Automatic enrollment
and state health reform
Stan Dorn
Senior Research
Associate
Urban Institute
202.261.5561
sdorn@ui.urban.org
State Coverage
Initiatives Program
AcademyHealth
Baltimore, MD
May 22, 2007
Overview
1. Enrollment models
2. Applying auto-enrollment to state
coverage reforms
3. Cross-cutting issues
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Preliminary topic:
Why enrollment
matters
If you build it, will they come?
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Why enrollment matters


Necessary to accomplish the goal of coverage
expansion
Cost offsets with eligible but un-enrolled: when
they get sick, they will use services, and the
state will pay
 Different from ineligible uninsured, whose later
illnesses may not become the state’s responsibility

Standard enrollment growth creates political
vulnerability – for example, see next slide
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PRESS RELEASE
The Maine
Heritage
Policy
Center
At one year, Mass.
healthcare plan falls short
By Sally C. Pipes | May 15, 2007
“So one year in, we have a plan that,
even if no more concessions to liberal
advocates are made, falls 20 percent
short of its stated goal.”
Muskie Survey Shows Dirigo’s
Failure and High Cost to Taxpayers
Taxpayers are spending $15 million a year to reach 1,800 uninsured Mainers.
Portland, ME - The Maine Heritage Policy Center today cited the DirigoChoice Member Survey: A Snapshot of
the Program’s Early Adopters, a report prepared by the Muskie School of Public Service, as definitive proof of
the failure of the DirigoChoice health insurance product. The survey reveals that only 1,800 or 22.4% of
DirigoChoice enrollees were uninsured and that the state is spending nearly $8.00 for every $1.00 of savings to
the health care system attributed to providing coverage to those previously uninsured individuals.
“DirigoChoice is a costly failure,” said Tarren Bragdon, director of health reform initiatives for the Maine
Heritage Policy Center. “It is not significantly covering the uninsured and it is costing the Maine taxpayers
millions of dollars a year. Maine taxpayers are paying $15 million a year to cover 1,800 previously uninsured
people.”
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Part I: Basic
enrollment models
Traditional public benefits model

Government’s role
 Provide program information – “outreach”
 Process applications

Individual must
 Apply
 Provide individual information showing
eligibility
 Complete the application process
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Implications of traditional model

Denies coverage to eligible people who:
 Do not apply
 Do not complete the process



It takes several years for a new program to reach
many of its targeted beneficiaries
High ongoing administrative costs for state
BUT:
 Familiarity means less risk, culture shock, uncertainty,
mid-course adjustment after initial stumbles
 Permits covert caseload controls that lower cost with
less risk of successful opposition –
 Procedural barriers “prevent waste, fraud and abuse”
 Reduced outreach may never come to public attention
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A different model: Auto-enrollment

Mechanisms
 Default enrollment
 Data-driven enrollment
 Proactively facilitated enrollment

Promise – lessening the historic tension
between safeguarding program integrity and
simplifying application procedures.
 More eligible people get covered
 A smaller percentage of ineligible people get covered
 Operational administrative costs drop (after
infrastructure development)
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Basic principle: Newton’s First
Law of Motion
“An object at rest tends
to stay at rest…”
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Examples of auto-enrollment
1.
2.
3.
4.
5.
SCHIP vs. Medicare Part D
Retirement savings
Medicare Part B
Community-based, proactive facilitation
of child health enrollment
Retention of health coverage in
Louisiana
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Example #1: SCHIP vs. Low-Income
Subsidies (LIS) for Medicare Part D
SCHIP enrollment by eligible children: first five
years
100%
75%
50%
Effective
10/1/97
44%
54%
60%
25%
0%
1997
1998
Source: Selden, et al., 2004 (MEPS data).
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2000
2002
Food stamps, after 2
years: 31% take-up
13
Example # 1, continued
LIS Enrollment by Eligible Seniors as of 6/11/06,
Less Than Six Months After 1/1/06 Effective Date
100%
Total enrollment: 74%
75%
14%
50%
25%
60%
Applied
Auto-enrolled
0%
Source: CMS enrollment data. Calculations by Urban Institute.
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Data-driven enrollment – Medicare
Part D, LIS
Can apply to SSA
 Without application, automatically enrolled
in drug plan, with LIS, if received Medicaid
or SSI the prior year
 Tremendous accomplishment – largely
unheralded

