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MEMORANDUM
June 17, 1997
TO: Distribution
FR: Chris Jennings
RE: Senate Finance Committee Markup and Children's Health Initiative
Attached is a copy of the letter the President sent up to Senator Roth indicating his
support for amendment proposed by Senators Chafee, Rockefeller, Jeffords, and Hatch to the
Senate Finance Committee markup on children's health. The President also referenced his
support for this amendment at the conclusion of his remarks at the Title IX event this morning.
Also attached is a one-page background on this amendment and the concerns we have
about the underlying provisions Chairman Roth has in his mark, as well as a set of Q & A's on
possible issues that may be raised by the media on this issue. Lastly, you will find a copy of the
letter Frank Raines sent to Chairman Roth this morning that outlines our concerns with all of the
provisions in the mark that are either inconsistent with either the Budget Agreement or our policy
priorities.
I hope you find this information useful. If you have any questions, please don't hesitate to
call me.
THE WHITE HOUSE
WASHINGTON
June 17, 1997
Dear Mr. Chairman:
I urge the Senate Finance Committee to adopt the bipartisan
children's health amendment proposed by Senators Chafee,
Rockefeller, Jeffords, and Hatch. As you know, I am extremely
committed to using the $16 billion for children's health to
provide meaningful coverage for as many uninsured children as
possible. The bipartisan amendment offers an opportunity to do
just that.
It is critical that we continue to work together in this
Congress to find ways to provide health care coverage for
millions of uninsured children. As you know, over ten million
children lack health care coverage -- and the impact on their
families is profound. A recent study showed that nearly 40
percent of uninsured children go without the annual check-ups
that all children need. One in four uninsured children do not
have a regular doctor. And throughout the country, too many
parents are living in fear that they may be forced to make the
impossible choice between buying medicine for a sick child or
food for an entire family.
Because of the importance of this problem, we need to work
together to design the most effective way to invest the $16
billion. The bipartisan amendment takes a major step toward this
goal. This plan rationalizes Medicaid so that children in the
same family are eligible for the same coverage. Children under 6
years old and under 133% of poverty -- about $21,000 for a family
of four -- are already eligible for Medicaid. The bipartisan
plan provides incentives for states to cover older children up to
this same income level. The plan also gives states the option of
choosing Medicaid or a more flexible grant approach for
uninsured, middle-class children. Resources and flexibility are
needed because, unlike low-income children, middle class
uninsured children are difficult to target with a single program.
In addition, this bipartisan plan offers meaningful coverage that
protects vulnerable children from excessive costs.
The bipartisan initiative - - which balances protections for
vulnerable children with flexibility to target middle-class
children stands in sharp contrast to the Commerce Committee's
proposal. The plan to simply put out a block grant, with few rules
and no benefits requirements, will not result in meaningful
coverage for many uninsured children. While your proposal improves
The Honorable William V. Roth, Jr.
Page Two
on the Commerce Committee's plan, the claim that it provides a
choice between Medicaid and a grant approach is exaggerated.
Given the incentives in the proposal, no rational state would
choose Medicaid.
The bipartisan amendment merits strong and favorable support
from the full Finance Committee. We should take advantage of this
opportunity to significantly reduce the number of uninsured
children. I look forward to working with you and others on the
Finance Committee and in the Congress to achieve this end.
Sincerely,
Brin Clinton
The Honorable William V. Roth, Jr.
Chairman
Committee on Finance
United States Senate
Washington, D.C. 20510
PRESIDENT ANNOUNCES SUPPORT FOR BIPARTISAN CHILDREN'S PLAN
Today, the President announced his support for the Senate bipartisan amendment to provide
meaningful health coverage to uninsured children. Senators Chafee, Rockefeller, Jeffords and
Hatch have designed a consensus proposal on how to invest the $16 billion in the Balanced
Budget Agreement. This proposal is consistent with the President's commitment to extending
meaningful health coverage through the most cost-effective approach. This important legislation
would result in the largest investment in children's health coverage since the enactment of
Medicaid in 1965.
