Cover: A Two-Step Procedure to Estimate Participation and Premiums in Multistate Health Plans

A Two-Step Procedure to Estimate Participation and Premiums in Multistate Health Plans

Published Mar 20, 2013

by Amado Cordova, Carter C. Price, Evan Saltzman

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Research Questions

  1. Which groups will be most interested in enrolling in multistate plans (MSP) under the Affordable Care Act?
  2. How can participation and premiums for these plans be estimated?

Multistate plans (MSPs) provide an attractive alternative among the health insurance plans established by the Affordable Care Act (ACA) because they will have to be offered in multiple states. In this study, the authors' first objective was to identify and characterize population groups that would likely be interested in enrolling in MSPs (Phase 1 of the study). The second objective was to develop a methodology to project participation and to estimate premiums for these plans (Phase 2). For this second phase, the authors developed a two-step procedure to estimate the demand for MSPs. In the first step, they used the COMPARE microsimulation model and its utility maximization algorithms to project enrollment, irrespective of whether exchange participants choose an MSP or another exchange plan. The second step consists of calculating MSP premiums by means of a tool written in the R language that separates MSP participants from enrollees in other exchange plans using criteria selectable by the user. In this report, the authors present results from Phase 1 and from the first step of Phase 2 and explain the methodology and challenges associated with the second step. National-level microsimulation results suggest that three target population groups expected to prefer MSPs are also more likely to join the exchanges than the general population by over two percentage points. States with a higher uninsurance rate and lower participation in the nongroup market under current law, such as Texas, are projected to have a larger percentage enrollment in the individual market exchanges after enactment of the ACA. Thus, these states may also have a higher percentage of MSP participants than other states. The main policy recommendation is for the Office of Personnel Management to make use of the findings of this report and to exercise the MSP premium calculator tool to aid in the implementation of the Multistate Plan Program.

Key Findings

RAND's COMPARE model projects that states with a higher uninsurance rate and lower participation in the nongroup health insurance market will have a larger percentage enrollment in the individual market exchanges after enactment of the ACA.

  • Thus, these states may also have a higher percentage of MSP participants than other states.

COMPARE also projects that three target population groups expected to prefer MSPs are also more likely to join the exchanges than the general population by over two percentage points.

The research described in this report was sponsored by the U.S. Department of Health and Human Services and was conducted within RAND Health, a division of the RAND Corporation.

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