Premium assistance

Future of Children

Volumn 13, Issue 1, 2003, Pages 214-223

  Curtis, Richard E ^a   Neuschler, Edward ^a  

^a Institute for Health Policy Solutions   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

CHILD; CHILD HEALTH CARE; COST EFFECTIVENESS ANALYSIS; FINANCIAL MANAGEMENT; HEALTH CARE COST; HEALTH CARE POLICY; HEALTH INSURANCE; HUMAN; LOWEST INCOME GROUP; MEDICAID; PUBLIC HEALTH INSURANCE; REVIEW; ARTICLE; ECONOMICS; FEE; MEDICAL CARE; STATISTICS; UNITED STATES;

CHILD; CHILD HEALTH SERVICES; FEES AND CHARGES; HEALTH POLICY; HUMANS; INSURANCE, HEALTH; MEDICAL ASSISTANCE; UNITED STATES;

EID: 0242304460     PISSN: 10548289     EISSN: 15501558     Source Type: Journal    
DOI: 10.2307/1602651     Document Type: Review

References (33)

1. Both SCHIP and Medicaid are authorized to use public funds to help eligible families pay premiums for employer-based coverage, rather than provide coverage directly. Usually, premium-assistance recipients pay for their employer coverage by payroll deduction, just as other workers do, and receive a separate payment from the state program to cover their outlay.
2. In 2002, the average employer paid 73% of the cost of full family coverage, which averaged $7,954 per year, or about $663 per month. Workers paid, on average, $174 per month for full family coverage. Kaiser Family Foundation and Health Research and Educational Trust. Employer health benefits: 2002 annual survey. Menlo Park, CA: Henry J. Kaiser Family Foundation, and Chicago, IL: Health Research and Educational Trust, 2002.
3. The state pays health plans $450 per month for an average family enrolled in RIte Care. Under the RIte Share premium-assistance program, the state's average monthly contribution to a family's employer-sponsored coverage is $272. Leddy, P. Premium assistance: Opportunities and challenges: Implementing Rhode Island's RIte Share program. Philadelphia, PA: 15th Annual State Health Policy Conference of the National Academy for State Health Policy, August 5, 2002. Slide presentation.
4. The underlying argument is that parents will know how to get care for their children if they are familiar with the health plan, because they use it themselves. See Hanson, K. Is insurance for children enough? The link between parents' and children's health care revisited. Inquiry (Fall 1998) 35:294-302.
5. Dubay, L., and Kenney, G. Covering parents through Medicaid and SCHIP: Potential benefits to low-income parents and children. Washington, DC: Kaiser Commission on Medicaid and the Uninsured, October 2001.
6. Child enrollment in RIte Care grew from 48,884 in December 1995 to 52,046 in December 1998 to 76,379 in December 2001. Leddy, P. Premium assistance: Opportunities and challenges: Implementing Rhode Island's RIte Share program. Philadelphia, PA: 15th Annual State Health Policy Conference of the National Academy for State Health Policy, August 5, 2002. Slide presentation.
7. See also Kaiser Commission on Medicaid and the Uninsured. Health insurance coverage in America: 2002 data update. Washington, DC: KCMU, February 2002, Table 2 (based on Urban Institute analysis of data from the March 2001 Current Population Survey).
8. Kronick, R., and Gilmer, T. Insuring low-income adults: Does public coverage crowd out private? Health Affairs (January/February 2002) 21(1):225-239.
9. Marquis, M.S., and Long, S.H. Public insurance expansions and crowd-out of private coverage. To be published in Medical Care, 2003.
10. In contrast, most studies of Medicaid's expansion of coverage to children up to 133% of the federal poverty level and pregnant women to 185% of the federal poverty level during the late 1980s and early 1990s found only relatively modest crowd-out of employer coverage. For a review of this work, see Dubay, L. Expansion in public health insurance and crowd out: What the evidence says. Menlo Park, CA: Henry J. Kaiser Family Foundation, October 1999.
11. Rhode Island Department of Human Services. Update: RIte Care, member cost sharing, RIte Share. Providence, RI: Hearing of the Joint Committee on Health Care Oversight, April 29, 2002. Slide presentation. Based on Medicaid Research and Evaluation Project; RIte Share Evaluation Studies. U.S. Bureau of the Census, Current Population Surveys 1994-2000 (September estimates).
12. Rowland, C. Officials rethinking RIte Care's mission. Providence Journal. May 21, 2000, at p. A-01.
