Five of the six study states chose waiting periods as the primary strategy to deter crowd-out (Table 18). California also wrote into its statute the possibility of increasing the waiting period from three to six months if significant crowd-out occurred. At the same time, state officials established exceptions to the waiting periods in the following circumstances:
- In all the states with waiting periods: when a child's loss of insurance is involuntary, due to parents' loss of employment, a change to employment that does not offer dependent coverage, or expiration of COBRA coverage
- In three of the states: when a child is "underinsured," that is the insurance the child has is either very expensive or very limited in scope:
- In California, children who have been covered by individual, rather than group, policies
- In Colorado, children whose parents are responsible for paying more than 50 percent of the premium costs for employer-sponsored coverage
- In Texas, children whose parents are paying premiums that exceed 10 percent of total family income
States instituted other measures to deter crowd-out and to reinforce the waiting period (Table 18), including: monitoring (New York only), asking questions about current and prior insurance on the application form, verifying other insurance, requiring applicants to get price quotes from private insurers, imposing obligations on employers in order to deter employer-driven crowd-out, imposing cost-sharing requirements, and having a benefits package similar to private insurance. 63
aLouisiana had a waiting period but dropped it.
All six study states included questions on the application form about the status of applicants' health insurance. This is considered an anti-crowd-out strategy because parents who state that their children have been covered by insurance within the waiting period are automatically denied, and states believe that the questions deter families from dropping coverage. The questions are similar in every state, asking whether the child already has health insurance, if the child has had coverage in the past three or six months, if the child has lost this coverage and, if so, why. To satisfy CMS's requirement, New York also asks parents applying for Child Health Plus detailed questions that allow the state to monitor crowd-out. 64
Four states impose cost-sharing provisions (especially premiums) as an anti-crowd-out measure to make SCHIP more like private insurance and make a switch less advantageous. Officials in these states believe that cost sharing poses an economic disincentive for families considering substituting SCHIP for private insurance. (Cost sharing is discussed in Chapter XII.)
Two states adopted unusual strategies to deter crowd-out. Missouri verifies the health insurance status of the applicant against a private coverage database, a provision aimed at enforcing the waiting period. Also, applicants who fall within the higher, premium-paying income group (226 to 300 percent of poverty) must obtain and provide price quotes from two private insurers for the cost of dependent coverage, to ensure that lower-cost alternatives for coverage do not exist. Families with access to what could be deemed "affordable" coverage, (those who obtain quotes for less than $290 per month) may not enroll in SCHIP. 65
California has adopted a strategy aimed at deterring employers from directly encouraging families to enroll their children in SCHIP. Insurance agents and insurance companies may not refer their insureds' dependents to Healthy Families if they already have employer-sponsored coverage. Employers are also prohibited from changing the extent and price of their coverage in a way that might encourage employees to switch to Healthy Families.
63. A. Westpfahl Lutzky and I. Hill, "Has the Jury Reached a Verdict? States' Early Experiences with Crowd-Out Under SCHIP," The Urban Institute, June 2001.
64. The state tabulates (1) the number of children who have had health insurance in the previous six months; (2) of those, the number that had this insurance through an employer; (3) the numbers of those who dropped that insurance for any of the following reasons: (a) the employer discontinued offering dependent coverage or is no longer contributing toward a premium for dependent coverage; (b) the premium was increased beyond a level that was affordable to the family and: (i) Child Health Plus was judged to be a more affordable alternative, (ii) Child Health Plus' benefits were judged to be better, or (iii) the parent was no longer working for the employer who offered health insurance. (A. Westpfahl and I. Hill, "Has the Jury Reached a Verdict? States' Early Experiences with Crowd-Out Under SCHIP." The Urban Institute, June 2001.)
65. The affordability threshold is adjusted periodically.