1. www.healthpolicy.ucla.edu Dylan H. Roby, Ph.D. Research Scientist UCLA Center for Health Policy Research June 10, 2008 This project was funded by the California Endowment Using an Affordability Model to Evaluate Policy Proposals During California’s Health Insurance Reform Effort

2. Two Dueling Proposals  Governor Schwarzenegger (GHCP) Pay or Play Provision (up to 4% employer payroll fee) Subsidies based on family income (up to 250% of FPL) Individual Mandate  Nunez/Perata (AB 8/SB 48) Pay or Play Provision (7.5% employer payroll fee) Purchasing Pool, guaranteed issue, and community rating Larger subsidies based on family income (up to 350% of FPL) This bill passed the assembly and senate, but was vetoed by the Governor  Both included an incremental Medicaid/SCHIP expansion

3. Predicting Potential Health Care Costs for California’s Families Recent Research Approaches  Hadley and Holohan (Urban Institute) Based on 3-years of Medical Expenditure Panel Survey (MEPS) data Used in Massachusetts’ Reform  Kominski and Roby (UCLA) Previous research used the above approach and incorporated California Health Interview Survey (CHIS) data For these 2 projects, used MEPS subset of the insured in the Western U.S.

4. Using MEPS to Estimate Family Health Care Spending Household Survey Uses NHIS respondent households Western Region Subset Pooling Multiple Years of Data (2002-2004) Using California specific Inflators  CPI-U Medical Care Services (for actual services) and Employer Health Benefits Survey (for premiums) Several Components of MEPS  Household Component Full Year Consolidated Data File Jobs File Person Round Plan Public Use File  Insurance Component

5. Two Separate Research Projects on Affordability California Budget Project (CBP)  Three Stereotypical Family Structures Single person, Single parent with 2 kids, Married couple with 2 kids  Estimates of Spending for Each Family Structure  Represented 8 million insured households UC Berkeley Labor Center  Focused on providing estimates of spending for all insured Californians  Poverty Bands (based around current proposals for reform)

6. Source: Carroll D, Roby DH, Ross J, Snavely M, Brown ER, and Kominski GF. What Does It Take for a Family to Afford to Pay for Health Care. UCLA Center for Health Policy Research, 2007.

7. About 2.9 Million Californians With Family Income Above 250% FPL Are Uninsured or Insured in the Non-Group Market Source: Jacobs K, Capozza K, Roby DH, Kominski GF, and Brown ER. Health Coverage Expansion in California: What Can Consumers Afford to Spend? UC Berkeley Labor Center and UCLA Center for Health Policy Research, 2007.

8. Proportion of Family Income Spent on Health Care Costs (Premiums and Out-of-Pocket Spending) for the Commercially Insured at the 50 th Percentile (Median) of Health Care Costs, by Family Income, 2007 Source: Jacobs K, Capozza K, Roby DH, Kominski GF, and Brown ER. Health Coverage Expansion in California: What Can Consumers Afford to Spend? UC Berkeley Labor Center and UCLA Center for Health Policy Research, 2007.

9. Proportion of Family Income Spent on Health Care Costs (Premiums and Out-of-Pocket Spending) for the Commercially Insured in the 90 th percentile of Health Care Costs, by Family Income, 2007 Source: Jacobs K, Capozza K, Roby DH, Kominski GF, and Brown ER. Health Coverage Expansion in California: What Can Consumers Afford to Spend? UC Berkeley Labor Center and UCLA Center for Health Policy Research, 2007.

10. How were these two projects used? The CBP Report resulted in fairly wide media coverage  It is easy to explain dollars. Labor Center brief  Used by advocates  Cited by the Legislative Analyst’s Office (LAO) After these two documents were published, a special session of the legislature was called.  The main proposal (AB X1 1 – Nunez) represented a compromise between the two dueling plans.

11. Compromise (AB X1 1 – Nunez) Medicaid/SCHIP expansion  Adults would qualify for Medicaid with income of up to 250% of FPL  Children would qualify for Medicaid/SCHIP with income of up to 300% FPL Broader subsidies and tax credits for higher income groups (up to 400% FPL) If a family (<250% of FPL) had to spend over 5% of their family income there was an opt-out option. Employer payroll tax  sliding scale (1% to 6.5%) depending on size of payroll

12. Summary and Conclusions The policy choices seemed to focus on out-of-pocket premium contributions only MEPS data allows us to recognize that Non- Employer Based Insurance enrollees would pay substantially more for coverage Some families, even with higher incomes, may be susceptible to high costs MEPS offers a tool for estimating the burden of health care costs and can be tailored by income, family size, and region.