To assess the effects of transitions from private to public health insurance by children on out‐of‐pocket medical expenditures and health insurance premium costs.
Data are drawn from the 1996 and 2001 panels of the Survey of Income and Program Participation. We construct a nationally representative, longitudinal sample of children, ages 0–18, and their families for the period 1998–2003, a period in which states raised public health insurance eligibility rates for children.
We exploit the Survey of Income and Program Participation's longitudinal design to identify children in our sample who transition from private to public health insurance. We then use a bootstrapped instrumental variable approach to estimate the effects of these transitions on out‐of‐pocket expenditures and health insurance premium costs.
Children who transition from private to public coverage are relatively low‐income, are disproportionately likely to live in single‐mother households, and are more likely to be Black or of Hispanic origin. Child health status is highly predictive of transitions. We estimate that these transitions provide a cash‐equivalent transfer of nearly U.S.$1,500 annually for families in the form of reduced out‐of‐pocket and health insurance premium costs.
Transitions from private to public health coverage by children can bring important social benefits to vulnerable families. This suggests that instead of being a net societal cost, such transitions may provide an important social benefit.