Public and Private Health Insurance Premiums: How Do They Affect the Health Insurance Status of Low-Income Childless Adults?

Article excerpt

The Patient Protection and Affordable Care Act (ACA) will substantially increase public health insurance eligibility and alter the costs of insurance coverage. Using Current Population Survey (CPS) data from the period 2000 2008, we examine the effects of public and private health insurance premiums on the insurance status of low-income childless adults, a population substantially affected by the A CA. Results show higher public premiums to be associated with a decrease in the probability of having public insurance and an increase in the probability of being uninsured, while increased private premiums decrease the probability of having private insurance. Eligibility for premium assistance programs and increased subsidy levels are associated with lower rates of uninsurance. The magnitudes of the effects are quite modest and provide important implications for insurance expansions j or childless adults under the A CA.

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Low-income childless adults are among the most likely groups of Americans to be uninsured. In 2008, childless adults accounted for 58% of the nonelderly uninsured. Among childless adults below the federal poverty level, 47% are uninsured (Hoffman et al. 2009). One reason for low coverage among this population is that many do not have access to employer-sponsored insurance and cannot afford coverage through the individual market. Additionally, few nonelderly childless adults qualify for public health insurance programs unless they are disabled or pregnant (Artiga and Schwartz 2010). Other factors leading to high uninsurance levels among childless adults include: disenrollment from their parents' plan at a certain age, a belief that they are healthy and not in need of medical care, and a reliance on the health care safety net.

These high levels of uninsurance lead to incomplete risk pooling within the health insurance market. Evidence suggests that lack of health insurance results in worse health outcomes because the uninsured tend to receive less preventive care, to be diagnosed at more advanced disease stages, to receive less comprehensive care, and to have higher mortality rates (Coleman et al. 2002). Lack of insurance also places individuals and their families at risk of financial catastrophe, as medical bills have been found to be a contributing factor in many personal bankruptcies (Dranove and Millenson 2006).

This study examines state-level childless adult health insurance expansions to analyze the effect of both public and private premium levels on the insurance status of low-income childless adults. State-level expansions have taken a variety of forms. States can use Section 1115 or other waivers to provide coverage through a public insurance program, or subsidize private health insurance through premium assistance programs. Given the flexibility states have in designing and implementing their expansion programs, many childless adult programs require more cost-sharing than the typical Medicaid program, often in the form of premiums. While premiums may limit the extent of private insurance crowd-out and help states constrain program costs, they can also potentially reduce participation rates since low-income enrollees may be unable to afford the premiums. Some state programs have relied on the use of premium subsidies to aid in the purchase of private health insurance, including both group and individual insurance, to promote coverage through the private market. For example, premium assistance programs may subsidize privately offered health insurance products through an employer as well as individual plans among those without access to employer-sponsored insurance. While each state is unique in the structure and subsidy levels of its premium assistance programs, premium subsidies are typically provided on a sliding scale by income.

Recent passage of the Patient Protection and Affordable Care Act (ACA) will substantially increase eligibility for publicly funded health insurance and alter the costs of private coverage among the low-income childless adult population. …