3 August 2006 State Coverage Initiatives Workshop for State Officials 1 Session 3: Coverage Mandates Panelist: Jerry Russo Department of Economics University of Hawaii 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

This research is funded in part through a U.S. Health Resources and Services Administration, State Planning Grant to the Hawaii State Department of Health. Sub-Contract Research Corporation of the University of Hawaii. Research conducted by the University of Hawaii, Social Science Research Institute in collaboration with the Hawaii State Department of Health, Hawaii Institute for Public Affairs: Hawaii Uninsured Project and the Hawaii Health Information Corporation. 2 Labor Market Impacts of Hawaii’s Employer Mandate Gerard Russo Department of Economics University of Hawaii

3 August 2006 State Coverage Initiatives Workshop for State Officials 3 University of Hawaii Research Team Hawaii 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 

3 August 2006 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

3 August 2006 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 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

3 August 2006 State Coverage Initiatives Workshop for State Officials 6 Hawaii Adults Age by Sector of Employment

3 August 2006 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

3 August 2006 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.

3 August 2006 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.

3 August 2006 State Coverage Initiatives Workshop for State Officials 10 Percent of Private-Sector Non-Collective Bargaining Employees with their own ESI: CPS ASEC

3 August 2006 State Coverage Initiatives Workshop for State Officials 11 Percent of Private-Sector Non-Collective Bargaining Employees with Spouse’s ESI: CPS ASEC

3 August 2006 State Coverage Initiatives Workshop for State Officials 12 Percent of Private-Sector Non-Collective Bargaining Employees with no ESI: CPS ASEC

3 August 2006 State Coverage Initiatives Workshop for State Officials Density Hours Worked HawaiiU.S. Probability Density of Non-Collective Bargaining Private-Sector Employees by Hours Worked Per Week: CPS ASEC Hawaii sample size=6, States & DC sample size=528,284

3 August 2006 State Coverage Initiatives Workshop for State Officials 14 Hours Worked per Week by Employees with ESI from their own Employer: Hawaii vs. US Density Hours HawaiiUS Probability Density of Employees with ESI by Hours Worked per Week: CPS ASEC , Private-Sector Non-Collective Bargaining Hawaii sample size=5, States & DC sample size=373,275

3 August 2006 State Coverage Initiatives Workshop for State Officials Density Hours HawaiiU.S. Probability Density of Employees without ESI by Hours Worked Per Week: CPS , Private-Sector Non-Collective Bargaining 20 hour effect Hawaii sample=1, States & DC sample=174,833

3 August 2006 State Coverage Initiatives Workshop for State Officials 16 Hours Worked per Week by High-Wage Employees: Hawaii vs. US Density Hours USHI Probability Density of Private-Sector Non-Collective Bargaining Employees by Hours Worked per Week—Hawaii vs. US: High-Wage Employees, CPS Basic Monthly Survey

3 August 2006 State Coverage Initiatives Workshop for State Officials 17 Hours Worked per Week by Low-Wage Employees: Hawaii vs. US Density Hours USHI Probability Density of Private-Sector Non-Collective Bargaining Employees by Hours Worked Per Week—Hawaii vs. US: Low-Wage Employees, CPS Basic Monthly Survey

3 August 2006 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.

3 August 2006 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.

3 August 2006 State Coverage Initiatives Workshop for State Officials 20 Estimated Annual Nominal Growth Rates: MEPS-IC UH Non-Linear Discrete-Time Estimates  Family Premiums Hawaii6.34% US9.85%  Single Premiums Hawaii5.43% US8.96%

3 August 2006 State Coverage Initiatives Workshop for State Officials 21 YearHawaii-ActualUS-ActualHawaii-PredictedUS-Predicted Note: The 1998 MEPS-IC sample for Hawaii is too small to compute reliable estimates Average Family Premiums in Hawaii and US: MEPS-IC Actual UH Projection

3 August 2006 State Coverage Initiatives Workshop for State Officials 22 Family Premium Trend Line: Hawaii and US , University of Hawaii Estimates Based on MEPS-IC

3 August 2006 State Coverage Initiatives Workshop for State Officials 23 YearHawaii-ActualUS-ActualHawaii-PredictedUS-Predicted Note: The 1998 MEPS-IC sample for Hawaii is too small to compute reliable estimates Average Single Premiums in Hawaii and US: MEPS-IC Actual UH Projection

3 August 2006 State Coverage Initiatives Workshop for State Officials 24 Single Premium Trend Line: Hawaii and US ,University of Hawaii Estimates Based on MEPS-IC

3 August 2006 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.

3 August 2006 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.