Options to Expand Insurance Coverage in West Virginia

1
Options to Expand Insurance Coverage in West
Virginia

• Presented to
• Covering West Virginias Uninsured
• Leadership Seminar on Healthcare Economics
• By
• John Sheils
• The Lewin Group
• June 4, 2003
• Revised August 20, 2003

2
Medicaid/SCHIP Income Eligibility Levels in West
Virginia
SCHIP
250
Medicaid
200
133
100
74
29
0
Aged,
Pregnant
Infants
Children 1-5
Children 6-19
Parents
Non-
Blind, and
Women
custodial
Disabled
Adults
3
Impact of Covering Parents Below the FPL and
Children to 250 Percent of the FPL a/
250
Children 4,800 State Cost
1.8m Uninsured 2,200
SCHIP
200
Medicaid
133
100
Parents 18,350 Uninsured 15,600 State Cost 9.4m
74
29
0
Aged,
Pregnant
Infants
Children 1-5
Children 6-19
Parents b/
Non-
Blind, and
Women
custodial
Disabled
Adults
a/ Medicaid regulations allow states to buy into
employer coverage by paying the employee share of
the employer premium when it is cost-effective to
do so. Estimates assume that West Virginia would
pay the employee premium share, although West
Virginia has no buy in program at this time. b/
Includes 1,600 currently eligible children who
are enrolled as their parent(s) become covered
under the expansion. Source Lewin Group
estimates using the Health Benefits Simulation
Model (HBSM).
4
Impact of Covering all Adults to the FPL and
Children Through 250 Percent of the FPL a/
250
Children 4,800 State Cost
1.8m Uninsured 2,200
SCHIP
200
Medicaid
133
100
Parents 18,350 Uninsured 15,600 State Cost 9.4m
Adults 75,994 Uninsured 64,053 State Cost 40.8m
74
29
0
Aged,
Pregnant
Infants
Children 1-5
Children 6-19
Parents b/
Non-
Blind, and
Women
custodial
Disabled
Adults
a/ Medicaid regulations allow states to buy into
employer coverage by paying the employee share of
the employer premium when it is cost-effective
to do so. Estimates assume that West Virginia
would pay the employee premium share, although
West Virginia has no buy in program at this time.
b/ Includes 1,600 currently eligible children
who become enrolled as their parent(s) become
covered under the expansion. Source Lewin Group
estimates using the Health Benefits Simulation
Model (HBSM).
5
Impact of Covering Adults to 200 Percent of the
FPL and Children to 250 Percent of the FPL a/
250
Children 4,800 State Cost
1.8m Uninsured 2,200
SCHIP
200
Parents 29,227 Uninsured 23,920 State Cost
15.2m
Adults 53,887 Uninsured 37,849 State Cost 31.7m
Medicaid
133
100
Parents 18,350 Uninsured 15,600 State Cost 9.4m
Adults 75,994 Uninsured 64,053 State Cost 40.8m
74
29
0
Aged,
Pregnant
Infants
Children 1-5
Children 6-19
Parents b/
Non-
Blind, and
Women
custodial
Disabled
Adults
a/ Medicaid regulations allow states to buy into
employer coverage by paying the employee share of
the employer premium when it is cost-effective
to do so. Estimates assume that West Virginia
would pay the employee premium share, although
West Virginia has no buy in program at this time.
b/ Includes 4,200 currently eligible children
who become enrolled as their parent(s) become
covered. Source Lewin Group estimates using the
Health Benefits Simulation Model (HBSM).
6
Summary of Enrollment and Costs Under Selected
Medicaid/SCHIP Expansions in 2003
Source Lewin Group estimates using the Health
Benefits Simulation Model (HBSM).
7
Cost and Coverage Impacts of Selected Medicaid/
SCHIP Expansions with Premium Requirements
a/Assumes a monthly premium of 199 (143 for
children) which is phased-out on a sliding scale
with income for people between 150 and 200
percent of the FPL.
Source Lewin Group Estimates using the Health
Benefits Simulation Model (HBSM)
8
Employer and Individual Buy-in to Medicaid
Coverage

• Employer Eligibility
• Firms with under 50 workers
• Average salary below average for small firms in
  West Virginia (22,900)
• Not offered insurance in 12 months
• Employer pays 50 of premium
• 75 of workers must enroll

• Individuals
• Living below 300 of FPL
• No access to employer coverage
• Uninsured 12 months

