CHILDREN’S ACTION ALLIANCE 4001 North 3rd Street Suite 160 Phoenix, Arizona 85012 (602) 266-0707 Fax: (602) 263-8792 http://www.azchildren.org
FACT SHEET
Burdensome Fees for Kids Health Coverage: Penny Wise, Pound Foolish The Arizona Legislature should consider rolling back fees charged to the lowest income KidsCare families. In July 2004, Arizona began charging monthly fees for health insurance coverage to the lowest income families receiving KidsCare. While the Legislature mandated these fees to curb rising healthcare costs, the fees do little to bring in more revenue to offset costs since most money collected is returned to the federal government. While the fees add barely a “drop in the bucket” towards paying for health care, evidence suggests that these same fees are resulting in thousands of families losing or foregoing health insurance coverage. The consequence is that these children become sicker and need more expensive care later on, leading to increased costs in the long run. Fees do little to pay for health care – Monthly fees (i.e. premiums) imposed on KidsCare families do little to address health care costs, since 77 cents of every dollar in fees collected in Arizona must be returned to the federal government. The $9.4 million in premiums that are expected to be collected in FY 2007 will add up to only $3.1 million in revenue for Arizona – barely a “drop in the bucket.” Fees hit lowest income KidsCare recipients hard – Beginning in July 2004, Arizona began charging monthly fees (premiums) to KidsCare recipients with the lowest incomes.1 While Arizona had previously charged monthly fees to other families receiving KidsCare, the state had never charged KidsCare recipients at the lowest eligibility levels (families whose incomes are between 100 and 150 percent of the federal poverty level). In fact, few states charge fees to working families earning so little. Arizona is currently one of only eleven states charging premiums to families receiving SCHIP or Medicaid with incomes between 100-150 of the federal poverty level. Few states charge lower income families monthly premiums for a very good reason. Families with lower incomes have little money left over after paying monthly household bills. A recent Children’s Action Alliance analysis of monthly expenses for working Arizona families found that a family of four with an income of 150 percent of the federal poverty level ($29,000 per year) would typically have only $59 left each month after housing, child care, food and transportation costs are paid.2 This meager amount cannot stretch far enough to cover other expenses such as clothing, telephone, school supplies, and health coverage for children.
1
KidsCare is Arizona’s version of the State Health Insurance Program , or SCHIP. SCHIP is a federal-state health insurance program for families that do not qualify for Medicaid. Eligibility levels for the program vary by state. 2 Children’s Action Alliance, “Many Working Families Struggle to Afford the Basics,” December 2004.
Many are losing or forgoing coverage – Evidence suggests that many families may be choosing to drop KidsCare coverage as a result of the new premium. In Arizona, after new and higher premiums were imposed for KidsCare families in July 2004, 16,363 children lost coverage due to non-payment of premiums in the first year.3 Families may also be choosing to forego public health coverage. Recent studies conducted by the Urban Institute suggest that even modest premiums deter many uninsured citizens from obtaining public health coverage. Similarly, an analysis of Medicaid enrollment data in four states found that as premiums rose from 1 percent to 5 percent of annual family income, estimated Medicaid participation rates among the uninsured declined from 57 percent to 18 percent.4 Lack of health coverage drives up results in more costly care – When families lose KidsCare coverage, they are likely to become uninsured.5 Children without health insurance are far more likely than insured kids to use emergency departments for primary care.6 Their families are also likely to delay their medical care visits resulting in more costly treatment.7 When uninsured children and their families do seek medical care and have no means to pay, these costs of such care often go uncompensated – shifting costs to the government and those with health insurance. One recent study suggests that over 87 percent of the costs of uncompensated care are paid for out of government programs such as disproportionate share hospital (DSH) adjustments and community health centers.8 Other costs are “shifted” by providers to those families who do have health insurance, driving up health insurance premiums for everyone. Indeed, a recent study by Families USA suggests that Arizona families with health insurance paid nearly $1,300 more in premiums in 2005 due to cost-shifting from the uninsured.9
3
Arizona Health Care Cost Containment System, “KidsCare Discontinuations Related to Non-Payment of Premiums.” Report produced for Children’s Action Alliance, January 2005. Also “KidsCare and HIFA Parent Discontinuations Due Solely to Non-Payment of Premiums.” Report produced for Children's Action Alliance, August 2005. 4 L. Ku and T.A. Coughlin, “Sliding-Scale Premium Health Insurance Programs: Four States’ Experiences,” Inquiry, 36, no. 4 (1999): 471-480. 5 B. Wright, et. al., “The Impact of Increased Cost Sharing on Medicaid Enrollees.” Health Affairs, 24, no.4 (2005):1106-1116. 6 Johnson, William and Rimza, Mary. “Reducing SCHIP Coverage: Saving Money or Shifting Costs.” Unpublished paper, December 2005. 7 JJ SudanoJr. And DW Baker, “Intermittent Lack of Health Insurance Coverage and Use of Preventive Services,” American Journal of Public Health 93, no 1 (2003). 8 Hadley, J. and Holahan, J. “Who Pays and How Much? The Cost of Caring for the Uninsured.” Washington, D.C.: Kaiser Commission on Medicaid and the Uninsured; 2003 Feb. Publication No.:4088. 9 Families USA. “Paying a Premium: The Added Cost of Care for the Uninsured.” June 2005.
KIDSCARE Monthly Premiums* Family Income for Family of Four based on 2005 Federal Poverty Levels (FPL)
101-150% FPL
1 Child
Monthly premium July 2003
NEW Monthly Premium July 2004
0
$10
0
$15
$10
$20
$15
$30
$15
$25
$20
$35
($19,543 - $29,025)
151-175% FPL
2 or more children 1 child
($29,218 – 33,862)
176-200% FPL
2 or more children 1 child
($34,056 -38,700) 2 or more children
*Premium: A fee that must be paid by a family every month to keep a child enrolled in KidsCare. If families fall behind and do not pay their premiums for two months, they are disenrolled from the program and must repay the amount in arrears before they can be reinstated in KidsCare.
For more information, please contact: Kim VanPelt Children’s Action Alliance, (602) 266-0707, E-mail:
[email protected] January 30, 2006
