CHIP OVERVIEW Basic Access Issues Basics of Cost-Sharing Designing Premiums Crowd-out Source: HCFA web page –presentations by Shuster, Ullman and Weinick.

IMPACT ON ACCESS TO HEALTH CARE Usual Source of Health Care Level of Services Quality, Continuity, and Satisfaction With Care

HEALTH INSURANCE AND ACCESS TO CARE

HEALTH INSURANCE AND USUAL SOURCE OF CARE SITE Source: Weinick, Weigers, and Cohen, 1998 (1996 MEPS)

HEALTH INSURANCE AND BARRIERS TO CARE Source: Weinick, Zuvekas, and Drilea 1997 (1996 MEPS)

HEALTH INSURANCE AND PHYSICIAN CONTACT Source: Monheit and Cunningham, 1992 (1987 NMES)

HEALTH INSURANCE AND WELL-CHILD VISITS Source: Short and Lefkowitz, 1992 (1987 NMES)

IMPACT ON USE AND EXPENDITURES Uninsured Children Use Fewer Health Care Services Than Insured Children Uninsured People Spend a Greater Proportion of Their Income on Health Care Services Than the Privately Insured (Taylor and Banthin 1994)

IMPACT ON HEALTH STATUS AND HEALTH OUTCOMES Adverse Health Outcomes Appear to Be Related to Being Uninsured Avoidable Hospitalizations for a Variety of Conditions Are More Common Among the Uninsured Than the Privately Insured Uninsured Newborns Are More Likely to Have Adverse Outcomes Than the Privately Insured Source: Office of Technology Assessment, 1992; Weissman, Gastonis, and Epstein, 1991

IMPACT ON HEALTH STATUS AND HEALTH OUTCOMES The Uninsured Are More Likely to Experience avoidable hospitalizations Be diagnosed at later stages of disease Be hospitalized on an emergency or urgent basis Be more seriously ill upon hospitalization Die upon hospitalization Source: Office of Technology Assessment, 1992

HOW MANY CHILDREN ARE UNINSURED?

HEALTH INSURANCE AND AGE Source: Weinick, Weigers, and Cohen 1998 (1996 MEPS)

HEALTH INSURANCE AND RACE

HEALTH INSURANCE AND FAMILY STRUCTURE

HEALTH INSURANCE AND PARENTS’ EDUCATION Source: Weinick, Weigers, and Cohen 1998 (1996 MEPS)

HEALTH INSURANCE AND PARENTS’ EMPLOYMENT Source: Weinick, Weigers, and Cohen 1998 (1996 MEPS)

HEALTH INSURANCE AND WHERE CHILDREN LIVE Source: Weinick, Weigers, and Cohen 1998 (1996 MEPS)

BACKGROUND Traditionally, Public Insurance (Medicaid) Was for the Poor and Was Free As Government Programs Expand to Serve Uninsured People in Working Class Families, Then Issues of Cost-Sharing Become More Relevant Premiums Have Been Used in Family-Based Expansion Programs, Like Tenncare or Washington's Basic Health Plan, and Are Now Being Permitted in CHIP Programs

Sliding Scale Premium: Reduces participation and government share of cost Copayment: Amount Paid by the Person to Get Specific Medical Services (e.g., Office Visit or Prescription Drugs) Copayments affect whether an insured person gets a specific service, affect health care utilization Reduces cost per covered person BASICS OF COST-SHARING

Reduces Government Cost, Both by Sharing Burden and Lowering Participation Targets Assistance and Subsidies to the Poorest May Reduce Problems of Welfare and Medicaid Dependency May Reduce Crowd-Out May Reduce Stigma ADVANTAGES OF PREMIUMS

Lowers Participation Might Lead to Adverse Selection Requires More Administrative Effort Might Break Up Coverage, If People Enter and Exit When They Can Afford DISADVANTAGES OF PREMIUMS

May Reduce Unnecessary Medical Care Use Can Be Tailored to Accomplish Specific Purposes, e.g., High Copayment for ER, but None for Preventive Services Can Supplement Provider Payments ADVANTAGES OF COPAYMENTS

Barrier to Care Can Reduce Use of Cost-Effective Services Harder for Provider, Could Reduce His/Her Payment DISADVANTAGES OF COPAYMENTS

RAND Health Insurance Experiment: Generally, Copayments Reduced Medical Utilization and Expenditures, but Did Not Affect Health Status except among poor Prescription Drugs: Copayments Reduce Drug Use, Could Increase Hospitalization Costs Tenncare: Many Went Without Medication Because of Drug Copayments RESEARCH ON COPAYMENTS

DESIGN OF PREMIUM STRUCTURES How Low and How High? Progressivity Stairsteps Fixed Dollars or Fixed Percentages? Equity for Individuals and Families

