Hillary Clinton’s Commitment: Universal, Quality, Affordable Health Care for Everyone in America

Over the course of 2016, Hillary Clinton has released a series of health care “briefs” that outline various policy proposals that contain her vision for the future of health care.[1] Taken together, these proposals introduce the framework of how a Clinton Administration would amend the Affordable Care Act (ACA). Clinton’s proposals, referred to in this report as the Plan, include, among others, the introduction of a public option insurance plan in the individual marketplace, tax credits for households spending more than five percent of income on out-of-pocket costs, and a wider range of premium tax credit eligibility. This report details the findings of the Center for Health and Economy’s (H&E) Under-65 Microsimulation Model on the Plan’s impact on health insurance coverage, premiums, provider access, medical productivity, and the federal budget. As with all projections, the estimates are associated with some degree of uncertainty. The summary of our findings is as follows.

Key Findings:

Coverage Impact: The Plan is projected to lead to 2 million more insured individuals in 2018 relative to the current baseline. By 2026, this number is expected to be 4 million more than under current law, with the increase concentrated in the individual market.
Premium Impact: The Plan is projected to decrease paid premiums for private health insurance coverage, with the largest impact on Silver plans.
Medical Productivity: Under the Plan, medical productivity is projected to decrease 1 percent by the year 2026 relative to the current baseline.
Provider Access: Provider access under the Plan is projected to decrease slightly 1 percent by 2026 relative to the current baseline.
Budget Impact: Compared to current law, the Plan is estimated to increase the federal deficit by $1.26 trillion between 2017 and 2026.

Analysis

The analysis utilizes the Under-65 Microsimulation Model developed for use by H&E. The model employs micro-data available through the Medical Expenditure Panel Survey and the Medicare Current Beneficiary Survey to analyze the effects of health policies on the health insurance plan choices of the non-disabled population and extrapolate the resulting impact to national coverage, average insurance premiums, the federal budget, and the accessibility and efficiency of health care.[2]

For this report, H&E assumes that the Plan would take effect on January 1, 2018. Listed below are the provisions from the plan that were scored. There were various provisions included in the Plan that were not scored either due to limitations of the under-65 model or redundancy in the plan. For example, the Medicare buy-in for consumers aged 55 and older was not included due to its likely effect of crowding out the public option combined with the new cost-sharing subsidy. The following provisions from the Plan and subsequent assumptions are included in this score:

The excise tax on high-cost employer sponsored plans is repealed.
Refundable tax credits of up to $2,500 for individuals and $5,000 for families are provided for households with out-of-pocket costs exceeding 5 percent of household income.
A “public option” health insurance plan is created.
Households purchasing coverage on the marketplaces contribute no more than 8.5 percent of income for a benchmark plan.

The Plan includes various provisions that H&E expects to have competing effects on individual market premium rates. Due to the nature of some of these provisions and uncertainty surrounding the implementation around the public option, this report assumes a scenario where premiums remain unchanged relative to current law. Therefore, in this score, premiums in the Individual marketplace mirror those in H&E’s March 2016 baseline while the rates in this report represent the premiums paid by the consumer only after the Plan’s additional tax credits and cost-sharing are applied. It should also be noted that since our latest baseline is March 2016, this report does not account for any recently-approved premium rates for 2017. A further discussion of how marketplace premiums might be affected by the Plan can be found below in the “Uncertainty in H&E’s Projections” section.

Paid Premium Impact

H&E health insurance premium estimates are based on five plan design categories offered in the individual market: Platinum, Gold, Silver, Bronze, and catastrophic. Under current law, the cost sharing designs of the four metallic categories correspond to approximate actuarial values: 90 percent, 80 percent, 70 percent, and 60 percent, respectively. Catastrophic coverage plans refer to health insurance plans that reimburse medical expenses only after members meet a high deductible—a maximum of $6,850 for an individual under current law. When analyzing the impact of policy proposals on health insurance premiums, the particular plan designs for each category are not held constant. For example, a proposal to repeal the out-of-pocket maximum would allow insurance companies to offer catastrophic coverage plans with much higher deductibles. The plan categories are meant to roughly demarcate the range of plan options available.

