This study uses the introduction of premiums into Kentucky's Children's Health Insurance Program (KCHIP) to examine whether the enrollment impact of new premiums varies by child health type. We also examine the extent to which children find alternative coverage after premium nonpayment. Public insurance claims data suggest that those with chronic health conditions are less likely to leave public coverage. We find little evidence of a differential impact of premiums on enrollment among the chronically ill. Our survey of nonpayers shows that 56% of responding families found alternative private or public health coverage for their children after losing CHIP.
The Children's Health Insurance Program Reauthorization Act (CHIRPA) was signed into law by President Obama in early 2009 and extends the Children's Health Insurance Program (CHIP) over a four-and-a-half-year period, until September 2013 (Horner et al. 2009). CHIP was created in 1997 as a federal-state partnership to initiate and expand health insurance coverage for uninsured, low-income children (Kenny and Chang 2004). The CHIRPA legislation was designed to build upon this success by targeting uninsured children, most of whom are eligible for CHIP coverage under current eligibility rules, but not enrolled. To encourage states to enroll these children, CHIRPA provides incentives to streamline eligibility processing and increases CHIP financial allotments to states.
Increased emphasis on outreach and enrollment implies a need to better understand programmatic barriers to enrollment and retention such as CHIP premiums. The net impact of reducing the complexity of the CHIP enrollment process may be negligible if such a policy change is financed in part by increases in CHIP premiums (Ross and Cox 2005). Thus the introduction of (or increases in) CHIP premiums raises many important policy questions. For example, do premiums reduce enrollment in CHIP? If so, how is this related to the health of the children in the program? In other words, are children with chronic conditions more or less likely to exit as a result of changes in premiums? Do the children who exit CHIP obtain other insurance coverage, either through other public programs (Medicaid) or the private market?
The purpose of this paper is to address these questions by examining the impact of the introduction of a $20 per family per month premium in Kentucky's CHIP in late
2003. We estimate Cox proportional hazard models to measure the impact of this policy change on the duration of premium-paying CHIP enrollment spells. Using linked claims data to identify children with chronic health conditions, we extend the literature by addressing whether child health influences the family decision to drop CHIP coverage when faced with changes in premiums. In order to complement the hazard analysis, we present the results from a survey of families with children that dropped CHIP coverage as a result of premium nonpayment in the first four months after the introduction of the premium (December 2003-March 2004). The survey results also extend the literature by allowing us to examine whether children who leave CHIP as a result of premium nonpayment find other sources of insurance coverage.
The results of our hazard analysis suggest that the introduction of the premium reduces the duration of CHIP coverage for the average child (as is typically found in the literature). In addition, children with chronic health conditions, such as diabetes, asthma, or one of a variety of mental health conditions, are less likely to leave CHIP coverage than children without one of these health conditions. Unlike Herndon et al. (2008), we find little evidence of a differential impact of premiums on the enrollment status of children with chronic conditions. Our survey results suggest that 56% of responding families report having some form of private (25%) or public (31%) health coverage after losing CHIP coverage for their children.
Previous Literature and Our Contributions
There is a growing literature that explores the impact of CHIP premiums using state administrative enrollment micro-data. (1) For the most part, this literature has focused on the first policy question raised earlier: Do premiums reduce enrollment in CHIP? The typical result is that the duration of enrollment does depend on premium levels, in addition to other dimensions of the program, such as application and renewal procedures. While state administrative enrollment data obviously are necessary to analyze trends in enrollment, they alone cannot address other more complex policy questions. For example, many states store enrollment data and claims data separately. Other than Shenkman et al. (2002) and Herndon et al. (2008), whose studies analyzed claims data for Florida CHIP recipients, it appears that researchers in this literature have not had access to claims data to control for the health status of children and to address the question of differential effects of premiums by health type. (2)
We build on insights from the studies of the Florida CHIP and extend the literature on public health insurance premiums in several ways. First, by analyzing a different state, we provide a new set of estimates to compare with Florida. Given that the only published studies on this topic that control for child health status are from one state, providing a comparison by using data from a different state is especially important. In addition, by analyzing a different state, we can exploit programmatic differences that may be useful in addressing our research questions. For example, as discussed in more detail later, the CHIP premium in Kentucky was implemented in the 151% to 200% federal poverty level (FPL) CHIP income-eligibility category and not in the 101% to 150% FPL CHIP income-eligibility category. This zero-premium CHIP eligibility category provides a potential control group to help better assess the impact of the premium on enrollment.
