CBO Releases Four Products Explaining How Its New Health Insurance Simulation Model Works

WASHINGTON, April 18 -- The Congressional Budget Office issued the following information:

In developing our forthcoming baseline budget projections, CBO has used a new health insurance simulation model, HISIM2, to generate estimates of health insurance coverage and premiums for the population under age 65. We have incorporated new data and completely revamped the way that we model consumers' and employers' behavior. HISIM2 improves on the previous model in the following ways:

* Incorporates new sources of data in early stages of the modeling process,

* Better accounts for consumers' selection of types of insurance plans, and

* Makes simulation of new insurance products easier.

Like its predecessor, HISIM2 incorporates the latest available evidence about consumers' and employers' responses to changes in health insurance and subsidies for it.

The model helps us develop baseline projections of coverage and premiums under current law and allows us to analyze the effects of proposed changes in policies that would affect health insurance coverage. HISIM2 will not significantly change CBO's baseline estimates of the total number of people with different types of coverage in the near term because those estimates are based on the same sources of data about current coverage as last year's estimates were. However, the new model better captures underlying relationships among individuals, families, employment, income, and insurance coverage because it incorporates new data and includes refinements in modeling insurance choices. Going forward, those improvements will enhance our estimates of the effects of legislative proposals and will allow us to provide more detailed analyses of proposals of interest to the Congress.

As part of our ongoing efforts to enhance the transparency of our work, today we released four products that, in combination, explain how HISIM2 works:

HISIM2--The Health Insurance Simulation Model Used in Preparing CBO's 2019 Spring Baseline. This slide deck explains how HISIM2 is used to develop baseline projections of health insurance coverage. It also describes how consumers' and employers' decisions are simulated in the new model.

* HISIM2 Code Segments, April 2019. This computer code (available for download in a ZIP file) supplements the slide deck by providing details about key aspects of HISIM2. The code shows how data on consumers and information about simulated offers made by employers are combined to define coverage alternatives. It also illustrates how the probabilities of choices among those alternatives are calculated.

* Sources and Preparation of Data Used in HISIM2--CBO's Health Insurance Simulation Model. This working paper describes the new sources of data and the procedures that CBO developed to adjust and add to those data to form the sample used by HISIM2.

* Health Insurance Coverage for People Under Age 65: Definitions and Estimates for 2015 to 2018. This report describes how CBO defines health insurance coverage for people under 65, explains where we obtain the data on coverage, and provides our current estimates of coverage for 2015 to 2018. CBO used those estimates to produce its spring 2019 baseline projections.

The development of CBO's health insurance simulation model is an ongoing process that involves sharing information about the model and improving it in response to new data and feedback we receive. Over the past year, we have made several presentations on the development of the new model. We've also solicited input from many experts--such as those on our technical review panel for the model--with knowledge on a variety of topics, including microsimulation modeling, health insurance markets, federal health programs, and data sources. We've used those experts' feedback to further develop the model. As with all of our models, this one will be regularly updated to incorporate new data and changes in law.

Today's four releases are part of a collection of information we've posted about our methods for analyzing health insurance coverage. With such transparency, we aim to promote a thorough understanding of our work, help people gauge how our projections might change if policies or circumstances differed from those anticipated, and enhance the credibility of our analyses and processes. More information about transparency at CBO--including links to overviews and documentation of some of CBO's other major models--is available on our website.

The four products released today are the latest examples of the extensive technical information that we have published about our health-related work. Other examples include last week's How Do Changes in Medical Malpractice Liability Laws Affect Health Care Spending and the Federal Budget? and last month's Prices for and Spending on Specialty Drugs in Medicare Part D and Medicaid.

CBO continually seeks feedback to make its work as useful as possible. Please send any feedback to [email protected].

Keith Hall is CBO's Director.