Decompose SPM MOOP premiums

changelog.d/8095.fixed.md

@@ -0,0 +1 @@
+Split medical expenses into program-specific variables and remove the generic medical out-of-pocket expense aggregate.

docs-quarto/methodology/moop-decomposition.qmd

@@ -7,77 +7,73 @@ subtitle: "Layering rules-based premium computations on CPS-imputed medical cost
 
 The Supplemental Poverty Measure subtracts medical out-of-pocket expenses (MOOP) from household resources. PolicyEngine US imports MOOP from the Current Population Survey's reported private health insurance premiums and other medical expenses. Imputed MOOP is accurate on average for the year the CPS was collected, but it does not respond to policy reform. If a user eliminates the ACA premium tax credit, simulated PTC goes to zero while imputed MOOP stays at the pre-reform value, understating the true cost to households.
 
-The fix is to decompose MOOP into a **rules-based** part (variables computable from statute) and an **imputed residual** (everything not modeled). Reforms move the rules-based part; the residual covers copays, over-the-counter costs, non-modeled employer premiums, etc.
+The fix is to decompose MOOP into a **rules-based** part (variables computable from statute) and imputed other components for costs the model cannot yet calculate directly. Reforms move the rules-based part; the imputed other components cover copays, over-the-counter costs, non-modeled employer premiums, etc.
 
 ## What's shipped today
 
-The SPM-unit-level wrapper combines imputed and computed pieces:
+The SPM-unit-level wrapper now combines explicit premium and non-premium
+pieces:
 
 ```python
-def formula(spm_unit, period, parameters):
-    imputed_moop = add(spm_unit, period, ["medical_out_of_pocket_expenses"])
-    imputed_part_b = add(spm_unit, period, ["medicare_part_b_premiums"])
-    computed_part_b = add(
-        spm_unit, period, ["income_adjusted_part_b_premium"]
-    )
-    chip_premium = add(spm_unit, period, ["chip_premium"])
-    medicaid_premium = add(spm_unit, period, ["medicaid_premium"])
-    return (
-        imputed_moop
-        - imputed_part_b
-        + computed_part_b
-        + chip_premium
-        + medicaid_premium
-    )
+spm_unit_medical_out_of_pocket_expenses = (
+    spm_unit_health_insurance_premiums
+    + spm_unit_non_premium_medical_out_of_pocket_expenses
+)
 ```
 
 | Component | How it flows | Double-count risk |
 |---|---|---|
-| Imputed person-level MOOP (private premiums + other medical) | In via `medical_out_of_pocket_expenses` | — |
-| Medicare Part B | Imputed subtracted, rules-based added (base + IRMAA) | No — clean swap |
-| CHIP premium (`chip_premium`) | Added on top of imputed MOOP | Yes — small overstatement for CHIP-paying families until CPS imputation strips the CHIP share at baseline |
-| Medicaid expansion premium (`medicaid_premium`) | Added on top of imputed MOOP | Yes — same pattern; IN HIP is the only state with a live (if currently suspended) schedule |
-| Marketplace net premium (`marketplace_net_premium`) | **Not wired in yet** | — |
+| Other health insurance premiums | In via `other_health_insurance_premiums` from data construction | No once data are built with baseline modeled premiums removed |
+| Medicare Part B | Computed by `medicare_part_b_premium` (base + IRMAA) | No |
+| CHIP premium (`chip_premium`) | Computed by state schedules | No once data are built with baseline modeled premiums removed |
+| Medicaid premium (`medicaid_premium`) | Computed by state schedules | No once data are built with baseline modeled premiums removed |
+| Marketplace net premium (`marketplace_net_premium`) | Computed from selected plan premium minus used PTC | No once data are built with baseline modeled premiums removed |
+| Other medical expenses and OTC health expenses | In via `other_medical_expenses` and `over_the_counter_health_expenses` | No |
 
-Person-level `medical_out_of_pocket_expenses` is deliberately left untouched so downstream consumers that use it directly — SNAP excess medical deduction, state itemized medical deductions — continue to read the imputed figure. Only SPM resources see the decomposed value.
+The old generic `medical_out_of_pocket_expenses` input is removed. Program
+rules outside SPM use their own statutory medical-expense wrappers rather than
+the SPM MOOP definition.
 
