Healthcare Spending

1
Healthcare Spending Access for Montana Kids and
families

• Dr. Steve Seninger
• steve.seninger_at_business.umt.edu
• Montana Kids Count
• Bureau of Business and Economic Research
• Healthcare Research Program
• www.bber.umt.edu
• The University of Montana-Missoula

2
Healthcare Spending in US Montana

• National Healthcare Spending? 1.9 trillion or
  16 of national Gross Product
  
• Montana 2005 Healthcare Spending estimated at
  4.9 billion.about
  
• ...16 of Montana Gross State Product
• Increased health expenditureshigher prices
  (times) increased utilization
  

3
US Healthcare Spending Utilization Price
Increases
Annual US Growth Rate In PC Health Expend. ()
8
6
Increase from inflation
4.0
4
2.5
2
Increase from utilization
3.0
3.5
2
1.2
1993-98
1999-2002
1998-99
Years
4
US Health Spending Utilization Price Increases
for 2003-2004
Annual US Growth Rate In PC Health Expend. ()
3.1
Increase from inflation
8.0
3.3
5.8
Increase from utilization
3.9
1.0
5
Price Increases in Drugs

• Brand name prescription drug prices up by more
  than 3 times overall rate (CPI) of inflation
  
• Lipitor (for cholesterol) up by 4 times rate of
  inflation
  
• Celebrex (for pain) up24, 3 times rate of
  inflation
  

6
Brand Name Drugs Cumulative Percent Price
Change, 2001-2004
Percent
27
24
22
19
CPI Baseline 6
7
U.S. Health Insurance Costs 2004-2005

• Insurance premiums up by 9
• . 9 increase in premiums is 6 percentage
  points above overall inflation rate .
  
• 7 percentage pointsgrowth in workers earnings

8
U.S. Health Insurance Premium Increases
1990-2005
SOURCES Kaiser/Health Research and U.S. Bureau
of Labor Statistics.

Montana Kids Count Bureau of Business Economic
Research. Winter 2005

9
Change in Health Insurance Premiums in Health
Care Spending per Privately-Insured Person, U.S.
2001-2003
Percent Change
13.9
12.9
9.5
7.4
10
Impacts on Employers and Consumers

• Health insurance unaffordable for many employers,
  especially small employers
  
• Consumers, families, and children go without
  health insurance
  
• Major health event and bills account for ½ of
  bankruptcies by households

11
Employment Health Insurance

• 68 of Insured non-elderly is employment based
  decreasing
  
• Positive factors jobs in manufacturing,
  government, union, and large firms
  
• Likely uninsured ? IF self-employed, work in
  wholesale, retail, agric, construction,
  part-time, firmsfirms

12
Health Insurance Coverage in Montana for 2003

• Dr. Steve Seninger, John Baldridge, Daphne
  Herling, Jim Sylvester
  
• Bureau of Business and Economic Research
• And Montana KIDS COUNT
• www.bber.umt.edu
• The University of Montana-Missoula

13
State Planning GrantHousehold
Surveywww.dphhs.state.mt.us/hpsd/uninsured/

• Total household contacts
• Refusals
• Non-interviews
• Perpetual appointments
• Completions
• Core sample
• Screened for select characteristics

6,747 1,422 144 107 5,074 2,941 2,133
Response Rate 75.2
14
Insurance Coverage by Type, Montana 2003
(n2,941)
15
Insurance Coverage by TypeMontana Residents 0-64
Years Old 2003 (n2,348)
16
Montana Uninsured Rate by Age 2003
39
22
24
19
17
14
17
Uninsured Rate by Income As of PovertyMontana
Residents 0-64 Years Old 2003
48
43
34
35
13
18
Who have the Highest UI Rates?

• Young adults-- the ages of 19 and 25, more than
  twice as likely to be uninsured than the general
  population.
  
•  Montanas American Indian populations uninsured
  rates more than two times higher over statewide
  rate.
  
