Texas Health Texas Health Insurance Market - Insurance Market - Insuring the Insuring the Uninsured Uninsured Presentation to Senate Finance Presentation to Senate Finance Committee Committee August 19, 2008 August 19, 2008 Dianne Longley Dianne Longley Director, Research and Analysis Director, Research and Analysis Life, Health and Licensing Life, Health and Licensing Texas Department of Insurance Texas Department of Insurance Texas Department of Insurance
Transcript
Texas Health Insurance Texas Health Insurance Market - Insuring the Market - Insuring the
Uninsured Uninsured
Presentation to Senate Finance CommitteePresentation to Senate Finance CommitteeAugust 19, 2008August 19, 2008
Dianne LongleyDianne LongleyDirector, Research and AnalysisDirector, Research and Analysis
Life, Health and LicensingLife, Health and LicensingTexas Department of InsuranceTexas Department of Insurance
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Texans’ Insurance Texans’ Insurance Status - 2006Status - 2006
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Category Number Percent
Total Population 23,236,000 -
Insured Population 17,533,000 75.5% - Employment-based 12,130,000 52.2%
- Individual 1,734,000 7.5%
- Government-based 5,782,000 24.9%
Uninsured Population 5,704,000 24.5%
Source: US Census Bureau, Current Population Survey, 2007
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History of Uninsured RatesHistory of Uninsured RatesYear # of Uninsured % Uninsured
1995 4,615,000 24.5%
1997 4,836,000 24.5%
1999 4,664,000 23.3%
2000 4,500,000 21.4%
2001 4,960,000 23.5%
2002 5,555,598 25.8%
2003 5,527,771 24.6%
2004 5,583,000 25.0%
2005 5,515,677 24.2%
2006 5,704,000 24.5%
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Source: US Census Bureau, Current Population Survey
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Common Characteristics Common Characteristics of the Uninsuredof the Uninsured
• Age: 45% of young adults 18-24 and 36% of 25-34 year olds are uninsured
• Ethnicity: 55% of uninsured are Hispanic• Income: 63% of uninsured are under 200% FPL• Citizenship: 76% of uninsured are US citizens but 54%
of non-citizens are uninsured• Employment: 66% of uninsured adults are employed;
44% work at firms with less than 25 employees; 27% work at firms with 500 or more employees; 82% of uninsured live in families with at least one adult that works full-time
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Uninsured Rates by Age - 2006Uninsured Rates by Age - 2006Texas
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Age Range
NumberUninsured
Percent ofTotal
Uninsured
Percent Uninsured within Age Category
Ages 6 and Younger
571,416 10.0% 20.3%
Ages 7 – 17 820,622 14.4% 21.9%
Ages 18 – 24 959,351 16.8% 40.8%
Ages 25 – 34 1,284,629 22.5% 37.3%
Ages 35 – 44 880,854 15.5% 26.9%
Ages 45 – 64 1,103,238 19.3% 21.9%
Ages 65 + 83,655 1.5% 3.2%
Total 5,703,765 100.0% 24.5%
Source: US Census Bureau, March 2007 Current Population Survey (Texas Sample)
Source: US Census Bureau, March 2007 Current Population Survey (Texas Sample)
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National Distribution of Immigrant National Distribution of Immigrant Uninsured Population - 2006Uninsured Population - 2006
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Total Number of Uninsured
(Millions)
Number of Uninsured Immigrants(Millions)
Percentage of Uninsured
Accounted for by Immigrants
US Total 44.6 11.7 26.3%
Texas 5.4 1.7 30.4%
California 6.6 3.2 48.5%
Florida 3.6 1.2 32.7%
New York 2.5 0.9 36.7%
New Jersey 1.2 0.5 42.1%
Source: EBRI estimates from the US Census Bureau, March 2005-2007 Current Population Survey
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Texas Uninsured Population Texas Uninsured Population by Citizenship – 2002-2006by Citizenship – 2002-2006
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US CitizenNaturalized
CitizenNot a US Citizen
# of Uninsured 2002
3,753,217 292,082 1,510,300
# of Uninsured 2003
3,657,478 243,676 1,472,530
# of Uninsured 2004
3,849,726 301,527 1,431,576
# of Uninsured 2005
3,956,747 251,402 1,307,528
# of Uninsured 2006
3,879,961 315,244 1,508,669Source: US Census Bureau, Current Population Survey
