Last summer, just before the first open enrollment period under the Affordable Care Act (ACA), the Kaiser Family Foundation (KFF) conducted a baseline survey of California’s uninsured nonelderly adult population. After the open enrollment period came to a close, we conducted a second survey with the same group of individuals who participated in the baseline (a longitudinal-panel survey) to find out whether they obtained coverage or remained uninsured and to explore the coverage choices people made, their experiences with open enrollment and their new insurance. Additional waves of the panel survey over the next two years will continue to track this same group of individuals to capture their changing attitudes and experiences. The surveys are designed and analyzed by researchers at KFF and the fieldwork costs associated with Wave 2 of the survey were paid for by The California Endowment.

California was an early adopter of the ACA and has been a leader in enrolling eligible residents in coverage through the two main avenues for expanding coverage under the law – Medi-Cal, the state Medicaid program, and Covered California, the new state marketplace where people can shop for insurance and access government subsidies to help pay for coverage.

This longitudinal panel study allows us to follow a large group of randomly selected uninsured Californians and assess how their insurance status changes over time to learn more about why or why not those changes occurred, and what gaining health insurance means for their daily lives without having to rely on respondents ability to report and recall details from months or years ago. By tracking a scientifically representative panel, we can quantify how widespread or limited certain problems or changes that may have been reported anecdotally actually were.  Statistically representative narratives and stories from individual’s actual experiences can then be drawn from the sample to illuminate more accurately how the uninsured fare as the law is implemented in California.

 

Key Findings

Of those Californians who were uninsured prior to open enrollment, 58 percent now report having health insurance, which translates to about 3.4 million previously uninsured adult Californians who have gained coverage, and 42 percent say they remain uninsured.¹  The most common source of coverage was Medi-Cal with 25 percent of previously uninsured Californians reporting they are now covered by Medi-Cal. An additional 9 percent of California’s previously uninsured say they enrolled in a plan through Covered California, resulting in about a third reporting new coverage from the two sources most directly tied to the ACA. Twelve percent say they obtained coverage through an employer and 5 percent report enrolling in non-group plans outside of the Covered California Marketplace; some enrollment in these types of coverage may have been motivated by the ACA’s requirement to purchase insurance and some may be the result of normal movement within the marketplace.

Fifty-two percent of Hispanics who were previously uninsured report enrolling in coverage, a share that rises to 61 percent of Hispanics after excluding those who are likely to be ineligible for financial assistance through Covered California or Medi-Cal due to their immigration status.²  And, over half of young adults age 19 to 34 (58 percent), those earning 138% of the federal poverty level (FPL) or less (54 percent), those earning greater than 138% and up to 400% FPL (61 percent),³  and those reporting fair or poor health (53 percent) report getting coverage since last summer. Outreach played a role in getting people covered — 69 percent of California’s previously uninsured who said they were contacted about signing up for health insurance since October 1st say they obtained coverage, compared to 52 percent of those that say they weren’t contacted.

Overall, after controlling for a number of demographic factors, the remaining uninsured are more likely to be male, undocumented immigrants, or people who have never had insurance, while those who are newly insured are more likely to be married, have been uninsured for less than two years, have a debilitating chronic condition or report being contacted about signing up for coverage.

California’s Newly Insured

• A majority of the newly insured say their plan is a good value for the amount they pay (73 percent) and report feeling well protected by their plan (64 percent). More newly insured report that gaining coverage has made them feel more financially secure than less (37 percent vs. 16 percent), but nearly half (46 percent) of those newly insured in plans other than through Medi-Cal say that paying for coverage is difficult.

• Getting coverage went smoothly for many newly insured, the majority of whom said it was easy to find the information they needed about enrolling (80 percent) and to sign up for coverage (76 percent). Six in 10 (60 percent) of those with coverage through Medi-Cal or Covered California say they had someone help them enroll.

• Among the newly insured, just over 4 in 10 (43 percent) say they visited the website during the open enrollment period, and the majority of them found their visit at least somewhat helpful. And, for those who ultimately enrolled in a Covered California plan, 72 percent say they visited the website, including just over half who say they found it helpful (55 percent).

• But some enrolling in Medi-Cal or Covered California report experiencing problems in confirming enrollment (29 percent and 42 percent, respectively) or determining if their income qualified them for Medi-Cal (19 percent) or financial assistance through Covered California (26 percent). Once enrolled, most newly insured report positive experiences with their plan so far (75 percent) and 43 percent say they have already visited a doctor or health provider.

• The newly insured are split on whether they attribute their new coverage to the ACA or not – 45 percent say they got insurance because of the law and 52 percent aren’t directly attributing their new coverage to the ACA and say it’s something they would have done anyway. But, looking at the two types of coverage that are most directly related to coverage expansions under the ACA, 60 percent of the newly insured (or 34 percent of previously uninsured Californians overall) say they enrolled in Medi-Cal or through Covered California.

• Most newly insured Hispanics say shopping was relatively easy. For those newly insured Hispanics who prefer to communicate in Spanish, nearly 9 in 10 (87 percent) say it was easy to find information in Spanish, including about two thirds (65 percent) who said it was very easy.

California’s Remaining Uninsured

• Many characteristics of the remaining uninsured indicate that they are a difficult to reach group with limited ties to health insurance. Nearly 4 in 10 (37 percent) say they have never had health insurance (compared to 20 percent who became insured) and an additional 45 percent say they have been uninsured for two or more years. Six in 10 (62 percent) are Hispanic, including 29 percent who are unable to take advantage of coverage expansions under the ACA due to their immigration status, and 70 percent of whom prefer to communicate in Spanish. In addition to those who are not eligible due to their immigration status, about 4 in 10 (39 percent) have incomes that put them in the group likely eligible for Medi-Cal and another quarter (24 percent) are likely eligible for financial assistance through Covered California.

• Roughly 7 in 10 (71 percent) of those who remain uninsured after the first open enrollment period say health insurance is something they need, but a third (34 percent) say cost remains a barrier to getting coverage.

• Just over a third (36 percent) of those who remain uninsured say they tried to get coverage but most say they did not enroll either due to the cost of coverage or difficulty completing the process.

• Nearly 6 in 10 (57 percent) of those still uninsured think they will get coverage later this year, though most (57 percent) of them are unsure where they might get it.

• Almost half of Hispanics who remain uninsured may not be eligible for coverage through Covered California or Medi-Cal under the ACA due to their immigration status, and just over half of remaining uninsured Hispanics (54 percent) are worried that enrolling in coverage would bring attention to their family’s immigration status. At the same time, Hispanics who remain uninsured largely feel that insurance is something they need (78 percent).

Newly Insured vs. Remaining Uninsured

Finally, in many areas examined in the survey differences exist between those who got insurance and those who remain uninsured. The majority of remaining uninsured don’t feel like they have enough information to understand how the ACA will impact them and their families (61 percent) whereas the majority of newly insured say they do (58 percent). The newly insured, including those who report ultimately getting coverage from a different source, were slightly more likely than the remaining uninsured to visit the Covered California website (43 percent vs. 30 percent) but while most of the newly insured report finding it helpful, most of those that remained uninsured said it was not helpful. More generally, the newly insured largely report positive experiences shopping for coverage and comparing plans, while the 36 percent of the remaining uninsured who tried said they had a hard time examining their options.

The California Longitudinal Panel Survey is a series of surveys that tracks the experiences and perceptions of a representative, random sample of 2,001 nonelderly Californian adults who were uninsured prior to the initial open enrollment period created by the Affordable Care Act (ACA). The first survey in the series was conducted prior to the open enrollment period⁴  and the second, presented here, took place at its conclusion. This longitudinal panel is a unique opportunity to follow the same group of Californians to find out whether they gained coverage or remained uninsured, how they feel about and interact with the new coverage options and what barriers to getting insurance remain. Additional surveys in this series will continue to track these individuals to keep the pulse on how their experience with and views towards coverage are evolving, how coverage impacts their feelings of financial security, and will illuminate how key groups of previously uninsured Californians are faring, such as Hispanics, new Medi-Cal or Covered California enrollees, or people reporting poor health.

California was an early adopter of the ACA and has been a leader in enrolling eligible residents in coverage through the two main avenues for expanding coverage under the law. Medi-Cal, the state Medicaid program is estimated to have enrolled about 1.6 million people and Covered California, the new state marketplace where people can shop for insurance and access government subsidies to help pay for coverage, is estimated to have enrolled about 1.4 million people.⁵  Because of California’s size and early embrace of the ACA, the experiences of those who were uninsured prior to the coverage expansions within the state can help inform future enrollment efforts both locally and across the country.

This longitudinal panel study allows us to follow a large group of randomly selected uninsured Californians and assess how their insurance status changes over time to learn more about why or why not those changes occurred, and what gaining health insurance means for their daily lives without having to rely on respondents ability to report and recall details from months or years ago. By tracking a scientifically representative panel, we can quantify how widespread or limited certain problems or changes that may have been reported anecdotally actually were.  Statistically representative narratives and stories from individual’s actual experiences can then be drawn from the sample to illuminate more accurately how the uninsured fare as the law is implemented in California.

And, while the ACA makes it easier for some people to get and keep coverage, there will inevitably continue to be people who move in and out of coverage as their job status changes, as shifts in their income change their eligibility for public assistance, or as they miss deadlines for enrollment. And, just as people have moved from being uninsured to having insurance since last summer (reported on in this study), others likely moved in the opposite direction and were covered then, but are uninsured now.⁶  This survey does not capture those experiences, and hence, does not estimate the overall change in the number of uninsured Californians since the start of open enrollment, but instead estimates the share of previously uninsured who got coverage.

Looking back to the results from the baseline survey to see where California’s uninsured started from prior to the open enrollment period, most (80 percent) had expressed a need for health insurance but many said they were without it because they didn’t think they could afford coverage (42 percent). In fact, California’s uninsured were a group struggling to stay financially afloat with nearly 90 percent reporting family incomes under 400% of the federal poverty level (FPL) (about 94,000 a year for a family of four in 2013), including more than half who reported their family income as 138% or less of the FPL (roughly $32,000 a year for a family of four). Sizeable shares reported that it is at least somewhat difficult for them to afford basic needs such as health care (83 percent), rent (65 percent), gas or other transportation costs (63 percent), or monthly utilities (61 percent). Health insurance is something that many of California’s uninsured had gone without for quite a while – about 7 in 10 (69 percent) reported they had not had coverage for two or more years. While many reported being employed (58 percent), most said they did not have access to a plan through an employer. In terms of the potential role the ACA may play in their lives, most had heard little about the upcoming coverage expansion opportunities and were unsure about how the law would impact them personally. Now, at the conclusion of the enrollment period we find that many more say they have enough information to understand the law’s impacts and are aware of some of the law’s key provisions, such as the requirement to have insurance and the coverage expansions through Medi-Cal and Covered California.

How Many Previously Uninsured Californians Got Covered?

Nearly 6 in 10 (58 percent), or approximately 3.4 million, previously uninsured adult Californians report obtaining health insurance since the start of open enrollment including 10 percent who say they have signed up but are waiting for coverage to start, while the remainder continued to go without health insurance (Figure 1). Fully a quarter of those uninsured prior to open enrollment report signing up for Medi-Cal while smaller shares report getting coverage through an employer (12 percent), a plan through Covered California (9 percent) and other non-group coverage (5 percent).

Under the Affordable Care Act, access to coverage in California was expanded primarily in two ways. Medi-Cal eligibility was broadened to include parents and adults without dependent children earning 138% FPL or less, two groups that had limited access to Medi-Cal coverage prior to the ACA. In addition, the Covered California Marketplace was developed as a place where people could shop and compare health insurance plans and access federal subsidies for health insurance. Outreach efforts and media coverage about the ACA may have encouraged some people who were previously eligible for coverage through Medi-Cal to obtain coverage, sometimes referred to as the “woodwork” effect. It is difficult to distinguish those who may already have been eligible for Medi-Cal from those who are newly eligible due to expanded eligibility under the ACA in this survey, but the combined enrollment of the newly insured in Medi-Cal and in plans through Covered California indicate that about a third (34 percent) of California’s previously uninsured got coverage through these ACA-related coverage options. In contrast, it is more typical for access to job-based insurance to shift frequently as people change jobs or become eligible after a waiting period, so some people may now have coverage through an employer because of normal movement in the insurance market, but others may have been motivated to enroll in an offer of coverage through an employer due to the ACA’s requirement to have insurance.

Which Previously Uninsured Californians Got Covered?

Rates of coverage among previously uninsured adult Californians are similar across age groups, income groups, and self-reported health status (Figure 2). For example, 58 percent of previously uninsured younger adults age 19 to 34 report getting insurance, similar to the share of middle-aged adults age 35 to 49 (55 percent) and the same as the share of near-elderly age 50 to 64 (58 percent). Reports of new coverage are also similar for those at different income levels. And, those reporting their health as fair or poor were just as likely to say they got insurance as Californians reporting being in at least good health (53 percent and 60 percent).

Prior to the coverage expansions under the ACA, Hispanics made up over half of the uninsured adult population in California and now over half of Hispanics (52 percent) who were previously uninsured report getting coverage (Figure 3), a share that is statistically similar to whites (61 percent). Still, concern over lagging enrollment among Hispanics in plans through Covered California warrants a closer look at new coverage rates among previously uninsured Hispanics. As many as a third of previously uninsured Hispanics may be ineligible for coverage through Medi-Cal or Covered California due to their immigration status.⁷  Therefore, focusing only on previously uninsured Hispanics whose immigration status permits them to enroll in Medi-Cal or participate in Covered California, 61 percent are newly insured, the same share as newly insured whites.

But for other characteristics, rates of coverage vary widely. For example, college graduates are more likely to have gained coverage than those with less education. In addition, those who report having a debilitating chronic disease, disability, or handicap are more likely than those without to say they now have coverage, with almost 8 in 10 reporting they obtained health insurance since last summer (Figure 4).⁸  Meanwhile, less than half of those who have spent their lifetime without insurance say they obtained coverage, a share that is 20 percentage points lower than those who say they have been insured at some point. Many in this group – 40 percent of those who say they have never had insurance – are undocumented immigrants who are ineligible for coverage through Medi-Cal or Covered California under the ACA. Still, it is notable that about 4 in 10 (43 percent) of previously uninsured Californians who report never having coverage before now report being insured. In addition, men were slightly less likely to report getting insurance than women (52 percent vs. 63 percent).

How much California’s uninsured knew about the law and what their view of it was before open enrollment are also factors that may contribute to some obtaining coverage. Those who were aware before open enrollment started of the requirement to obtain insurance, the Medi-Cal expansion, or the subsidies available to help people purchase insurance are somewhat more likely to say they now have insurance than those who were unaware of these key provisions (Figure 5). But, a similar share of those with favorable views of the law last summer report getting coverage as those who had unfavorable views (59 percent vs. 57 percent).