9
Buy-in to Medicaid Offers Coverage for About 25
Percent Less Than Private Insurance

• Program Operations
• Number enrolled 25,900
• Reduction in uninsured 20,100
• Net cost to State a/ 0.0
• a/ Premiums set at levels required to fully fund
  program 199 per month for adults and 143 per
  month for children

West Virginia Medicaid Provider Payments as a
Percent of Private Payments
100
87
90
77
80
67
70
60
50
40
30
20
10
0
Prescription Drugs
Hospital
Physician
10
Create Low-cost Health Insurance Coverage Option

• Program
• Exempt from State benefits mandates (e.g. mental
  health, substance abuse, breast reconstruction)
• State reinsurance to subsidize high-cost cases
  (90 of costs over 30,000)
• Benefits limit of 100,000
• Uniform benefits package
• All insurers must participate
• Estimated savings of 10 to 15 in West Virginia

• Eligibility
• Individuals
• Uninsured 12 months
• Living below 250 of FPL
• Firms
• Fifty or fewer workers
• Less than 30 of workers paid over 30,000
• Employer pays half of premium
• Average Monthly Premium 278 (Persons 40-45)

11
Services Covered Under Low-cost Health Insurance
Option
Covered Services

• Inpatient
• Outpatient
• Physician
• Outpatient surgical
• Pre-admission testing
• Maternity care

• Adult preventive
• Preventive primary care for children
• Equipment
• Diagnostic
• Emergency
• Prescription drugs

Copays and Deductibles

• Inpatient Hospital 500
• Surgical services 20 copay
• Outpatient surgery 75 copay
• Other service 20 copay

• Emergency 50 copay
• Drugs 3,000 maximum
• Prenatal 10 copay

12
Mandatory Benefits in West Virginia a/

• Alcoholism Treatment
• Breast Reconstruction
• Colorectal Screening
• Contraceptives
• Diabetic Supplies
• Emergency Services
• Infertility Services (Non-invitro)

• Mammography Screening
• Mental Health
• Minimum Maternity Stay
• Rehabilitative Services
• Second Surgical Opinion
• TMJ Disorders
• Well-Child Care

a/Low-cost coverage option is exempt from
mandated benefits requirements
13
Impact of Low-cost Benefits Package
Percent of Claims for a Typical Health Plan by
Decile Ranking of Participants by Spending
Illustration of Reinsurance Concept

• Program Impacts
• Number Enrolled 6,200
• Reduction in Uninsured 5,800
• State Cost 2.3 million

14
High-risk Pool for Individuals

• Program Features
• Can not get coverage due to illness
• Individual pays 150 of standard risk premium
• State covers cost in excess of premiums
• Federal grants
• 1.0 million seed money
• Grant of about 231,000/year for losses

• Impacts
• Number enrolled 791
• Federal grant 231,000
• Annual net state
• cost 1.7 million

• Monthly Costs
• Standard Risk Premiums 365
• Amount paid 544
• Benefits costs per person 750

15
Refundable Tax Credit for Small Employers in West
Virginia

• Eligibility
• Firms with 50 or fewer workers
• Have not insured in six months
• Average earning below average for small firms in
  state
• Credit equals 40 of
• employer premium payments
• Typical premium 327 (based on PEIA for people
  age 40 to 45)

• Impacts
• People in firms that decide
• to offer coverage due
• to credit 4,300
• Reduction in
• uninsured 4,100
• Tax credit cost 5.4 million

16
Tax Credits to Individuals for Non-group
Insurance

• Tax Credit for People Below 300 of FPL
• Credit of 1,500 Single/3,000 Family
• People Receiving Credits a/ 95,600
• Reduction in Uninsured 66,300
• Cost of Credit 119.6 million

• Typical Premium 327 (Based on PEIA for People
  Age 40 to 45)

a/Includes both uninsured people who would take
coverage due to the credit (66,300 people), and
people currently purchasing non-group coverage
who would also be eligible for the credit (29,300
people).
17
Annual Cost and Coverage Impacts of Expansion
Proposals Compared
a/ Includes total program costs less premium
collections b/ Assumes standard FMAP of 75
percent c/ Uncompensated care for all providers
is estimated to be about 407 million, of which
about 208 million is attributed to hospitals
Source Lewin Group estimates using the Health
Benefits Simulation Model (HBSM).