The Impact of CHIP on Children's Insurance Coverage: An Analysis Using the National Survey of America's Families

The Children's Health Insurance Program (CHIP) was enacted in August 1997 with the goal of expanding health insurance coverage for low-income uninsured children. In contrast to previous expansions in public coverage, the CHIP legislation explicitly sought to target the program to the uninsured and, because of the higher federal matching rate, to ensure that states maintained their level of effort under the Medicaid program. This focus led to legislative requirements that states implement mechanisms to prevent the substitution of public coverage for private coverage and that states maintain their Medicaid eligibility thresholds at pre-CHIP levels and not cover those children under CHIP. Ultimately, all states expanded eligibility for children under Title XXI: 43 states chose eligibility levels of 200 percent of the federal poverty level (FPL) or above. While before CHIP, states could expand coverage under Medicaid, only six states had Medicaid coverage for children at or above 200 percent of the federal poverty level in 1997. Under CHIP, North Dakota has the lowest eligibility threshold, at 140 percent of the federal poverty level and New Jersey has the highest threshold, at 350 percent of the federal poverty level. Accompanying the eligibility expansions under CHIP were unprecedented efforts aimed at reaching and enrolling uninsured children in public coverage, which had spillover effects on Medicaid programs—most states simplified their Medicaid enrollment processes for children and adopted broad-based outreach efforts. To date a number of published econometric studies have attempted to estimate the extent to which CHIP has contributed to declines in uninsurance and employer-sponsored coverage (Lo Sasso and Buchmueller 2004; Davidoff, Kenney, and Dubay 2005; Hudson, Selden, and Banthin 2005; Bansak and Raphael 2006; Gruber and Simon 2007;).1 These studies have used different data sets and different approaches to control for other possibly confounding changes occurring over the same period as the CHIP expansions. The estimates of the extent to which CHIP coverage has substituted for employer-sponsored coverage are highly variable across the studies that were reviewed in 2004, ranging from 10 to 70 percent (Davidson, Blewett, and Call 2004). In this paper, we use data from three rounds of the National Survey of America's Families (NSAF) to examine the impacts of the CHIP program and the enhanced efforts to reach and enroll children in Medicaid and CHIP on insurance coverage for children. Our paper attempts to improve on the previous literature by accounting for concurrent trends related to increases in the costs of private coverage, which we treat as endogenous, that may be correlated with changes in public health insurance programs, by employing a richer set of control variables for family- and county-specific work patterns in addition to state and time-fixed effects, and by using a low-income comparison group for each of our analyses to establish a counterfactual for what would have happened in the absence of the CHIP program. The more unique contribution of this paper is that we estimate the percentage decline in employer coverage and uninsurance that occurred overall and among the target population as a result of CHIP.