Outreach played a role in getting some people covered – 69 percent of California’s previously uninsured who said they were contacted about signing up for health insurance since October 1^st say they obtained coverage, compared to 52 percent of those that say they weren’t contacted. On the other hand, those that say they were encouraged by a family or friend to sign up for coverage are no more likely to report being newly insured than those who didn’t report the same encouragement (58 percent and 55 percent) (Figure 6).

Many of these factors tend to overlap so to attempt to isolate the personal elements that best predict who was more likely to get insurance during this first open enrollment period, we conducted a regression analysis with demographic factors, relevant perceptions of the law, and outreach indicators. This analysis showed Californians who say they obtained insurance are more likely to report being married, having a debilitating chronic condition, having been uninsured for less than two years, and being contacted about getting coverage after controlling for a variety of demographic factors such as age, education, and income. On the other hand, the regression analysis also showed that Californians who reported remaining uninsured are more likely to be male, have never had insurance, or be undocumented immigrants. And, there are no differences by race/ethnicity after controlling for these demographics, particularly after controlling for immigration status and never having had coverage. Knowledge of key provisions or attitudes of the law going into open enrollment did not significantly predict enrollment after controlling for other characteristics.⁹ 

 

What Type Of Coverage Did They Get?

With over half of California’s uninsured as of last summer reporting incomes that put them at or below 138 percent of the federal poverty level, it may not be surprising that Medi-Cal is the source of coverage for the largest share of the newly insured (44 percent, or 25 percent of all previously uninsured Californians) (Figure 7). After Medi-Cal, one in five newly insured (21 percent, or 12 percent overall) say they are now covered by a plan through an employer. Sixteen percent of the newly insured (9 percent overall) say they got insurance through Covered California and another 9 percent (5 percent overall) say they enrolled in non-group insurance outside of the Covered California Marketplace. Combining the enrollment in the two types of coverage most directly related to coverage expansions under the ACA, Medi-Cal and Covered California, 60 percent of the newly insured (or 34 percent of previously uninsured Californians overall) say they enrolled in coverage through these two ACA-related coverage options. Just over half of the newly insured (54 percent) say the coverage they got is just for themselves and doesn’t include any family members.

Types of New Coverage for Key Demographic Groups

Most newly insured Hispanics say they enrolled in Medi-Cal (46 percent) and they were less likely than whites to say they enrolled through Covered California (11 percent vs. 26 percent) (Figure 7). Young adults primarily report getting coverage through Medi-Cal or an employer (including a parent’s employer).

Fully 6 in 10 of the newly insured reporting they are in fair or poor health say they signed up for Medi-Cal, compared to 37 percent of those reporting they are in at least good health (37 percent) (Figure 8). This difference may be related in part to the availability of retroactive enrollment and the role community clinics, hospitals and other providers play in signing eligible people up for Medi-Cal when they come in for care. Those newly insured who have been uninsured for a shorter amount of time are more likely than those reporting longer periods without coverage to report enrolling in coverage through an employer. In contrast, about half of those who have been without health insurance for a year or more now say they have coverage through Medi-Cal. Not surprisingly, the employed are more likely to say they enrolled in coverage through an employer than those who are unemployed (32 percent vs. 8 percent). Newly insured women were more likely to report enrolling in Medi-Cal than newly insured men (50 percent vs. 38 percent), while about twice as many newly insured men enrolled in coverage through an employer than newly insured women (29 percent vs. 14 percent).

 Accessing coverage through an employer

There are often changes in people’s health insurance status as they switch jobs or increase or decrease working hours. In the baseline panel survey last summer, over half (54 percent) of the previously uninsured who now say they have job-based insurance reported that their or their spouse’s employer offered insurance, but most said they did not participate in the plan because they were still in the waiting period for coverage (30 percent) or the amount they would have to pay is too much (19 percent). In addition, over a quarter (27 percent) of those who now have coverage through an employer report currently working full time after saying they were working part time or were unemployed in summer 2013. Many who now have job-based coverage anticipated enrolling. In the baseline survey, 7 in 10 said they expected to get insurance in 2014, including 3 in 10 who said they thought it would be through an employer. As a result, some newly insured through an employer may have come out of the waiting period since last summer or now work for an employer that offers insurance, while others may have been motivated by the ACA to take-up an employer’s offer of coverage.

Enrolling in Medi-Cal

Many newly covered by Medi-Cal are not new to the program. Forty-five percent of those newly insured by Medi-Cal said last summer that they have received coverage through the program before and an additional 16 percent say they had tried to enroll at some point. Nearly a quarter (23 percent) of previously uninsured Californians without dependent children say they enrolled in Medi-Cal. This is similar to the share of previously uninsured adults with dependent kids who say they enrolled in Medi-Cal (28 percent) and an indication that some who may not have been eligible for the program before are now covered.

Purchasing a plan through Covered California

And, for those who say they got a plan through Covered California, nearly half (46 percent) said last summer that they had tried to purchase non-group insurance before but most said they didn’t end up buying it because it was too expensive.

Why Did The Previously Uninsured Get Coverage?

When asked to name the reason why they got covered in their own words, the newly insured give a variety of answers (Figure 9). A fifth (21 percent) volunteer that they were motivated by the ACA and wanted to avoid the penalty for not having health insurance. A similar share (17 percent) say they got it because of issues with their health, 14 percent say they got it as a safeguard against emergencies and high medical bills, and 13 percent say they decided to get health insurance for more general health needs and preventive care. Seven percent say they were able to get it through an employer and a few others say they got it because insurance became available (4 percent) or they got it because they are eligible for Medi-Cal (3 percent).

When asked more directly whether they got coverage because of the ACA or if they would have obtained it regardless of the law, 45 percent say they got insurance because of the law. Still, just over half of the newly insured (52 percent) don’t directly attribute their new coverage to the ACA and say it’s something they would have done anyway. The development of the Covered California Health Insurance Marketplace and the changes to the non-group market under the ACA were designed to make coverage more accessible and affordable. The majority (64 percent) of those with coverage through Covered California say the law is the reason they got insurance, while 7 in 10 (72 percent) newly insured with employer-sponsored coverage say they would have gotten it anyway. People with Medi-Cal are split with 48 percent saying they got it because of the law and 50 percent saying they would have enrolled regardless (Figure 10). It is important to note that these are people’s perceptions – some of the newly insured would likely have been ineligible for Medi-Cal or unable to purchase coverage without the ACA expansions. As noted earlier, gauging by the types of coverage the newly insured report enrolling in, 60 percent of the newly insured (34 percent of California’s previously uninsured overall) are now more likely covered as a result of the ACA coverage expansions through Medi-Cal and Covered California.

Do They Think Coverage Is Affordable, Making Them Financially Secure?

The uninsured are a group that typically report being under considerable financial strain, and in the baseline survey last summer over half said they felt financially insecure, and the vast majority expressed concern about being able to pay their rent or mortgage or keep up with rising costs. Confronted with tight budgets and little disposable income, affording health insurance still seems to be a stretch for many. Nearly half (46 percent) of those newly insured by coverage other than Medi-Cal say paying for coverage every month is at least somewhat difficult (Figure 11). Those with insurance through Covered California are split in their reports of how difficult it is to pay their monthly premium with 51 percent saying it is at least somewhat difficult and 48 percent saying it is not difficult. Most of those with job-related coverage (whose employers are likely paying for at least some of the cost) say it is not too or not at all difficult for them to pay the monthly cost of coverage. While affording these costs may be challenging, nearly three quarters say their plan is a good value for the amount they pay (Figure 12).

Many newly insured recognize the role health insurance can play in protecting them from costly or unexpected medical expenses. For example, more say that gaining insurance has made them feel more financially secure than less (37 percent vs. 16 percent), though a substantial share (45 percent) say it has made no difference. But 3 in 10 of the newly insured say they still feel vulnerable to high medical bills rather than well-protected (Figure 13).

About a quarter of the newly insured say their coverage cost less than they thought it would, while 17 percent say it cost more and the remainder say the cost was about what they expected (43 percent) or aren’t sure (14 percent). Nearly 4 in 10 (37 percent) of those with a plan through Covered California, a group that may be getting subsidies for coverage, say that their coverage was less expensive than they expected, while a quarter say it cost more and a third say the cost is about what they expected (Figure 14).

The majority (55 percent) of the newly insured with a plan through Covered California report getting financial assistance and the vast majority of these say they wouldn’t have been able to afford coverage without it.¹⁰ 

What Was Their Experience Shopping For Coverage?

For the most part, the newly insured report having had at least a somewhat easy time finding the information they needed about getting health insurance (80 percent), comparing the monthly premium cost (73 percent) and out of pocket cost sharing under different plans (71 percent), and finding a plan that meets their needs (65 percent). About 4 in 10 report difficulty comparing the services that would be covered under each plan, but still 57 percent say that was easy as well (Figure 15).

Three quarters (75 percent) of the newly insured with a plan through Covered California report having a choice of plans, suggesting that at least some are unaware of opportunities to shop and compare costs and coverage for a variety of plans. They report that the main factors in their choice were monthly premium costs (34 percent) and out of pocket costs (22 percent), followed by the choice of doctors and hospitals (9 percent) and the range of benefits covered (7 percent). Forty-three percent of new Medi-Cal enrollees report having a choice in plans, and the main factors they report in their decision were the choice of doctors and hospitals (16 percent), the range of benefits covered (10 percent) and the low cost of the plan (7 percent).

While the Covered California website had one of the smoother launches compared to the national healthcare.gov or other state-based exchanges, it and the 1-800 number were still plagued by technical glitches and long wait times.¹¹  Among the previously uninsured who say they successfully enrolled in some type of coverage, just over 4 in 10 (43 percent) say they visited the website during the open enrollment period, and the majority of them found their visit at least somewhat helpful. And, for those who ultimately enrolled in a Covered California plan, 72 percent say they visited the website, including just over half found it helpful (55 percent) (Figure 16). Fewer report calling the Covered California 1-800 number (26 percent); a share that rises to 54 percent of those who now report having a plan through Covered California. Like the website, most of the newly insured found it helpful. Modest shares of the remaining uninsured report visiting the website (30 percent) or calling the 1-800 number (15 percent) but in contrast to the newly insured, most found their attempts unhelpful (see Section 3 for more on the experiences of the remaining uninsured).

How Did People Enroll? Did They Have Help?

The newly insured report a variety of different avenues for enrollment. Most newly insured Medi-Cal enrollees report signing up for coverage in person while most newly insured through Covered California say they enrolled online (Figure 17). But even though about half of Covered California enrollees say they signed up online, most weren’t doing so on their own. Six in ten (61 percent) say they got assistance with their enrollment, most often from a family member or friend (25 percent) or from a Covered California representative (26 percent). A similar share of newly insured Medi-Cal beneficiaries say they got help (60 percent) and most say it was from an enrollment or community health worker (31 percent) (Figure 18). Most newly enrolled say assistance was easy to come by, particularly those who ended up enrolling in Medi-Cal (72 percent), but the newly insured with a Covered California plan are more divided with 51 percent saying it was easy to find help and 38 percent saying it was difficult, including 21 percent who said it was very difficult.

For the most part, enrollment went fairly smoothly according to those signing up for Medi-Cal or private insurance through Covered California or an employer (Figure 19). However, the newly insured in plans through Medi-Cal or an employer are more likely to say the process was very easy than those insured through Covered California. In fact, about 4 in 10 (39 percent) of those newly insured through Covered California say their process was at least somewhat difficult, including 14 percent who say it was “very” difficult.

Additionally, some newly insured hit snags while enrolling. About one in five (19 percent) of those with Medi-Cal coverage and about a quarter (26 percent) of those with a Covered California plan say it was difficult to determine if their income qualified them for Medi-Cal or financial assistance. Still the majority in both groups said it was easy to determine eligibility, including 54 percent of those with Medi-Cal coverage who say it was very easy (Figure 20).

At the tail end of the enrollment process, many had a hard time confirming that they had successfully enrolled. Roughly 4 in 10 report having difficulty confirming enrollment with Covered California and about 3 in 10 report problems confirming enrollment in Medi-Cal (Figure 20).

What Do The Newly Insured Understand About Their New Coverage?

Of the newly insured, over 60 percent report having been uninsured for over two years and 1 in 5 say they had never had insurance before now, indicating that many in this group may not be well versed in the often complicated nature of health insurance. But when it comes to their new plan, a large majority of the newly insured say they feel like they understand the coverage and the out-of-pocket costs of their plan at least somewhat well (Figure 21). These shares are similar across different plan types.

In an effort to make it easier for people to shop and compare health plans, non-group insurance is now categorized into metal levels (platinum, gold, silver and bronze). Half (50 percent) of the newly insured with plans through Covered California say they signed up for the silver option, followed by bronze (18 percent), platinum (4 percent) and gold (2 percent).¹²  One in 4 (24 percent) didn’t know the answer to this question about their plan.

Do They Like It? Have They Used It?

The newly insured haven’t had their insurance plans for long, but a large majority reports positive experiences with their coverage so far, including 78 percent of Medi-Cal enrollees and about 6 in 10 of Covered CA enrollees (Figure 22). Four in ten (43 percent) say they have visited a doctor since enrolling, and a few of those who visited a doctor (15 percent, or 6 percent of the newly insured overall) say they experienced a problem using their insurance, including limited provider networks and other access issues. Future waves of the panel survey will further explore the newly insured’s interactions with health care providers as they have more experience using their new insurance.

Enrollment And Shopping Experiences Among Hispanics

Making up over half of California’s uninsured population before open enrollment began, Hispanics were an important target of outreach and enrollment efforts during the first open enrollment period. Fifty two percent of Hispanics who were previously uninsured now report having insurance, most of whom say they signed up for Medi-Cal.

Newly insured Hispanics report a smooth enrollment process and more than 8 in 10 say they have had positive experiences with their coverage so far (Figure 23). Reflecting the finding that most Hispanics got coverage through Medi-Cal, 47 percent of newly insured Hispanics say they signed up in person and an even larger share say they had someone help them complete the process (69 percent).

Most newly insured Hispanics say finding help was easy, including half that say it was very easy (Figure 23). More generally, newly insured Hispanics report that information on signing up for insurance was easy to come by (79 percent). And, nearly 9 in 10 (87 percent) newly insured Hispanics taking the survey in Spanish said it was easy to find information in Spanish, including about two thirds (65 percent) who said it was very easy.

But information gaps persist –the majority (53 percent) of newly insured Hispanics say they don’t have enough information on what the law will mean for them, while the majority of newly insured whites feel they do (71 percent) (Figure 24).

Who Remained Uninsured?

