The Impact of an Increase in KCHIP Premiums on Insurance Coverage of Kentucky Children
- Presenter:
Chair: Willard Manning; Discussant: TBA Mon June 5, 2006 15:30-17:00 Room 121
The state of Kentucky has been very successful in implementing a health insurance program for low income, uninsured children under the guidelines established by the State Children’s Health Insurance Program (SCHIP) which was created by the Balanced Budget Act of 1997 under Title XXI of the Social Security Act.
Since its inception, the Kentucky Children’s Health Insurance Program (KCHIP) has not charged any premium for this insurance coverage. For many reasons it has become more difficult for Kentucky to finance the KCHIP program in its current form. The recent recession has caused state tax revenue to fall nationwide. At the same time, there has been acceleration in the growth of KCHIP spending. Nationwide growth in CHIP spending can be attributed to causes such as enrollment increases, increases in the cost of prescription drugs, and provider payment increases. An additional constraint on the state’s ability to maintain its KCHIP program is that Congress reauthorized federal funding at a lower level starting in July 2003. Finally, as other states build their CHIP programs, the federal money available for redistribution will decrease. For these reasons, the state of Kentucky began in December 2003 charging a $20 monthly premium for families with children covered by KCHIP with income levels between 151% and 200% of the federal poverty level (FPL). This service category is known as KCHIP III.
The purpose of this paper is to examine the impact of the introduction of this premium on enrollment durations in KCHIP III. Do children in KCHIP III exit the program more rapidly after the premium was introduced? A Cox proportional hazards model of KCHIP III duration will be estimated with the policy change modeled as a time varying covariate which is equal to 0 prior to the December 2003 and equal 1 afterwards. A similar model can be estimated for KCHIP II (coverage for children with family income between 100% and 150% FPL) enrollment. Because children in KCHIP II do not have to pay any premiums, they are a naturally provided control group.
In order to isolate the effect of non-payment of the premium as a potential exit route from KCHIP III, movements to and between other state level insurance programs, such as KCHIP II and Medicaid, are controlled for. Exits for other reasons, such as aging out of the program or moving out of the state are also controlled for.
Preliminary results suggest that children were 4 times as likely as in a typical month to exit KCHIP III if they remain enrolled until the premium is introduced. The average exit probability in a typical month in the sample is 9%. The preliminary results also show large effects of yearly recertification on exiting. Non-white children have a greater chance of exiting when compared to white children and children covered under managed care KCHIP III have a greater chance of exiting when compared to those covered under fee for service KCHIP III.
