Lower income parents who have health insurance through their employers are increasingly likely to forgo family coverage and enroll their kids in Medicaid or the Children’s Health Insurance Program (CHIP) instead, a new study found.
Working families’ growing reliance on these programs is something lawmakers should keep in mind when they consider whether to renew financing for the CHIP program in 2017, the study’s lead author said.
“These aren’t just safety net programs for uninsured families,” said Douglas Strane, a clinical research associate at PolicyLab at the Children’s Hospital of Philadelphia and the lead author of the study, which appeared in the December issue of Health Affairs. “If CHIP isn’t renewed, we could place substantial pressure on working families.”
Medicaid, called Medi-Cal in California, is the state-federal program that provides health coverage for low-income adults and children. CHIP provides health insurance for children in families whose incomes are modest but too high to qualify for Medicaid.
In 2016, only three states — Arizona, Idaho and North Dakota — limited Medicaid/CHIP coverage to children whose families have incomes less than 200 percent of the federal poverty level ($40,320 for a family of three). In contrast, 19 states offered coverage to children with family incomes greater than 300 percent of the federal poverty level ($60,480 for a three-person family), according to the Kaiser Family Foundation. (Kaiser Health News, which produces California Healthline, is an editorially independent program of the foundation.)
Medicaid/CHIP out-of-pocket costs vary by state, but coverage is generally significantly less expensive than employer coverage.
The Health Affairs study analyzed data from the Medical Expenditure Panel Survey between 2008 and 2013 for families with incomes between 100 and 400 percent of the federal poverty level in which at least one parent had employer-sponsored coverage. The study predated the opening of the health law’s marketplaces, but the researchers said that because these families had employer-based coverage options, they would likely not qualify for less expensive coverage on the exchanges.
In California, the federal Children’s Health Insurance program has been folded into the state’s Medi-Cal program, to cover kids with family incomes of up to 266 percent of the federal poverty level. More than half of California’s children are in the public health program, with more than 1.3 million of them eligible through CHIP.
Kelly Hardy, a children’s health advocate in California, said the percentage of Medi-Cal kids who have parents with job-based coverage has probably grown under the Affordable Care Act since 2014. Not only are more employers required to offer health coverage, she said, California has expanded its Medi-Cal and CHIP programs.
“There are times when the coverage that parents are getting through their employers is not as robust” in terms of benefits, said Hardy, senior managing director for health at Children Now.
“Parents are going to choose the best and most affordable coverage that’s available,” she said.
Over the course of the Health Affairs study, nearly all the families in which a parent was offered coverage accepted it for the parent, and about three-quarters of children in the sample were covered by their parents’ employer-sponsored plan, on average.
But the proportion of kids who lacked employer-sponsored coverage even though at least one parent had it grew from 22.5 percent in 2008 to 25 percent in 2013, the study found. Likewise, the percentage of children who were on Medicaid or CHIP even though at least one parent had coverage through an employer increased 3.1 percentage points, to 15.2 percent, over the course of the study.
Premium increases for employer-sponsored coverage may put a family plan out of reach for low- and moderate-income families, said Strane. Between 2006 and 2016 premiums rose 58 percent for family coverage, according to the Kaiser Family Foundation’s 2016 annual survey of employer-sponsored coverage. This year, families pay $5,277 for coverage on average, 29 percent of the total cost of the plan. Workers’ share of the premium grew 78 percent over the past decade, outpacing the growth in premiums, according to the KFF study.
“They did the math and likely figured CHIP was going to save them money,” said Strane.
This story was produced by Kaiser Health News, an editorially independent program of the Kaiser Family Foundation. Please visit khn.org/columnists to send comments or ideas for future topics for the Insuring Your Health column.