Income Eligibility Thresholds, Premium Contributions, and Children's Coverage Outcomes

A CHIP expansion simulation finds sensitivity to higher contributions for higher income families.

Many states have raised income eligibility thresholds as a way to expand their Child Health Insurance Program (CHIP). They also have begun requiring newly eligible higher-income families to contribute to the cost of coverage.

These researchers examined the interplay between income-eligibility thresholds of up to 400 percent federal poverty level (FPL) and various contribution combinations on coverage rates. They used the federal Current Population Survey, which collects labor market, sociodemographic, and health insurance data on households.

Of the 42,806 children in their statistical sampling of families with less than 400 percent FPL, 39 percent were publicly insured, 55 percent privately insured, and 12 percent uninsured. Among those imputed to be eligible for public insurance, 71 percent had no premium, 17 percent low premium, seven percent medium premium, and five percent high premium.

Under this simulation, as income thresholds increased from 200 to 300 to 400 percent FPL, the percentage of children eligible increased (68%, 85%, and 93% respectively). The percentage of children enrolled in public coverage decreased as premium contributions increased and the percentage of children with private coverage increased. When public coverage was expanded without premium requirements, the crowd-out (replacement of private by public insurance) ranged from half to three-fourths.

“Gains in public coverage and reductions in private coverage under eligibility expansions to higher income families are nullified if the expansions are coupled with premium schedules that require more than a modest contribution,” they conclude.