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Uninsured Rates by Uninsured Rates by Employment Status for Persons Employment Status for Persons
Age 18 and Older - 2006Age 18 and Older - 2006
Employment Status
Number of Uninsured
Adults
Percent of Total Uninsured
Percent Uninsured
within Employment
Category
Employed 2,858,634 68.3% 26.7%
Unemployed 209,741 5.0% 46.9%
Not in Labor Force
1,117,317 26.7% 34.9%
Total 4,185,692 100.0% 29.1%
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Source: US Census Bureau, March 2007 Current Population Survey (Texas Sample)
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Uninsured Rates for Adults Uninsured Rates for Adults by Company Size - 2006by Company Size - 2006
Size of FirmNumber of Uninsured
Adults
Percent of Total Uninsured
Percent Uninsured within Size Category
Not reported 171,240 6.0% 49.3%
Less than 10 875,308 30.6% 43.3%
10-24 369,812 13.0% 42.5%
25-99 427,643 14.0% 32.2%
100-499 321,165 11.2% 25.9%
500-999 69,619 2.4% 13.6%
1,000 or more 623,847 22.8% 14.2%
Total 2,858,634 100.0% 26.7%
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Source: US Census Bureau, March 2007 Current Population Survey (Texas Sample)
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Trends Among Uninsured Trends Among Uninsured 2004-20062004-2006
• 8% decrease in uninsured rate among 18-24 year olds
• 100 percent increase in uninsured rate among adults age 65 and older
• 9% increase in uninsured rate among those earning 200% to 249% of poverty level
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State
Percentage of Population Under 65
w/Employer Sponsored Insurance
Percentage of Population that is Uninsured
Median Household
Income
(Three-year Average
from 2004-2006) 1
Avg. Single Premium Cost
in 2006 – Group
Coverage 2
All Firms Combined
Avg. Family Premium Cost
in 2006 – Group Coverage 2
All Firms Combined
United States 62.9 15.8 $47,287 $4,118 $11,381
Texas 54.0 24.5 $43,425 $4,133 $11,690
Arizona 56.2 20.9 $46,729 $4,280 $11,549
Arkansas 54.7 18.9 $37,420 $3,567 $9,928
California 55.5 18.8 $53,770 $4,036 $11,493
Florida 57.3 21.2 $44,448 $3,936 $11,046
Illinois 68.2 14.0 $49,280 $4,245 $11,781
Massachusetts
69.9 10.4 $56,236 $4,448 $12,290
Minnesota 70.2 9.2 $57,363 $3,981 $11,395
New Mexico 52.0 22.9 $40,827 $4,037 $11,279
New York 63.5 17.9 $48,201 $4,605 $12,075
Sources:1. U.S. Census Bureau, Current Population Survey, 2005-2007 Annual Social and Economic Supplements 2. Agency for Healthcare Research and Quality, 2006 Medical Expenditure Panel Survey-Insurance
Component
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State
Percentage of Large Firms that
Offer Health Insurance
Percentage of Small Firms that Offer
Health Insurance
Percentage of Employees that
Enroll When Insurance is Offered in
Large Firms
Percentage of Employees that
Enroll When Insurance is Offered in
Small Firms
United States 95.6 42.6 78.6 77.4
Texas 88.9 32.2 78.9 80.4
Arizona 94.8 32.3 76.4 80.6
Arkansas 91.6 29.3 81.0 80.1
California 94.9 45.5 83.0 81.2
Florida 94.7 38.9 77.4 72.0
Illinois 97.6 41.1 79.2 82.0
Massachusetts 97.3 55.5 77.1 70.6
Minnesota 98.2 37.7 77.6 75.2
New Mexico 92.7 34.6 68.3 68.1
New York 98.0 50.6 78.2 76.9
Agency for Healthcare Research and Quality, 2006 Medical Expenditure Panel Survey-Insurance Component
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Texas Insurance Enrollment Data Small Firms Large Firms
1. Total number of firms 294,072 124,657
2. Total number of employees 1,918,682 6,098,561
3. Percentage of firms that offer insurance 32.2 88.9
4. Number of firms that do offer insurance 94,691 110,820
5. Number of firms that do not offer insurance 199,381 13,837
6. Number of employees working in firms that offer insurance 936,316 5,641,168
7. Percentage of employees working in firms that offer insurance 48.8 92.5
8. Number of employees working in firms that do not offer insurance
982,366 457,393
9. Number of employees eligible for coverage 777,142 4,479,087
10. Number of employees who are enrolled 624,822 3,533,999
11. Percentage of all employees that have employer-sponsored cvg. 33% 58%
12. Number of employees who have access to coverage but are not enrolled
152,320 944,088
