Interim Evaluation Report: Congressionally Mandated Evaluation of the State Children’s Health Insurance Program. 2. Experiences with Family Coverage in New Jersey, Rhode Island, and Wisconsin


On January 18, 2001, CMS authorized three states to extend SCHIP coverage to parents: New Jersey, Rhode Island, and Wisconsin. All three states had begun covering adults under Medicaid before their SCHIP waivers were approved. Both New Jersey and Rhode Island did so under Section 1931 of the Social Security Act, while Wisconsin did so under a Section 1115 Medicaid demonstration. According to a recent report on the early experiences of these three states prepared as part of ASPE's evaluation of SCHIP (Kaye et al. 2001), the early experience in these three states suggest that:

  • States believe that family coverage is an effective way to cover children
  • Employers, parents, health plans, and providers strongly support family coverage
  • These programs appear not to have crowded out the private market

Enrollment of children increased rapidly in all three states when they expanded their programs to include parents of Medicaid and SCHIP eligible children. It is not possible to identify how much of the increase in enrollment was due exclusively to family coverage, as opposed to other factors, such as increased outreach efforts, streamlined enrollment, and, in Rhode Island, erosion of the private insurance market. All three states reported that the greatest enrollment growth was among children. In many of these cases, the children (but not the parents) could have been eligible for Medicaid before family coverage was implemented. In other words, even though some children in many of these families were eligible for Medicaid, it appears that the families did not apply for coverage for their children until the parents also could be covered. Due to a short program history, the study could not examine SCHIP family coverage's effect on retention of children in the program. However, some anecdotal evidence suggests that family coverage has encouraged appropriate utilization among enrolled children. Moreover, providers felt that family coverage not only increased children's enrollment in the program, but also improved the parents' health and knowledge about health care, thus enabling them to better care for their children.

All employers, staff from health plans and providers, and parents interviewed in the three states supported family coverage. Employers praised the program as a way to provide coverage to low-income families who do not have access to employer-sponsored coverage and/or to help families in transition from welfare to work. Parents were overwhelmingly positive about family coverage.

Any expansion of publicly funded insurance coverage raises the possibility that public coverage will crowd out private coverage; family coverage is no exception. Nevertheless, there is little evidence that crowd-out occurred. Stakeholders in New Jersey and Wisconsin felt that the crowd-out prevention provisions of the SCHIP program (such as waiting periods) and insurance laws (that require employers to offer health insurance to all qualified employees) played a role in preventing crowd-out. A good economy and low unemployment also contributed to preventing crowd-out. Rhode Island has experienced a distinct problem. In the past few years, two of the four commercial insurance carriers providing employer coverage withdrew from the state. Premiums in the remaining two commercial plans increased significantly. As a result of the plan withdrawals and the premium increases, people dropped private coverage and some enrolled in RIteCare (the SCHIP program). There is insufficient information to determine what portion of the increase is attributable to which factors. Those interviewed, however, expressed the view that the existence of RIteCare did not contribute to either the withdrawals or premium increases, but it did provide an important safety net for many people who probably would otherwise not have been able to obtain health insurance coverage.

A major concern among health plans was the higher cost of serving SCHIP parents compared with Medicaid parents. They reported that SCHIP parents were likely to be older than adults in Medicaid and more likely to have chronic diseases. To address these concerns, Rhode Island and Wisconsin raised their capitation rates to plans and instituted risk sharing. New Jersey already had risk sharing in place at the time of program expansion.

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