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Example #2: retirement savings
Percentage of eligible workers who participate in
tax-advantaged retirement accounts
90%
33%
10%
Independent enrollment in
IRA
Firms where new hires
enroll in 401(k) only after
completing a form
Firms where new hires go
into 401(k) UNLESS they
complete an opt-out form
Sources: Etheredge, 2003; EBRI, 2005; Laibson (NBER), 2005.
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Example #3: Medicare Part B
Percentage of eligible individuals who receive
various Medicare benefits
96%
33%
13%
Voluntary enrollment in
MSP - SLMB
Voluntary enrollment in
MSP - QMB
Medicare Part B, in which
seniors are enrolled
UNLESS they opt out
Sources: NASI, 2006; Remler and Glied, 2003.
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Example #4: Community-based
facilitators of child health
enrollment
Medicaid/SCHIP take-up rate among low-income,
Latino children in Boston: standard outreach vs.
community-based case managers
96%
57%
Standard outreach
Community-based case managers
Source: Flores, et al., Pediatrics, 12/05.
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Example #5: Retention in Louisiana
Percentage of children losing Medicaid
coverage at renewal before and after
implementation of data-driven procedures
28%
8%
June 2001
April 2005
Source: Summer and Mann, Georgetown University Health Policy Institute
(prepared for Commonwealth Fund), June 2006. Note: other policy changes
included telephone contact, rather than forms, to supplement data.
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Part II: Applying AutoEnrollment to State
Coverage Reforms
Potential applications vary with
the type of reform
1.
2.
3.
4.
Subsidizing low-income workers at small
firms
Child-focused expansions
Expansions that include adults
Individual mandate
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Application #1 – subsidizing lowincome employees of small firms
Low income is the key variable to
effectively targeting subsidies to uninsured
employees of small business
 Can’t ask employers to means-test

 Privacy
 Hassle
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Among micro-firms’ employees, most
uninsured workers have low incomes
Workers at establishments with fewer
than 10 employees, by insurance status
and family income: 2005
10.0
Millions of
workers
5.0
7.3
3.0
2.2
2.0
Uninsured
Insured
0.0
Under 200% FPL
Over 200% FPL
Income
Source: Clemans-Cope and Garrett (Urban Institute) 2006. Unpublished estimates based on the
February 2001 and 2005 Contingent Work Supplement of the Current Population Survey
(CPS) and the March 2001 and 2005 Annual Social and Economic (ASEC) Supplement of the CPS.
.
23
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Among small firms’ employees, most
uninsured workers have low incomes
Workers at establishments with 10 to 24
employees, by insurance status and
family income: 2005
10.0
6.3
Millions of
workers
5.0
1.8
1.4
1.4
Uninsured
Insured
0.0
Under 200% FPL
Over 200% FPL
Income
Source: Clemans-Cope and Garrett.
.
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How to identify subsidy-eligible
workers?
Traditional approach – have workers
complete application forms
 Expedited approach #1 – use wages as
proxy for income
 Expedited approach #2 – automatic
enrollment, based on state-accessible
income data

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Wages vs. income: target efficiency
Percentage of workers without health coverage,
by wages and income: 2005
60%
60%
50%
50%
50%
39%
40%
54%
30%
40%
30%
20%
21%
20%
6%
10%
39%
16%
10%
4%
0%
0%
Less than
$7
$7 to $9.99
$10 to
$14.99
$15+
Under 100-199% 200-399%
100% FPL
FPL
FPL
400% +
FPL
Source: Clemans-Cope and Garrett.
.
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Wages vs. income: effectiveness
Distribution of uninsured workers,
by wages and income: 2005
$15+,
22%
11%
22%
Under $7,
24%
31%
$10 to
$14.99,
27%
$7 to
$9.99,
27%
36%
Under 100% FPL,
100-199% FPL,
200-399% FPL,
400% + FPL,
Source: Clemans-Cope and Garrett.
.
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Disadvantages of wage level as
key to eligibility
Difficulty accessing
federal dollars through
Medicaid and SCHIP
 Potential for
embarrassment if a lowwage worker has high
family income

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Auto-enrollment strategy to identify
eligible workers based on income

Obtain automated access to income databases
 Other means-tested programs
 State workforce agency earnings data
 State income tax data

The mechanism depends on the reform
 In a premium support program, use data to identify
low-income employees who qualify for premium
payments
 In a program that gives small firms access to health
insurance exchanges or purchasing pools, use data to
identify low-income employees who qualify for
premium subsidies
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Application #2 –
children
Key life event
strategy
 Master list strategy
 Express lane
eligibility

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Key life event strategy: two
parts
1.
2.
Identify uninsured children at key life
events
Enroll them into coverage
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Key life events: identify uninsured children

Key life event defined: life event that most
uninsured children experience
 Ideally, build on existing mechanisms well-suited to
learning insurance status

