CHIPRA Mandated Evaluation of the Children's Health Insurance Program: Final Findings. IV. Access to Private Coverage Among Low-income Children

08/01/2014

KEY FINDINGS:

  • Direct substitution of CHIP coverage for private insurance at the time of enrollment was estimated to occur for only 4 percent of new enrollees. About 13 percent of new enrollees had any private coverage in the 12 months before enrolling in CHIP and only 28 percent of those ended that coverage for potentially voluntary reasons.
  • A broader measure of access to ESI finds that 43 percent of CHIP enrollees had a parent with access to ESI, but only 20 percent were reported to have access to dependent ESI coverage. Access to ESI for low-income uninsured children and Medicaid enrollees was also very limited.
  • Even when dependent coverage is available, affordability is likely an important barrier many families face in accessing ESI for their children.
  • CHIP and Medicaid enrollees had high levels of parental uninsurance. In California, Florida and Texas, 62 percent of CHIP enrollees and 54 percent of Medicaid enrollees had at least one uninsured parent.

Since CHIP expanded eligibility for public insurance to children in 1997, there has been considerable concern that the program would encourage families to substitute public coverage for their existing employer-sponsored insurance (ESI) coverage. Although concern about this substitution is common for many government programs, it has been particularly pronounced for CHIP because the program extended eligibility to children of parents with incomes higher than the traditional eligibility threshold for Medicaid or other safety net programs. Moreover, many have feared that employers would make dependent coverage less available if children of employees had an alternative source of coverage. As a result, the original CHIP legislation required states to incorporate strategies into their programs to prevent the substitution of CHIP for private group coverage.

In this chapter, we use data from the 2012 congressionally mandated CHIP and Medicaid survey of enrollees and disenrollees as well as from the 2011/2012 National Survey of Children’s Health (NSCH) to provide information on the potential substitution of public for private coverage.35 The chapter begins with a description of the type of coverage held by children before they enrolled in CHIP, including the share with prior private coverage. We then examine the extent to which children covered by CHIP had access to private coverage while they were enrolled, and conclude by presenting evidence on access to ESI coverage among low-income uninsured children.

Most new enrollees were covered by Medicaid or CHIP before their most recent CHIP enrollment; only 13 percent had any private coverage before enrolling in CHIP.

The vast majority of new enrollees (82 percent) had a period of public insurance coverage in the 12 months before enrolling in CHIP (Figure IV.1). Just over half of new enrollees (52 percent) had Medicaid or CHIP coverage in the 12 months before they enrolled in CHIP, with no period of uninsurance just prior to enrollment.36 Another 30 percent of new enrollees had public coverage in the year before but were uninsured just prior to enrolling.

A much smaller share of new CHIP enrollees (13 percent) had private coverage in the 12 months before enrolling in CHIP, including 2 percent that had a gap in coverage before enrolling and 10 percent that enrolled directly after private coverage without a gap in insurance.37 The rest of the new enrollees were uninsured the full year before enrolling in CHIP (5 percent) or had other insurance (such as Medicare or military-based coverage) before enrolling (1 percent). The low rate of private coverage prior to enrolling suggests a relatively low level of direct substitution of CHIP for private coverage.

Figure IV.1. Coverage of New CHIP Enrollees During the 12 Months Prior to Enrolling

Figure IV.1. Coverage of New CHIP Enrollees During the 12 Months Prior to Enrolling

Source: 2012 Congressionally Mandated Survey of CHIP and Medicaid Enrollees and Disenrollees.

Note: New enrollees are those enrolled in CHIP for three months following at least two months without CHIP coverage.


Direct substitution of CHIP for private coverage at the time of enrollment was estimated to occur for only 4 percent of new enrollees.

Table IV.1 describes the reasons that a child’s private coverage ended, as reported by the child’s parent. This information helps to refine further the estimate of the direct substitution of CHIP for private coverage, by considering whether private coverage was dropped voluntarily to enroll in CHIP or whether it was lost due to circumstances beyond the family’s control. The results suggest that the vast majority lost their private coverage involuntarily. An estimated 69 percent of children who enrolled in CHIP after some period of private coverage were reported to have lost that coverage due to a parent’s job loss or loss of benefits from an employer. An additional 3 percent lost private coverage due to an involuntary change in family circumstances, such as a death or divorce. Of children who had private coverage before enrolling, only about 5 percent appear to have lost this coverage for voluntary reasons based on a preference for CHIP.