The bipartisan amendment protects vulnerable children while offering states flexibility. It:
Gives states incentives to rationalize Medicaid. Today, Medicaid covers children
under 6 years old with incomes up to 133% of poverty, or $21,000 for a family of four.
The bipartisan plan provides incentives for states to cover all children, regardless of age,
up to this income level.
Funds innovative state programs to target middle-class uninsured children. Unlike
low-income children, middle-class uninsured children are difficult to target with a single
program. A grant program gives states the resources and flexibility to find and cover
these children.
Offers meaningful coverage that protects vulnerable children from excessive costs.
Children have a wide range of health needs. The bipartisan amendment assures that
children covered through the initiative receive meaningful benefits without unaffordable
cost sharing.
The Roth proposal, in contrast, does not balance protection for vulnerable children with
state flexibility.
False choice. The Roth proposal asserts that states have the choice of expanding
coverage to children through a block grant or Medicaid. However, it is a false choice.
The rules for the block grant are designed so that no rational state would chose Medicaid,
regardless of its merits.
Splits families. The Roth proposal allows states to use the block grant for older, low-
income children and Medicaid for younger children. It makes no sense to give a child
below 6 years old one type of coverage and a child above 6 years old different coverage.
The President encourages the Senate Finance Committee and the full Congress to support this
bipartisan approach. We should take full advantage of this opportunity to provide meaningful
health coverage to a significant number of uninsured children.
Questions and Answers
Q:
In Robert Pear's New York Times story today, the Governors -- who you applaud for
their innovative efforts in this area -- are claiming that states will never expand
coverage under a proposal with so many strings attached. How do you respond to
this letter?
A:
As a former Governor, the President well understands that states need flexibility to design
programs that best meet the needs of their populations. However, if the taxpayers are
going to invest $16 billion in children's health care, there needs to be some accountability
for these dollars. We believe that this proposal contains important administrative
and financial incentives that will help states expand their programs.
Q:
Why don't you support Republican proposals that allow states to use all of the
funding for grants?
A:
We believe that we should build on the Medicaid program and encourage states to cover
all children under 133 percent of poverty so that children in the same family -- whatever
age -- are eligible for the same coverage. This approach offers meaningful coverage that
protects vulnerable children from excessive costs. The Chafee-Rockefeller-Jeffords-
Hatch amendment also gives states the option of choosing Medicaid or a more flexible
grant approach for uninsured, middle-class children. We believe that resources and
flexibility are needed because, unlike low-income children, middle class uninsured
children are difficult to target with a single program.
Q:
How can you criticize the Roth grant proposal when your benefit package is less
prescriptive than his?
A:
Our approach always assumes a strong Medicaid base program. The Roth proposal
establishes incentives for states to allocate the entire $16 billion children's health
investment to block grants, which would allow for less meaningful health insurance
coverage. In so doing, it children 6 years of age and older at income levels less than 133
percent of poverty -- about $21,000 for a family of four -- would not have the same
benefit as their younger siblings.
Q:
Are you saying that you will veto any proposal that is less prescriptive than the
Chafee-Rockefeller Amendment?
A:
We will have to evaluate all proposals that come up. There may strengthening provisions
that make some sense. But there is no question that relative to all proposals on the table,
that the Chafee-Rockefeller-Jeffords-Hatch amendment is far preferable.
EXECUTIVE OFFICE OF THE PRESIDENT
CEFICE
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
THE DIRECTOR
June 17, 1997
The Honorable William V. Roth, Jr.
Chairman
Committee on Finance
United States Senate
Washington, D.C. 20510
Dear Mr. Chairman:
I am writing to express the views of the Administration on the Medicare, Medicaid, and
children's health provisions under consideration by the Finance Committee, for inclusion in the
FY 1998 budget reconciliation bill. The Administration's views on the other provisions in the
Chairman's mark, including Welfare-to-Work, benefits for immigrants and unemployment
insurance, will be provided separately.