Examples
 Annual start of school – school health form
 Health care
 Hospital-based birth –billing, outstationed E.W.s
 Other pediatric care – provider billing
 Retroactive coverage gives provider and patient financial
incentives to complete enrollment
 State income tax forms
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Key life event strategy – enrollment

Let family request enrollment (e.g., on child
health form for school)
 Waive confidentiality
 Opt-out mechanism


Use state-accessible income data to ascertain
potential eligibility
Presumptive eligibility, if eligibility seems likely.
Is PE allowed for this group only? Unclear
 Can’t be less than statewide
 Can’t be for subgroup of children
 But: PE is never for all – its scope is whoever the
qualified entities try to reach
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Key life events – enrollment, cont.

Going from PE to ongoing Medicaid/SCHIP
 Reduce burdens on family
 Use state-available data whenever possible
 Pre-populated forms, seeking corrections
 Intensive follow-up – educate re using health care
and transitioning to ongoing eligibility
 MCO role here? Potential trade-offs between savings to state
and conflict of interest in choice of plan
 Precedent: sponsored enrollment in WA state

If no PE –
 Enroll if you know they’re eligible
 If they’re probably eligible, but you’re not sure? Act as
if going from PE to ongoing coverage
 Reduce burden on family
 Use intensive application assisters
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Key life events – children with
incomes too high for subsidies



Offer
unsubsidized
SCHIP
Mail card,
activated by
toll-free call
Lower
premiums to
reflect good
risks
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Master list strategy

Simple strategy in concept
 List #1: all children in the state
 List #2: all children in the state with insurance
 Compare the lists – identify the uninsured children –
then enroll them

Compiling list #1 (all children)
 State income tax records (if state grants EITC)
 School attendance (local records can be more current
than state records)
 Birth certificate data
 Correct with Postal Service move data, records of
marriage, death and divorce
 Errors and gaps are inevitable
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Master list strategy – Compiling list #2
(all children with insurance)


State can learn who gets Medicaid and SCHIP
For private coverage – DRA Section 6035 (TPL)
 Each state must require insurers to provide
information re enrollment of Medicaid beneficiaries
 Explicitly applies to group plans under ERISA
 CMS developing data-sharing mechanism

Use this mechanism to identify all privately
insured children, not just Medicaid enrollees
 The state law required by DRA can be broadened

What about ERISA? Always a question – but:
 Congress thinks states can compel information about
employee benefits. Otherwise, no Section 6035!
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Master List Strategy: comparing
lists, enrolling children

Children on list #1 but not list #2 may be
uninsured – OR:
 May have different address
 May be insured but not on list #2 (e.g., private insurer
may not have all children in records or the child’s
identifiers don’t match because of clerical error)
 May not live in state
 May not exist

Must contact the family to confirm address and
uninsurance before providing even PE
 After that, enrollment as with Key Life Events
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Express lane eligibility strategy
Concept: if another means-tested
program has already found a
family to have sufficiently low
income that the children qualify
for Medicaid or SCHIP, enroll the
children in Medicaid or SCHIP!
But there are obstacles to
overcome!
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Most low-income, uninsured children
live in families that receive meanstested nutrition assistance
Percentage of Low-Income, Uninsured Children Whose
Families Participated in Means-Tested Nutrition Programs:
2002
71%
59%
22%
8%
NSLP
WIC
Food Stamps
Any of those
three programs
Source: Dorn and Kenney, Urban Institute (prepared for Commonwealth Fund), June 2006.
Notes: (1) Analysis based on 2002 NSAF. (2) NSLP is the National School Lunch Program. (3) LowIncome is at or below 200% of the FPL.
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Obstacle #1: IT



Must match, convey, analyze, enter data
Inadequate IT infrastructure - Enhanced
FMAP via MMIS (90% for start-up, 75% for
operations) is denied to “eligibility systems,”
by federal regulation from
Options
 MITA – today’s MMIS - add eligibility data to EHRs
 Medicaid transformation grants
 Cuts waste, fraud and abuse
 $52 million – 100% federal dollars
 Applications due 6/15/07
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IT needed to identify the already insured
Health Coverage Among Low-Income Children Whose
Families Participated in Means-Tested Nutrition Programs:
2002
ESI
Medicaid/SCHIP
17%
2%
25%
20%
WIC
16%
2%
2%
66%
Uninsured
6%
12%
56%
NSLP
Other coverage
2%
84%
57%
24%
8%
Food Stamps
Source: Dorn and Kenney.
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Any of these
programs
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Obstacle #2: methodologies

Problem: each program has its own
methodology
 Generally, Medicaid will determine children to
have lower income than will other programs
 But not always – e.g.,food stamps, excess
shelter cost deduction

Upshot: health program must recalculate
eligibility
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Overcoming methodology obstacle

Pick non-health program with income threshold
far below Medicaid’s. E.g.:
 Medicaid to 150% FPL (after disregards)
 Free school lunch - 130% FPL (gross income)

SSA 1902(r)(2) income disregard. E.g.:
 Disregard all income above net family income found
by food stamp program
 FS net income limit = 100% FPL

1115 waiver to disregard methodological
differences
 Budget neutrality: unspent SCHIP allocations
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Will federal government say yes?



