WHAT ARE THE IMPACTS ON CHILDREN WHEN THERE IS AN INCREASE IN HEALTH PLAN COVERAGE? 

Responsible researcher: Eduarda Miller de Figueiredo

Authors: Janet Currie and Jonathan Gruber

Article: Health Insurance Eligibility, Utilization of Medical Care, and Child Health

Intervention Location: United States

Sample Size: 225 thousand children

Sector: Healthcare

Variable of Main Interest: Measure of use per individual

Type of Intervention: Health Plan

Methodology: Instrumental Variable

Summary

            The high infant mortality rates of children in the United States prompted the authors to seek to understand whether there was anything related to the quality/quantity of medical care to which these children were exposed. In 1984 there was an expansion of eligibility for the Medicaid program, which targets low-income children. From this expansion, the authors estimated the effects and magnitude of this expansion on the use of medical care and mortality. Using a linear probability model and a model with instrumental variables, the results suggest an increase in the number of consultations and hospitalizations, as well as a reduction in the infant mortality rate.

1. Policy Problem

            High rates of infant mortality and morbidity suggest that American children do not receive the same amount or quality of health care as children in other developed countries. For example, when compared to Canadian children, children ages 1-4 in the United States have a 14% higher mortality rate.

            According to Bloom (1990), a possible explanation for this is that up to 30% of poor children do not have any type of health insurance, in a country where the uninsured receive less health care than the insured. Therefore, the debate over health care reform increasingly emphasized health insurance for children, but there was no convincing evidence that increasing eligibility for public insurance would actually improve children's health (Boston Globe, 1994). .

Taking this into account, the authors sought in this article to identify the effects of insurance coverage based on expansions of Medicaid for low-income children. Wherein Medicaid is a federal-state program that provides health insurance to the poor.

2. Implementation and Evaluation Context

Medicaid eligibility was tied to receipt of cash welfare payments under the Aid to Families with Dependent Children (AFDC) program. Therefore, eligibility was effectively limited to very low-income women and children in single-parent families. Medicaid coverage to other groups of children and, in 1992, states were required to include in coverage children under the age of 6 in families with incomes up to 133% of the poverty line and 6 -19 years old those children with family income up to 100% of the poverty line. Furthermore, there was the option to include babies with up to 185% of the poverty line, thus, there was a variation in eligibility due to the different rates between states.

Naturally, the first question to ask following changes to Medicaid is whether they have had a significant effect on the fraction of the population eligible for the program.

3. Policy/Program Details

            Beginning with the Deficit Reduction Act of 1984 (DEFRA '84) [1] , the link between AFDC coverage and Medicaid eligibility was reduced, as DEFRA '84 eliminated family structure requirements for Medicaid eligibility. Medicaid for young children. Requiring states to provide coverage for children born after September 1983 and who live with AFDC-eligible income families.

4. Method

The authors used data from the Current Population Survey (CPS) from 1984 to 1992, which made it possible to collect information on demographic characteristics, income and work data. And also data from the National Health Interview Survey (NHS), which also includes information on the use of medical care, covering a total sample of 225,000 children in the period studied.

To begin analyzing the effect of Medicaid eligibility on utilization, the authors used a linear probability model, with the measure of utilization by individual i as the dependent variable. Additionally, the authors added control variables that include gender, race, ethnicity, education and housing, an indicator of the individual's eligibility for Medicaid , and binary variables for state and year.

However, the authors highlight the existence of an endogeneity bias. A sick child can cause lower parental income—if one parent is forced to leave work to care for the child, for example—leading to a spurious positive correlation between Medicaid . Therefore, there may be substantial error in the eligibility measure. To correct for this possible bias, the authors used a “simulated instrument” that varies only with the state's legislative environment and not with its economic or demographic characteristics.

5. Main Results

First, the authors noted that there was a “dramatic” increase in eligibility for the Medicaid , with one-third of all U.S. children eligible at the end of the period. To separate the effects of the economic cycle from the effects of legislative change, the fraction of the 1984 population that would be eligible under each year's laws was also estimated. The results suggest that most of the increase in eligibility was a result of legislative changes.

Increases in eligibility do not automatically lead to increases in insurance coverage. By examining uptake of Medicaid by newly eligible children, the authors demonstrated that coverage increased, but not as steeply as eligibility. Making a child eligible for Medicaid increased the likelihood of the child being covered by insurance by approximately 30%.

Based on the results using the linear probability model, the authors found that Medicaid significantly reduces the probability of going without a doctor visit in the year prior to the survey by 2.5 percentage points, but has no statistically significant effect on the probability of having one. a visit in the last two weeks. When compared to the baseline probability of going without a visit for those eligible for Medicaid , making a child eligible reduces the probability of going without a visit by 12.8%.

However, when estimating using the instrumental variable, the results suggest that becoming eligible for Medicaid is associated with a 9.6 percentage point drop in the probability of going without a visit in the previous year. In other words, the results found by the authors, using this methodology, suggest that making children eligible for the program reduces the probability of them being left without a visit by half. A very large and significant increase of 4 percentage points in the probability of a hospitalization in the previous year was also observed. This coefficient implies that becoming eligible for Medicaid nearly doubles the probability of being hospitalized.

Another result found was that increasing the fraction eligible for Medicaid has a significant negative effect on the infant mortality rate. Where for every 10 percentage point increase in the fraction of children eligible for Medicaid , it reduces mortality by 0.128 percentage points, which is 3.4% of the sample's baseline mortality rate.

6. Public Policy Lessons

            The results suggest that an expansion in the eligibility of the American federal-state health insurance program increases the use of appointments in a relatively efficient manner. However, it also demonstrated significant increases in the incidence of hospitalization which, according to the study authors, may reflect inefficiencies in the way care is provided to patients in the health insurance program.

References

Bloom, Barbara, “Health Insurance and Medical Care,” Advance Data from Vital and Health Statistics of the National Center for Health Statistics, No. 188 (Washington, DC: Public Health Service, 1990).

[1] Deficit Reduction Act of 1984.