Economic returns for investing in children's health.Montana's uninsured rate for children is one of the highest in the country, with 14 to 16 percent of the state's children lacking private or public health insurance. Despite a strong state economy, the rate of uninsured children has worsened in recent years. In addition, Montana Montana (mŏntăn`ə), Rocky Mt. state in the NW United States. It is bounded by North Dakota and South Dakota (E), Wyoming (S), Idaho (W), and the Canadian provinces of British Columbia, Alberta, and Saskatchewan (N). is one of four states that does not provide Children's Health Children's Health Definition
Children's health encompasses the physical, mental, emotional, and social well-being of children from infancy through adolescence. Insurance Program (CHIP) coverage to children above 175 percent of the federal poverty level and has the lowest income ceiling in the nation for covering kids under Medicaid Medicaid, national health insurance program in the United States for low-income persons; established in 1965 with passage of the Social Security Amendments and now run by the Centers for Medicare and Medicaid Services. . That translates to an unhealthy start for thousands of Montana children and hidden costs of $240 million for Montana providers, employers, and consumers.
Lack of health care access is particularly severe for low-income low-in·come
Of or relating to individuals or households supported by an income that is below average. children below the federal poverty level--$21,200 for a family of four (Figure 1). But not all of the state's uninsured children come from low-income households. Almost 13,000 uninsured Montana children live in households with incomes above Montana's median income of $40,600 (Figure 2.)
Montana state government has initiated several responses to the state's high uninsured rate. Premium assistance and tax credits to small employers under the Insure Insure can mean:
To make something easier to be endured.
Mentioned in: Kinesiology, Applied the health insurance premium cost squeeze confronting working parents. Montana's 2007 Legislature authorized au·thor·ize
tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es
1. To grant authority or power to.
2. To give permission for; sanction: increasing the poverty cutoff for CHIP from 150 percent to 175 percent of the federal poverty level and increased access to Medicaid for children. But these policy responses still leave 35,000 Montana children uninsured.
Children without regular health care are at a developmental, social, and educational disadvantage compared to those who see a doctor regularly or have a medical home. Healthy children achieve better educational outcomes with a higher likelihood of becoming productive citizens prepared for work, public service, and overall life experiences.
A currently active proposal, the Healthy Montana Kids initiative, aims to provide health care coverage to many of Montana's uninsured children. The following economic analysis uses the initiative as a case study to determine the benefits and costs of insuring more of Montana's children.
Under Healthy Kids Montana, nearly 30,000 children would be added to public and private insurance programs. This approach would maintain a mix of government and employer-sponsored health insurance coverage, leaving 60 percent of insured kids covered by private insurance.
The Healthy Montana Kids initiative would increase the income eligibility level for CHIP to 250 percent of the federal poverty level, or $53,000 for a family of four. CHIP currently covers about 16,600 children now at an income-eligibility ceiling of 175 percent of the poverty level. Medicaid eligibility also would increase and help pay the costs of adding children to their parents' health insurance policy (if the family falls under the income ceiling). The CHIP and Medicaid expansions would cost the state about $20 million per year but would provide over $70 million per year in federal matching funds Noun 1. matching funds - funds that will be supplied in an amount matching the funds available from other sources
cash in hand, finances, funds, monetary resource, pecuniary resource - assets in the form of money for health care because the federal government pays 80 percent of CHIP and 60 percent of Medicaid. The initiative also calls for an active enrollment process that works with hospitals, schools, and others to enroll all eligible uninsured children.
Benefits and Cost Savings from Insuring More Children
Analysis of costs and benefits to Montana can be illustrated with the Healthy Montana Kids initiative. State budget costs along with federal match dollars coming into the Montana economy should be examined. It is also important to identify the difference between state budget spending for the initiative compared to the costs and additional spending that would occur if Montana children continue to be uninsured.
Every year, uncompensated uncompensated (n·kômˑ·p health care costs the state's health care providers, employers, and consumers more than $240 million. Uncompensated care uncompensated care,
n health care services provided by a hospital, physician, dental professional, or other health care professional for which no charge is made and for which no payment is expected. is medical care received but not fully paid for, either out-of-pocket out-of-pock·et
1. Calling for the spending of cash: out-of-pocket expenses.
2. Lacking funds: hungry, cold, and out-of-pocket travelers.
Adj. by individuals or by a private or public insurance payer. A small percentage of this amount is covered by philanthropy philanthropy, the spirit of active goodwill toward others as demonstrated in efforts to promote their welfare. The term is often used interchangeably with charity. and disproportionate share hospital The United States government provides special funding to hospitals who treat significant populations of indigent patients through the Disproportionate Share Hospital (DSH) programs. payments (payments intended to offset losses hospitals incur To become subject to and liable for; to have liabilities imposed by act or operation of law.
Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. when large shares of their patients are unable to pay their hospital bills). However, the bulk of this bill is paid by cost shifts onto consumers and employers through higher health insurance premiums (Hadley Had·ley , Henry Kimball 1871-1937.
American composer and conductor whose romantic works include operas, such as Bianca (1918), symphonies, and chamber music. and Holahan).
Looking over the next several years to 2012, Montana's annual uncompensated care costs show a price tag of $1,528 for every one of the approximately 170,000 uninsured Montanans throughout the state. An additional $186 represents federal disproportionate share hospital payments to Montana providers based on the number of low-income patients the various institutions serve.
Cost savings from reducing uncompensated care by insuring more children can be related to Montana's CHIP cost per child. Cost and cost-savings estimates are based on state fiscal year 2012 numbers in view of the initiative's timing, the potential actions by the Montana Legislature, and the anticipated changes in federal funding when a new national administration is in place after the November November: see month. 2008 elections.
Projected costs from current baseline The horizontal line to which the bottoms of lowercase characters (without descenders) are aligned. See typeface.
baseline - released version program numbers show a CHIP cost per child in 2012 of $2,535, with Montana's 20 percent share equal to $557 per child. These costs per child are compared to gains via net savings of $1,528 in uncompensated care costs per newly insured child and $186 savings on federal taxes for financing disproportionate share hospital payments to Montana, yielding a positive net gain per newly insured child of $1,156.
The net gains per newly insured child are significant, particularly when compared to the state budget costs of $557 per child. Such savings can be aggregated over the almost 30,000 newly insured children and compared to the state budget costs of covering these children.
These cost savings shown in Figure 3 also reduce the rate at which health insurance premiums rise through reductions in cost shifting of uncompensated care costs onto privately insured health care consumers. Through reducing the rate at which premiums increase, the cost savings' impact to employers and workers is shown in Figure 4. Allocating two-thirds of the savings to family plans and another one-third to employee-only coverage results in annual savings or premium reductions of $1,018 and $510, offering some cost relief to employers.
Insuring 30,000 more Montana children will reduce uncompensated care costs, leading to reductions in private health insurance premium growth of $510 per year for an individual policy and $1,018 per year for a family policy.
There are significant aggregate savings for all Montana shareholders when applying the newly insured child savings in uncompensated care to the 30,000 kids who would now be covered. These annual savings include savings to employers of $25 million, $5 million in savings to households with private insurance and $12 million to state employee plans. Another $5 million in reduced federal taxes due to lower federal disproportionate dis·pro·por·tion·ate
Out of proportion, as in size, shape, or amount.
dispro·por share payments to Montana brings the total aggregate savings per year to $47 million.
State Budget Costs
Two underlying factors that determine state budget costs are: 1) the number of uninsured children who would be enrolled and 2) the number of privately-insured children who are currently insured through their parents' employer-based or individually-purchased policy whose parents would drop them from their private coverage and transfer them to CHIP, Medicaid, or employer-based coverage at or below public coverage premium costs.
Transfer of coverage through substituting public for private insurance is often referred to as "crowd-out" when individuals move to a public program from private health insurance (employer-sponsored or private non-group insurance). State program data on transfer rates for CHIP are very different from some national statistical studies which vary widely based on the data used, the years examined, whether the focus is on children or adults, the modeling technique and the assumptions made (Blewett and Call).
Calculating the number of children who potentially might transfer from private health insurance to public coverage is of prime importance when analyzing the impact of any state health insurance reform on the state budget. Estimates of the transfer rate for Montana's CHIP program range from 7 percent to 25 percent. The higher-end estimate of 25 percent is based on survey data from recent enrollees in Montana's expansion of CHIP to the 175 percent federal poverty interval, while 7 percent is based on Montana fiscal year 2007 program data. An intermediate rate of 14 percent rate comes from U.S. Congressional Budget Office The Congressional Budget Office (CBO) is responsible for economic forecasting and fiscal policy analysis, scorekeeeping, cost projections, and an Annual Report on the Federal Budget. The office also underdakes special budget-related studies at the request of Congress. estimates for CHIP data for a number of states (Ku).
