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Lipson and Verdier - General

VIEWS: 44 PAGES: 30

									        Evaluation of
Maine’s Dirigo Health Reform:
      Initial Experience
and Lessons for Other States

          February 1, 2008

Debra J. Lipson and James M. Verdier
 Mathematica Policy Research, Inc.
                 Acknowledgments
       Our co-authors
        – Lynn Quincy, Shanna Shulman, Elizabeth Seif,
          Matt Sloan, Bob Hurley

       Sponsors
         – The Commonwealth Fund
        – Changes in Health Care Financing
          and Organization (HCFO)—a national initiative of
          the Robert Wood Johnson Foundation


2
            Overview of Presentation
       Background on Dirigo Health Reform

       Evaluation questions & study design

       Major findings

       Financing subsidies from savings in
        overall health system

       Lessons and conclusions

3
    Background on Dirigo Health Reform
       and Its Coverage Expansions




4
    Dirigo Health Reform Goals
             Make affordable health care coverage
              available to every Maine citizen by
              2009 (about 140,000 uninsured in 2003)

             Slow the growth of health care costs
              through cost containment

             Improve quality of care—for example,
              by comparing provider performance
              using quality measures



5
               Dirigo Health
        Coverage Expansion Initiatives
                                                              400%
   DirigoChoice –                                            350%                                    DirigoChoice (not




                                 Income as a Percent of FPL
    subsidized insurance                                      300%
                                                                                                      eligible for subsidies)

    product for small                                                                                 DirigoChoice
                                                              250%
    groups, self-employed,                                                                            Subsidy-Eligible
    and individuals                                           200%
                                                                                                      MaineCare
                                                              150%
                                                                                                      Expansion-Eligible
   Increased Medicaid                                        100%
                                                                                                      Dual MaineCare/
    eligibility for parents of                                50%                                     DirigoChoice Eligible
    dependent children –                                       0%
    from prior max. of 150%                                          Children   Parents   Childless
    FPL to 200% FPL                                                                        Adults



6
               DirigoChoice Features
       Individuals
         – could be previously insured
       Small Firms:
         – 50 or fewer eligible employees
         – could have offered health benefits to employees
           previously
       Subsidies for premiums and deductibles for
        individuals with family income < 300% FPL
       Comprehensive benefits – MH, preventive care,
        annual OOP cost limits
       Jointly operated by state and private health plan
7
     Illustrative Dirigo Enrollee
    John, Age 56, Self-employed

                 2006 annual income: $18,000

                 2007 DirigoChoice premium
                   – Before subsidy: $857/mo.
                   – With subsidy: $521/mo.

                 Major Surgery Costs: ~$80,000
                 John’s costs:
                      Deductible: $1,600
                      Co-pays: $5,200



8
         Evaluation
    Questions and Design




9
               Research Questions
        Are low-income uninsured people gaining coverage
         under DirigoChoice or Medicaid?

        How have small employers responded to the
         availability of DirigoChoice?

        Are the DirigoChoice subsidy financing sources
         adequate and sustainable enough to cover many
         more low-income uninsured?

        Which aspects of Maine’s approach to health
         coverage expansion are relevant elsewhere? What
         can other states learn from its experience?
10
                Study Design
     Qualitative & Quantitative Methods
     • Analysis of DirigoChoice & Medicaid administrative
         data on enrolled firms and individuals

        Survey of small businesses in Maine

        Key stakeholder interviews

        Comparison of Maine to other states vis-a-vis:
          – health insurance coverage
          – small group and individual market regulations
          – health care delivery system
          – Medicaid policies

11
     MAJOR FINDINGS




12
     Cumulative Net Enrollment in DirigoChoice,
          January 2005–September 2006
                                                                                                                       Individual
                                                                                                                       Sole proprietor
                                                                                                                       Small group
12000
                              Sole proprietor/Individual
                              enrollment cap reached                                    Sole proprietor/Individual
10000                                                                                   enrollment cap lifted


                Individual
 8000
                enrollment
                begins
 6000


 4000


 2000


     0
         Jan-   Feb-   Mar-   Apr-   May-   Jun-   Jul-   Aug-   Sep-   Oct-   Nov-   Dec-   Jan-   Feb-   Mar-   Apr-   May-   Jun-   Jul-   Aug-   Sep-
         05     05     05      05     05    05     05      05    05     05      05     05    06     06     06     06      06    06     06      06    06
13
                            Enrollment in Dirigo Health
                            Medicaid Expansion Groups
                   30000
                                                                       March 05:
                                                                       Childless adult
                   25000   January 05: DirigoChoice                    freeze instituted
                           began
Monthly Caseload




                   20000
                                                                             July 06:
                                                                             Childless
                                                                             adult
                   15000                                                     freeze
                                                                             lifted
                   10000




                   5000                       April 05: Parent
                                              Expansion
                                              (150-200%FPL)
                      0



                                                             Date

14                         Childless Adults            Medicaid Expansion to Parents
        Previous Health Coverage Among
     DirigoChoice Members Enrolling in 2006
                        Small firm            Sole                            All
                        members            proprietors        Individuals   Members

     Prior
     coverage                54%               67%                68%        65%

     Uninsured               37%               30%                28%        31%

      Responses
      not usable              9%                 3%                 4%        4%


