Response to health insurance by previously uninsured rural children

Objective. To examine the healthcare utilization and costs of previously un insured rural children. Data Sources/Study Setting. Four years of claims data from a school-based h ealth insurance program located in the Mississippi Delta. All children who were not Medicaideligible or were uninsured, were eligible for limited bene fits under the program. The 1987 National Medical Expenditure Survey (NMES) was used to compare utilization of services. Study Design. The study represents a natural experiment in the provision of insurance benefits to a previously uninsured population. Premiums for the claims cost were set with little or no information on expected use of servi ces. Claims from the insurer were used to form a panel data set. Mixed mode l logistic and linear :regressions were estimated to determine the response to insurance for several categories of health services. Principal Findings. The use of services increased over time and approached the level of utilization in the NMES. Conditional medical expenditures also increased over time. Actuarial estimates of claims cost greatly exceeded a ctual claims cost. The provision of a limited medical, dental, and optical benefit package cost approximately $20-$24 per member per month in claims p aid. Conclusions. An important uncertainty in providing health insurance to prev iously uninsured populations is whether a pent-up demand exists for health services. Evidence of a pent-up demand for medical services was not support ed in this study of rural school-age children. States considering partnersh ips with private insurers to implement the State Children's Health Insuranc e Program could lower premium costs by assembling basic data on previously uninsured children.