To estimate the effect of premium increases on the probability that near‐poor and moderate‐income children disenroll from public coverage.
Enrollment, eligibility, and claims data for Georgia's PeachCare for Kids () program for multiple years.
We exploited policy‐induced variation in premiums generated by cross‐sectional differences and changes over time in enrollee age, family size, and income to estimate the duration of enrollment as a function of the effective (per child) premium. We classify children as being of low, medium, or high illness severity.
A dollar increase in the per‐child premium is associated with a slight increase in a typical child's monthly probability of exiting coverage from 7.70 to 7.83 percent. Children with low illness severity have a significantly higher monthly baseline probability of exiting than children with medium or high illness severity, but the enrollment response to premium increases is similar across all three groups.
Success in achieving coverage gains through public programs is tempered by persistent problems in maintaining enrollment, which is modestly affected by premium increases. Retention is subject to adverse selection problems, but premium increases do not appear to significantly magnify the selection problem in this case.