Studies Concerning National Health Policy Issues

ARC has participated actively in the evaluation and analysis of national health policy issues since 1974.  This involvement has contributed significantly to ARC's capacity to provide relevant information and insights to private health care organizations. The in-depth nature of ARC's role in several high-level national policy areas has enabled ARC to develop a  broad perspective concerning current health care trends and future directions in health policy.

During the early 1980's, discussion of national health care reform centered around market reform.  ARC became involved in the analysis of a variety of market incentives designed to provide health care services more efficiently through existing private channels, including proposals to increase the level of competition among alternative insurers and options, to alter the tax exclusion for employer sponsored health insurance payments, to permit flexible spending accounts, for rating and underwriting reforms and for health risk adjustment in the small group and individual insurance markets.

During the George H. W. Bush Administration, ARC was retained to analyze the impact of various small  group health insurance reform initiatives. Primary attention has been focused on the impact of rate bands upon premiums for very healthy and very sick groups, the impact on the overall cost of insurance  from requiring guaranteed issue, the cost of alternative reinsurance mechanisms, and the remaining options open to insurers to pursue market segmentation strategies (some methods have been removed by  reform). ARC also provided the primary staff analysis that led to the recommendations concerning methods of health risk adjustment for small employer groups. ARC also prepared a series of papers which  provided a seminal analysis of the nature and impact of competition among health insurers in the Federal Employees Health Benefits program.

ARC was also retained by the Congressional Budget  Office to assist in estimating the cost of major Congressional proposals, such as those mandating employer health insurance coverage, the "Pay or Play" proposals such as the Kennedy plan first introduced in 1987 and tax credit proposals such as that of the Bush Administration. For a variety of these plans, ARC has estimated average premiums, distributions of premiums (which drive the government subsidy cost), and cost incidence (employer versus employee, and employee by income). The impact of such proposals on administrative expenses has also been carefully analyzed.

During the consideration of major reforms to the health care system in 1992-94, ARC staff were consulted extensively by the Health Care Reform Task Force working groups and in developing the Health Security  proposal. ARC personnel have provided key components to the agencies responsible for modeling the cost impacts of health care reform, including several working groups of the Task Force, the Office of the Actuary of CMS, the Assistant Secretary for Planning and Evaluation, the Executive Office of Management and Budget, and the Congressional Budget Office. ARC staff is currently advising the Office of the Secretary of HHS concerning proposals to reform small group and individual insurance rating and underwriting, analyzing the potential of medical IRAs and analyzing impacts of alternatives to the present Medicare program.

ARC has also been assisting CMS in compiling comprehensive national health accounts, which provide the basis of estimates for the national impact of health care financing reform proposals. In particular, recent studies by ARC have led to major revisions in the estimated national and state specific expenditures for prescription and OTC drugs and the proportions of national  expenditures that are paid through various forms of health insurance.

ARC has been involved in the collection and organization of extensive health care data bases and all aspects of the surveying process. ARC has helped design the surveys and the edit checks, served as a technical consultant to the telephone interviewers, interviewed selected employers and HMOs, reviewed  all responses for  consistency and errors, and assisted with data entry. After organization of the data base has been completed, ARC has calculated per capitas, weighted the responses, and analyzed enrollment, benefits, premiums, stop loss, and administrative costs.

ARC has conducted studies for CMS, ASPE/Health, CBO, and other federal agencies. Some of the specific studies include:

• Analysis of health benefits legislation expanding Medicaid.
• Analysis of legislation requiring employers to provide health insurance or pay a tax.
• Projections of National Health Accounts.
• Analysis of tax incentives for health insurance including tax credits and a cap on tax deductions.
• Analysis of administrative problems in enforcing a tax exclusion cap.
• Studies of catastrophic insurance.
• Estimates of the costs of national health insurance programs.