States are split on how best to insure more kids. California opts for new subsidy program; others back Medicaid expansion
Best Insure Kids
September 30, 1997
California and Missouri highlight the wide variation in approaches states may use to tap their share of the $24 billion in federal funds available over the next five years through the new State Children’s Health Insurance Program (SCHIP).
California’s legislature has just approved a plan to make a major investment in subsidized private insurance for low-income children combined with a small expansion of Medicaid to make eligibility more consistent across age groups.
In contrast, Missouri state officials are planning a large expansion of Medicaid to take advantage of SCHIP. While the plan still must be approved by the legislature, the administration wants to cover uninsured children up to 300% of the federal poverty level (FPL) under Medicaid.
Some governors and legislators oppose large Medicaid expansions because Medicaid is an entitlement program and, in their view, unnecessarily bureaucratic. But many children’s advocates argue that it is a proven and efficient way to guarantee that children will get the services they need.
No matter which approach is used, Sarah Shuptrine, who heads the Southern Institute on Children and Families, Columbia, S.C., said establishing one eligibility level for Medicaid, at 133% or more of the federal poverty level (FPL), would "make Medicaid much easier to administer" and might help to reduce confusion among parents who often are unaware of their children’s eligibility for the program. Her home state of South Carolina is planning to do just that—expanding Medicaid eligibility to 150% FPL across the board, for children ages 1-18.
Under federal law, states must cover pregnant women, infants and children up to 6 with family income at or below 133% FPL and children from 6 to 14 at or below 100% FPL. States must cover children up to age 19 at or below 100% of FPL by 2002.
More important than leveling eligibility, said Steve Freedman, a founder of Florida’s Healthy Kids program for non-Medicaid-eligible children, is for states to seize the opportunity offered by the new federal law to guarantee continuous eligibility to Medicaid for 12 months regardless of fluctuations in household income. Currently, he noted, up to 50% of children on Medicaid go on and off the program during the course of a year.
The $480 million program approved by the California legislature will offer insurance coverage with small premiums to an estimated 580,000 children whose parents earn too much to qualify for Medi-Cal. Under the Healthy Families Program, scheduled to start July 1, 1998, cost-sharing will depend on income. Families earning up to 150% of FPL will contribute $7 per child per month, up to a maximum of $14 per family per month. Families earning between 150% and 200% of FPL would have monthly premiums up to $9 per child and $27 per family. All participants also will have $5 co-pays for doctor’s visits, except for preventive care, and for prescriptions.
California’s share of the total first-year cost will be $170 million, with the federal government paying $310 million, far less than the $855 million the federal government has made available to the state in fiscal 1998. The state will have the opportunity to access the funds later.
The legislature also agreed to expand its Medi-Cal program slightly to cover an estimated 16,000 children between ages 15 and 18 to 100% of FPL. Younger children 6-14 already are covered at this level. But Gov. Pete Wilson rejected proposals to further expand the Medicaid program because he believed it would be more expensive than contracting with private health plans and because he wanted families to share in the cost of premiums.
300% of FPL in Missouri
In contrast to California’s approach, Missouri has amended its Section 1115
Medicaid waiver and plans to integrate into one program its existing fee-for-service Medicaid program, its Section 1915 (b) managed care waiver known as MC+, and SCHIP, according to Gregory Vadner, director-Division of Medical Services.
Missouri wants to develop "a comprehensive approach" to covering children and low-income adults, said Mr. Vadner, who downplays the Medicaid connection, noting that insurance is being purchased through private managed care plans.
Under Missouri’s proposal, none of the children covered by the program would be charged premiums or copays, he said.
To reduce the chance that families will drop employer insurance to enroll in the program, Missouri is including a six-month "look-back" provision. Residents must have been uninsured for at least six months before they can enroll. Mr. Vadner acknowledges that while the plan for SCHIP is supported by the governor, it still must be approved by the legislature.
Two-pronged strategy
At presstime, the Wisconsin Legislature was still considering a plan to to provide health insurance to children in families with income between 133% and 185% of FPL under the new BadgerCare program. Families would pay a premium based on family income, up to 3.5% of their income for the same benefit package offered under Medicaid. There would be no other co-pays or deductibles. Children of parents who work for an employer that pays for 75% or more of the cost of family coverage would not be eligible.
The legislature also is considering a proposal to expand Medicaid coverage to children between ages 6-18 up to 133% of FPL. Currently, the state covers children between 6-14 to 100%.
Taken together, the changes would go a long way toward "building a bridge" for people getting off welfare, said Pris Boroniec, deputy director of the state’s Bureau of Health Care Financing.
South Carolina is taking the simpler approach of expanding Medicaid coverage for children ages 1- 18 to 150% of FPL. Deborah Francis, deputy director of the Office of Programs for the Department of Health and Human Services, said children could be enrolled in Partners for Healthy Children as soon as Oct. 1. For the first time, the state will allow mail-in applications, as do about half the states.
