Appendix B The Financial Impact of a Multi-Payer Universal Coverage Program for Maryland: Detailed Tables

Table B-1 Changes in Health Spending in Maryland under the Multi-Payer Universal Coverage Proposal in 2001 (Employers Have the Option to Continue to Offer Insurance) (in millions)

a/See Table 2 for a detailed summary of changes in statewide health spending. Includes changes in wages and tax revenues. Source: Lewin Group estimates using the Maryland version of the Health Benefits Simulation Model (HBSM).

Table B-2 Changes in Health Spending in Maryland under the Multi-Payer Universal Coverage Proposal in 2001 (Employers Have the Option to Continue to Offer Insurance) (in millions) a/

a/Includes spending for acute care. Excludes research, construction long-term care and public health. b/Assumes that utilization of health services by previously uninsured persons will rise to the levels reported by insured persons with similar age, sex, income and health status characteristics. c/Assumes that utilization of newly covered health services for insured persons whose coverage is upgraded (prescription drugs, etc.) will rise to the levels reported by persons who have such coverage. d/Total insurer administrative costs are estimated to be $1,232 million in 2001. Insurer administrative costs will drop to $941 million under the single-payer model. We estimated single-payer program administrative costs based upon Medicare program administrative costs adjusted for the unique features of the single-payer plan. e/Savings in provider administrative costs result from: uniform billing procedures, elimination of patient billing, for cost sharing amounts, and the use of hospital capital and operating budgets. For a discussion of the methodology used see: John F. Sheils et al., “National Health Spending Under a Single Payer System: The Canadian Approach,” Lewin-VHI, January 8, 1992. f/Under a universal coverage program, hospitals and physicians will receive payments for care formerly provided as uncompensated care. We assume that provider payments are adjusted to eliminate provider windfalls for care already paid for through cost shifting. g/Assumes a 4.0 percent increase in utilization for persons formerly enrolled in HMOs. h/Assumes a 17.7 percent rebate on prescription drug expenses covered under the program, which is the same percentage drug rebate received by the Maryland Medicaid Program. Rebates for privately insured persons under the current system are assumed to be equal to 8.3 percent. Source: Lewin Group estimates using the Maryland version of the Health Benefits Simulation Model (HBSM).

Table B-3 Changes in Provider Payment Under the Multi-Payer Universal Coverage Proposal in 2001 (Employers have the option to continue to offer coverage.) (in millions)

a/ See Table B-2 for detailed summary of changes in statewide health spending. Source: Lewin Group estimates using the Maryland version of the Health Benefits Simulation Model (HBSM).

Table B-4 Analysis of Program Costs and Revenues under the Maryland Multi-Payer Universal Coverage Proposal in 2001 (Employers Have the Option to Continue to Offer Insurance) (in millions)

Notes for Table B-4 Analysis of Program Costs and Revenues under the Maryland Multi-Payer Universal Coverage Proposal in 2001 a/Includes provider payments for acute care health services that are covered under the program. Provider payments are estimated based upon overall average provider payment levels under current programs. Excludes patient copayments and spending for non-covered services. b/We assume that provider payment rates are reduced to reflect reduced uncompensated care expenses and savings in provider administrative costs. c/Reflects the net change in state and local employee benefits expenditures as a result of shifting from employer- based health coverage to the payroll tax. Assumes all state and local government employers are enrolled in the single- payer program. d/Includes the cost of administering benefits under the single-payer program. Estimates based upon the cost of administering benefits under the Medicare program. e/The program will be reimbursed for services provided to persons who are covered under the CHAMPUS program. f/Federal Medicare program funding for Maryland residents would be transferred to the Maryland single-payer program. This includes federal funding for Part-A and the federal share of funding for Part-B. g/The state share of funding for the Medicaid program is transferred to the single-payer program. Estimates exclude the state share of funding for disproportionate share hospital payments. h/The federal share of funding for the Medicaid acute care program would be transferred to the single-payer program. Includes benefits payments, administration and the federal share of disproportionate share hospital payments. i/Current state and local funding for mental health and various indigent care program would be transferred to the single-payer program. Includes funding only for state health programs, which are not also included under the state share of the Medicaid program. j/The program imposes a payroll tax on employers of 5.9 percent and employees of 2.9 percent. k/Assumes a net increase in revenues from the Maryland alcohol tax rates to the national average ($28.5 million ) and a increase in the tobacco tax to $1.25 per pack of cigarettes ($172.1 million). l/The bill imposes a personal income tax equal to 4.0 percent of state income tax done on a progressive scale. m/Employers are assumed to pass-on the change in employer health care costs under the program as a change in wages resulting in corresponding changes in state personal income tax revenues. Source: Lewin Group estimates using the Maryland version of the Health Benefits Simulation Model (HBSM). Table B-5 Change in Federal Health Spending in Maryland under the Multi-Payer Universal Coverage Proposal in 2001 (Employers Have the Option to Continue to Offer Insurance) (in millions)

