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Health Care Costs and Financing

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State-subsidized health insurance programs provide both benefits and difficulties for low-income children

A growing number of States have begun to explore premium subsidy programs, which help low-income working families purchase health insurance through the workplace or private plans. These plans help States cover a larger number of the uninsured than they could through traditional Medicaid. Three studies from the Child Health Insurance Research Initiative (CHIRI™), supported in part by the Agency for Healthcare Research and Quality (AHRQ), recently examined the benefits and difficulties in several subsidy programs. The first study (AHRQ grant HS10463) found that Oregon's State Children's Health Insurance Program (SCHIP) and premium subsidy programs serve different children, but appear to serve them equally well. The second study (AHRQ grant HS10465) found that SCHIP can improve care for vulnerable children and reduce racial/ethnic disparities in health care. The third study (AHRQ grant HS10435) found that families have difficulty shifting to Medicaid primary care case management programs.

Mitchell, J.B., Haber, S.G., and Hoover, S. (2005, September). "Premium subsidy programs: Who enrolls, and how do they fare?" Health Affairs 24(5), pp. 1344-1355.

This study examined the factors leading parents to choose Oregon's premium subsidy program, the Family Health Insurance Assistance Program (FHIAP), over SCHIP, and compared the experience of children enrolled in each program with regard to access, use of services, and satisfaction.

Janet B. Mitchell, Ph.D., and colleagues from RTI International surveyed parents randomly selected from the enrollment rosters of Oregon's Medicaid Program and the FHIAP. Because FHIAP and SCHIP have the same income eligibility requirements, low-income families in Oregon have a choice between the free SCHIP program and FHIAP, which requires copayments and has more restricted benefits. More than half of parents (52 percent) said they chose to enroll their child in FHIAP because they did not think their child was eligible for SCHIP. Other major reasons included a preference for private, rather than public, insurance (16 percent); the desire to insure the entire family (16 percent); and a wish to keep their current insurance plan or physicians (7 percent). The majority of SCHIP parents (83.8 percent) had not heard of FHIAP and did not know it was an option.

The majority (70 percent) of families in FHIAP purchased insurance through the individual market, and the remainder purchased employer-sponsored coverage. Parents choosing to enroll their children in FHIAP were more likely than parents of children enrolled in SCHIP to be employed, highly educated, speak English, have prior experience with premiums and private health insurance, and perceive insurance as protection against future health care needs.

The two programs afforded low-income children similar access to health care services. Nearly all the children had a usual source of care, and roughly equal proportions had seen their primary care physician at least once in the past 6 months. However, a higher proportion of SCHIP enrollees cited an unmet need for primary care (6.9 vs. 2.0 percent) and specialty care (11.2 vs. 3.8 percent). Conversely, FHIAP enrollees reported a higher unmet need (39 percent vs. 29.7 percent) for dental care, citing high costs and lack of dental insurance.

There were also differences in where children received their care. FHIAP children were more likely to receive their care in a doctor's office or health maintenance organization, whereas SCHIP children were more likely to visit a hospital clinic or community health center.

The authors conclude that efforts to enroll low-income children in premium subsidy programs may need to be accompanied by education on how insurance works. They also should consider whether insurers include provider networks that serve non-English-speaking families, and the possible burden of even the modest FHIAP deductibles and copayments on low-income families.

Shone, L.P., Dick, A.W., Klein, J.D., and others (2005, June). "Reduction in racial and ethnic disparities after enrollment in the state children's health insurance program." Pediatrics 115(6),pp. e697-e705.

SCHIP provides health insurance to low-income children, many of whom are members of racial/ethnic minority groups. This study found that after enrollment in New York State's SCHIP, more children of all races and ethnicities had a usual source of care (USC). They were also more likely to get their care from their USC, and fewer had unmet needs for care than they did before they enrolled in SCHIP. In addition, racial/ethnic disparities in USC, unmet need, and continuity of care that existed prior to SCHIP virtually disappeared.

