Employer-sponsored Coverage Research Articles

State Wins Rare Federal Waiver to Raise Medicaid Income Limit

Back to table of contents Previous article Next article Government NewsFull AccessState Wins Rare Federal Waiver to Raise Medicaid Income LimitRich DalyRich DalySearch for more papers by this authorPublished Online:7 Nov 2008https://doi.org/10.1176/pn.43.21.0008aAs many states consider new cuts to their Medicaid programs to compensate for larger-than-expected drops in revenue, Massachusetts is celebrating the decision of federal officials to grant a Medicaid waiver that would allow broader access to the commonwealth's unique health insurance program.Massachusetts will be able to expand its first-in-the-nation health care program because federal officials have agreed to provide a $10.6 billion boost over the next three years, according to Massachusetts officials.“This is an exceptional outcome under any circumstances, especially so now,” said Gov. Deval Patrick (D) at a press conference announcing the Medicaid funding. “The American economy is in turmoil, and the future is uncertain. But even in tough times, we cannot afford to abandon our commitment to affordable, accessible, high-quality health care for every man, woman, and child in the commonwealth. Thanks to this agreement, we can keep our commitments.”The waiver from Medicaid's standard funding and benefit formula for states followed months of negotiations between Massachusetts and federal officials. It will provide Massachusetts with about $2.1 billion more over the next three years than it received from the federal government three years ago in its last Medicaid waiver package.The waiver allows Massachusetts to provide subsidized health insurance to some residents with incomes higher than would typically be allowed under traditional Medicaid rules.The funding boost came as state leaders were scrambling to cover a substantial budget shortfall.The agreement with the federal government also allows Massachusetts to spend $5 billion over the next three years, or about $1 billion more than previously allowed, on its newly created programs. The amount was $2 billion less than Massachusetts requested last December, but it was described as sufficient because enrollment in the expansive Massachusetts health insurance program has slowed in recent months.Massachusetts' legislative leaders said the agreement will provide crucial support for the state's historic health care reform law, which was enacted in 2006 and requires nearly every resident to have coverage (Psychiatric News, July 4).“The waiver enables the state to continue to provide good, affordable health care to families and provides additional funding and flexibility to build on these early successes in the years to come,” said Sen. Edward Kennedy (D-Mass.) in a written statement. “We've made major progress in the program's first two years, cutting the number of uninsured in half, and increasing employer-sponsored coverage.”The Massachusetts insurance program will inform the national health reform debate in 2009, Kennedy said.The Massachusetts agreement runs counter to the recent experience of many other state Medicaid programs in which state officials are fighting with federal officials for the right to extend subsidized health insurance to people with incomes higher than is traditionally allowed under Medicaid rules. Massachusetts is one of the few states to offer Medicaid coverage to residents with higher incomes than normally allowed by the federal government.Massachusetts was granted permission to amend its Medicaid program in 2006 to provide subsidized health insurance to individuals making up to 300 percent of the federal poverty level, or roughly $31,000 for a single person and $63,600 for a family of four in 2008.That eligibility standard made thousands more residents eligible for health coverage that is at least partially subsidized by the federal government. That provision was renewed under a key part of the recent waiver package.Over the last two years, the Massachusetts health care insurance law has moved nearly 440,000 more residents into coverage, about half of whom were enrolled in employer-sponsored programs. The larger-than-expected number of residents who are still uninsured, however, led to a $130 million funding gap, which Massachusetts officials are working to close, in part, through increased premiums and copayments for residents who receive subsidized coverage.The commonwealth has put off a plan to require employers to boost the amount they were paying for their employees' insurance.More information on the Medicaid package is posted at<www.lawlib.state.ma.us/2006/01/medicaid-bill-will-limit-eligibility.html>.▪ ISSUES NewArchived

Reforming the US health-care system

Reforming the US health-care system

Prescription drug benefits and use of guideline recommended medications by elderly Medicare beneficiaries with diabetes mellitus.