Table 1. Average Annual Marketplace Premiums After Credits
		2017	2018	2019	2020	2021	2026
Single Coverage	Platinum	4,200	4,400	4,700	5,000	5,300	7,200
	Gold	3,300	3,400	3,600	3,900	4,100	5,600
	Silver²	2,100	2,700	2,800	2,900	3,100	3,800
	Bronze	2,000	1,900	1,900	1,900	2,000	2,200

Family Coverage¹	Platinum	15,300	16,800	17,900	19,000	20,300	27,800
	Gold	11,700	12,700	13,600	14,500	15,400	21,300
	Silver²	6,900	8,000	8,500	9,000	9,700	13,100
	Bronze	6,800	6,700	6,800	7,000	7,100	8,000
¹ Family coverage estimates are based on a family size of four persons.
² Includes the public option and Silver plans that are offered to low income households eligible to receive cost sharing benefits that alter the effective premium relative to un-assisted silver plans.

Under current law, eligible households may purchase subsidized insurance for a specified percentage of household income that ranges from 2.03 to 9.66 percent in 2016, dependent on income. A federal subsidy pays the remaining portion of the premium that is not covered by the household’s specified income contribution. This specified income contribution is also subject to annual increases if the annual increase in health insurance costs exceeds a measure of household income growth.

Table 2. Average Marketplace Premiums After Credits
		2017	2018	2019	2020	2021	2026
Single Coverage	Silver²	1,400	1,500	1,800	1,900	2,000	3,100
	PO-Silver	0	3,000	3,100	3,200	3,300	3,800
	Silver	2,800	2,900	3,000	3,200	3,400	4,600
Family Coverage²	Silver²	5,000	5,000	5,400	5,900	6,400	9,100
	PO-Silver	0	11,300	11,700	12,000	12,400	14,300
	Silver	10,400	10,700	11,400	12,100	12,900	17,900
¹ Family coverage estimates are based on a family size of four persons.
² Silver plans that receive cost sharing assistance have exceptionally low, after-credit premiums, primarily because they are only offered to households that receive generous premium subsidies.

The Plan proposes to change the maximum premium contribution on the exchanges to 8.5 percent of household income. If the remaining maximum income contribution levels are adjusted by the same factor, the new range under the Plan would be 1.79 to 8.5 percent. This will lower the paid premium amount for those receiving subsidies in the health insurance marketplace and thus lowers overall paid premiums in the individual marketplace. H&E assumes that the Plan’s proposed contribution levels will be static throughout the 10-year window.

Table 3. Percent Change of Post-Credit Premiums from Current Law¹
		2017	2018	2019	2020	2021	2026
Single Coverage	Platinum	-2%	-4%	-4%	-4%	-5%	-4%
	Gold	-3%	-6%	-8%	-5%	-5%	-5%
	Silver²	-4%	-5%	-5%	-4%	-4%	-3%
	Silver	0%	-3%	-6%	-6%	-6%	-6%
	Bronze	-5%	-10%	-10%	-14%	-9%	-12%

Family Coverage¹	Platinum	-1%	-3%	-4%	-4%	-3%	-3%
	Gold	-2%	-5%	-4%	-5%	-5%	-4%
	Silver²	-17%	-23%	-22%	-20%	-20%	-19%
	Silver	-2%	-4%	-5%	-5%	-5%	-4%
	Bronze	-3%	-7%	-8%	-8%	-9%	-9%
¹ The public option is not considered in the calculations in this table.

One of the key proposals of the Plan is the introduction of a public option health plan to the health insurance marketplace. The public option is meant to be a federally administered plan that offers coverage at a cheaper premium than private plans with similar actuarial value (AV). For this report, H&E assumes that the plan would be similar in quality to Silver exchange plans and is therefore included in the projected average paid premium for Silver plans in Table 1 while Table 2 compares all available types of Silver plans.

Coverage Impact

H&E insurance coverage estimates reflect health insurance choices for the under-65 population. H&E estimates that the Plan will lead to 2 million more insured individuals in 2018 and 4 million more insured individuals by 2026. The increase in the insured population is largely due to the availability of the cost sharing tax credits in the individual marketplace combined with the introduction of the public option plan to the individual marketplace and a much broader range of premium subsidy eligibility.

Table 4. Health Insurance Coverage (millions)
			2017	2018	2019	2020	2021	2026
Individual Market		36		36	35	34	34	31
	health insurance marketplace	16		23	22	22	21	18
	Other Non-group Insurance	20		13	13	13	13	13

Employer Sponsored Insurance		145		145	145	145	145	144

Medicaid		51		51	51	52	52	53

Other Public Insurance²		10		11	11	12	12	15

Total Non-Elderly Population		273		274	275	277	278	285
Total Insured¹		241		242	242	243	243	244
Uninsured¹		32		32	33	34	36	41
¹ All insurance coverage estimates refer only to the under-65 population.
² Other Public Insurance includes under-65 Medicare enrollment.