13. As of June 2002, 12 states were operating premium-assistance programs. Programs in 4 states (Iowa, Missouri, Pennsylvania, and Texas) were available only to Medicaid recipients. Virginia operated separate programs for Medicaid and SCHIP recipients. Maryland offered premium assistance only under its separate SCHIP program for children between 200% and 300% of the federal poverty level. Illinois offered premium assistance to children, without federal matching funds, as an alternative to enrollment in its SCHIP "KidCare" program. Wisconsin offered premium assistance only to family groups in the SCHIP income range. And 3 states (Massachusetts, New Jersey, and Rhode Island) offered premium assistance to families and children as part of broader demonstration projects encompassing both Medicaid and SCHIP. Finally, using state funds only, Oregon offered premium assistance to any income-eligible adult or child. [State Coverage Initiatives. State Coverage Matrix. Updated June 2002. Accessed August 22, 2002. Available online at http://www.statecoverage. net/matrix.htm. Also state Web sites for Illinois (http://www.kidcareillinois. com/ html/enrollment.htm) and Oregon (http://www.ipgb.state.or.us/ Docs/fhiaphome.htm) and author's personal communication with Kelly Carter, Manager of KidCare Customer Service, Illinois Department of Public Aid, June 6, 2001.
14. For more in-depth information about many of these state programs, see Effective coverage expansions for uninsured kids and their working parents: Links to job-based coverage. Washington, DC: Institute for Health Policy Solutions, May 18, 2001.] Most other states operate limited premium-assistance programs only for Medicaid recipients with significant health problems, but these programs serve very few recipients, and little is known about them.
15. Sexton, J. Overview of the Iowa Health Insurance Premium Payment (HIPP) program. Washington, DC: Institute for Health Policy Solutions, February 4, 2000. Available online at http://www.ihps.org.
16. Despite the prevalence of managed care in Medicaid, most state Medicaid programs can still pay claims submitted directly by providers on a traditional fee-for-service basis. Separate (and newer) SCHIP programs, by contrast, often do not have direct claims-payment capability. Instead, these programs contract with private health plans to enroll SCHIP eligibles on a capitated basis.
17. Because of the expensive wraparound coverage, Mississippi never implemented premium assistance under its separate SCHIP program after receiving federal approval to do so. State Coverage Initiatives. State Coverage Matrix: Mississippi. Updated June 2002. Accessed August 22, 2002. Available online at http://www.statecoverage. net/ms-employer.htm.
18. Nothing prohibits individual SCHIP programs from contracting with their state's Medicaid program or fiscal agent to provide wraparound coverage for SCHIP premium-assistance recipients. To avoid the need for major system modifications that could make such a proposition too expensive, the state would probably have to give SCHIP premium-assistance recipients access to the full Medicaid benefit package and cost-sharing protections. The equity of such an arrangement might be questioned, because it would give premium-assistance recipients greater benefits than other SCHIP participants; but the Medicaid experience with wraparound coverage suggests that this concern is more theoretical than practical. Political opposition to such an approach might be hard to overcome, however, because opposition to expansion of the Medicaid program was one of the major reasons behind states choosing to implement separate SCHIP programs.
19. Chang, D. Maryland Children's Health Premium Program: Premium assistance challenges and opportunities. Philadelphia, PA: 15th Annual State Health Policy Conference of the National Academy for State Health Policy, August 5, 2002. Slide presentation.
20. Institute for Health Policy Solutions. Unpublished analysis of the 1996 Medical Expenditure Panel Survey (full-year panel).
21. Neuschler, E., and Curtis, R. Individual workers' wage levels, total family income relative to poverty, and prevalence of employer coverage. Washington, DC: Institute for Health Policy Solutions, August 2001, Figure 3.
