Increased Family Cost-Sharing in SCHIP: How Much Can Families Afford?

Increased Family Cost-Sharing in SCHIP: How Much Can Families Afford? Betsy Shenkman Bruce Vogel Institute for Child Health Policy Department of Epidemiology and Health Policy Research University of Florida June 25, 2005

Project Purposes • To examine the responsiveness of disenrollment to premium changes and child health and sociodemographic characteristics in one state SCHIP; • To calculate a price elasticity for families in the short-term

Study Setting • Florida Healthy Kids Program • 5-19 year olds between 101% FPL and 200% FPL receive subsidized premiums • Family share prior to July 1, 2003 was $15 per family per month (PFPM) • Termination due to non-payment of premium after two months • Until July 1, 2004, passive renewal process used; so overall disenrollment in the program relatively low

Program Changes • Premiums increased on July 1, 2003 from $15 per PFPM to $20 PFPM for all families receiving subsidized premiums • The Center for Medicare and Medicaid Services (CMS) – exceeded Federal cost sharing limits for families at or below 150% FPL • October 1, 2003 – premiums reduced back to $15 PFPM for those at or below 150% FPL; remained at $20 PFPM for those above

Study Time Frame and Sample • Time frame for analyses – March 2003 through March 2004 • Disenrollees – Children enrolled for at least two months and disenrolled for at least two months during the time period

Data • Enrollment files – months enrolled, age, gender, address information, subsidy level • Health care claims and encounter data linked to enrollment files • Clinical Risk Groups used to classify children into health status categories • Healthy, Significant Acute, Minor Chronic, Moderate, and Major Chronic Conditions

Analyses • Cox proportional hazards models were used to estimate the responsiveness of disenrollment to premium changes, age, sex, income, CRG health status category, and months enrolled.

Disenrollees From Healthy Kids N=237,178 • Percent disenrollees

Key Findings • With the $20 premium increase, families 2x as likely to disenroll as before increase • The Price elasticity for the disenrollment hazard rate of 2.2, was calculated • Given this price elasticity, a 10% increase in the monthly premium would produce a 22% increase in the disenrollment hazard rate • An increase in the premium from $15 per month to $20 per month (a 33% increase), would increase the disenrollment hazard rate by approximately 73%, or from a baseline hazard rate of 1.4% to 2.4%

Key Findings • Families at or below 150% FPL 35% more likely to leave compared to higher income • Rural areas 6% more likely to leave than those in urban areas • Health status an important predictor – 8% to 17% less likely to disenroll with significant acute or chronic condition than those who are healthy

Conclusions • In the short-term, families are very price sensitive • Cannot determine if this is an equilibrium response but • Saw a large effect that perhaps could be moderated across time

Policy Implications • Premium increases need to be considered very carefully • At least in the short-term can have a strong impact • Can differentially affect certain groups of children

Increased Family Cost-Sharing in SCHIP: How Much Can Families Afford?