On the Importance and Intrinsic Difficulties of Incorporating Health Insurance Benefits in Absolute Poverty Trends.

CONTEXT: US government poverty measures do not include health insurance in the threshold or health insurance benefits in resources. Yet the 2019 Economic Report of the President presented long-term trends using the full-income poverty measure (FPM), which includes health insurance benefits as resources. A 2021 technical advisory report recommended statistical agencies produce absolute poverty trends with and without health insurance. METHODS: The authors analyzed the conceptual validity and relevance of long-term absolute poverty trends incorporating health insurance benefits. They estimated the extent to which the FPM credits health insurance benefits with meeting nonhealth needs. FINDINGS: In FPM estimates, health insurance benefits alone remove many households from poverty. Long-term absolute poverty trends incorporating health insurance benefits have intrinsic difficulties, because health insurance benefits are in-kind, mostly nonfungible, and large, and because health care undergoes substantial technological change-features that interact to undermine validity. Valid poverty measures with health insurance benefits require resources and thresholds consistent at each point in time, while absolute poverty measures require thresholds constant in real terms over time. These goals conflict. CONCLUSIONS: Statistical agencies should not produce absolute poverty trends incorporating health insurance benefits. Instead, they should focus on less-absolute poverty measures with health insurance benefits.

Health Savings Accounts No Longer Promote Consumer Cost-Consciousness.

Two decades ago Congress enabled Americans to open tax-favored health savings accounts (HSAs) in conjunction with qualifying high-deductible health plans (HDHPs). This HSA tax break is regressive: Higher-income Americans are more likely to have HSAs and fund them at higher levels. Proponents, however, have argued that this regressivity is offset by reductions in wasteful health care spending because consumers with HDHPs are more cost-conscious in their use of care. Using published sources and our own analysis of National Health Interview Survey data, we argue that HSAs no longer appreciably achieve this cost-consciousness aim because cost sharing has increased so much in non-HSA-qualified plans. Indeed, people who have HDHPs with HSAs are becoming less likely than others with private insurance to report financial barriers to care. In sum, promised gains in efficiency from HSAs have not borne out, so it is difficult to justify maintaining this regressive tax break.

Estimating The Effects Of Health Insurance And Other Social Programs On Poverty Under The Affordable Care Act.

The effects of health insurance on poverty have been difficult to ascertain because US poverty measures have not taken into account the need for health care and the value of health benefits. We developed the first US poverty measure to include the need for health insurance and to count health insurance benefits as resources available to meet that need-in other words, a health-inclusive poverty measure. We estimated the direct effects of health insurance benefits on health-inclusive poverty for people younger than age sixty-five, comparing the impacts of different health insurance programs and of nonhealth means-tested cash and in-kind benefits, refundable tax credits, and nonhealth social insurance programs. Private health insurance benefits reduced poverty by 3.7 percentage points. Public health insurance benefits (from Medicare, Medicaid, and Affordable Care Act premium subsidies) accounted for nearly one-third of the overall poverty reduction from public benefits. Poor adults with neither children nor a disability experienced little poverty relief from public programs, and what relief they did receive came mostly from premium subsidies and other public health insurance benefits. Medicaid had a larger effect on child poverty than all nonhealth means-tested benefits combined.

Including health insurance in poverty measurement: The impact of Massachusetts health reform on poverty.

We develop and implement what we believe is the first conceptually valid health-inclusive poverty measure (HIPM) - a measure that includes health care or insurance in the poverty needs threshold and health insurance benefits in family resources - and we discuss its limitations. Building on the Census Bureau's Supplemental Poverty Measure, we construct a pilot HIPM for the under-65 population under ACA-like health reform in Massachusetts. This pilot demonstrates the practicality, face validity and value of a HIPM. Results suggest that public health insurance benefits and premium subsidies accounted for a substantial, one-third reduction in the health inclusive poverty rate.

Health care utilization and self-care behaviors of Medicare beneficiaries with diabetes: comparison of national and ethnically diverse underserved populations.