Overall, the Administration finds much to support in the mark. It incorporates many of
the proposals from the FY 1998 President's budget and is generally consistent with the
Bipartisan Budget Agreement. It proposes Medicare structural reforms that constrain growth,
extend the life of the Hospital Insurance (HI) Trust Fund for at least a decade, and improve
preventive care benefits. In addition, the Committee's mark assures that hospitals will receive all
of the funding to which they are entitled for graduate medical education and uncompensated care.
All of these changes will help strengthen and modernize Medicare for the 21st century. It also
allocates the full $16 billion for children's coverage policies without dedicating any of this
important investment to an inefficient tax approach.
Medicaid
In a number of areas related to Medicaid, however, the Administration has serious
concerns with provisions that do not reflect the budget agreement. If the Committee were to
proceed with its legislation in this form, we would be compelled to invoke the provisions of the
agreement that call on the Administration and the bipartisan leadership to undertake remedial
efforts to ensure that reconciliation legislation is consistent with the agreement.
Investments. After extended negotiations that preceded the budget agreement, the
Administration and the Congressional leadership agreed to specified savings and investments in
the Medicaid program over five years. Recognizing that premiums represent a significant burden
on low-income beneficiaries, the agreement allocated $1.5 billion to ease the impact of
increasing Medicare premiums on this population. The Finance Committee mark failed to
include this proposal. We strongly urge the Committee to include this proposal.
We are pleased that the Committee mark includes a higher matching payment for the
Medicaid program in the District of Columbia and inflation adjustments for the Medicaid
programs in Puerto Rico and the territories, but we are concerned that the increases are not
sufficient. The matching rate proposed in the mark for the District of Columbia sunsets at the
end of FY 2000 and is 10 percentage points lower than the matching rate of 70 percent proposed
in the FY 1998 President's budget. It appears that the five-year spending associated with the
inflation adjustments for Puerto Rico and the territories proposed in the mark is lower than the
level proposed in the President's budget. We strongly urge the Committee to include these
provisions at the level proposed in the President's budget.
Restoring Medicaid Benefits for Disabled Children. The budget agreement clearly
includes the proposal to restore Medicaid for current disabled children losing SSI because of the
new, more strict definition of childhood eligibility. The Finance Committee mark failed to
include this proposal. We strongly urge the Committee to include this provision and retain
Medicaid benefits for approximately 30,000 children who could lose their health care coverage in
FY 1998.
The Committee mark also includes a number of provisions that were not specifically
addressed in the budget agreement, and about which the Administration has serious concerns.
They include the following:
Disproportionate Share Hospital Savings. We have concerns about the details of the
allocation of the disproportionate share hospital (DSH) payment reductions among States
included in the mark. The Finance Committee mark may have unintended distributional effects
among States. We recommend that the Committee revisit the FY 1998 President's budget
proposal, which achieves savings by taking an equal percentage reduction off of states' total
DSH spending, up to an "upper limit."
We are very concerned that the Finance Committee mark does not include any retargeting
of DSH funds. As the Administration has stated previously, we believe that significant savings
from DSH payments should be linked to an appropriate targeting mechanism. It is for this reason
that we support proposals to assure that some DSH funds are directed to hospitals that serve a
high proportion of low-income and uninsured patients.
Privatization. The Chairman's mark would allow the eligibility and enrollment
determination functions of Federal and State health and human services benefits programs --
including Medicaid, WIC, and Food Stamps -- in ten States to be privatized and deems approved
such a proposal from the State of Texas. While certain program functions, such as computer
systems, can currently be contracted out to private entities, the certification of eligibility for
benefits and related operations (such as obtaining and verifying information about income and
other eligibility factors) should remain public functions. The Administration believes that
changes to current law would not be in the best interest of program beneficiaries and strongly
opposes this provision.