Of all the states seeking to implement new children’s initiatives, Texas faces some of the toughest challenges, in part because of the huge amount of money it could receive and because of the complicated financing the state wants to use to supply matching funds. Second only to California, Texas is eligible to receive $561.5 million in fiscal 1998 alone, more than 13% of the total. Together California and Texas are eligible to receive one-third of the total funds being made available in the year.
HCFA rejects Texas’ approach
Texas’ Section 1115 Medicaid waiver, which would have added 350,000 children to the state’s Medicaid program, was, in effect, denied by the Health Care Financing Administration (HCFA) late last month because of the state’s plan to rely on 10 regional hospital tax districts as sole providers.
The state wanted to use tax revenues from those districts as its federal match. Now, said Charles Stuart, spokesman for the Texas Health and Human Services Commission, the state is examining whether it can use the tax district money to match federal funds under the new children’s program.
The state is looking both at purchasing insurance for children or expanding Medicaid. There are enough federal funds available to expand coverage to children up to 150% of FPL, Mr. Stuart said. Texas already has a vehicle to provide private insurance, a program called Texas Healthy Kids Corporation, which was approved by the Legislature earlier this year. The public/private initiative subsidizes private insurance through premiums and voluntary contributions.
In New York, Commissioner of Health Barbara DeBuono in New York is opposed to using the federal money to expand Medicaid, an already large and "generous" program, according to a spokeswoman.
The most likely alternative is for the state to use the federal funds to expand its Child Health Plus Plan, one of the largest programs in the country for subsidizing private insurance for low-income children. About 140,000 non-Medicaid-eligible children are covered in the program. The state already had plans to expand the number of children served to 251,000 over the next three years. The benefit package was recently expanded to include hospitalization.
The Campaign for Healthy Children, is urging the state to convene a special session of the legislature sometime in September to raise matching funds and to take maximum advantage of the money. The group, which is a joint project of Statewide Youth Advocacy, Inc. and the American Academy of Pediatrics, District II, is advocating expanding the benefit package with dental, vision and hearing coverage. It is also urging the state to eliminate the family contribution for all families earning under 160% of FPL. For families earning between 160% and 220% of FPL, the group is recommending a maximum premium contribution of $9 per child per month. State officials say no decisions have yet been made on how New York will use the $256 million it is eligible to receive in fiscal 1998.
Florida is planning to use the new federal funds (it is allocated $270.3 million in fiscal 1998) to more than triple the size of its high-profile Healthy Kids insurance program from 38,000 to 145,000, according to Paul Belcher, coordinator for the Health and Human Services Policy Unit in the governor’s office. The state also is examining the possibility of adding options to the benefit package that families could choose at an added cost. For example, the basic benefit package could include a dental benefit, or a mental health benefit at modest additional premium. There also could be an option for children with chronic, high cost health needs, available to families at much higher cost. And families may be given the option of buying health insurance on their own with vouchers from the state.
Tinkering around the edges
Healthy Kids founder Steve. Freedman said the state has talked about using some money to "tinker around the edges of Medicaid," perhaps expanding coverage for 15-18-year-olds, and bringing infants under 1 (now at 185%) and children under 6 (now at 133%) up to 200% of FPL.
In Massachusetts, Acting Gov. Paul Cellucci (R) took many political analysts by surprise by calling for Massachusetts to use the new federal funds to expand Medicaid to include all children under age 19 with income up to 200% of FPL, bringing an additional 35,000 children into the program. The previous administration of Gov. William Weld had resisted expanding the Medicaid program.
Gov. Cellucci’s proposal overlaps with the Children’s Medical Security Plan, which provides coverage without a premium to non-Medicaid eligibles up to age 19 in families with incomes at or below 200% of the poverty level. Children in families with incomes between 200% and 400% of poverty pay a subsidized premium rate.
Arkansas, which received permission from HCFA Aug. 19 to cover children 17 and under up to 200% of FPL in a primary care case management program with small co-pays, has not yet decided how it might seek to use the $46.9 million allocated to it in fiscal 1998, said Medicaid director Ray Hanley.
A big stumbling block, said Mr. Hanley, is a prohibition by HCFA on using any of the funds to subsidize insurance for public employees. The ban puts an unfair burden on low-paid employees in states like Arkansas, where employees pay a large share of the premium, he said.
Contact Ms. Shuptrine at 803-779-2607; Mr. Freedman at 352-392-5904; Ms. Boroniec at 608-266-2522; Mr. Stuart at 512-424-6514; Mr. Vadner at 573-751-3425; and Mr. Hanley at 501-682-8292.
States are split on how best to insure more kids. California opts for new subsidy program; others back Medicaid expansion
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