RWJF Content Alert - How Do Coverage Expansions Effect Families' Well-Being?

Publication Date: 
August 24, 2010

New Report Examines the Overall Impact of CHIP on Low-Income Families’ Consumption and Household Spending

Back in 2008, “crowd-out” was a focal point of the debate over reauthorization of the Children's Health Insurance Program (CHIP). Yet the criticisms of crowd-out may have overshadowed a more fundamental question about the impact of increased public coverage—how the program has affected families’ overall well-being.

In a new study, published by the Forum for Health Economics and Policy and funded by the Robert Wood Johnson Foundation’s Changes in Health Care Financing & Organization (HCFO), the authors analyzed how CHIP expansions have affected total household consumption, and also detailed categories of household spending (e.g., food, housing and education). The findings suggest that CHIP coverage substantially improved the material well-being of the low-income families it is intended to assist—including those who had previously been paying for their own coverage. Families saw a decline in out-of-pocket spending on health (including insurance and medical care) from $300-$400 per quarter, and an increase of about $3,200-$5,500 in total non-health consumption. The “extra” resources that were made available to households as a result were split between consumption of transportation (i.e., buying a car) and retirement savings.

Read the study.