Among the key access questions about the HIPAA group reforms are :
- What are the changes in enrollment in employer-sponsored plans by employees in small groups?
- What are the changes in rates of offering coverage by small employers?
- What are the effects on the structure of the market?
The design to address these questions is shown in Table 1 and discussed above. It involves a comparison of changes over time in groups of states that have implemented reform to comply with HIPAA (groups A, B, and C) with states that had previously met the HIPAA standards (group D). The data sources are discussed next.
What are the changes in enrollment in employer-sponsored plans by employees in small groups? A contrast between the state groups in the change the proportion of employees in small groups covered by group insurance can be made using data from the March CPS in the pre-and post-HIPAA period. (We define small to be fewer than 100 workers because the March CPS employer size questions do not allow one to identify groups of fewer than 50). A difference-in-differences design, such as we propose, is quite demanding in sample size because it involves a four group comparison. Based on sample sizes in the 1997 March survey, we estimate that the evaluator would have better than 95 percent power to detect a difference of 4 percentage points in change between group B and D or group C and D. This is equivalent to a 10 percent change in enrollment in the states with new legislation compared to a constant rate in the control group, and power of about 50-60 percent to detect a 5 percent change in enrollment.
Unfortunately, group A in Table 1, which includes states that implemented the greatest change in their small group insurance regulations to conform to HIPAA, consists of a single, small state. Consequently, an evaluator cannot expect to obtain reliable change estimates for this state group. Matters are somewhat better if successive March surveys in the pre- and post-HIPAA period are pooled to make estimates for this state. By pooling data for two years for both the before and after observations, one would have about 70 percent power to detect a 15 percent change in participation in group insurance among those in small groups in group A relative to a constant rate in group D (or about a 6 percentage point difference in the rate of change between the state groups).
HIPAA was intended to eliminate some of the most serious abuses in the market. Thus, as well as the effect on overall participation in group plans, policymakers will be interested in the effects on groups that previously had difficulty in acquiring group coverage. Certain industries, for example, are known to be singled out as poor risks by insurers and the CPS can be used to make a pre-post comparison of enrollment among those in small groups in at-risk industries. However, when subsetting the sample, pooling of years in both the pre- and post-period may be necessary for reliable results. Focusing on employees in small groups in industries that are often redlined, one would have less than 50 percent power to detect a 15 percent change in participation among these employees in state groups B or C relative to a constant rate in the control states using a single March CPS. By pooling over two years for the pre and post period, however, power can be improved to about 70 percent.
What are the changes in rates of offering coverage by small employers? The CPS does not collect information about whether employees are offered an employer sponsored-plan if they are not enrolled in one. Therefore, answering this question requires an alternative data source. Studying employer behavior is best accomplished through information about individual employers. The MEPS-IC provides information about a large sample of employers, and permits state level analyses in most states (see Part III for more details). Lags in data availability place this data source outside of the time frame of the scope of the evaluation that we have defined. Information about 1999 would not be expected to be available for analysis until the middle of 2001. However, we include it here because it is the best source for studying employer response to HIPAA. Based on the same design for the 1996 survey, the MEPS-IC would provide 80 percent power to detect a 4 percentage point difference in change over time between state group B and the control group D, and a difference of 3 percentage points between group C and group D.
What are the effects on the structure of the market? As we discussed above, Deborah Chollet and her colleagues have developed methods for synthesizing and integrating multiple data sources to produce measures of market structure. We do not believe the HCFA(now known as CMS) sponsored evaluation should duplicate those efforts. However, a simple measure of the count of the number of carriers in the market is a gross indicator of change that HCFA(now known as CMS) may wish to monitor. Regulator interviews conducted by IHPS as part of a Robert Wood Johnson Foundation study to measure insurance market regulations and characteristics that mediate their effect, indicated that most state insurance departments are able to provide this simple measure. This data might be collected during the case studies, or the national survey of regulators discussed under Question A above.