• Income level with Montanans who have incomes are 2 times more likely to be uninsured than
  statewide rate

19
Montana Uninsured Rates and Numbers by Age, 2003

• All Ages 19 ?173,000 Uninsured Montanans
  (based on 2002 Census estimates)
  
• Age 18
• Age 19-25 39?32,300
• Age 26-49 24?74,600
• Age 50-64 13?23,900
• Age 65 .5?700

20
Who are Montanas Uninsured?

• White ?86
• Adults 25 years of age?67
• High school degree or higher?92
• Above poverty (2 times FLP)?45
• Employed?77
• Self-Employed or work for firms

21
What are Impacts of No Health Insurance?

• UI persons 3 times more like to have medical
  debt (21 vs 7 for insured)
  
• Average medical debt2500 as high as 16 of
  household income of UI persons
  
• 90 of Uninsured cannot afford it
• Average affordability for UI person96
• Most UI (80) did have insurance sometime in past

22
Medical DebtMontana Residents 0-64 Years Old
2003
2,828
2,700
2,506
2,546
25
16
13
9
Means are based on data without the upper and
lower outliers
23
Montana Residents 0-64 Years Old with Medical
Debt 2003(n2,251)
24
Are Montanas uninsured forced or do they choose
to be uninsured? 2003(n1,227)

• Focus Group Comments (n40)
• Cost..even though available through job..is 360
  per month..little left for living on
  
• Cant afford 400 a month..for just catastrophic
  insurance
  
• Insurance companies charge too much.

25
Previous Insurance Coverage of Montanas
Uninsured 2003(n1,227)
Focus Group Comments (n40) ---..had it through j
ob..but so expensive my employer dropped it..I
was without for 7 years ---We used to have covera
ge for everyone..back in the day when business
was a little better.
26
Ability to Afford Low Cost Health
InsuranceMontanas Uninsured 2003 (n1,227)
96
27
State Planning GrantMontana Employer Survey

• Total business located (sample)
• Unable to contact
• Contacted
• Refusals
• Completions

642 95 546 26 520
Response Rate for Contacts 95.2
Response Rate for Sample 81.0
28
Monthly Health Insurance PremiumsMontana
Businesses 2003(n132)
596
492
325
124
94
31
29
Major Findings from Employer Survey

• 40 small firms
• 1/3 of small firms offering HI offer it to all
  workers
  
• Only half of large firms offering HI offer it to
  all employees
  
• 81 of non-offering firms cite cost
• 30 liked tax credit 40 non-offers would
  participate in small business purchasing pool

30
Montana Employers Offering Insurance byNumber of
Employees2003(n520)
31
Why Eligible Employees Do Not Use Montana Firms
Health Insurance Coverage 2003 (n347)
32
Why Montana Firms Do Not Offer Health Insurance
Coverage2003(n302)
33
Health Insurance Policy Alternatives for Those
Firms Not Providing Insurance--2003

• Provide small firms with tax credits to offset a
  portion of the premium.
  
• Allow employers to buy into large, public health
  insurance plans like the state employees plan
  only low-income employees would be eligible for
  such a buy-in plan.
• Create a purchasing pool that allows many small
  businesses to join together to purchase insurance
  at rates that are similar to those found in large
  group plans.

34
Montana Employer Views on Health Insurance
Premium Increases in 2003(n520)
35
Provide Health Insurance With A Tax
Credit2003(n170)
36
Participate in Insurance Purchasing
Alternatives2003(n170)
37
Montanas Uninsured Kids (18 year olds and under)

• 37,000 statewide
• 50 or 18,500,000 are in Rural areas (which have
  42 of the states kid population)
  
• 18,000 are below 150 of Federal Poverty
  Level?the poverty threshold for CHIP
  

38
Montanas Uninsured Kids Urban and Rural

• 15 Urban kids uninsured 20 Rural kids
  uninsured
  
• 63 Urban kids insured via parents work vs. 50
  for Rural kids
  
• 14 Urban kids Medicaid or CHIP vs. 19 for rural
  kids

39
Montana American Indian KidsInsurance

• American Indian kids10 of 234,000 Montana kids
  or 24,000
  
• American Indian uninsured rate38 from Household
  Survey?9,000
  
• Estimated Montana poverty rate (for American Indian kids?
  
• Most of 9,000 probably CHIP eligible (150FPL)

40
Extending CHIP to 18,000 Montana Kids Eligible
but Uninsured

• State Cost of insuring another kid 330 per
  year
  
• Returns? Healthier kids, increased school
  readiness long run employment gains
  
• Long run 7 returns per 1 invested

41
Focus Group (n40)

• Four at risk consumer groups Miles City,
  Billings, Havre, Polson (n28)
  
• Two employer groups (n12) Miles City
  (hospitality services) Missoula (professional
  services)
  
• Age range 25 to 62 years old
• Female70, male30

42
Focus Group (n40)Where Uninsured Get their
Health Care

• I either go to the walk-in clinic or the ER
• I self-diagnose
• I havent been to the doctor in 10 years it
  scares me.
  
