1. 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, Prime Contract No. 1 P09 OA 00046-01. Sub-Contract Research Corporation of the University of Hawaii, Project No. 659075. 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. Expansion of Public Insurance for Adults: SCHIP and Medicaid/QUEST Gerard Russo Sang-Hyop Lee Lawrence Nitz University of Hawai`i at Mānoa Hawai`i Coverage for All Project Technical Workshop III 23 May 2003

2. 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, Prime Contract No. 1 P09 OA 00046-01. Sub-Contract Research Corporation of the University of Hawaii, Project No. 659075. 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. POLICY SCENARIO: SCHIP Adults Extend State Children’s Health Insurance Program eligibility to the parents of children aged 0-18 years residing in households with incomes less than or equal to 200% of the Federal Poverty Line.

3. Rev. 22 May 2003Preliminary results. Not for quotation, citation nor further dissemination. Social Security Amendments Medicare: Title XVIII of the Social Security Act 1965 Medicaid: Title XIX of the Social Security Act 1965 SCHIP: Title XXI of the Social Security Act 1997

4. Rev. 22 May 2003Preliminary results. Not for quotation, citation nor further dissemination. SCHIP FMAP Federal Medical Assistance Percentage (FMAP) FFY 2002 69.44% FFY 2003 71.14%

5. Rev. 22 May 2003Preliminary results. Not for quotation, citation nor further dissemination. Adult SCHIP Demonstration States Arizona Minnesota New Jersey Rhode Island Wisconsin

6. Rev. 22 May 2003Preliminary results. Not for quotation, citation nor further dissemination. Econometric Model: Multinomial Logit Mutinomial Logit to Estimate the Probability of Coverage Three Categories Uninsured Private Insurance & Other Medicaid QUEST Predictor Variables Age Sex Income County Race/Ethnicity Health Status (some models) Employment Status (some models)

7. Rev. 22 May 2003Preliminary results. Not for quotation, citation nor further dissemination. Methodology for Predicting the Effect of Changing Eligibility Step I: Estimate multinomial logit model on a sample of adults with eligible children where the adults are also eligible (i.e., 0-100% FPL). Step II: Estimate multinomial logit model on a sample of adults with eligible children where the adults are ineligible (i.e., 100-200% FPL). Step III: Predict with Model I and Model II with the characteristics of the target population (i.e., adults with SCHIP children 100-200% FPL).

8. Rev. 22 May 2003Preliminary results. Not for quotation, citation nor further dissemination. Economic-Demographic Analysis of Adult SCHIP Expansion How many additional adults are potentially eligible for free medical assistance under the SCHIP Expansion from 100% to 200% FPL? 35,756 adults based on CPS 1996-2002 Of the newly eligible adults, how many are expected to be enrolled in SCHIP? (Take-Up) 7831 adults based on model estimate CPS 1996-2002 Of the newly enrolled SCHIP beneficiaries, how many are expected to have switched from private to public insurance? (Crowd-Out) 4255 adults based on model estimates CPS 1996-2002 How many adults will become newly insured? 3576 adults based on model estimates CPS 1996-2002

9. Rev. 22 May 2003Preliminary results. Not for quotation, citation nor further dissemination. Econometric Prediction of Insurance Coverage Change due to Adult SCHIP Expansion: CPS 1996-2002 Prediction Ineligible Prediction Eligible Change Uninsured14.0%4.0%-10.0% Private Insurance 80.2%68.3%-11.9% Public Insurance 5.8%27.7%+21.9% Total100% 0%

10. Rev. 22 May 2003Preliminary results. Not for quotation, citation nor further dissemination. Econometric Prediction of Insurance Coverage Change due to Adult SCHIP Expansion: CPS 1996-2002 Prediction Ineligible Prediction Eligible Change Uninsured50061430-3576 Private Insurance 28,67624,421-4255 Public Insurance 20749905+7831 Total35,756 0

11. Rev. 22 May 2003Preliminary results. Not for quotation, citation nor further dissemination. Incurred Per Capita Expenses 2001: Uninsured SCHIP Adults Age 19-64, 100-200% FPL Emergency Room & Hospital Discharge $388 Private Physician Offices? Primary Care Facilities? Pharmaceuticals, etc.? TOTAL$388

