidies would total Health Insurance Policy Simulation Model (HIPSM), we approximately $33 billion, with the majority going to estimate important effects of the ACA at the state level: those below 200 percent of the federal poverty level the increase in insurance coverage, coverage and subsidies (FPL). Subsidies per nonelderly person, a useful measure in the new nongroup health benefit exchanges, Medicaid for comparing subsidy amounts between states, are enrollment and costs under the expansion and total new highest in the Pacific states and lowest in New England. federal spending on Medicaid and subsidies. We provide results by state, by region and by two useful groups of • Nationally, there would be 4.9 million new Medicaid states. Key results are also displayed on maps. For ease of enrollees who are eligible for Medicaid under current law, accounting for 8.3 percent of total new Medicaid comparison, we simulate the ACA as if fully implemented enrollment under the ACA. Regionally, newly enrolled in 2011 and contrast the results with HIPSM’s prereform current eligibles make up the smallest share of total baseline results for 2011. These results complement an Medicaid enrollment in New England, 5.4 percent and earlier policy brief that analyzed the national impact of the largest share in the mountain states, 10.5 percent. health reform as if implemented in 2010.1 States with the highest ratio of ESI eligible residents see We estimate that: the lowest percentages of their total Medicaid enrollment • Full implementation of the ACA would lead to a 10.3 made up by newly enrolled current eligibles, as do states percentage point decrease in the national uninsurance with a high proportion of residents under 138 percent of rate for the nonelderly, roughly equivalent to 28 million the FPL. fewer uninsured Americans. Although every state would • There would be 12.3 million newly eligible Medicaid enjoy a decline in uninsurance, the magnitude of the enrollees nationwide, representing approximately a fifth decrease varies significantly by state, ranging from a 1.1 of total enrollment.2 This enrollment is driven by newly percentage point decrease in Massachusetts to a 16.9 eligible adult nonparents, who account for 10.0 million percentage point decrease in Texas. of the newly eligible Medicaid enrollees. Children and • State-level income distributions and employer-sponsored adult parents make up a smaller proportion of newly insurance (ESI) eligibility levels affect the impact of eligible Medicaid enrollees. Due to the Children’s Health health reform. States where lower income levels allow for Insurance Program (CHIP), children are already covered higher Medicaid and exchange subsidy eligibility would through a high-income threshold, so fewer gain eligibility see a greater decline in uninsurance rates. Likewise, with the general Medicaid expansion. states with low ESI eligibility would see a larger decrease • Newly eligible Medicaid enrollees are less expensive, on in uninsurance than states with high ESI eligibility. average, than current enrollees. Although new eligibles • The percent of nonelderly covered through nongroup make up about 20 percent of total enrollees, they only health exchanges would vary by state. Massachusetts account for 15.4 percent of costs. This is because the has the lowest coverage through nongroup exchanges at newly eligible adults would be, on average, cheaper to 5.4 percent, while North Dakota covers 13.9 percent of cover than currently enrolled adults. Without reform, its population through the nongroup exchange, with a most states do not have an income eligibility threshold national average of 8.9 percent. We also observe regional for adult nonparents, and many of those that do have closed their enrollment. Therefore, the adult nonparents West Virginia would receive $498 in new federal spending currently enrolled gained eligibility through disability for every nonelderly person in the state, while Iowa would and medical need. receive only $171. A full analysis of the economic impact of • There would be $82.3 billion in new federal spending on the ACA on states would have to include the distributional Medicaid and exchange subsidies flowing to the states. effects of Medicare payment cuts, new taxes on payroll and There would be considerable state variation since factors unearned income and taxes on insurers, drugs and medical affecting both the exchanges and Medicaid are involved. device manufacturers. Introduction dollars, in dollars per nonelderly exchange subsidies as well as Medicaid person and in dollars per person with rather than on total Medicaid spending. With the enactment of the Health Care subsidized coverage. Subsidy dollars per and Education Reconciliation Act of nonelderly person provides a measure Methods 2010 on March 30, 2010, the Patient of the level of federal subsidies flowing To estimate the effects of health reform Protection and Affordable Care Act into a state, controlling for differences and the individual mandate, we use became law, fundamentally changing in state population. The amount of the Urban Institute’s Health Insurance health insurance and access to health subsidy dollars per subsidized person 4 care in the United States. This brief Policy Simulation Model. HIPSM allows comparisons between states of provides state-level estimates of three simulates the decisions of businesses how much an average subsidized person important aspects of reform. First, and individuals in response to policy would cost. while all states would see an increase changes, such as Medicaid expansions, in insurance coverage under the ACA, Third, we present estimates of new health insurance options, subsidies the current insurance markets in the Medicaid/CHIP enrollment and costs for the purchase of health insurance various states differ considerably. Thus, under the Medicaid expansion, giving and insurance market reforms. The the coverage effects of the ACA would separate figures for adult nonparents, model provides estimates of changes vary significantly between states. We adult parents, children and those made in government and private spending, present state-level estimates of the newly eligible by the expansion. For premiums, rates of employer offers of percent of the nonelderly who would each estimate, we provide results by coverage and health insurance coverage 5 be uninsured without health reform state, region and two groups of states. resulting from specific reforms. and the uninsured rate among the Key results are also displayed on maps. We simulate the main coverage nonelderly under the ACA. The effect provisions of the ACA as if they were of health reform on insurance coverage Lastly, we consider the Medicaid costs of new enrollees and estimate the share fully implemented in 2011 and compare within a state is the difference of these results to the HIPSM baseline results for two, the percentage point decline in the paid by the federal government. We combine this with the total exchange 2011 prior to implementation of these uninsured rate. We examine state and reforms. This approach differs from that subsidies to estimate the total federal regional patterns in this decline. of the Congressional Budget Office or the dollars flowing to the states. Second, we examine coverage and CMS actuaries who by necessity provide subsidy costs in the new nongroup The results presented here complement 10-year estimates. Our approach permits health benefit exchanges. We provide state-by-state estimates of Medicaid more direct comparisons of reform with state estimates of the number of coverage and spending released in the prereform baseline and of various nonelderly covered in the exchanges 2010.3 That work dealt exclusively reform scenarios with each other. The and how the distribution of exchange with Medicaid and used two take-up key coverage provisions of the ACA and coverage would vary by income group. rate scenarios to forecast Medicaid their implications for coverage and costs The share of exchange coverage for enrollment for 2014 to 2019. This were summarized in an earlier policy those below 400 percent of the federal report presents 2011 estimates, as brief providing a nationwide analysis of poverty level is particularly significant described in the Methods section the ACA based in 2010.6 because the large majority of these below. We present state-level results To simulate state-level results, we would receive subsidies. This share is from a full HIPSM simulation of the made the following enhancements a result of several factors, such as the ACA. Medicaid enrollment is not based to the model not reflected in earlier availability of ESI in addition to the on fixeda priori take-up rates as in documentation: distribution of income in a state. We the earlier work but is simulated as then present income-based premium described below in Methods. We focus • Two years of CPS data (survey years and cost-sharing subsidies in total on new federal dollars paid to states for 2009 and 2010) were pooled together Timely Analysis of Immediate Health Policy Issues 2 to increase state sample size. Results in a given state is a significant effort. be difficult to reliably impute based on for large states are based on a larger We are starting to supplement the CPS data. These additional deductions are number of surveyed households baseline used in this brief with special unlikely to affect our results materially.
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