Kathleen M. White “It was once said that the moral test of government is how that government treats those who are in the dawn of life, the children; those who are in the twilight of life, the elderly; and those who are in the shadows of life—the sick, the needy, and the handicapped.” —Hubert H. Humphrey Health insurance coverage for the children of the United States (U.S.) has improved over the last 30 years. In 2009, twenty-nine million children were enrolled in Medicaid and 7 million in the Children’s Health Insurance Program (CHIP), yet many children remain uninsured and eligible for Medicaid or CHIP, but are not enrolled. Since 2008, the U.S. has experienced a severe economic recession with unemployment levels greater than 10% resulting in a decline in employer-sponsored health insurance; yet the numbers of uninsured children dropped from 9 million in 2005 to 8.1 million in 2009 due to increasing public insurance coverage for children. However, nearly 72% of the uninsured children live in families with household incomes below 200% of the federal poverty level (FPL) or about $44,000 for a family of four (Kaiser Commission on Medicaid and the Uninsured, 2010a). This trend began in the early 1980s as the country saw an increase in child poverty resulting from the stagnating economic situation and an increase in single-parent families. The uninsurance rates increased from 20.9% to a high of 30.8% between 1977 and 1987 (Cunningham & Kirby, 2004; Selden, Hudson, & Banthin, 2004). During the same period, there was also a steady decline in the percentage of private insurance coverage for children. The Medicaid program was not able to address this worsening situation, as many of the children came from homes that did not meet Medicaid eligibility criteria. An expansion of public coverage was needed, and the State Children’s Health Insurance Program (now referred to as CHIP, not SCHIP) was developed. Medicaid is a federal entitlement program enacted in 1965 that guarantees eligible children access to a health care benefit package with little or no cost to them or their families. It is jointly financed and administered by the federal and state governments. The federal government has established minimum standards for the Medicaid program, including eligibility requirements and the minimum benefit package, and the states administer the program within those parameters. The states may vary their programs if they receive permission in the form of a “waiver” to depart from the federal standards, which has resulted in significant variation among the states. Because of the increasing uninsurance rates between 1984 and 1990, which reached a high of 30%, the Medicaid program implemented several poverty-related expansions to include many poor and near-poor children who were not eligible for welfare, the traditional pathway to receive Medicaid coverage (Selden et al., 2004). States were required to cover children 6 years of age and under from families earning up to 133% of the FPL and were allowed to expand coverage to include families earning up to 185% of the FPL and still receive federal matching funds (Sasso & Buchmueller, 2004). “From 1988 to 1998, the proportion of children insured through Medicaid increased from 15.6% to 19.8%. At the same time, the percentage of children without health insurance increased from 13.1% to 15.4%, mostly as a result of fewer children being covered by employer-sponsored health insurance” (Centers for Medicare and Medicaid Services [CMS], 2005). However, many low-income children who were above the poverty level were still not eligible for these Medicaid expansion programs, and it was widely recognized that something else was needed to address the coverage gap for low-income children not eligible for Medicaid. After the defeat of President Clinton’s universal health insurance plan, many in Congress felt that it was time to expand health care coverage to the most vulnerable in the population; children became a likely choice. In 1997, the State Children’s Health Insurance Program (SCHIP) was enacted as part of Title XXI of the Social Security Act (Balanced Budget Act of 1997, PL 105-33). This legislation provided health insurance coverage to children, up to age 19, in low-income families that were not eligible for Medicaid. This included families whose income was too high to qualify for Medicaid or that were not covered by private health insurance, often because the family income was too low for them to afford the private coverage. The original SCHIP legislation apportioned $40 billion in federal matching funds over a 10-year period to allow participating states to receive federal contributions to expand Medicaid eligibility, to create a new health care coverage program under the SCHIP legislation, or to develop a program that combined Medicaid with a new program. The SCHIP program provided the funds to the states, not to the individual as in Medicaid, and the states could design the program to meet their own needs. Under this program, the states could provide health care coverage to children in families earning up to 200% of the FPL. The procedure for the development of the SCHIP programs was similar to that of Medicaid. The state had to develop a program plan and submit it to CMS for approval. CMS then had to approve or disapprove the plan within 90 days of submission. States were allowed to modify the state plan by again submitting it to CMS for approval. The amount of federal funding for each state participating in SCHIP is defined in the statute appropriation, with annual allotments determined by a statutory formula based on the number of children and the state cost factor. The state cost factor is a geographic factor based on the annual wages in the health care industry for that state. The state plan must address eligibility standards, enrollment caps, disenrollment policies, type of health benefits covered, basic delivery system approach, cost sharing, and screening and enrollment procedures. The original SCHIP legislation had several important goals: to expand health insurance for children whose families earn too much money to be eligible for Medicaid but not enough money to purchase private health insurance; to provide access to quality medical care without dependence on cost; to develop a system that establishes a medical home for clients; to simplify the enrollment process for a public insurance program; and finally, to provide flexibility and innovation for the states to design a program that met the needs of their population, such as cost sharing different benefit packages in order to cover a wider segment of the population. The states were allowed to develop different eligibility criteria and coverage. Eligibility in most states began for uninsured children whose family income was at 185% to 200% of the FPL. Generally, all plans were required to cover well-baby and well-child care, immunizations, hospitalization, and emergency room visits. For states that opted for a Medicaid expansion, the services provided under SCHIP needed to mirror the Medicaid services provided by that state. For states that opted for a separate child health program, there were four options for determining coverage: By fall 1999, all states had adopted some type of SCHIP program. Initially, in all but 12 states the coverage was given to children in families with incomes of at least 200% of the FPL, allowing more near-poor families to meet the states’ eligibility criteria. By 2001, 19 states had expanded Medicaid, 15 states had created a separate SCHIP program, and 17 states had implemented some type of combination program (Sasso & Buchmueller, 2004) (Box 18-1). The Kaiser Commission on Medicaid and the Uninsured (2004) found that between 1997 and 2003, the percentage of poor children who were uninsured declined from 22.4% to 15.4% and that uninsurance rates have declined even more dramatically for the group of slightly higher income children who were the main target of SCHIP: those with family incomes of 100% to 200% of the FPL. Uninsurance rates for that group fell from 22.8% to 14.7% in 2003, a decline of more than one third (36%). However, the number of children eligible for public coverage who remain uninsured was still estimated to be about 21%, and an estimated 5.6 million children were eligible but not enrolled.
Children’s Health Insurance Coverage
Medicaid and the State Children’s Health Insurance Program
Health Insurance Coverage for Low-Income Children
Public Health Insurance Coverage for Children
Medicaid
Children’s Health Insurance Program
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