To determine whether prescription drug benefits are associated with the use of guideline recommended medications by older persons with type 2 diabetes mellitus (DM). Cross-sectional study. A national sample of Medicare beneficiaries with DM aged 65 and older and an indication for angiotensin-converting enzyme inhibitor (ACEI) or angiotensin II-receptor blocker (ARB) use or high risk of coronary heart disease (hypertension or current smoking) who participated in the 2003 Medicare Current Beneficiary Survey. Prescription drug coverage was measured according to self-report and verified according to insurance claims. Outcome variables were use of an ACEI or an ARB (ACEI/ARB) or a statin or use of an ACEI/ARB and a statin. Survey-weighted multinomial logistic regression was used to identify the independent effect of drug coverage on one of two categories of recommended medication use (ACEI/ARB or statin or ACEI/ARB and statin) compared with the reference category of none after controlling for sociodemographic characteristics and health status. The final study sample was 1,181 (weighted N=4.0 million). Overall, 23% had no drug coverage, 16% Medicaid coverage, 43% employer coverage, 9% Medigap coverage, and 9% Department of Veterans Affairs (VA) or state-sponsored low-income coverage. Overall, 33% received a statin and an ACEI/ARB, 44% only an ACEI/ARB or a statin, and 23% neither. After adjustment, VA and state-sponsored drug benefits were most strongly associated with combined ACEI/ARB and statin use (relative risk ratio (RRR)=4.83, 95% confidence interval (CI)=2.24-10.4)), followed by employer-sponsored coverage (RRR=2.60, 95% CI=1.67-4.03)). Prescription drug benefits from VA and state-sponsored drug programs are strongly associated with use of recommended medications by older adults with DM.

The Deepening Crisis in U.S. Health Care: A Review of Data, Spring 2008

This report presents information on the state of U.S. health care in early 2008. The numbers of uninsured and underinsured continue to rise, and the proportion of people covered by employer-sponsored private coverage decreases. For 29 percent of low- and middle-income households with credit card debt, medical bills are a contributor to their current balance. Health spending in the United States is on the increase, and projected spending in 2008 will consume 16.6 percent of gross domestic product. Health insurance premiums grew 78 percent between 2002 and 2007. Meanwhile, safety-net hospitals are facing deep deficits and service cuts across the country. Pharmaceutical and insurance companies spend millions lobbying Congress. Health industry CEOs continue to be richly rewarded, even as companies come under investigation or face fines for claims denials, manipulation of data, or violations of claims-handling regulations. Average monthly premiums for Medicare Part D increase while plans are reducing coverage for high-cost drugs. And research shows how private plans such as Medicare Advantage hurt Medicare. According to opinion polls, the majority of Americans and physicians support a single-payer health care system.

Welfare Reform and Older Immigrants' Health Insurance Coverage

I examined changes in older immigrants' health insurance coverage after welfare reform in the United States to determine whether the reform measures achieved their goal of saving money by reducing Medicaid participation without increasing the number of uninsured people. Data were obtained from older adults who participated in the Current Population Survey's Annual Social and Economic Supplement from 1994 to 1996 and 2001 to 2005. I used logistic regression to estimate changes in the sample's Medicaid and health insurance coverage after welfare reform, paying special attention to noncitizens and recent immigrants. Older immigrants' health insurance status was associated with their citizenship status and length of stay in the United States. Medicaid participation significantly decreased among noncitizens and recent immigrants but increased among naturalized citizens. Private health insurance and employer-sponsored insurance coverage significantly increased among recent immigrants but decreased among established immigrants and naturalized citizens. The probability of being uninsured did not significantly change among any group of immigrants. Given increases in postreform Medicaid participation among some immigrant groups, my findings suggest that the long-term cost-saving effectiveness of the current restrictive Medicaid eligibility policy is doubtful.

Employment-Based Health Benefits Under Universal Coverage

In the context of proposals for universal coverage, a key emerging issue is the role of employer-sponsored coverage. Such coverage has been slowly eroding and has been criticized for providing little meaningful plan choice. Increased reliance on the individual insurance market in its present form is unlikely to meet society's goals, but directing those without access to employer coverage who receive subsidies to regional insurance exchanges could make such coverage much more attractive. But real-world experience with such a reform is needed before considering the substitution of individual coverage for employer-based coverage.

Take-Up of Medicare Part D and the SSA Subsidy: Early Results from the Health and Retirement Study

We analyze newly available data from the Health and Retirement Study on senior citizens' take-up of Medicare Part D and the associated SSA Low-Income Subsidy. We find that economic factors - specifically, demand for prescription drugs - drove the decision to enroll in Part D. For the most part, individuals with employer-sponsored coverage in 2004 kept that coverage, as they should have. Individuals with no prescription drug coverage in 2004 mostly enrolled in Part D or obtained other coverage; many of those who remained without coverage reported that they do not use prescribed medicines. Take-up of the SSA Extra Help subsidy seems to have been more problematic, with many Part D beneficiaries unaware of the subsidy program or unsure about their eligibility. There is apparent under-reporting in the HRS of participation in the subsidy program, suggesting that some who profess to be unaware of the program may actually be participating in it. In terms of respondents' subjective experiences of decision-making, the majority report having had little or no difficulty with the Part D enrollment decision and being confident that they made the right decision. Thus, for the most part, despite the complexity of the program, Medicare beneficiaries seem to have been able to make economically rational decisions in which they had confidence, although additional intervention for low-income beneficiaries may be desirable.