13. Number of employees who do not have access to coverage 1,141,540 1,619,474
Agency for Healthcare Research and Quality, 2006 Medical Expenditure Panel Survey-Insurance Component
Increase in Health Insurance Premiums Increase in Health Insurance Premiums Compared to Other Indicators, 2000-2005Compared to Other Indicators, 2000-2005
8.2
10.9
12.913.9
11.2
9.2
2.7
3.9 4.0
2.6 2.9
2.21.6
3.5
2.2
3.33.12.3
1.60.8
3.7 2.7
4.2
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
2000 2001 2002 2003 2004 2005
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ea
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Health Insurance Premiums
Workers' Earnings
Overall Inflation
Gross Domestic Product
SOURCE: Kaiser Family Foundation and Health Research and Educational Trust, Employer Health Benefits: 2005 Annual Survey (www.kff.org/insurance/7315/sections/ehbs05-1-1.cfm) U.S. Department of Commerce, Bureau of Economic Analysis (2005). (www.bea.doc.gov)
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History of Average Annual Small Employer Group History of Average Annual Small Employer Group Health Insurance Costs in TexasHealth Insurance Costs in Texas
YearAverage Annual Premium
for Single Coverage
Average Annual Premium
for Family Coverage
1997 $2,172 $5,534
1998 $2,270 $5,575
1999 $2,539 $6,486
2000 $2,955 $6,784
2001 $3,229 $7,974
2002 $3,580 $8,800
2003 $3,793 $9,831
2004 $4,346 $10,253
2005 $4,270 $10,970
2006 $4,463 $11,310
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Source: Medical Expenditure Panel Survey and Employer Health Benefits Survey
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History of Average Annual Large Employer Group History of Average Annual Large Employer Group Health Insurance Costs in TexasHealth Insurance Costs in Texas
YearAverage Annual Premium
for Single Coverage
Average Annual Premium
for Family Coverage
1997 $2,200 $5,727
1998 $2,030 $5,590
1999 $2,261 $6,161
2000 $2,538 $6,618
2001 $2,809 $7,423
2002 $3,195 $8,841
2003 $3,607 $10,069
2004 $3,639 $10,087
2005 $4,065 $11,613
2006 $4,057 $11,745
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Source: Medical Expenditure Panel Survey, AHRQ
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Maximum Annual Per-Person Rates Maximum Annual Per-Person Rates Reported for Small and Large Reported for Small and Large
Employer Groups – 2006Employer Groups – 2006
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Source: TDI Annual Group Accident and Health Insurance Survey
CompanySmall Employer
Groups Large Employer
Groups
A $20,610 $7,866
B $26,894 $10,241
C $19,055 $13,098
D $20,164 $17,597
E $62,209 Unknown
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Primary Health Care Cost DriversPrimary Health Care Cost Drivers
• Technology– New services– Increasing number of people using services– Improved access to services
• Pharmaceuticals– New drugs– Extended life spans / higher utilization
• Aging population• Sicker population
– Increasing obesity prevalence
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Health Spending is Highly Concentrated Health Spending is Highly Concentrated Among Relatively Few PeopleAmong Relatively Few People
24%33%
49%
64%
85%97%
0%10%20%30%40%50%60%70%80%90%
100%
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Sp
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Top 1% Top 2% Top 5% Top 10% Top 25% Top 50%
Percent of Population
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Source: “Prescription Drugs and the Changing Concentration of Health Care Expenditures”, Health Affairs, Vol. 26, Jan-Feb 2007
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Claims Distribution Under Texas Claims Distribution Under Texas Group Insurance Plans – 2005Group Insurance Plans – 2005Total Value of Annual
Claims IncurredNumber of Enrollees within
Claims RangePercentage of Insureds
$0 454,863 17.6%
$1 - $1,000 1,309,447 50.8%
$1,001 - $5,000 523,247 20.3%
$5,001 - $10,000 146,182 5.7%
$10,001 - $25,000 95,686 3.7%
$25,001 - $50,000 28,030 1.1%
$50,001 - $75,000 8,500 0.33%
$75,001 - $100,000 3,921 0.15%
$100,001 - $250,000 5,762 0.22%
$250,001 - $500,000 1,110 0.04%
$500,001 - $1,000,000 259 0.01%
$1,000,001 or more 48 0.002%
Totals 2,577,055 100.00%
