Children's Health Insurance Expansions: State Experiences in Developing Benefit Packages and Cost-Sharing Arrangements. E. Other Factors Determining Premiums and Cost-Sharing


Additional issues raised by the states in determining premium and cost-sharing features of their programs included raising revenues through premiums to offset costs and the use of copayments to affect utilization of services.

States looked at raising premium levels to offset costs of adding services to their benefit packages. For example, to finance the addition of inpatient care, New York's Child Health Plus raised premium levels for all but the poorest families. Families with incomes between 120% and 160% of the federal poverty level went from paying no premium to a maximum of $36/member/month. Those with incomes above 160% of poverty saw their premiums rise 400% or more. Children in families earning less than 120% of the poverty level continue to receive coverage for free.

States also considered how copayments would affect the utilization of health services. For example, some states have implemented higher copayments for emergency room services, which are generally viewed as costly and often inappropriately utilized, to encourage families to seek preventive and primary care services for their children. In order to encourage families to seek preventive care, the CaliforniaKids Program implemented a $25 copayment for emergency room use. Since the co-pay for doctor visits is only $5, the incentive is for parents to take their children to the physician's office and not the emergency room. Vision and dental copayments are set at $10 each, as well as $10 for non-generic prescriptions. This is to encourage parents to only purchase these items when they are absolutely needed. The Florida Healthy Kids program adopted a similar approach, requiring a $25 copayment for emergency room use, compared to a $5 co-pay for a physician visit.