2
Medicaid Cost Sharing. The mark would allow States to require limited cost sharing for
optional benefits. We are concerned that this proposal may compromise beneficiary access to
quality care. Low-income Medicaid beneficiaries may forgo needed services if they cannot
afford the copayments. We urge the Committee to revisit the FY 1998 President's budget
proposal, which would allow nominal copayments only for HMO enrollees. This proposal grants
States some flexibility and would allow HMOs to treat Medicaid enrollees in a manner similar to
non-Medicaid enrollees, without compromising access to care.
Criminal Penalties for Asset Divestiture. The Finance Committee mark would amend
Section 217 of the Health Insurance Portability and Accountability Act (HIPAA) of 1996 to
provide sanctions only against those who assist people to dispose of assets in order to qualify for
Medicaid. We believe the better solution to the issues that the HIPAA provision created would
be to repeal this section altogether.
Children's Health
The Chairman's mark does not include detailed specifics on the children's health
provisions. However, we are encouraged by reports that a bipartisan group of Senators are
proposing to use this investment to build on Medicaid for low-income children and offer States
grants to give children in working families meaningful coverage.
We believe that the $16 billion investment in children's health should be used for health
insurance coverage. It is for this reason that the Administration supports proposals that only
allow funds to be used for insurance, through Medicaid or a capped grant, and does not allow
funds to be used for direct services. Under a direct services option, we are concerned that a State
could spend all of its money on one benefit or to offset the effects of the DSH cuts on certain
hospitals, and children would not necessarily get meaningful coverage.
We urge the Committee to use the funds in the most cost-effective manner possible to
expand coverage to children, as required by the agreement. The Chairman's mark includes both
a Medicaid and a grant option; however, the mark should not discourage States from choosing
the Medicaid option. We believe that Medicaid is a cost-effective approach to covering low-
income children, and would like to work with you on strengthening this option. We also believe
that the grant program should be designed to be as efficient as possible. The mark should
provide appropriate details to assure that funds are used solely for the purposes intended by the
agreement and not used to offset States' share of Medicaid.
It is our understanding that the alternative children's health coverage approach that is
being developed by the bipartisan coalition of Senators includes provisions that address many, if
not all, of these concerns. We look forward to working with the bipartisan coalition and the
Committee on this high priority issue for the President and the Congress.
3
Medicare
Home Health Reallocation. It is our view that the home health reallocation in the
budget agreement is not properly reflected in the Committee's mark. During the negotiations, we
discussed at great length the shift of home health expenditures to Part B, and it was always
understood to be immediate. The Committee's phase-in of the shift means a loss of two years of
solvency on the Part A trust fund, two years which we can ill afford to lose. In addition, a
phased-in reallocation would cause significant administrative problems regarding claims
processing, appeals, and medical review for Medicare contractors. We urge the Committee to
incorporate the same provision that was included in last week's House Commerce Committee
bill.
Balance Billing Protections in Medicare Choice. While the Administration supports
the introduction of new plan options for Medicare beneficiaries, we believe that any new options
must be accompanied by appropriate beneficiary protections. We believe that inclusion of
private fee-for-service plans in Medicare Choice without balance billing protections is
unnecessary. Beneficiaries should not be exposed to billing in excess of current law protections.
Also, we are concerned that this option will attract primarily healthy and wealthy beneficiaries
and leave sicker and poorer beneficiaries in the more expensive, traditional Medicare program.
Medical Savings Accounts. While we have agreed to work to develop a demonstration
of this concept for the Medicare population, we have concerns about the size and scale of the
demonstration in the mark. The Committee's mark provides for a demonstration with 500,000
participants at a cost of approximately $2 billion over five years, which is many times larger than
any other Medicare demonstration. We believe the demonstration should be limited
geographically for a trial period, which will enable us to design the demonstration to answer key
policy questions. We have suggested limiting the demonstration to two states for a three-year
period. Further, we strongly believe that the current law limits on balance billing should also be
applied to this demonstration to protect beneficiaries from being subjected to unlimited
additional charges.