H&E projects the introduction of the public option to contribute to the increase of insured in the health insurance marketplace. For a more detailed discussion of the assumptions made about H&E’s scoring of the public option, consult the Uncertainty in Projections section below.

Two provisions are expected to be the main drivers of coverage increases in the individual market. First, H&E expects the cost sharing tax credits available to qualifying households under the Plan to contribute to increased individual market Enrollment. The Plan proposes that refundable tax credits be distributed to individual households with medical expenses equal to or exceeding 5 percent of the household income—up to $2,500 for individuals and $5,000 for families.

The second provision is the Plan’s proposed lowering of the maximum premium contribution threshold. This provision serves to increase the number of households eligible for the premium subsidy and increases the amount of the subsidy for many already receiving it. The effects of the Plan’s broader premium subsidies and new cost sharing tax credits are twofold. First, H&E expects many currently uninsured individuals to purchase insurance as a result of the generosity of these credits. Also, many households that are not currently eligible for federal cost sharing are expected to transition to the individual market from other public insurance coverage and Medicaid.

Table 5. Change in Coverage Estimates (millions)
		2017	2018	2019	2020	2021	2026
Individual Market		*	3	3	3	5	4
	health insurance marketplace	*	6	6	7	7	6
	Other Non-group Insurance	*	-3	-3	-2	-2	-2

Employer Sponsored Insurance		*	*	*	*	*	*

Medicaid		*	*	*	*	*	*

Other Public Insurance		*	*	-1	*	-1	-1

March 2016 Baseline¹		241	240	240	239	239	240
A Better Way		241	242	242	243	243	244
¹ All insurance coverage estimates refer only to the under-65 population.
* Difference between baseline estimates is between 0 and 1 billion.

As a result of the introduction of the public option, cost sharing tax credits, and the larger premium subsidies created by the lower income contribution levels explained above, H&E expects enrollment in the health insurance marketplace to increase by 6 million in 2016. The bulk of this increase is largely due to households enrolled in non-exchange plans deciding to transition to the health insurance marketplace. The three provisions outlined above combine to draw households currently enrolled in lower AV, non-exchange plans into the less costly health insurance marketplace. At the same time, H&E expects about 2 million currently uninsured to purchase plans in the individual market in 2018 due to the increased cost sharing and premium subsidy eligibility offered in the health insurance marketplace. By 2026, H&E expects about 18 million people to be enrolled in the health insurance marketplace, about 6 million more relative to the current baseline.

Productivity and Access

In an attempt to evaluate access and productivity in the health care system, H&E estimates the Medical Productivity Index (MPI) and the Provider Access Index (PAI). Health insurance plan designs are associated with varying degrees of access to desired physicians and facilities, as well as incentives that promote or discourage efficient use of resources. H&E estimates each index by attributing productivity and access scores to the range of plan designs available and uses the changes in plan choices to project the evolution of health care quality. In tables 8 and 9, there is some seemingly irregular changes from year to year. Most of that is due to the interaction between provisions of the current law in our most recent baseline and the Plan, as both current law and the Plan have various provisions being enacted over the ten-year window.

Table 6. Medical Productivity Index
	2017	2018	2019	2020	2021	2026
Individual Market	2.5	2.2	2.3	2.3	2.4	2.6
Employer Sponsored Insurance	2.3	2.3	2.4	2.4	2.4	2.5
Private Insurance	2.4	2.3	2.4	2.4	2.4	2.6
Medicaid	1.5	1.5	1.5	1.5	1.5	1.5
Total Insured¹	2.2	2.1	2.1	2.2	2.2	2.3

Table 7. Provider Access Index
	2017	2018	2019	2020	2021	2026
Individual Market	3.5	2.7	2.6	2.5	2.4	1.6
Employer Sponsored Insurance	3.8	3.8	3.8	3.8	3.8	3.7
Private Insurance	3.7	3.6	3.6	3.6	3.6	3.4
Medicaid	1.0	1.0	1.0	1.0	1.0	1.0
Total Insured¹	3.1	3.0	3.0	3.0	2.9	2.8
¹ All insurance coverage estimates refer only to the under-65 population.

