Staying Covered: The Importance of Retaining Health Insurance for Low-Income Families

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Expanding eligibility for public and private health insurance is an obvious way to bring health coverage to more of the uninsured. Now researchers say that helping those who already have insurance retain their coverage may be an equally important and cost-effective method not only for reducing the uninsured rate but for improving the continuity and quality of people's health care.

According to a new study, if everyone who had public or private coverage at the beginning of a year retained coverage throughout the year, the number of uninsured low-income children would decline by two-fifths and the number of uninsured low-income adults would decline by more than one-quarter.

In Staying Covered: The Importance of Retaining Health Insurance for Low-Income Families, a report prepared with support from The Commonwealth Fund, analysts Leighton Ku and Donna Cohen Ross of the Center on Budget and Policy Priorities examine why many low-income people lose their health coverage, what the effects of this loss are, and how public policy can help people retain their insurance.

Low-income people are more vulnerable to loss of insurance than higher-income groups. That is because they experience greater change, on average, in job or life circumstances, which can alter their eligibility for coverage. Complicating matters are eligibility and procedural barriers to obtaining and retaining publicly funded coverage through Medicaid and the Children's Health Insurance Program (CHIP). According to census data for 1996-97, about one-fifth of low-income children and one-sixth of low-income adults who have Medicaid coverage at the beginning of a year become uninsured by the end of that year. Many lose coverage despite remaining eligible for Medicaid because of complicated renewal procedures. In contrast, only about one-tenth of low-income individuals who begin the year with private health insurance become uninsured during the year.

Even brief gaps in coverage can contribute to problems in accessing care, obtaining prescriptions, and paying medical bills, the report finds. Stable coverage helps patients maintain continuous relationships with doctors, which improves use of preventive and primary care. Moreover, Medicaid expenditures fall when people have coverage for longer periods.

The Medicaid and CHIP programs could keep more people enrolled, say the authors, by simplifying renewal procedures or reducing insurance premium requirements. The waiting periods and asset tests for these programs could be eased as well.

Facts and Figures

  • If everyone with public or private health coverage at the beginning of a given year retained it throughout the next 12 months, the number of uninsured, low-income children would decline by up to 40 percent, and the number of uninsured, low-income adults by up to 30 percent.
  • From 17 percent to 19 percent of children and adults with poverty-level incomes who began the year with Medicaid became uninsured by the end of the year. In contrast, about 13 percent of poor children and adults who began the year covered by private insurance were uninsured by the end of the year.

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Publication Details

Publication Date:
December 1, 2002
Authors:
Leighton Ku and Donna Cohen Ross, Center on Budget and Policy Priorities.
Citation:

Staying Covered: The Importance of Retaining Health Insurance for Low-Income Families, Leighton Ku and Donna Cohen Ross, Center on Budget and Policy Priorities., The Commonwealth Fund, December 2002

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