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Lobbyists Use Crystal Ball To Negotiate
Expansion Of Children's Health Insurance Subsidies
CUSTOMER OF THE MONTH (OCT., 1999)
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Since 1984, Signalhealth has provided information-based healthcare
strategies to nearly every sector of the healthcare industry. Their
clientele includes medical institutions, practices, and trade associations,
health insurers, and HMOs. In 1996, Signalhealth was hired by an
alliance of community and medical organizations concerned with the
lack of adequate health insurance for a large number of low-income
children. Signalhealth used Crystal Ball as an essential part of
its client's lobbying effort, which resulted in an expansion of
the program to cover over 300,000 children.
Signalhealth President John W. Rodat's specialty is healthcare
data analysis, which he uses to inform and improve his client's
decision-making processes. Since most public healthcare issues are
fiscally and politically sensitive, Rodat relies on Crystal Ball
to negotiate and communicate the risks inherent to these policies.
The alliance that hired Signalhealth set out to convince the New
York State legislature to expand its program of children's health
insurance subsidies. Since the legislature determines which services
are eligible for coverage, the co-payment amount for services, and
the level of premium subsidy for each family, the amount of money
at stake and the associated uncertainty made this effort politically
and technically challenging.
Using Crystal Ball, Rodat built a spreadsheet model detailing the
potential program expansion. Uncertain variables within the model
included the proportion of uninsured children who would participate,
the proportion of insured children whose coverage might eventually
shift to a publicly subsidized program, the medical service use
rates, and pricing for each type of service. Rodat then took the
model to his clients and recommended the best possible options to
advocate. A strategy was developed from the estimates, and the model
was then used to lobby for legislative change.
Rodat took the model into meetings with legislative staff and let
them interact with it using his laptop. "We actually spent an entire
afternoon with legislative fiscal staff going through the model,
showing them its logic, and allowing them to try their own alternative
assumptions and different decisions," said Rodat. "One of the things
that made this project a success was that the model enabled us to
show legislative staff how we had built our estimates and how we
were explicitly confronting the uncertainty surrounding these decisions."
The potentially large number of children involved, the inherent
variation in medical service use patterns, and the costs of these
services all contributed to uncertainty in how much the program
expansion would cost. With his model, Rodat was able to show that
even small differences in enrollment, service use, or pricing could
change point estimates of program costs by millions of dollars.
Model outputs included premium levels, total program cost, and costs
to individual families. The accessible interface of Crystal Ball
and its quick production of graphical output made it easy for him
to explain the underlying logic and to support his client's positions
on expansion.
Most of the financial estimates presented in this highly political
environment are "black box estimates" done by vested interests.
As such, they are usually received with considerable skepticism.
Because Rodat purposefully made his estimates transparent, and because
he incorporated uncertainty in his estimates, key legislative staff
members not only began to trust the estimates, but to rely on them.
By openly sharing data with legislative staff, Rodat gave the legislature
a far greater understanding of the risks associated with the program
expansion, including what the worst-case scenarios might mean. "It
also meant that our clients were much more intimately involved in
the deliberations over this legislation than they otherwise would
have been," Rodat added. The successful result of the lobbying effort
was an expansion of the program, which currently covers over 300,000
children in New York State.
For more information on Signalhealth and John Rodat, please
see his listing in our Consultants' Corner.
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