Does expanding children’s health insurance save money in the long run?

A statewide study of potentially preventable hospital admissions for children revealed small but statistically significant decreases in such hospital admissions after local programs were established to expand access to health insurance.

Nine California counties created Children’s Health Initiatives (CHIs) aiming to achieve universal enrollment of California’s children into the state Medicaid and SCHIP programs. Additionally, these counties developed their own “Healthy Kids” insurance product designed to enroll children ineligible for the state and federal programs.

The authors of this study investigated changes in rates of potentially preventable pediatric hospital admissions for conditions such as asthma, pneumonia, and dehydration before and after implementation of the CHIs. Data for the study was derived from statewide hospital discharge data.

Looking at the time period from 2000 to 2005, rates of preventable hospitalizations have declined similarly in counties that implemented CHIs as well as those which never implemented such programs (currently approximately 13 per 10,000 and 11 per 10,000, respectively). Surprisingly, the overall rate of pediatric preventable hospitalizations began and remained higher in counties which implemented CHIs.

Three of the nine counties with CHIs saw statistically significant (p<0.05) drops in their hospitalization rates (from 14.49-17.59 per 10,000 to 11.67-13.75 per 10,000). When partitioned by income, families in a high income group actually demonstrated significant reductions of preventable hospital admissions in four of nine counties. Counterintuitively,  only 1 of 9 counties saw similar change in the low income group.  However, after adjustment with multivariate analysis, the low income group did demonstrate statistically significant declines in hospitalization rates about 20% below baseline. The high income group did not share this effect.

Commentary:

There is a common thinking that because children are cheap to insure and broadened health insurance coverage will prevent future hospitalizations that, as a consequence, overall health care costs will be reduced. This paper’s findings challenge that concept. The authors estimate California’s CHIs have prevented $7 million dollars in annual health care costs secondary to preventable hospitalizations. Yet, this accounts for only 9% of the cost of the new programs. While providing universal health care to children has a strong moral argument, the financial benefit will not accrue immediately.

Med Care 2008; 46: 142.

by

Cedric K. Dark, MD, MPH