Insuring children or insuring families: do parental and sibling coverage lead to improved retention of children in Medicaid and CHIP?

Recent research indicates that 3 million children leave Medicaid or the Children's Health Insurance Program (CHIP) each year and become uninsured, despite continuing eligibility. This paper explores the effect of family coverage on drop-out among children in these two programs, using instrumental variables to address the endogeneity of parental and sibling coverage in Medicaid/CHIP. Using the Current Population Survey March Supplement (1999-2004), I find that having a parent (primarily a mother) or sibling in public insurance is associated with a significantly lower risk of drop-out; after instrumenting with parental and sibling eligibility, only parental coverage remains a significant predictor of retention. I conclude that policy attempts to expand health insurance to the 8.5 million uninsured children in the U.S. would be much more effective if they covered parents and children in the same program.