A recent study explores the impact of rising health insurance costs on the phenomenon of split coverage, a practice in which working poor families opt to cover their children via public insurance, even though employer-sponsored insurance (ESI) is available, in order to cut costs.
Premiums for ESI family coverage nearly doubled from 2003 to 2013, while median family incomes remained stagnant. In 2013, the average annual premium for a family plan was $4,421 compared to $1,170 for an individual plan. For families who qualify, CHIP and Medicaid are attractive options to cover their children.
Using data from the Medical Expenditure Panel Survey, the authors test the hypothesis that poor households would be increasingly likely to split coverage as the cost of ESI for dependent coverage rose over time. They also hypothesized that there might be a rise in uninsurance rates among families ineligible for public insurance. In families who had at least one parent that was offered ESI and with incomes between 100 and 400% of the federal poverty level (FPL), the percentage of children with public insurance increased from 12.1% in 2008 to 15.2% in 2013.
Notably, in families with incomes from 100 to 199% FPL, the proportion of children with public insurance increased from 22.8% to 29.9%. And for families with incomes of 200 to 299% FPL, uninsurance rates for children increased from 6% to 9.2%.
The authors suggest three policy recommendations. First, that CHIP financing be extended beyond 2017, and that the ACAs maintenance of effort provisions be renewed beyond 2019. Second, the family glitch which refers to the lack of an affordability test for family coverage needs to be fixed. Third, the incoming Health and Human Services Secretary should require that CHIP plans be used as the benchmark for essential benefit packages for children as CHIP plans pay a higher percentage of healthcare expenses compared to silver level ACA health plans.
I would go well beyond that. Just as we provide public insurance for other non-working populations, namely Americans older than 65, we should also provide public insurance to children from birth through 18 years, regardless of income. This would relieve an enormous financial strain on near poor and middle class families, help to ensure the health of future generations, and demonstrate the compassion and values of the American taxpayer.
Many families rely on employer-sponsored health insurance for their children. However, the rise in the cost of such insurance has outpaced growth in family income, potentially making public insurance (Medicaid or the Children’s Health Insurance Plan) an attractive alternative for affordable dependent coverage. Using data for 2008-13 from the Medical Expenditure Panel Survey, we quantified the coverage rates for children from low- or moderate-income households in which a parent was offered employer-sponsored insurance. Among families in which parents were covered by such insurance, the proportion of children without employer-sponsored coverage increased from 22.5 percent in 2008 to 25.0 percent in 2013. The percentage of children with public insurance when a parent was covered by employer-sponsored insurance increased from 12.1 percent in 2008 to 15.2 percent in 2013. This trend was most pronounced for families with incomes of 100-199 percent of the federal poverty level, for whom the share of children with public insurance increased from 22.8 percent to 29.9 percent. Among families with incomes of 200-299 percent of poverty, uninsurance rates for children increased from 6.0 percent to 9.2 percent. These findings suggest a movement away from employer-sponsored insurance and toward public insurance for children in low-income families, and growth in uninsurance among children in moderate-income families.
PMID: 27920320 Strane, D. et al. Health Affairs. 2016; 35 (12): 23022309.