As many previously uninsured Californians gained coverage, 42 percent remained uninsured. Many of the remaining uninsured have tenuous links to health insurance posing challenges for future enrollment efforts. Forty-five percent of the remaining uninsured reported in the baseline survey that they had been without health insurance for two or more years (Figure 25) and an additional 37 percent said they have never had insurance. Hispanics make up 62 percent of the remaining uninsured and nearly half of them (29 percent) are undocumented Hispanics who are not eligible for Medi-Cal or assistance through Covered California. About 4 in 10 (39 percent) report family income that put them in the group likely eligible for Medi-Cal and another quarter (24 percent) are likely eligible for financial assistance through Covered California.¹³  These shares reflect the demographics of people who were uninsured prior to the first ACA open enrollment period and did not get coverage during the open enrollment period. Others may have been covered prior to open enrollment but now uninsured – a group not captured by this survey.

Why Did They Remain Uninsured?

Why did 42 percent of California’s uninsured prior to open enrollment remain without coverage? Most of the remaining uninsured seem to value insurance, with majorities saying it is something they need (71 percent) and that it is worth the costs (59 percent) (Figure 26). Still roughly 3 in 10 of the remaining uninsured say they can get by without insurance (28 percent) or don’t feel coverage is worth the price (33 percent), including 4 in 10 (40 percent) of those who are likely eligible for coverage through Covered California or Medi-Cal due to their self-reported income level and immigration status.

The cost of insurance (whether perceived or actual) remains a barrier. When asked in their own words why they didn’t get coverage, one-third (34 percent) point to costs as the reason. Fifteen percent say they don’t qualify or don’t think they do, including 9 percent who say they can’t enroll or are worried about signing up because of their immigration status. Other reasons the remaining uninsured give for not signing up for coverage include not having yet tried or being too busy (9 percent), not having enough information about enrolling (9 percent), having tried but not being successful (8 percent), and not wanting or needing coverage (7 percent) (Figure 27). A few (6 percent) say they didn’t get insurance because of issues associated with the application process, including three percent who say they are still awaiting contact or approval – a finding that is perhaps related to the large backlog of about 900,000 Medi-Cal applicants waiting for counties across the state to process their applications.¹⁴ 

Do They Think They Will Get It Later?

Although they missed the ACA’s first open enrollment period, almost 6 in 10 (57 percent) of the remaining uninsured think they will enroll in a plan later this year, while 3 in 10 (31 percent) think they will continue to go without health insurance (Figure 28). More than 7 in 10 (73 percent) of the remaining uninsured who are likely eligible for Medi-Cal say they plan to enroll later this year, compared to about half of those in the exchange target group (51 percent). Of those who see coverage in their future, 57 percent are uncertain where they will get insurance, and small shares say they expect to get it from Medi-Cal (15 percent), an employer (13 percent), or through Covered California (11 percent).

Some may in fact be able to enroll in coverage before the next Covered California open enrollment period. People eligible for Medi-Cal may sign up any time of the year, and others with qualifying events such as marriage may be able to enroll though Covered California outside of the specified enrollment periods. About half of the remaining uninsured say they are aware that people can still sign up for Medi-Cal (51 percent) or Covered California (54 percent); however it is unclear if they know that enrollment through Covered California is only a possibility if they have had a qualifying life event.

Did They Try To Get Coverage? Why Didn’t They Get It?

Over a third (36 percent) of the remaining uninsured say they have tried to get insurance since the open enrollment period began (Figure 29). Most of those that report trying pursued more than one avenue in their attempt to get coverage. Nearly a quarter (23 percent) of the remaining uninsured say they tried to get coverage through Covered California and 19 percent say they tried to get coverage from Medi-Cal. Smaller shares of the remaining uninsured say they looked directly to private health insurance companies (10 percent), to health insurance agents or brokers (7 percent), and to their employer (5 percent). But they ran into barriers – some remaining uninsured report trying to sign up for non-group insurance and found it too expensive (15 percent) and others were not able to complete the application process (6 percent). Eight percent of the remaining uninsured say they tried to sign up for Medi-Cal and were not eligible for coverage and another 7 percent said they tried to get Medi-Cal but were not able to complete the application process.

In contrast to those who got insurance, the majority of people who tried to get coverage but remain uninsured say that shopping for coverage was difficult. Those that report trying to get Medi-Cal or non-group coverage say it was hard to find a plan that met their needs (76 percent, or 25 percent of the remaining uninsured overall). Weighing the trade-offs between coverage and costs also proved difficult for most who report attempting to get non-group coverage; roughly 7 in 10 say it was difficult to compare the services the plans covered (71 percent, or 18 percent of remaining uninsured overall), the out-of-pocket costs required to use services (69 percent, or 18 percent of remaining uninsured overall), and the monthly premium payment (67 percent, or 17 percent of remaining uninsured overall). Nearly 6 in 10 (58 percent, or 20 percent of remaining uninsured overall) of those who say they tried to get insurance say it was difficult to find the information they needed about signing up for coverage (Figure 30).

Some of the remaining uninsured report visiting the Covered California website (30 percent) or calling the 1-800 number (15 percent), but unlike those who got insurance, most say they found them unhelpful (65 percent of those who visited website and 66 percent of those who called the 1-800 number).

Are The Remaining Uninsured Aware Of Coverage Options?

Eight in ten (81 percent) of the remaining uninsured are aware of the requirement to buy health insurance under the ACA, and most (65 percent) think the mandate applies to them (Figure 31). The remaining uninsured are divided on whether or not they’ll have to pay a fine this year with 44 percent saying they think they will be penalized and 43 percent saying they won’t. Many, in fact, may be exempt due to financial hardship or other exceptions under the law.

Other provisions are less widely recognized, including the parts of the law that may benefit the remaining uninsured most. For example, 6 in 10 remaining uninsured say they are aware of the Medi-Cal expansion (58 percent), and a similar share say they are aware the law provides financial assistance to help low and moderate income Americans (60 percent), leaving roughly 4 in 10 unaware of these aspects of the law that may open doors for them to access coverage (Figure 31).

On a more personal level, 6 in 10 (61 percent) of the remaining uninsured say they are lacking information on how the law will impact them (Figure 32). Confusion about what assistance they may be eligible for is also widespread. Less than half (43 percent) of those likely eligible for Medi-Cal think they would qualify for the program. Of those in the group potentially eligible for subsidies through Covered California, about 3 in 10 (29 percent) think they are eligible for assistance.

Remaining Uninsured Hispanics

Forty-eight percent of Hispanics who were uninsured prior to open enrollment report remaining uninsured, and almost half of these remaining uninsured Hispanics (46 percent) may not be eligible for coverage under the ACA due to their immigration status (22 percent of previously uninsured Hispanics overall) (Figure 33). As a result, many worry about the potential link between health insurance and immigration authorities. Over half (54 percent) of Hispanics who remain uninsured, particularly those who prefer to communicate in Spanish or are undocumented themselves (69 percent or 73 percent, respectively), say they are worried that getting coverage will draw attention to their families immigration status (Figure 34), and despite the Administration’s assurance otherwise¹⁵  many worry it could result in deportation. Seven in 10 remaining uninsured Hispanics who say they were born outside the U.S. (72 percent, or 52 percent of remaining uninsured Hispanics overall) say they are worried that signing up for health insurance could hurt their ability to become a U.S. citizen, including half (51 percent) who say they are very worried.

In addition to immigration concerns, language may also present a barrier for some Hispanics who remain uninsured. Fully 70 percent of remaining uninsured Hispanics took the survey in Spanish (34 percent of Hispanics overall) and they are divided as to the amount of information about signing up for health insurance that is available in Spanish. About half (52 percent) say that, in their experience, there is at least some information in Spanish available (Figure 35) and about 4 in 10 say there is only a little or no information in Spanish. Personal assistance in Spanish may be more visible – about 6 in 10 (58 percent) remaining uninsured Hispanics who took the survey in Spanish say they are aware of people in their community trained to help them sign up for coverage in Spanish.

In spite of these potential barriers there is widespread overall support for the role of health insurance among Hispanics who remain uninsured – roughly three quarters (78 percent) say health insurance is something they need and is worth the cost (72 percent), shares that are higher than their white peers (Figure 35).

California’s Undocumented Uninsured

In California, undocumented immigrants make up about a fifth of those who were uninsured before the ACA expansions kicked in, and under the law, they are not eligible for Medi-Cal or subsidies through the exchange. As a group they are largely aware of these restrictions – 63 percent say they are not eligible for Medi-Cal and 70 percent say they don’t qualify for financial assistance through Covered California. Half say the mandate doesn’t apply to them and most (60 percent) correctly respond that they won’t have to pay a fine for not having coverage.

While the ACA restricts access to health benefits for undocumented immigrants under the law, there is still keen interest in coverage among this group. Since last summer about a third (35 percent) of California’s undocumented uninsured say they obtained coverage and of those who remain uninsured, half say they intend to get coverage later this year. In fact, the remaining undocumented uninsured are more apt to say they place a high value on insurance than other remaining uninsured Californians; nearly three quarters (73 percent) of the undocumented uninsured say health insurance is worth the cost and 85 percent say it is something they need, each 20 percentage points higher than the share for other remaining uninsured Californians.

As the open enrollment period came to a close in the spring, nearly 6 in 10 of California’s previously uninsured report gaining coverage, with the largest share (25 percent) reporting they got coverage through Medi-Cal. All told, about a third of California’s previously uninsured say they enrolled in the two types of coverage most directly tied to the ACA – Medi-Cal and plans through Covered California. Forty-two percent say they remain uninsured including 13 percent who are ineligible for Medi-Cal or Covered California due to their immigration status.

Future waves of the Kaiser Family Foundation California Longitudinal Panel Survey will continue to track this same, representative group of individuals who were uninsured before the major provisions of the ACA took effect to learn more about how people are using their coverage, their experiences finding health care providers and paying for care, and whether they shop for coverage during the next open enrollment period, remain in the same plan or become uninsured again. At the same time, future surveys will determine if some of the remaining uninsured from this wave of the survey gain coverage and what eventually brought them into the fold. They also will measure the extent to which perceived or actual barriers such as cost and immigration status keep others from getting health insurance and how those remaining uninsured fare. Returning to the same previously uninsured Californians at multiple points in time allows for a unique look at the views and experiences of this key group as they navigate new coverage options under the ACA and the changing health care system.

This report primarily examines three key groups: 1) the overall group of Californians who were uninsured prior to the ACA’s first open enrollment periods, most often referred to as “California’s previously uninsured,” 2) the subgroup of previously uninsured who report getting coverage, referred to as the “newly insured,” and 3) the subgroup of previously uninsured who report that they still do not have coverage, referred to as the “remaining uninsured.” And, as noted in the Survey Methodology Section, only those uninsured for at least two months were included in the baseline survey. Other terms used occasionally throughout the report are defined below:

• Eligible Previously Uninsured Californians: Because the coverage expansions under the ACA do not extend to undocumented immigrants, some of the analyses focuses on those who reported being U.S. citizens or permanent residents in the baseline survey, described in shorthand as those who are ‘eligible’ for the ACA’s coverage expansions.
• Undocumented Previously Uninsured Californians: For the purposes of this report, undocumented immigrants are defined as those who reported in the baseline survey that a) they were not born in the United States or Puerto Rico, b) they came to this country without a green card, and c) they have not received a green card or become a permanent resident since arriving. There are several ways that this definition, while workable for the purposes of a broad analysis of this sort, falls short of the complexity of real life. First, it relies on self-reporting, and since respondents have an incentive not to reveal unlawful immigration status, it is undoubtedly a somewhat imperfect measure. Second, those that did not answer all three in the series of immigration status items in wave 1 (14 of wave 2 respondents) were not able to be categorized. Third, by necessity of time and efficiency, the survey did not allow for a full exploration of the many nuances inherent in the U.S. immigration system. For example, this category may actually include a small number of individuals in California as refugees, asylees or other humanitarian immigrants who might better be placed among the ‘eligible uninsured’. The survey, unfortunately, does not allow this level of detailed sorting. Since estimated immigration status is based on individuals’ responses to the baseline survey, it is possible that some small share of those thought to be undocumented immigrants have now become permanent residents or received a green card.
• Income categories: Because eligibility for two of the law’s main components – the Medi-Cal expansion and the tax credits being made available to purchase insurance on the new exchanges – is based on an individual’s family income relative to the federal poverty level (FPL), in some cases we report survey results by FPL categories. Eligible previously uninsured Californians with incomes 138% FPL or less (roughly $32,000 a year for a family of 4 in 2013) are eligible for Medi-Cal coverage, while those with incomes greater than 138% and up to 400% FPL (roughly $32,000-$94,000 for a family of 4 in 2013), are eligible for subsidies to purchase insurance through Covered California Marketplace. Those with incomes above 400% FPL are allowed to buy insurance through Covered California, but are not eligible for subsidy assistance. For convenience, we sometimes refer to the eligible group with incomes 138% FPL or less as the “Medi-Cal target group”, and those greater than 138% and up to 400% FPL as the “exchange subsidy target group”. These obviously are approximations that do not allow for every real world exception to be taken into account. For example, lawfully present immigrants may remain subject to a five year wait before they may enroll in Medi-Cal, but for the purposes of this analysis they are included in the Medi-Cal target group if they meet the income criteria. Similarly, some of those in the exchange subsidy target group may not be eligible for marketplace subsidies if they have access to affordable employer coverage, a situation difficult to ascertain in a phone survey.

This is the second in a series of surveys by the Kaiser Family Foundation (KFF) tracking the views and experiences of a group of Californians who were uninsured in the summer of 2013, prior to implementation of the ACA’s insurance market reforms and coverage expansions through Covered California and Medi-Cal. Future surveys will continue to track this group’s experiences over the course of the next year and a half. The first survey (Wave 1) was conducted from July 11-August 29, 2013, with a randomly selected group of individuals who were uninsured at the time of the interview and was paid for entirely by KFF. The current survey (Wave 2) was conducted from April 1-June 15, 2014, with the same longitudinal panel of respondents, whether they obtained coverage or remained uninsured. Both surveys were designed and analyzed by researchers at KFF. Social Science Research Solutions collaborated with KFF researchers on sample design, weighting, and supervised fieldwork. Fieldwork costs associated with Wave 2 of the survey were paid for by The California Endowment.

The Wave 1 survey was conducted among a representative random sample of 2,001 adults ages 19-64 living in California who reported having been without health insurance for at least two months at the time of the interview¹⁶  (note: persons without a telephone could not be included in the random selection process). Computer-assisted telephone interviews conducted by landline (990) and cell phone (1,011, including 660 who had no landline telephone) were carried out in English and Spanish by SSRS. To increase efficiency in reaching this low-incidence, hard-to-reach group, both the landline and cell phone sampling frames oversampled areas with a lower-income population (since being uninsured is negatively correlated with income). The landline sample frame also oversampled households whose phone numbers were matched with directory listings indicating the presence of at least one person age 19-64 and a household income of less than $25,000. Additionally, 230 interviews (130 landline, 100 cell phone) were conducted with respondents who previously completed recent national SSRS omnibus surveys of the general public and indicated they were ages 19-64 and uninsured. These previous surveys were conducted with nationally representative, random-digit-dial landline and cell phone samples.