• Ive got a really good doctor..knows I dont have
  a lot of money..and he just sets it aside until I
  can pay him.
  

43
Focus Group Policy Comments Medicaid CHIP

• 2 kidsno insurance.. I make too much money to
  qualify for Medicaid
  
• I worked for a doctor that limited the number of
  Medicaid patients.
  
• CHIP..great program initiallybut each year keeps
  getting cut
  
• CHIPthere are certain doctors that wont accept
  it.
  
• I applied to the CHIP program but we were just
  over the level, twice.

44
KEY INFORMANT 29 interviews have been conducted

• 7 from health care providers
• 6 from community based organizations or community
  leaders
  
• 8 from private industry
• 8 from administrators of public agencies or
  non-governmental organizations

45
Key InformantMajor themes

• Cost is the reason that people do not have health
  insurance or that businesses cannot offer it
  
• Current system(s) can not be fixed
• Most respondents identified some type of
  universal, single-payer health system as the
  long-term solution
  

46
Other Key Informant themes

• Problem too big for states solutions must come
  from federal level
  
• Creation of a tiered health care system
• Development of haves and have nots within
  private sector
  
• Problem with pre-existing conditions and large
  deductibles
  

47
Key Informants Private Sector

• Want to offer HI but cannot afford to
• Small business owners going without or purchasing
  catastrophic plans
  
• Subsidies, tax credits or other incentives
  unlikely to be large enough
  
• High levels of frustration
• HI as a benefit helps to recruit and retain good
  employees
  

48
Key InformantsAgricultural Sector

• Distance/access to providers
• Disqualified from public programs by high assets
  (even with low income)
  
• High premiums/high deductibles not affordable
• No ability to pool
• Workers Compensation confused w/ private
  insurances
  
• Mobility of seasonal farm workers lack of
  access to county programs
  

49
Policy Responses To Rising Healthcare Costs

• Malpractice Insurance
• Tax Credit/Premium Subsidies for Small Business
• Reform of Healthcare System at State Level

50
Malpractice 1

• Surgeons Obstetricians sued about once every 6
  years
  
• Average awards500,000 for missed or delayed
  diagnosis
  
• But..malpractice costs2 of 1.9 trillion

51
Malpractice 2

• State laws to put caps on non-monetary loss due
  to malpractice and to control malpractice premium
  rates
  
• Montana legislature create association of
  insurers to provide when insurance is not
  reasonably available
  
• Butin some states premium growthby 2 or 3 the
  growth in claims
  
• Alternatives Review for incompetent physicians
  and
  
• Public fund for health care injuries similar to
  vaccine manufacturers since 1988
  

52
2005 Small Business Health Care Affordability Act
for Small Employers

• Statewide 40 small firmsinsurance
  
• Affordability Act targets firms with 2-5
  employees
  
• Tax credit to small firms currently offering
  insurance estimated that this will affect 2,000
  employees

53
2005 Small Business Health Care Affordability Act
2

• Premium assistance for firms not offering health
  insurance
  
• Estimated that this will bring in 6,000 new
  enrolls
  
• Just startedfully subscribed

54
System Reform at the State Level

• Montana?CHIP and Medicaid changes pull in another
  10,000 kids?still leaves 27,000 without
  
• Returns? Healthier kids, increased school
  readiness long run employment gains
  
• Long run 7 returns per 1 invested

55
Other States

• Maine?using existing funding and internalizing
  cost savings from hospitals and docs on serving
  uninsured
  
• Massachusetts?expand Medicaid and relaxes certain
  requirements on what plans MUST cover plus tax
  credits for low income working folks
  
• Returns? Healthier kids, increased school
  readiness long run employment gains
  
• Long run 7 returns per 1 invested

56
Who are Montanas uninsured? 2003(n1,227)
57
Summary Observations on Montanas Uninsured

• Not just the poor?45 are 2 times above poverty
  level
  
• 77 are employed
• 92 high school education or higher
• Many small business owners cant afford insurance
  for themselves their family

58
Outlook for Costs Access

• Higher healthcare costsincreased uninsured
  kids, workers employers
  
• Rationed health care for.
• Insured but not for increasing Uninsured