Analysis of Children's Health Insurance Patterns: Findings from the SIPP. How Much Churning Is There among Uninsured Children and Medicaid Participants?

05/12/1999

"Churning" in a population consists of exits and re-entries by the same group of people over a relatively short period, whereas "turnover" more literally involves exits and entries by different people. The frequency of churning and turnover among uninsured children and Medicaid participants influences the magnitude of the task of insuring the uninsured and the efficiency with which it may be possible to do so. For example, churning in the Medicaid population has come to be viewed as a serious problem by Medicaid managed care organizations.

As we noted, 12 million children started nearly 19 million new spells without insurance between October 1992 and September 1994. In other words, more than one-third of the new spells that began during this two-year period were the second or third spells of children who had become uninsured earlier in the period. In each year alone, 20 to 23 percent of the new spells were additional spells of children becoming uninsured for at least the second time in the year. The magnitude of this churning among the uninsured raises questions that must be addressed if we are to make significant progress in permanently reducing the number of uninsured children. Why do so many children regain coverage only to lose it again within a year or two? What are the roles of public and private sources of insurance in accounting for this phenomenon?

If we look at who is uninsured from one year to the next, we find less turnover than we might imagine, given the sizable numbers of children entering and leaving the uninsured population each month. While 800,000 children regained insurance coverage each month over the study period, only to be replaced by another 800,000 who lost coverage, and while 12 million different children became uninsured over the two-year period, we find that 62 percent of the 9.5 million children who were uninsured in October 1992 were still uninsured in September 1993, and 52 percent were still uninsured a year later. In other words, after two years, only about half of the uninsured children or between four and five million had been replaced by children who became uninsured during the intervening period. Some of the children who were still uninsured had undoubtedly remained uninsured continuously over the two-year period, but the estimates of churning suggest that children who gained insurance coverage and then lost it again may account for a significant proportion of the children who were uninsured at both the beginning and end of the period.

While the turnover in the population of uninsured children over one or two years may appear small, we would underscore two aspects of these findings:

  • The turnover is not small in terms of actual numbers of children. If the federal government and the states could immediately and permanently insure the estimated 11 million children who are currently uninsured, these findings suggest that a year later, an additional 4 to 5 million children would be uninsured.
  • The figures on year-to-year turnover hide the many children who go without insurance for some period during the intervening 12 months--losing but regaining coverage before the end of the year. Again, in the scenario that we described, with current estimates of the uninsured, more than 4 million additional children would go without insurance for some period during the year.

Relative to the number of new enrollments, the amount of churning in the Medicaid program is on a par with what we see among uninsured children. Specifically, 9.0 million children initiated the 13.4 million new spells of Medicaid participation in FY93 or FY94. That is, one-third of the new spells were second or third spells by children who had enrolled in Medicaid earlier in the period. Each year, about one in five new spells included children who were enrolling in Medicaid for at least the second time during the year.

Both in absolute number and as a proportion of the total caseload, however, new spells on Medicaid were less common than new spells without insurance. The 13.4 million new spells on Medicaid that started between October 1992 and September 1994 contrast with the 19 million new spells without insurance initiated over the same period. The month-to-month turnover in the Medicaid child population, at 4 percent of the caseload, was only half the monthly turnover in the uninsured. Further, 80 percent of the children who were enrolled in Medicaid in October 1992 were still enrolled in Medicaid in September 1993 and, a year later, 76 percent. Again, some portion of the children who were enrolled in Medicaid at the beginning and end of the period actually left the program and returned, but given the lower exit rates from Medicaid than from the uninsured, we would expect a larger share to have been continuously enrolled in Medicaid than the fraction of uninsured children who were continuously uninsured over the same period.

In sum, while churning has attracted interest in studies of the Medicaid population, we find more churning and substantially more turnover among uninsured children than among children enrolled in Medicaid. However, we must recognize that changes in the Medicaid caseload that are developing post-welfare reform could begin to alter the Medicaid dynamics as well.

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