Men with Health Insurance and the Women Who Love Them: The Effect of a Husband's Retirement on His Wife's Health Insurance Coverage

Health insurance coverage in the years prior to retirement is particularly important because it protects the household from the financial risks of uninsurance as well as the health consequences of delaying care while uninsured. While results from the retirement job lock literature show that those who would lack coverage after retirement continue to work to maintain benefits, little work has explored the types of health insurance choices made by couples after retirement. It may be difficult for a married man to coordinate continuous coverage for a younger wife whose primary source of coverage has been from the husband, and thus households may pay more for non-group coverage or be exposed to the risks of uninsurance. This paper studies a panel of married couples from the 1992-2004 waves of the Health and Retirement Study (HRS) to study the types of health insurance decisions households make around the time of retirement. Results indicate that households seem to do well at avoiding uninsurance at the time of retirement, but may make high cost choices in order to insure the wife. Men switch into Medicare or coverage from their wife at retirement if they lose their own coverage, but a large fraction of women take-up privately purchased coverage. In fact, the transition from husband's coverage to privately purchased coverage is twice as large in periods when the husband retires than otherwise. Transitions to uninsurance are lower in periods of retirement than at other times, suggesting that men continue to work if either spouse would lose coverage. Though less risky, insurance purchased in the non-group market is expensive relative to employer-sponsored coverage. Thus, married households may need to increase savings to pay for health insurance that bridges the gap until the wife can claim Medicare at age 65.

The U.S. Economy And Changes In Health Insurance Coverage, 2000–2006

The number of uninsured Americans increased by 3.4 million between 2004 and 2006, despite improving economic conditions. In the first four years of the decade, during a period of economic recession, the number increased by 6.0 million. The dominant factor in both periods was a decline in employer-sponsored insurance coverage. Although the recent decline was less than that experienced from 2000 to 2004, growth in public coverage was small, and the number of uninsured people increased by 1.0 million children and 2.4 million adults. Employer coverage declined most for self-employed or small-firm workers, in the South, and among noncitizens.

State Strategies to Reduce the Number of Uninsured Children

We present a local and state phased approach for expanding coverage and improving the health care system for children. During the first phase, state regulatory reforms can be instituted to enhance the ability of Medicaid and State Child Health Insurance Plan (SCHIP) programs to provide measurable, high-quality clinical care that is patient-centered, safe, effective, timely, and efficient. The second phase can implement regulatory and legislative reforms that build program awareness in the community and streamline the enrollment process to maximize the enrollment of eligible uninsured children into a state's Medicaid/SCHIP program. The third phase involves a legislative expansion of income eligibility for SCHIP together with state-financed programs for legal immigrant children and foreign national children. The fourth phase considers legislative reforms to make family coverage more affordable to slow the erosion of employer-sponsored family insurance coverage, especially in small businesses.

Seniors Paying More for Drugs Under Part D Than Other Plans

Seniors Paying More for Drugs Under Part D Than Other Plans

Financial Protection Afforded by Employer-Sponsored Health Insurance

This article provides the first national estimates of actuarial values and out-of-pocket spending from the era of nonrestrictive managed care that began in the late 1990s. Employer plans paid about 84 percent of total medical expense for those with employer-sponsored coverage in 2004, about 1 percent less than in 2000, and high users faced potential out of pocket spending in the thousands of dollars when they received a portion of their care out of network. Since 2004, more employers have offered plans with higher deductibles coupled with employer-funded personal accounts. These arrangements can result in low out of pocket costs for many employees, but high users will face substantially higher costs. Many employers adopting high-deductible plans are not contributing to personal accounts. Those who are concerned about higher out-of-pockets might consider income-related cost sharing, educational efforts to communicate the savings that can result from using in-network providers, and continued availability of managed care options that limit out-of-pocket spending.