Preventive Benefits. While the preventive benefits are largely the same as those
advanced in the President's budget, we bring to your attention the proposal to waive coinsurance
for mammograms. As you know, mammography saves lives, yet many Medicare beneficiaries
fail to use this benefit. Research has found that copayments hinder women from fully taking
advantage of this benefit. Thus, we continue to support waiving copayments for mammograms.
Home Health Copayments. We note that the Committee's mark would impose a Part B
home health copayment of $5 per visit, capped at an amount equal to the annual hospital
deductible. Medicare beneficiaries who use home health services tend to be in poorer health than
other Medicare beneficiaries. Two-thirds are women, and one-third live alone. Forty-three
percent have incomes under $10,000 per year. We are concerned that a copayment could limit
beneficiary access to the benefit. Imposing a home health copay is not necessary to balance the
4
budget, and any further consideration of this policy should be part of a bipartisan process to
address the long-term financing challenges facing Medicare.
Medicare Eligibility Age. Raising the eligibility age for Medicare is not necessary to
balance the budget, and any further consideration of this policy should be part of a bipartisan
process to address the long-term financing challenges facing Medicare. Moreover, this proposal
does not contain provisions to address the fact that early retirees between the ages of 65-67 may
not be able to obtain affordable insurance in the private market.
Prudent Purchasing. As you know, the Medicare program is governed by a strict set of
provider payment rules that limit the ability of the Federal government to secure the most
competitive terms available to other payers in the marketplace. We have advanced a set of
proposals to allow Medicare, the nation's largest health insurer, to also take advantage of lower
rates providers offer to other payers. At a time when we all agree that Medicare spending has
been growing too quickly and the Federal budget faces increasing pressures for scarce resources,
we do not understand why the Committee would miss the opportunity to take advantage of all
these proposals to allow Medicare to be a more prudent purchaser. We propose adopting
practices that work in the private sector. We should let them work in the public sector as well.
These practices can work well to save taxpayers money and promote quality. We urge the
Committee to include the President's proposals.
HI Tax for State and Local Workers. We note that the Committee's mark includes a
proposal to extend the HI tax for State and local government employees. This proposal was not
discussed in the negotiations surrounding the development of the budget agreement.
Commission. We note that the Committee's mark includes a Medicare commission.
Establishing a bipartisan process that is mutually agreeable is essential to successfully address
the challenges facing Medicare. We look forward to working with you on the development of
the best possible bipartisan process to address the long-term financing challenges facing
Medicare while simultaneously ensuring the sound restructuring of the program to provide high-
quality care for our nation's senior citizens.
Cost Allocation Amendment
We understand that amendments may be offered during Committee consideration to
prevent costs from increasing in Food Stamps and Medicaid due to cost-shifting for common
functions from the TANF block grant, which places a cap on TANF administrative costs. We
understand that the CBO baseline includes costs of over $5 billion in FYs 98-02 because CBO
assumes administrative cost-shifting from TANF to Food Stamps and Medicaid. This proposal
seeks to reduce the extent of the cost-shift to Food Stamps and Medicaid, which could yield
substantial savings against CBO's baseline.
5
While the Administration is generally supportive of this effort -- to prevent States from
changing cost allocation plans in order to shift greater administrative costs from the capped
TANF block grant to open-ended Food Stamp and Medicaid administrative costs that are
matched by the Federal government - we would need to carefully review the specific mechanism
proposed. Furthermore, we would have very serious reservations about proposals that would cap
Food Stamps and Medicaid administrative costs and would oppose a cap that would limit the
ability of a State to manage its programs.
The budget negotiators discussed changes to the Food Stamp and Medicaid programs at
considerable length. Any further savings in this area would require mutual agreement, as would
the allocation of those savings either to deficit reduction or to new spending.
