Affordability of Insurance: Application of ACA Definitions in a Linked Employee-Employer Data Set

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Slide 1

Affordability of Insurance: Application of ACA Definitions in a Linked Employee-Employer Data Set

G. Edward Miller
Thomas M. Selden
Jessica P. Vistnes

AHRQ Conference September 10, 2012

Slide 2

Affordable Care Act (ACA)

• The ACA will expand access to health insurance by:
  • Subsidizing Exchange coverage (139-400% FPL).
  • Expanding Medicaid (≤138% FPL).
• Research has found a relationship between employers' insurance decisions and alternative forms of coverage for employees.
  • Spousal offers of ESI.
  • Public coverage.
• The ACA will present employers with important new sources of insurance coverage to consider.

Slide 3

Important Information to Assess the ACA

• Important categories of Modified Adjusted Gross Family Income (MAGI) in the ACA.
  • ≤138% FPL (Medicaid eligible).
  • 139-250% FPL (Large Exchange Subsidy).
  • 251-400% FPL (Small Exchange Subsidy).
  • >400% FPL (No Subsidy).
• Important to know:
  • Within-employer distribution of workers' MAGI.
  • Alternative sources of coverage.
  • Premiums.
• No nationally representative data set has all required data.

Slide 4

Employer-Sim Model

• Synthetic workforces:
  • Use household data on workers to 'populate' establishment-level data on employers and their health insurance plans.
• Medical Expenditure Panel Survey (MEPS) Insurance Component (IC):
  • 2010 data on private establishments.
  • Out-of-Pocket (OOP) premiums for all plans offered.
• MEPS Household Component (HC):
  • 2005-2007: pooled data on workers and their families.
  • MAGI: constructed per ACA rules, CPI-adjusted to 2010 $s.

Slide 5

Linking Workers to Establishments

• Draw a sample of 300+ workers that match each establishment on these characteristics.
• Include 100+ low, medium and high wage workers.
• Workers are sampled with replacement.

Slide 6

Raking Workers Weights

• 0/1 variables for MEPS HC workers.
• Percent distributions in MEPS IC establishments.
• Iteratively adjust MEPS HC sample weights until worker characteristics match estab. % distributions.

Slide 7

Synthetic Workforces

• Synthetic workforces (in principle) can be used to examine any employee/family characteristic from the MEPS HC.
• Quality depends on correlation between the HC characteristic and variables used in linking and raking.
  • We do not provide standard errors, which could be quite large given the multiple sources of data and imperfections in the synthetic match.
• Modified adjusted gross incomes are strongly related to many of the variables available to construct synthetic workforces.

Slide 8

Goals

• Estimate how many employers have a majority of workers who are income-eligible for ACA-related coverage.
• Within predominantly subsidy-eligible firms, examine the degree of variation in workers' incomes.
• Examine issues related to the affordability of insurance.

Slide 9

Stratify Analysis by Firm-Size

• Large firms (50+ full-time workers):
  • Subject to fines if at least one full-time employee gets subsidized Exchange coverage.
• Small firms (<50 full-time workers):
  • No penalties for employees accessing Exchange coverage.
  • Tax credits for some firms with <25 workers (started in 2010).

Slide 10

Distribution of establishments, by workers' family income, 2010

Source: Authors' calculations using data from the Employer-Sim Model. Estimates are weighted by MEPS-IC establishment weights. We did not estimate standard errors for point estimates from our simulation model.

Slide 11

Distribution of incomes for full-time, eligible workers in establishments that offer ESI, 2010

Source: Authors' calculations using data from the Employer-Sim Model. Estimates are weighted by MEPS-IC establishment weights. We did not estimate standard errors for point estimates from our simulation model.

Slide 12

Affordability of Insurance

• ACA definition of affordability:
  • OOP premium for single coverage <9.5% of MAGI.
• Our definition of affordable dependent coverage:
  • Dependent coverage if offered.
  • OOP premium for dependent coverage <9.5% of MAGI.
• Use the Employer-Sim Model to examine affordability.
  • Re-weight the data to produce worker-level estimates.
  • Focus on workers with MAGI between 139-400% FPL.
    • Potentially eligible for subsidized Exchange coverage.

