Modeling Dr. Dynasaur 2.0 Coverage and Finance Proposals: Effects of the Expansion of Vermont's Dr. Dynasaur Program...

The authors assessed an expansion of Vermont's Dr. Dynasaur program that would cover all residents age 25 and younger. The current Dr. Dynasaur program combines Vermont's Medicaid program and Child Health Insurance Program for children ages 0 through 18 to provide a seamless insurance program for those with family incomes below 317 percent of the federal poverty level. The authors used RAND's COMPARE-VT microsimulation model with Vermont-specific demographic, economic, and actuarial data to estimate the effects on health insurance coverage, costs, and premiums. They also identified the new revenues required to fund the program expansion and explored three alternative financing strategies to raise those funds: (1) an increase in the Vermont income tax, (2) a Vermont payroll tax, and (3) a Vermont business enterprise tax. The authors found that enrollment would increase by more than 260 percent under the 100-percent enrollment scenario and by nearly 200 percent under the 70-percent enrollment scenario by 2019. Not surprisingly, the children and young adults who move off employer-sponsored insurance (ESI) and into Dr. Dynasaur 2.0 have considerably lower expected health care costs than those who remain on ESI, increasing the per-person premiums by nearly $1,000 for those remaining enrolled in ESI. Annual health care expenditures per person for children and young adults in 2019 are estimated at $4,325 with Medicare prices. The combination of increased reimbursement rates, large increases in enrollment, and relatively low Dr. Dynasaur premiums (no more than $720 per year) will require significant new tax revenues to meet program obligations.