Linda J. Blumberg

The demand for alcohol: the differential response to price.

Although several studies indicate that drinking is responsive to price, little work has focused on whether prices have a differential effect on light, moderate, or heavy drinking. This study examines the price responsiveness of the demand for alcohol: whether heavy drinkers are less sensitive to price than light or moderate drinkers. The study uses data on alcohol consumption on the 1983 National Health Interview Survey. The results indicate that both light and heavy drinkers are much less price elastic than moderate drinkers. Further, we cannot reject the hypothesis that the very heaviest drinkers have perfectly price inelastic demands.

Did the Medicaid expansions for children displace private insurance? An analysis using the SIPP

Using data from the 1990 panel of the Survey of Income and Program Participation (SIPP), we address the question: Did the Medicaid expansions for children cause declines in private coverage? We use a multivariate approach that attributes a displacement effect to declines in private coverage for children targeted by the Medicaid expansions exceeding declines for a comparison group of older low-income children. We find that 23% of the movement from private coverage to Medicaid due to the expansions was attributable to displacement. There is no evidence of displacement among those starting uninsured, leading to an overall displacement effect of 4%.

Worker Decisions to Purchase Health Insurance

Studying worker health insurance choices is usually limited by the absence of price data for workers who decline their employers offer. This paper uses a new Medical Expenditure Panel Survey file which links household and employer survey respondents, supplying data for both employer insurance takers and decliners. We test for whether out-of-pocket or total premium better explains worker behavior, estimate price elasticities with observed prices and with imputed prices, and test for worker sorting among jobs with and without health insurance. We find that out-of-pocket price dominates, that there is some upward bias from estimating elasticities with imputed premiums rather than observed premiums, and that workers do sort among jobs but this does not affect elasticity estimates appreciably. Like earlier studies with less representative worker samples, we find worker price elasticity of demand to be quite low. This suggests that any premium subsidies must be large to elicit much change in worker take-up behavior.

The Health Reform Monitoring Survey: Addressing Data Gaps To Provide Timely Insights Into The Affordable Care Act

The Health Reform Monitoring Survey (HRMS) was launched in 2013 as a mechanism to obtain timely information on the Affordable Care Act (ACA) during the period before federal government survey data for 2013 and 2014 will be available. Based on a nationally representative, probability-based Internet panel, the HRMS provides quarterly data for approximately 7,400 nonelderly adults and 2,400 children on insurance coverage, access to health care, and health care affordability, along with special topics of relevance to current policy and program issues in each quarter. For example, HRMS data from summer 2013 show that more than 60xa0percent of those targeted by the health insurance exchanges struggle with understanding key health insurance concepts. This raises concerns about some peoples ability to evaluate trade-offs when choosing health insurance plans. Assisting people as they attempt to enroll in health coverage will require targeted education efforts and staff to support those with low health insurance literacy.

Trends in health care financial burdens, 2001 to 2009.

CONTEXTnOver the past decade, health care spending increased faster than GDP and income, and decreasing affordability is cited as contributing to personal bankruptcies and as a reason that some of the nonelderly population is uninsured. We examined the trends in health care affordability over the past decade, measuring the financial burdens associated with health insurance premiums and out-of-pocket costs and highlighting implications of the Affordable Care Act for the future financial burdens of particular populations.nnnMETHODSnWe used cross sections of the Medical Expenditure Panel Survey Household Component (MEPS-HC) from 2001 to 2009. We defined financial burden at the health insurance unit (HIU) level and calculated it as the ratio of expenditures on health care-employer-sponsored insurance coverage (ESI) and private nongroup premiums and out-of-pocket payments-to modified adjusted gross income.nnnFINDINGSnThe median health care financial burden grew on average by 2.7% annually and by 21.9% over the period. Using a range of definitions, the fraction of households facing high financial burdens increased significantly. For example, the share of HIUs with health care expenses exceeding 10% of income increased from 35.9% to 44.8%, a 24.8% relative increase. The share of the population in HIUs with health care financial burdens between 2% and 10% fell, and the share with burdens between 10% and 44% rose.nnnCONCLUSIONSnWe found a clear trend over the past decade toward an increasing share of household income devoted to health care. The ACA will affect health care spending for subgroups of the population differently. Several groups burdens will likely decrease, including those becoming eligible for Medicaid or subsidized private insurance and those with expensive medical conditions. Those newly obtaining coverage might increase their health spending relative to income, but they will gain access to care and the ability to spread their expenditures over time, both of which have demonstrable economic value.

Toward Universal Coverage in Massachusetts

This paper presents several options designed to help the Commonwealth of Massachusetts move to universal health insurance coverage. The alternatives all build upon a common base that includes an expansion of the Medicaid program, income-related tax credits, a purchasing pool, and government-sponsored reinsurance. These measures in themselves would not yield universal coverage, nor would an employer mandate by itself. We show that an individual mandate, and an employer mandate combined with an individual mandate, both would yield universal coverage with a relatively small increase in government costs relative to state gross domestic product and current health spending. The cost of an employer mandate—with a “pay or play” design—is sensitive to the payroll tax rate and base, the number and kind of exemptions, and whether workers whose employers “pay” receive discounts when they purchase health insurance. The development of these alternatives and their analyses contributed to the eventual health care compromise that emerged in Massachusetts in April 2006.

Why Employers Will Continue to Provide Health Insurance: The Impact of the Affordable Care Act

The Congressional Budget Office, the Rand Corporation, and the Urban Institute have estimated that the Patient Protection and Affordable Care Act (ACA) will leave employer-sponsored coverage largely intact; in contrast, some economists and benefit consultants argue that the ACA encourages employers to drop coverage, thereby making both their workers and their firms better off (a “win-win” situation). This analysis shows that no such “win-win” situation exists and that employer-sponsored insurance will remain the primary source of coverage for most workers. Analysis of three issues—the terms of the ACA, worker characteristics, and the fundamental economics of competitive markets—supports this conclusion.

How Choices In Exchange Design For States Could Affect Insurance Premiums And Levels Of Coverage

The Affordable Care Act gives states the option to create health insurance exchanges from which individuals and small employers can purchase health insurance. States have considerable flexibility in how they design and implement these exchanges. We analyze several key design options being considered, using the Urban Institutes Health Insurance Policy Simulation Model: creating separate versus merged small-group and nongroup markets, eliminating age rating in these markets, removing the small-employer credit, and setting the maximum number of employees for firms in the small-group market at 50 versus 100 workers. Among our findings are that merging the small-group and nongroup markets would result in 1.7 million more people nationwide participating in the exchanges and, because of greater affordability of nongroup coverage, approximately 1.0 million more people being insured than if the risk pools were not merged. The various options generate relatively small differences in overall coverage and cost, although some, such as reducing age rating bands, would result in higher costs for some people while lowering costs for others. These cost effects would be most apparent among people who purchase coverage without federal subsidies. On the whole, we conclude that states can make these design choices based on local support and preferences without dramatic repercussions for overall coverage and cost outcomes.

Government as Reinsurer: Potential Impacts on Public and Private Spending

This paper analyzes the potential effects of alternative government reinsurance mechanisms on public and private expenditures in group and nongroup health insurance markets. High reinsurance thresholds, with the government taking responsibility for costs over

Estimating the Counterfactual: How Many Uninsured Adults Would There Be Today Without the ACA?

50,000 per year, would absorb a small share of private costs. Lower thresholds would have greater effects, but would increase government costs significantly. We also find that reinsurance would reduce the variance in expenditures considerably and should reduce risk premiums charged by private insurers. We conclude that focusing on small employers and the nongroup market could target government spending where costs are highest and insurance markets most unstable.