Total Premiums = $6,156,008,314; Total Claims = $4,754,838,085Source: 2005 Group A&H Survey of 21 largest insurers,
Texas Department of Insurance
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How Much Can How Much Can Small Employers Afford?Small Employers Afford?
Cost Per-Employee-Per-Month
that Employer Can Pay2001 2004
Less than $50 23% 17%
$50 22% 17%
$100 20% 20%
$150 9% 8%
$200 5% 6%
$250 2% 2%
$300 or More 2% 1%
Would Not Purchase at Any Cost 14% 14%
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TDI Small Employer SurveyTDI Small Employer Survey
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How Much Can Non-Poor How Much Can Non-Poor Families Pay?Families Pay?
Monthly Amount of Money Families Above 200% of Poverty Will Pay for Insurance
2001
None 5%
No more than $50 23%
$50-$100 35%
$101-$150 14%
More than $150 13%
Don’t Know 10%
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Source: TDI Survey of Non-Poor Uninsured
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Insurance Challenges Reported Insurance Challenges Reported by Employers to TDIby Employers to TDI
• Cost
• Participation requirements
• Inability to offer multiple plans
• Rate stability
• Underwriting / rate variability due to employee demographics
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Previous Legislative Initiatives to Previous Legislative Initiatives to Reform the Small Group MarketReform the Small Group Market
• Guarantee issue• Minimum participation requirements• Creation of standardized small group plans• Rating bands• Creation of Texas Health Insurance
Reinsurance System• Coalition and Cooperative group purchasing• Consumer Choice Plans that exclude certain
Number of Policies Issued to Previously Uninsured Groups and/or Individuals
Individual Policies 3,233 1,336 414
Small Employer Group Policies 325 701 915
Large Employer Group Policies 0 21 0
Total 3,558 2,058 1,329
Number of Lives Insured That Were Previously Uninsured
Individual Policies 5,886 2,056 540
Small Employer Group Policies 1,439 8,354 6,955
Large Employer Group Policies 0 4,019 0
Total 7,325 14,429 7,495
Source: CCP Figure 2 Filings with TDI*2007 Data Subject to Change Pending Final Audit
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Small Employer Insurance Enrollment 1993-2007Small Employer Insurance Enrollment 1993-2007
Source: TDI Figure 48 – Required annual filing by all small employer insurers
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YearNumber of Small Employers
with Insurance Number of Insured Lives
1993 36,952 Unavailable
1994 50,144 Unavailable
1995 63,698 Unavailable
1996 74,164 Unavailable
1997 83,437 978,966
1998 86,106 1,608,737
1999 96,710 1,446,486
2000 97,793 1,444,480
2001 84,240 1,070,483
2002 89,201 1,192,386
2003 91,281 1,162,704
2004 91,456 1,189,319
2005 86,106 1,102,135
2006 88,571 1,178,414
2007 87,510 1,135,127
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Options for Expanding Coverage, Options for Expanding Coverage, Reducing Health Insurance PremiumsReducing Health Insurance Premiums
• Subsidy programs
• Benefit plan design changes
– Basic coverage
– Catastrophic coverage / high deductibles
• Reinsurance for high cost claims
• Insurance reforms
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Public / Private Insurance Subsidy Public / Private Insurance Subsidy Programs – Key FeaturesPrograms – Key Features
• State provides subsidy funds to purchase an approved benefit plan; sliding scale based on income
• Individual plans or employment-based plans, or both
• Coverage varies: basic, catastrophic, or comprehensive
• Enrollment often lower than expected; depends heavily on value of subsidy
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Subsidy Example 1: New MexicoSubsidy Example 1: New Mexico• The state contracts with managed care
organizations for a standard benefit plan; provides comprehensive benefits up to $100,000 annually
• Available to uninsured adults below 200% FPL
• Can enroll through employer or as an individual if employer doesn’t offer
• State subsidizes cost– Employer pays $75, employee pays $20 or $35– If individual enrollee, pay $75 + $20 / $35
• Enrollment: 17,000