22. The risk of crowd-out would be great if virtually free public coverage were made available to applicants with low family incomes but relatively high individual wages. Higher-wage workers are very likely to already have employer coverage. For this reason, taking individual parents' wage levels into account, not just total family income, could be a powerful tool in designing policies that would effectively expand coverage of the uninsured rather than simply substitute public coverage for existing employment-based coverage. In particular, requiring a premium contribution (for public-program coverage of an adult) that increased with wage level would make people less likely to drop employer coverage or switch jobs to qualify for publicly financed coverage. See Neuschler, E., and Curtis, R. Expanding healthy families to cover parents: Issues and analyses related to employer coverage. Washington, DC: Institute for Health Policy Solutions, January 2001.
23. The cost-effectiveness of premium assistance is determined by comparing the cost to enroll all family members in the employer plan with the cost to enroll eligible family members in the public program. Under an employer plan, covering only children is not possible. Parents usually must pay for full family coverage in order to cover their children. (Some plans allow workers to cover their children without covering their spouses, for a lower premium, but workers must always be covered.) The public-program cost, on the other hand, varies directly with the number of eligible family members (and, usually, with their ages and genders). If only the children are eligible, the public-program cost will be lower than if all family members are eligible, and, therefore, only employer plans with lower contribution requirements for family coverage will qualify for premium assistance.
24. Schulte, S., Yondorf, B., Howell, L., and Leif and Associates. Final report of the Child Health Plan Plus employer buy-in feasibility study. Denver, CO: Rose Community Foundation, December 2001.
25. The revised SCHIP regulations at 45 CFR 457.560 indicate that states could treat premiums for family coverage as they do coverage of other family members, rather than counting them against the out-of-pocket expenditure limit for children's coverage. Department of Health and Human Services, Health Care Financing Administration. State Child Health; Revisions to the Regulations Implementing the State Children's Health Insurance Program; Final Rule. Federal Register (June 25, 2001), vol. 66, no. 122, pp. 33810-24. See especially p. 33815.
26. See also Federal Centers for Medicare and Medicaid Services (formerly Health Care Financing Administration). Health Insurance Flexibility and Accountability Demonstration Initiative. August 2001. Available online at http://www.hcfa.gov/medicaid/hifa/default.htm.
27. See note 12. Total HIPP enrollment includes about 5,500 Medicaid eligibles and about 3,000 ineligible family members.
28. Waldman, B. Coverage goals and implementation experience. In Effective coverage expansions for uninsured kids and their working parents: Links to job-based coverage. Washington, DC: Institute for Health Policy Solutions, May 18, 2001. Total premium-assistance enrollment includes about 6,000 program eligibles and more than 4,000 ineligible family members.
29. See note 12. As noted, however, Iowa has not implemented premium assistance under its separate SCHIP program because that program has no mechanism to fill in employer-plan cost sharing or to pay for SCHIP services not covered by the employer plan.
30. This waiver dates from the mid-1990s and was not issued pursuant to the new Health Insurance Flexibility and Accountability Demonstration Initiative.
31. In early 2002, Massachusetts received federal approval to use "secretary-approved coverage" as the "benchmark" for its premium-assistance program, rather than the "largest commercial HMO" benchmark used for its regular SCHIP program. This approval was granted on the basis that the narrower list of services had previously been approved for use in premium assistance under the state's Medicaid demonstration waiver program. Prior to this approval, children could receive premium assistance if their employer plan equaled or exceeded the Basic Benefit Level. But if their employer plan met the SCHIP benchmark (which very few employer plans do), the state was allowed to claim the higher federal SCHIP matching rate. Massachusetts Division of Medical Assistance. Personal communication with Colleen Murphy, assistant general counsel, May 15, 2002.
32. See note 6, Leddy.
33. U.S. Department of Health and Human Services, Centers for Medicare and Medicaid Services. Health Insurance Flexibility and Accountability (HIFA) Demonstration Initiative. August 6, 2001. Available online at http://www.cms.hhs.gov/hifa/hifagde.htm.