A comparison of the two Florida studies suggests that Shenkman et al. (2002) did not consider transfers to other public coverage, such as Medicaid, in their definition of a CHIP coverage spell, while Herndon et al. (2008) allowed for such transfers in their CHIP spell definition. A second major contribution we make to the literature is to examine this difference in the definition of the coverage spell explicitly by estimating separate models for each one. Our survey results for families that drop CHIP coverage for their children represent a third major contribution to the literature. Administrative enrollment data alone are insufficient to fully address whether these children find alternative sources of coverage after leaving CHIP.
Kentucky's CHIP, the Hazard Sample, and the Survey Sample
KCHIP--The Kentucky Children's Health Insurance Program
The commonwealth of Kentucky initiated the Kentucky Children's Health Insurance Program (KCHIP) on July 1, 1998, by extending Medicaid coverage to children ages 14 through 18 in families at or below 100% FPL. Eligibility for other children was phased in over time using both state options of expanding Medicaid eligibility and creating a standalone program. Today, children under age 19 with family incomes at or below 100% FPL are eligible for Medicaid. Children under age 19 with family incomes between 101% and 150% FPL are eligible for KCHIP 2, which was set up as a further expansion of Medicaid. Children under 19 with family incomes between 151% and 200% FPL are eligible for KCHIP 3, which was created as a stand-alone program. (3) To give a sense of the programs' magnitude, in 2003 the average monthly enrollment in Kentucky Medicaid was 332,700 children, the average monthly enrollment in KCHIP 2 was 32,171 children, and the average monthly enrollment in KCHIP 3 was 19,459 children.
Despite the fact that KCHIP 2 is a Medicaid expansion and KCHIP 3 is technically a stand-alone program, both offer essentially the same level of coverage, which is equivalent to the full health coverage offered under Medicaid in Kentucky. (4) Initially, the state chose not to charge any monthly premiums for KCHIP coverage (as is the case in Kentucky Medicaid). This changed in December 2003, when Kentucky began charging a $20 monthly premium for families with children covered by KCHIP 3. This policy change was brought on by a variety of factors, including growth in program costs and falling state revenues. Because KCHIP 3 is a stand-alone program rather than a Medicaid expansion, the state could impose this premium without a federal waiver. (5) To summarize the cost-sharing requirement history in Kentucky, prior to December 2003 there were no premiums or copayment requirements in Medicaid, KCHIP 2, or KCHIP 3. The premium introduced in December 2003 applied only to KCHIP 3 coverage, so the other eligibility categories continued to have no premium or copayment requirements.
The KCHIP 3 Sample for the Hazard Analysis
The Kentucky Cabinet for Health and Family Services provided administrative enrollment micro-data for all KCHIP and Medicaid recipients enrolled at some point during the 33-month period between December 2001 and August 2004. The administrative enrollment database provides information on monthly enrollment and program status, as well as demographic variables including age, gender, race, and region of residence. The final sample consists of 46,068 new, first-time KCHIP 3 enrollment spells initiated during the 33-month period for children ages one to 18 with no missing demographic information. We start our empirical analysis of the impact of premiums on coverage duration with this sample. (6)
A new KCHIP 3 enrollment spell is defined as starting in the month that children move into KCHIP 3, whether they had no public coverage in the previous month or were covered under KCHIP 2 or Medicaid. (7) Unlike much of the early literature examining the determinants of the duration of CHIP enrollment spells, such as Shenkman et al. (2002), we follow Allison (2003), Marton (2007), and Herndon et al. (2008) in that we do not treat transfers to other public coverage (KCHIP 2 or Medicaid) as exits. Instead, we consider continuing months covered under another eligibility category as part of the KCHIP 3 spell that preceded it. The impact of this assumption will be discussed later.
A KCHIP 3 spell ends when a child is no longer publicly covered for one full month. In our descriptive statistics, we separately describe the spells classified as ending due to nonpayment and spells ending for any other reason. Other reasons for exiting KCHIP include a parent obtaining private health insurance or the family moving out of state. We cannot differentiate between these potential exit routes. In addition, it is not clear if a family is classified as exiting due to nonpayment because it cannot pay the KCHIP 3 premium or because it stopped paying …