 ## The target architecture
 
-Once the CPS-imputation side strips each premium's baseline share from the reported aggregate, the wrapper becomes cleanly layered:
+Once the CPS-imputation side strips each premium's baseline share from the reported aggregate, the wrapper is cleanly layered:
 
 ```
-spm_unit_MOOP = imputed_residual
+spm_unit_MOOP = other_health_insurance_premiums
               + computed_chip_premium
               + computed_medicare_part_b_premium
               + computed_marketplace_net_premium
               + computed_medicaid_premium
+              + other_medical_expenses
+              + over_the_counter_health_expenses
 ```
 
 with
 
 ```
-imputed_residual = imputed_MOOP_total − baseline_computed_premium_sum
+other_health_insurance_premiums =
+    reported_non_medicare_premiums − baseline_computed_premium_sum
 ```
 
-where `baseline_computed_premium_sum` is evaluated under the CPS reference year's rules during data construction. Baseline totals reconcile to CPS-reported MOOP exactly; reforms propagate through the computed pieces. Medicare Part B already works this way. CHIP and Medicaid will follow once per-household baseline premiums are pre-subtracted in `policyengine-us-data`.
+where `baseline_computed_premium_sum` is evaluated under the CPS reference year's rules during data construction. Baseline totals reconcile to CPS-reported premiums; reforms propagate through the computed pieces.
 
 ## Components computable today
 
 | Component | Variable | Entity | Status |
 |---|---|---|---|
 | CHIP premium | `chip_premium` | TaxUnit | 17 states encoded (see [CHIP](../programs/chip.qmd)) |
-| Medicare Part B | `income_adjusted_part_b_premium` | Person | Rules-based (base + IRMAA tiers); **fully swapped** in SPM wrapper |
-| Marketplace net premium | `marketplace_net_premium` | TaxUnit | `SLCSP × benchmark_ratio − used_PTC`; benchmark ratio imputed per-household via CPS back-out; not yet wired into the SPM wrapper |
+| Medicare Part B | `medicare_part_b_premium` | Person | Rules-based (base + IRMAA tiers) |
+| Marketplace net premium | `marketplace_net_premium` | TaxUnit | `SLCSP × benchmark_ratio − used_PTC`; benchmark ratio imputed per-household via CPS back-out |
 | Medicaid expansion premium | `medicaid_premium` | TaxUnit | IN HIP POWER Account (suspended since 2020, schedule reform-ready) |
 
 ## Why Marketplace net premium is layered differently
 
-CPS private-premium reports conflate Marketplace, employer, and direct-purchase coverage in a single aggregate. `selected_marketplace_plan_benchmark_ratio` is now populated per tax unit via back-out from the reported premium, but the baseline subtraction of "imputed Marketplace premium" requires isolating the Marketplace share from the CPS aggregate — in-progress as a data-side follow-up. Until then, `marketplace_net_premium` is available as a variable but not wired into the SPM wrapper.
+CPS private-premium reports conflate Marketplace, employer, and direct-purchase coverage in a single aggregate. `selected_marketplace_plan_benchmark_ratio` is populated per tax unit via back-out from the reported premium. Data construction then subtracts baseline `marketplace_net_premium` from reported non-Medicare premiums so SPM can add the modeled Marketplace premium without double counting.
 
 ## Gaps
 
 - **Copays** — the federal 5 % of income CHIP cost-sharing cap (42 CFR 457.560) binds on premiums + copays combined. Without copay modeling, the cap never bites on premium alone in realistic cases.
-- **Employer plan employee share** — stays in the imputed residual; employer plans aren't statutory and can't be computed from rules without a separate employer-plan model.
+- **Employer plan employee share** — stays in `other_health_insurance_premiums`; employer plans aren't statutory and can't be computed from rules without a separate employer-plan model.
 - **Michigan and Montana historical Medicaid expansion premiums** — eliminated 2024-01-01 and 2023-01-01 respectively; historical schedules not yet encoded for reform analysis.
 
