Private Health Insurance of Chronically III Children

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ARTICLES

continued

Private

Health

Insurance

of Chronically

Ill

Children

Harriette

B. Fox,

MSS,

and

Paul

W. Newacheck,

MPP

From Fox Health Policy Consultants, Washington, DC, and the Institute for Health Policy Studies, University of California, San Francisco

ABSTRACT. Accurate information regarding the

ade-quacy of private health insurance coverage available to

the families ofchronically ill children is scarce. A national survey was conducted of firms offering health insurance to employees and their dependents. Data were collected concerning private health insurance coverage of services needed by chronically ill children, including basic medical care services, ancillary therapies, mental health services, and long-term care. Nearly all surveyed firms offered health insurance. Coverage of inpatient hospital care,

outpatient physician services, medical supplies and

equipment, x-ray studies, laboratory services, and

pre-scription medications was widespread, but coverage of

services such as physical therapy, speech therapy,

occu-pational therapy, and nutrition services was much less prevalent. More than two thirds of the firms covered comprehensive home health services but often with limits and only in lieu of more expensive inpatient care. Long-term care, such as skilled nursing home care, was covered

by only one third of firms. Overall, the survey results,

combined with information concerning recent trends in private health insurance, reveal increasing coverage of lower cost alternatives to hospital or institutional care and improved maximum lifetime benefits and stop-loss coverage but also increased cost-sharing requirements.

These results suggest that, although families with

chron-ically ill children may have access to a widening range of

services such as home health care or individual benefits

management, they may be forced to bear an increasing

proportion of the cost. Pediatrics 1990;85:50-57; health insurance, chronic illness.

Received for publication Nov 21, 1988; accepted Mar 17, 1989. The views expressed are solely those of the authors and may not

reflect views of the funding agency.

Reprint requests to (H.B.F.) Fox Health Policy Consultants,

It is estimated that approximately 10% of US

children are affected by chronic health problems.”2

The most common chronic conditions in childhood

are problems of the respiratory system, as well as

allergies, learning disabilities, and disorders of the

mental and nervous systems. Most children are only

mildly affected by chronic conditions, but a

sub-stantial minority of children with chronic

condi-tions suffer from some degree of long-term

limita-tion in their usual activities.3 These children range from those who are limited in sports or recreational

activities to those who are unable to engage at all

in ordinary play or school activities. Children with

chronic limitations in their activities now number

in excess of 3 million nationwide and account for

5% of all children younger than 18 years old.4

Evidence from major national surveys suggests that

the number of children with limitations in their

activities due to chronic conditions has more than

doubled since the 1960556 The reasons for this large

increase in prevalence are not entirely clear,

al-though changes in survey methods, awareness, and

advances in life-saving technologies, especially

neo-natal care, appear to have contributed to the

up-ward trend.6

Children with chronic illnesses, particularly

those severe enough to cause long-term limitation

of activity, experience different health and social

needs than other children. Chronic illness in

child-hood is not typically a stable phenomenon but one

that often is characterized by acute flare-ups

fol-lowed by periods of remission.7 To minimize the

number and severity of these acute episodes,

com-prehensive and well-coordinated care is necessary. In addition to basic medical services, children with

(2)

variety of ancillary therapies and psychosocial

in-terventions. These might include physical,

respi-ratory, and occupational therapy; mental health

counseling to cope with the emotional difficulties

that accompany illness and disability; and perhaps even basic long-term care services to assist the child

and the family in coping with functional

limita-tions. The more severe the child’s condition, the

more likely he or she is to require multiple inter-ventions.