A Helping Hand For Private Insurance Markets

A Helping Hand For Private Insurance Markets

Falling into the Doughnut Hole

The Medicare Part D prescription drug benefit may facilitate provision of medications by subsidizing drug costs. However, beneficiaries with higher drug utilization may face higher out-of-pocket (OOP) costs under the benefit's "doughnut hole" provisions that substantially increase beneficiary cost-sharing. The Medicare Current Beneficiary Survey Cost and Use data for 1997 through 2001 were used to estimate the impact of the standard Part D benefit on drug expenditures. The sample consisted of adults who were not dually enrolled in Medicaid (41,617 without ESRD, 256 with ESRD). Outcomes were annual total and OOP drug spending projected to 2006, as well as estimates of individual spending changes under Part D. In 2006, ESRD beneficiaries will have mean annual total and OOP expenditures that are approximately twice that of their Medicare peers. The overall impact of Part D on OOP expenditures is similar among all beneficiaries; however, many individuals with employer-sponsored coverage and those with higher costs (especially those with ESRD) may face cost increases with significant monthly variability as a result of reaching the "doughnut hole," a no-coverage gap in the standard benefit. Therefore, ESRD beneficiaries face substantial total and OOP annual expenditures for medications, causing most to reach the Part D benefit gap. Higher OOP costs may lead to reductions in spending and medication use with subsequent treatment gaps that may lead to increased use of medical services. As the new legislation takes effect, policy makers who are considering modifications in the program may benefit from further research to monitor patterns and gaps in coverage, medication use and spending, and hospitalization and survival trends.

Why Employer-Sponsored Insurance Coverage Changed, 1997–2003

Four and a half million Americans gained employer-sponsored health insurance coverage during 1997-2001, while nearly nine million lost coverage in the ensuing economic downturn (2001-2003), after population growth was accounted for. Macroeconomic trends affecting employment, job quality, and incomes drove most of the coverage changes, although key factors varied during the two periods. Take-up rates affected coverage, mostly reflecting the interaction of premium cost trends and labor-market tightness, but take-up also was influenced by the implementation of the State Children's Health Insurance Program (SCHIP) during 1997-2001. Coverage among low-income people was most affected by economic conditions and premium costs.

Men with Health Insurance and the Women Who Love Them: The Effect of a Husband's Retirement on His Wife's Health Insurance Coverage

Health insurance coverage in the years prior to retirement is particularly important because it protects the household from the financial risks of uninsurance as well as the health consequences of delaying care while uninsured. While results from the retirement job lock literature show that those who would lack coverage after retirement continue to work to maintain benefits, little work has explored the types of health insurance choices made by couples after retirement. It may be difficult for a married man to coordinate continuous coverage for a younger wife whose primary source of coverage has been from the husband, and thus households may pay more for non-group coverage or be exposed to the risks of uninsurance. This paper studies a panel of married couples from the 1992-2004 waves of the Health and Retirement Study (HRS) to study the types of health insurance decisions households make around the time of retirement. Results indicate that households seem to do well at avoiding uninsurance at the time of retirement, but may make high cost choices in order to insure the wife. Men switch into Medicare or coverage from their wife at retirement if they lose their own coverage, but a large fraction of women take-up privately purchased coverage. In fact, the transition from husband’s coverage to privately purchased coverage is twice as large in periods when the husband retires than otherwise. Transitions to uninsurance are lower in periods of retirement than at other times, suggesting that men continue to work if either spouse would lose coverage. Though less risky, insurance purchased in the non-group market is expensive relative to employer-sponsored coverage. Thus, married households may need to increase savings to pay for health insurance that bridges the gap until the wife can claim Medicare at age 65.

Gains in Children's Health Insurance Coverage but Additional Progress Needed

This paper examines changes in children's health insurance coverage following the creation of SCHIP in 1997 and assesses prospects for further progress. Findings from the National Survey of America's Families indicate that children gained coverage between 1999 and 2002. In all, 1.8 million fewer children were lacking coverage in 2002 and gains were concentrated among children in low-income families. However, close to 8 million children are still uninsured, many of whom lack access to employer-sponsored coverage but qualify for Medicaid or SCHIP. An expanded federal role in the financing of these programs is likely needed for continued progress in covering the nation's low-income children. (Dubay, Lisa, and Genevieve Kenney. November 2004. Gains in Children's Health Insurance Coverage but Additional Progress Needed. Pediatrics 114(5): 1338-1340.)

Awakening consumer stewardship of health benefits: prevalence and differentiation of new health plan models.