 ## See also

policyengine_us/tests/policy/baseline/gov/hhs/medicaid/eligibility/categories/medically_needy/is_medically_needy_for_medicaid.yaml

@@ -6,7 +6,7 @@
         age: 77
         employment_income: 200
         ssi_countable_resources: 1_000
-        medical_out_of_pocket_expenses: 500
+        other_medical_expenses: 500
       person_2:
         age: 66
         employment_income: 100

policyengine_us/tests/policy/baseline/gov/hhs/medicare/costs/medicare_cost.yaml

@@ -63,3 +63,14 @@
       2019: 0
   output:
     medicare_cost: 9_298  # $11,080 - $1,782 Part B (2021: $148.50*12)
+
+- name: unit test 6 - direct Part B premium input
+  period: 2025
+  input:
+    age: 65
+    is_medicare_eligible: true
+    medicare_enrolled: true
+    medicare_quarters_of_coverage: 40
+    medicare_part_b_premium: 3_000
+  output:
+    medicare_cost: 11_500  # $14,500 spending - $3,000 Part B premium

policyengine_us/tests/policy/baseline/gov/hhs/medicare/eligibility/income_adjusted_part_b_premium.yaml → policyengine_us/tests/policy/baseline/gov/hhs/medicare/eligibility/medicare_part_b_premium.yaml

@@ -9,7 +9,7 @@
       2023: 0
     is_medicare_eligible: true
   output:
-    income_adjusted_part_b_premium: 2_220  # $185 * 12 months
+    medicare_part_b_premium: 2_220  # $185 * 12 months
 
 - name: unit test 2 -  married, extra premium
   period: 2025
@@ -22,7 +22,7 @@
       2023: 0
     is_medicare_eligible: true
   output:
-    income_adjusted_part_b_premium: 4_440  # $370 * 12 months
+    medicare_part_b_premium: 4_440  # $370 * 12 months
 
 - name: unit test 3 -  single, extra premium
   period: 2025
@@ -35,7 +35,7 @@
       2023: 0
     is_medicare_eligible: true
   output:
-    income_adjusted_part_b_premium: 7_546.8  # $628.90 * 12 months
+    medicare_part_b_premium: 7_546.8  # $628.90 * 12 months
 
 - name: unit test 4 - HOH,  extra premium
   period: 2025
@@ -48,7 +48,7 @@
       2023: 0
     is_medicare_eligible: true
   output:
-    income_adjusted_part_b_premium: 3_108  # $259 * 12 months
+    medicare_part_b_premium: 3_108  # $259 * 12 months
 
 - name: unit test 5 -  married, no extra premium
   period: 2025
@@ -61,7 +61,7 @@
       2023: 0
     is_medicare_eligible: true
   output:
-    income_adjusted_part_b_premium: 2_220  # $185 * 12 months
+    medicare_part_b_premium: 2_220  # $185 * 12 months
 
 - name: unit test 6 -  married, extra premium, rich
   period: 2025
@@ -74,4 +74,4 @@
       2023: 0
     is_medicare_eligible: true
   output:
-    income_adjusted_part_b_premium: 7_546.8  # $628.90 * 12 months
+    medicare_part_b_premium: 7_546.8  # $628.90 * 12 months

policyengine_us/tests/policy/baseline/gov/hud/hud_adjusted_income.yaml

@@ -1,7 +1,7 @@
 # TODOs:
 # - Tests involving is_hud_elderly_disabled_family
 # - Tests involving childcare_expenses
-# - Tests involving medical_out_of_pocket_expenses (which only applies to elderly/disabled families)
+# - Tests involving other_medical_expenses (which only applies to elderly/disabled families)
 
 - name: Default value is zero.
   period: 2022
@@ -94,8 +94,8 @@
   period: 2022
   input:
     hud_annual_income: 10_000
-    age: 70
-    medical_out_of_pocket_expenses: 300
+    age: 62
+    other_medical_expenses: 300
   output:
     hud_adjusted_income: 9_600 # $10,000 - $400 elderly/disabled - $300 medical expense deduction
 
@@ -104,7 +104,7 @@
   input:
     hud_annual_income: 10_000
     is_disabled: true
-    medical_out_of_pocket_expenses: 301
+    other_medical_expenses: 301
   output:
     hud_adjusted_income: 9_599
 
@@ -113,14 +113,14 @@
   input:
     hud_annual_income: 10_000
     is_disabled: true
-    medical_out_of_pocket_expenses: 20_000
+    other_medical_expenses: 20_000
   output:
     hud_adjusted_income: 0
 
 - name: Single person with no disabilites with medical expenses does not have medical expense deductions.
   period: 2022
   input:
     hud_annual_income: 10_000
-    medical_out_of_pocket_expenses: 20_000
+    other_medical_expenses: 20_000
   output:
     hud_adjusted_income: 10_000

policyengine_us/tests/policy/baseline/gov/irs/income/taxable_income/deductions/itemizing/itemized_medical_expenses.yaml

