Cost and Coverage: The Impact of Implementing Various State Health Care Reform Proposals Nationally. Implementing a National Premium Subsidy Program

06/01/2008

Given the widespread interest in premium subsidy programs, ASPE worked with The Lewin Group to design and model a national premium subsidy program.  The premium subsidies, including individual/family contribution requirements, reflect the Massachusetts program’s premium subsidy schedule, and the benefits mimic those included in the Massachusetts Commonwealth Care plans (see descriptions above).

For this analysis, subsidies could only be used for the purchase of coverage on the individual market; they could not be used toward the purchase of ESI.  We assume the subsidies are funded in full by the Federal government, in order to provide cost estimates for a nationalized premium subsidy program.  In addition, we include two variations of the program – one including a “crowd-out” provision and one without; both presenting coverage and cost results.  A crowd-out provision is a mechanism designed to keep people from dropping private coverage in order to enroll in subsidized public coverage.  This crowd-out provision utilized a requirement that individuals must be uninsured for at least six months prior to enrolling in the program (referred to as a waiting period).  This eligibility requirement is meant to be a deterrent from dropping coverage, as it would require individuals to “go bare” for six months.  While most premium subsidy programs include some kind of crowd-out provision to ensure they are not substituting public coverage for private coverage, we have also included coverage and cost estimates of a subsidy program without any such provisions in order to see the impact of the crowd-out provision.

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