Medical Expenditure Panel Survey (MEPS)

Authorizing Legislation: Federal funds pursuant to Title IX and Section 927(c) of the Public Health Service Act.

		FY 2005 Enacted	FY 2006 Appropriation	FY 2007 Estimate	FY 2007 Request ± FY 2006
Total	BA	0	0	0	$          -
	PHS Eval	$ 55,300,000	$ 55,300,000	$ 55,300,000	$          -
FTEs		NA	NA	NA

A. Statement of Budget

A total of $55,300,000 is provided for MEPS. These funds will be used to support the contracts and IAAs used for the conduct of MEPS.

B. Program Description

MEPS is the only national source for annual data on how Americans use and pay for medical care. It supports all of AHRQ's research related strategic goal areas. The survey collects detailed information from families on access, use, expense, insurance coverage, and quality. Data are disseminated to the public through printed and Web-based tabulations, microdata files and research reports/journal articles.

The data from MEPS have become a linchpin for the public and private economic models projecting health care expenditures and utilization. This level of detail enables public and private sector economic models to develop national and regional estimates of the impact of changes in financing, coverage, and reimbursement policy, as well as estimates of who benefits and who bears the cost of a change in policy. No other surveys provide the foundation for estimating the impact of changes on different economic groups or special populations of interest, such as the poor, elderly, veterans, the uninsured, or racial/ethnic groups. Government and non-governmental entities rely upon these data to evaluate health reform policies, the effect of tax code changes on health expenditures and tax revenue, and proposed changes in government health programs such as Medicare. In the private sector (e.g., RAND, Heritage Foundation, Lewin-VHI, and the Urban Institute), these data are used by many private businesses, foundations and academic institutions to develop economic projections. These data represent a major resource for the health services research community at large. Since 2000, data on premium costs from the MEPS Insurance Component have been used by the Bureau of Economic Analysis to produce estimates of the gross domestic product (GDP) for the Nation. In addition, the MEPS establishment surveys have been coordinated with the National Compensation Survey conducted by the Bureau of Labor Statistics through participation in the Inter-Departmental Work Group on Establishment Health Insurance Surveys.

C. Performance Analysis

MEPS is part of AHRQ's Efficiency strategic plan goal area and the Data Development Portfolio. A significant factor that reduces the efficiency of our modern-day health care system is waste caused by systems that do things that don't improve care, processes that could be designed to do things better, and systems that fail to do things that would assure more effective treatment. AHRQ's investments include efforts to develop ways to:

1. Measure and report on the efficiency of systems, procedures, and processes.
2. Assess the scope, nature, and impact of waste in health care systems.
3. Design techniques, methods, and technology to improve treatment outcomes and reduce associated costs.

Efficiency Strategic Plan Goal

Performance Goal	Results	Context
MEPS Use and Demographic Files will be available 12 months after final data collection	AHRQ met this performance goal in FY 2004 and will continue to consistently provide timely data	The MEPS is part of AHRQ's Efficiency strategic plan area and the Data Development Portfolio. The first MEPS data (from 1996) became available in April 1997. This rich data source has become not only more comprehensive and timely, but MEPS' new design has enhanced analytic capacities, allowed for longitudinal analyses, and developed greater statistical power and efficiency. During the last few years, AHRQ has developed a series of Statistical Briefs using MEPS data. These briefs, released on the MEPS Web site, provide timely statistical estimates on topics of current interest to policymakers, medical practitioners, and the public at large. During 2004 and 2005, topics included diabetes, obesity, expenditures, and insurance coverage. MEPS has also met or exceeded all of its performance goals in terms of data

National survey provides essential information for measuring trends in the concentration of medical expenses. Data from AHRQ's 1987, 1996, and 2003 medical expenditure surveys indicate health care spending is highly concentrated, with a relatively small proportion of the population accounting for a large share of total health expenditures. When ranked by 1996 health care expenditures, the top 1 percent of the U.S. civilian non-institutionalized population accounted for 28 percent of the total health care expenditures. Some attenuation in the magnitude at the upper tail of the expenditure distribution has occurred over time. By 2003, the top 1 percent of the population accounted for 24 percent of total health care expenditures, the top 5 percent accounted for 49 percent, and the top 10 percent accounted for 64 percent of such expenditures (in 1996 these figures were 28 percent, 56 percent, and 69 percent, respectively) (Figure 1).

State Differences in the Cost of Job-Related Health Insurance, 2003

Nationwide, the average premiums were $3,481 for single coverage, $6,647 for employee-plus-one coverage, and $9,249 for family coverage (Table 1). Among the 10 largest States, single premiums ranged from $3,293 in California to $3,814 in New Jersey, employee-plus-one premiums ranged from $6,443 in California to $7,380 in New Jersey, and family premiums ranged from $8,641 in Georgia to $10,168 in New Jersey. Contributions towards health insurance premiums made by employees nationwide averaged $606 for single coverage, $1,577 for employee-plus-one coverage, and $2,283 for family coverage. Among the 10 largest States, employee contributions for single coverage ranged from $475 in California to $750 in Florida, for employee-plus-one coverage from $1,230 in Pennsylvania to $1,970 in Florida, and for family coverage from $1,661 in Michigan to $2,810 in Florida.

