The nearly equal numbers of transitions into and out of each coverage status raise questions about the source of this near-equilibrium. Do children return to their original source of coverage? Indeed, many do. Children who changed their health insurance coverage often changed it again in the next four months--the interval between SIPP interviews. About 40 percent of all changes were followed by a second change within this time span, and four out of five of these (or 32 percent overall) involved a return to the original source of coverage. What may be of more importance, however, is how this phenomenon varied across types of transitions. Depending on both the original source and the destination, the frequency with which an initial change was followed by a second change ranged from 23 to 64 percent. Children leaving ESI were the most likely to have a second transition and the most likely to return to their original source of coverage, whereas children who moved into ESI were the least likely to have a second transition, doing so only 23 to 24 percent of the time.
Movements between ESI and Medicaid are of particular interest to policymakers seeking to cover the uninsured without drawing children out of employer-based coverage. It is noteworthy, then, that the children who were most likely to change their coverage again and the most likely to return to their original coverage were those who moved from ESI to Medicaid. For these children, 64 percent changed their coverage again in the next four months, and 55 percent returned to ESI. At the same time, children who moved from Medicaid to ESI were the least likely to change their coverage again in the next four months. Only 23 percent of the children who moved from Medicaid to ESI changed their coverage again in the next four months, and less than 16 percent of those who left Medicaid returned to Medicaid in four months.