@@ -0,0 +1,13 @@
+- name: Itemized medical expenses sum medical out-of-pocket expenses.
+  period: 2025
+  input:
+    people:
+      person1:
+        other_medical_expenses: 1_200
+      person2:
+        other_medical_expenses: 300
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+  output:
+    itemized_medical_expenses: 1_500

policyengine_us/tests/policy/baseline/gov/irs/income/taxable_income/deductions/itemizing/medical_expense_deduction.yaml

@@ -0,0 +1,8 @@
+- name: Medical expense deduction applies the AGI floor to itemized medical expenses.
+  period: 2025
+  input:
+    other_medical_expenses: 10_000
+    positive_agi: 100_000
+  output:
+    itemized_medical_expenses: 10_000
+    medical_expense_deduction: 2_500

policyengine_us/tests/policy/baseline/gov/local/ca/la/dss/infant_supplement/ca_la_infant_supplement.yaml

@@ -71,7 +71,7 @@
         age: 19
         was_in_foster_care: true
         employment_income: 11_111
-        medical_out_of_pocket_expenses: 1_332
+        other_medical_expenses: 1_332
         rent: 1_332
         is_in_foster_care: true
         is_tax_unit_head_or_spouse: true
@@ -92,7 +92,7 @@
         age: 19
         was_in_foster_care: true
         employment_income: 11_111
-        medical_out_of_pocket_expenses: 1_332
+        other_medical_expenses: 1_332
         rent: 1_332
         is_in_foster_care: true
         is_tax_unit_head_or_spouse: true

policyengine_us/tests/policy/baseline/gov/local/ca/la/general_relief/integration.yaml

@@ -6,7 +6,7 @@
       you:
         age: 44
         immigration_status_str: CITIZEN
-        medical_out_of_pocket_expenses: 600
+        other_medical_expenses: 600
         is_aca_eshi_eligible: false
         is_pregnant: false
         ca_calworks_child_care_time_category: MONTHLY

policyengine_us/tests/policy/baseline/gov/states/al/tax/income/deductions/itemized/al_medical_deduction.yaml

@@ -2,7 +2,7 @@
   period: 2021
   input:
     state_code: AL
-    medical_out_of_pocket_expenses: 2_000
+    other_medical_expenses: 2_000
     al_agi: 80_000
   output:
     al_medical_expense_deduction: 0
@@ -12,7 +12,7 @@
   period: 2021
   input:
     state_code: AL
-    medical_out_of_pocket_expenses: 7_000
+    other_medical_expenses: 7_000
     al_agi: 90_000
   output:
     al_medical_expense_deduction: 3_400

policyengine_us/tests/policy/baseline/gov/states/ar/tax/income/deductions/itemized/ar_medical_expense_deduction_indiv.yaml

@@ -3,10 +3,10 @@
   input:
     people:
       person1:
-        medical_out_of_pocket_expenses: 5_000
+        other_medical_expenses: 5_000
         ar_agi_indiv: 120_000
       person2:
-        medical_out_of_pocket_expenses: 18_000
+        other_medical_expenses: 18_000
         ar_agi_indiv: 120_000
     tax_units:
       tax_unit:
@@ -23,10 +23,10 @@
   input:
     people:
       person1:
-        medical_out_of_pocket_expenses: 5_000
+        other_medical_expenses: 5_000
         ar_agi_indiv: 240_000
       person2:
-        medical_out_of_pocket_expenses: 18_000
+        other_medical_expenses: 18_000
         ar_agi_indiv: 0
     tax_units:
       tax_unit:

policyengine_us/tests/policy/baseline/gov/states/ar/tax/income/deductions/itemized/ar_medical_expense_deduction_joint.yaml

@@ -3,10 +3,10 @@
   input:
     people:
       person1:
-        medical_out_of_pocket_expenses: 5_000
+        other_medical_expenses: 5_000
         ar_agi_joint: 120_000
       person2:
-        medical_out_of_pocket_expenses: 18_000
+        other_medical_expenses: 18_000
         ar_agi_joint: 120_000
     tax_units:
       tax_unit:
@@ -23,10 +23,10 @@
   input:
     people:
       person1:
-        medical_out_of_pocket_expenses: 5_000
+        other_medical_expenses: 5_000
         ar_agi_joint: 240_000
       person2:
-        medical_out_of_pocket_expenses: 18_000
+        other_medical_expenses: 18_000
         ar_agi_joint: 0
     tax_units:
       tax_unit: