Cost and Coverage Impacts of the President’s Health Care Reform Proposal and a Congressional Tax Credit Proposal. Impact on the Uninsured

05/19/2008

President’s Proposal.  We project that under current policy there will be about 48.8 million people without health insurance in 2009.  Under the President’s proposal, about 10.9 million people would become newly covered under the tax deduction, 8.6 million under Affordable Choices, and another 0.8 million children under SCHIP (Figure 12).  Note that children would be automatically enrolled into the SCHIP program as their parents enroll in an Affordable Choices plan. 

We estimate a net reduction in the uninsured of 18.1 million after taking into account approximately 2.2 million that would be expected to lose coverage when their employer coverage is discontinued as a result of eliminating the tax preference for ESI (see discussion below). 

Number of People Affected (in millions)
Figure 11: Summary of Changes in Coverage Under the Presidents Proposal in 2009
Number of people who take the tax deduction Total 174.5
Previously uninsured 10.9
Previously Non-group Insurance 9.3
Previously Employer Coverage 154.3
Number of people who enroll in Affordable Choices Health Insurance Program (Affordable Choices) Total 9.7
Previously uninsured 8.6
Previously with employer or non-group insurance 1.1
Workers and dependents whose employer drops coverage Total 12.3
Take non-group coverage 8.5
Enroll in Affordable Choices 0.5
Enroll in Medicaid/SCHIP 1.1
Go uninsured 2.2
Take up Employer coverage Total 1.0
Currently decline ESI who take it 0.7
Firms who start offering coverage 0.3
Reduction in uninsured Total 18.1
Newly covered due to tax deduction 10.9
Newly covered adults due to Affordable Choices 8.6
Children newly covered in Public Program due to Parents
covered in Affordable Choices
0.8
Become uninsured from employer dropping coverage (2.2)
Source: Lewin Group estimates using the Health Benefits simulation model (HBSM).

Congressional Tax Credit proposal.  Under the tax credit proposal, about 22.7 million people would become newly covered (Figure 12).  We estimate a net reduction in the uninsured of 21.1 million. This takes into account approximately 1.6 million that would be expected to lose coverage when their employer coverage is discontinued as a result of eliminating the tax preference for ESI (see discussion below).

Figure 12: Summary of Changes in Coverage under the S.1019 Proposal in 2009

Number of People Affected (in millions)
Figure 12: Summary of Changes in Coverage under the S.1019 Proposal in 2009
Number of People who take the tax credit total 188.8
Previously uninsured 22.7
Previously non-group 10.0
Previously ESI coverage 156.1
Workers and dependents whose employer drops coverage Total 12.6
Take non-group coverage 10.6
Enroll in Medicaid/SCHIP 0.4
Go uninsured 1.6
Take up ESI coverage Total 2.8
Currently decline ESI who take it 2.1
Firms who start offering coverage 0.7
Reduction in uninsured Total 21.1
Newly covered 22.7
Become uninsured from employer dropping coverage (1.6)
Source: Lewin Group estimates using the Health Benefits simulation model (HBSM).

Figure 13 displays our estimates of the reduction in uninsured by state.  The average percent reduction in the number of uninsured is higher under the Congressional tax credit proposal (41 percent reduction) compared to the President’s proposal (35 percent reduction).  In fact, in all but one state (Arizona), the reduction in uninsured was greater under the Congressional proposal.  In Arizona, there was a rather high take-up of the tax deduction coupled with a relatively low take-up rate of the tax credit (see state specific tables in Appendix).  Also of note, North Dakota has the lowest reduction in the number of uninsured under either proposal. 

