The Role of Private Health Insurance in Children's Health Care

Private health insurance is the primary means of financing health care for America's children and pregnant women. Most coverage is provided under employer plans. Access to private health care coverage, however, is threatened by the increasing cost of health care, cost shifting by providers, and insurance marketing practices that tend to deny coverage to high-risk individuals. These pressures have already led to an increase in the number of uninsured children and pregnant women. This paper provides an overview of the private health insurance market with a focus on recent trends. The effects of self-funding arrangements by employers and of various cost-control arrangements--including managed care plans, patient cost-sharing provisions, and employee premium contributions--are examined for their potential impact on children and pregnant women. Policies that might expand health insurance coverage for children, including a universal health insurance plan, and health insurance market reforms, are explored. Alternative strategies for enhancing universal health insurance coverage for children include mandatory employer-based insurance programs, a program of tax credits to underwrite individual insurance plans, and a single-payer government program financed through the tax system. The authors conclude that efforts should be made to preserve the current private health insurance system by reducing cost shifting from public programs, guaranteeing the availability of coverage to all groups, and controlling costs by means of competition, managed care, and perhaps global spending limits. Such comprehensive reforms might be necessary merely to preserve private insurance coverage for a majority of America's children and pregnant women.