Tenncare: Sliding Scale Premiums Between 100 and 400% of FPL, Full Premiums Above 400%; Copayments Hawaii QUEST: Sliding Scale Premiums Between 100 and 300% of FPL Washington Basic Health Plan: Sliding Scale Premiums Between 0 and 200% of Poverty, Free for Children Thru Medicaid Expansion (State Funded) Minnesotacare: Sliding Scale Premiums for Families With Children Between 0 and 275% of Poverty, for Childless Adults Between 0 and 135% of Poverty FOUR STATES WITH FAMILY EXPANSIONS

ESTIMATED PARTICIPATION FUNCTION, BASED ON THREE STATES, 1995

As Premiums Rise, Participation Levels Fall Even When Free, Some Do Not Participate There Is No "Right" Level for Premiums Trade-Off Between Budget and Participation Goals, As Well As Perception of What Seems "Fair" MAIN FINDINGS OF ANALYSIS

Includes Children Only, People May Be More Willing to Insure Children Other Factors Matter Too: Publicity, Ease of Application, Type of Benefit Package Interactions With Medicaid Federal Rules on Premiums and Copayments Constrain Choices CHIP MIGHT BE DIFFERENT

If Medicaid Expansion, Then Follow Medicaid Rules, Essentially Banning Cost-Sharing If CHIP-Only, Then Premiums in Families Below 150% of Poverty Must Not Exceed "Nominal" Levels, Related to Medically Needy Rules …Modest copayments permitted If CHIP-Only, Then Total Cost-Sharing in Families Above 150% of FPL Must Not Exceed 5%… No copayments on preventive services WHAT ARE COST-SHARING RULES IN CHIP?

PRIVATE INSURANCE: OFFER RATES Source: Cooper and Schone 1997 (1987 NMES and 1996 MEPS)

PRIVATE INSURANCE: TAKE- UP RATES Source: Cooper and Schone 1997 (1987 NMES and 1996 MEPS)

PUBLIC INSURANCE: ELIGIBILITY 29.5% of All Children Are Estimated to Be Medicaid Eligible 33.7% of children ages 0-12 are estimated to be eligible 20.2% of children ages are estimated to be eligible Source: Selden, Banthin, and Cohen 1998 (1996 MEPS)

INSURANCE COVERAGE OF CHILDREN ELIGIBLE FOR MEDICAID Private 25.9% Medicaid 51.9% Uninsured 22.2% Source: Selden, Banthin, and Cohen 1998 (1996 MEPS)

MEDICAID TAKE-UP RATES AMONG ELIGIBLE CHILDREN Source: Selden, Banthin, and Cohen 1998 (1996 MEPS)

INSTITUTE OF MEDICINE DEFINITION OF QUALITY (1990) The degree to which health services for individuals and populations * increase the likelihood of desired health outcomes and * are consistent with current professional knowledge

SUMMARY Quality Assessment Can Help screen out bad providers Help with improving all providers Show effects of changes or variations BUT – DIFFICULT TO MEASURE AND ENFORCE

The Substitution of Public Coverage for Private Coverage (the “woodwork effect”) May Lead To: Fewer improvements in access to care and health status than expected Greater increases in public expenditures than expected Lower cost effectiveness of the program than expected POLICY IMPORTANCE OF CROWD-OUT

Low-Income Children Gain Access to Affordable, Comprehensive, Health Insurance That Always Covers Preventive Care Low-Income Families Who Have Been Paying for Insurance Coverage Get Financial Relief Employers Who Have Historically Provided Health Insurance Coverage to Their Low Wage Employees May Have Lower Health Insurance Costs WHO BENEFITS FROM CROWD-OUT?

Almost Nothing WHAT CAN STATES THAT EXPAND THEIR MEDICAID PROGRAMS UNDER CHIP DO TO PREVENT CROWD- OUT?

Institute Waiting Periods Subsidize Employer-Sponsored Coverage Make Coverage and Premiums Comparable to Employer-Sponsored Coverage Monitor Crowd-Out and Implement Prevention Strategies If Crowd-Out Is a Problem WHAT CAN STATES THAT CREATE SEPARATE CHIP PROGRAMS DO TO PREVENT CROWD-OUT?

CROWD-OUT PREVENTION STRATEGIES Note: Most states requiring waiting periods make exceptions under certain conditions. Source: Children’s Defense Fund

May Prevent Crowd-Out May Create Inequities in the Program May Be Difficult to Administer May Reduce Participation Among the Uninsured ADVANTAGES AND DISADVANTAGES OF CROWD-OUT PREVENTION

Any Equitable and Administratively Workable Program Will Crowd-Out Private Coverage Children Will Come Out Ahead With Greater Insurance Security and Coverage That Always Includes Preventive Care There Will Be Benefits of Financial Relief to Families Who Had Previously Purchased Health Insurance

The Focus on Crowd-Out, While Important From a Budget Perspective, Draws Attention Away From Other Challenges States Face Under Both Their Medicaid and CHIP Programs Offering Health Insurance Alone Is Not Sufficient Programs Must Get Uninsured Children to Participate and Provide Access to High- Quality, Effective Medical Care in Order to Realize Improvements in Child Health