The current survey, Wave 2, also consisted of computer-assisted telephone interviews conducted by landline (623) and cell phone (545, including 327 who had no landline phone) in English and Spanish. Screening for Wave 2 involved verifying that the respondent had participated in Wave 1. Multiple attempts were made to reach every respondent from Wave 1 and encourage participation in Wave 2. Efforts included multiple dialing at various times of day and throughout the week, mailings and emails to those who provided such contact information, repeated dialing of non-working numbers, and attempts to find alternative phone numbers for non-working numbers.

In order to re-connect with respondents who may be more willing to complete the survey online, an abbreviated web version was introduced on May 14. The online questionnaire was offered in English and Spanish and was limited to key questions about insurance status, type of coverage, and reasons for obtaining coverage or remaining uninsured. A total of 51 respondents completed the online version of the survey.

A multi-stage weighting design was applied to ensure accurate representation of California’s nonelderly adult uninsured population prior to the ACA’s coverage expansions. The weighting process for Wave 2 involved corrections for sample design, as well as sample weighting to match the weighted Wave 2 sample to Wave 1 responses along demographic characteristics. As it did for Wave 1, the Wave 2 base weight accounted for the oversamples used in the sample design, as well as the likelihood of non-response for the sample from earlier omnibus surveys, number of eligible household members for the landline sample, and a correction to account for the fact that respondents with both a landline and cell phone have a higher probability of selection. Demographic weighting parameters for Wave 2 were based on Wave 1 weighted demographics, which were adjusted for age, education, race/ethnicity, nativity (for Hispanics only), Hispanics by gender, presence of own child in household, marital status, California region, poverty level, and phone usage. For more information on weighting and data sources, see the Wave 1 methodology. All differences referred to in the report are statistically significant. Statistical tests of significance account for the effect of weighting, and, for trend analysis, testing takes into account the survey’s panel design.

A unique consideration for surveys with a longitudinal panel design is whether those who participate in subsequent waves of the survey differ from those who refuse to participate again or are unable to be recontacted. Sixty-one percent of Wave 1 respondents completed the Wave 2 survey, and while there are some differences in the unweighted demographics of those who completed Wave 2 and the full Wave 1 sample, these differences are corrected for by weighting. As shown in the table below the total weighted distributions are similar for Wave 1 and Wave 2 for age, gender, race/ethnicity, self-reported health status, disability status, party identification, education and income. See the Wave 2 Attrition Appendix for more information on attrition.

Another consideration for panel surveys is the potential for “sensitization effects,” that is, what effect returning to the same people about the same topics has on their experiences or views. For example, after taking the baseline survey that covered many aspects of the coverage expansions under the ACA, were people more likely to seek out information about health insurance and enroll than they would have been otherwise? While there is no direct way to measure this effect on this survey, other analyses have found that these effects are minimal and short-lived¹⁷  and we do not believe they would have had a substantial impact on results presented here, particularly given all the other media coverage, advertising, and outreach targeted at this population during the fall and winter of 2013 and 2014.

The margin of sampling error including the design effect for the full sample is plus or minus 4 percentage points. For the newly insured, it is plus or minus 5 percentage points and for the remaining uninsured it is plus or minus 7 percentage points. Numbers of respondents and margin of sampling error for key subgroups are shown in the table below.

For results based on other subgroups, the margin of sampling error may be higher. Sample sizes and margin of sampling errors for other subgroups are available by request. Note that sampling error is only one of many potential sources of error in this or any other public opinion poll.

Some demographic measures referred to in the report were only asked during the baseline survey, such as questions about educational attainment, debilitating chronic condition, length of time uninsured, resident status, and race/ethnicity. For more information on the first wave of the Kaiser Family Foundation California Longitudinal Panel Survey visit, https://www.kff.org/health-reform/report/californias-uninsured-on-the-eve-of-aca-open-enrollment/.

1. The baseline survey included only those adult Californians ages 19-64 who reported being without coverage for at least two months.  Because this panel survey focuses on a specific group who were uninsured prior to open enrollment, it does not estimate the overall change in the number of uninsured Californians.  The approximate number of newly insured adult Californians is calculated with the estimate of 5.9 million uninsured nonelderly adults based on a Kaiser Family Foundation analysis of 2013 ASEC Supplement to the Current Population Survey, available at https://modern.kff.org/other/state-indicator/adults-19-64/. ↩︎
2. For the purposes of this report, undocumented immigrants are defined as those that reported in the baseline survey that a) they were not born in the United States, and b) they came to this country without a green card, and c) they have not received a green card or become permanent residents since arriving. See the “About The Terms In This Report” Section for more details. ↩︎
3. Among ‘eligible’ previously uninsured Californians earning 138% FPL or less, 61 percent report gaining coverage and 39 percent say they remain uninsured. For those ‘eligible’ between 139% and 400% FPL, 66 percent report now being covered and 34 percent say they remain uninsured. For the purposes of this report, the previously uninsured who are ‘eligible’ are defined as California residents ages 19-64 who have been uninsured for at least two months and would be eligible for participation in the ACA coverage expansion based on their self-reported status as a citizen, permanent resident, or lawfully present immigrant. ↩︎
4. For more information on Wave 1, see “California’s Uninsured on the Eve of ACA Open Enrollment: The Kaiser Family Foundation Baseline Survey,” Kaiser Family Foundation, September 2013, https://modern.kff.org/health-reform/report/californias-uninsured-on-the-eve-of-aca-open-enrollment/. ↩︎
5. DHHS Centers for Medicare & Medicaid Services, “Medicaid & CHIP: May 2014 Monthly Applications, Eligibility Determinations and Enrollment Report,” July 11, 2014 http://medicaid.gov/AffordableCareAct/Medicaid-Moving-Forward-2014/Downloads/May-2014-Enrollment-Report.pdf. DHHS Office of the Assistant Secretary for Planning and Evaluation Issue Brief, “Health Insurance Marketplace: Summary Enrollment Report For The Initial Annual Open Enrollment Period,” May 1, 2014 http://aspe.hhs.gov/health/reports/2014/MarketPlaceEnrollment/Apr2014/ib_2014Apr_enrollment.pdf. The California Department of Health Care Services estimates 1.9 million people have enrolled in Medi-Cal since open enrollment started, http://news.coveredca.com/2014/04/covered-californias-historic-first-open.html. ↩︎
6. For more information on the experiences of insured and uninsured Californians prior to open enrollment, see, “The Uninsured At The Starting Line In California,” Kaiser Family Foundation, February 2014, https://modern.kff.org/uninsured/report/the-uninsured-at-the-starting-line-in-california-california-findings-from-the-2013-kaiser-survey-of-low-income-americans-and-the-aca/ ↩︎
7. For the purposes of this report, undocumented immigrants are defined as those that reported in the baseline survey that a) they were not born in the United States, and b) they came to this country without a green card, and c) they have not received a green card or become permanent residents since arriving. See the “About The Terms In This Report” Section for more details. ↩︎
8. In the baseline survey, 13 percent of California’s uninsured population reported having a disability, handicap or chronic disease that keeps them from participating fully in work, school, housework, or other activities. Most of those reporting such an ailment also report being in fair or poor health, but the measure of health status is more general with about a third reporting being in fair or poor health (32 percent for Wave 2 and 38 percent for Wave 1). The fact that the group reporting a debilitating chronic condition is a small but specific group may help explain why 77 percent of them report getting health insurance compared to 53 percent of those reporting being in fair or poor health. ↩︎
9. Regression results are available on request. ↩︎
10. This share is lower than what has been reported by Covered California. According to Covered California, 88 percent of those covered through the Marketplace (including those who were previously insured and those who were not) have subsidized coverage. This may indicate that some of the newly insured are unaware of the assistance they’re receiving and may not know the real cost of their plan. Multiple factors may be contributing to this apparent under-reporting on the survey, but it is likely that at least some individuals receiving government financial help may be unaware that the government is paying a portion of their premium. Insurance concepts are complicated and many people have trouble reporting detailed information about their plans. During the enrollment process, some people may have been focused on the bottom line question of “What do I pay?” and less focused on whether that amount was subsidized or not. For the numbers from Covered California, see http://news.coveredca.com/2014/04/covered-californias-historic-first-open.html ↩︎
11. Los Angeles Times, “Website glitch slows Obamacare enrollment in California,” March 11, 2014. http://articles.latimes.com/2014/mar/11/business/la-fi-mo-covered-california-obamacare-enrollment-20140311 ↩︎
12. The Covered California Marketplace reports the distribution of enrollment across metal types for all Covered California enrollees, not just the previously uninsured, as follows: 26% bronze, 62% silver, 6% gold, 5% platinum, 1% catastrophic.  For more information, see http://news.coveredca.com/search?updated-max=2014-05-07T08:46:00-07:00&max-results=7&start=7&by-date=false  This survey only includes those who were previously uninsured prior to the open enrollment period, but after excluding the 24 percent who said they didn’t know the metal level of their plan, the distribution is similar to what Covered California reported for all of its enrollees: 23% Bronze, 65% Silver, 2% Gold, 5% Platinum, 0% catastrophic. ↩︎
13. For the purposes of this report, the ‘eligible remaining uninsured’ are California residents who said they had been uninsured for at least two months in the baseline survey and would be eligible for participation in the ACA coverage expansion based on their self-reported status as a citizen, permanent resident, or lawfully present immigrant. See the “About The Terms In This Report” Section for more details. ↩︎
14. Kaiser Health News, “Mountainous Backlog Stalls Medi-Cal Expansion in California,” July 02, 2014. http://www.kffhealthnews.org/stories/2014/july/02/mountainous-backlog-stalls-medical-expansion-in-california.aspx ↩︎
15. U.S. Immigration and Customs Enforcement. Clarification of Existing Practices Related to Certain Health Care Information, October 25, 2013. http://www.ice.gov/doclib/ero-outreach/pdf/ice-aca-memo.pdf ↩︎
16. Those who had been uninsured for less than two months were excluded from the survey since they may be experiencing a short period of uninsurance (i.e. someone who is between jobs), and the goal of the survey was to capture the experiences and views of those who have been without insurance for a longer period of time and are poised to experience the new coverage provisions of the ACA. ↩︎
17. M. Brodie, “Sensitization Effects in a Study of the Impact of a Nationally Broadcast Special on Health Care Reform,” in Doctoral Thesis: Political Institutions, Participation, and Media Evaluations— Influences on Health Care Policy (Boston, Mass.: Harvard University, 1995). ↩︎

As part of efforts to rein in the federal budget and constrain the growth in Medicare spending, some policy leaders and experts have proposed to increase Medicare premiums and cost-sharing obligations.  Today, 54 million people ages 65 and over and younger adults with permanent disabilities rely on Medicare to help cover their health care costs.  With half of all people on Medicare having incomes of less than $23,500 in 2013, and because the need for health care increases with age, the cost of health care for the Medicare population is an important issue.¹ 

Although Medicare helps to pay for many important health care services, including hospitalizations, physician services, and prescription drugs, people on Medicare generally pay monthly premiums for physician services (Part B) and prescription drug coverage (Part D).  Medicare has relatively high cost-sharing requirements for covered benefits and, unlike typical large employer plans, traditional Medicare does not limit beneficiaries’ annual out-of-pocket spending.  Moreover, Medicare does not cover some services and supplies that are often needed by the elderly and younger beneficiaries with disabilities—most notably, custodial long-term care services and supports, either at home or in an institution; routine dental care and dentures; routine vision care or eyeglasses; or hearing exams and hearing aids.

Many people who are covered under traditional Medicare obtain some type of private supplemental insurance (such as Medigap or employer-sponsored retiree coverage) to help cover their cost-sharing requirements.  Premiums for these policies can be costly, however, and even with supplemental insurance, beneficiaries can face out-of-pocket expenses in the form of copayments for services including physician visits and prescription drugs as well as costs for services not covered by Medicare.  Although Medicaid supplements Medicare for many low-income beneficiaries, not all beneficiaries with low incomes qualify for this additional support because they do not meet the asset test.

Because people on Medicare can face out-of-pocket costs on three fronts—cost sharing for Medicare-covered benefits, costs for non-covered services, and premiums for Medicare and supplemental coverage—it is important to take into account all of these amounts in assessing the total out-of-pocket spending burden among Medicare beneficiaries.  Our prior research documented that many beneficiaries bear a considerable burden for health care spending, even with Medicare and supplemental insurance, and that health care spending is higher among older households compared to younger households.² 

This new analysis builds on prior work to examine out-of-pocket spending among Medicare beneficiaries, including spending on health and long-term care services and insurance premiums, using the most current year of data available (2010) from a nationally representative survey of people on Medicare.  It explores which types of services account for a relatively large share of out-of-pocket spending, which groups of beneficiaries are especially hard hit by high out-of-pocket costs for services and premiums, and trends in out-of-pocket spending on services and premiums between 2000 and 2010.

Data and Methods

The analysis is based on data from the Medicare Current Beneficiary Survey (MCBS) Cost and Use file from 2000 to 2010 (the most recent year of data available).  The dataset includes detailed information on Medicare-covered and non-covered services, utilization, and spending, including spending by Medicare, Medicaid, third-party payers, and out-of-pocket payments by beneficiaries.  The types of services included in the MCBS are dental, home health, inpatient hospital, long-term care facility, medical providers and supplies, outpatient hospital, prescription drugs, and skilled nursing facility.  The MCBS does not include spending and use for personal care services and supports, which can be a significant expense for people on Medicare who require long-term services and supports (LTSS) in the community.  Therefore, any out-of-pocket spending on personal care and support delivered in the home or the value of unpaid personal care and support services is not included in the out-of-pocket spending estimate for home health services.

The analysis excludes beneficiaries enrolled in Medicare Advantage plans, totaling 10.8 million or 22 percent of the 48.4 million Medicare beneficiaries represented in the 2010 MCBS, because the MCBS does not include reliable utilization and out-of-pocket spending data for this population, which would introduce significant bias if this population was included in the analysis.

To estimate total out-of-pocket spending per beneficiary in traditional Medicare, including premiums and services, we calculate for each sample person the sum of out-of-pocket spending on insurance premiums for Medicare Parts A and B and supplemental insurance coverage and medical and long-term care services reported in the MCBS.  These amounts are averaged across the entire sample of traditional Medicare beneficiaries and weighted to be representative of the traditional Medicare beneficiary population or specific subgroups of beneficiaries.  References to “total out-of-pocket spending” in this analysis always include both premiums and service spending.  We also often refer to the separate components of total spending (either out-of-pocket spending on services or premiums) in presenting results.