H&E expects medical productivity to increase slightly under the Plan. The shift of consumers from higher AV plans to lower AV plans in the individual market leads to a net increase in efficiency, as individual market plans typically require more cost sharing, which encourages price-conscious decision making among consumers. As people increasingly purchase more Silver and Bronze plans throughout the 10-year window relative to current law, medical productivity is expected to increase also. There is a slight decrease in productivity in the ESI market. This is largely a result of the repeal of the excise tax in high-cost ESI plans. Many high-cost plans affected by the tax under current law are no longer under the Plan, which leads to higher enrollment in the Gold and Platinum metal levels in the ESI market.

Under the Plan, average provider access is projected to decrease relative to H&E’s current baseline due to growing enrollment in plans in the Bronze and Silver metal levels. The structure of the Plan’s cost sharing subsidies encourages households to enroll in plans with lower premiums and higher cost sharing. As these plans are generally associated with narrower networks, this shift has a negative effect on provider access. H&E also projects this trend to continue over time as premiums increase and the incentive to purchase low AV plans increases along with premiums. H&E also projects an increase in provider access in the ESI market under the Plan. This is due to the repeal of the excise tax on high cost ESI plans. More people expected to enroll in Gold and Platinum plans in the ESI market as a result of the repeal, leading to an increase in provider access that is associated with plans at higher metal levels.

Table 8. Change in Medical Productivity Index
	2017	2018	2019	2020	2021	2026
Individual Market	0%	2%	3%	0%	2%	7%
Employer Sponsored Insurance	0%	2%	-1%	-1%	0%	-2%
Private Insurance	0%	1%	2%	-1%	0%	2%
Medicaid	0%	0%	0%	0%	0%	0%
Total Insured¹	0%	2%	2%	-2%	-1%	-1%

Table 9. Change in Provider Access
	2017	2018	2019	2020	2021	2026
Individual Market	0%	-2%	-1%	-5%	-4%	-22%
Employer Sponsored Insurance	0%	-1%	-1%	2%	2%	3%
Private Insurance	0%	0%	0%	0%	-1%	-2%
Medicaid	0%	0%	0%	0%	0%	0%
Total Insured¹	0%	0%	-1%	2%	1%	-1%
¹ All insurance coverage estimates refer only to the under-65 population.

Budget Impact

H&E projects that the insurance coverage provisions of the Plan will lead to a net budget shortage of $1.26 trillion dollars relative to the current H&E baseline over the next decade. In its analysis of the Plan’s impact on the federal budget, H&E looks only at provisions directly related to health insurance coverage. Clinton’s plan includes a number of provisions not directly related to coverage like eliminating the ability for pharmaceutical companies to deduct money spent on direct-to-consumer advertising from their tax liability, among other things.

H&E estimates that the Plan will lead to a gross reduction in source funds of $132 billion. The Plan repeals the excise tax on high cost employer sponsored insurance under the ACA that begins in 2020 and does not replace it. As the plan does not include any changes to the employer and individual mandates, there are no other expected changes to revenue.

H&E estimates that the Plan will lead to a gross increase in the use of funds of $1.128 trillion. This increase in spending is a result of stronger premium tax credits, a new cost sharing subsidy, the implementation of a public option, and funding increases for community health and other programs. First, the Plan allocates funds to various community health and research initiatives. Initiatives to receive increased funding include drug abuse programs, Alzheimer’s research, Federally Qualified Health Center expansion, and the National Health Service Corps. Also, due to the Plan’s broadening of premium tax credit eligibility and provisions that are expected to increase enrollment in the individual market such as the public option and cost sharing subsidies, H&E expects a wider take up of the Plan’s tax credits to lead to an increase in spending of $186 billion relative to current law.

Table 10. Change in Budgetary Impact Estimates (billions)¹
		2017	2018	2019	2020	2021	2026	2017-2026
Change in Sources of Funds Baseline Estimates²
	Tax on Employer Sponsored Health Insurance	*	*	*	-19	-20	-16	-132
	Individual and Employer Mandate Taxes	*	*	*	*	*	*	*
	Subtotal	*	*	*	-19	-20	-16	-132
Change in Uses of Funds Baseline Estimates³
	Cost Sharing Benefits	*	83	86	90	94	119	896
	Premium Tax Credits	*	17	17	19	19	26	186
	Public Option	*	8	9	9	9	8	79
	Medicaid	*	-4	-4	-4	-5	-5	-41
	Other Public Insurance	*	-5	-5	-6	-5	-5	-49
	Research and Community Health Funding⁺	1	6	6	6	6	6	57
	Subtotal	1	105	109	114	119	149	1,128
Net Budgetary Impact⁴		-1	-105	-109	-133	-139	-165	-1,260
¹ Cost estimates refer only for the under-65 population.
² Positive values denote increases in revenue; negative values denote decreases in revenue.
³ Positive values denote increases in spending; negative values denote decreases in spending.
⁴ Positive values denote surplus; negative values denote deficit.
⁺Includes extra funds allocated for National Health Service Corps, Alzheimer’s research, Federally Qualified Health Centers expansion, and drug abuse program funding.
* Difference between baseline estimates is between 0 and 1 billion.

