The Children's Health Fund believes Medicaid and State Children's Health Insurance Programs (SCHIP) help to ensure a medical home for children. The Medicaid and SCHIP are bedrock public insurance programs that provide access to health care services for millions of children and families.
Medicaid extends health coverage to more than one in four children from families who are at or near the Federal Poverty Level (FPL). Under Medicaid, states are required to pay for mandatory services such as the Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) services, a comprehensive and preventive program for recipients under age 21.
The federal government matches state Medicaid expenditures through the Federal Medical Assistance Percentage (FMAP) program, which is based on the state's per capita income figure. The federal government pays an estimated 57 percent of all Medicaid expenditures.
The State Children’s Health Insurance Program (SCHIP), enacted in 1997, was the largest expansion of health insurance coverage for children since the inception of Medicaid in 1965. SCHIP provides coverage to children in low-income families whose income exceeds Medicaid income eligibility limits. Unlike Medicaid, which is an entitlement program, SCHIP is a block grant program. Every state receives a set amount from the federal government. In exchange, states are given the flexibility to determine how exactly they administer their programs. For example, states are free to establish their own eligibility criteria. Coverage for benefits under SCHIP programs may be less than those provided under Medicaid.
Nationally, approximately 6.1 million children were enrolled in SCHIP during FY 2005.Since its enactment, SCHIP has been extremely successful in enrolling eligible children, reducing the uninsured rate for children from 22.8% to 15.6%. However, there is still work to be done. The year 2005 witnessed a spike in the number of uninsured children for the first time in nearly a decade, adding to the almost 9 million children uninsured.
Insurance coverage for children is a wise investment. Children without coverage are more likely to go without immunizations, end up in Emergency Rooms when conditions could have been addressed sooner at the primary care level. Uninsured children get less medically necessary care, and are more likely to have unmet needs for care.
The Children’s Health Fund has supported SCHIP since its inception in 1997 and to this day, believes that it is a key component of the health care safety net in this country. The U.S. Congress must act to reauthorize the program as it expires in late 2007. While the program is not without flaws, with certain states experiencing shortfalls in funding and other states making only a small commitment for children, CHF believes it is a crucial step in achieving universal health care coverage for all children.
Merely reauthorizing SCHIP is not enough. In 1997, Congress appropriated $39.7 billion over ten years to assist states with providing SCHIP coverage to low-income children. However, as the program matured, it became clear that systemic funding issues existed, as the needs of some states outpaced annual allocations and statutory funding formulas appeared to short change others. As recently as December 2006, Congress was forced to take action to address funding shortfalls in 17 states. Congress appropriated an additional $283 million to partially cover Fiscal Year 2006 shortfalls. Although this provided some relief, it was not a permanent fix. The shortfalls still need complete redress. If this funding problem is not addressed, it is estimated that more than a million children would lose SCHIP coverage over the next four years.
CHF is calling on Congress to fully fund SCHIP, solve problematic funding mechanisms that have caused shortfalls in the past, encourage states to enroll all eligible children in the program and support health care services that form the basis of a medical home. CHF supports funding of the program that means maintaining coverage for children currently enrolled and expanding the number of children enrolled through better outreach reach efforts. $13 Billion in new federal funds are needed over the next 5 years to allow states to sustain their existing SCHIP programs. Additional funds are needed to allow growth in the program.
Medicaid is expected to cost the federal government $192.6 billion in 2006. In many state budgets across the country, Medicaid is the second largest expenditure behind education. As federal share costs rise, government is proposing cost containment measures. In 2005, the president proposed cuts to the Medicaid program for Fiscal Year 2006 and Congress responded by passing the Deficit Reduction Act (DRA) that included $4.8 billion in spending reductions over five years to Medicaid. The DRA also increased state flexibility to tailor Medicaid programs by allowing states to define benefit packages, implement cost sharing mechanisms such as co-payments for medical services and denial of services for lack of payment.
For Fiscal Year 2007, the President proposed a new round of savings in the Medicaid program. As the budget process is nascent, it is not certain what level of funding will be part of the final budget agreement. However, whatever cost cutting measures are finally agreed upon, cost containment strategies often result in beneficiaries losing coverage, or having reduced access to services.
States have already begun implementing preemptive measures to deal with reduced federal funding. In Florida, for example, a waiver was approved that allows the state to privatize Medicaid and enacted SCHIP reforms that have limited enrollment periods. These actions, on the part of states, could negatively impact the medical home model of care for children as we know it.
Access to health care insurance facilitates access to a medical home. Sadly, despite gains in enrollment in the Medicaid and SCHIP programs, 9 million children in this country remain uninsured; 6.96 million of these children come from working families. The Center for Budget Policies and Priorities estimates that seventy percent of all uninsured children are eligible for low-cost or free health care coverage under Medicaid and SCHIP. For these children, lack of insurance is a barrier to a medical home.
Those who have health insurance but still face barriers when accessing care due to restrictive or bare bones policies or high deductible or co-payments are categorized as underinsured. Underinsured individuals, including children and families, typically pay a larger percentage of their income for insurance policies and if purchased on their own, these policies are more likely to have limits on coverage. Restrictive insurance policies or bare bones policies do not cover treatments for certain diseases, usually costly chronic care for illnesses such as diabetes that disproportionately impact low income populations.
Gaps in coverage interrupt access to health care. Underinsured children and families are more likely to postpone seeking care, have problems paying a medical bill, leave prescriptions unfilled, be contacted by a collection agency about medical bills and finally, unable to get needed medical care.
Maintain the Medicaid entitlement: As an entitlement program, Medicaid is open to all children meeting income eligibility requirements. The entitlement nature of Medicaid allows it to expand during challenging economic times, to be responsive to technical advances and to ensure that all children who qualify receive the health care they need. Although legislative attempts to transform Medicaid into a block grant program have thus far been unsuccessful, the Secretary of the Department of Health and Human Services has signaled his approval for individual states seeking to reform their Medicaid programs to do so through waivers of federal requirements. CHF supports legislative efforts that maintain congressional authority to determine the structure of Medicaid.
Strengthen the SCHIP program: The State Children’s Health Insurance Program (SCHIP) was established in 1997 to reduce the number of uninsured children and has been an unqualified success. In 2003, 5.8 million children were enrolled in SCHIP. SCHIP must be reauthorized by Congress in 2007. CHF strongly urges Congress to strengthen the SCHIP program to ensure that funds intended to provide health care to children remain dedicated to the goal of guaranteeing underserved children access to comprehensive, quality health care.
