Childrens health insurance programs move to reduce and simplify cost-sharing
Kids Insurance / Cost Sharing
January 31, 1998
One of the major decisions states face as they roll out new or expanded children’s insurance programs with the aid of federal funds is what kind of cost-sharing to impose on low-income families without endangering access.
The federal Children’s Health Insurance Program (CHIP) has set firm limits on cost-sharing for children in families with incomes below 150% of the federal poverty level (FPL). Families in this income group pay the same cost-sharing as the Medicaid population or the medically needy population, depending on whether the child is insured through Medicaid or through a CHIP-only insurance program.
However, state officials have fewer guideposts for higher-income families. The only federal requirement is that cost-sharing cannot exceed 5% of family income.
State officials and program administrators know there is a "threshhold of affordability" for these low-income families, but because of the lack of recent data in this area, they must rely on budget limitations, gut feelings, anecdotal reports and small-scale testing of price sensitivity to find that threshhold.
CHIP money is making it possible for states with existing children’s insurance programs to reduce cost-sharing requirements on families. Changes include simplifying co-pay structures, both to make collection easier and to reduce confusion among providers and patients.
Here is a sample of what states are doing about cost-sharing:
•Tennessee is eliminating deductibles for all children from families with household incomes between 100% and 200% of the federal poverty level (FPL). The deductible for non-Medicaid-eligible children was $250 per year per child and $500 for families. The TennCare program will also reduce copays for this group from 2-8% to 2% of the cost of service.
The changes are "going to improve access tremendously," said Tony Garr, executive director of the Tennessee Health Campaign, an umbrella group for consumer advocacy organizations.
Mr. Garr believes the deductibles discouraged many people from enrolling their children in TennCare while the copays of 2-8% dissuaded others from going to the doctor, even when they could have received free preventive health services that did not require copays. A 10% copay remains for children at 200% or above of FPL.
Russ Miller, director of communications for the Tennessee Medical Association (TMA), said Tennessee physicians found the copay system to be problematic in part because of the many tiers, but also because of the challenge in educating patients about how it works. Copays are better understood by the privately insured, he said, adding that "insurance companies are not doing their role" in educating
TennCare clients. While TennCare’s decision to reduce copays to a flat 2% of the cost of service is an improvement, TMA believes a flat fee would be "easier to understand" than a percentage, he said.
Florida’s Health Kids
• Florida’s Healthy Kids program must reduce cost-sharing to conform with CHIP limits for children below 150% of FPL. Currently, families with incomes up to 185% of FPL contribute $5 to $27 per child toward the monthly premiums. Rose Naff, executive director of Florida’s Healthy Kids, said her program wants to move to a flat premium contribution of $15 per family to remove incentives for families with several children to insure only the sick one. She said the Health Care Financing Administration (HCFA) has not yet approved the change and has expressed concern that the $15 flat rate would be too high for some low-income families.
•New York hopes to expand access by eliminating premiums, but not copays, for more low-income children. Currently, the state’s Child Health Plus program waives premium contributions for children up to 120% of FPL, but now the state plans to waive premiums for those up to 160% of FPL. Premiums for children between 160% and 222% of FPL will be limited to $9 per child per month, with a $36 maximum per family. That’s down from $13 per child and a $52 maximum previously.
Robert Hinckley, spokesman for the New York Department of Health, said the state’s highest priority is to guarantee access to as many uninsured children as possible under age 19. To accomplish this, the state has chosen not to expand benefits to match Medicaid, but is using CHIP funds to reduce premiums for those at the low-end of the income range covered by its Child Health Plus program.
•Pennsylvania, which currently provides health insurance without premiums for non-Medicaid-eligible children up to 185% of FPL, is considering raising that cut-off to 200%, said Lowware Murry, CHIP project manager for the state Department of Insurance.
Ms. Murry said the state also is looking at providing greater subsidies for those between 200% and 235% to encourage more to join the program. Currently, the state provides a 50% subsidy for children between 185% and 235% of FPL, but Ms. Murry acknowledges that only a very small percent (5%) of those in the state’s CHIP program are in this category.
•New Hampshire Healthy Kids program, which targets enrollees above the 185% FPL limit of the state’s Medicaid program, hit a wall when premiums per child recently rose 10% to $67 per child per month, according to Tricia Brooks, executive director.
With the aid of the new federal funds, the state will be able, for the first time, to subsidize premiums for non-Medicaid eligible children 18 and under through 235% of FPL, according to Karen Hicks, special assistant to the governor for policy. The amount of the subsidy has not been determined, she said.
California’s Healthy Families
California’s Healthy Families will use cost-sharing requirements to create incentives for families. Families with incomes of 100-150% of FPL will pay $7 per child in monthly premiums and up to $14 per family. Families with incomes between 151-200% of FPL will pay $9 per child and a maximum of $27 per family. However, families may be have to pay more if they do not select one of the lowest-priced plans.
The state also is offering a $3 discount per child per month to families selecting the plan in each area that has done the best job including traditional and safety-net providers in its provider network and one month free if a family pays for three months in advance.
According to Peter Anderson, deputy director of California’s Managed Risk Medical Insurance Board, the governor originally proposed setting the premium at 2% of family income, but the legislature felt that the dollar ranges offered a simpler and more affordable alternative.
Childrens health insurance programs move to reduce and simplify cost-sharing
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