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Subsidy Example 2: OklahomaSubsidy Example 2: OklahomaA: Employer sponsored subsidy
• Originally targeted employers with less than 25 employees; expanded to groups up to 50
• State subsidizes coverage for workers earning up to 200% FPL– State pays 60% of employee premium, 85% of spouse– Employer pays 25% of employee premium, – Employee pays remaining 15%
• Choice of several plans• Enrollment: up to 50,000 lives; currently at 5,564
B: Individual Plans
• Available to adults earning up to 200% FPL with no access to employer-sponsored coverage
• Benefits administered through Medicaid• Premiums range from $0 to $51.39 for individuals, and from $0 to
$68.91 for families• Current enrollment: 11,694
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Subsidy Example 3: ArkansasSubsidy Example 3: Arkansas
• Available to uninsured, low-wage workers (under 200% FPL) in firms with 2 to 500 employees
• Limited benefit plan provided by self-funded state-sponsored plan; could not reach agreement with insurers to offer plan
• All employees must enroll unless they have other coverage; subsidies are only available to workers under 200% FPL, while all others pay the full cost (up to $500 per month)
• Enrollment targets of 50,000 workers under 200% FPL and 30,000 workers over 200% FPL
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Ongoing Research to Develop Expansion Ongoing Research to Develop Expansion Options For Legislative ConsiderationOptions For Legislative Consideration
• SB 10 – Small Employer Premium Assistance Study – a joint project of HHSC and TDI
• SB 10 Healthy Texas Study – a TDI study to design a small employer health insurance program
• State Coverage Initiatives (SCI)/ Robert Wood Johnson Foundation Coverage Institute Development Grant – joint project of Governor, Lt. Governor, Senate, House, HHSC and TDI
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Premium Assistance Program Cost Premium Assistance Program Cost Estimates for SB 1637/HB 3366, Estimates for SB 1637/HB 3366,
80th Legislature80th Legislature• In 2007, TDI calculated costs of implementing legislation to
create small employer premium assistance program• Would have provided $50 per eligible employee per month in
first year and decreased by $15 a month in each subsequent year
• Eligibility: employees in firms with 2-25 eligible employees, no employer-sponsored insurance for at least 12 months, incomes of 300% of poverty level or lower
• TDI estimated that 637,689 workers in small firms would qualify
• Cost estimates developed:– With 10% take-up rate, $38.2 million in year one for 63,768 workers;
$26.8 million in year two. – With 20% take-up rate, $76.5 million in year one for 127,537
workers; $53.6 million in year two– Additional costs for program development and administration
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Three-Share Plans with Three-Share Plans with Employer, Employee, and Employer, Employee, and
Government ContributionsGovernment Contributions• Takes advantage of employer’s payments• Usually provides “limited benefit” coverage, local
coverage only – no “out of network” benefits• Existing programs provide health services rather than
health insurance• Limited participation – must be previously uninsured• Have only been created to-date at local level• TDI awarded $750,000pilot project grant created under
HB 1; HHSC recently awarded $1 million grant• Galveston 3-share program currently enrolling members
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Houston Pilot ProjectHouston Pilot Project• Design based on research under SPG Program• Key features include
– Average cost of $150 per employee per month– Simplified enrollment and rating process using modified
community rating (rates vary only for age and gender)– Would allow on-line enrollment– Eliminated health-based underwriting– Offered two plan options: “basic” and “catastrophic”– Developed with input from Harris County stakeholders– Actuarial work provided by Milliman actuarial firm– 88% of focus group employers in Houston indicated they would
purchase the plan if available
• Harris County Healthcare Alliance issued a request for proposal in February, 2007. No contract was awarded.