Table 1: Average Annual Health Insurance Premium per Enrolled Employee at Private-Sector Establishments Offering Health Insurance: United States and 10 Largest States, 2003

State	Single Coverage	Employee- Plus-One Coverage	Family Coverage
United States	$3,481	$6,647	$9,249
California	$3,293	$6,443	$9,091
Texas	$3,400	$6,642	$9,575
New York	$3,592	$6,842	$9,439
Florida	$3,592	$6,696	$9,331
Illinois	$3,692	$7,098	$9,693
Pennsylvania	$3,449	$6,820	$9,133
Ohio	$3,416	$6,573	$9,136
Michigan	$3,671	$7,099	$9,449
New Jersey	$3,814	$7,380	$10,168
Georgia	$3,624	$6,627	$8,641

Source: Center for Financing Access and Cost Trends, AHRQ, Medical Expenditure Panel Survey—Insurance Component, 2003, Tables II.C.1, II.D.1, II.E.1

MEPS Impact

Since its inception in 1996, MEPS has been used in several hundred scientific publications and many more unpublished reports.

• MEPS has been used to estimate the impact of the recently passed MMA by the Employee Benefit Research Institute (the effect of the MMA on availability of retiree coverage), by the Iowa Rural Policy Institute (effect of the MMA on rural elderly) and by researchers to examine levels of spending and co-payments.
• MEPS has been used in congressional testimony on the impact of health insurance coverage rate increases on small businesses.
• MEPS-IC has been used by a number of States in evaluating their own private insurance issues, including eligibility and enrollment by the State of Connecticut and community rating by the State of New York. As part of the Robert Wood Johnson Foundation's State Coverage Initiative, MEPS data were cited in 69 reports, representing 27 States.
• MEPS data have been used in HHS Reports to Congress on expenditures by sources of payment for individuals afflicted by conditions that include acute respiratory distress syndrome, arthritis, cancer, chronic obstructive pulmonary disease, depression, diabetes, and heart disease.
• MEPS data are used to develop estimates provided in the Consumers Checkbook Guide to Health Plans of expected out of pocket costs (premiums, deductibles, and co-payments) for Federal employees and retirees for their health care. The Checkbook is an annual publication that provides comparative information on the health insurance choices offered to Federal workers and retirees.
• MEPS data have been extensively used to examine the pharmacological treatment of many conditions including depression (in both adults and children), back pain, attention deficit hyperactivity disorder (ADHD), obesity, hypertension, and cardiovascular diseases.
• MEPS data have been used by CDC and others to evaluate the cost of common conditions including arthritis, injuries, diabetes, obesity, and cancer.
• MEPS data have been used to examine quality of care, including the receipt of preventive care and barriers to that receipt. MEPS data have been used by private sector insurance firms to estimate the potential return on investment to firms for providing bariatric surgery benefits to their enrollees.

D. Rationale for the FY 2007 Request

The FY 2007 Request for MEPS totals $55,300,000 in PHS evaluation funds, maintaining the FY 2006 President's Budget level. In addition to this commitment of funds, another $1,940,000 is included within the HCQO budget activity to support a portion of the incremental funding needed to operationalize the transition in MEPS to a Windows®-based CAPI system ($1,100,000) and to facilitate linkages between the MEPS Insurance Component and Household Component ($840,000) that enhance analytical capacity.

Continuation of MEPS Activities

The FY 2007 funding for MEPS will be used to maintain enhancements to the sample size and content of the MEPS Household and Medical Provider Surveys necessary to satisfy the congressional mandate to submit an annual report on national trends in health care quality and to prepare an annual report on health care disparities. The MEPS Household Component sample size is maintained at 15,000 households in 2007, with full calendar year information. These sample size specifications for the MEPS permit more focused analyses of the quality of care received by special populations due to significant improvements in the precision of survey estimates. This design, in concert with the survey enhancements initiated in prior years, significantly enhances AHRQ's capacity to report on the quality of care Americans receive at the national and regional level, in terms of clinical quality, patient satisfaction, access, and health status both in managed care and fee-for-service settings.

These funds will also permit the continuation of an oversample in MEPS of Asian and Pacific Islanders and individuals with incomes less than 200 percent of the poverty level in MEPS. These enhancements, in concert with the existing MEPS capacity to examine differences in the cost, quality, and access to care for minorities, ethnic groups, and low income individuals, will provide critical data for the National Healthcare Quality Report and the National Healthcare Disparities Report. The MEPS CAPI will transition to a Windows®-based system beginning with the household data collection in 2007. Developmental work was initiated in FY 2005 and will continue through FY 2008. The addition of $1,100,000 from the HCQO budget covers a portion of the incremental funding needed to successfully operationalize the CAPI conversion.

Funds will also be allocated to the MEPS Insurance Component to maintain improvements in the availability of data to the States. In FY 2007, data on employer-sponsored health insurance will be collected to support separate estimates for all 50 States and these funds would be used to enhance the tabulations we provide to the States to support their analysis of private, employer- sponsored health insurance. The Insurance Component consists of two sub-components, the household sample and the list sample. In FY 2007, the addition of $840,000 within the HCQO budget will facilitate statistical linkages between the MEPS Insurance Component and Household Component that enhance analytical capacity. In prior years, the data obtained, when linked back to the household respondent, allowed for analysis of individual behavior and choice made with respect to health care use and spending.

Recent enhancements to the estimation capabilities of the MEPS Household Component have also been realized and permit the generation of health care utilization, expenditure, and health insurance coverage estimates for some large metropolitan areas and for the 10 largest States. This has resulted in visible improvements in the analytic capacity of the survey without any additional increments to the sample size.

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