As Summer Heats up, Two Recent Papers Point to the Chilling Effect of Premium Increases on Low-Income Children and Parents’ Access to Health Insurance

Recent research on the effects of premium increases on enrollment in both Medicaid and CHIP finds that the implementation of even relatively small premiums has a detrimental effect on enrollment—including drops in initial sign-ups as well as reductions in continuous enrollment. These recent findings serve to further amplify existing concerns regarding Wisconsin’s recent and future BadgerCare policy changes and their implication for both public and private health insurance enrollment of children and parents in Wisconsin.

The most recent paper, “Children’s Health Insurance Program Premiums Adversely Affect Enrollment, Especially Among Lower-Income Children”, written by researchers from the federal government’s Agency for Healthcare Research and Quality (AHRQ) and published in this month’s edition of the journal Health Affairs, focused on the effects of premiums on children (ages 0-18) eligible for Medicaid or CHIP. The researchers simulated the effects of increasing public premiums on this group using national data from the 1999-2000 Medical Expenditures Panel Survey (MEPS) and found that the effect of premiums on coverage levels varied by both income level and by parents’ access to employer sponsored insurance.

• For children with parents with access to employer coverage an increase of $10 per a child per month with a family income between 101-150% of the FPL resulted in a reduction in public coverage of 6.7 percentage points which was associated with a 3.3 percentage-point increase in uninsurance.
• For children with parents without access to employer coverage an increase of $10 per a child per month with a family income between 101-150% of the FPL resulted in a reduction in public coverage of 7.2 percentage-points which was associated with a 5.3 percentage-point increase in uninsurance.

The second paper hits closer to home. This paper, written by UW alumnus Laura Dague and published in the Journal of Health Economics in May, examines the effects of monthly premiums for families newly enrolled in the BadgerCare Plus program between March 2008 and September 2009. The study, utilizing monthly data from the Wisconsin Department of Health Services (DHS), found that the negative effect of premium increases was most apparent when premiums of $10 per month were assessed for individuals who didn’t previously owe premiums. For children (with incomes over 200% FPL) and adults (with incomes over 150% FPL), a monthly premium of $10 per enrollee resulted in:

• 1.4 fewer months of continuous enrollment in BadgerCare Plus; and
• A 12 percentage-point increase in the probability that enrollees left BadgerCare within 12 months and 13-15 percentage-point increase in the probability of enrollees leaving the program within 6 months.

Implications for Children and Parents in Wisconsin
Out of the nearly 62,800 parents and caretakers above 100% of the FPL who lost public coverage following the policy changes to Badger Care in April, less than a third are insured through the Marketplace and approximately 38,000 (61%) are currently “unaccounted” for in terms of their insurance status. The recently published studies help explain why even modest premiums for Marketplace coverage can be a substantial impediment for the coverage of low-income families.

A second area of concern, addressed in a May 2013 WCCF paper, are changes to BadgerCare that were written into statute in 2013. While the changes are not allowable under current federal law till 2019, they have the potential to severely limit access to BadgerCare for children. The changes include extending premiums to children enrolled in BadgerCare between 150% and 200% of the poverty level. According to an estimate made by DHS in 2011, the premium increase could cause more than 12,000 children to lose BadgerCare coverage. Given the results of the aforementioned research paper, the premium increases could also result in disruptions in care due to decreases in continuous enrollment.

Finally, another area of recent policy change that requires further examination is the effect of new premium payment policy for children and parents on Transitional Medicaid Assistance (TMA). Since July 2012, monthly enrollment data has indicated a sharp decline in TMA enrollment for both parents and children. How much of this decline can be attributed to the difficulty families have in paying the premiums required under TMA remains an interesting question.

Sashi Gregory