Children's Health Insurance Expansions: State Experiences in Developing Benefit Packages and Cost-Sharing Arrangements. A. Cost-sharing Mechanisms Used by the States

02/17/1998

In the context of children's health insurance, cost-sharing is defined as mechanisms, such as premiums and copayments, that require beneficiaries to share in the cost of providing their health coverage. Cost-sharing requirements, which often deter families from enrolling and utilizing services for children's coverage, may conflict with a program's overarching objective to provide services to low-income children, and therefore must be carefully designed. In addition to the impact that premiums and copayments may have on reducing participation, states must also consider the benefits of instituting "price sensitive" cost-sharing. For example, moderately priced cost-sharing mechanisms are often instituted by state programs as a means of instilling a sense of responsibility in participants, and deterring the welfare stigma that is often associated with public programs. Moreover, as copayments and premiums for subsidized insurance mimic the cost-sharing requirements of employer-sponsored coverage, they serve as a bridge between public and private insurance and a deterrent to substitution.

The types of cost-sharing implemented by the nine programs are summarized in Table 4 and include: monthly premiums, annual enrollment fees and copayments. In addition, states may use family caps that define the maximum cost-sharing required by families and sliding scales that are based on family size and income.

Table 4: Cost-Sharing Mechanisms

  CaliforniaKids Colorado Children's Basic Health Plan Florida Healthy Kids1 MA Children's Medical Security Plan MinnesotaCare New York Child Health Plus Pennsylvania CHIP TennCare Washington Basic Health Plus
Monthly Premiums     X X X X X X  
Annual Enrollment Fee   X              
Copayments X X X X   X X    
Family Cap     X X   X      
Sliding Scales     X X X X X X  

1Florida Healthy Kids has a family cap on premiums in some locations. However, it only applies to families who pay the full amount each month for multiple kids and who are not subsidized.

States have attempted to carefully set copayments at levels that would not deter utilization for some services such as preventive services but would assist in controlling the improper use of other services such as emergency room utilization. Table 5 illustrates copayment levels by service in the various programs.

Table 5: Co-Payment Levels

  CaliforniaKids Colorado Children's Basic Health Plan Florida Healthy Kids MA Children's Medical Security Plan1 MinnesotaCare New York Child Health Plus Pennsylvania CHIP TennCare Washington Basic Health Plus
Office Visits $5 $2 $3 $1-5 No copayments for children. $2   No copayments. No copayments.
Health Screenings   $2   $1-5 $2  
Outpatient Surgery           $5
Outpatient Mental Health     $5     $5
Emergency Room2 $25   $25   $35 $5
Ambulance Transport            
Hospital Admission            
Vision Care $10          
Eyeglasses     $10     $5
Hearing Screenings and Aids           $5
Prescriptions   $2 $3     $5
Non-generic prescriptions $10 $2        
Dental $10         $5

1 Massachusetts has sliding scale copayments based on family income guidelines of $1, $3 or $5.
2 Both the New York Child Health Plus program and the Florida Healthy Kids program do not assess a copayment when the use of the emergency room is appropriate.