Uncharted terrain - but
Bush Administration supported Express Lane
in context of Frist-Bingaman bill (S. 1049)
CMS already provides more aggressive
Express Lane eligibility for seniors with
Medicare Part D
 Auto-enrollment from MSP into LIS, even though:
 6 states waive asset test for MSP, and LIS has asset test
 18 states disregard in-kind income for MSP
 10 states define household to include resident
grandchildren
 Statutory standard: “Substantially the same”
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Proposed legislation

Express lane becomes state
option
 Children and adults



Enhanced FMAP for IT
connections between health
agencies and others
More access to federal data
Context:
 SCHIP reauthorization
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Application #3: state expansions
to cover adults


Same basic strategies as with children
Key life events
 File W-4 forms for withholding when start job
 State income tax forms
 Seek health care
 Enroll as with children, except no PE


Master list comparison – same
Express lane?
 Less “warm and fuzzy”
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Most poor, uninsured parents live in families
that receive means-tested nutrition
assistance or child health coverage
Percentage of Uninsured, Poor Parents Whose Families
Participated in Means-Tested Nutrition Programs or
Whose Children Received Medicaid, 2002
83%
55%
53%
39%
22%
NSLP
WIC
Food stamps
One or more
children
receive
Medicaid
Any of these
nutrition or
child health
programs
Source: Dorn and Kenney. Note: Poor parents have the following characteristics: their income is at or
below the FPL; they are ages 18 to 64; and they live with a stepchild, biological child, or adopted child
under age 18.
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Health Coverage Among Poor Parents Whose Families
Participated in Means-Tested Nutrition Programs or Whose
Children Received Medicaid, 2002
ESI
46%
Medicaid/SCHIP
48%
Other coverage
32%
Uninsured
41%
46%
4%
4%
2%
34%
37%
16%
13%
NSLP
WIC
3%
57%
3%
49%
36%
8%
7%
14%
Food Stamps
Child in
Medicaid
Any of these
programs
Source: Dorn and Kenney.
High-impact, efficient
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Application #4 – How auto-enrollment
can help individual mandates

Mandates are not self-executing
 In 2004, 14.6% of drivers had no auto insurance, even
though almost all states required it

Auto-enrollment can help these laws work
 Automatically enrolled into coverage at key life
junctures or based on master list comparison
 Premium based on income, determined by data
(correctable by individual)
 If premiums are not paid, collect on income tax form

Auto-enrollment can soften the framing
 Everyone is enrolled – (don’t say “mandate”)
 We’re just making sure everyone is enrolled and paying
premiums, based on Urban
income
– not punitive
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If you don’t like individual
mandates:

Auto-enrollment can be an alternative
 Default enrollment, with opt-out
 “Instead of mandating coverage for everyone, let’s use
the same kind of default enrollment system that
Medicare has used for years to reach almost all
seniors”

Successful auto-enrollment can avoid mandates.
State policy can operate in two phases:
 Phase 1 – default enrollment, with opt-outs
 Phase 2 - If by date X, less than Y% of the population
is covered, then everyone is insured – no opt-outs
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The Auto-Enrollment motto:
“Applications? We don’t need no stinkin’ applications!”
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Part III: Cross-cutting
issues
Issues
1.
2.
3.
4.
5.
6.
Citizenship and immigration status
documents
Data adequacy
Privacy and data security
Default enrollment and service utilization
Premium payment
Risk of error
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Citizenship and immigration status

Current law: limited options under Titles XIX, XXI
 Use automated data sources for citizenship if
possible: birth and school records, etc.
 SAVE to confirm satisfactory immigration status,
based on A number or I number
 Presumptive eligibility for non-citizen children, then
confirm immigration status during PE period
 Intensive application assistance for likely eligibles

Intense pressure to improve automated systems
 Real ID
 Employer verification

Good chance of statutory change this year
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Data: current, accurate and complete?

