Differential effect of the state children's health insurance program expansions by children's age.

In 1996, a year before the State Children's Health Insurance Program (SCHIP) was signed into law, a federal mandate set different income eligibility levels for public health insurance by age. States were required to extend eligibility for public health insurance to children younger than 6 years old (henceforth pre-ESA, which stands for pre-elementary school-aged) in families with income below 133 percent of the federal poverty line (FPL), and to children 6–12 years old (henceforth ESA) in families with income under 100 percent FPL eligible, while no mandate existed for children aged 13–18 (henceforth post-ESA). The difference in eligibility levels between adolescents and younger children may suggest that policy makers before SCHIP thought that younger children needed insurance more than adolescents. The SCHIP expansion decreased the disparity in income eligibility across age groups within states by expanding income eligibility disproportionately, with a larger increase in eligibility for older children than for younger. By 2001, after every state had implemented some form of the SCHIP expansion, the income eligibility for public health insurance in almost all states was the same for all children under the age of 19. These differences in the size of the expansion led to the empirical question that this paper addresses: Did the SCHIP expansion affect newly eligible children of different ages in different ways? It is unclear a priori which age group (pre-ESA, ESA, or post-ESA) would be most affected by the SCHIP expansion. On the one hand, pre-ESA children need more health services, implying that if a public health insurance policy becomes available for both pre-ESA and post-ESA children who cannot afford private health insurance coverage, then pre-ESA children will be more likely to take up public coverage. On the other hand, the older children's income eligibility thresholds were much lower before the SCHIP expansion, implying that the newly eligible children from the older age group come on average from families with lower incomes. Because evidence from the earlier Medicaid expansions suggests that take-up rates fall as income increases, one would expect that take-up rates would be higher for the older age group (Currie and Gruber 1996; Card and Shore Sheppard 2004;). These two countervailing factors imply that both pre-ESA and post-ESA children potentially could have been the group most affected by the SCHIP expansion. Using Survey of Income and Program Participation (SIPP) data from 1996 and 2001, I assess the effects of SCHIP on insurance coverage and physician visits in three ways. First, using a difference-in-differences approach, I estimate the take-up rate of public health insurance coverage for each age group, which is the fraction of newly eligible children who are covered by public health insurance, and test whether take-up rates are the same across age groups. Second, I explore whether public health insurance coverage substituted for private coverage (what is known as the crowd-out effect) or whether the increase in public coverage reduced the uninsurance rate. I also test whether the declines in private coverage and uninsurance rates are significantly different across age groups. Third, I estimate whether SCHIP affected the percentage of children seeking treatment, which I measure using the percentage of children visiting a physician at least once in the last 12 months before the SIPP interview, testing whether the increase in physician visits differs across age groups. The effect of SCHIP expansion on coverage has been addressed before (Rosenbach et al. 2001; Zuckerman et al. 2001; Cunningham, Hadley, and Reschovsky 2002; Cunningham, Reschovsky, and Hadley 2002; Lo Sasso and Buchmueller 2004; Hudson, Selden, and Banthin 2005; Bansak and Raphael 2006; Buchmueller, Lo Sasso, and Wong 2007; Gruber and Simon 2007). These studies find take-up rates ranging from 5 to 18 percent, depending on the specification and data used. However, the studies do not explore differences in the effect of SCHIP across age or income levels. Literature examining earlier Medicaid expansions (Currie and Gruber 1996; Card and Shore Sheppard 2004;) does address whether the expansions had a different effect on coverage at different income levels. However, the earlier Medicaid expansion applies to pre-ESA and ESA children at lower income levels, which may not be valid for the SCHIP expansion. Although the SIPP was used to estimate the effect of prior Medicaid expansions (see, e.g., Blumberg, Dubay, and Norton 2000; Ham and Shore-Sheppard 2005;), this study is the first to use the SIPP to estimate the effect of the SCHIP. Using the SIPP provides a better measure of health insurance than does the more commonly used Current Population Survey (CPS) (Short 2001). The study also provides the first test of whether a public health insurance program expansion has different impacts across different populations. Unlike most earlier studies of Medicaid or SCHIP expansions, this paper combines the effect of a health care expansion on coverage with an important indicator of health care treatment: physician visits. This paper is organized as follows: the second section explains the methods used to test and assess the effects of SCHIP on health insurance coverage and physician visits; the third section describes the data used; the fourth section reports trends over time in health insurance coverage as well as physician visits and regression results; and the fifth section concludes.