Consumer Response to a National Marketplace for Individual Insurance. Impact by Insurance Scenario

06/28/2008

For each scenario, the change in the number of insured is presented from a 2008 status quo estimate.  The insurance market is divided into the individual and group markets and further demarcated by the types of health insurance taken up from the simulation model.  The “HSA No-offer” category in the group market refers to individuals who were offered coverage but turned it down and bought an HSA policy on their own.  All of the detailed numbers are from the limited sample with national approximations provided for the aggregate impacts of each scenario.  For each scenario, we provide a ‘within’ sample and national estimate. The within sample is based on the 18-64 aged sample from MEPS and the national estimate is an extrapolation to all non-Medicare aged US citizens.

The impact of competition among the five largest states is presented in Table 3.  Under the minimum, moderate and maximum effects of state policies, there is improvement in the level of insurance.  The impact ranges from 69,444 (minimum) to 11.6 million (maximum) newly insured from a base number of 47 million uninsured.  The moderate impact is 7.5 million newly insured individuals.  Most of the effect of this scenario is observed in the individual market.

Table 3 Scenario 1: Competition among 5 largest States

  Status Quo Scenario 1
Least Regulated Top 5 State - Texas
Minimum Moderate Maximum
Individual
HSA 4,665,291 10,337 0% 812,972 17% 1,289,019 28%
PPO High 7,515,552 27,115 0% 2,479,808 33% 4,450,141 59%
PPO Low 180,379 (267) 0% (22,772) -13% (30,916) -17%
PPO Medium 1,534,799 687 0% 16,995 1% 8,908 1%
Uninsured 28,848,310 (37,872) 0% (3,287,002) -11% (5,717,152) -20%
Group Market
HMO 5,505,466 (6,159) 0% (762,628) -14% (1,143,19) -21%
HRA 6,166,134 (2,298) 0% (269,016) -4% (438,955) -7%
HSA Offered 307,298 (482) 0% (56,901) -19% (77,608) -15%
HSA No-offer 11,088 48 0% 10,485 95% 25,041 226%
PPO High 16,535,831 8,487 0% 1,308,780 8% 1,827,254 11%
PPO Low 665,950 (862) 0% (161,976) -24% (220,539) -33%
PPO Medium 53,470,814 12,840 0% 1,962,239 4% 2,434,256 5%
Turned Down 3,530,681 (10,888) 0% (1,994,983) -57% (2,405,829) -68%
  With Sample National  
Minimum Insurance Estimate: 48,759 69,445  
Moderate Insurance Estimate: 5,281,985 7,522,827  
Moderate Insurance Estimate: 8,122,981 11,569,095  

The impact of competition among the five largest states is presented in Table 3.  Under the minimum, moderate and maximum effects of state policies, there is improvement in the level of insurance.  The impact ranges from 69,444 (minimum) to 11.6 million (maximum) newly insured from a base number of 47 million uninsured.  The moderate impact is 7.5 million newly insured individuals.  Most of the effect of this scenario is observed in the individual market.

Allowing for a national market where anyone can shop for health insurance in any state yields the simulated results presented in Table 4.  The reduction in the number of uninsured is greater than in the first scenario across the minimum, moderate and maximum regulatory effects.  The moderate national impact is just over 12 million previously uninsured who now have coverage.  As in the first scenario, the greatest improvement occurs in the individual market.  The greatest take-up is for the high-option PPO, followed by the HSA.  There is a net transfer out of low-option PPO plans toward high-option PPO plans.  This finding makes sense in that if someone could afford a more generous plan design due to a lower premium they would make this switch.  In the employer-sponsored market, there is movement out of the HMO in favor of medium-option PPOs.  Once again, the medium-option PPO is more expensive than the HMO and also more favored than the HMO.  As a result, if the price of health insurance is reduced, more will opt for the newly more affordable medium-option PPO.

