The Potential Economic Impact of 3-Share Programs in Texas

Texas Communities Healthcare CoalitionPresented by TXP & RH2 | November 7, 2008

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Presentation Overview

• Study Purpose • Approach• Benefits of Health Coverage• Preliminary Economic Impact Estimates• Conclusions

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Study Purpose

• Estimate the potential economic impact on Texas communities implementing 3-Share health coverage initiatives– Galveston, Harris County, Dallas, El Paso and

Central Texas– A 3-Share Health Coverage Plan

Reduces employer and employee costs by splitting the cost for coverage 3 or more ways between the employer, employee and a 3rd party – often a foundation, local government or local safety net providers.

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Study Approach

• Best practice research - other states– Examined 3-Share enrollment by businesses

and employees

• Small business case studies– Talked to businesses enrolled in TX 3-Share

Plan and uninsured small businesses

• Examined literature on benefits of health coverage -- economic and otherwise

• Economic impact analysis

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Benefits of Health CoverageDecreased Morbidity and Mortality

• Uninsured lack access to necessary treatments and care– Lack of access to medical technology

necessary to treat heart attacks, cataracts, and depression results in $1.1 billion per year in excess sickness and death(Glied and Little 2003)

• Lack of health insurance causes roughly 18,000 unnecessary deaths every year in the United States. (Institute of Medicine 2004)

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Benefits of Health Coverage Increased Labor Force Participation/Productivity• Uninsured participate in the work force in

lower numbers because they are sicker. (Commonwealth Fund 2006)– 18 million Americans 19-64 did not work

because of health conditions or disability• If these workers made minimum wage the economy

would expand by $185 billion/yr

• 55 million workers annually can’t concentrate on the job because of personal or family illness. – Resulting 478 million days reduced productivity

• Based on their average earnings economic losses estimated at $27 billion.

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Benefits of Health CoverageJob mobility

• 3 in 10 Americans stayed in a job they wanted to leave to keep their health benefits (New York Times/CBS News Poll 2008)

• In 2002 California found 2.3% of employees with employment based coverage would have made productivity-improving job changes absent job lock.– Leading to $772 million in annual foregone

productivity gains in CA alone.

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Trends- Health InsuranceOverview

• Employers want to control health insurance costs

• Employers are asking employees to to pay an increasing share of their health insurance.

• Employers are using prevention/disease management to control costs

• Other approaches (such as managed care) perceived to be losing effectiveness.

• Health coverage among employers is declining, especially in sectors where smaller firms are more prevalent

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Health Insurance TrendsDecline % of Firms Offering Health Insurance

Source: Kaiser Foundation

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Health Insurance TrendsGrowth in the Cost of Health Insurance vs. Inflation & Worker Earnings

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Measuring the Potential Economic ImpactMethodology

Step 1. Determine uninsured rates by firm size

– Employee and dependent– Develop assumptions for % dependents -

adults/children

Step 2. Apply rates from Step 1 to TX counties to estimate number of uninsured by firm size in each 3-Share county

Step 3. Using Muskegon/Central Texas model estimate potential universe of uninsured employees

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Measuring the Potential Economic ImpactMethodology

Step 4. Assume 35% of firms from Step 3 would purchase health coverage for employees

– 75% of eligible employees in qualified firms would enroll in health plans

Step 5. Calculate economic impacts of employee 3-Share health plan enrollment

– Estimate increased health spending (direct spending)

– Estimate indirect and induced spending (related sectors - medical supplies, office rents, etc.)

– Estimate job creation from increases attributable to total health spending

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Ex. Calculation - Preliminary Estimate Tarrant County 1. Health Insurance Coverage

Rates

All EmployerOwn

Name DependentIndividually Purchased

Total Public

Medicaid Uninsured

All Workers 100.0% 70.2% 52.8% 17.4% 6.9% 10.9% 4.8% 17.4%

Private Sector 100.0% 69.8% 52.7% 17.2% 5.8% 10.3% 5.2% 18.7%

under 10 100.0% 48.2% 26.1% 22.2% 10.8% 14.7% 7.2% 32.1%

10 to 24 100.0% 58.6% 37.0% 21.6% 7.4% 10.5% 5.7% 27.7%

25 to 99 100.0% 68.5% 50.6% 17.9% 5.7% 10.0% 4.9% 20.0%

Firm Size 1 to 4 5 to 9 10 to 19 20-49 50-99# of Firms 18,205 6,939 4,946 3,756 1,360

Avg. # of Employees/ Firm 2 7 14 30 65

Total # of Employees 36,410 48,573 69,244 112,680 88,400

2. Tarrant County Employment Data

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Ex. Calculation - Preliminary EstimateTarrant County (continued)

4. Estimates of Actual Coverage (35% of Businesses and 75% Within Business)

Covered EmployerTotal Own Name Dependant

under 10 40,991 22,166 18,825 10 to 24 40,574 25,623 14,951 25 to 99 77,191 56,991 20,200Not Covered Employer

Total Own Name Dependant under 10 43,992 23,789 20,203 10 to 24 28,670 18,105 10,564 25 to 99 35,489 26,202 9,287

3. Estimates of Universe of Potential Covered Employees

Total Own Name Dependant

under 10 11,548 6,245 5,303

10 to 24 7,526 4,753 2,773

25 to 99 9,316 6,878 2,438

TOTALS 28,390 17,875 10,514

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Ex. Calculation - Preliminary EstimateTarrant County (continued)

Estimated Number of Tarrant County 3-Share Participants

Employees 17,875Dependants 10,514Total 28,389

Health Spending by Uninsured (Hadley, et al - $2001 - national data)

Baseline "Average” Private "Average" PublicChildren $ 733 $1,408 $1,008Adults $1,644 $3,187 $2,568

Health Spending by Uninsured (2007 Estimate)

Baseline "Average" Private "Average" Public BlendChildren $971 $1,865 $1,335 $1,600Adults $2,178 $4,222 $3,402 $3,812

Increased Health Spending if All Uninsured Had Enrolled in 3-Share

Employees DependentsChildren $3,307,639Adults $29,205,977 $8,589,417Totals $29,205,977 $11,897,056 $41,103,033

Total Economic Impact Output Earnings Employment

$104,112,153 $35,761,885 985

5. Economic Impact Calculations

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ResultsTotal 3-Share Enrollees & Estimated Economic Impact

 

Enrolled Employees

Enrolled Dependants Total Lives

Central Texas 18,957 11,392 30,349

Dallas 30,362 17,779 48,141

El Paso 6,230 3,751 9,981Galveston 2,345 1,431 3,776

Harris 42,502 25,177 67,679

Tarrant 17,875 10,514 28,389

All Regions 118,271 70,044 188,315

Texas 241,828 145,003 386,831

  Direct Spending Total Spending Total Earnings Total Employment

Central Texas $43,864,410 $111,106,597 $38,164,433 1,052

Dallas $69,726,221 $176,613,415 $60,665,623 1,672

El Paso $14,423,624 $36,534,399 $12,549,342 346

Galveston $5,450,737 $13,806,475 $4,742,439 131

Harris $97,932,941 $248,059,782 $85,207,011 2,348

Tarrant $41,103,033 $104,112,153 $35,761,885 985

All Regions $272,500,967 $690,232,821 $237,090,733 6,533Texas $559,200,273 $1,416,429,404 $486,534,797 13,407

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Summary

• Economic estimates are preliminary and assume no funding limits -- that is, everyone that wants to enroll in a 3-Share coverage health plan can

• If funding were not an issue the potential economic impact both locally and to the state would be substantial