Despite widespread publicity of consumer-directed health plans, little is known about their prevalence and the extent to which their designs adequately reflect and support consumerism. We examined three types of consumer-directed health plans: health reimbursement accounts (HRAs), premium-tiered, and point-of-care tiered benefit plans. We sought to measure the extent to which these plans had diffused, as well as to provide a critical look at the ways in which these plans support consumerism. Consumerism in this context refers to efforts to enable informed consumer choice and consumers' involvement in managing their health. We also wished to determine whether mainstream health plans-health maintenance organization (HMO), point of service (POS), and preferred provider organization (PPO) models-were being influenced by consumerism. Our study uses national survey data collected by Mercer Human Resource Consulting from 680 national and regional commercial health benefit plans on HMO, PPO, POS, and consumer-directed products. We defined consumer-directed products as health benefit plans that provided (1) consumer incentives to select more economical health care options, including self-care and no care, and (2) information and support to inform such selections. We asked health plans that offered consumer-directed products about 2003 enrollment, basic design features, and the availability of decision support. We also asked mainstream health plans about their activities that supported consumerism (e.g., proactive outreach to inform or influence enrollee behavior, such as self-management or preventive care, reminders sent to patients with identified medical conditions.) We analyzed survey responses for all four product lines in order to identify those plans that offer health reimbursement accounts (HRAs), premium-tiered, or point-of-care tiered models as well as efforts of mainstream health plans to engage informed consumer decision making. The majority of enrollees in consumer-directed health plans are in tiered models (primarily point-of-care tiered networks) rather than HRAs. Tiers are predominantly determined based on both cost and quality criteria. Enrollment in HRAs has grown substantially, in part because of the entry of mainstream managed care plans into the consumer-directed market. Health reimbursement accounts, tiered networks, and traditional managed care plans vary in their capacity to support consumers in managing their health risks and selection of provider and treatment options, with HRAs providing the most and mainstream plans the least. While enrollment in consumer-directed health plans continues to grow steadily, it remains a tiny fraction of all employer-sponsored coverage. Decision support in these plans, a critical link to help consumers make more informed choices, is also still limited. This lack may be of concern in light of the fact that only a minority of such plans report that they monitor claims to protect against underuse. Tiered benefit models appear to be more readily accepted by the market than HRAs. If they are to succeed in optimizing consumers' utility from health benefit spending, careful attention needs to be paid to how well these models inform consumers about the consequences of their selections.

Health-Related Tax Breaks Favor Wealthy Workers

Back to table of contents Previous article Next article Government NewsFull AccessHealth-Related Tax Breaks Favor Wealthy WorkersKate MulliganKate MulliganSearch for more papers by this authorPublished Online:16 Apr 2004https://doi.org/10.1176/pn.39.8.0018Tax benefits for health insurance favor those with higher incomes, according to an analysis in the February issue of the journal Health Affairs.John Sheils, vice president of the Lewin Group Inc., and Randall Haught, a senior scientist there, estimate that the tax expenditure for health benefits in 2004 will be $188.5 billion in 2004.They define the term tax expenditures as the amount of revenue that the federal government foregoes by exempting certain health benefits and spending from the federal income and Social Security taxes. Or, more simply, it is the amount of money the federal government loses because it grants certain health-related tax exemptions.Those items include employer health benefit contributions for workers and retirees. For 2004 the authors estimated that employers will pay about 77 percent of the cost of employer-sponsored coverage. The value of these benefits is not taxable to the employees.The authors noted, “It is important to understand that the tax expenditure for health benefits accrues to workers rather than employers.”Other items that help produce that $188.5 billion figure are tax deductions for out-of-pocket health spending that exceed 7.5 percent of adjusted gross income, health-benefit deductions for the self-insured, and reimbursement accounts through which out-of-pocket health costs can be paid in pretax dollars.Sheils and Haught estimate that the average health benefit tax expenditure will be about $1,482 per family in 2004. However, the rewards of the tax exemption accrue largely to high-income groups (see chart above).Families with annual incomes of $100,000 or more will gain an average of $2,780, but families with incomes of less than $10,000 will gain an estimated $102.Only 28.4 percent of all tax expenditures in 2004 will go to families with incomes below $50,000, even though this group contains 57.5 percent of families in the United States.The authors wrote that the “results raise important equity issues concerning the current distribution of tax benefits.”Given the fact that more than 43 million Americans are uninsured, the authors asked “whether it is appropriate that 26.7 percent of federal health benefits tax expenditures goes to the 14 percent of the population with the highest incomes.”The article, “The Cost of Tax-Exempt Health Benefits in 2004,” can be accessed for a fee at www.healthpolicy.org. ▪ ISSUES NewArchived

Holes in the Health Insurance System-Who Lacks Coverage and Why

Lack of health insurance coverage is a large and growing problem for millions of American families. Rising health care costs and economic insecurity continue to threaten the bedrock of the health insurance system - employer-sponsored coverage - while states’ fiscal situations and the escalating federal deficit complicate any efforts at reform. Providing health insurance coverage to the millions of uninsured remains a major health care challenge for the nation and understanding the current health insurance environment, who the uninsured are, and why they are uninsured is critical when considering health care reform. This paper aims to define the problem of the uninsured, providing an overview of the uninsured in America and the roles and limits of private and public insurance. Following this discussion, the paper describes the current health insurance environment and examines the prospects for improving coverage.