Crowding Out Private Coverage: The Cost of Expanding Children's Health Insurance

New research on the expansion of the government's main children's health insurance program offers a reminder that much of the last decade's worth of coverage expansions have come at the expense of private insurance.

In a paper for the April issue of the journal Health Services Research, Researchers from RAND Corporation, Columbia University, and the University of California report that eligibility expansions of the Children's Health Insurance Program (CHIP), a state-managed Medicaid sister program, between 2002 and 2009 didn't actually increase coverage by very much. During that time frame, 18 states increased eligibility, and in 13 of those states, the increase was relatively large, altering the program's requirements so that it covered children from families with incomes between 200 and 400 percent of the poverty line. But those eligibility changes didn't result in large coverage increases. Overall, the study reports, for every 100 children who became eligible, just four actually took advantage of the new coverage. And only about half of those children were previously uninsured. The authors estimate that the upper bound "crowd out" rate was 46 percent. 

Nearly half the time, in other words, expanding CHIP's eligibility requirements has resulted in moving kids out of private insurance programs that are generally associated with better health outcomes and into a worse performing public health program.