     Source: MPR tabulation of Dirigo Health Agency Administrative Data

15
 More Low-income Enrollees Qualified
  for Higher Subsidies than Expected
     Income Level        Projected     Enrollees as Ever Enrolled
                         Enrollment      of 9/06      as of 9/06
     Medicaid-eligible           11%             1%            1%

     <150% FPL                    3             49            46
     150-199% FPL                 6             16            16
     200-249% FPL                29             10            11
     250-299% FPL                26              4             5
     > 300% FPL                  24             20            22
     Total                      100            100           100

16
 Fewer Small Firm Workers Enrolled in
    DirigoChoice Than Expected
                   Projected    Enrollment as of   Ever Enrolled
                   Enrollment         9/06           as of 9/06

     Small group     90%             30%               35%
     members

     Sole                            28%               26%
     proprietors
                      10%
     Individuals                     42%               38%


     All members     100%            100%             100%



17
          Small Employer Survey
     Firm Characteristics by Offer Type
                                                              Coverage offered
 Firm                              All firms   DirigoChoice    Another plan      None
 characteristics
                                     773           509             121            143
 All firms                         (100%)         (66%)           (16%)          (18%)
 Mean number of                       8.1          6.7            17.7**          5.0**
 employees


 Average wage
     Mean percent who earn
     less than $12 per hour           44%          45%             26%**          55%**

     Mean percent who earn
     $12 to $18 per hour              38%          39%             43%**         33%*

     Mean percent who earn
     more than $18 per hour           18%          17%             32%**         12%*


18   *p < .05   ** or ++ p < .01
 Average Change in Employer Contribution
           Under DirigoChoice
       Compared to Prior Coverage

                                                47%
      Annual
                              20%                           Lower
     deductible
                                         33%                Same

                                                            Higher

                                                  52%
     Premium
                                     32%
 contribution
                             16%



                  0%   10%   20%   30%    40%   50%   60%

19
             Why Firms That Considered
             DirigoChoice Did Not Enroll

        Too costly or not affordable          45 (58%)

        Benefits offered do not fit           8 (10%)
         employees’ needs

        Did not qualify for DirigoChoice      6 (8%)

        Other reasons                         19 (25%)



         n = 78 of 773
20
           DirigoChoice
         Subsidy Financing

              and the

     The Savings Offset Payment


21
                   DirigoChoice
              Financing Sources - 2006
         Savings                                                                    DirigoChoice
     Offset Payment                                                              Member Contribution
          31%                                                                            40%




      State General Funds
     (carryover from 2005)
             29%

22      Sources: 2007 Dirigo Health Agency allocation request to the Maine legislature;
        Dirigo Health Agency, 2006, Annual Report: Program Overview 2005 & 2006.
            Savings Offset Payment
    SOP assessments on insurers and 3rd-party
     administrators equal to estimated ―aggregate
     measurable cost savings‖
    Potential Savings Sources
     – Fewer uninsured due to Dirigo Health expansions,
       leading to reduction in bad debt/charity care
     – Hospital savings from voluntary cost controls
     – CON and capital fund savings from lower capital
       investments
     – ―Provider fee savings‖: less cost shifting to other
       payers due to increased Medicaid provider rates
23
          Savings Offset Payment Issues

        Type of savings to count
        Assumptions, data and methods used to
         estimate savings
        Method for capturing provider savings
         – Insurers expected to recover SOP by reducing
           provider payments and passing on savings to
           consumers via lower premiums, but did not

        Insurers & employers filed legal challenge to
         SOP
24
       Estimated v. Actual Savings
               2006-2008
            Dirigo Health Board   Approved by Insurance
                  Estimate           Superintendent

     2006       $110.6 M                $43.7 M

     2007        $41.8 M                $34.3 M

     2008        $78.1 M                $32.8 M




25
     Lessons and Conclusions




26
         Financing Coverage Expansions
        Financing insurance subsidies for low- and middle-
         income people from savings in the private health
         system is vulnerable to opposition from those
         expected to pay for subsidies
          – Capturing cost savings from reduced bad
            debt/charity care and other cost containment
            efforts can be just as hard as raising taxes

        Medicaid eligibility expansions can be effective in
         increasing coverage, but may be politically
         controversial in many states
          – Issues of budget cost, income levels covered,
            ―crowd out‖ of private insurance

27
     Program Design and Implementation

        Incremental, voluntary coverage programs
         can help offset premium costs and raise
         health coverage rates -- but unlikely to
         achieve universal coverage

        Inevitable trade-off between scope of
         benefits and affordability of premiums

        Maintaining or expanding small employer
         offer rate is hard in high-cost states
28
            Relationships with Private
             Health Insurance Plans

        Using competition among health plans to
         lower price not an option in some states
          – May not be enough plans
        State-sponsored plans that co-exist, or
         compete, with private plans:
          – Risk adverse selection if benefits are
            better
          – Have limited potential to raise insurance
            rates or attract firms & individuals, if
            benefits are lower and enrollment is
            voluntary
29
                 Caveats & Limitations
        Data Limitations
         – Annual CPS data for Maine are too imprecise to
           measure declines in uninsured at state level
         – No state household survey since 2002
        Evolution of Dirigo Health Coverage Reforms
         – Changes to DirigoChoice benefits, administration,
           marketing
         – Impact of Dirigo cost containment and quality
           improvement initiatives not yet known

30

								
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