Trends in Family Health Insurance Premiums and Contributions for Employer Coverage, 2001–16
Pending federal decisions on Medicaid and CHIP could push many families into employer plans that represent large shares of their incomes
Since the enactment of the Children’s Health Insurance Program (CHIP) in 1997, an increasing share of children has come to rely on public health insurance coverage through either Medicaid or CHIP. Uninsurance among children has also declined substantially; only 5.3 percent of children from birth to age 18 lacked health insurance coverage in 2016, down from 14.4 percent in 1997. Health insurance coverage for children increased over this period even though premiums for employer-sponsored insurance outpaced income and employer-sponsored coverage dropped considerably.
Understanding the costs of employer coverage for families if children lose Medicaid or CHIP coverage is important because pending congressional actions will affect children’s eligibility for these programs. If Congress does not reauthorize CHIP or extend current Medicaid eligibility for children, millions of children would no longer be eligible for CHIP and Medicaid; some would be eligible for Marketplace subsidies, but others would not. Many families ineligible for subsidies would turn to employer plans to cover their children. This analysis examines the premiums families could face to maintain coverage for their children in the event of a retrenchment of CHIP and Medicaid eligibility for children.
Source: Urban Institute Analysis of the Medical Expenditure Panel Survey – Insurance Component, 2001-2016
Pending federal decisions will shape the coverage framework for children in the coming years and determine whether the very high rates of children’s coverage that have been achieved are maintained. As part of CHIP reauthorization, Congress is expected to set key parameters for federal appropriations to CHIP, federal matching rates under CHIP, and eligibility and enrollment policies under Medicaid and CHIP. Earlier research has estimated that coverage for millions of children could be at risk if CHIP funding and the maintenance-of-effort requirement are eliminated. Children’s coverage will also be affected by other federal decisions on Marketplace coverage under the Affordable Care Act, including whether the federal government continues to pay cost-sharing subsidies for families with incomes under 250 percent of the federal poverty level (FPL).
Given the current uncertainty around future CHIP and Medicaid coverage for children, we examine how the average costs of employer-sponsored coverage have changed at the national and state levels since 2001.1 We assess the premiums that families with incomes at 200 percent of FPL could face for employer coverage if Medicaid and CHIP coverage were no longer available to them.
We compare the average family premium and average employee contribution toward a family premium across states from 2001 to 2016. We present these figures both in nominal dollars and as a share of 200 percent of FPL for a family of four. We chose 200 percent of FPL for comparison because children with this family income are eligible for CHIP in nearly every state. Many families who receive CHIP have lower incomes, so their premiums would make up a higher share of income than is presented here. Because the vast majority of CHIP enrollees have family incomes below 200 percent of FPL, we also present estimates of premiums and employee contributions as a share of income at 150 percent of FPL in our key findings below. In addition, we present national estimates for premiums at “low-wage firms,” where at least 50 percent of employees earn at or below the 25th percentile for all hourly wages in the United States, based on data from the Bureau of Labor Statistics. Premiums for employees of these firms may better capture the costs of covering children under an employer plan for those families who currently qualify for CHIP. Because families facing above-average premiums for employer-sponsored insurance are likely to enroll their children in Medicaid and CHIP instead of employer coverage, our focus on average premiums likely understates the premium costs that these families could face if their children were to lose Medicaid/CHIP eligibility.
Although Medicaid and CHIP plans can include premiums, these costs are constrained by federal law. For example, annual premiums for families earning between 201 and 250 percent of FPL averaged $224 in the 36 states with separate CHIP programs in 2015. But premiums are not the only cost dimension along which employer coverage will differ from Medicaid and CHIP coverage. A full accounting of the affordability of employer coverage for families whose children could lose CHIP or Medicaid coverage must factor in the higher out-of-pocket cost-sharing requirements (e.g., deductibles, coinsurance, and copayments) typically required under employer coverage relative to Medicaid and CHIP. Evidence suggests that although premium growth has slowed in recent years, average deductible growth for private employer plans has increased.
1 Our analysis begins with 2001, the first year that the Medical Expenditure Panel Survey–Insurance Component collected separate data for family coverage plans and employee-plus-one coverage plans.
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The research team is also grateful to Stephen Zuckerman and Linda Blumberg for their feedback and contributions.
Editorial: Vicky Gan