Background: Medicaid and the Children’s Health Insurance Program (CHIP) provide health care to over 30 million children in the United States.1,2 As a result, low-income children have had increased access to health care, of all forms, which has increased the utilization of primary care and decreased unnecessary ED visits and hospitalizations. However, this comes at a high cost, both at the state and national level. Medicaid currently subsidizes more than 50% of every state’s public insurance program, spending about $100 billion/year in health care payments for children.3 Given this hefty price tag, there have been myriad strategies proposed to help decrease these costs. One such strategy, includes decreasing enrollment in public insurance through decreasing income eligibility thresholds. As a result, many children from low-income families would lose their public insurance and be eligible for commercial insurance only. Consequently, this would place an undue financial burden on these families and the health care systems that care for them. Furthermore, it is anticipated that poor health care outcomes would increase in these vulnerable populations.
Study design: Retrospective cohort study using 2014 State Inpatient Databases.
Setting: Pediatric hospitalizations (aged less than 18 years) from 14 states during 2014 with public insurance listed as the primary payer. This encompassed about 30% of family households in the United States in 2014.
Synopsis: Simulations were done at three different thresholds of the federal poverty level (FPL), including less than 100%, less than 200% and less than 300%. Of the families included, 43% lived below 300%, 27% below 200% and 11% below 100% of the FPL. Of note, public insurance FPL eligibility limits tended to be lower in states with a greater percentage of the population being below 300% of the FPL. The results, of these reductions, were as follows:
- If reduced to less than 300% of the FPL, about 155,000 hospitalizations became ineligible for reimbursement. The median per-hospitalization estimated costs ranged from approximately $6,000 to approximately $10,000, accumulating $1.2 billion in estimated costs.
- If reduced to less than 200% of the FPL, about 440,000 hospitalizations became ineligible for reimbursement. The median per-hospitalization estimated costs ranged from approximately $2,000 to approximately $10,000, accumulating $3.1 billion in estimated costs.
- If reduced to less than 100% of the FPL, about 650,000 hospitalizations became ineligible for reimbursement. The median per-hospitalization estimated costs ranged from approximately $2,000 to approximately $10,000, accumulating $4.4 billion in estimated costs.
If these reductions occurred, healthy newborns would be disproportionately affected by them, which is important to note because newborn hospitalization is one of the fastest-rising costs in pediatric care. In fact, it can range from approximately $700 to approximately $2,000 per hospitalization, which may represent a huge financial strain for families that are unable to secure commercial insurance. Furthermore, with the average hospitalization of non-newborns ranging from $3,000 to $10,000, it is likely that this cost would constitute a fairly large percentage of a low income family’s annual income, which may represent an untenable financial burden.
Thus, if these families are unable to obtain commercial insurance and/or pay these debts, the financial burden will shift to the institutions that care for these vulnerable populations.
Bottom line: If public insurance eligibility thresholds were decreased, a large number of pediatric hospitalizations would become ineligible for coverage, which would shift the costs to families and institutions that are already financially strained and likely result in poor health care outcomes for some of our most vulnerable pediatric patients.
Citation: Bettenhausen JL et al. The effect of lowering public insurance income limits on hospitalizations for low-income children. Pediatrics. 2018 Aug. doi: 10.1542/peds.2017-3486.
Dr. Darden is a pediatric hospitalist at Phoenix Children’s Hospital and clinical assistant professor, University of Arizona, Phoenix.
1. The Henry J. Kaiser Family Foundation. Total Medicaid Spending. 2016. Available at: http://kff.org/medicaid/state-indicator/total-medicaid-spending/.
2. Medicaid and CHIP Payment and Access Commission. Trends in Medicaid Spending. 2016. Available at https://www.macpac.gov/wp-content/uploads/2016/06/Trends-in-Medicaid-Spending.pdf.
3. Medicaid and CHIP Payment and Access Commission. Medicaid’s share of state budgets. 2017. Available at: https://www.macpac.gov/subtopic/medicaids-share-of-state-budgets/.