SWA data – quarterly wages, new hires
 Gaps: other states, federal employees, unearned
income, self-employment, contractor income


State income tax for $ outside SWA data: but old
Strategies
 Combine recent employment earnings data with prior-
year tax data re other income
 If in prior years, person had no other income or unchanging
levels of other income, use prior year tax data
 If in prior years, person had changing levels of such income,
ask person for information
 Estimate, inform consumer, ask consumer to correct
 When asking for info, use phone calls, not forms
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Shape eligibility rules with data in mind

Avoid eligibility rules impervious to data
 Month-to-month eligibility based on current income
 Asset requirements (some data on assets, not easy)

Easier to grant eligibility based on data if:
 Continuous eligibility, regardless of changes
 Data-derived facts establish eligibility
 Prior-year tax data, with exceptions:
 Recent quarterly employment wages
 Let applicant show more recent income lower
 Require consumer reports of recent income much higher than tax
records, perhaps at end of eligibility period
 Bold precedent: means-testing Medicare Part B premiums
 For 2009, generally use 2007 income (on tax returns)
 If 2007 income tax data unavailable by 10/15/08, use 2006 income data
and reconcile when 2007 data become available
 If 2008 income is much lower, beneficiary can claim bigger subsidy
 Otherwise, income in 2008 and 2009 doesn’t matter!
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Privacy and data security
What does the law require?
 What is the right thing to do?

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Isn’t data protected by statute?

State law
 Changes may be needed to access
data held by other state agencies
 Check privacy statutes

Federal statutes limit access to
national data
 In some cases, federal law change
may be needed – e.g., national
New Hires Data Base
 In some cases, consumers can
consent to disclosure
 State-federal interagency
agreements generally needed
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Federal law data duties, per CMS







“Administrative, technical, and physical safeguards to
ensure [data] integrity and confidentiality”
“Protect against unauthorized uses or disclosures of the
information”
“Security plan that outlines how software and data
security will be maintained”
Internal and external “risk assessment,” including
biennial “review … of physical and data security
operating procedures and personnel practices”
Train staff
Bind vendors in contracts that include remedies
Process to report violations to state and federal officials
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The right thing to do, per EPIC*








Lawful, fair, and legitimate data collection.
Accurate, complete, and timely data.
State reason for data request and prohibit use for other purposes.
Require consent for use of information inconsistent with the purpose
of which it was collected.
Procedures to stop unauthorized access, use, modification, or
disclosure of data.
Transparency of data practices, including notice of databases and
the identity and location of the data controller.
Individual Participation: requires access to, correction of, and
sometimes destruction of personal information.
Accountability: requires legal rights to ensure compliance.
*Electronic Privacy Information Center
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The right thing to do, per GAO









Access controls (only authorized individuals access data)
Configuration management (only authorized software)
Segregation of duties (detects inappropriate actions)
Continuity of operations planning, in case of disruption
Agency-wide information security program
System to report breaches
Dedicated, secure computer lines to transmit data;
Anomaly detection (notifies officials when user accesses
something unusual)
Public Key Infrastructure (PKI)
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Do default enrollees get care?



Extra dimension to problem if capitation
Not necessarily huge problem: default enrollees
into Medicare Part D fill the most prescriptions
Potential remedies
 Consumer education
 Health plan incentives
 Partial withhold of some capitated payments until some
services are provided
 Award future default enrollment shares based on prior
performance with default enrollees

Monitor with encounter data, compare default to
other enrollment
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Premium payment

Automate premium collection
 Create incentive – lower premium if automate
collection
 Modes of automation
 Paycheck withholding (change state W-4 form to help)
 Automatic credit card payments

Will low-income people be asked to pay more
than they can afford under default enrollment?
 For families, cost burdens and damage to credit rating
 Risks to state: admin. costs (collection, churning, etc.)
 If neither use services nor pay premiums for a defined
period (e.g., 90 days) = opt-out, no penalty or liability
 Or require affirmative act to start coverage (e.g., call
toll-free number)
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The risk of error


E.g.: withholding Medicare
Part D premiums from
social security checks
Lessons
 Test IT systems “end to
end” before use
 Systems to fix problems,
track trends, report to
officials for policy changes
 Single “rapid response”
agency
 Traditional “notice of action”
to beneficiaries
 Monitor “warning lights,” like
disenrollments
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Summary
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For new state initiatives to succeed, enrollment
and retention methods must be effective
The more you ask people to do, the fewer
people will do it
If you want new initiatives to cover as many
eligible individuals as possible, use default
enrollment, data-driven enrollment, and
proactively facilitated assistance to eliminate or
greatly reduce the need for consumers to
complete forms
Urban Institute
66