Caring for persons with diabetes is expensive, and this burden is increasing. Little is known about service use, behaviors, and self-care of older individuals with diabetes who live in underserved communities. Information about self-care, informal care, and service utilization in urban (largely Latino, n = 695) and rural (mostly white, n = 819) Medicare beneficiaries with diabetes living in federally designated medically underserved areas was collected using computer-aided telephone interviews as part of the baseline assessment in the Informatics and Diabetes Education and Telemedicine (IDEATel) Project. Where items were comparable, service use was compared with that of a nationally representative group of Medicare beneficiaries with diabetes, using data from the Medical Expenditure Panel Survey. Compared to nationally representative groups, the underserved groups reported worse general health but similar health care service use, with the exception of home care. However, compared to the underserved rural group, the underserved, largely minority urban group, reported worse general health (P < 0.0001); more inpatient nights (P = 0.003), emergency room visits (P < 0.001), and home health care (P < 0.001); spent more time on self-care; and had more difficulty with housework, meal preparation, and personal care. Differences in service use between urban and rural groups within the underserved group substantially exceeded differences between the underserved and nationally representative groups. These findings address a gap in knowledge about older, ethnically diverse individuals with diabetes living in medically underserved areas. This profile of disparate service use and health care practices among urban minority and rural majority underserved adults with diabetes can assist in the planning of future interventions.

Cost-sharing: a blunt instrument.

Cost-sharing is a health care cost-containment technique in which health care services are partially paid for by patients out of pocket. Cost-sharing can reduce non-cost-effective care, but it can also undermine the financial protection and access values of health insurance. We review the empirical evidence published since the mid-1980s about cost-sharing's effect on utilization, expenditures, health, and adverse consequences, including how the effects vary by form of care, by health status, and by sociodemographic characteristics. Some cost-sharing, such as emergency department copayments, reduces utilization without any harmful effects, whereas other cost-sharing reduces valuable care such as maintenance drug use among the chronically ill. Cost-sharing should be used judiciously, with attention taken not to reduce highly cost-effective care.

How much more cost sharing will health savings accounts bring?

Proponents of health savings accounts (HSAs) contend that they will reduce medical expenditures. In practice, however, the effect of HSAs, and the high-deductible health plans that must accompany them, will depend on the actual provisions of those plans and of the plans they replace. We show that typical plans in the market today already contain substantial cost sharing. We find that many HSA/high-deductible arrangements would actually reduce cost sharing for many groups. In particular, the group responsible for half of all medical spending would see no change or a decline in cost sharing at the margin and on average.

The effect of health savings accounts on health insurance coverage.

The authors investigate the potential of Health Savings Accounts (HSAs) to expand health insurance coverage. They examine how many currently uninsured people might be encouraged to buy coverage through HSAs, and what the impacts of such actions might be on the group and nongroup health insurance markets. Their main conclusions: HSAs are not likely to be an important contributor to expanding coverage among uninsured people because most of them do not face high-enough marginal tax rates to benefit substantially from the tax deductibility of HSA contributions. Meanwhile, HSAs could potentially destabilize the small-group market. To the extent that they encourage well-compensated healthy workers to abandon job-based coverage--a result that is more likely if current HSA provisions are combined with proposed premium deductibility--HSAs could undermine the entire structure of job-based coverage among small firms.

Modeling health insurance expansions: effects of alternate approaches.

Estimates of the costs and consequences of many types of public policy proposals play an important role in the development and adoption of particular policy programs. Estimates of the same, or similar, policies that employ different modeling approaches can yield widely divergent results. Such divergence often undermines effective policymaking. These problems are particularly prominent for health insurance expansion programs. Concern focuses on predictions of the numbers of individuals who will be insured and the costs of the proposals. Several different simulation-modeling approaches are used to predict these effects, making the predictions difficult to compare. This paper categorizes and describes the different approaches used; explains the conceptual and theoretical relationships between the methods; demonstrates empirically an example of the (quite restrictive) conditions under which all approaches can yield quantitatively identical predictions; and empirically demonstrates conditions under which the approaches diverge and the quantitative extent of that divergence. All modeling approaches implicitly make assumptions about functional form that impose restrictions on unobservable heterogeneity. Those assumptions can dramatically affect the quantitative predictions made.

