Six consumer advocacy groups have identified several state plans under the State Children's Insurance Program (CHIP) that provide good solutions to cost-sharing, crowd-out and other thorny implementation problems states face.
Children's advocacy groups hail state CHIP plans that offer innovative solutions
April 30, 1998
Childrens' advocacy groups hail state CHIP plans that offer innovative solutions to thorny problems
Six consumer advocacy groups have identified several state plans under the State Children's Insurance Program (CHIP) that provide good solutions to cost-sharing, crowd-out and other thorny implementation problems states face.
"We recognize that not all of these ideas will be appropriate in every state or situation, but our hope is that by sharing information we can give people good ideas about ways to improve their state plans, said Donna Langill, director of the child health project for the National Association of Child Advocates (NACA).
NACA was one of the cosponsors of an audioconference early this month that focused attention on these models. Other co-sponsors included the Children's Defense Fund, Families USA, the Center for Budget and Policy Priorities, the National Association of Children's Hospitals, and Family Voices.
Cost-sharing
Vicki Pulos, associate director of health policy for Families USA, said that many states are committed to requiring cost-sharing from beneficiaries for their children's health coverage. There are many different opinions about whether states should rely more on premiums, copays or deductibles. Each option has its benefits and disadvantages, she said.
Rhode Island is giving families in its RiteCare program the chance to decide for themselves whether they want copays or premiums. Some families like premiums better because they are a predictable cost every month, said Ms. Pulos. Other families may prefer co-pays because they do not anticipate using many services.
The state has developed actuarially equivalent payments for the two options. Consumer advocate groups caution that Rhode Island families must be given sufficient information on the pros and cons of each type of cost-sharing to make an appropriate decision.
HCFA limits cost-sharing for families above 150% of FPL to no more than 5% of a family's annual income.
One question is who will keep track of cost-sharing. Some states place the burden on families to track their own spending. Connecticut is putting the burden on managed care plans. Ms. Pulos said the state will need to ensure that plans are accurately monitoring cost-sharing expenditures and relaying the information to families. State officials will be able to determine if utilization of health services is being affected by cost-sharing.
To simplify the tracking of cost-sharing spending, California imposes a spending cap of $250 per family per year for copays. "This is an easy way for states to document to HCFA that they are complying with the 5% cap for families," said Ms. Pulos. The cap is helpful to large families and families with special needs children who use a lot of services and pay a lot of copays, she said.
Ms. Pulos said the state needs to check to make sure families do not confuse the cap on copays with a cap on use of services. There is a chance that families could cut back on services because they misconstrue the cap on copays, she said.
Cost-sharing is not allowed by HCFA for preventive services such as well-baby and well-child visits and immunizations. The federal government does not want to discourage the use of these services, Ms. Pulos said.
Defining preventive services
A few states have broadened the definition of preventive services and therefore broadened the exemption from cost-sharing. Georgia includes the costs of maintenance medication and monitoring of chronic conditions such as asthma in the definition of preventive services. New Jersey and Connecticut have designated preventive dental services as preventive services. Connecticut has made a number of exemptions from services requiring copays.
Many states have not yet had a chance to address in detail what happens when families don't pay premiums, said Ms. Pulos. Maine's program offers some consumer protections in the enforcement process, she said. Families who fail to pay their premiums are entitled to two reminder notices and a grace period before they can be disenrolled. They also are entitled to a hearing so that they can dispute their disenrollment on the grounds of failure to pay.
Maine also has made special allowances for low-income families in its crowd-out provision, said Ms. Langill. To make it more difficult for people to leave employer-sponsored coverage for public coverage, states are imposing waiting periods for children who have recently been insured.
While Maine imposes a three-month waiting period, it makes exceptions for dependents of workers whose employers pay less than 50% of the costs of dependent coverage or whose costs for dependent coverage exceed 10% of their income. The state agency also has the flexibility to grant "good cause" exemptions.