Researchers conducted two telephone surveys with parents of white, black, and Hispanic children throughout New York State. Parents of 2,644 children were interviewed shortly after enrollment, and 2,290 of those completed the follow-up interview 1 year later.

Before SCHIP, 95 percent of white children had a USC compared to 86 percent of black and 81 percent of Hispanic children. During SCHIP, nearly all white, black, and Hispanic children had a USC (98, 95, and 98 percent, respectively). Similarly, disparities were virtually eliminated in continuity of care, as measured by the increased proportion of health care visits to the USC during SCHIP. Before SCHIP, more white than black and Hispanic children made all or most of their visits to their USC (61, 54, and 34 percent, respectively); all improved during SCHIP, with no remaining disparities (87, 86, and 92 percent, respectively).

Disparities in unmet needs for medical care were eliminated. Before SCHIP, 38 percent of black children had an unmet need for care compared with 27 percent of white children; white and Hispanic children did not differ significantly (27 versus 29 percent). During SCHIP, 19 percent of children of all three racial/ethnic groups had unmet needs.

Finally, parent-rated visit quality improved for all groups, but preexisting racial/ethnic disparities in quality of care assessments remained during SCHIP. Sociodemographic and health system factors did not explain disparities or their reduction. The authors conclude that the provision of health insurance to uninsured low-income children may enhance efforts to reduce preexisting racial/ethnic disparities in care, and emphasize the importance of continued efforts to improve the quality of care for all racial/ethnic groups.

Bronstein, J.M., Adams, K.E., Florence, C.S., and others (2005, Summer). "Children's service use during the transition to PCCM in two states." Health Care Financing Review 26(4), pp. 95-107.

During the initial implementation years of Medicaid primary care case management (PCCM) in Alabama and Georgia, use of primary, preventive, and emergency department (ED) services declined. This study concludes that the primary reason for the decline was the difficulty families had understanding and adjusting to restrictions on the providers they were authorized to use for routine care.

PCCM is a form of managed care in which the primary medical provider provides primary and preventive care, coordinates referrals for specialty and ancillary care, and usually authorizes the use of ED facilities. The program's goals are to provide a medical home and reduce unnecessary specialty and ED care.

Janet M. Bronstein, Ph.D., of the University of Alabama at Birmingham, and colleagues used Medicaid claims data from both States to track children during the implementation of PCCM from 1994 to 1999 and to control for geographic availability of Medicaid providers, which also declined during this period.

Focus groups conducted in 2001 with enrollees and providers shed some light on the decrease in primary care, preventive visits, and ED care associated with PCCM implementation. Enrollees reported they were assigned physicians rather than being asked to choose them, and some stated they no longer took their children to the physician because they were not familiar with their assigned physician. Many were unaware they could change their assigned physician, or had tried but found it difficult. Providers for the most part endorsed the concept of children having a medical home, but felt there were many problems with implementing this system through the Medicaid program. Public health department providers felt office physicians were too busy and too acute-care oriented to focus on preventive care.

The authors concluded that the decline in primary and preventive care could be due to several reasons. First, children possibly received less care from public health departments which had previously been major providers of this service. Second, some visits may not have been captured by Medicaid claims data because some public health providers had indicated they were willing to continue to see patients and forgo payment. Third, claims data may not have captured ED visits that were disallowed by Medicaid because enrollees reported that PCCM had not radically changed their use of ED services and they ignored hospital bills because they expected Medicaid to cover the services. However, Dr. Bronstein concludes that care use rates will increase as the PCCM programs mature and providers and enrollees adjust to the system.

Editor's Note: These studies are part of the Child Health Insurance Research Initiative (CHIRI™), which is co-sponsored by the Agency for Healthcare Research and Quality, The David and Lucile Packard Foundation, and the Health Resources and Services Administration. CHIRI™ provides policymakers with information to help them improve access to and the quality of health care for low-income children. Additional CHIRI™ findings can be accessed on the CHIRI™ Web site at http://www.ahrq.gov/chiri/.

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