Affordability & Lessons    Learned from State CHIP    Programs                  Leigha Basini, JD1                Program ...
WHO ARE THE UNINSURED?          Income Distribution by FPL of 45.7 Million           Currently Uninsured Adults and Childr...
CONSEQUENCES OF UNAFFORDABLE   COVERAGE    When formerly            free coverage costs 1% of     income         Estimat...
WHAT IS AFFORDABILITY? Focus on three    approaches:  1. Current spending  2. Household budget  3. Percentage of income ...
WHAT IS AFFORDABILITY? Household budget:      what people need to earn to afford necessities       What are “necessities...
CHIP AFFORDABILITY Current income      eligibility ranges from 160-  400% FPL Most states 200-250% FPL Up to 5% of inco...
ACA COVERAGE SUBSIDIES Premium      subsidies  Income as a      Premium as a      Income as a      Premium as a  Percent ...
MASSACHUSETTS STANDARD Family coverage   affordability schedule for 2011        Income as a        Premium as a        Pe...
ACA VS. MASSACHUSETTS     Minimum Monthly 2010 Single Adult Premiums         $200                                         ...
10
BE FLEXIBLE Legislationor regulation? Choose wisely Kentucky CHIP statute - $20/month premium  for 151-200% FPL     Led...
CONSIDER COST INCREASERAMIFICATIONS New Jersey CHIP – similar experience    to Kentucky       Date                      E...
BE CONSUMER-FOCUSED   Premium payment methods      Over 40% of CHIP programs accept 5 or       more payment methods   T...
ALIGN ACROSS PROGRAMS Identify         potential cliffs How can states smooth cliffs?     $$$     Regulate premiums A...
SET RESULTS-DRIVEN POLICIES Is cost sharing results-driven?     Low copayment for high value services        CHIP: No c...
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Affordability and Lessons Learned from State CHIP Programs by Leigha Basini

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States are responsible for on the ground implementation of the Affordable Care Act (ACA), including expanding coverage options through Exchanges, Medicaid and other health insurance programs. This webinar considers different ways policymakers define affordability and draws on lessons from the Children's Health Insurance Program (CHIP), which can serve as a model for states as they implement affordability provisions in ACA. It also looks at the impact on families when coverage is not affordable and considerations for families in purchasing decisions.

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Affordability and Lessons Learned from State CHIP Programs by Leigha Basini

  1. 1. Affordability & Lessons Learned from State CHIP Programs Leigha Basini, JD1 Program Manager June 20, 2011
  2. 2. WHO ARE THE UNINSURED? Income Distribution by FPL of 45.7 Million Currently Uninsured Adults and Children under 65 11% Below 133% FPL 8% 17% 45% 133-199% 200-299% 19% 300-399% 400% and above 2Source: Analysis of March 2009 CPS by N. Tilipman and B. Sampat ofColumbia University for The Commonwealth Fund.
  3. 3. CONSEQUENCES OF UNAFFORDABLE COVERAGE  When formerly free coverage costs 1% of income  Estimated 16% enrollment decrease  When formerly free coverage costs 5% of income  Estimated 74% enrollment decreaseSource: L. Ku, Charting the Poor More for Health Care: Cost-Sharing in 3Medicaid (Washington, DC: The Center on Budget and Policy Priorities, May 7,2003).
  4. 4. WHAT IS AFFORDABILITY? Focus on three approaches: 1. Current spending 2. Household budget 3. Percentage of income Current spending: the amount insured people voluntarily spend  At what point do enough people enroll to assume something is affordable?  If offered, people tend to enroll in ESI, even if costly 4  There will always be some who don’t enroll
  5. 5. WHAT IS AFFORDABILITY? Household budget: what people need to earn to afford necessities  What are “necessities”? May or may not include health care  Takes into account regional cost variations Percentageof income: percentage of income that can be spent on health care, based on FPL  What is used in CHIP and ACA 5
  6. 6. CHIP AFFORDABILITY Current income eligibility ranges from 160- 400% FPL Most states 200-250% FPL Up to 5% of income for premiums, copayments, deductibles, co-insurance  Lower in many states No cost sharing for well-child care Study of 17 states found average 98-100% actuarial value for families to 225% FPL  Actuarial value: Percentage of total anticipated health care costs that insurer pays on average in a 6 given product
  7. 7. ACA COVERAGE SUBSIDIES Premium subsidies Income as a Premium as a Income as a Premium as a Percent of FPL Percent of Percent of FPL Percent of Income Income Up to 133% 2% 200-250% 6.3-8.05% 133-150% 3-4% 250-300% 8.05-9.5% 150-200% 4-6.3% 300-400% 9.5% Cost sharing subsidies Income as a Actuarial Value Income as a Actuarial Value Percent of FPL of Coverage Percent of FPL of Coverage 100-150% 94% 200-250% 73% 150-200% 87% 250-400% 70% 7 7
  8. 8. MASSACHUSETTS STANDARD Family coverage affordability schedule for 2011 Income as a Premium as a Percent of FPL Percent of Income 0-150% 0% 150-200% 2.5-3.4% 200-250% 4-5% 250-300% 5-6% 300-398% 6.1-8.1% 398-511% 7.4-9.5% 511-625% 8.8-10.8% 8
  9. 9. ACA VS. MASSACHUSETTS Minimum Monthly 2010 Single Adult Premiums $200 $182 $180 $160 $146 $140 $120 $114 $100 $81 MA $80 $77 $77 ACA $60 $54 $39 $39 $40 $20 $0 $0 150% 175% 200% 225% 250%Source: S. Dorn, The Basic Health Program Option under 9 9Health Reform: Issues for Consumers and States(Washington, DC: The Urban Institute, March 2011).
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  11. 11. BE FLEXIBLE Legislationor regulation? Choose wisely Kentucky CHIP statute - $20/month premium for 151-200% FPL  Led to disenrollment, reenrollment  Cost money to reenroll, send invoices, lost federal match  Had to “suspend” premium requirement through budget process rather than amend law 11
  12. 12. CONSIDER COST INCREASERAMIFICATIONS New Jersey CHIP – similar experience to Kentucky Date Enrollment June 2008 (premiums) 33,203 June 2009 (no premiums) 36,525 June 2010 (no premiums) 45,765 Will enrollment decrease? Where will people go? What will it cost the state? 12
  13. 13. BE CONSUMER-FOCUSED Premium payment methods  Over 40% of CHIP programs accept 5 or more payment methods Track OOP spending Grace period Health literacy/readability 13
  14. 14. ALIGN ACROSS PROGRAMS Identify potential cliffs How can states smooth cliffs?  $$$  Regulate premiums Align cost sharing 14
  15. 15. SET RESULTS-DRIVEN POLICIES Is cost sharing results-driven?  Low copayment for high value services  CHIP: No cost sharing for well child care  Higher copayment for low value services  CHIP: Higher cost sharing for non-emergency ER use RAND – with children, cost sharing decreased utilization Experiment with cost sharing to further disease management, generic/brand drug copayments, wellness incentives, etc. 15

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