In Tables 5 through 7 we consider the independent effects of each of the proposed policy changes listed above. Table 5 shows the results of providing favorable tax treatment of HDHP premiums. The HDHP market grows to 7.2 million, a 4.0 million person increase. The total subsidy cost, after netting out ESI subsidy savings, is $5.14 billion. Also, the subsidy cost per newly insured person in the individual market is the lowest of any of the simulations at $1,779.
The results of more favorable tax treatment of HSA contributions are displayed in Table 6. This policy change is the least effective of the three: an increase of 136,020 new HDHP contracts and a small reduction in the uninsured of 90,979. Also, the cost per newly uninsured is the highest of all of three options at $4,412. The impact on the group market is small, though proportionately more people opt out of ESI and into HDHP under this proposed policy.
As seen in Table 7, a tax credit for high deductible health insurance coupled with an HSA has the largest impact with a net increase in HDHP participation in the individual market of 8.6 million lives. The total individual HDHP market enrollment would be 11.7 million. This projection is higher than our original model and reflects many of the changes made in this refinement. In particular, premiums of the alternative PPOs are now higher and make the HDHP more attractive. This premium difference, coupled with greater price sensitivity to premiums and cost sharing in our new plan choice model, produce this result. This policy change has an individual market subsidy of $14.8 billion and a cost per newly insured estimate of $2,276. This estimate is very similar to the combined SOTU policy.
| New MMA Population | Round 1 Population | Round 4 Population | Round 5 Population | SOTU Round 5 Subsidy | SOTU-MMA Delta | |
|---|---|---|---|---|---|---|
| Indivdual Market | ||||||
| HSA | 3,156,133 | 7,203,862 | 7,203,862 | 7,203,862 | $5,134,257,739 | 4,047,729 |
| PPO High | 37,591 | 32,679 | 32,679 | 32,679 | $0 | -4,912 |
| PPO Low | 6,046,777 | 4,922,203 | 4,922,203 | 4,922,203 | $0 | -1,124,573 |
| PPO Medium | 232,105 | 195,701 | 195,701 | 195,701 | $0 | -36,404 |
| Uninsured | 27,305,770 | 24,384,952 | 24,384,952 | 24,384,952 | $0 | -2,920,818 |
| Group Market | ||||||
| HMO | 19,667,935 | 19,704,840 | 19,651,237 | 19,651,575 | -$21,181,329 | -16,360 |
| HRA | 2,745,496 | 2,814,116 | 2,741,134 | 2,741,275 | -$2,916,262 | -4,220 |
| Employer-sponsored HSA | 77,465 | 77,461 | 77,414 | 77,413 | -$33,059 | -52 |
| Opt - out HSA | 38,923 | 170,176 | 171,814 | 171,811 | $139,498,077 | 132,888 |
| PPO High | 7,761,708 | 7,747,223 | 7,756,719 | 7,756,667 | -$15,798,254 | -5,041 |
| PPO Low | 1,117,420 | 1,073,171 | 1,077,268 | 1,077,248 | -$2,475,173 | -40,172 |
| PPO Medium | 40,877,293 | 40,829,008 | 40,783,752 | 40,783,743 | -$111,077,327 | -93,550 |
| Turned Down | 12,471,072 | 12,303,590 | 12,460,245 | 12,459,853 | -11,219 | |
| Total Subsidy | $5,120,274,412 | |||||
| New MMA Population | Round 1 Population | Round 4 Population | Round 5 Population | SOTU Round 5 Subsidy | SOTU-MMA Delta | |
|---|---|---|---|---|---|---|
| Indivdual Market | ||||||
| HSA | 3,156,133 | 3,292,152 | 3,292,152 | 3,292,152 | $401,358,806 | 136,020 |
| PPO High | 37,591 | 37,478 | 37,478 | 37,478 | $0 | -113 |
| PPO Low | 6,046,777 | 6,002,906 | 6,002,906 | 6,002,906 | $0 | -43,871 |
| PPO Medium | 232,105 | 231,048 | 231,048 | 231,048 | $0 | -1,057 |