For many families, expenses for chronic

disease-related medical care are not large, particularly if

the child’s condition is both mild and stable. For

other families, expenditures on health care services

can represent a substantial economic burden. For

example, children with limitations in their

activi-ties due to chronic conditions use about 3 times as

many physician visits and spend 10 times as many

days hospitalized as other children.8 Charges for

these services are proportionately higher for

fami-lies of children with limitations of their activities.9 How well are families of chronically ill children

protected against large health care bills? The

an-swer remains elusive for the most part. We know

from surveys conducted by the National Center for

Health Statistics that chronically ill children, es-pecially those with activity limitations, are slightly

more likely than other children to have some type

of health insurance coverage. We also know that

most insured chronically ill children have private

health insurance coverage.’0 Little is known,

how-ever, about how well private insurance covers the

range of services needed by chronically ill children or how well this insurance insulates a family against

undue financial burdens. Inadequate financial

pro-tection is likely to be most problematic for families

without any form of insurance or among those

families with meager indemnity insurance that pays

a limited fixed amount per day of illness (eg, $100

per hospital day). The majority of privately insured chronically ill children, however, typically are coy-ered as dependents under their parents’

employer-sponsored health plan, and little is known about

the quality or adequacy of this coverage.

To help build our base of knowledge in this area

and to identify gaps in existing health insurance coverage, we present results from a national survey

of firms that provide health insurance to their

employees and dependents. The survey was

de-signed to elicit information concerning the breadth

and depth of private health insurance coverage for

chronically ill children. Although information

con-cerning private health insurance coverage for basic

medical care services has been collected from other

national surveys,”2 no one has attempted to

col-lect information about the adequacy of coverage for

services uniquely needed by chronically ill children. We provide detailed information concerning private

health insurance coverage of both basic medical

care services and ancillary therapies, mental health

services, and long-term care services needed by

chronically ill children.

METHODS

To provide a comprehensive profile of private

health insurance benefit provisions as they apply

to chronically ill children and their families, we

conducted a telephone survey of 150 randomly

se-lected employers during the summer of 1987. The

survey was designed to collect information

regard-ing whether a health benefit plan was offered to

employees and their dependents, the types of

ben-efits provided (eg, hospital and physician services),

and the limits and cost-sharing requirements

im-posed on them. The survey was composed of a

sample of 50 small (0 to 100 employees), 46 medium

(101 to 500 employees), and 54 large (more than

500 employees) firms chosen at random from the

Dun and Bradstreet US Business Directory’3 and

the Business Insurance Directory.’4 The sample

was intended to include equal proportions of small, medium, and large firms, but interviewees reported

changes in the number of employees which resulted

in certain firms being reclassified. Although the use of these sources results in a overselection of more

prosperous firms, these directories are the only

business listings that include small businesses.

A 99% response rate was achieved through the

use of multiple call-backs. (Two firms in the origi-nal sample refused to participate; two additional

firms were randomly selected to maintain the 150

firm sample.) Of the 150 businesses surveyed, 140

offered group health insurance plans to their

em-ployees and dependents. Ten firms did not offer

health insurance and were excluded from the

tab-ular presentation of health benefit provisions that follows.

As in any survey, results are subject to errors in

reporting and processing responses. To minimize

these potential biases a closed-ended survey

instru-ment was developed and pretested on a small

num-ber of firms. Interviews were conducted by a single interviewer to reduce interviewer variation. Little

bias due to nonresponse should be present in the

results because a 99% response rate was achieved.

The questionnaire was administered by telephone

to the director of employee benefits, or a similar

administrator, who answered a schedule of 64

ques-tions regarding benefits available under the firm’s

health insurance plan. Respondents were asked to

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preferred provider organization plans; prepaid

plans were not considered. Approximately half of

the firms in our survey offered more than one health

insurance plan to their employees. The plan having

the most generous benefits package was used in

tallying survey responses.

In addition to the survey of employers, we

inter-viewed benefit design and claims management

per-sonnel with 11 major health insurance carriers

re-garding the structure of the plans that they either

underwrite or administer. For this purpose, we

talked with personnel at Aetna Life and Casualty,

the Allstate Insurance Group, the Blue Cross and

Blue Shield Association, Connecticut General Life

Insurance Company, Equitable Insurance Group,

the John Hancock Insurance Group, the Lincoln

National Insurance Corporation, the Metropolitan

Insurance Corporation, the Mutual of Omaha

Group, the Prudential Insurance Company of

America, and the Travelers Insurance Group. These

companies are representative of the largest health

insurers operating in the United States.

