CHIP: May Lead to Loss of Employer-Based Coverage

      The Children's Health Insurance Program risks squeezing out private insurance by enrolling children who already have coverage, rather than reaching only the uninsured, according to a new report. Researchers at the Economic and Social Research Institute surveyed 594 employers that currently offer private health insurance, and found that nearly one-fifth -- 19% -- "would consider dropping said coverage for their employee's children if a CHIP-style program were available in their state." Forty percent thought their competitors would drop coverage. However, the percentage dropped significantly if there were a waiting period for enrollment, or if employers were forced to drop dependent coverage for all of their workers, rather than just a portion. The researchers recommend codifying those requirements for the program, along with providing private health insurance subsidies and a well thought-out cost sharing system. Also, the study indicated that "substitution of CHIP coverage ... is most likely to occur among low-income families," so "a modest displacement may not actually be a waste of CHIP funds." The study found that employers who "contributed generously" to employee health premiums were less likely to say they would drop coverage. Still, most workers and employers alike "generally were not aware of CHIP."

Shooting the Breeze
      The researchers also conducted a study group with parents, finding that although some might drop private coverage for CHIP, they "clearly had mixed feelings," including concerns about hidden costs, being forced to change pediatricians, poor quality of care, bureaucracy and the possibility of social stigma. ESRI Senior Fellow Dr. Elliot Wicks said, "These findings show that attitudes toward CHIP are complex. Although the potential for cost savings is an important factor for employers and parents alike, it is not the only factor ... Employers expressed genuine concerns about their employees' welfare, while parents clearly had concerns about what would happen to their children if they were enrolled in a CHIP program" (ERSI release, 6/7).