CBO's health insurance simulation model a technical description

Original publisher: [Washington, D.C.] : Congress of the U.S., Congressional Budget Office, [2007] OCLC Number: (OCoLC)180852740 Subject: Health insurance -- United States. Excerpt: ... based on the detailed distribution of firm sizes from the Census Bureau's 2001 Eco-nomic Census. The distribution of characteristics of a given worker's coworkers, by firm size ( for example, the percentage older than 50 or the percentage in fair or poor health ), closely matches survey data from the MEPS. More important, the variation in coworker characteristics is greater in small firms, consistent with what is seen in data at the firm level. A worker in a small synthetic firm is more likely than is one in a large firm to have a very high or very low proportion of coworkers in poor health. Health Insurance Premiums All individuals in the model are assigned nongroup insurance premiums, and every-one who is employed is assigned an ESI premium. The premiums are assigned, regardless of actual coverage status, using the imputation methods described below. Generally, premiums are based on individuals ' expected insurance costs, sometimes constrained by state regulations on premium ratings or other factors. In the aggregate, the cost to insurers of providing insurance coverage - including payments for health care and administrative expenses - approximately matches the premiums they charge. The processes for assigning ESI and nongroup premiums differ and are described separately below. Premiums for Employer-Sponsored Insurance The ESI premium for a worker in a given firm ( or for a recipient of insurance through COBRA ) is based on the expected aggregate health spending of the firm's workers. The construction of ESI premiums occurs in five steps: Expected health spending is computed for each worker, that spending is averaged over all workers in the synthetic firm, a firm-specific load factor is added, the firmwide premium is adjusted to account for any applicable state regulations, a...