RESULTS

General Health Insurance Characteristics

From our sample 93% of the firms offered health

insurance to their employees and dependents. Firm

size was closely associated with provision of health

insurance. Whereas only 80% of small firms offered

health insurance coverage, all of the medium and

large firms in our sample provided this coverage to

their employees. Among firms offering health

in-surance to their employees, 71% provided insured

plans, 23% offered self-insured plans, and 6% made

coverage available through multiple employer

trusts. Insured plans are those in which Blue Cross!

Blue Shield associations or commercial carriers,

such as Prudential or Lincoln National, are at risk

for claims payouts. Under self-insurance, it is the

employer who assumes the risk. Multiple

employ-ers’ trusts are consortia of employers who form a

trust for the purpose of purchasing and

administer-ing health insurance. Multiple employers’ trusts

frequently are self-insured.

Hospital and Physician Services

Employer-based plans typically provide good

coy-erage for traditional medical services, such as hos-pital care and physician services. As shown in Table

1, all of the firms in our sample that offered health

insurance provided coverage for inpatient hospital

care, including room and board, surgical care, and

other physician services provided on an inpatient

basis. Coverage of outpatient physician services

(including home and office visits) also was offered

universally by the employer-based health insurance

plans in our survey. Typically, coverage for

physi-cian services included only services necessary for

the diagnosis, evaluation, and treatment of an

ill-ness or injury. Preventive services were not covered for all children, but a significant proportion of the

plans (60%) did provide coverage of at least some

preventive services for infants and young children.

Care coordination, or case management for special

problems, was covered in about 20% of the plans as

a reimbursable physician service.

Ancillary Services, Equipment, and Supplies

Employers’ plans provided excellent coverage for

many ancillary medical services that may be needed

by chronically ill children. For example, our survey data, presented in Table 2, indicate that more than

90% of employers’ plans provided benefits for

med-ical supplies, medical equipment, x-ray and

labo-ratory services, and prescription medications. The basic ancillary therapy services-physical

therapy, speech therapy, and occupational

ther-apy-appear to be covered somewhat less

fre-quently. Our survey found that at least three

quar-ters of employee health benefit plans provided

coy-erage for physical therapy and speech therapy (89%

and 77%, respectively) and that somewhat more

than half provided coverage for occupational

ther-apy (57%). Even where benefits for the ancillary

therapies are provided, however, coverage may be

TABLE 1. Employer-Based Health Insurance Coverage of Hospital and Physician

Serv-ices, United States, 1987*

Benefits Provided All Firms (N = 140)

Size of Firm

Small Medium Large

(n=40) (n=46) (n=54)

Hospital room and board 140 40 46 54

Inpatient surgical services 140 40 46 54

Inpatient physician services 140 40 46 54

Outpatient physician services (of- 140 40 46 54

fice and house)

(4)

TABLE

2.

Employer-Based Health Insurance Coverage ofAncillary Services, Equipment

and Supplies, United States, 1987*

Benefits Provided All Firms (N=140)

Size of Firm

Small Med,um. Large

(n=40) (n=46) (n=54)

Medical equipment 96

(135) 95 (38) 96 (44) 98 (53)

Medical supplies 93

(130) 90 (36) 89 (44) 98 (53)

X-Ray and laboratory services 99

(139) 100 (40) 100 (46) 98 (53)

Prescription medications 96

(134) 90 (36) 98 (45) 98 (53)

Occupational therapy 57

(80) 43 (17) 46 (21) 78 (42)

Physical therapy 89

(124) 80 (32) 85 (39) 98 (53)

Speech therapy 77

(108) 65 (26) 70 (32) 93 (50)

Nutritionist services 8

(11) 3 (1) 4 (2) 15 (8)

* Results are percentages of firms with numbers of firms in parentheses.

limited to situations in which the service is

fur-nished for rehabilitation purposes. In our survey,

only 1% of employers reported that such a

restric-tion applied, but the major insurance carriers

inter-viewed indicated that the rehabilitation

require-ment actually may be much more common.