The budget agreement reflects compromise on many important and controversial issues,
and challenges the leaders on both sides of the aisle to achieve consensus under difficult
circumstances. It is critical that we do so on a bipartisan basis.
I look forward to working with you to implement this historic agreement.
Sincerely,
Faisk
Franklin D. Raines
Director
Identical letter sent to the Honorable Daniel Patrick Moynihan
6
Addendum
Medicare Choice. We would prefer to link the growth in payments for Medicare Choice
plans to growth in the fee-for-service sector of Medicare, rather than having two separate growth
targets. To do so may lead over time to an erosion of the value of the Medicare Choice benefit
package and expose beneficiaries to increased premiums.
Medigap Reforms. The President's bill advanced a number of important Medigap
reforms including annual open enrollment (as well as including information about Medigap plans
in the annual open enrollment season informational materials), community rating, open
enrollment for disabled and ESRD beneficiaries when they become entitled to Medicare, and
portability protections similar to those enacted last year in HIPAA for the under-65 population.
Many of these important protections were also advanced by bipartisan bills including those
sponsored by Senators Chafee and Rockefeller. We urge your reconsideration of the merits of
these proposals. They ensure that Medicare beneficiaries are able to purchase affordable
Medigap policies to fill in the many areas not covered by Medicare. Medicare beneficiaries
should be able to choose which Medigap plans to purchase, or Medicare Choice plans to enroll
in, without artificial constraints.
Survey and Certification User Fee Proposal. The Committee mark does not contain a
provision allowing HCFA to require state survey agencies to impose fees on health care
providers for initial surveys required as a condition of participation in the Medicare program.
This provision would authorize states to collect and retain fees from health care providers to
cover the cost of initial surveys. Under the budget agreement, the discretionary funding level for
HCFA Program Management assumes enactment of this mandatory, government receipt fee
proposal. Adequate funding for survey and certification activities is essential to program
integrity.
Hospital Capital Property Tax. We are concerned about the inclusion of this provision
on the grounds that it results in an inequitable redistribution of inpatient hospital PPS funding
among proprietary and not-for-profit hospitals.
Creation of Duplicative Managed Care Bureaucracy. We understand that an
amendment may be offered that would establish a new bureaucracy in HHS to administer the
managed care reforms in the mark. We would strongly oppose such an amendment. The
implications for beneficiary services are serious: one agency is in a much better position to
coordinate programs and policies that will permit the 38 million Medicare beneficiaries to make
informed choices of the whole new array of plan options under the mark. In addition, at a time
when we are trying to reduce the size of the Federal bureaucracy, it seems counter-productive to
divide Federal administration of Medicare into two separate, largely duplicative agencies.
May 8, 1997
TO:
Jen K. and Carrie G.
FR:
Sarah B.
RE:
Kids Paper
Here is our most recent kids paper as well as an NEC communications document on the
children's policy Budget Agreement, which, as you will note, is much vaguer. Last week they
just agreed to a funding level ($16 billion) for children's health policies that would be divided up
between Medicaid (including the 12 month eligibility policy) and grant money. The Workers
Between Jobs proposal has been dropped, although since the agreement is vague, there is a
chance they could add a kids-only version of it back in later.
They may have more detail by next week on the split between the grant money and the Medicaid
money and possibly a bit more detail on how these policies will be structured. I will let you
know if any more specifics get worked out.
President Clinton Worked to Expand
Coverage for Children
TEN MILLION AMERICAN CHILDREN TODAY
LACK HEALTH CARE COVERAGE.
