Healthcare/Long-Term Care Financing

Cost and Coverage Impacts of the President’s Health Care Reform Proposal and a Congressional Tax Credit Proposal. Single-Year Estimates of State Costs

Note that the net Federal, State and total public costs for both proposals are displayed by State in Figure 13 . Detailed estimates of the costs, similar to those displayed in Figure 15 and Figure 16 are displayed in the Appendix for each State. Below we describe the derivation of the net cost amounts for the States under each pro

Cost and Coverage Impacts of the President’s Health Care Reform Proposal and a Congressional Tax Credit Proposal. Single-Year Estimates of Federal Costs

President’s Proposal . The total amount of the federal tax revenue lost due to the new deduction would be $294.6 billion, including income and Social Security taxes ( Figure 16 ). These revenue losses would be largely offset by about $229.9 billion by requiring workers to count the value of their ESI coverage as taxable income. After

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

In this section we will discuss the impacts from both programs on Federal and State health spending. We first do so based upon our single year estimates assuming that the programs are fully implemented in 2009. We then present the estimated impacts over a 10-year projection period including an expected phase-in of the program over time.

Cost and Coverage Impacts of the President’s Health Care Reform Proposal and a Congressional Tax Credit Proposal. Changes in Private Insurance Coverage

President’s Proposal . Under current law, the tax exclusion for employer-sponsored health benefits effectively reduces the cost of insurance to workers. Creating a tax deduction of an equal amount for both employer and non-group coverage eliminates the relative tax advantage of providing coverage through the employer, resulting in a shi

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

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 1

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

Below we describe the impact of the President’s proposal and the Congressional tax credit proposal on health insurance coverage nationally and by state.

Assumptions used for the State-Level Estimates

Cost and Coverage Impacts of the President’s Health Care Reform Proposal and a Congressional Tax Credit Proposal. Assumptions used for the State-Level Estimates

As mentioned earlier, aside from developing national estimates, we also modeled the President’s proposal and the Congressional tax proposal for each state. Again, we used the HBSM to estimate the state impacts. The policy options were modeled using similar assumptions and methods as described above for the national estimates. This facilita

Key Modeling Assumptions for Tax Deduction and

Cost and Coverage Impacts of the President’s Health Care Reform Proposal and a Congressional Tax Credit Proposal. Key Modeling Assumptions for Tax Deduction and Tax Credit

We modeled the effect of the President’s tax deduction proposal and the Congressional tax credit proposal on coverage using a uniform methodology. We estimated the impact of these tax incentive methodologies in HBSM based upon a multivariate model of how the likelihood of taking coverage is affected by changes in the net cost of insurance to t

Key Modeling Assumptions for the Affordable

Cost and Coverage Impacts of the President’s Health Care Reform Proposal and a Congressional Tax Credit Proposal. Key Modeling Assumptions for the Affordable Choices Program

State Participation. Affordable Choices is an optional program to the states. To participate, the state must redirect half of their DSH funds to the Affordable Choices program. The remainder of the program is financed with federal matching funds, at the SCHIP enhanced matching rates. While the enhanced matching rate is attractive, the stat

Cost and Coverage Impacts of the President’s Health Care Reform Proposal and a Congressional Tax Credit Proposal. Baseline (Current-law) Development

The key to simulating changes in the health care system is to develop a baseline database that depicts the U.S. health care system in detail. Our HBSM baseline data is based upon the 1999 through 2001 Medical Expenditures Panel Survey (MEPS) data, which provide information on sources of coverage and health expenditures for a representative sam

Description of the Lewin Health Benefits

Cost and Coverage Impacts of the President’s Health Care Reform Proposal and a Congressional Tax Credit Proposal. Description of the Lewin Health Benefits Simulation Model

HBSM was created to provide comparisons of the impact of alternative health reform models on coverage and expenditures for employers, governments and households. HBSM facilitates comparisons of alternative health reform initiatives by using uniform data and assumptions. For example, take-up rates for Medicaid and various tax credit/premium p

Cost and Coverage Impacts of the President’s Health Care Reform Proposal and a Congressional Tax Credit Proposal. Methodology and Assumptions

We used The Lewin Group Health Benefits Simulation Model (HBSM) to analyze the costs and coverage impacts of the proposals nationally and for each State. The Health Benefits Simulation Model (HBSM) is a micro-simulation model of the U.S. health care system.

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

We also estimated the cost and coverage impacts of a Congressional tax credit proposal, which was modeled after Senate bill S.1019. This proposal would replace the current tax exclusion for ESI with a flat-tax credit of $2,000 per adult and $500 per child with a maximum of 2 children.

The President’s Tax Deduction Proposal and State-

Cost and Coverage Impacts of the President’s Health Care Reform Proposal and a Congressional Tax Credit Proposal. The President’s Tax Deduction Proposal and State-Based Grant Funding Program

There are two major components to the President’s proposal: the tax deduction and a state-based grant funding program called Affordable Choices.

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

The Office of the Assistant Secretary for Planning and Evaluation (ASPE), Department of Health and Human Services (DHHS) tasked Lewin to analyze health care reform proposals that aim to expand health insurance coverage by providing tax deductions and tax credits. The two proposals Lewin analyzed were the President’s health care tax deduction

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

Final Report Prepared by: The Lewin Group May 19, 2008 Prepared for: Office of the Assistant Secretary for Planning and Evaluation (ASPE) U.S. Department of Health and Human Services (HHS)

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The Effect of Health Care Cost Growth on the U.S. Economy. Footnotes

Recent estimates suggest that the U.S. spends $98 billion in excess administrative costs and $66 billion in excess drug costs, compared to other nations with a single-payer system (Krugman, 2007). For example, in 1971, both the U.S. and Canada spent 7-8 percent of their GDP on health care. With the adoption of its single-payer health care syste

The Effect of Health Care Cost Growth on the U.S. Economy. Appendix 2: Description of Variables and Data Sources

Variable Unit of measurement Source Comments Table A.1 describes the variables used in the empirical analysis in section 4, and the sources and construction of these variables. State population Number Bureau of Economic Analysis Per capita health expenditure Thousands of

The Effect of Health Care Cost Growth on the U.S. Economy. Appendix 1: List of Keywords and Their Combinations Used for the Literature Search

Health care costs + U.S. economy Rising costs + health + economy Health care sector + role + U.S. economy Rise + health care spending + U.S. Health care costs + economic growth Health care costs + GDP Health spending + impact Health spending + GDP Health spending + employment Health spending growth + productivity Health care c

The Effect of Health Care Cost Growth on the U.S. Economy. References

Alonso-Zaldivar, R. Health care costs magnify voter unease on economy. Los Angeles Times . October 25, 2006. Assistant Secretary for Planning and Evaluation (ASPE). Effects of Health Care Spending on the U.S. Economy . U.S. Department of Health and Human Services (HHS): Washington, D.C., 2005. Available at: http://aspe.hhs.gov/health/co

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