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Model Application Template for the State Children’s Health Insurance Program

Effective Date:

Approval Date: 17 less than the benefits under Kids Connection, both programs have eligibility levels above the federal minimum: Florida’s is 185 percent of FPL and Minnesota’s 275 percent of FPL. Despite these high coverage levels and attractive program names, there is little evidence that the crowd-out of these programs was significant:

A study in the October 1997 Journal of the American Medical Association (JAMA) found that only three percent of MinnesotaCare enrollees previously had employer-based coverage and only four percent had individually purchased insurance before enrolling in the state program.

A September 1997 study found that only two percent of children in Florida's Healthy Kids program had previous employer-based coverage and one percent had individually purchased insurance at any time during the year before enrollment.

Also, a study by the Alpha Center reported that officials in states that expanded health coverage did not find crowd-out to be a genuine problem in programs for children or for people with incomes up to 200 percent of the federal poverty level.

Therefore, while there may be some substitution of coverage in the short run, it is anticipated that it will be no more than two to three percent.

In the long run, there may be greater impact, but the state will monitor this issue. However, even in the longer run there is reason to believe that Medicaid coverage will only make up for reduced employer-based coverage of families and dependents. As pointed out by the Children’s Defense Fund: “Employer-based coverage of children has dropped steadily year after year since the mid-1970s, whether Medicaid coverage of children was increasing, decreasing, or stagnant. In February 1997, the General Accounting Office (GAO) reported that three of five studies found no relationship between Medicaid expansions and declining private coverage. Of the two studies finding a relationship, one candidly admitted that losses in children's employer-based coverage could be unrelated to Medicaid.

Employers cut health benefits because of competitive pressure for cost- control, not changed public benefits rules. The 1997 GAO report also found that private coverage has fallen nearly twice as quickly for children as for the population as a whole because economic forces cause employers to limit employee benefits to workers alone rather than helping employees' families. Few employees replace coverage of spouses and children with coverage of children alone. Most employer-sponsored family insurance covers the spouse, not just children. Few families would shift from such dependent coverage to a