Two new studies look at effect on employers' decisions to offer insurance, changes in children's coverage
ROCHESTER, NY, November 29, 2005 - Employers with low-wage workers whose children were likely to qualify for public insurance through expanded eligibility in the State Children's Health Insurance Program (SCHIP) responded by raising the amount that employees had to pay for dependent coverage, making public insurance more attractive than company-sponsored coverage, a new study appearing in INQUIRY's fall issue shows. Evidence further indicates that the percentage of workers opting for employer-sponsored health coverage declined in these firms.
The study, "The Effect of SCHIP Expansions on Health Insurance Decisions by Employers," was written by Thomas Buchmueller of the University of California at Irvine and the National Bureau of Economic Research, Kosali Simon of Cornell University and the National Bureau of Economic Research, and Philip Cooper and Jessica Vistnes of the Agency for Healthcare Research and Quality (AHRQ). It is the first study to examine the behavior of employers and workers with respect to health insurance and the implementation of SCHIP. The study is in one of two articles in INQUIRY's fall issue on the effects of SCHIP, with the second focusing on changes in children's health coverage.
Created in 1997 out of concern for the large number of uninsured children in the United States, SCHIP is a federal-state program that extends eligibility for public insurance to children of the "working poor" - families whose incomes are just above the federal poverty level but out of range to qualify for free or subsidized insurance under earlier Medicaid expansions. Despite the health benefits to children, some policymakers worry that the availability of SCHIP may lead some parents to substitute the new public coverage for private insurance - a phenomenon called crowd-out.
The employer study used 1997-2001 data from the Insurance Component of the Medical Expenditure Panel Survey (MEPS), large national survey of businesses. Although the researchers found that employers increased workers' contributions for family coverage relative to single coverage - a way to induce employees to disenroll their children from company-sponsored plans and enroll them in SCHIP - they found no evidence that employers stopped offering single or family coverage outright.
The findings have important implications for others in the workforce. The authors note: "Knowing that the substitution effect is accompanied by changes in employee health insurance terms means that some noneligible families working in these firms also might face higher health insurance premiums for family coverage, as would families who were eligible for SCHIP based on income, but who would not qualify because they had not been without insurance for a certain period of time."
The second study, "The Impact of SCHIP on Insurance Coverage of Children," used MEPS data from 1996 to 2002 and found that SCHIP's eligibility expansions significantly reduced the number of uninsured children and increased the number with public health insurance - both for those targeted by SCHIP and by earlier poverty-related Medicaid expansions. Written by Julie L. Hudson, Thomas M. Selden, and Jessica S. Banthin, all of AHRQ, the study found some evidence that the SCHIP expansions led to a reduction in private insurance, but the authors warn that the crowd-out measures were too imprecise to estimate their significance.
"It is noteworthy that Medicaid and SCHIP together have been successful in reducing uninsurance among children to levels that have not been seen since the late 1970s," the authors wrote. "Although crowd-out may have increased the costs of achieving these gains, the relevant issue for those who believe children should have health insurance is whether alternative policy solutions exist that could have covered this number of children at lower cost. We believe it is important that crowd-out be seen as only one, imperfectly measured aspect of designing public policies for enhancing child and family welfare."
Other papers from the fall 2005 issue:
- "Remembrances: Walter J. McNerney, 1925-2005"
- "The View from Here: Provide Medicaid to Evacuees," by Editor Katherine Swartz
- "Dialogue: If Nonprofit Doesn't Mean 'No Profit,' How Much Is Enough in Health Care," with participants Mark Bartlett, Michael DeLucia, Charles Goheen, John O'Brien, Gerald Wedig, and moderator Bruce McPherson
- "Health Plan Switching Among Members of the Federal Employees Health Benefits Program," by Adam Atherly, Curtis Florence and Kenneth E. Thorpe
- "The Value of Experience: Differences in Knowledge Among Medicare Beneficiaries," by Merrile Sing and Beth Stevens
- "Nursing Home Closures, Changes in Ownership and Competition," by Nicholas G. Castle
- "A Copayment Increase for Prescription Drugs: The Long-Term and Short-Term Effects on Use and Expenditures," by Teresa B. Gibson, Catherine G. McLaughlin, and Dean G. Smith