| Uninsured | 27,305,770 | 27,175,814 | 27,175,814 | 27,175,814 | $0 | -129,957 |
| Group Market | ||||||
| HMO | 19,667,935 | 19,722,471 | 19,668,132 | 19,668,468 | -$4,294,438 | 533 |
| HRA | 2,745,496 | 2,818,471 | 2,745,374 | 2,745,516 | -$619,013 | 20 |
| Employer-sponsored HSA | 77,465 | 77,518 | 77,454 | 77,453 | -$10,976 | -13 |
| Opt - out HSA | 38,923 | 58,064 | 58,743 | 58,741 | $22,542,298 | 19,818 |
| PPO High | 7,761,708 | 7,751,747 | 7,762,298 | 7,762,246 | -$4,217,737 | 538 |
| PPO Low | 1,117,420 | 1,074,742 | 1,078,609 | 1,078,589 | -$202,858 | -38,831 |
| PPO Medium | 40,877,293 | 40,899,936 | 40,859,657 | 40,859,642 | -$21,831,754 | -17,650 |
| Turned Down | 12,471,072 | 12,316,635 | 12,469,318 | 12,468,930 | $0 | -2,142 |
| Total Subsidy | $392,724,328 | |||||
| New MMA Population | Round 1 Population | Round 4 Population | Round 5 Population | SOTU Round 5 Subsidy | SOTU-MMA Delta | ||
|---|---|---|---|---|---|---|---|
| Individual Market | |||||||
| HSA | 3,156,133 | 11,714,785 | 11,714,785 | 11,714,785 | $14,696,676,908 | 8,558,652 | |
| PPO High | 37,591 | 23,069 | 23,069 | 23,069 | $0 | -14522 | |
| PPO Low | 6,046,777 | 4,049,678 | 4,049,678 | 4,049,678 | $0 | -1,997,098 | |
| PPO Medium | 232,105 | 137,397 | 137,397 | 137,397 | $0 | -94,708 | |
| Uninsured | 27,305,770 | 20,814,468 | 20,814,468 | 20,814,468 | $0 | -6,491,303 | |
| Group Market | |||||||
| HMO | 19,667,935 | 19,717,183 | 19,717,183 | 19,663,410 | -$9,221,841 | -4525 | |
| HRA | 2,745,496 | 2,817,714 | 2,817,714 | 2,744,644 | -$943,624 | -852 | |
| Employer-sponsored HSA | 77,465 | 77,484 | 77,484 | 77,424 | -$18,334 | -42 | |
| Opt - out HSA | 38,923 | 122,306 | 122,306 | 123,795 | $159,724,415 | 84,871 | |
| PPO High | 7,761,708 | 7,750,024 | 7,750,024 | 7,760,701 | -$5,527,275 | -1007 | |
| PPO Low | 1,117,420 | 1,074,496 | 1,074,496 | 1,078,411 | -$820,756 | -39,009 | |
| PPO Medium | 40,877,293 | 40,856,724 | 40,856,724 | 40,811,157 | -$62,405,042 | -66,135 | |
| Turned Down | 12,471,072 | 12,303,651 | 12,303,651 | 12,460,042 | $0 | 11,030 | |
| Total Subsidy | $14,777,464,451 | ||||||
The comparison of the impact of the total 2006 SOTU proposals is presented in Table 8, which shows the results of the three policy changes combined, as well as individual impacts. The numbers reflect only the individual market since the group market is offered insurance. Likewise, the uninsured total reflects results from only the individual market. Subsidy costs are tallied for the individual market to give a national presentation of the cost per newly-insured person resulting from the SOTU policies. The least expensive option, per capita, is a tax- deductible HDHP premium. The most expensive is increasing the tax-deductible threshold for the HSA. Interestingly, the per capita cost of the tax credit proposal and entire SOTU are nearly identical.
| HSA Enrollees | Uninsured | New Insured | Annual Subsidy Cost (millions) | Subsidy Cost Per New Insured | |
|---|---|---|---|---|---|
| 2003 Medicare Modernization Act | 3,272,521 | 27,305,770 | 0 | $0 | $0.00 |
| State of the Union 2006 | 16,194,845 | 17,802,877 | 9,502,893 | $21,829 | $2,297.12 |
| Tax deductions HSA Premium | 7,474,963 | 24,420,419 | 2,885,351 | $5,136 | $1,780.09 |
| More deductible HSA Contribution | 3,433,760 | 27,214,791 | 90,979 | $393 | $4,316.63 |
| Low Income Subsidy of HSA Premium | 11,929,312 | 20,848,203 | 6,457,568 | $14,792 | $2,290.66 |
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