Table 4 Scenario 1: Competition among All States

  Status Quo Scenario 2
Least Regulated State - Alabama
Minimum Moderate Maximum
Individual
HSA 4,665,291 345,512 7% 1,390,604 30% 1,690,744 36%
PPO High 7,515,552 937,979 13% 4,560,713 61% 7,411,603 99%
PPO Low 180,379 (10,515) -6% (37,603) -21% (52,379) -29%
PPO Medium 1,534,799 36,214 2% 42,742 3% 28,632 2%
Uninsured 28,848,310 (1,345,190) -5% (5,965,457) -21% (9,078,600) -31%
Group Market
HMO 5,505,466 (220,241) -4% (1,114,650) -20% (1,529,468) -28%
HRA 6,166,134 96,537 -2% (454,184) -7% (660,064) -11%
HSA Offered 307,298 (19,005) -6% (81,630) -27% (103,864) -34%
HSA No-offer 11,088 2,522 23% 19,898 179% 49,230 390%
PPO High 16,535,831 376,588 2% 1,792,964 11% 2,343,582 14%
PPO Low 665,950 (42,910) -6% (214,315) -32% (272,079) -41%
PPO Medium 53,470,814 613,956 1% 2,551,739 5% 3,022,911 6%
Turned Down 3,530,681 (614,374) -17% (2,499,822) -71% (2,844,248) -81%
  With Sample National  
Minimum Insurance Estimate: 1,959,564 2,790,894  
Moderate Insurance Estimate: 8,456,279 12,043,791  
Moderate Insurance Estimate: 11,922,847 16,981,025  

Allowing for a national market where anyone can shop for health insurance in any state yields the simulated results presented in Table 4.  The reduction in the number of uninsured is greater than in the first scenario across the minimum, moderate and maximum regulatory effects.  The moderate national impact is just over 12 million previously uninsured who now have coverage.  As in the first scenario, the greatest improvement occurs in the individual market.  The greatest take-up is for the high-option PPO, followed by the HSA.  There is a net transfer out of low-option PPO plans toward high-option PPO plans.  This finding makes sense in that if someone could afford a more generous plan design due to a lower premium they would make this switch.  In the employer-sponsored market, there is movement out of the HMO in favor of medium-option PPOs.  Once again, the medium-option PPO is more expensive than the HMO and also more favored than the HMO.  As a result, if the price of health insurance is reduced, more will opt for the newly more affordable medium-option PPO.

Under the scenario of competition within four regions in the United States shown in Table 5, we find greater insurance coverage than the status quo, but less impact than a national market among all 50 states.  Interestingly, coverage is higher under this scenario than under the ‘five largest state’ scenario.  The moderate insurance estimate for this scenario indicates a net increase of just over 11 million newly insured.  Movement across plans is fairly consistent with what was observed in previous tables and the greatest change occurs in the individual market.  The minimum insurance estimate is disproportionately smaller than the national market minimum estimate, suggesting that regional competition might expose greater sensitivity to expected differences in state mandates.

Table 5 Scenario 3: Competition among States in 4 Regions

  Status Quo Scenario 3
Least Regulated State in 4 Regions - AL,AZ,NE,NH
Minimum Moderate Maximum
Individual
HSA 4,655,291 273,357 6% 1,230,693 26% 1,557,056 33%
PPO High 7,515,552 807,254 11% 4,221,135 56% 6,868,237 91%
PPO Low 180,379 (9,175) -5% (35,815) -20% (49,615) -28%
PPO Medium 1,534,799 33,600 2% 37,436 2% 22,584 1%
Uninsured 28,848,310 (1,105,036) -4% (5,453,448) -19% (8,398,262) -29%
Group Market
HMO 5,505,466 (140,557) -3% (994,350) -18% (1,408,263) -26%
HRA 6,166,134 (75,582) -1% (406,888) -7% (605,391) -10%
HSA Offered 307,298 (11,311) -4% (74,750) -24% (97,600) -32%
HSA No-offer 11,088 1,936 17% 17,437 157% 37,968 342%
PPO High 16,535,831 196,143 1% 1,624,974 10% 2,182,670 -38%
PPO Low 665,950 (20,858) -3% (194,308) -29% (255,140) -38%
PPO Medium 53,470,814 323,772 1% 2,364,368 4% 2,893,495 5%
Turned Down 3,530,681 (273,524) -8% (2,336,438) -66% (2,747,738) -78%
  With Sample National  
Minimum Insurance Estimate: 1,378,559 1,963,403  
Moderate Insurance Estimate: 7,789,931 11,094,751  
Moderate Insurance Estimate: 11,146,000 15,874,606  

Under the scenario of competition within four regions in the United States shown in Table 5, we find greater insurance coverage than the status quo, but less impact than a national market among all 50 states.  Interestingly, coverage is higher under this scenario than under the ‘five largest state’ scenario.  The moderate insurance estimate for this scenario indicates a net increase of just over 11 million newly insured.  Movement across plans is fairly consistent with what was observed in previous tables and the greatest change occurs in the individual market.  The minimum insurance estimate is disproportionately smaller than the national market minimum estimate, suggesting that regional competition might expose greater sensitivity to expected differences in state mandates.

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