THE PRESIDENT'S CHILDREN'S HEAL TH INITIATIVE EXPANDS
HEAL TH CARE COVERA GE FOR MILLIONS OF CHILDREN
THE PRESIDENT FOUGHT TO ENSURE THAT ANY BALANCED BUDGET AGREEMENT
EXPANDS CHILDREN'S HEALTH COVERAGE. HIS CHILDREN'S HEALTH INITIATIVE
PROVIDES HEALTH COVERAGE FOR AS MANY AS FIVE MILLION ADDITIONAL
CHILDREN BY:
Strengthens Medicaid for Children. The President fought to ensure that the guarantee
of Medicaid coverage for all poor children is preserved. Furthermore, the Agreement
invests in expanding Medicaid coverage for poor children by:
Working to enroll many of the three million children who are eligible but not enrolled
in Medicaid;
Providing States with new options to expand coverage to children; and
Continuing Medicaid coverage for children with disabilities who lost coverage due to
definitional changes as well as impoverished legal immigrants.
Supports Innovative State Programs through a Capped Mandatory Grant Program.
States could receive grants to:
Cover children whose families earn too much to qualify for Medicaid but too little to
afford private coverage; and
Builds on innovative programs that address the unique needs of children in each State.
For example, programs like State/insurance company partnerships and school-based
could be expanded.
Budget
Dgreement
Document
THE PRESIDENT'S CHILDREN'S HEALTH INITIATIVE
Significant gaps remain in children's health coverage. In 1995, 10 million children in America
lacked health insurance. The President's children's health initiative will extend coverage to up to
5 million uninsured children by 2000.
Strengthening Medicaid for Poor Children
12-Month Continuous Eligibility. Currently, many children receive Medicaid protection
for only part of the year. The President's budget gives States the option to provide one year
of continuous Medicaid coverage to children. The budget invests $4.9 billion over five
years for this health insurance.
Outreach. The President also proposes to work with the Nation's Governors,
communities, advocacy groups, providers and businesses to develop new ways to reach out
to the 3 million children eligible but not enrolled in Medicaid.
Building Innovative State Programs for Children in Working Families
State Partnership Grant Program. The President's budget provides $3.8 billion between
1998 to 2002 ($750 million a year) in grants to States. States will use these grants to
provide insurance for children, leveraging State and private investments in children's
coverage through a matching system (as in Medicaid). States have flexibility in designing
eligibility rules, benefits (subject to minimums set by the Secretary) and delivery systems.
The Federal grants, in combination with State and private money, will cover children
whose families earn too much to qualify for Medicaid but too little to afford private
coverage. The grant program will also increase Medicaid enrollment since some families
interested in the new program will learn that their children are in fact eligible for Medicaid.
Continuing Coverage for Children Whose Parents are Between Jobs
Workers Between Jobs Initiative. Nearly half of all children who lose health insurance
do so because their parents have lost or changed jobs. The President's budget will give
States grants to cover workers between jobs, including their children, at a cost of $9.8
billion over the budget window. The program, which is structured as a four-year
demonstration, will offer temporary assistance (up to 6 months) to families. This
assistance may be used to purchase coverage from the worker's former employer (through
COBRA) or other private plans, at States' discretion.
The President's budget also makes it easier for small businesses to establish voluntary
purchasing cooperatives, increasing access to insurance for workers and their children.
THE PRESIDENT'S FY 1998 BUDGET:
CHILDREN'S HEALTH INITIATIVE
BACKGROUND
Numbers and Trends
Who Are Uninsured Children and Why Are Children Uninsured
Challenges to Covering Children
THE PRESIDENT'S CHILDREN'S HEALTH INITIATIVE
Medicaid Improvements for Children
State Partnership Program for Children
Workers Between Jobs Initiative
Welfare Reform Policies Related to Children
BACKGROUND
Numbers and Trends
2
One in Seven Children Are Uninsured
Uninsured
14%
9.8 million
16 5 5million
Medicaid
44.8 million
23%
Private
63%
Source: March 1996 Current Population Survey. Children are less than 18 years old.
3
While the Proportion of Uninsured Children Remains
Constant, Medicaid & Employer Coverage Have Changed
100%
13%
Uninsured
14%
80%
16%
Medicaid
23%
60%
40%
Employment-Based
67%
Coverage
59%
20%
0%
Other
1987
1995
Note: While it appears that the children losing employer coverage gained Medicaid coverage, recent studies suggest that this is not the case.