Slide 13

Affordability (continued)

• For full-time workers with MAGI 139-400% FPL, who are offered insurance, we examine the percent of workers with:
  • Affordable single coverage (legal ACA definition).
  • 'Affordable' dependent coverage from own employer.
• Examine options for workers with "unaffordable" dependent coverage:
  • Spousal offer of ESI.
  • Children eligible for public coverage with premium.

Slide 14

Affordability of Dependent Coverage

• Determine needed coverage for each family member:
  • Assume persons ≤138% FPL, children with free public coverage, and persons with Medicare or Tricare do not need ESI.
  • Others are assumed to need ESI provided by the worker.
• Count the number of persons in workers' health insurance eligibility unit (HIEU) who need ESI:
  • Caveat: MEPS HIEU definition does not account for new ACA rules for dependents up to age 26.
• Calculate OOP premium, from own employer, to cover all who need ESI.
• Determine whether OOP premium <9.5% of MAGI.

Slide 15

Distribution of OOP Premiums: Workers with MAGI 139%-400% FPL, 2010

 Source: Authors' calculations using data from the Employer-Sim Model. Estimates are weighted by MEPS-IC worker-level weights. We did not estimate standard errors for point estimates from our simulation model.
**Premiums for dependent coverage are conditional on an offer of dependent coverage.

Slide 16

Affordability of Single ESI: Workers with MAGI 139%-400% FPL, 2010

Source: Authors' calculations using data from the Employer-Sim Model. Estimates are weighted by MEPS-IC worker-level weights. We did not estimate standard errors for point estimates from our simulation model.

Slide 17

Affordability of Single ESI: Workers with MAGI 139%-400% FPL, 2010

Source: Authors' calculations using data from the Employer-Sim Model. Estimates are weighted by MEPS-IC worker-level weights. We did not estimate standard errors for point estimates from our simulation model.

Slide 18

Affordability of Dependent ESI: Workers with MAGI 139%-400% FPL, 2010

Source: Authors' calculations using data from the Employer-Sim Model. Estimates are weighted by MEPS-IC worker-level weights. We did not estimate standard errors for point estimates from our simulation model.

Slide 19

Alternative sources of dependent coverage: Workers with MAGI 139%-400% FPL, 2010

  Source: Authors' calculations using data from the Employer-Sim Model. Estimates are weighted by MEPS-IC worker-level weights. We did not estimate standard errors for point estimates from our simulation model.
***Workers may have both a spousal offer and eligible children, so percentages do not sum to 100%.

Slide 20

Limitations

• We do not calculate standard errors (SEs).
• Appropriate SEs must account for multiple sources of variance:
  • Matching of MEPS-HC workers to MEPS-IC establishments.
  • Using samples of MEPS-HC workers to estimate summary statistics for each establishment.
  • Sampling variation in the MEPS-IC.
• Relative standard errors (RSEs) for our point estimates are likely to be large.
• Additional sources of error are attributable to the HC-IC linkage process.

Slide 21

Summary

• ACA-related incentives raise important considerations for private employers regarding the provision of ESI.
  • Many establishments have a majority of workers who are income-eligible for Medicaid or Exchange coverage.
• Within-firm heterogeneity in workers' incomes complicates employers' decisions.
• Most workers with MAGI 139-400% FPL have access to affordable single coverage.
  • We estimate that about 750,000 workers lacked affordable single coverage in 2010.
• For those with lack of access to 'affordable' dependent coverage.
• Nearly half lacked an alternative source of dependent coverage.

Slide 22

Further Work

• Evaluate the affordability of dependent coverage using all available sources:
  • Worker's ESI.
  • Spouse's ESI.
  • Children's eligibility for public insurance.
• Evaluate workers' net benefits of Exchange coverage by comparing costs of moving to the Exchange with the costs of the most affordable alternative.
• Examine the within-establishment concentration of workers who would benefit from Exchange coverage.