a/Includes reduction in costs for benefits to federal employees and retirees offset by the payroll tax. Assumes all Federal government employees living in Maryland are enrolled in the single-Payer program. b/Benefits for Medicare recipients, Medicaid beneficiaries, and CHAMPUS/VA beneficiaries will be eliminated as those beneficiaries are enrolled in to the single-payer plan. c/The federal government will transfer to the state their share of savings to current federal programs. d/Tax loss due to reduced wage levels resulting from higher employer costs. Source: Lewin Group estimates using the Maryland version of the Health Benefits Simulation Model (HBSM).

Table B-6 The Impact of the Multi-Payer Universal Coverage Proposal on Private Employer Health Spending for workers in Maryland in 2001: Before Wage Effects (Employers Have the Option to Continue to Offer Insurance) (in millions)

a/Includes employers’ share of premium payments for employers that continue to provide insurance to workers and wrap around coverage for those employers that discontinue providing primary coverage. b/Employers are required to pay a payroll tax to fund the single payer program. Employers that continue to provide coverage pay a payroll tax for each worker equal to 5.9 percent of wages less the employer share of the premium payment. Source: Lewin Group estimates using the Maryland version of the Health Benefits Simulation Model (HBSM).

Table B-7 Employer Health Spending in Maryland under Current Policy and under the Multi- Payer Universal Coverage Proposal by Firm Size and Industry in 2001: Before Wage Effects (Employers Have the Option to Continue to Offer Insurance)

a/Includes the employer contributions for benefits for workers, dependents and retirees. b/Includes payroll tax payments and the cost of continuing full insurance benefits and wrap around benefits for workers, dependents and retirees. Source: Lewin Group estimates using the Maryland version of the Health Benefits Simulation Model (HBSM).

Table B-8 Impact of a Multi-Payer Universal Coverage Proposal on Private Employers in Maryland by Firm Size and Industry in 2001: Before Wage Effects (Employers Have the Option to Continue to Offer Insurance)

Source: Lewin Group estimates using the Maryland version of the Health Benefits Simulation Model (HBSM).

Table B-9 Impact of the Multi-Payer Universal Coverage Proposal on Households in Maryland in 2001: (Employers Have the Option to Continue to Offer Insurance) (in millions)

a/Assumes that the increased cost of the premium for employers upgrading to the minimum benefits package is passed on in full to the workers. b/Family out-of-pocket payments for acute care health services will be reduced under the program due to: 1) reduced patient cost-sharing requirements under the plan and 2) expanded coverage for services often excluded under existing plans. c/Employers are assumed to pass-on the cost (savings) resulting from shifting from employer-based insurance to the payroll tax in the form of changes in wages. Source: Lewin Group estimates using the Maryland version of the Health Benefits Simulation Model (HBSM).

Table B-10 Change in Average Household Spending on Health Care in Maryland Under the Multi- Payer Universal Coverage Proposal in 2001: After Wage Effects a/ (Employers Have the Option to Continue to Offer Insurance)

a/    Excludes institutionalized persons. b/    Includes changes in premiums, out-of-pocket expenses, taxes earmarked to fund health reform and after-tax wage effects. Source: Lewin Group estimates using the Maryland version of the Health Benefits Simulation Model (HBSM). Table B-11 Change in Average Household Per-Capita Spending on Health Care in Maryland Under the Multi-Payer Proposal in 2001 by Family Income and Age of Householder: After Wage Effects (Employers Have the Option to Continue to Offer Insurance)

a/Excludes institutionalized persons. b/Includes changes in premiums, out-of-pocket expenses, taxes earmarked to fund health reform, and after tax wage effects. Source: Lewin Group estimates using the Maryland version of the Health Benefits Simulation Model (HBSM). Table B-12 Distribution of Families in Maryland by Change in Household Spending under the Multi- Payer Proposal in 2001: After Wage Effects a/

a/Includes changes in premiums, out-of-pocket expenses, taxes earmarked to fund health reform and after-tax wage effects. Excludes institutionalized persons. Source: Lewin Group estimates using the Maryland version of the Health Benefits Simulation Model (HBSM).

Figure B-1 Change in Health Spending for Non-Aged Families in Maryland under the Multi-Payer Universal Coverage Proposal by Current Insured Status in 2001 (Employers Have the Option to Continue to Offer Insurance) (Families Headed by an Individual under Age 65)

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