Abstract
BackgroundWithin the United States, public insurance premiums are used both to discourage private health policy holders from dropping coverage and to reduce state budget costs. Prior research suggests that the odds of having private coverage and being uninsured increase with increases in public insurance premiums. The aim of this paper is to test effects of Children’s Health Insurance Program (CHIP) premium increases on public insurance, private insurance, and uninsurance rates.MethodsThe fact that families just below and above a state-specific income cut-off are likely very similar in terms of observable and unobservable characteristics except the premium contribution provides a natural experiment for estimating the effect of premium increases. Using 2003 Medical Expenditure Panel Survey (MEPS) merged with CHIP premiums, we compare health insurance outcomes for CHIP eligible children as of January 2003 in states with a two-tier premium structure using a cross-sectional regression discontinuity methodology. We use difference-in-differences analysis to compare longitudinal insurance outcomes by December 2003.ResultsHigher CHIP premiums are associated with higher likelihood of private insurance. Disenrollment from CHIP in response to premium increases over time does not increase the uninsurance rate.ConclusionsWhen faced with higher CHIP premiums, private health insurance may be a preferable alternative for CHIP eligible families with higher incomes. Therefore, competition in the insurance exchanges being formed under the Affordable Care Act could enhance choice.
Highlights
Within the United States, public insurance premiums are used both to discourage private health policy holders from dropping coverage and to reduce state budget costs
The Children Health Insurance Program (CHIP) in the Unites States was created by the Balanced Budget Act of 1997 to help expand health insurance coverage to children in families with incomes which are too high to qualify for Medicaid, the public insurance program for individuals with low incomes
Children’s Health Insurance Program (CHIP) enrollment is lower, private insurance take-up is higher, and the uninsurance rate is lower among children in the high versus low premium group
Summary
Within the United States, public insurance premiums are used both to discourage private health policy holders from dropping coverage and to reduce state budget costs. Most CHIP programs charge premiums to families based on income Public insurance premiums both discourage private health policy holders from dropping coverage and reduce state budget costs. Previous studies examined the effect of Premium contributions for CHIP are influenced by the perceptions of legislators, the level of premium contribution required for public premium schedules in other states, the political context in which they were introduced, and the decisions by individuals regarding insurance purchase [9]. These considerations may have important bearing on the impacts of initial premium levels as well as premium increases over time [5]. Children with public or private health insurance may be different in terms of their family income, health, or preferences from children who are not insured [10]
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