Table IV.1. Direct Substitution of CHIP for Private Coverage

  Percentage
Private Coverage in the Year Prior to Enrolling 13
Reason Private Coverage Ended
Employment or Benefit Loss/Change (Involuntary) 69
No longer works for employer, lost/changed jobs 63
Employer no longer offers coverage 6
Family Circumstances (Involuntary) 3
Parent got divorced 2
Child custody changed 1
Preference for CHIP/Dislike Other Insurance (Voluntary) 5
Dropped plan to qualify for CHIP 3
Employer plan changed/less desirable/employer switched to less generous plan 1
[CHIP/Medicaid] costs less 1
[CHIP/Medicaid] has better benefits 0
Insurance not needed/child does not get sick 0
Affordability (Indeterminate) 18
Cost of insurance or dependent coverage went up 9
Family income changed 5
Financial or affordability reasons 4
Miscellaneous (Indeterminate) 5
Total 100
Upper-Bound Estimate of Direct Substitution of CHIP for Private Coverage
Voluntary + indeterminate reasons 28
Involuntary reasons 72
Direct substitution (voluntary + indeterminate) * share with prior private coverage) 4

Source: 2012 Congressionally Mandated Survey of CHIP and Medicaid Enrollees and Disenrollees.

Note: New enrollees are those enrolled in CHIP for three months following at least two months without CHIP coverage.


Another 18 percent of children with a recent history of private coverage were reported to no longer have that coverage due to affordability, including changes in income, the cost of insurance, or other financial reasons. It is not possible to classify these cases as either strictly voluntary or involuntary coverage losses. In some cases, the child might have maintained the coverage in the absence of CHIP, whereas in others the financial strain on the family would have left the child uninsured. An additional 5 percent of children lost coverage for other miscellaneous reasons, such as move-related issues and logistical problems with insurance forms, which cannot be classified as voluntary or involuntary.

We estimated a direct substitution rate by calculating the proportion of children who lost coverage due to voluntary or indeterminate reasons and multiplying it by the share of children who had prior private coverage. This approach assumes that all of those reporting affordability or other miscellaneous reasons would have maintained their coverage in the absence of CHIP, resulting in an estimated 28 percent classified as voluntarily substituting CHIP for private coverage. With only 13 percent of new enrollees reporting any prior private coverage, this results in an upper-bound direct substitution estimate of 4 percent. This estimate is substantially smaller than those found in past research on the extent of substitution occurring in CHIP (LoSasso and Buchmueller 2004; Davidoff et al. 2005; Hudson et al. 2005; Sommers et al. 2007; Dubay and Kenney 2009; Howell and Kenney 2012; Gresenz et al. 2012, 2013). A couple of factors likely contribute to this finding. First, the survey of CHIP enrollees was administered during the sluggish recovery from the recession, which likely contributed to the limited evidence of prior private coverage among these children. Second, the growth in Medicaid and CHIP coverage has resulted in a large proportion of children having public coverage prior to their most recent CHIP enrollment. These children may have substituted public for private coverage at some point in the past which we cannot observe. Findings on access to employer coverage through a parent may be more indicative of the potential for CHIP and Medicaid to substitute for private coverage and are discussed in the next section.

Approximately 40 percent of established CHIP enrollees had a parent with ESI coverage, but only half of them reported that the ESI policy could cover the child.

For both new and established enrollees, access to dependent ESI coverage was considerably more limited than access to any ESI coverage. Among established CHIP enrollees, an estimated 43 percent have a parent who was either offered ESI or had an ESI policy (Figure IV.2). While 40 percent of established CHIP enrollees had a parent with an ESI policy, only about half of them (20 percent) had a parent with a policy that reportedly could cover the child. The estimates of available dependent coverage based on the survey of CHIP families may be lower than what is reported on employer surveys for several reasons. First, the sample of families may have been concentrated in firms or jobs that do not offer dependent coverage. Second, respondents may have understood the question to be about whether dependent coverage would have been affordable rather than simply about whether it was offered. Finally, respondents may have been concerned that their access to CHIP could be at risk if they reported that they had access to ESI for their child. Thus, we interpret the estimates of plans that could cover the child with caution and consider the broader estimates of any access to ESI for parents as an upper bound on potential access for children. Potential access to ESI coverage was slightly more limited for new enrollees than for established enrollees; 38 percent of new enrollees had a parent with an ESI offer or policy compared with 43 percent of established enrollees.

Figure IV.2. Potential Access to ESI Among CHIP Enrollees

Figure IV.2. Potential Access to ESI Among CHIP Enrollees

Source: 2012 Congressionally Mandated Survey of CHIP and Medicaid Enrollees and Disenrollees.

Notes: ESI is employer-sponsored insurance. Established enrollees are those enrolled for at least 12 months at the time of sampling. New enrollees are those enrolled for 3 months at the time of sampling who did not transfer from Medicaid or prior CHIP coverage in the previous four months. */** indicates that the estimate is significantly different from the established enrollees estimate at the .05/.01 level.


For established enrollees with access to dependent ESI coverage, affordability concerns may prevent children from being covered in the absence of CHIP.

While about 40 percent of established CHIP enrollees had a parent with ESI coverage, several factors could prevent them from being covered by a parent’s plan. First and foremost, only 20 percent of children were reported to have access to a plan that could cover them. Furthermore, as Table IV.2 shows, among those children with access to dependent coverage, the parents of 57 percent of them would be responsible for the entire premium and the parents of 39 percent would have to contribute some portion of the premium. Of children with access to a dependent ESI policy to which an employer contributes anything, the main reasons reported by parents for not joining were that the premiums were too high (55 percent), that CHIP/Medicaid costs less (8 percent) or that out-of-pocket costs in the employer plan were unaffordable (7 percent).

Access to ESI was more limited for children covered by Medicaid than it was in CHIP.

We also estimated potential access to ESI among children with Medicaid coverage in three states (California, Florida, and Texas). Figure IV.3 presents data suggesting that CHIP enrollees were more likely to have access to ESI than Medicaid enrollees: 11 percent of established Medicaid enrollees had a parent who had or was offered ESI, compared with 44 percent of established CHIP enrollees in the three states. The proportion of Medicaid children with reported access to dependent coverage was very low (3 percent).

Figure IV.3. Potential Access to ESI Among CHIP and Medicaid Established Enrollees in California, Florida, and Texas

Figure IV.3. Potential Access to ESI Among CHIP and Medicaid Established Enrollees in California, Florida, and Texas

Source: 2012 Congressionally Mandated Survey of CHIP and Medicaid Enrollees and Disenrollees.

Notes: ESI is employer-sponsored insurance. These estimates are for three states with Medicaid enrollee sample (CA, FL, TX). Established enrollees are those enrolled for at least 12 months at the time of sampling. */** indicates that the estimate is significantly different from CHIP estimate at the .05/.01 level.


CHIP and Medicaid enrollees had high levels of parental uninsurance.

While access to ESI varied considerably for Medicaid versus CHIP enrollees, the proportion of children with uninsured parents was similar in the two groups. Among Medicaid enrollees in California, Florida and Texas, 54 percent had at least one uninsured parent, and 45 percent had only uninsured parents, compared with 62 percent and 44 percent for CHIP enrollees in the same three states (data not shown).38 This suggests that the Affordable Care Act coverage expansions have the potential to benefit low-income children by addressing high levels of uninsurance among their parents.

Table IV.2. Employer Contributions and Plan Choice Among Parents of Established CHIP Enrollees with Access to Dependent ESI Coverage

  Percent
Any Parent with ESI Policy That Covers Child 20
Employer pays none for child 57
Employer pays some for child 39
Employer pays all for child 4
Reason Child is Not Covered by the Parent's Plan [Asked of Those Where Employer Pays Some/All for Child]  
Affordability: Premium 55
CHIP/Medicaid costs less 8
Affordability: Out of Pocket 7
CHIP/Medicaid better benefits 6
Cannot see needed providers 1
Services do not meet needs 1
Other Reasons 21
Don’t Know/Refused 1

Source: 2012 Congressionally Mandated Survey of CHIP and Medicaid Enrollees and Disenrollees.

