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The Effects of Premium Increases in SCHIP Programs:

The Experience of Three States

Genevieve Kenney, The Urban Institute

Andrew Allison, Kansas Health Institute

Julia Costich, University of Kentucky

Jim Marton, University of Kentucky

Josh McFeeters, The Urban Institute

June 25, 2005

Child Health Policy Research Meetings

THE URBAN INSTITUTE Preliminary: Not for Quotation or Distribution

Two-Part Project Funded by the David and Lucile Packard Foundation

1) Examine effects of increases in public premiums on enrollment in public programs in three states

•How did enrollment patterns change following premium increases?•To what extent did disenrollment patterns change following premium increases?•Did effects appear to vary with income?

2) Examine effects of Premiums on Insurance Coverage Nationally

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Motivation

• Between 2002 and 2004,16 states raised premium levels under SCHIP

• Increased attention on cost sharing in Medicaid programs

• Few studies have examined effects of premium increases in a rigorous manner, with controls for potentially confounding changes

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Background

• 35 states expanded coverage with a separate non-Medicaid program

• Cost sharing must be less than 5% of family income in separate programs

• Cost sharing amounts cannot be higher for low-income families than they are for higher-income families

• Premiums are rare in Medicaid programs for children

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Premium Policies in Three States, 2003Kansas Kentucky New Hampshire

For 151-175% FPL: Premium increased from $10 to $30 per family in 2/03, then decreased to

$20 in 7/03

For 176-200% FPL: Premium increased from $15 to $45 in 2/03, then decreased to $30 in 7/03

For 151-200% FPL :

$20 premium per family introduced in 12/03 (no

premium charged prior to that time)

For 185-249% FPL:

Premium increased from $20 to $25 per child in

1/03. Family maximum is $100 per month

For 250-300% FPL: Premium increased from

$40 to $45 in 1/03. Family maximum is $135 per

month

No sanctions for

non-payment until

re-certification.

Termination of enrollment if more than two months

past due.

Termination of enrollment if more than two months

past due.

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Study Populations

Children ages 1 to 18 in New Hampshire’s Healthy Kids Silver program: 185-300% FPL;

Children ages 0 to 18 in Kentucky’s KCHIP III program: 151-200% FPL;

Children ages 0 to18 enrolled in Kansas’ HealthWave XXI program: 151-200% FPL;

Study Period: July 2001 – November 2004

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Data• Monthly administrative caseload data in

premium-paying categories;

• Data linked over time at child-level to identify enrollment spells;

• New enrollees defined as children in premium paying SCHIP in a given month, but not enrolled in premium-paying SCHIP (KS, NH)/any public coverage (KY) the prior mo.;

• Disenrollees defined as children enrolled in premium-paying SCHIP for at least one month, but not enrolled in premium paying-SCHIP in the subsequent month;

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Methods

• Contrast changes in caseload growth before and after premium increase;

• Estimate multivariate time-series models of caseload and new enrollment (control for time trends, monthly dummies, address auto-correlation);

• Estimate Cox Proportional Hazard models to assess changes in disenrollment patterns;

• Use unemployment rate as control variable

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Preliminary: Not for Quotation or Distribution

Figure 1. Total Caseload in the Premium-Paying Categories of Kansas' HealthWave XXI Program

0

2000

4000

6000

8000

10000

12000

14000

Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04

En

roll

me

nt

Enrollment declined by 83 enrollees or 0.75 percent between January and February 2003

Enrollment declined by 572 enrollees or 5.20 percent between May and June 2003

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Figure 2. Total Caseload in the Premium-Paying Category of Kentucky's KCHIP Program

0

5,000

10,000

15,000

20,000

25,000

Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04

En

roll

me

nt

Enrollment declined by 2,367 enrollees or 12.77 percent between December 2003 and January 2004

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Figure 3. Total Caseload in the Premium-Paying Categories of New Hampshire's

Healthy Kids Silver Program

0

1000

2000

3000

4000

5000

6000

7000

8000

Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04

En

roll

me

nt

Enrollment declined by 84 enrollees or 1.46 percent between December 2002 and January 2003.

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Change in Growth Rates following Premium Increases

6 Months 6 MonthsBefore After

Kansas 151-175% FPL 13.53% 4.27% 176-200% FPL 8.64% 2.54%

Kentucky 151-200% FPL -0.17% -17.44% New Hampshire 185-249% FPL 32.37% 7.52% 250-300% FPL 38.56% 6.84%

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Findings: Time-Series Models

All estimates point to negative effects of premium increases on premium-paying caseload, but magnitude and statistical significance vary substantially across models

• Impact estimates sensitive to specification of time trends

• Inclusion of county-level unemployment rate affected the estimated premium impact in one of the three states

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Findings: Hazard Models

• No consistent effects for Kansas

• Strong, consistent effects for Kentucky—hazard rate 1.4 times higher following introduction of premium

• Small, variable effects for New Hampshire—hazard rate 1% to 10% higher following premium increase; larger effects found for lower-income than for higher-income group

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Magnitude: Hazard Models

• After new premium in KY,1,522 kids per month left KCHIP III on average, compared to 1,087 kids before the new premium;

• After premium increase in NH, 1,012 to 1,097 kids left Healthy Kids Silver compared to 999 before the premium increase;

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Policy Implications

• Increases in premiums appear to reduce enrollment and increase disenrollment

• Larger effects found with introduction of new premium and for lower-income children

• Other premium policies may matter

• Important to address possible spillover effects on non-premium paying caseload and impacts on insurance coverage