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Healthy New York ProgramHealthy New York Program
• State subsidized reinsurance mechanism that is one component of Healthy New York
• Pays 90% of claims between $5,000 and $75,000 per individual
• Small employers, sole proprietors and individuals may participate if they are uninsured for the past 12 months and meet income eligibility
• All HMOs must offer a qualified plan; premiums are community rated
• Risk corridor was originally set at $30,000 to $100,000; it was reduced due to low claims activity, and premiums dropped approximately 17%
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Other States’ Tax Credits/Deductions for Other States’ Tax Credits/Deductions for Small Employers Offering InsuranceSmall Employers Offering Insurance
State Description of Credit/Deduction
Idaho
Employers are eligible to apply a $1,000 tax credit per employee earning an avg. wage of $15.50 or more per hour. State defined “revenue-producing enterprises” who employ individuals earning an avg. rate of less than $15.50 per hour are eligible to receive a $500 tax credit per employee
Kansas
First two years, tax credit is lesser of $35 per month per eligible employee or 50 percent of total amount paid by employer. In 3rd year, tax credit equals 75% of the lesser of $35 per month per employee or 50% of the total amount paid by employer. In 4th year: tax credit equals 50% of the lesser of $35 per month per employee or 50% of the total amount paid by employer. In 5 th year, tax credit equals 25% of the lesser of $35 per month per employee or 50% of total amount pd by employer. No tax credit after 5 years.
KentuckyFirst year, tax credit of 20% of the first year premium. In 2nd year, tax credit of 15% of the premium. In 3rd year, tax credit of 10% of the premium. In 4th year, tax credit of 5% of premium.
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Other States’ Tax Credits/Deductions for Other States’ Tax Credits/Deductions for Small Employers Offering InsuranceSmall Employers Offering Insurance
State Description of Credit/Deduction
MaineCredit is available for employers who provide dependent coverage. Credit limited to 20% of qualified expenses, not to exceed $125 per employee with dependents.
Montana
Provides state income tax credit to employers with 2-9 employees, who offer health insurance. Credit of $100 month for employee-only; $100 for spouse; $40 a month for dependents. If avg. age of employees is 45 or older, credit increases to $125. No employee may earn more than $75,00. Limit on number of tax credits available.
Ohio Premiums paid by a small employer are fully deductible.
OklahomaTax credit applied to those employers whose employees participate in the state certified, basic health benefit plan. A tax credit of $15 per month per eligible employee is allowed for two consecutive years.
OregonBusinesses may include the cost of providing health insurance coverage as one of the costs of doing business when determining their taxable income.
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Section 125 PlansSection 125 Plans
• Created by Congress in 1978 under Section 125 of the Internal Revenue Code
• Allows companies to give employees the option to pay for certain benefits on a pre-tax basis
• Three Section 125 alternatives:– Flexible Spending Account – allows employees to pay
for certain out-of-pocket health care expenses or dependent care costs on a pre-tax basis
– Cafeteria Plans – most complex option, allows employees to select from a menu of options for pre-tax deductions; more complicated to create and administer
– Premium Only Plan
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Section 125 Premium Only PlanSection 125 Premium Only Plan• Allows employees to pay their health insurance premium on
a pre-tax basis, which increases employees’ take-home pay and offsets part of the cost of insurance
• Employers pay lower taxes: the total pre-tax premiums paid by employees are exempt from the employer’s federal and state income taxes, social security, federal unemployment taxes, and most other state taxes
• Available for premiums paid for health, dental, vision and some life insurance; not applicable to long term care insurance premiums
• Once established, minimal ongoing administrative requirements
• Employee savings: 22 to 40 percent of premium contributions
• Employer savings: varies, but averages between seven and 10 percent of employees’ contributions
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