For analysis of high out-of-pocket spending, we divide traditional Medicare beneficiaries’ total out-of-pocket spending (including services and premiums) into quartiles and deciles, and estimate the share of beneficiaries overall and by subgroup who have spending in the top quartile and top decile of total out-of-pocket spending.  For a more detailed discussion of methods, data, and limitations, see Methodology.

Key Findings

In 2010, Medicare beneficiaries spent $4,734 out of their own pockets for health care spending, on average, including premiums for Medicare and other types of supplemental insurance and costs incurred for medical and long-term care services.

• Premiums for Medicare and supplemental insurance accounted for 42 percent of average total out-of-pocket spending among beneficiaries in traditional Medicare in 2010 (Exhibit ES.1).
• Of the remaining 58 percent of average total out-of-pocket spending on services, long-term facility costs are the largest component (accounting for 18 percent of total out-of-pocket spending), followed by medical providers/supplies (14%), prescription drugs (11%), and dental care (6%).  Neither long-term care services and supports nor dental services are covered by Medicare.

Out-of-pocket spending rises with age among beneficiaries ages 65 and older and is higher for women than men, especially among those ages 85 and older. 

• Out-of-pocket spending tends to increase with age; in 2010, beneficiaries ages 85 and older spent three times more out-of-pocket on services, on average, than beneficiaries ages 65 to 74 ($5,962 vs. $1,926).
• On average, women on Medicare pay more out of pocket for services and premiums combined than men on Medicare ($5,036 vs. $4,363, respectively, in 2010), and this difference grows somewhat wider with age.  Women ages 85 and over spent an average of $8,574 in 2010 on services and premiums while men ages 85 and over spent an average of $7,399 in total.  This difference is primarily attributable to higher long-term care facility costs among older women.

As might be expected, beneficiaries in poorer health, who typically need and use more medical and long-term care services, have higher out-of-pocket costs, on average.  This is the case whether measured by self-reported health status, number of chronic conditions or limitations in activities of daily living (ADLs), or use of services, such as hospitalizations, post-acute care, and long-term care.

• Average out-of-pocket spending on services rises as beneficiaries’ health status declines, and rises with the number of functional impairments and chronic conditions.  For example, average out-of-pocket spending on services by beneficiaries in poor self-reported health was 2.5 times greater than among beneficiaries who said they were in excellent health ($4,505 vs. $1,774, respectively, in 2010).  Similarly, beneficiaries with three or more ADL limitations spent five times more on services as those with no ADLs or IADLs in 2010 ($7,737 vs. $1,528, on average).
• Beneficiaries with Alzheimer’s disease, Parkinson’s disease, and end-stage renal disease (ESRD) have relatively high out-of-pocket spending on services compared to beneficiaries with certain other conditions ($8,305, $5,841 and $5,439, respectively, on average in 2010), but their higher costs are driven by use of different types of services.  For example, for people with Alzheimer’s disease, long-term care facility costs accounted for a majority of their average out-of-pocket costs in 2010, while those with ESRD faced higher out-of-pocket costs for medical services.

Just as Medicare spends more on beneficiaries who use more Medicare-covered services, more extensive use of services leads to higher out-of-pocket spending.  This is especially true for beneficiaries who have multiple hospitalizations and post-acute care use and those who live in long-term care facilities.

• Average out-of-pocket spending on services rises with the number of hospitalizations; Medicare beneficiaries with one hospitalization in 2010 paid $4,475 out of pocket on services, on average, while those with two or more hospitalizations paid $6,216.
• Patients with a hospital readmission within 30 days of discharge spent roughly $1,200 more on services than those with only one inpatient stay in 2010 ($5,687 vs. $4,475, respectively, on average), including higher spending for medical providers and supplies, inpatient hospital services, and skilled nursing facility (SNF) services.
• Among beneficiaries who were hospitalized in 2010, those who received post-acute care in a SNF had significantly higher out-of-pocket spending on services than those who were discharged without SNF care ($9,508 vs. $3,645, respectively, on average); this was especially the case for long-term care facility residents with an inpatient stay and post-acute SNF care.  Among beneficiaries with an inpatient stay followed by a skilled nursing facility stay, average out-of-pocket spending on SNF services was seven times greater among facility residents ($4,258) than among community residents ($595) in 2010.
• The small share of beneficiaries who live in long-term care facilities face significantly higher out-of-pocket spending on medical and long-term care services than those in the community (averaging $17,534 and $1,858, respectively, in 2010).  While most of their spending on services is for long-term care facility expenses, facility residents also incur higher costs for inpatient hospital and post-acute care services than beneficiaries living in the community.

Spending on premiums, a significant component of total out-of-pocket spending among Medicare beneficiaries, varies less across subgroups of the Medicare population than spending on services.  Unlike out-of-pocket spending on services, premium spending does not vary by health status or utilization, though it does vary somewhat by age, income, and source of supplemental coverage.

• While there is little variation in premiums among those ages 65 and over, premiums tend to be lower for beneficiaries under age 65 than among beneficiaries ages 65 and over, on average.  This is most likely related to the fact that a relatively large share of Medicare beneficiaries under age 65 is also covered by Medicaid and thus not liable for premiums.
• Average premiums are generally similar for beneficiaries with incomes above $20,000, but lower for beneficiaries with lower incomes, most likely due to three factors: 1) lower-income beneficiaries with Medicaid typically do not pay premiums; 2) lower-income beneficiaries with full Medicaid benefits have little need for supplemental coverage; and 3) lower-income beneficiaries without Medicaid may not be able to afford supplemental insurance.
• Among beneficiaries in traditional Medicare, those with a Medigap supplemental insurance policy pay more in premiums for this additional coverage, on average, than beneficiaries with employer-sponsored retiree health benefits ($2,166 vs $1,335, on average, in 2010).  Not surprisingly, premiums are considerably lower for beneficiaries with Medicaid and those with no supplemental coverage.

Analysis of ‘high out-of-pocket spenders’ finds a disproportionate share of certain groups, including older women, beneficiaries living in long-term care facilities, those with Alzheimer’s disease and ESRD, and beneficiaries who were hospitalized, in the top quartile and top decile of total out-of-pocket spending (including both services and premiums).  In 2010, one in four beneficiaries spent at least $5,244 out of pocket on medical and long-term care services and premiums (the top quartile), and one in ten spent at least $8,235 (the top decile).  Average total out-of-pocket spending among the top quartile—$11,530 in 2010—was more than twice as much as the average among all beneficiaries ($4,734), while among the top decile, it was four times as much ($19,236).

• Long-term care facility costs are a major component of spending for beneficiaries in the top quartile of total out-of-pocket spending, accounting for more than one-fourth of their average out-of-pocket spending in 2010; indeed, seven out of ten beneficiaries living in long-term care facilities are in the top quartile.  But it is not just long-term care facility spending that drives higher out-of-pocket costs; higher spending on medical providers and supplies, prescription drugs, and dental services also contribute to relatively high spending among those in the top quartile.
• Overall, four in ten women ages 85 and older are in the top quartile of total out-of-pocket spending on services and premiums, compared to only one-third of men ages 85 and older. These differences are attenuated but not eliminated when looking at out-of-pocket spending among community residents only.
• A disproportionate share of beneficiaries ages 85 and older are in both the top quartile and decile of total spending on services and premiums, compared to younger beneficiaries.  Nearly four in ten beneficiaries ages 85 and older are in the top quartile versus just over two in ten of those ages 65-74.
• More than four in ten beneficiaries with Alzheimer’s disease and ESRD were in the top quartile of total out-of-pocket spending in 2010, and nearly four in ten with Parkinson’s disease.
• Close to half of beneficiaries with two or more hospitalizations (45%) and more than half of those with an inpatient stay and a SNF stay (54%) were in the top quartile of total out-of-pocket spending in 2010.

Between 2000 and 2010, average total out-of-pocket spending among beneficiaries in traditional Medicare increased from $3,293 to $4,734, a 44 percent increase.

• During this period, total out-of-pocket costs increased at an average annual growth rate of 3.7 percent; the average annual growth rate between 2000 and 2010 was higher for premiums (5.8%) than for services (2.4%).
• Over these years, the average annual growth rate in out-of-pocket spending fluctuated, but trended down after 2006.  Total out-of-pocket spending among beneficiaries in traditional Medicare grew at an average annual rate of 5.0 percent between 2000 and 2006, but fell to 1.8 percent between 2006 and 2010.  This downward trend in the annual rate of growth in average total out-of-pocket spending also applies to both services and premiums.  Out-of-pocket spending on services increased at an average annual growth rate of 3.5 percent between 2000 and 2006, but this growth rate dropped to 0.9 percent between 2006 and 2010; for premiums, the average annual growth rate decreased from 7.6 percent between 2000 and 2006 to 3.2 percent between 2006 and 2010.

Implications

The typical person on Medicare in 2010 paid about $4,700 out of pocket in premiums, cost sharing for Medicare-covered benefits, and costs for services not covered by Medicare.  Even with financial protections provided by Medicare and supplemental insurance, some groups of Medicare beneficiaries incurred significantly higher out-of-pocket spending than others, which could pose challenges for those living on fixed or modest incomes.  Out-of-pocket spending tends to rise with age and number of chronic conditions and functional impairments, and is greater for beneficiaries with one or more hospitalizations, particularly those who receive post-acute care.

Efforts to prevent unnecessary hospitalizations and readmissions and improve the coordination of post-acute care could not only help to reduce Medicare spending but also help to reduce out-of-pocket spending among beneficiaries with the greatest needs.  Monitoring trends in out-of-pocket spending among people on Medicare in the coming years will be important in understanding whether such efforts are making a difference.

In 2010, Medicare beneficiaries spent $4,734 out of pocket, on average, including premiums for Medicare and other types of supplemental insurance and medical and long-term care services.  Premiums are a large share of average total out-of-pocket health care spending for all Medicare beneficiaries, accounting for 42 percent of spending.  Of the 58 percent of average total out-of-pocket spending on services, long-term facility costs are the largest component (18%), followed by medical providers/supplies (14%) and prescription drugs (11%)

1

.

Out-of-pocket spending rises with age among beneficiaries ages 65 and older and is higher for women than men, especially among those ages 85 and older; these differences are driven primarily by variation in average spending on medical and long-term care services, rather than in premium spending.  Total out-of-pocket spending on services and premiums was particularly high among beneficiaries ages 85 and older who spent, on average, twice the amount spent by beneficiaries ages 65 to 74 in 2010 ($8,191 vs. $4,020).  In 2010, average total out-of-pocket spending was higher for women than men ($5,036 vs. $4,363, respectively, in 2010), and this difference grew somewhat wider with age.  Women ages 85 and over spent an average of $8,574 while men ages 85 and over spent an average of $7,399—a difference of nearly $1,200.  This difference is primarily attributable to higher long-term care facility costs among older women

2

and

Beneficiaries’ health status and chronic conditions also are significant drivers of out-of-pocket spending, primarily due to large differences in spending on health and long-term care services.  Not surprisingly, those beneficiaries with poorer self-reported health status spend more than those who rate themselves in better health.  In 2010, beneficiaries in poor health spent around $1,700 more out of pocket in total than those in excellent or very good health, on average

4

.  Those in poor health spent less on premiums than those in excellent health ($1,295 vs. $2,283, on average) but significantly more on medical and long-term care services ($4,505 vs. $1,774).  Average total out-of-pocket spending also rises with the number of functional impairments and chronic conditions beneficiaries have, and is especially high among those with three or more limitations in activities of daily living

The types of medical services beneficiaries use leads to large differences in average total out-of-pocket spending; in particular, being hospitalized and using post-acute skilled nursing facility services.  Being hospitalized leads to higher total out-of-pocket spending, on average, compared to those without an inpatient hospital stay

7

.  In 2010, roughly one in five Medicare beneficiaries experienced an inpatient hospital stay; those with one inpatient stay had average total out-of-pocket spending more than 50 percent higher than those without a hospital stay ($6,458 vs. $4,202) and their spending on services was twice as high, on average ($4,475 vs. $2,199).  Those with two or more inpatient stays spent nearly twice as much in total as those without a hospital stay, on average ($8,053 vs. $4,202) and their average spending on services was nearly three times as much ($6,216 vs. $2,199).  Patients with a hospital readmission within 30 days in 2010 spent on average roughly $1,200 more on services than those with only one inpatient stay ($5,687 vs. $4,475, respectively), including higher spending for medical providers/supplies, inpatient services, and skilled nursing facility services

Among Medicare beneficiaries with an inpatient hospital stay, skilled nursing facility users spend substantially more out of pocket than others, on average, particularly long-term care facility residents.  Among beneficiaries who were hospitalized in 2010, those who received post-acute care in a SNF had significantly higher total out-of-pocket spending than those who were discharged without SNF care ($11,434 vs. $5,574, respectively, on average); their spending on medical and long-term care services was 2.5 times greater ($9,508 vs. $3,645); these average amounts were even larger for long-term care facility residents with an inpatient stay and post-acute SNF care

9

.  For this group, out-of-pocket spending on SNF services among those with a hospital stay and SNF care averaged $4,258 in 2010, seven times greater than average SNF spending among community residents ($595)

Whether beneficiaries live in the community or in long-term care facilities produces significant differences in the average amount spent out of pocket on services and where those dollars go.  Community residents spent $1,858 out of pocket in 2010 on medical and long-term care services, on average, while long-term care facility residents spent $17,534 on average.  For the majority of Medicare beneficiaries who lived in the community in 2010, medical providers/supplies accounted for just over one-third of average out-of-pocket service spending ($647), followed by prescription drugs ($542) and dental services ($320)

11

.  For the six percent of beneficiaries who were long-term care facility residents in 2010, the largest component of average out-of-pocket service spending was long-term care facility costs ($14,474)—which is not surprising, given the high cost of long-term care

The use of dental services and out-of-pocket spending on dental care varies among beneficiaries.  Although dental services are not covered by Medicare, people continue to need and use dental care as they age.  However, less than a quarter of those in poor health reported visiting a dentist in 2010, and they spent far less on dental care than beneficiaries in better health

14

.  Average out-of-pocket spending on dental services was highest among beneficiaries in excellent health—a majority of whom (57%) visited a dentist in 2010—and five times higher than those in poor health ($538 vs. $111, respectively).

