Do Children Enrolling in Public Health Insurance Have Other Options?

Key Points

This report describes prior health insurance coverage of children entering SCHIP, as well as current coverage within their families. Main findings include:

• • Over half of new enrollees (57%) were uninsured at the time they entered SCHIP.
  • Most children (70%) entering SCHIP had health insurance for at least some portion of the previous year.
  • Families of new SCHIP enrollees often have multiple types of health insurance, yet most enrollees (66%) have at least one uninsured parent.
  • Half of the children entering SCHIP (51%) were eligible to enroll in job-based health insurance through at least one parent, although this option may not have been affordable.
  • These findings help policymak­ers better understand the role that SCHIP plays in providing insur­ance coverage to low-income chil­dren in Kansas.

Introduction

The Kansas SCHIP program was created to provide health insurance to children in low-income families that do not have an alternative source of coverage, either because their income is too high to qualify for Medicaid, or because they do not have access to affordable private health insurance. The state initially limited eligibility to children who had not been covered by private health insurance during the previous six months, unless they no longer had access to that coverage. However, the restriction on prior coverage was revoked in April 2001.

Despite efforts to target the program to low-income and otherwise uninsured children, little is known about SCHIP enrollees in terms of their previous insurance coverage, their family’s insurance status, and their access to employer-sponsored coverage.

Most children were insured for at least some portion of the year before enrolling

Seventy percent of children newly enrolling in SCHIP were insured for at least some portion of the previous year [See figure on opposite page]. Among those with coverage, the average new enrollee was covered for about 10 of the 12 months leading up to their entry into SCHIP. Parents report that nearly half (44%) of children entering SCHIP were covered by either SCHIP or Medicaid for some portion of the previous year, that about one in five (22%) had private cov­erage, and that 4% of children had some other type of coverage. Nearly one-third (30%) were uninsured for the entire year.

Families of children enrolling in SCHIP often have multiple types of insurance

Most new SCHIP enrollees (58%) were in families where at least one fami­ly member had another type of insurance coverage. Some (14%) were in families with persons also enrolled in Medicaid, and two-fifths (41%) had at least one pri­vately-insured family member. The pres­ence of multiple sources of insurance in a family may mean that parents have to negotiate different cost-sharing rules, lists of covered drugs, and lists of partici­pating doctors and dentists for various members of the family. The challenges of obtaining health care can be even greater when a family member is unin­sured, and most new SCHIP enrollees were in families with at least one unin­sured member. Two-thirds (66%) of new SCHIP enrollees had at least one unin­sured parent, and 5% of those with sib­lings had at least one uninsured sibling.

Half of new enrollees Children’s Insurance in the Year Before Enrolling in SCHIP

A child’s need for publicly-sponsored insurance depends on whether alter­natives such as job-based health insurance are available, affordable and ade­quate. We found that half of new SCHIP enrollees (51%) were eligible to be enrolled in job-based insurance through a parent. This includes all families where a working parent was eligible for a job-based family insurance plan, regardless of whether the parent elected to participate in the plan themselves, and regardless of the cost of that plan. It is not clear how many parents could have afforded to enroll their children in job-based insur­ance rather than SCHIP. While we found that one-third of new SCHIP enrollees (36%) had a parent with job-based insurance, employers usually cover a lower percentage of health insurance premiums for dependents than for employees. This is especially true in smaller firms, where many par­ents of SCHIP enrollees work.

Perhaps most surprising is our find­ing that half of children enrolling in SCHIP (51%) were eligible to enroll in job-based insurance through a parent. Nevertheless, this finding is consistent with several national studies showing that the presence of SCHIP diverts some children away from private insur­ance, although there is considerable debate about how large a problem this might be.

Why might families enroll their children in SCHIP instead of job-based insurance? Cost certainly plays a role for these low-income families. Even when it is available to them, the deductibles, co-payments, and monthly premiums that go along with job-based insurance may not be affordable, and this cost sharing is almost certainly higher than it is in SCHIP. In addition, SCHIP covers services such as dental care that job-based health insurance frequently does not cover.

These findings suggest that some children enrolling in SCHIP would probably have insurance coverage even if SCHIP did not exist. However, this study also demonstrates the presence of real health insurance need among children enrolling in SCHIP. If they did not have access to SCHIP, at least some enrollees would be uninsured. Moreover, even children with access to alternative types of coverage might be better off in SCHIP because of its lower cost and more comprehensive benefits.

State budget pressures and concerns about SCHIP’s impact on private insurance coverage have led some policymakers to search for ways to better target SCHIP toward those children who most need it. In the meantime, policy­makers will weigh SCHIP’s potential inefficiencies against the bene­fits the program provides to many children in low-income families.