The Potential Economic Impact of 3Share Programs in Texas

1
The Potential Economic Impact of 3-Share
Programs in Texas

• Texas Communities Healthcare Coalition
• Presented by TXP RH2 November 7, 2008

2
Presentation Overview

• Study Purpose
• Approach
• Benefits of Health Coverage
• Preliminary Economic Impact Estimates
• Conclusions

3
Study Purpose

• Estimate the potential economic impact on Texas
  communities implementing 3-Share health coverage
  initiatives
• Galveston, Harris County, Dallas, El Paso and
  Central Texas
• A 3-Share Health Coverage Plan
• Reduces employer and employee costs by splitting
  the cost for coverage 3 or more ways between the
  employer, employee and a 3rd party often a
  foundation, local government or local safety net
  providers.

4
Study Approach

• Best practice research - other states
• Examined 3-Share enrollment by businesses and
  employees
• Small business case studies
• Talked to businesses enrolled in TX 3-Share Plan
  and uninsured small businesses
• Examined literature on benefits of health
  coverage -- economic and otherwise
• Economic impact analysis

5
Benefits of Health CoverageDecreased Morbidity
and Mortality

• Uninsured lack access to necessary treatments and
  care
• Lack of access to medical technology necessary
  to treat heart attacks, cataracts, and depression
  results in 1.1 billion per year in excess
  sickness and death(Glied and Little 2003)
• Lack of health insurance causes roughly 18,000
  unnecessary deaths every year in the United
  States. (Institute of Medicine 2004)

6
Benefits of Health Coverage Increased Labor
Force Participation/Productivity

• Uninsured participate in the work force in lower
  numbers because they are sicker. (Commonwealth
  Fund 2006)
• 18 million Americans 19-64 did not work because
  of health conditions or disability
• If these workers made minimum wage the economy
  would expand by 185 billion/yr
• 55 million workers annually cant concentrate on
  the job because of personal or family illness.
• Resulting 478 million days reduced productivity
• Based on their average earnings economic losses
  estimated at 27 billion.

7
Benefits of Health CoverageJob mobility

• 3 in 10 Americans stayed in a job they wanted to
  leave to keep their health benefits (New York
  Times/CBS News Poll 2008)
• In 2002 California found 2.3 of employees with
  employment based coverage would have made
  productivity-improving job changes absent job
  lock.
• Leading to 772 million in annual foregone
  productivity gains in CA alone.

8
Trends- Health InsuranceOverview

• Employers want to control health insurance costs
• Employers are asking employees to to pay an
  increasing share of their health insurance.
• Employers are using prevention/disease management
  to control costs
• Other approaches (such as managed care) perceived
  to be losing effectiveness.
• Health coverage among employers is declining,
  especially in sectors where smaller firms are
  more prevalent

9
Health Insurance TrendsDecline of Firms
Offering Health Insurance
Source Kaiser Foundation
10
Health Insurance TrendsGrowth in the Cost of
Health Insurance vs. Inflation Worker Earnings
11
Measuring the Potential Economic
ImpactMethodology

• Step 1. Determine uninsured rates by firm size
• Employee and dependent
• Develop assumptions for dependents -
  adults/children
• Step 2. Apply rates from Step 1 to TX counties to
  estimate number of uninsured by firm size in each
  3-Share county
• Step 3. Using Muskegon/Central Texas model
  estimate potential universe of uninsured employees

12
Measuring the Potential Economic
ImpactMethodology

• Step 4. Assume 35 of firms from Step 3 would
  purchase health coverage for employees
• 75 of eligible employees in qualified firms
  would enroll in health plans
• Step 5. Calculate economic impacts of employee
  3-Share health plan enrollment
• Estimate increased health spending (direct
  spending)
• Estimate indirect and induced spending (related
  sectors - medical supplies, office rents, etc.)
• Estimate job creation from increases attributable
  to total health spending

13
Ex. Calculation - Preliminary Estimate Tarrant
County
2. Tarrant County Employment Data
14
Ex. Calculation - Preliminary EstimateTarrant
County (continued)
3. Estimates of Universe of Potential Covered
Employees
4. Estimates of Actual Coverage (35 of
Businesses and 75 Within Business)
15
Ex. Calculation - Preliminary EstimateTarrant
County (continued)
5. Economic Impact Calculations

• Estimated Number of Tarrant County 3-Share
  Participants
• Employees 17,875
• Dependants 10,514
• Total 28,389
• Health Spending by Uninsured (Hadley, et al -
  2001 - national data)
• Baseline "Average Private "Average"
  Public
• Children 733 1,408
  1,008
• Adults 1,644 3,187
  2,568
• Health Spending by Uninsured (2007 Estimate)
• Baseline "Average" Private "Average"
  Public Blend
• Children 971 1,865 1,335
  1,600
• Adults 2,178 4,222 3,402
  3,812
• Increased Health Spending if All Uninsured Had
  Enrolled in 3-Share
• Employees Dependents

16
ResultsTotal 3-Share Enrollees Estimated
Economic Impact
17
Summary

• Economic estimates are preliminary and assume no
  funding limits -- that is, everyone that wants to
  enroll in a 3-Share coverage health plan can
• If funding were not an issue the potential
  economic impact both locally and to the state
  would be substantial