While premiums for Medicare and supplemental insurance are a significant component of total out-of-pocket spending by Medicare beneficiaries, our analysis shows less variation across different groups of beneficiaries in out-of-pocket costs for premiums than for services; premiums do vary, however, by age, income, and supplemental coverage.  Among beneficiaries ages 65 and older, there is little variation in premiums by age group, while beneficiaries under age 65 with disabilities pay lower premiums than older beneficiaries

2

.  This is most likely related to the fact that a relatively large share of Medicare beneficiaries under age 65 is also covered by Medicaid and thus not liable for premiums.  Average premiums are generally similar for beneficiaries with incomes above $20,000, but lower for beneficiaries with lower incomes, most likely due to three factors: 1) lower-income beneficiaries with Medicaid typically do not pay premiums; 2) lower-income beneficiaries with full Medicaid benefits have little need for supplemental coverage; and 3) lower-income beneficiaries without Medicaid may not be able to afford supplemental insurance

Beneficiaries with Medigap supplemental policies pay higher premiums than those with employer-sponsored retiree health coverage, while those with Medicaid pay significantly lower premiums, on average.  In 2010, beneficiaries with Medigap supplemental insurance policies paid more in supplemental insurance premiums than beneficiaries with employer-sponsored retiree health insurance, on average ($2,166 and $1,335, respectively)

16

.  Supplemental insurance premiums accounted for more than one-third of average total out-of-pocket spending by Medigap policyholders.  Medicare beneficiaries enrolled in Medicaid face lower out-of-pocket costs if they are full-year enrollees or community residents, and higher costs if they are part-year enrollees or long-term care facility residents

While the average person in traditional Medicare spent $4,734 out of pocket on medical and long-term care services and premiums in 2010, one-fourth of beneficiaries spent at least $5,244 out of pocket on services and premiums (the top quartile), and one in ten spent at least $8,235 (the top decile) that year

1

.  In 2010, total out-of-pocket spending among beneficiaries in the top quartile of spenders averaged $11,530, 2.7 times average spending by beneficiaries in the third quartile ($4,223) and more than 16 times that of beneficiaries in the bottom quartile ($712)

A greater share of some groups of beneficiaries than others are high out-of-pocket spenders.  Perhaps not surprisingly, this includes the vast majority of Medicare beneficiaries who live in long-term care facilities, 70 percent of whom are in the top quartile of out-of-pocket spending on services and premiums

3

.  Overall, a greater share of older beneficiaries than younger beneficiaries are high out-of-pocket spenders, with more than one-third (38%) of beneficiaries ages 85 and older in the top quartile of total out-of-pocket spending

Among beneficiaries ages 85 and older, a greater share of women than men are high out-of-pocket spenders, with 41 percent of women ages 85 and older in the top quartile compared to 33 percent of older men

5

.  These differences are attenuated but not eliminated when looking at out-of-pocket spending among community residents only; for example, 34 percent of women ages 85 and older living in the community are in the top quartile of total out-of-pocket spending compared to 31 percent of older men (data not shown).

Just as average total out-of-pocket spending increases with the number of functional limitations and chronic conditions, the share of beneficiaries who are high out-of-pocket spenders increases with the number of functional limitations and chronic conditions.  In 2010, 41 percent of beneficiaries with three or more limitations in activities of daily living (ADLs) were among the top quartile of spenders, compared to only 20 percent of those without any ADLs or IADLs

6

.  Nearly one-third (32%) of beneficiaries with five or more chronic conditions were in the top quartile of spending, compared to one-fifth of those with one or two chronic conditions.  A greater share of beneficiaries with certain conditions are high out-of-pocket spenders; this includes more than four in ten beneficiaries with Alzheimer’s and end-stage renal disease (ESRD) in the top quartile of out-of-pocket spending, and roughly one-third of beneficiaries with certain other conditions.  At least one in five beneficiaries with Parkinson’s disease, Alzheimer’s disease, and ESRD are in the top decile of out-of-pocket spending

The share of Medicare beneficiaries in the top quartile and top decile of total out-of-pocket spending increases with the number of hospitalizations and skilled nursing facility (SNF) use.  More than one-third (38%) of beneficiaries with one inpatient hospital stay were in the top quartile of total out-of-pocket spending in 2010, while 45 percent of beneficiaries with two or more hospitalizations and over half (54%) of beneficiaries with an inpatient stay and a SNF stay were in the top quartile of total out-of-pocket spending (this latter group may include beneficiaries in the first two groups)

8

.

Medicare beneficiaries’ average total out-of-pocket spending, including services and premiums, increased by nearly $1,500 between 2000 and 2010.  On average, beneficiaries in traditional Medicare spent $1,500 more (a 44 percent increase) on their total out-of-pocket costs (including services and premiums) in 2010 than in 2000 ($4,734 vs. $3,293, respectively)

1

.  Average out-of-pocket spending on medical and long-term care services increased by 27 percent between 2000 and 2010 (from $2,161 to $2,744), while average out-of-pocket spending on Medicare and other premiums increased by 76 percent (from $1,132 to $1,989).

Between 2000 and 2010, total out-of-pocket costs increased at an average annual growth rate of 3.7 percent; the average annual growth rate between 2000 and 2010 was higher for premiums (5.8%) than for services (2.4%)

2

 and

While average total out-of-pocket spending increased between 2000 and 2010, the annual rate of growth in spending trended downward after 2006.  The annual rate of growth in average total out-of-pocket spending fluctuated over the years between 2000 and 2010, but trended down in the latter part of the decade

2

.  Total out-of-pocket spending among beneficiaries in traditional Medicare increased at an average annual rate of growth of 5.0 percent between 2000 and 2006, but this growth rate fell to 1.8 percent between 2006 and 2010.

This downward trend in the annual rate of growth in average total out-of-pocket spending also applies to both services and premiums.  Similar to the downward trend in the average annual growth rate for total out-of-pocket spending, we observed slower growth in the separate components of total out-of-pocket spending

3

.  Out-of-pocket spending on services increased at an average annual growth rate of 3.5 percent between 2000 and 2006, but this growth rate dropped to 0.9 percent between 2006 and 2010; for premiums, the average annual growth rate decreased from 7.6 percent between 2000 and 2006 to 3.2 percent between 2006 and 2010.

Among all beneficiaries, average out-of-pocket spending on medical providers/supplies, dental services, and skilled nursing facility services increased more than average spending on other types of services between 2000 and 2010.

4

However, the average annual rate of growth in out-of-pocket spending between 2000 and 2010 was more than three times greater for spending on skilled nursing facilities (17.1%) than the next fastest growing category of spending (inpatient hospital services; 5.2%)

Among users of services, average out-of-pocket spending for most types of services increased between 2000 and 2010.  In 2010, beneficiaries with a skilled nursing facility stay spent five times more on SNF services than those with a SNF stay in 2000 ($2,221 vs. $418, respectively, on average)

6

.  The average number of days associated with SNF stays increased from 28 to 35 over the same period.³   Users of prescription drugs spent somewhat more out of pocket on prescription drugs in 2010 than in 2000, on average—increasing from $510 in 2000 to $580 in 2000, while the average number of prescription drug fills increased from 28 to 42 over these years.⁴   It is likely that the introduction of the Part D prescription drug benefit in 2006 and the shift toward greater use of generic drugs helped to moderate the average out-of-pocket spending increase among prescription drug users, as well as contributing to the growth in the number of prescription fills.

The analysis in this chartbook is based on data from the Centers for Medicare & Medicaid Services (CMS) Medicare Current Beneficiary Survey (MCBS) Cost and Use file, 2000-2010 (the most recent year available).  The MCBS is a survey of a nationally-representative sample of the Medicare population, including both aged and disabled enrollees who are living in the community as well as facility residents.  The Cost and Use file integrates survey information reported directly by beneficiaries with Medicare administrative data.  Survey-reported data includes the demographics of respondents, such as sex, age, race, living arrangements, income, health status, and physical functioning, the use and costs of health care services, and supplementary health insurance arrangements.  The survey also collects information on inpatient and outpatient hospital care, physician and other medical provider services, home health services, durable medical equipment, long-term and skilled nursing facility services, hospice services, dental services, and prescription drugs.  Survey-reported information is matched to and supplemented by administrative records and billing and claims-level data when possible.  Extensive efforts are made to verify the accuracy of survey reports and to reconcile discrepancies using administrative bill data to produce a more complete and reliable dataset.

At present, however, this reconciliation process is not possible for beneficiaries enrolled in Medicare Advantage plans, because Medicare Advantage plans were not required to report encounter data to CMS until recently.  Because the 2010 MCBS does not include reliable utilization and out-of-pocket spending data for beneficiaries in Medicare Advantage plans, to include this population would introduce significant bias associated with underreporting of events and spending for Medicare Advantage enrollees.  Therefore, our analysis excludes these beneficiaries, totaling 10.8 million or 22 percent of the 48.4 million Medicare beneficiaries represented in the 2010 MCBS.  Our analysis is limited to beneficiaries enrolled in traditional Medicare only, representing 78 percent of all Medicare beneficiaries in 2010.

Out-of-pocket spending for medical and long-term care services reported in the MCBS is not the same as beneficiary liability or the Medicare cost-sharing amount for services used.  Instead, out-of-pocket spending amounts are net of payments by any third-party payers, such as payments by Medicaid, Medigap, or employer-sponsored insurance.  Survey-reported out-of-pocket payments are those payments made by the beneficiary or their family, including direct cash payments or in the form of Social Security or Supplemental Security Income (SSI) checks to a nursing home.  Out-of-pocket spending on premiums is derived from administrative data on Medicare Part A and Part B premiums paid by each sample person along with survey-reported estimates of premium spending for other types of health insurance beneficiaries may have (including Medigap, employer-sponsored insurance, and other public and private sources).

To estimate total out-of-pocket spending per beneficiary in traditional Medicare, we calculate for each sample person aggregate estimates of out-of-pocket spending on both insurance premiums for Medicare Parts A and B and supplemental insurance coverage and medical and long-term care services reported in the MCBS.  These amounts are averaged across the entire sample of traditional Medicare beneficiaries and weighted to be representative of the traditional Medicare beneficiary population or specific subgroups of beneficiaries.  For analysis of high out-of-pocket spending, we divide total out-of-pocket spending by traditional Medicare beneficiaries into quartiles and deciles, and estimate the share of beneficiaries overall and by subgroup who have spending in the top quartile and top decile of total out-of-pocket spending.

The medical and long-term care services included in this analysis are:

• Dental services: Includes cleaning, x-rays, repair, purchase or repair of dentures, and orthodontic procedures.  The basic unit measuring use of these services is a single visit to the dentist, where a variety of services might be rendered.
• Home health:  Includes home health visits by professionals (nurses, doctors, social workers, therapists, and hospice workers) or friends (persons who do not live with the beneficiary, but help the beneficiary at home with personal care or other daily needs; these persons may be home health aides, homemakers, friends, neighbors or relatives).
• Inpatient hospital services: Includes inpatient hospital stays, including emergency room visits which result in an inpatient admission.  The basic unit measuring use of inpatient hospital services is a single admission.
• Long-term care facility services:  Includes individual long-term care facility events; a long-term care facility is defined as having three or more beds and providing long-term care services throughout the facility or in a separately identifiable unit.  Types of facilities participating in the survey include nursing homes, retirement homes, domiciliary or personal care facilities, distinct long-term units in a hospital complex, mental health facilities and centers, assisted and foster care homes, and institutions for the mentally retarded and developmentally disabled.  The basic unit measuring use of long-term care facility services is a “stay” in a nursing home or other long-term care facility.  Stays are measured in terms of days of residence in that facility.
• Medical providers/supplies:  Includes medical doctor and practitioner visits; diagnostic laboratory and radiology; medical and surgical services; and durable medical equipment and non-durable supplies, such as eyeglasses or contact lenses and hearing aids, orthopedic items such as canes, walkers, wheelchairs and corrective shoes, diabetic supplies, oxygen supplies and equipment.  Types of practitioners include chiropractors, podiatrists, audiologists and optometrists; mental health professionals such as psychiatrists, psychologists and clinical social workers; therapists such as physical therapists, speech therapists, occupational therapists, and intravenous and respiratory therapists; other medical practitioners such as nurses and paramedics; and other places offering medical care, such as clinics, neighborhood health centers, infirmaries and urgent care centers.  The basic unit measuring use of these services is a separate visit, procedure, service, or a supplied item for a survey reported event.
• Outpatient hospital services:  Includes outpatient visits to the outpatient department or outpatient clinic of a hospital, as well as emergency room visits that do not result in a hospital admission.  The basic unit measuring use of outpatient services is a separate visit to any part of the outpatient department for a survey-reported event.
• Prescription drugs:  Includes individual outpatient prescribed medicine events, including drugs provided to enrollees in Medicare Part D drug plans; excludes prescription medicines provided by the doctor or practitioner as samples and those provided in an inpatient setting.  The basic unit measuring use of prescription drugs is a single purchase of a single drug in a single container.
• Skilled nursing facility services:  Includes short-term institutional stays, such as skilled nursing home stays or rehabilitation hospital stays; excludes inpatient hospital admissions and long-term care facility stays.  The basic unit measuring use of these services is an admission.

There is one important limitation in the data related to home health care.  The home health use and payment records in the MCBS Cost and Use file are designed to represent events where medical care, as opposed to personal care and support, was furnished to the sample person.  This exclusion of personal care services and supports is deliberate, since the MCBS is intended to capture medical service use and spending of Medicare covered and non-covered services.  Therefore, any out-of-pocket spending on personal care and support delivered in the home or the value of unpaid personal care and support services is not included in the out-of-pocket spending estimate for home health services.  For some beneficiaries, this would produce a lower estimate of their total out-of-pocket spending for home-based care, but we are not able to estimate the magnitude of this effect.

1. Gretchen Jacobson, Jennifer Huang, Tricia Neuman, and Karen Smith, “Income and Assets of Medicare Beneficiaries, 2013-2030,” Kaiser Family Foundation, January 2014, https://modern.kff.org/medicare/issue-brief/income-and-assets-of-medicare-beneficiaries-2013-2030/. ↩︎
2. Juliette Cubanski, Christina Swoope, Anthony Damico, and Tricia Neuman, “Health Care on a Budget: The Financial Burden of Health Spending by Medicare Households,” Kaiser Family Foundation, January 2014, https://modern.kff.org/medicare/issue-brief/health-care-on-a-budget-the-financial-burden-of-health-spending-by-medicare-households/; Tricia Neuman, Juliette Cubanski, Jennifer Huang, and Anthony Damico, “How Much Skin in the Game is Enough? The Financial Burden of Health Spending for People on Medicare, Kaiser Family Foundation, May 2011, https://modern.kff.org/medicare/report/how-much-skin-in-the-game-is-enough-the-financial-burden-of-health-spending-for-people-on-medicare/; Tricia Neuman, Juliette Cubanski, and Anthony Damico, “Revisiting ‘Skin in the Game’ Among Medicare Beneficiaries,” February 2009, Kaiser Family Foundation, https://modern.kff.org/medicare/revisiting-skin-in-the-game-among-medicare/; Tricia Neuman, Juliette Cubanski, Katherine Desmond, and Tom Rice, “How Much Skin in the Game Do Medicare Beneficiaries Have? The Increasing Financial Burden of Health Care Spending, 1997-2003,” Health Affairs, November/December 2007, https://modern.kff.org/health-costs/issue-brief/how-much-skin-in-the-game-do-medicare-beneficiaries-have-the-increasing-financial-burden-of-health-care-spending-1997-2003/. ↩︎
3. Kaiser Family Foundation analysis of the Medicare Current Beneficiary Survey 2010 Cost & Use file. ↩︎
4. Kaiser Family Foundation analysis of the Medicare Current Beneficiary Survey 2010 Cost & Use file. ↩︎

Enrollment in the new state demonstrations to integrate care and align financing for beneficiaries dually eligible for Medicare and Medicaid is underway, and there is considerable interest in the demonstration evaluation plans among federal and state policymakers, beneficiaries, and other stakeholders.  The demonstrations are being implemented under new authority, Section 1115A of the Social Security Act, which was added by the Affordable Care Act and authorizes the Health and Human Services Secretary to expand the duration and scope of demonstration models, including nationwide, that are expected to reduce program spending without reducing care quality or improve patient care without increasing spending.  This issue brief describes the Centers for Medicare and Medicaid Services’ plan to evaluate the demonstrations, via its contract with RTI International.