The 14 percent transfer rate is a reasonable estimate, particularly in view of Montana's high percentage of self-employed self-em·ployed
Earning one's livelihood directly from one's own trade or business rather than as an employee of another.
self workers and small-employer firms, both of which make affordable health insurance a major problem for Montana's uninsured children.
Using projected fiscal year 2012 CHIP costs per child ($2,535), a projected private insurance premium cost ($992) per child covered by the employer sponsored option (with one-half of the transfers going to this option) yields a total annual state budget cost of $20.3 million, with the experience-based transfer rate of 14 percent.
The annual state budget cost of $20.3 million brings in 30,000 uninsured kids and also allows for 8,000 currently insured children on employer-sponsored plans employer-sponsored plan,
n a program supported totally or in part by an employer or group of employers to provide dental benefits for employees. The plan may be administered directly by the employer or another person or group under a contractual that are below the 250 percent federal poverty eligibility cutoff who may transfer from private coverage to the initiative program.
The annual $20.3 million state budget cost would be financed by an initiative-designated $20 million as a portion of Montana Insurance Licensing fees into a special revenue account.
Matching federal dollars of more than $70 million annually for the state money spent on newly insured kids in Medicaid and CHIP represent new outside spending into the state economy. This newly created outside spending has a multiplier effect Multiplier Effect
The expansion of a country's money supply that results from banks being able to lend. The size of the multiplier effect depends on the percentage of deposits that banks are required to hold on reserves. on Montana labor income that, as a new element in the state's tax base, will generate another $5.5 million in state income tax revenues every year.
Insuring more Montana children offers a positive economic payback Payback
The length of time it takes to recover the initial cost of a project, without regard to the time value of money. of more than $2.50 to Montanans for every state $1 expended ex·pend
tr.v. ex·pend·ed, ex·pend·ing, ex·pends
1. To lay out; spend: expending tax revenues on government operations. See Synonyms at spend.
2. , a rate of return that complements other positive impacts of more health investment in the state's children. Other returns include better school performance with more than 20 percent gains on measures of attention and concentration in the classroom for CHIP-enrolled children compared to their performance before enrollment and on keeping up with school activities according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. research by the Managed Risk Medical Insurance Board, 2002.
Blewett and Call. "Revisiting Crowd-Out," Robert Wood Johnson Foundation Robert Wood Johnson Foundation, charitable organization devoted exclusively to health care issues. It was established in 1936 by Robert Wood Johnson (1893–1968), board chairman of the Johnson & Johnson medical products company. , 2007.
Hadley, Jack and Holahan, John. "Covering the Uninsured: How Much Would It Cost?" Health Affairs, W-3 (June June: see month. 2003), pp. 250-265.
Ku, Leighton Leighton is the name of a number of places:
Steve Seninger is a research professor at the Bureau of Business and Economic Research.
Figure 1 Number of Uninsured Montana Children Under 19 Years of Age Below the Poverty Level 2001-2003 8,000 2003-2005 10,000 2005-2007 11,000 Sources: U.S. Census Bureau and Annie E. Casey Foundation, www.aecf.org. Note: Table made from bar graph. Figure 2 Number of Uninsured Montana Children Under 19 Years of Age by Annual Income Levels for a Family of Four, 2004-2006 less than $19,971 11,027 $19,971 to $29,757 6,432 $29,758 to $39,742 4,595 $39,743 to $49,728 5,514 $49,729 and higher 7,432 Sources: U.S. Census Bureau; Annie E. Casey Foundation, www.aecf.org; and Congressional Research Service, www.loc.gov/crsinfo/ Note: Table made from bar graph. Figure 3 Projected Annual Savings and State Budget Costs for Insuring More Montana Children, 2012 Uncompensated Care $1,528 Disproportionate Share Hospital Payment $186 State Budge Cost $557 Net Gain $1,156 Sources: Montana Kids Count, Bureau of Business and Economic Research, The University of Montana. Note: Table made from bar graph. Figure 4 Projected Annual Cost Savings on Employer Health Insurance Premiums for Insuring More Montana Children, 2012 Family $1,018 Individual $510 Sources: Montana Kids Count, Bureau of Business and Economic Research, The University of Montana. Note: Table made from bar graph.