Evaluating Child Health Plus in upstate New York: how much does providing health insurance to uninsured children increase health care costs?

Background. In response to the increase in the number of American children without health insurance, new federal and state programs have been establis hed to expand health insurance coverage for children. However, the presence of insurance reduces the price of care for families participating in these programs and stimulates the use of medical services, which leads to an inc rease in health care costs. In this article, we identified the additional e xpenditures associated with the provision of health insurance to previously uninsured children. Methods. We estimated the expenditures on additional services using data fr om a study of children living in the Rochester, New York, area who were enr olled in the New York State Child Health Plus (CHPlus) program. CHPlus was designed specifically for low-income children without health insurance who were not eligible for Medicaid. The study sample consisted of 1910 children under the age of 6 who were initially enrolled in CHPlus between November 1, 1991 and August 1, 1993 and who had been enrolled for at least 9 continu ous months. We used medical chart reviews to determine the level of primary care utilization, parent interviews for demographic information, as well a s specialty care utilization, and we used claims data submitted to CHPlus f or the year after enrollment to calculate health care expenditures. Using t his information, we estimated a multivariate regression model to compute th e average change in expenditures associated with a unit of utilization for a cross-section of service types while controlling for other factors that i ndependently influenced total outpatient expenditures. Results. Expenditures for outpatient services were closely related to prima ry care utilization-more utilization tended to increase expenditures. Age a nd the presence of a chronic condition both affected expenditures. Children with chronic conditions and infants tended to have more visits, but these visits were, on average, less expensive. Applying the average change in exp enditures to the change in utilization that resulted from the presence of i nsurance, we estimated that the total increase in expenditures associated w ith CHPlus was $71.85 per child in the year after enrollment, or a 23% incr ease in expenditures. The cost increase was almost entirely associated with the provision of primary care. Almost three-quarters of the increase in ou tpatient expenditures was associated with increased acute and well-child ca re visits. Conclusions. CHPlus was associated with a modest increase in expenditures, mostly from additional outpatient utilization. Because the additional prima ry care provided to young children often has substantial long-term benefits , the relatively modest expenditure increases associated with the provision of insurance may be viewed as an investment in the future.