Specific benefits for nutrition services are rare in

private health insurance plans. Our survey data

indicate that less than 10% of employer-based plans

provided such coverage in 1987. Of those that did,

most specified only that nutrition services must be

physician prescribed and cannot be provided for

weight loss or control.

Long-Term Care Services

Long-term care benefits, particularly

institu-tional care, often were limited in scope and duration

in employer-sponsored health insurance plans.

Al-though most employers covered in-home nurse

services and home health aide services, only one

third of the employers in our survey offered

cover-age for skilled nursing home facility care. Even

when these services were offered as covered

bene-fits, the majority of employers placed limits on the

number of visits or days for which claims would be

paid. In contrast, fewer than a quarter of employers

placed limits on the number of acute hospital days

covered, and among those that specified hospital

day limits, the limits generally exceeded 150 days

per year.

Long-term care benefits traditionally have been

defined primarily as institutional care, visiting

nurse, and home health aide services. As insurers

have moved to emphasize benefits that have the

potential of containing costs, however, a more

com-prehensive home care benefit-including skilled

nursing, home health aide, physical therapy,

respi-ratory therapy, and medical social work-has been

adopted by many employers’ plans. Among the

firms that we surveyed, 69% had plans that used

such a comprehensive home care benefit definition (Table 3). Nearly half of these plans provided home

care with no coinsurance requirement. Still, more

than 75% of the plans offering comprehensive home

care limited the number of covered visits, most

often to only 90 visits annually.

Regardless of the scope of the home care benefit,

it frequently carried with it the requirement that

home care services be provided in lieu of

hospitali-zation. Sometimes, in fact, there actually must be

a prior hospitalization, in which home care could

be reimbursed only if it cut short a hospital stay.

Because home-delivered services are viewed as

ex-pensive, they usually are not authorized by insurers

except when savings in even higher cost

institu-tional services can be achieved.

Another recent innovation in the health

insur-ance industry has been the development of

individ-ual benefits management programs. Individual

ben-efits management is a health plan provision under

which reimbursement for a wide range of

home-and community-based services not otherwise

in-cluded in a family’s health insurance plan may be

authorized, provided that the total cost of these

services would be less than the cost of hospitaliza-tion or other expensive covered services. Data from

our survey indicate that as many as half of

(5)

it in practice on a case-by-case basis when requested

by a physician or family member, even though it

was not an explicit benefit provision.

Mental

Health Services

Although mental health benefits were offered by

most employer-based plans, they commonly were

subject to special limits that were significantly more restrictive than those for other benefits (Table 4).

According to our survey, employers who offered

coverage for outpatient mental health services

typ-ically maintained benefit provisions that limited

their liability. For example, one third of employers’

plans had coverage with a specific dollar limit.

Nearly one half of all employers in our survey

placed limits on the number of visits that would be

reimbursed.

Moreover, employers’ health plans generally did

not provide benefits for all professionals who

fur-nish mental health services. Of the employers that

we surveyed, 15% had plans that would pay claims only for the services of a psychiatrist. Another 66% would pay claims for the services of a psychiatrist

or psychologist, but only 15% would cover

psychi-atrists, psychologists, and psychiatric social

work-ers.

As with physician services generally, it is possible

for a psychiatrist to file a claim for a service

pro-vided by another mental health professional

work-ing under his or her supervision. Thus, the family

of a chronically ill child who required play therapy

or counseling services from a psychiatric social

worker employed in a physician’s group practice,

clinic, or hospital outpatient facility might have

their claims paid even if the family’s health benefit

TABLE 3. Employer-Based Health Insurance Coverage of Long-Term Care Services, United States, 1987*

Benefits Provided All Firms

(N = 140)

Size of Firm

Small Medium Large (n=40) (n=46) (n=54)

Comprehensive home care (including occupational, speech, 69 53 70 80

physical and respiratory therapies, social work, skilled nurs- (96) (21) (32) (43)

ing, and home health aide services)

In-home skilled nurse services 87

(122) 93 (37) 83 (38) 87 (47)

Home health aide services 74

(104) 58 (23) 78 (36) 83 (45)

Skilled nursing home facility care 33

(46) 20 (8) 26 (12) 48 (26)

Individual benefits management 51

(72) 28 (11) 37 (17) 81 (44)

* Results are percentages of firms with numbers of firms in parentheses.

