Healthcare/Long-Term Care Financing

Short-Term Fixes to the Sustainable Growth Rate Process . 1.0 Purpose and Overview

There has been considerable recent interest in revising the Sustainable Growth Rate (SGR) process of updating payments to physicians and other providers under the Medicare program. Researchers at the Centers for Medicare & Medicaid Studies (CMS) and with the U.S.

Short-Term Fixes to the Sustainable Growth Rate Process . Executive Summary

Purpose: This report assesses effects of a variety of refinements to the current Sustainable Growth Rate (SGR) Medicare physician payment update process. A spreadsheet model of the SGR process was developed to examine changes in conversion factors (CFs) and program spending in response to changes in the SGR process, including changes to

Short-Term Fixes to the Sustainable Growth Rate Process

Final Report Presented to: Lynn Nonnemaker DHHS/OS/ASPE Presented by: NORC at the University of Chicago 1350 Connecticut Ave, NW, Suite 500 Washington, DC 20036 (202) 223-6040

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

The process used is similar to that used by the Bureau of the Census to establish final family weights in the March CPS. A description of the CMS data is available at: http://www.cms.hhs.gov/NationalHealthExpendData/02_NationalHealthAccountsHistorical.asp#TopOfPage We controlled for worker wage levels, industry, firm size and other characte

Cost and Coverage Impacts of the President’s Health Care Reform Proposal and a Congressional Tax Credit Proposal. 10-Year Estimates

We projected the cost of the two proposals over the 10-year period, 2009 through 2018. Note that when projecting program enrollment and costs, we assume a 40 percent phase-in for 2009 and an 80 percent phase in for 2010, with the program reaching ultimate enrollment beginning in 2011. Therefore, the 2009 impact estimates in our projections dif

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

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