Poor smokers, poor quitters, and cigarette tax regressivity.

The traditional view that excise taxes are regressive has been challenged. I document the history of the term regressive tax, show that traditional definitions have always found cigarette taxes to be regressive, and illustrate the implications of the greater price responsiveness observed among the poor. I explain the different definitions of tax burden: accounting, welfare-based willingness to pay, and welfare-based time inconsistent. Progressivity (equity across income groups) is sensitive to the way in which tax burden is assessed. Analysis of horizontal equity (fairness within a given income group) shows that cigarette taxes heavily burden poor smokers who do not quit, no matter how tax burden is assessed.

How much might universal health insurance reduce socioeconomic disparities in health? : A comparison of the US and Canada.

A strong association between lower socioeconomic status and worse health has been documented within many countries, but little work has been done to compare the strength of this relationship across countries. We compare the strength of the relationship between income and self-reported health in the US and Canada. We find that being below median income raises the likelihood that a middle-aged person is in poor or fair health by about 15 percentage points in the US, compared with less than 8 percentage points in Canada. We also find that this 7 percentage points stronger relationship between low income and poor health in the US compared with Canada is reduced by about 4 percentage points after age 65, the age at which virtually all US citizens receive basic health insurance through the Medicare programme. Income differences in the probability that an individual lacks a usual source of care are also significantly larger in the US than in Canada before the age of 65, but about the same after age 65. Our results are therefore consistent with the theory that the availability of universal health insurance in the US, or at least some other difference that occurs around the age of 65 in one country but not the other, decreases the difference in the strength of the income-health relationship in the US compared with Canada.

Health status and heterogeneity of cost-sharing responsiveness: how do sick people respond to cost-sharing?

This paper examines whether the responsiveness of health care utilization to cost-sharing varies by health status and the implications of such heterogeneity. First, we show theoretically that if health care utilization of those in poor health is less responsive to cost sharing, this, combined with the skewness of health expenditures in health status, leads to overestimates of the effect of cost sharing. This bias is exacerbated when elasticities are generalized to populations with greater expenditure skewness. Second, we show empirically that cost-sharing responsiveness does differ by health status using data from the Medicare Current Beneficiary Survey. Medicare beneficiaries are stratified into health status groups based on activity of daily living (ADL) impairments and self-reported health status. Separately, for each of the health status groups, we estimate the effect of Medigap insurance on Part B utilization using a two-part expenditure model. We find that the change in expenditures associated with Medigap is smaller for those in poorer health. For example, when stratified using ADLs, Medigap insurance increases expenditures for 'healthy' groups by 36.4%, while the increase for the 'sick' group is 12.7%. Results are qualitatively the same for different forms of supplemental insurance and different methods of health status stratification. We develop a test to demonstrate that adjusting our results for selection bias would result in estimates of greater heterogeneity. Our results imply that a lowerbound estimate of the bias from neglecting heterogeneity is about 2-7%.

What other programs can teach us: increasing participation in health insurance programs.

Many uninsured Americans are already eligible for free or low-cost public coverage through Medicaid or Children's Health Insurance Program (CHIP) but do not "take up" that coverage. However, several other public programs, such as food stamps and unemployment insurance, also have less-than-complete take-up rates, and take-up rates vary considerably among programs. This article examines the take-up literature across a variety of programs to learn what effects nonfinancial features, such as administrative complexity, have on take-up. We find that making benefit receipt automatic is the most effective means of ensuring high take-up, while there is little evidence that stigma is important.

Inside the sausage factory: improving estimates of the effects of health insurance expansion proposals.

The fate of a proposal to expand health insurance is influenced by predictions of the proposal's effects on the number of newly insured and the cost of new coverage. Estimates vary widely, for reasons that are often hard to discern and evaluate. This article describes and compares the frameworks and parameters used for insurance modeling. It examines conventions and controversies surrounding a series of modeling parameters: how individuals respond to a change in the price of coverage, the extent of participation in a new plan by those already privately insured, firms' behavior, and the value of public versus private coverage. The article also suggests ways of making models more transparent and proposes "reference case" guidelines for modelers so that consumers can compare modeling results.