On July 7, the National Bureau of Economic Research (NBER) published a study examining the impact of providing health coverage to uninsured low-income individuals.  Focusing on the impact on health service utilization, health outcomes, and financial burden, the study examined the effects of a 2008 Oregon Medicaid expansion that used a lottery system to select 10,000 participants to enroll in Medicaid out of a pool of approximately 90,000 applicants.  NBER found that beneficiaries had statistically significantly higher health service utilization and better self reported physical and mental health than the control group, which was comprised of individuals not selected for Medicaid coverage in the lottery.  Additionally, the authors found statistically significantly lower out-of-pocket (OOP) medical spending and medical debt among beneficiaries when compared to the control group.  The study has implications for the impact of the national health care reform law’s Medicaid expansion on uninsured individuals.

Finkelstein, Amy et. al. (2011). The Oregon health insurance experiment: evidence from the first year. National Bureau of Economic Research, (17190). http://www.nber.org/papers/w17190

Authors: Amy Finkelstein, Sarah Taubman, Bill Wright, Mira Bernstein, Jonathan Gruber, Joseph P. Newhouse, Heidi Allen, and Katherine Baicker.

On July 20, the Kaiser Family Foundation (KFF) released a report examining three proposals to prohibit Medicare supplemental insurance policies, known as “Medigap” policies, from covering 100 percent of beneficiaries’ out-of-pocket (OOP) costs.  Several recent proposals to reform Medicare and reduce federal spending have included such measures on the grounds that allowing Medigap plans to cover all OOP costs increases service utilization and Medicare spending.   Based on the numerous OOP spending requirements that the proposals would impose on Medigap beneficiaries, the authors estimate that implementing the policy change in FY2011 would save Medicare between $1.5 and $4.6 billion.  However, the report cautions that it does not account for the negative effects of the reduced utilization of needed care, which could negatively affect future spending in addition to adversely affecting outcomes.

From the report:

The National Bureau of Economic Research (NBER) has released a study, finding that households containing at least one family member with a chronic illness typically have less generous employer-sponsored health coverage than households without such individuals.  Comparing households’ out-of-pocket (OOP) expenses with their total health care spending, the authors assess coverage generosity based on the ratio of OOP spending to total health spending.  The study found that households with a family member with a chronic illness generally had higher proportions of OOP spending to total health spending than their counterparts.  However, the authors assert that this disparity is not due to variations in plan benefits but rather to the use patterns consistent with chronic illnesses, noting that individuals with chronic illnesses typically have higher expenditures in traditionally less generous coverage categories, including prescription drug coverage.  The study suggests that current health plan designs may have a negative financial impact on the chronically ill, which may negatively affect their outcomes if high costs impede their ability to adhere to treatment regimens.

Abraham, Jean M., Royalty, Anne Beeson and DeLeire, Thomas. (2011). Gauging the generosity of employer-sponsored insurance: differences between households with and without a chronic condition. The National Bureau of Economic Research, 17232. http://www.nber.org/papers/w17232

Authors: Jean M. Abraham, Anne B. Royalty, and Thomas DeLeire.

On June 8, the Kaiser Family Foundation released a brief examining the effect of converting Medicare into a premium support program, as outlined in the U.S. House-approved $3.5 trillion FY2012 budget.  The authors chart the history of the premium support policy concept, examine policy decisions and issues that would affect its impact, and consider its potential effect on out-of-pocket (OOP) spending.  In addition, the brief explains how the government would set and adjust premium contributions, whether and how government contributions would be adjusted based on beneficiary demographics, and the required services plans must offer for participation in such a program.

From the report:

Current Medicare can be understood as a “defined benefit” program. The federal government has an open-ended obligation to pay for the program’s statutorily promised benefits. With an increasing focus on persistently high federal deficits and accumulating national debt, proposals are being debated in Congress to reduce the federal government’s expenditures on the program. One option is a defined contribution model such as premium support whereby the government’s fiscal commitment to the program would become more limited and predictable.

The most prominent of the proposals described as premium support1 that are presently being discussed are the plan for Medicare restructuring sponsored by House Budget Committee Chair, Paul Ryan (R-WI), which was approved by the House of Representatives in April 2011 as part of the House Fiscal Year 2012 budget resolution,2 and the Medicare recommendations made by recent deficit reduction commissions, including the commission led by Pete Domenici and Alice Rivlin.3 Elements of Medicare premium support also can be seen in the existing Medicare Advantage (MA or Part C) and Prescription Drug (Part D) programs. Similar “managed competition” concepts upon which premium support was developed are reflected in the coverage expansions and insurance reforms included in the Patient Protection and Affordable Care Act (ACA) enacted in 2010.

Full Report: The Nuts and Bolts of Medicare Premium Support Proposals (PDF | 670 KB)

Kaiser Family Foundation. (2011). The nuts and bolts of Medicare premium support proposals.

On July 7, 2011, the Substance Abuse and Mental Health Services Administration's Center for Behavorial Health Statistics and Quality published a report summarizing the sources of payment for mental health treatment for adults as captured by the National Survey of Drug Use and Health. Among the primary findings 34.5 percent of individuals receiving outpatient mental health services reported that most costs were covered by private insurance, while 34.7 percent of individuals receiving inpatient services reported that most costs were covered by public insurance. Additionally, 26.2 percent of individuals receiving outpatient mental health services and 18.8 percent of those receiving inpatient services reported that they or a family member were the primary source of payment. Finally, of those that paid for a portion or whose family paid for a portion of treatment, 2.3 percent of individuals receiving outpatient services contributed over $5,000, while 9.6 percent of individuals receiving inpatient services contributed over $10,000. 

From the report:

For many individuals with mental health problems, their willingness to seek and their success in receiving treatment often depend on their ability to pay, either from their own resources or through private or public insurance coverage. Appropriate treatment may be inaccessible because individuals lack any insurance coverage, or the insurance coverage they have for mental health and substance abuse conditions is inadequate. The Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008 and the Affordable Care Act (ACA) of 2010 have the potential to improve access to mental health and substance abuse services. The MHPAEA is expected to improve coverage for people who have limits or caps on their benefits. The ACA is intended to provide access to insurance coverage, including benefits for mental health and substance abuse conditions, for many persons who are currently uninsured.

Substance Abuse and Mental Health Services Administration. (2011). Sources of payment for mental health treatment for adults.

On May 10, the U.S. Department of Health and Human Services (HHS) released a report finding that few uninsured individuals have the capacity to pay for potential hospital stays.  HHS officials estimate that uninsured families can pay in full for only 12 percent of hospital stays that they may experience.  With approximately 50 million uninsured individuals, the report notes that previous studies estimated 2008 uncompensated hospital care costs at up to $49 billion.  The authors caution that these costs are often shifted onto insured individuals and employers.

From the report:

One of the primary purposes of health insurance is to protect against the risk of incurring unaffordable medical bills.  When the uninsured cannot afford the care they receive, that cost must be absorbed by other payers.  This brief, written by Andre Chappel, Ph.D., under the supervision of Richard Kronick and Sherry Glied, reports estimates of how likely it is that those without health insurance will be able to pay their hospital bills if they have to be admitted to hospital.

Full Report: The Value of Health Insurance: Few of the Uninsured Have Adequate Resources to Pay Potential Hospital Bills (PDF | 125 KB)

U.S. Department of Health and Human Services. (2011). The value of health insurance: few of the uninsured have adequate resources to pay potential hospital bills. Chappel, A.