TABLE 4. Employer-Based Health Insurance Coverage of

United States, 1987*

Mental Health Services,

Benefits Provided All Firms (N = 140)

Size of Firm

Small Medium Large

(n = 40) (n = 46) (n = 54)

Mental health counseling 92

(129) 93 (37) 91 (42) 93 (50) Limits on practitioner

Physician only 11

(15) 10 (4) 20 (9) 4 (2)

Physician or psychologist 66

(93) 68 (27) 61 (28) 70 (38)

Physician or psychologist or social worker 15

(21) 15 (6) 11 (5) 19 (10) Limits on No. of services

20/y 14 (20) 18 (7) 13 (6) 13 (7) 21-52/y 23 (32) 18 (7) 22 (10) 28 (15)

No limit 55

(77) 58 (23) 57 (26) 52 (28)

Lifetime maximum dollar limit 34

(48) 11 (11) 33 (15) 41 (22)

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plan contained no provision for psychiatric social work services per se.

Maximum Benefit Levels and Out-of-Pocket

Expense

Limits

To protect against large outlays, most

employer-based plans in our survey placed lifetime limits on

the amount they would pay out for health care

services (Table 5). Nearly three fourths of all firms surveyed set their lifetime benefit levels at $1 mil-lion or less. The remainder had either no lifetime

benefit limits or set the limit above $1 million.

Interestingly, the smaller firms in our survey

ap-peared somewhat more likely than larger firms to

set their lifetime benefit levels above $1 million, perhaps because they were more likely to purchase

comprehensive coverage under a traditional

insur-ance arrangement.

Unlike maximum benefit levels, out-of-pocket

expenditure limits are designed to protect employ-ees and their families against excessive expenses.

After these annual limits are reached, the plan

generally reimburses all covered services in full and

no additional cost sharing is required on the part

of the insured. According to our survey, approxi-mately one quarter of all firms established

out-of-pocket expense limits at or below $1000 annually.

Approximately half of all firms surveyed set

out-of-pocket limits between $1000 and $2000 annually, and the remaining firms had higher out-of-pocket limits or no limits at all.

DISCUSSION

Private health insurance is intended essentially

to provide protection against medical expenses

as-sociated with acute illness and subsequent periods

of recuperation and rehabilitation. Privately

in-sured families of chronically ill children, therefore, tend to have good coverage for hospital, surgical,

and physician services. However, most privately

insured families have less comprehensive coverage

for psychologists’ and social workers’ services,

home visiting services, and some of the ancillary

therapies. Whereas these latter services are

infre-quently used by children with acute health

prob-lems, they are more likely to be needed by chroni-cally ill children. However, even when such services are covered, benefit levels are likely to be restricted

by visit limits or maximum dollar amounts as well

as the usual cost-sharing requirements.

We found some interesting and disconcerting

differences in health insurance characteristics

ac-cording to firm size. Smaller firms were less likely

to offer health care coverage in our survey. When

health insurance was provided to employees and

their dependents by small firms, it was less likely

to include coverage for desirable services such as

comprehensive home care. If few workers were

em-ployed by small firms, this would not be a

substan-tial problem. However, unpublished data from the

US Department of Labor indicate that 56% of US

workers are employed by small firms (less than 100

workers).

Although in recent years there has been some

improvement in the depth of basic service coverage, and also some expansion in the range of health care

services covered, the most sweeping changes in

employee health benefits have been those aimed at

controlling costs. Persistent growth in health care

costs during the last decade has resulted in large

increases in premium costs to employers. Many

employers, particularly large ones, have responded

by restructuring incentives in their health

insur-ance plans. The most significant changes that have

TABLE 5. Out-of-Pocket Expenditure Limits and Lifetime Max Employer-Based Health Insurance, United States, 1987*

imum Benefi t Levels for

All Firms (N=140)

Size of Firm

Small

(n=40)

.

