Highlights from RAND COMPARE Analysis of House and Senate Health Reform Proposals
Media Conference Call
Beth McGlynn, associate director of RAND Health, highlights findings from the RAND COMPARE analysis of U.S. Senate health reform proposal H.R. 3590 and contrasts them with a similar analysis of the House health reform proposal, H.R. 3962. Key findings show that the U.S. Senate proposal would cut the number of uninsured Americans by about half and cost the federal government about $899 billion by 2019.
Additional Resources
As many of you are, I'm sure, aware, RAND has been conducting research on a wide range of health policy issues for more than 40 years, but in 2005 under direction from the RAND Health Board of Advisors, we undertook a new effort called the COMPARE Initiative, which is designed to provide policy makers and the public with objective facts about options for improving the health care system.
And we've, over this time, been looking at three major types of challenges faced by the U.S. healthcare system. First, we see increasing problems with access to health insurance and to healthcare services. Second, there has been considerable discussion about the unsustainable rates of growth in spending on healthcare services. And finally, we have looked at the problems with serious deficits in quality. So problems with access, cost and quality.
We've developed a variety of approaches to evaluating how well different policy options would address these problems. We're going to focus today on a set of analyses that used microsimulation methods. Microsimulation is a way of quantifying how well a policy option will achieve its goal. The approach we've taken is similar to the methods that are used by the Congressional Budget Office to provide Congress with estimates of the effects of proposed legislation on federal spending.
So most recently, we've evaluated the bills passed by the House on November 7th, 2009, and the Senate on December 24th, 2009. Although these bills each have numerous provisions, their primary objective is to reduce the number of people without health insurance. So how well would they do that?
Both bills would reduce by about 50% the number of people without insurance. We project that by 2019, if no new laws are passed, about 53 million people will be uninsured. The House bill would reduce that number to 24 million, whereas the Senate bill would reduce that number to 25 million.
National spending on health care will increase if these bills are passed more than it would if these bills are not passed. We estimate that, under the House bill, national spending would increase about 3.3%, whereas the increase would be around 2% under the Senate bill.
Government spending will also increase and this has been the major focus of both the CBO analysis and much of the debate in Congress. Under the House bill, we project that government spending would increase by $1 trillion between 2013 and 2019. Under the Senate bill, we project an increase of $899 billion between 2014 and 2019. You may have noticed previously that the Senate bill is enacted one year later, in 2014, compared to the House bill, which is enacted in 2013, which explains some of these differences.
We also find that premiums for those obtaining insurance through employers will decrease. We estimate that under both these bills premiums in the employer market will be about 2% lower than they would be otherwise. In the individual market, under the House bill, we see that premiums might be slightly higher, say around 2%, whereas under the Senate bill, we see premiums that are a little bit lower, 3.7%.
It's important to note that these are very uncertain numbers. I'm sure many of you have heard a lot of the debate about what's going to happen to insurance premiums, but we-- the numbers that we find may be no different from zero, but they certainly don't suggest extremely large increases in premium prices, such as been suggested by other analyses.
So in addition to producing some information about the basic effects of these bills, COMPARE analyses have also considered the effects of different combinations of the policy options contained in these bills. These analyses may be particularly important as we approach the Blair House summit on healthcare on February 25th.
Some of the insights from those analyses include the following. First, we see that the individual mandate is the most effective stand-alone policy option for reducing the number of people without insurance. By itself and under the design of the House bill, it would reduce the number of uninsured to about 30 million. Using the design of the Senate bill, it would reduce that number to 31 million.
But if the individual mandate were implemented alone, federal spending would increase. We find that the penalty and subsidy provisions are critical to determining how effective the individual mandate is likely to be. For example, under the Senate bill, if the penalties were removed, about 10 million more people would be uninsured. If the subsidies were not available, about 13 million more people would be uninsured.
Eliminating the employer provisions would have a greater effect on government spending than on the rate of uninsurance. Under the Senate bill, for example, 700,000 fewer people would be insured, but government spending would increase by $98 billion.
We also find that varying the income level for Medicaid eligibility has little effect on the number of uninsured. Under the Senate bill, if the threshold were raised from 133% of the federal poverty level as it was passed, to 150% of the federal poverty level, about 2 million more people would enroll in Medicaid, but the number of uninsured would drop by just 600,000.
If the-- if we went the other way and eligibility were set at 100% instead of 133% of the federal poverty level, 4 million fewer people would enroll in Medicaid, but the number of uninsured would increase by just 1 million.
I appreciate your interest in this work. We believe the American people and policy makers need to have objective facts available to guide discussions of the policy options under consideration.