H&E expects that the largest new source of expenditures will be the cost sharing tax credit provision introduced by the plan. Upon the year of introduction, H&E estimates the increase in cost of all federal cost sharing to be $83 billion relative to current baseline. The generosity of these tax-credits along with number of people eligible is expected to increase year by year as premiums increase, resulting in a growth in expenditures of $896 billion over the budget window.

Another new source of spending under the plan is the implementation of the public option. As the public option is expected to be introduced to the market at a lower cost to consumers relative to similar plans in order to increase competition, H&E expects the plan to make up the difference in cost either by reduced quality and access or through extra federal funding. For this report, H&E assumes that the plan would be similar in quality to Silver exchange plans, therefore it is expected that the public option would cost $8 billion upon introduction in 2018. Over the ten-year budget window, H&E projects expenditures for the public option to total $79 billion.

H&E expects a net decrease of $91 billion in Medicaid and other public insurance expenditures under the Plan. This decrease in spending is due to slight shift in enrollment away from Medicaid and other public insurance over the course of the budget window as more federal dollars go towards increased premium and cost sharing subsidies and the public option in the health insurance marketplace

Uncertainty in H&E Projections

As with all policy projections, H&E estimates are associated with substantial uncertainty. While our estimates provide good indication on the nation’s health care outlook, it is not likely that the policy environment will remain unchanged throughout our ten-year analysis period. And even if no major legislative action occurs, there still exists a wide range of possible future scenarios. H&E attempts to depict an unbiased, middle -ground representation of the future should the policy and economic environment remain constant. While the goal is to quantitatively describe the most likely scenario, actual events may differ significantly from published predictions.

Aside from the details assumed by H&E in order to make the Plan scoreable, one point of uncertainty that applies to this analysis is the way in which the public option is implemented. For this report, H&E assumed that the public option would match the quality of Silver plans in the individual marketplace. This assumption lead to higher enrollment in the public option, along with decreases in premiums paid by the consumer, yet it resulted in $79 billion in additional federal expenditures. For the public option to break even under our assumption, either higher premiums would have to be charged to consumers or reimbursement rates to providers would have to be reduced leading to narrower networks. If either of these measures were taken to save money, the goal of lower premiums through increased competition may not be realized. It is also possible that the public option envisioned by the Plan is different than how it was applied for this report.

The Plan’s effect on premiums before subsidies is also a source of uncertainty. Aside from new cost sharing subsidies and expanded premium eligibility, there are many provisions included in the Plan that H&E’s under-65 model cannot account for that would place upward pressure on premiums in the individual market. The Plan would require insurers to implement an out-of-pocket cost cap on drugs and allows three free doctor’s visits for sick beneficiaries (in addition to free preventative visits) before their deductible is met, and prohibits cost sharing amounts for receiving care from out-of-network doctors in in-network hospitals—all while limiting year-over-year underlying premium increases to 10 percent. It is possible that these provisions combine to increase premiums before subsidies are applied, especially if the public option fails to facilitate competition in the individual market. Depending on the magnitude of premium increases this would lead to a drop in enrollment and a decrease in spending, especially if premiums increases approach the 10 percent threshold. Another possibility is that private insurers compensate for these restrictions through higher deductibles, copays, coinsurance, or by some other means. For the purposes of this report, H&E assumes that the pre-subsidy, pre-cost sharing price of premiums remains consistent with our March baseline.[3] This also means that recently-reported 2017 premium increases were not considered in the scoring of this report.

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[1] Hillary Clinton’s Commitment: Universal, Quality, Affordable Health Care for Everyone in America. (n.d.). Retrieved August 24, 2016 from https://www.hillaryclinton.com/briefing/factsheets/2016/07/09/hillary-clintons-commitment-universal-quality-affordable-health-care-for-everyone-in-america/

[2] More information on the H&E Under-65 Microsimulation Model can be found at http://dev-health-economy.pantheonsite.io/models/under-65-microsimulation/

[3] http://dev-health-economy.pantheonsite.io/health-and-economy-baseline-estimates-4/