Transitions from private to public health coverage among children: estimating effects on out-of-pocket medical costs and health insurance premium costs

Abstract

Objective: To assess the effects of transitions from private to public health insurance by children on out-of-pocket medical expenditures and health insurance premium costs.

Data sources: Data are drawn from the 1996 and 2001 panels of the Survey of Income and Program Participation. We construct a nationally representative, longitudinal sample of children, ages 0-18, and their families for the period 1998-2003, a period in which states raised public health insurance eligibility rates for children.

Study design: We exploit the Survey of Income and Program Participation's longitudinal design to identify children in our sample who transition from private to public health insurance. We then use a bootstrapped instrumental variable approach to estimate the effects of these transitions on out-of-pocket expenditures and health insurance premium costs.

Principal findings: Children who transition from private to public coverage are relatively low-income, are disproportionately likely to live in single-mother households, and are more likely to be Black or of Hispanic origin. Child health status is highly predictive of transitions. We estimate that these transitions provide a cash-equivalent transfer of nearly U.S.$1,500 annually for families in the form of reduced out-of-pocket and health insurance premium costs.

Conclusions: Transitions from private to public health coverage by children can bring important social benefits to vulnerable families. This suggests that instead of being a net societal cost, such transitions may provide an important social benefit.