Connnecticut, which has a six-month waiting period, allows a number of exemptions from the waiting period, including loss of employment other than because of voluntary termination, death of a parent, a change to a job that doesn't have dependent coverage, expiration of COBRA and self-employment.
Some states, have decided to wait until there is evidence that crowd-out is actually occurring before they impose a waiting period or extend an existing one.
California has decided it will only increase the waiting period to six months from the current three months if there is evidence of crowd-out. Florida has found that more than 90% of children that come into its HealthyKids program have been uninsured for 12 months or longer. The state does not have a waiting period and is "not expecting crowd-out to be a problem," said Ms. Langill. Florida would only impose a three-month waiting period if there were signs of crowd-out.
California is trying to put responsibility for crowd-out squarely on the shoulders of employers. Under federal tax laws, self-insured employers can't single out low-income workers for loss of coverage, said Ms. Langill. California has now prohibited this for all employers in the state. Furthermore, she said, California has made it an unfair labor practice for employers to modify coverage or employee contributions for dependents in order to encourage employees to get coverage in a public program; it is unfair competition for insurance agents to steer clients to public programs with some of these practices.
A number of states are trying to cover parents as well as uninsured children-even it means they must do it without the enhanced matching rate from Title 21, said Ms. Pulos. Missouri, which will expand its Medicaid program to cover children up to 300% of FPL, is applying for a Section 1115 waiver to cover parents as well. Oregon is developing a state-funded program called the Family Health Insurance Assistance program for working people with incomes below 150% of the FPL. Both states are coordinating their Title 21 funding with other funding. Missouri will cover parents at the standard Medicaid matching rate. Oregon, while hopeful that it can get the enhanced matching rate to cover adults in the future, is now covering them through its state-funded insurance premium assistance program.
States may insure parents with the enhanced matching rate from Title 21 funds if they demonstrate that family coverage is more cost-effective than covering eligible children alone.
Wisconsin, which wants to cover children and parents up to 185% of FPL with the enhanced match for at least some parents, is trying to demonstrate the cost-effectiveness of family coverage by comparing what it would cost to cover children in the state employee plan vs. what it would cost to cover the entire family in a Medicaid HMO.
Vermont is making an argument for the cost-effectiveness of family coverage by pointing to evidence that providing health coverage to uninsured adults helps reduce welfare rolls. The state points to a recent analysis by Minnesota indicating that MinnesotaCare has helped reduced payments for TANF (Temporary Assistance to Needy Families).
Avoiding entitlements
A major concern about using CHIP money for Medicaid expansions in some states is that it would expand an entitlement program, leaving them responsible for continuing the benefits for the expanded population if federal money dries up.
Stan Dorn, director of the health division for Children's Defense Fund, noted that several states, including Oregon and Georgia, are attempting to avoid expanding an entitlement by creating a Medicaid look-alike program with benefits very similar to those offered to the Medicaid population. This approach also allows the states to impose premiums and copays not allowed in the Medicaid program.
By adopting a Medicaid look-alike program, states can avoid the administrative costs of creating a separate children's insurance program, Mr. Dorn said. If a program has the same benefits, providers and plans as Medicaid, the state can use the same application process and the same administrative infrastructure, making it easy for the state's Medicaid agency to assume responsibility for the program.
Under a Medicaid look-alike program, if some children in a family qualify for Medicaid and others qualify for CHIP coverage, all children would receive the same benefits, he said. Mr. Dorn noted that this approach also ensures that if a family's income rises and their children are bumped out of Medicaid, there would be no disruption in coverage if the children continued to be qualified for CHIP coverage.
Contact Ms. Pulos at 202-737-6340 or Ms. Langill at 202-289-0777, ext 217. To obtain a written copy of the "good ideas" report fax request to Amy Checkoway at 202-289-0776 or e-mail NACA at childadvocacy.org.
Six consumer advocacy groups have identified several state plans under the State Children's Insurance Program (CHIP) that provide good solutions to cost-sharing, crowd-out and other thorny implementation problems states face.
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