Study: CHIP doesn’t crowd out private insurance

The Children’s Health Insurance Program, the state-federal program that covers lower-income children, has expanded eligibility significantly in recent years. Between 2002 and 2009, 13 states increased the income threshold for CHIP to between 200 and 400 percent of the federal poverty line.

But the practical implications of those big expansions, a new National Bureau of Economics Research paper suggests, is actually quite limited. It turns out that the higher income populations targeted by these expansions actually enroll in the program at very low rates:

Our analyses show that the 2002-2009 expansions to CHIP eligibility were associated with very limited take-up of public insurance among children in families with incomes between 2 and 4 times the FPL, with 4 children enrolling for every 100 who became newly eligible. ... In Illinois, for example, the income eligibility threshold increased from 200 to 400 percent of the FPL in 2007 and enrollment in public coverage among children in families with incomes in that range grew from 9.9 percent to 13.8 percent between 2007 and 2008. Similarly, Wisconsin modified its income eligibility threshold from 185 percent to 300 percent of the FPL in 2008. Public coverage grew from 8.1 to 12.0 percentage points among children in the 200 to 400 percent of the FPL income band.

Why do so few middle-income kids enroll? One big factor is probably private health insurance, which they are more likely to have than lower-income children. The authors also raise the stigma that comes along with a public program as another reason higher-income families may not enroll their children at particularly high rates. What these results do suggest is that fears of “crowd out,” with children ditching private coverage once a public option becomes available, look to be unfounded within the CHIP program.