12. Rev. 22 May 2003Preliminary results. Not for quotation, citation nor further dissemination. Economic Cost Analysis What is the expected direct expenditure per newly enrolled beneficiary? $3000 Burden to Federal Taxpayers $2134 Burden to State Taxpayers $866 What is the current total medical expenditure by all sources per uninsured adult residing in SCHIP households 100-200% of FPL? $388

13. Rev. 22 May 2003Preliminary results. Not for quotation, citation nor further dissemination. Economic Cost Analysis (cont.) What is the cost per newly insured adult? Cost to Federal Taxpayers Cost to State Taxpayers Cost to Society as a Whole What is the total cost of the SCHIP expansion? Cost to Federal Taxpayers Cost to State Taxpayers Cost to Society as a Whole

14. Rev. 22 May 2003Preliminary results. Not for quotation, citation nor further dissemination. Burden to Federal and State Taxpayers Direct Cost of SCHIP Expansion $3000*7831=$24,493,000 Federal Share 71.14%: $2134*7831=$16,711,354 State Share 28.86%: $866*7831=$6,781,646 Direct Cost per Newly Insured Adult $6849 Federal Cost per Newly Insured Adult $4873 State Cost per Newly Insured Adult $1976

15. Rev. 22 May 2003Preliminary results. Not for quotation, citation nor further dissemination. Net Cost to Society as a Whole Cost of Newly Insured Adults $3000*3576. $10,728,000 Less Current Medical Expenses $388*3576. $1,387,488 Net Cost$9,340,522

16. 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, Prime Contract No. 1 P09 OA 00046-01. Sub-Contract Research Corporation of the University of Hawaii, Project No. 659075. 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. Policy Scenario: Medicaid/QUEST Adults Extend Quest eligibility to adults with incomes less than or equal to 200% of the Federal Poverty Line

17. Rev. 22 May 2003Preliminary results. Not for quotation, citation nor further dissemination. Medicaid/QUEST FMAP Federal Medical Assistance Percentage (FMAP) FFY 200358.77%

18. Rev. 22 May 2003Preliminary results. Not for quotation, citation nor further dissemination. Where we are now: Distribution of Insurance in 2001, BRFSS Survey ClassNum.Percent Uninsured1347.84 Insured147085.96 Medicaid1066.2

19. Rev. 22 May 2003Preliminary results. Not for quotation, citation nor further dissemination. Two models Test Case: Compute a predictive equation on the 0% to 100% FPL population Estimate the distribution of insured among the 100%-200% FPL population using this equation Base Case: Compute a predictive Equation on the entire sample Estimate the distribution of insured among the 100% -200% FPL population

20. Rev. 22 May 2003Preliminary results. Not for quotation, citation nor further dissemination. Predictions of changing Medicaid ceiling to 200% of FPL Predicted vs. Actual Rates of Coverage (pooled 2000 and 2001 data, BRFSS) Coverage Method: Prediction Eligible* Prediction Ineligible^Actual Uninsured8.937.84 Insured81.29285.96 Medicaid9.956.2 *Prediction Target Group Eligible: Fit model over the population <100% FPL, then predict over the means of the 100%-200% FPL population. ^Prediction Target Group Ineligible: Fit model over the entire population and predict over the means of the 100%-200% FPL population.

21. Rev. 22 May 2003Preliminary results. Not for quotation, citation nor further dissemination. Implications for Changing Adult Eligibility From the ideal base case, raising the eligibility floor to 200% FPL brings the Medicaid coverage from 5% to 9.9% The same change in eligibility also raises the percentage of uninsured from 3% to 8.9% 10.8% of the target population will switch from private or other health insurance to Medicaid

22. Rev. 22 May 2003Preliminary results. Not for quotation, citation nor further dissemination. Problematic Issues The whole population model may not be the best indicator of the base case for the 100% to 200% FPL household’s insurance decision The multivariate logistic regression for the 0% to 100% FPL population may identify behavioral patterns unrelated to the policy difference—the zero monetary cost of Medicaid coverage

23. Rev. 22 May 2003Preliminary results. Not for quotation, citation nor further dissemination. Open Questions How can we more cleanly separate the economic decision to acquire a particular health insurance coverage from other motivations or experiences in the target population? Do systematic differences in the underlying surveys lead to different results in the CPS and BRFSS?