Med,um

(n=46)

Large

(n=54)

Annual out-of-pocket expenditure limit

$1000 26 28 20 30

(36) (11) (9) (16)

$1000-$2000 49 43 61 43

(68) (17) (28) (23)

>$2000 (including no limit) 26 30 20 28

(36) (12) (9) (15)

Maximum lifetime benefit

$10o0000 73 65 74 78

(102) (26) (34) (42)

>$1 000 000 26 35 22 22

(36) (14) (10) (12)

Unknown 1 4

(2) (0) (2) (0)

(7)

been introduced are new and more flexible benefits

for lower cost alternatives to hospitalization and

additional requirements for cost sharing. At the

same time, however, maximum lifetime benefits

and stop-loss protection for families have improved significantly.

Greater Coverage of Cost-Effective Benefits

Several industry surveys provide evidence of the

sharp increase in coverage of services that have the

potential for reducing hospital utilization,

espe-cially coverage of home care. For example, US

Department of Labor data show that the percentage

of employees with home care coverage nearly

dou-bled between 1983 and 1986.”

Moreover, as already mentioned, the home care

benefits being offered now appear to be more

com-prehensive than they were previously. Today,

em-ployers who are revising or first introducing this

benefit frequently specify a laundry list of services that typically include those of an occupational ther-apist, physical therapist, speech therapist,

respira-tory therapist, and medical social worker.

Tradi-tional limits on the total number of visits or amount

of reimbursement may still remain, however, and,

to ensure cost savings, many employers require that

the benefit be offered in lieu of hospitalization. In addition to the home care benefit, an

increas-ing number of employers have begun providing

individual benefits’ management to authorize

reim-bursement for a wide range of home- and

commu-nity-based services that are less costly than hospi-talization. Many employers now specify this benefit provision in their plans. Others, on a case-by-case basis, will agree to the same type of flexible benefits arrangement even if it is not offered explicitly.

Virtually all of the larger insurance carriers now offer this kind of benefit, which may be variously

called individual case management, large claims

management, or medical care management,

de-pending on the insurer. Of the 11 major health

insurers that we interviewed, however, only 5 could

tell us what proportion of the group health

insur-ance plans they underwrote or managed contained

the individual case management benefit. Lincoln

National Insurance and the Allstate Insurance

Group reported that the benefit was written into

100% of their plans. The Blue Cross/Blue Shield

Association told us that approximately 75% of the

local plans responding to a recent survey provided

this benefit. Prudential estimated that 20% of its

plans had it, and Metropolitan Insurance, which

had only been marketing individual benefits

man-agement for a few years, indicated that 10% of its

plans currently contained the benefit.

The trend toward better home and community

care coverage is obviously a positive one for families with chronically ill children. It could enable many

families, who otherwise would have had coverage

only if their children were hospitalized, to obtain

reimbursement for their children’s care at home or

in some type of therapeutic day-care setting.

Chil-then dependent on sophisticated and costly medical

technologies could gain access to otherwise

uncov-ered services, but so might children with less

exten-sive medical care requirements. The utility of this

flexible benefit is limited, however, by the extent

of the insurer’s maximum liability and the amount

of reimbursement already provided under the

pol-icy.

Increased Cost-Sharing Requirements

The trend to greater cost sharing with employees

has been well documented. To keep their own

health benefits’ costs down, employers have been

increasing the financial obligations of their

employ-ees by increasing the employee’s cost of using

coy-ered services. Despite the resistance of unions,

higher coinsurance and deductible requirements

have been playing an important role in the

restruc-turing of employers’ health care benefits. The

Wyatt Company reports that between 1980 and

1986 the proportion of comprehensive major

medi-cal plans stipulating that participants must pay

10% or 20% oftheir nonhospital expenses increased

by 55%, a substantial increase, although not as

dramatic as the increase in coinsurance

require-ments for hospital services.’2 An indicator of the

trend toward greater cost sharing was found in our

survey which revealed, for example, that more than

90% of employers’ plans required coinsurance as

high as 20% of the reasonable, prevailing rate for

physicians’ charges.