Figure 13. Summary of Proposal Impacts on State Uninsured and Cost Estimates
    President's Proposal Congressional Tax Credit Proposal
State Current Uninsured (in 1,000s) Reduction in Insured (in 1,000s) Net Federal Cost (in  $ millions) Net State Cost (in  $ millions) Net Total Public Cost (in  $ millions) Reduction in Insured (in 1,000s) Net Federal Cost (in  $ millions) Net State Cost (in  $ millions) Net Total Public Cost (in  $ millions)
Alabama 696 252 $1,446 $262 $1,709 286 $844 -$440 $404
Alaska 141 34 $84 $12 $97 40 -$42 -$13 -$55
Arizona 909 446 $2,022 $271 $2,293 299 $993 -$461 $531
Arkansas 520 197 $1,097 $168 $1,265 235 $764 -$203 $561
California 7,276 2,341 $12,220 $2,175 $14,394 2,830 $6,799 -$4,946 $1,853
Colorado 880 348 $1,724 $340 $2,065 396 $789 -$561 $228
Connecticut 449 138 $551 $68 $619 173 -$154 -$545 -$699
Delaware 103 28 $152 $28 $180 36 $0 -$110 -$110
Florida 3,596 1,432 $5,774 $52 $5,826 1,723 $3,526 -$190 $3,336
Georgia 1,615 625 $3,189 $422 $3,611 771 $1,758 -$939 $819
Hawaii 118 43 $425 $1 $426 47 $262 -$189 $73
Idaho 280 140 $494 $75 $569 148 $289 -$149 $140
Illinois 1,881 621 $3,451 $622 $4,074 745 $1,115 -$1,489 -$374
Indiana 975 311 $1,675 $292 $1,967 382 $542 -$747 -$205
Iowa 379 120 $1,124 $257 $1,382 144 $531 -$396 $135
Kansas 380 122 $947 $202 $1,148 136 $423 -$274 $149
Kentucky 666 217 $1,237 $218 $1,455 250 $718 -$393 $325
Louisiana 825 336 $1,229 $73 $1,303 387 $787 -$218 $569
Maine 149 27 -$23 $22 -$1 48 -$205 -$225 -$430
Maryland 778 259 $1,838 $306 $2,144 326 $639 -$698 -$59
Massachusetts NA NA NA NA NA NA NA NA NA
Michigan 1,224 395 $2,168 $377 $2,546 479 $173 -$1,159 -$985
Minnesota 609 223 $1,849 $517 $2,366 289 $689 -$1,191 -$501
Mississippi 516 186 $1,048 $124 $1,171 219 $771 -$246 $525
Missouri 655 201 $1,881 $276 $2,158 258 $998 -$607 $391
Montana 195 64 $322 $57 $379 72 $196 -$97 $99
Nebraska 258 75 $619 $111 $730 91 $267 -$196 $71
Nevada 464 166 $901 $39 $940 191 $603 -$17 $586
New Hampshire 168 50 $276 $2 $278 67 -$50 -$9 -$59
New Jersey 1,350 634 $1,724 $78 $1,802 736 -$24 -$1,428 -$1,453
New Mexico 300 111 $675 $83 $758 118 $361 -$141 $219
New York 2,483 1,053 $2,950 $488 $3,439 1,236 $315 -$2,333 -$2,018
North Carolina 1,496 541 $3,154 $501 $3,655 654 $2,176 -$822 $1,354
North Dakota 95 17 $229 $50 $278 23 $111 -$57 $54
Ohio 1,646 559 $3,082 $476 $3,557 704 $996 -$1,320 -$324
Oklahoma 696 284 $1,256 $215 $1,471 323 $831 -$345 $486

 

Figure 13. Summary of Proposal Impacts on State Uninsured and Cost Estimates (cont’d)
    President's Proposal Congressional Tax Credit Proposal
State Current Uninsured (in 1,000s) Reduction in Insured (in 1,000s) Net Federal Cost (in $ millions) Net StateCost (in $ millions) Net Total Public Cost (in $ millions) Reduction in Insured (in 1,000s) Net Federal Cost (in $ millions) Net State Cost (in $ millions) Net Total Public Cost (in $ millions)
Oregon 609 303 $744 $126 $871 314 $93 -$445 -$352
Pennsylvania 1,668 599 $2,787 $391 $3,179 683 $831 -$1,315 -$484
Rhode Island 141 41 $125 $41 $166 51 -$52 -$133 -$185
South Carolina 715 242 $1,122 $161 $1,283 292 $694 -$439 $254
South Dakota 117 28 $266 $17 $283 36 $143 -$6 $138
Tennessee 928 312 $1,769 $53 $1,821 370 $897 -$67 $830
Texas 5,511 2,014 $6,523 $344 $6,867 2,308 $4,109 -$227 $3,881
Utah 425 154 $790 $122 $912 186 $395 -$228 $167
Vermont 71 27 $14 $18 $32 33 -$126 -$86 -$212
Virginia 1,086 375 $2,746 $473 $3,219 466 $1,372 -$838 $534
Washington 1,009 492 $1,556 $17 $1,573 557 $521 -$86 $435
West Virginia 321 103 $548 $70 $618 116 $304 -$164 $140
Wisconsin 708 192 $926 $255 $1,181 241 -$399 -$709 -$1,108
Wyoming 93 22 $141 -$11 $130 29 $58 -$26 $32

NA – Estimates are not included for Massachusetts due to the transitioning of their reform plan.

Source: Lewin Group estimates using the Health Benefits simulation model (HBSM).

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