• The evaluation will include both qualitative and quantitative methods.  Qualitative information will be based on site visits, including interviews with state staff; beneficiary focus groups; and stakeholder interviews.  Quantitative information will be based on implementation tracking data reported by states and analysis of claims, encounter, quality, utilization, and cost data.  Each state’s demonstration will have a comparison group of similar beneficiaries unaffected by the demonstration.  The evaluation will not include a beneficiary survey.
• The evaluation will profile each state’s care delivery system prior to the demonstration, identify key elements that the state’s demonstration intends to change, and measure the effects of any changes.  It will describe major demonstration design features in each state and compare those features across demonstration states.  Other areas of focus in the evaluation include beneficiary experience, utilization and access to care, quality of care, costs, subpopulations and health disparities.
• The evaluation results will be reported at regular intervals.  The evaluation plan calls for state-specific initial (based on the first six months of implementation), quarterly, annual, and final reports, as well as an aggregate final evaluation report.  While the law requires the evaluation results to be publicly available, the evaluation plan does not specify which of these reports will be released publicly or when.

The evaluation plan acknowledges that the analysis may be limited by the quality and availability of claims and encounter data.  As the evaluation progresses, it will be important for timely results and reports to be publicly available to promote broad discussion of the demonstrations’ successes and challenges.

Enrollment in the new state demonstrations to integrate care and align financing for beneficiaries dually eligible for Medicare and Medicaid is underway.¹   As of July 2014, beneficiaries in five states (California, Illinois, Massachusetts, Ohio, and Virginia) are participating in capitated demonstrations, to be followed by five more states (Michigan, New York, South Carolina, Texas, and Washington) in the coming months.   For the last year, beneficiaries have been enrolled in Washington’s a managed fee-for-service (FFS) model, with enrollment soon to be effective in another managed FFS demonstration in Colorado.The demonstrations are being implemented under new authority, Section 1115A of the Social Security Act, which was added by the Affordable Care Act.  Section 1115A requires the Health and Human Services Secretary to evaluate the demonstrations, and the Centers for Medicare and Medicaid Services (CMS) has contracted with RTI International to do so.  RTI will use qualitative and quantitative methods to evaluate the demonstrations overall as well as each state’s model.²    RTI’s work is in addition to any evaluations that individual states are undertaking.³ There is considerable interest in the demonstration evaluation plans among federal and state policymakers, beneficiaries, and other stakeholders.  The demonstrations will affect some of the most vulnerable beneficiaries, among the poorest and sickest covered by Medicare or Medicaid, while the predominant pre-existing service delivery models for this population typically involved little to no coordination between the two programs.  In addition, the Secretary is authorized to expand the duration and scope of tested models, including on a nationwide basis, that are expected to reduce program spending without reducing care quality or improve patient care without increasing spending.  This issue brief describes CMS’s plan to evaluate the demonstrations, via its contract with RTI, in the areas of implementation, beneficiary experience, utilization and access to care, quality of care, cost, and health disparities among subpopulations, including the specific research questions identified for each area.  Details about individual state demonstration evaluations are included to the extent available.⁴ 

 

Key Questions

1. What does the law require the Secretary’s evaluation of the demonstrations to include?

Section 1115A requires the demonstration evaluation to assess the quality of care provided, including patient level outcomes and “patient-centeredness” criteria, and changes in Medicare and Medicaid spending.⁵   The Secretary can require states and other entities participating in the demonstrations to collect and report information necessary for monitoring and evaluation purposes.⁶   Section 1115A also directs the Secretary, to the extent feasible and based on input from multi-stakeholder groups, to select measures reflecting national priorities for quality improvement and patient-centered care.⁷   Finally, the law requires that the evaluation results be publicly available “in a timely fashion.”⁸ 

2. Which research methods will RTI use to evaluate the demonstrations?

RTI will use a combination of qualitative and quantitative methods in its evaluation, including:

Site visits:  Two-person teams will make at least two site visits to each state.  The first site visit will be within six months of the beginning of demonstration enrollment.  RTI’s evaluation plan includes a site visit interview protocol for interviews with state demonstration staff.

Focus groups:  Four focus groups of eight to 10 people each will be conducted in each state. Focus group participants will include beneficiaries, family members and informal caregivers.  RTI and CMS will determine the timing for focus groups and decide whether to conduct any focus groups in languages other than English.  If there appears to be high initial rates of opt out or disenrollment in some states, RTI will consider conducting focus groups with beneficiaries who have made those choices to better understand their decisions.  The evaluation plan includes a preliminary focus group outline.

Stakeholder interviews:  Interviews will be conducted quarterly by phone or in-person during site visits.  There will be up to eight telephone interviews in each state within six months of demonstration implementation and up to eight in-person or telephone interviews in each state per demonstration year.  The evaluation plan includes an interview outline for one-hour, one-on-one interviews to assess beneficiary experience in the demonstrations.

Interview participants will include representatives from:

• beneficiary and advocacy groups;
• the state implementation council;
• the CMS-state joint contract management team, state officials, and key demonstration staff;
• health plans and  health or medical home providers;
• entities providing enrollment options counseling to beneficiaries; and
• the demonstration ombuds program.

State data reporting system:  RTI will collect approximately 130 data elements on an aggregate (not beneficiary) level as part of the evaluation.  The evaluation plan highlights complaints, grievances and appeals; disenrollment and opt out rates; information about waiting lists or lags in accessing services; and the rate of change in primary care provider assignment as data “of particular interest.”  There are three components to the data collection:

A. Model summary:  RTI will prepare a summary of each state’s demonstration, consisting of 21 static data elements, based on the state’s MOU with CMS..B. Implementation tracking data: States will report quarterly on 45 data elements, with the first quarter beginning on the day of implementation.  These data include progress indicators (numerical data reported in monthly increments) and tracking elements by design feature (yes/no responses and brief text descriptions about demonstration progress, successes, and challenges during the quarter)..1. Progress indicators include the number of beneficiaries eligible to participate in the demonstration; currently enrolled; passively enrolled; who opted out prior to enrollment; who voluntarily disenrolled; and whose enrollment ended (e.g., death, loss of eligibility).  They also include the demonstration service area; number of 3-way contracts with plans; new CMS initiatives that may affect dual eligible beneficiaries in the demonstration area; and the number of health or medical homes participating in the demonstration and number of enrollees these entities serve (if applicable)..2. Tracking elements include new state policies or procedures to improve service integration; changes in reporting requirements; training or capacity-building activities for plans and providers, including primary care; new policies or procedures regarding care coordination or electronic health records; new or expanded demonstration benefits; activities to increase beneficiary enrollment; major challenges or issues in implementation and solutions developed; activities to engage stakeholders, enrollees, families or advocates in policy development or oversight; tracking and receiving data from plans and providers on new quality indicators; changes in payment methodology for plans and providers; timing of state’s most recent Medicaid Statistical Information Systems (MSIS) submissions; whether plans experienced any problems submitting encounter data; and other successes related to the demonstration..C. Demonstration impact and outcomes:  RTI’s analysis of claims, encounter and assessment data on quality, utilization and cost measures will yield 40 to 50 numerical data fields, updated quarterly.  Sources will include MSIS and Medicare FFS claims data, Medicaid managed care organization (MCO) and Medicare Advantage plan encounter data, and the Nursing Home Minimum Data Set (MDS)..

3. How will the quantitative analysis in the evaluation be structured?

Comparison group:  RTI’s quantitative analysis for the evaluation will use an “intent-to-treat” approach, comparing beneficiaries eligible for each state’s demonstration with a similar population of beneficiaries who are unaffected by the demonstration.  All eligible beneficiaries will be included in the demonstration group, regardless of whether they actively participate.  The geographic area from which the comparison group will be drawn will be determined based on how it compares with the demonstration area in terms of population characteristics (e.g., age, income, race/ethnicity); market characteristics, such as provider supply; the size of the population meeting the demonstration’s eligibility criteria; Medicare and Medicaid spending per dual eligible beneficiary; the shares of long-term services and supports (LTSS) delivered in facility and community-based settings; and the extent of Medicare and Medicaid managed care penetration.

RTI will first consider whether it is possible to use an in-state comparison group for each state’s demonstration.  If a demonstration is statewide or if the excluded regions of a state are not representative of the areas included in the demonstration, the comparison group will be out-of-state or possibly a combination of in- and out-of-state beneficiaries.  Because all or most of their dual eligible population will be included in their demonstrations, Washington and, most likely, Massachusetts will have out-of-state comparison groups, while RTI will consider in-state comparison groups for Illinois, Ohio, and Virginia.  The comparison group geographic areas will be determined within the first year of demonstration implementation, while the comparison group members will be determined retrospectively at the end of each demonstration year.

Claims data:  RTI will analyze available Medicare and Medicaid data quarterly for selected quality, utilization, access to care, and cost measures and Nursing Home MDS data for facility admissions.  The analysis for each state’s demonstration and comparison groups will include a two year pre-demonstration baseline period and each demonstration year.  RTI’s evaluation plan notes that as of August 2013, about one-third of potential demonstration and comparison group states had not yet submitted MSIS data for the second quarter of FY2012, meaning that claims data lagged more than one year.  Ideally for RTI’s evaluation, MSIS data will be finalized within four to six months after the end of each quarter.

Encounter data:  RTI also notes the evaluation’s need for encounter data from Medicare Advantage plans, non-demonstration-related Medicaid MCOs, and demonstration health plans in areas such as patient diagnosis, service intensity (brief vs. comprehensive visits), type of visit (preventive vs. treatment), ancillary services, and facility changes.  Data also will be assessed for changes in coding patterns, given that capitated payments may be affected by coding intensity.  RTI notes that the quality of encounter data is not yet known, Medicare Advantage plans have up to one year from the service date to submit data, and Medicaid managed care data is expected to vary by state.  Consequently, the evaluation may be limited if data is incomplete or unavailable on a timely basis.

Beneficiary surveys:  RTI will not conduct beneficiary surveys as part of its evaluation; however, RTI asks that findings from any surveys fielded by states, CMS, or other entities be shared for inclusion in the evaluation.  Health plans in the demonstration must participate in the Medicare Health Outcomes Survey (HOS) and report Healthcare Effectiveness Data and Information Set (HEDIS) measures and the Medicare Consumer Assessment of Health Care Providers and Systems (CAHPS) survey.  In addition, CMS’s demonstration operations support contractor will administer a beneficiary CAHPS survey in the managed FFS states.  RTI notes that ideally all surveys would use a standard instrument and believes that the CAHPS instrument for assessing patient-centered medical homes seems most appropriate.

Research questions related to quantitative analysis:

• Which demonstration model (managed FFS or capitated) has achieved greater savings?
• Are there differences in key outcomes (e.g., quality, utilization, expenditure types) that can be attributed to the type of financial alignment model used?
• Do the effects achieved by alternative integrated care models occur equally fast?  Or, does one model (managed FFS or capitated) achieve gains more quickly than the other?
• Does the approach to enrollment (e.g., passive) affect access to care and costs?
• How does the relative degree of care management intensity and diversity across services affect outcomes?
• Do these effects vary across subgroups of beneficiaries?

4. What evaluation reports will RTI produce for CMS and on what timeframe?

RTI’s evaluation reports will include:

State-specific initial reports, which will be qualitative and based on the first six months of implementation;

Quarterly reports for CMS and states’ ongoing demonstration monitoring, with preliminary information on enrollment, disenrollment, quality, utilization, and cost measures;

Annual reports, which will include descriptive statistics for each state’s demonstration and comparison group with estimates for beneficiary experience, utilization, access to care, cost, and quality measures.  Changes in measures across years or subgroups within years will be noted (e.g., total costs (for Medicare and Medicaid separately), rates of primary and specialist care use, rates of avoidable hospitalizations and inappropriate readmissions, counts of hospital and nursing facility admissions and length of stay, rates of home and community-based services (HCBS) use, and mortality);

Final aggregate evaluation report, which will seek to determine the relative effectiveness of states’ demonstration design choices and study sources of variation at the state level; and

Final evaluation reports for each state, which will assess the demonstration’s overall impact on quality, utilization and cost measures relative to the comparison group.

While the law requires the evaluation results to be publicly available, the evaluation plan does not specify which of these reports will be released publicly.

5. How will demonstration implementation be evaluated?

RTI will profile each state’s care delivery system prior to the demonstration, identify key elements that the state’s demonstration intends to change, and measure the effects of any changes.  The evaluation will describe major demonstration design features in each state and compare those features across demonstration states.  The design features also will be used to identify demonstration characteristics associated with better outcomes in the quality, utilization, access to care, and cost analyses (described below).

The evaluation will examine how care coordination in the demonstration is structured, how prescriptive the state is in setting care coordination expectations in health plan contracts, how demonstration care coordination compares with that in other capitated programs serving other populations, and whether care coordination is person-centered.  If possible, the evaluation will categorize the intensity and scope of mandated care coordination functions across all demonstration states.  Information to evaluate demonstration implementation will be gathered from document review, stakeholder interviews, and state-reported data.

Demonstration Design Features to be examined:

• The demonstration’s integrated delivery system (e.g., primary care, including medical or health homes; LTSS; behavioral health; developmental disability services);
• Integrated delivery system supports (e.g., care team composition; use of health information technology at the state, provider, and plan level);
• Care coordination/case management (e.g., assessment, service planning, and care management stratification processes);
• Benefits and services (e.g., scope, new or enhanced);
• Enrollment and access to care (e.g., integrated enrollment and care access; provider accessibility standards; opt out, disenrollment, and auto-assignment policies);
• Beneficiary engagement and protections (e.g., state policies to integrate Medicare and Medicaid grievances and appeals, quality management systems); and
• Financing and payment elements (e.g., financing model, incentives, shared savings).

