Modified Adjusted Gross Income (MAGI) Income Conversion Methodologies. Appendix 3: Differences between SNNG Simulation and MDM Simulation

03/01/2013

As noted in the text, the Same Number Net and Gross (SNNG) Method is much more dependent on the accuracy of the simulation than the other methods analyzed by the Department, including the Marginal Disregard Method (MDM).  The MDM approach will be correct if the people simulated as eligible, and in the band range of 25 percentage points of FPL of the existing net income standard, have disregards that are on average similar to the actual population of people who are eligible in the 25 percentage points of FPL range.  It does not matter if we accurately estimate the number of people who are eligible, as long as the mean disregards of those estimated to be eligible are close to the true mean disregard.

For the SNNG approach, we not only have to estimate the average disregards accurately, but we also have to be sure that we estimate the right number of people eligible.  In addition, the SNNG approach requires that we accurately estimate the number of people who are not currently eligible but who might become eligible, as well as their disregards.  In sum: there are more targets for which the simulation must be accurate in order to have confidence in the results generated by the SNNG Method, and there are not good benchmarks for many of these targets.

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