The Effects of State Policy Design Features on Take Up and Crowd Out Rates for the State Children’s Health Insurance Program

We evaluate the effects of state policy design features on SCHIP take up rates and on the degree to which SCHIP benefits crowd out private benefits. The results indicate that overall program take up rates range from 10.1 to 10.5 percent. However, there is considerable heterogeneity across states, suggesting a potential role of inter-state variation in policy design. We find that several design mechanisms have significant and substantial positive effects on take up. For example, eliminating asset tests, offering continuous coverage, simplifying the application and renewal processes, and extending benefits to parents all have sizable and positive effects on take-up rates. Mandatory waiting periods, on the other hand, consistently reduce take-up rates. In all, inter-state differences in outreach and anti-crowd out efforts explain roughly one quarter of the cross-state variation in take-up rates. Concerning the crowding out of private health insurance benefits, we find that between one quarter and one third of the increase in public health insurance coverage for SCHIP eligible children is offset by a decline in private health coverage. We find little evidence that the policy-induced variation in take-up is associated with a significant degree of crowd-out, and no evidence that the negative effect on private coverage caused by state policy choices is any greater than the overall crowding out effect. This suggests that states are not augmenting take-up rates by enrolling children that are relatively more likely to have private health insurance benefits.