Research questions related to implementation:

• What are the primary features of each state demonstration and how do they differ from the state’s previous system available to the demonstration-eligible population?
• To what extent did each state implement the demonstration as proposed?
• Which states were able to fully implement their intended proposals?
• Were certain models more easily implemented than others?
• Were the demonstrations more easily implemented for certain subgroups?
• What factors contributed to successful implementation?
• What were the barriers to implementation?
• How have beneficiaries participated in the ongoing implementation and monitoring of the demonstrations?
• What strategies used or challenges encountered by each state can inform adaptation or replication by other states?

6. How will beneficiary experience be evaluated?

RTI’s evaluation of beneficiary experience in the demonstrations will include impact on quality of life, health outcomes, access to needed services, service integration and coordination across settings and delivery systems, provider choice, beneficiary rights and protections, and the delivery of person-centered care.  Data to evaluate beneficiary experience include beneficiary focus groups; stakeholder interviews; monitoring of beneficiary engagement activities, grievances and appeals, and feedback from demonstration ombuds programs; claims data analysis on key quality, utilization and access to care measures; and the results of any beneficiary surveys performed by states, CMS or other entities.  Focus groups and stakeholder interviews to assess beneficiary experience will include beneficiaries, relatives, and advocates but not service providers or anyone who oversees the demonstration.

Research questions related to beneficiary experience:

• What impact do these demonstrations have on beneficiary experience overall, by state, and for beneficiary subgroups?
• What factors influence the beneficiary enrollment decision?
• Do beneficiaries perceive improvements in their ability to find needed health services?
• Do beneficiaries perceive improvements in their choice of care options, including self-direction?
• Do beneficiaries perceive improvements in how care is delivered?
• Do beneficiaries perceive improvements in their personal health outcomes?
• Do beneficiaries perceive improvements in their quality of life?

7. How will utilization and access to care be evaluated?

RTI will analyze the pre-demonstration (two years prior to implementation) and annual utilization rates during the demonstration of Medicare and Medicaid-covered services in each state to determine the demonstration’s effects on type and level of service use, ranging along a continuum from facility-based to home-based care.  The evaluation also will calculate the average utilization rates for the pre-demonstration period and at the beginning, middle, and end of the demonstration.  Utilization rates for each state will be stratified by hierarchical condition categories scores or health status measures.  Nearly all utilization analyses will be conducted at the beneficiary level.

RTI also will analyze patterns of primary vs. specialty care use, hypothesizing that primary care physicians will provide an increasingly higher proportion of visits in the demonstration group relative to the comparison group over time, unless non-visit compensation is provided to physicians in the comparison group.  This analysis will account for the fact that specialists may provide primary care for people with chronic conditions.  RTI also will explore measures to assess fragmentation of care for behavioral health and LTSS.  RTI notes that the utilization and access to care analysis may be limited by potential problems with encounter data, lack of care coordination data, and incomplete behavioral health services data.

The evaluation of utilization and access to care in Massachusetts’ demonstration will include a focus on mental health and substance use disorder prevention and treatment services; community support services; and dental, vision, and non-medical transportation services, which the demonstration is expanding.

Research questions related to Utilization:

• What is the impact of the state demonstrations on utilization patterns during the course of the demonstration?
• What is the impact on hospital and nursing facility admission rates, potentially avoidable hospitalization utilization rates by setting, and LTSS utilization rates?  What is the impact of the demonstration on hospital and nursing facility length of stay?
• Do demonstrations change the balance between HCBS and nursing facility use, the types of enrollees who use these services, and utilization rates by type of HCBS such as personal care?  Do enrollees receive more HCBS as a result of the demonstrations?
• Is any impact short term (lasting for only one year prior to returning to pre-demonstration level, increasing over time, reaching a plateau after a year or two)?
• Does the observed impact vary by health condition or other beneficiary characteristics?
• Will case management or care coordination lead to lower hospital admission rates or, if admitted, shorter lengths of stay and shorter nursing facility and home health care episodes?
• Are demonstration group members using fewer inpatient services and more ambulatory services?
• Is the impact greater for more medically complex (multiple chronic condition), high cost (top 10%) enrollees?

Research questions related to Access to Care:

• Do demonstration participants experience increases in the mean number of primary care visits and increased visit rates by specialty type?
• Does acuity on admission to nursing facilities increase?  Do discharge rates back to the community from nursing facilities increase?  Is there an increase in the proportion of HCBS users self-directing care?
• Does the mental health outpatient utilization rate increase?  Does the outpatient substance use disorder service utilization rate increase?

8. How will quality of care be evaluated?

RTI’s evaluation will analyze a set of quality measures common to all demonstration states (listed below).⁹   Many are HEDIS measures that demonstration health plans must report, although similar reporting is not required in the comparison states, with the result that these data will not exist for beneficiaries outside of the demonstration.  In addition, state-specific quality measures will be finalized within six months of implementation.  The evaluation plan calls for rapid-cycle monitoring, although the timeliness of encounter data submission by health plans is not yet known.  RTI also will develop variables to control for observable differences between individual beneficiaries, both within the demonstration group and between the demonstration and comparison groups; at minimum, these will include demographic information, such as age, race, and sex.  The quality measures listed below will be supplemented with information about beneficiary quality of life, satisfaction, and access to care (described above) and any relevant available beneficiary survey information.

Evaluation Quality Measures:

• 30-day all-cause risk-standardized readmission rate
• Influenza immunization
• Pneumococcal vaccination for beneficiaries age 65 and older
• Ambulatory care sensitive condition admissions – overall composite
• Ambulatory care sensitive condition admissions – chronic composite
• Preventable emergency department visits
• Emergency department visits, excluding those resulting in inpatient admission or death
• Admissions with primary diagnosis of severe and persistent mental illness or substance use disorder
• Follow-up after hospitalization for mental illness
• Screening for clinical depression and follow-up
• Cardiac rehabilitation following hospitalization for cardiac event
• Percent of high-risk long-stay nursing facility residents with pressure ulcers
• Screening for fall risk
• Initiation and engagement of alcohol and other drug dependence treatment
• Adult body mass index assessment
• Annual monitoring for patients on persistent medications
• Antidepressant medication management
• Breast cancer screening
• Comprehensive diabetes care – selected components
• Controlling high blood pressure

9. How will cost be evaluated?

RTI’s evaluation will identify high-level cost measures that can be calculated for all states to monitor changes in cost over time.  RTI notes that the evaluation will use a regression-based approach to determine cost savings, which will provide information about how various factors relate to costs. ¹⁰   In the capitated models, costs will include per member per month rates, combined with costs for beneficiaries who opt out or disenroll.  RTI will measure pre-demonstration and annual spending on beneficiaries for both Medicare and Medicaid, although RTI anticipates that only Medicare costs may be available for most states in the first annual report.  In the capitated models, RTI anticipates that service-level spending will not be available from the encounter data reported by health plans so the utilization analysis described above will be the means to understand the demonstration’s impact by type of service.  In its annual reports, RTI will present costs for various subgroups of interest, such as demographic groups, LTSS users, beneficiaries with intellectual/developmental disabilities, those with end-stage renal disease, and those with chronic conditions such as diabetes, and will test for differences across demonstration years.  The final evaluation report will include cost impact analysis using comparison groups.  RTI notes that the availability and timeliness of encounter data will affect the cost analysis.

Research questions related to Cost:

• Do the demonstrations reduce costs?
• If so, how were the demonstrations able to reduce the costs of demonstration enrollees compared with the comparison group?
• How do the demonstrations differentially affect expenditures for beneficiaries at risk for having high costs?

10. How will subpopulations and health disparities be evaluated?

RTI will work with CMS to identify subpopulations to analyze in each state, based on whether the state’s demonstration is targeted to a particular population, the size of subpopulations participating in the demonstration and how they are distributed across states, and how subpopulations can be identified in data sets in the demonstration and comparison groups.  Possible subpopulation groups include racial and ethnic groups, people living in rural or inner-city areas, younger people with disabilities, people age 65 and older, people with serious and persistent mental illness, people with developmental disabilities, people with end-stage renal disease, people with multiple chronic conditions, LTSS users, and high-cost beneficiaries.  The evaluation will not analyze all subpopulations in every state.  Data sources for subpopulation analysis will include beneficiary focus groups and interviews with beneficiaries, state officials, and health plans with large subpopulations.  Questions will include whether health plans refer beneficiaries to community services such as the Supplemental Nutrition Assistance Program and senior centers; have established protocols for treating common medical and non-medical problems among subpopulations; and have procedures to address the needs of people with limited English proficiency; and which features stakeholders believe are most effective in these areas.

Subpopulations of focus in Massachusetts’ demonstration:   people with end-stage renal disease, those receiving behavioral health services, those with chronic physical conditions (estimated to be about 40% of the demonstration eligible population), and those receiving LTSS (including people with developmental disabilities in the community who are not receiving home and community-based wavier services).  Other potential subpopulations in Massachusetts include people in facilities, people with high activities of daily living needs living in the community, and people with high behavioral health needs living in the community.  RTI will compare characteristics of people who enroll in the demonstration with those who are eligible but do not enroll.

Subpopulations of Focus in Washington’s managed FFS demonstration:  eligible beneficiaries who receive different levels of health home services, ranging from no to intensive use.  Groups also will be divided based on amount of time enrolled in a health home.

Research questions related to Subpopulations and Health Disparities:

• How do the demonstrations, as implemented by the different states, address the unique needs of subpopulations?  Are there special initiatives designed to meet the needs of these populations (such as special care coordination efforts, new services for people with serious and persistent mental illness, nursing facility diversion programs)?  Do the demonstration states successfully implement what they proposed?  Do the models that focus on subpopulations work better than those that are designed for more general populations?
• Do the demonstrations reduce expenditures and improve beneficiary experience, quality of care, and health outcomes for subpopulations?  What is the effect on service use?
• Do the demonstrations reduce or eliminate undesirable disparities (such as between African Americans and whites) in access to care, beneficiary experience, health care utilization, expenditures, quality of care, and health outcomes?
• To the extent that the demonstrations have positive outcomes for subpopulations, what features of the demonstration account for these outcomes?

Examples of measures for people with behavioral health conditions:  outpatient services; HCBS; new long-term nursing facility admissions for people with serious and persistent mental illness; access to a full range of scheduled and urgent medical and behavioral health care and LTSS; beneficiary reports of improved quality of life as a result of access to a full range of services; beneficiary choice of medical, behavioral health and long-term care services and providers; beneficiary reports on life satisfaction; care coordination assessment processes that integrate medical, behavioral health and LTSS; hospitalizations for people with serious and persistent mental illness, outpatient visits after hospitalizations for mental illness, and the initiation and engagement of alcohol and other drug dependence treatment.

Examples of measures for nursing facility residents: admission rates, acute care utilization (physician visits, hospitalization, emergency room), and cost patterns for short and long-term stays; acuity level in new admissions to evaluate the extent to which the demonstrations are successfully maintaining frail beneficiaries in the community; and selected nursing facility quality measures.  Trends in admissions and quality will be monitored within demonstration and comparison states.

Looking Ahead

As enrollment continues in the financial alignment demonstrations, interest in how these models will be evaluated will remain high.  Federal and state policymakers, health plans, providers, beneficiaries, and other stakeholders will want to know whether and how the demonstrations are achieving their stated goals over the short and long-term.  CMS, through its contract with RTI, has set out its plans to evaluate the demonstrations in a number of areas, including implementation, beneficiary experience, utilization and access to care, quality of care, cost, and health disparities among subpopulations, at the aggregate and state levels.  While the law requires the evaluation results to be publicly available, the evaluation plan does not specify which of the various reports produced will be released publicly.  The evaluation plan also acknowledges that the analyses may be limited by the quality and timeliness of available claims and encounter data.  In addition, there may be areas of interest that the evaluation does not fully assess, such as states’, plans’, and providers’ efforts to make their services, policies, and practices accessible to beneficiaries with disabilities.  CMS’s release of its evaluation plans makes this information available so that stakeholders and the public can better understand how the demonstrations will be measured.  As the evaluation progresses, it will be important for timely results and reports to be publicly available to promote broad discussion of the demonstrations’ successes and challenges among stakeholders.

 

1. For more information about the demonstrations, see Kaiser Commission on Medicaid and the Uninsured, Financial and Administrative Alignment Demonstrations for Dual Eligible Beneficiaries Compared:  States with Memoranda of Understanding Approved by CMS (May 2014), available at https://modern.kff.org/medicaid/issue-brief/financial-alignment-demonstrations-for-dual-eligible-beneficiaries-compared/. ↩︎
2. See RTI International, Measurement, Monitoring, and Evaluation of State Demonstrations to Integration Care for Dual Eligible Individuals, Aggregate Evaluation Plan (Dec. 16, 2013), available at http://www.cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-Medicaid-Coordination-Office/FinancialAlignmentInitiative/Evaluations.html. ↩︎
3. For example, Massachusetts has released preliminary findings from focus groups with beneficiaries who voluntarily enrolled in the demonstration and who opted out of the demonstration.  Mass. Executive Office of Health and Human Services, One Care Early Indicator Project Reports, available at http://www.mass.gov/eohhs/consumer/insurance/one-care/one-care-early-indicators-project-eip-reports.html. ↩︎
4. As of the writing of this issue brief, RTI’s state-specific evaluation plans are available online for Massachusetts (Dec. 23, 2013), Ohio (Jan. 3, 2014), Virginia (April 24, 2014), Illinois (April 28, 2014), and Washington’s managed FFS (May 13, 2014) and capitated (June 3, 2014) models.  See http://www.cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-Medicaid-Coordination-Office/FinancialAlignmentInitiative/Evaluations.html.     ↩︎
5. ACA § 3021(a), adding 42 U.S.C. § 1315a(b)(4)(A). ↩︎
6. Id. adding 42 U.S.C. § 1315a(b)(4)(B). ↩︎
7. Id. adding 42 U.S.C. § 1315a(b)(4)(C). ↩︎
8. Id. adding 42 U.S.C. § 1315a(b)(4)(B). ↩︎
9. For more detail, see RTI International, Measurement, Monitoring, and Evaluation of State Demonstrations to Integration Care for Dual Eligible Individuals, Aggregate Evaluation Plan, Table 18, Quality measures for evaluation:  Detailed definitions, use and specifications (Dec. 16, 2013), available at http://www.cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-Medicaid-Coordination-Office/FinancialAlignmentInitiative/Evaluations.html ↩︎
10. By contrast, an actuarial approach will be used to determine cost savings in managed FFS states, which can be calculated on a faster timeline to determine the performance payments to states after the end of each demonstration year. ↩︎