Evaluation of Maine

1
Evaluation ofMaines Dirigo Health Reform
Initial Experience and Lessons for other States

• February 1, 2008
• Debra J. Lipson and James M. Verdier
• Mathematica Policy Research, Inc.

2
Acknowledgments

• Our co-authors
• Lynn Quincy, Shanna Shulman, Elizabeth Seif, Matt
  Sloan, Bob Hurley
• Sponsors
• The Commonwealth Fund
• The Robert Wood Johnson Foundation, Changes in
  Health Care Financing and Organization Initiative

3
Overview of Presentation

• Background on Dirigo Health Reform
• Evaluation questions study design
• Major findings
• Financing subsidies from savings in overall
  health system
• Lessons for states

4
Background on Dirigo Health Reform and Its
Coverage Expansions
5
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 carefor example, by comparing
  provider performance using quality measures

6
Dirigo Health Coverage Expansion Initiatives

• DirigoChoice subsidized insurance product for
  small groups, self-employed, and individuals
• Increased Medicaid eligibility for parents of
  dependent children from prior max. of 150 FPL
  to 200 FPL

7
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 lt 300 FPL
• Comprehensive benefits MH, preventive care,
  annual OOP cost limits
• Jointly operated by state and private health plan

8
Illustrative Dirigo EnrolleeJohn, age 58,
self-employed

• Annual income
• DirigoChoice premium
• Before subsidy
• After subsidy
• Major Surgery
• Total Costs
• Johns costs
• Deductible
• Co-pays
• Max OOP 10,000

9
Evaluation Questions and Design
10
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 Maines approach to health
  coverage expansion are relevant elsewhere? What
  can other states learn from its experience?

11
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

12
MAJOR FINDINGS
13
Cumulative Net Enrollment in DirigoChoice,January
2005September 2006
Sole proprietor/Individual enrollment cap reached
Sole proprietor/Individualenrollment cap lifted
Individual enrollment begins
14
Enrollment in Dirigo HealthMedicaid Expansion
Groups
30000
March 05 Childless adult freeze instituted
January 05 DirigoChoice began
25000
20000
July 06 Childless adult freeze lifted
Monthly Caseload
15000
10000
April 05 Parent Expansion (150-200FPL)
5000
0
15
Previous Health Coverage Among DirigoChoice
Members Enrolling in 2006
Sole proprietors
Small firm members
All Members
Individuals
Prior coverage
Responses not usable
Source MPR tabulation of Dirigo Health Agency
Administrative Data
16
More Low-income Enrollees Qualified for Higher
Subsidies than Expected
Income Level Projected Enrollment Enrollees as of 9/07 Ever Enrolled as of 9/07
Medicaid-eligible 11 1 1
lt150 FPL 3 49 46
150-199 FPL 6 16 16
200-249 FPL 29 10 11
250-299 FPL 26 4 5
gt 300 FPL 24 20 22
Total 100 100 100
17
Fewer Small Firm Workers Comprised Dirigo Members
Than Expected
Projected Enrollment Enrollment as of 9/07 Ever Enrolled as of 9/97
Small group members 90 30 35
Sole proprietors 10 28 26
Individuals 10 42 38
All members 100 100 100
18
Small Employer SurveyFirm Characteristics by
Offer Type
Coverage offered
All firms
Mean number of employees
Average wage
p lt .05 or p lt .01
19
Average Change in Employer ContributionUnder
DirigoChoice Compared to Prior Coverage
20
Why Firms That Considered DirigoChoice Did Not
Enroll

• Too costly or not affordable
• Benefits offered do not fit employees needs
• Did not qualify for DirigoChoice
• Other reasons

• 45 (58)

• 8 (10)

• 6 (8)

• 19 (25)

n 78 of 773
21
DirigoChoice Subsidy Financingand the The
Savings Offset Payment
22
DirigoChoice Financing Sources - 2006
Savings Offset Payment 31
DirigoChoice Member Contribution 40
State General Funds (carryover from 2005) 29
Sources 2007 Dirigo Health Agency allocation
request to the Maine legislatureDirigo Health
Agency, 2006, Annual Report Program Overview
2005 2006.
23
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

24
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

25
Estimated v. Actual Savings2006-2008
Dirigo Health Board Estimate Approved by Insurance Superintendent
2006 110.6 M 43.7 M
2007 41.8 M 34.3 M
2008 78.1 M 32.8 M
26
Lessons for Other States
27
Translating Lessons to Other States
PROBLEMCharacteristics of Uninsured
Design of coverage strategies
Implementation
28
Maine Health Insurance Coverage and Costs

• Medicaid coverage very high most low-income
  groups covered, limiting potential to expand
  public coverage
• Focus on small employers, which comprise higher
  share of all employers than US average
• Stringent small group/individual insurance
  regulations already enacted
• Second highest health insurance premiums in the
  country
• Limited competition among health plans or
  providers

29
What Can Other States Learn?

• State-sponsored plans that compete with private
  plans
• Risk of adverse selection if benefits are better
• Limited potential to raise insurance
  rates/attract firms individuals if benefits
  lower and enrollment is voluntary
• Maintaining or expanding small employer offer
  rate is hard in high-cost states

30
Financing Coverage Expansions

• Medicaid eligibility expansions effective in
  increasing coverage, but politically
  controversial in many states (taxes)
• Capturing cost savings from reduced bad
  debt/charity care and other cost containment
  efforts can be just as hard as raising taxes
• Coverage expansions without forceful cost control
  will confront affordability problems

31
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

32
Concluding Comments

• Incremental, voluntary coverage expansions can
  help many people, but unlikely to achieve
  universal coverage
• 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