Notes: ESI is employer-sponsored insurance. Established enrollees are those enrolled for at least 12 months at the time of sampling. Reason child is not covered is only asked of families with ESI that could cover the child and for which the employer would pay all or some of the premium.


Most low-income uninsured children lacked access to ESI.

Analysis using the 2011/2012 NSCH indicates that few uninsured children in families with incomes below 400 percent FPL had access to ESI through their parents’ employment (Table IV.3). Most uninsured children with family incomes below 400 percent of FPL lived in families where neither the parent nor the child had access to employer-sponsored coverage. The largest group of uninsured children in both income groups (66 percent of uninsured children with family income below 200 percent of FPL and 58 percent of uninsured children with family income between 200 and 400 percent of FPL) lacked ESI access because their parents were uninsured and had no ESI offer. Thus, most uninsured children who could be enrolling in Medicaid/CHIP would not be substituting CHIP for available employer-sponsored insurance.

Just 16 percent of uninsured children with family income below 200 percent of FPL and 29 percent of those between 200 and 400 percent of FPL could potentially get ESI through their parents’ employment. In total, more than 16 percent of uninsured children in both of these income groups live in families in which the parent has access to ESI but either the available ESI coverage cannot include dependents (11 percent of those below 200 percent of FPL and 8 percent of those between 200 and 400 percent of FPL) or the employer contributes nothing toward coverage for dependents (7 percent of those below 200 percent of FPL and 10 percent of those between 200 and 400 percent of FPL).

Additional analysis of the NSCH (not shown) indicates that 59 percent of uninsured children below 200 percent of the FPL had been previously enrolled in Medicaid or CHIP, and more than 4 in 10 of these had been enrolled in the prior year. Another 14 percent of low-income uninsured children had never been enrolled in the programs but had attempted to enroll. Thus, while most low-income uninsured children had no access to ESI, the majority had prior experience with Medicaid/CHIP.

Table IV.3. Access to ESI Among Uninsured Children (0–17) in the United States, by Income Group, 2011/2012

  Percent
  <200% FPL 200–400% FPL
Access to ESI Through Parents 16 29
Parent has insurance that could cover child 6 13
Employer pays ALL/SOME of child’s premium 3 9
Employer pays NONE of child’s premium 3 4
Parent has offer of insurance that could cover child 10 16
Employer pays ALL/SOME of child’s premium 6 10
Employer pays NONE of child’s premium 4 6
No Access to ESI Through Parents 83 69
Parent has ESI that does not cover child 6 5
Parent has offer of ESI that does not cover child 5 3
Parent has insurance, but not employer- or union-based (and has no employer offer) 8 3
Parent is uninsured and has no employer offer 66 58
Unknown Access to ESI 1 2
Parent has insurance or eligible for insurance but unknown whether it could cover child 1 0
Parent has insurance through former employer but unknown whether it could cover child 0 0

Source: Urban Institute Analysis of the 2011/2012 National Survey of Children's Health.

Notes: ESI is employer-sponsored insurance. Shares do not add up to 100 percent due to missing information (row not shown).


35 Further details on findings reported in this chapter are contained in memos and issue briefs prepared for the evaluation. For relevant findings from the analysis of data from the 2012 congressionally mandated survey of CHIP and Medicaid enrollees and disenrollees, see McMorrow et al. (2013a) and McMorrow et al. (2013b), contained in Harrington and Kenney et al. (2014). For relevant findings from the analysis of the 2011/2012 National Survey of Children’s Health, see Haley et al. (2013).

36 Most transferred from Medicaid, but some reported continuous CHIP enrollment on the survey.

37 The estimates in Figure IV.1 of children with prior private coverage with and without a gap in coverage do not sum to the total estimate of children with prior private coverage due to rounding.

38 Among CHIP enrollees in all 10 survey states, 57 percent had at least one uninsured parent and 42 percent had only uninsured parents.

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