At the same time, deductibles have become much

more prevalent. In 1986, only 15% of plans

ex-empted any type of benefit from the deductible

requirement. This is a dramatic decrease from 5 1 %

of plans just 6 years earlier. Moreover, changes in

the application of deductibles have been

accom-panied by significant increases in the deductible

amount per person. Forty-six percent of plans were

found to have deductibles greater than $100 in 1986, compared with only 5% of plans in 1980.12

The cumulative effect of more prevalent

coinsur-ance requirements, particularly in combination

with the greater use of deductibles, obviously is to

increase the amount of a family’s out-of-pocket

expense liability. The intent of this kind of benefit restructuring is to reduce service utilization; yet,

for chronically ill children, the reduced access to

services could result in a deterioration of the child’s

(8)

Better Coverage Against Catastrophic Expenses ACKNOWLEDGMENTS

Just as the application of cost-sharing require-ments has increased, it is also true that coverage

for catastrophic health care costs has become more

prevalent. Trend data reveal that since 1980

em-ployers’ provisions for maximum lifetime benefits

and out-of-pocket spending limitations have

im-proved significantly.

According to the labor department, 42% of plan

participants in 1986 had either unlimited lifetime benefits or a $1 million lifetime benefit maximum,

whereas only 26% had this protection 4 years

ear-her. Similarly, the proportion of employees with a

limit on their annual payout for covered services

(usually up to $1000, $2000, or $4000) increased

from 63% to 81% during the same 4-year period.”

The impact of these improved benefit provisions is

to increase health insurance protection for families who face, on an annual or long-term basis, extensive

health care costs that otherwise could leave them

financially devastated.

In summary, the health insurance market, driven

by rapidly increasing health care costs, is undergo-ing significant change. Private insurance for basic medical care services needed by chronically ill

chil-dren appears generally sufficient. Coverage for

other health care services, including mental health counseling and long-term care, is less consistent and generally less adequate. There is evidence that

employers and insurers are improving coverage for

many services needed by chronically ill children,

but at the same time deductible and coinsurance

levels have been increasing. Hence, privately

in-sured chronically ill children are benefiting from

access to a greater variety of needed services but

may be liable for an increasing proportion of the

costs.

Funding for this project was provided by the Division of Maternal, Infant, and Child Health of the Bureau of

Maternal and Child Health and Resources Development

(MCJ 063500), US Department of Health and Human

Services.

The authors thank Ruth Yoshpe and Lori Neiswander for their research assistance.

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8. Feller BA. Health characteristics of persons with chronic

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9. Newacheck PW. The costs of caring for chronically ill chil-dren. Business Health. 1987;4:18-24

10. Newacheck PW, McManus MA. Financing health care for

disabled children. Pediatrics. 1988;81:385-394

11. Employee Benefits in Medium and Large Firms, 1986.

Wash-ington, DC: US Dept of Labor, Bureau of Labor Statistics; June 1987

12. 1986 Group Benefits Survey:A Survey ofGroup Benefit Plans Covering Salaried Employees of US Employers. Washington,

DC: The Wyatt Co; 1986

13. Dun and Bradstreet Reference Book. New York, NY: Dun Bradstreet Credit Servicesly 1987

14. Business Insurance Directory of Corporate Buyers of Insur-ance, Benefit Plans, and Risk Management Services.

Chi-cago, IL: Cram Communications, Inc; 1984

DAY-CARE

COSTS

Working parents in New York City’s Manhattan pay an average $172 a week

to put a preschool child in a for-profit day-care center. That, says consultant

Runzheimer International, is more than double the cost in San Francisco or

Chicago and almost triple the U.S. average.

(9)

1990;85;50

Pediatrics

Harriette B. Fox and Paul W. Newacheck