Medicaid increased coverage of poor children who do not have access to employer insurance.
Source: EBRI 1997. Children are less than 18 years old.
4
The Number of Uninsured Children Above Medicaid
Eligibility Has Increased
9.8 million
10
(14% of Children)
8.5 million
(13% of Children)
8
5.1
3.3
Above 133 Percent of
million
million
6
Poverty
4
52
At or Below 133 Percent
47
2
million
of Poverty
million
0
1987
1995
Note: Beginning in 1990, states were required to cover children under 6 to 133% of poverty and phase in coverage for children 6 through 18 below poverty. In 1995, children up to age
13 were eligible for Medicaid. Many states have used options to cover children at higher incomes.
Source: EBRI, 1996
5
Who Are Uninsured Children and Why Are Children Uninsured
6
Uninsured Children Come From Working Families
Non-Working
Parents
13%
Working Parents
87%
Note: 62% of uninsured children have parents who work full year, full time
7
Source: March 1996 Current Population Survey. Children are less than 18 years old.
Not All Uninsured Children Are Poor
("Poverty" is about $16,000 for a family of four)
200% of Poverty
Poor:
and Above
Under 100% of Poverty
30%
34%
Near Poor:
100-200% of Poverty
36%
Source: March 1996 Current Population Survey. Children are less than 18 years old.
8
Why Are Children Uninsured
1.
Eligible but not enrolled in Medicaid. According to the General Accounting Office, an estimated
3 million uninsured children are eligible but not enrolled in Medicaid.
2.
Parents earn too much for Medicaid but too little for private coverage. When job-related
insurance loss is put to the side, the most important reason why children lose insurance is that it is
too expensive for the family. The highest rate of uninsured children is in families just above the
poverty line.
3.
Parents change jobs. Nearly half of all children who lose health insurance do so because their
parents lose or change jobs
9
What Is the Distribution of Uninsured Children By Income
100%
14% Private
(2.1 million)
50% Private
80%
22% Uninsured
(8.0 million)
(3.3 Million)
87% Private
(34.7 million)
60%
64% Medicaid
23% Uninsured
40%
(9.8 million)
(3.6 Million)
20%
27 % Medicaid
(4.3 million)
7% Uninsured
(2.9 Million)
6% Medicaid
0%
Poor
Near Poor
Middle Class
(15.2 million)
(15.9 million)
(40 million)
"Poor" means < 100% of poverty; "Near Poor" means 100-199% of poverty; "Middle Class" means > 200% of poverty. "Private" includes nongroup and other coverage. * 2.4 million
Note: The number of children covered by Medicaid is less than 18 million due to under-reporting on this survey. Source: March 1996 Current Population Survey.
Challenges to Covering Children
Costs. Although children are the least expensive population to insure, proposals to cover them
can be expensive. This results from two major challenges:
Substitution or "crowd out". Costs rise when a new program substitutes Federal dollars for
employer or state contributions for kids' coverage.
Administration. Proposals have to strike a balance between complex administrative rules and
enforcement - which aim to limit crowd out - and the goals of simplicity and small government.
11
THE PRESIDENT'S CHILDREN'S HEALTH INITIATIVE
Medicaid Improvements for Children
The President's budget gives States the option to provide one year of continuous Medicaid
coverage to children. This will cost an estimated $3.7 billion between 1998 and 2002 and help an
estimated one million children.
Currently, many children receive Medicaid protection for only part of the year. Medicaid
eligibility is intermittent due to fluctuations in family income throughout the year.
This policy allows States to guarantee Medicaid coverage for up to one year even when a
family's income changes. This means that children can remain with the same provider for up
to a year, improving continuity of care.
The President will also work with Governors to enroll eligible Medicaid children. The
President also proposes to work with the Nation's Governors, communities, advocacy groups,
providers and businesses to develop new ways to reach out to the 3 million children eligible but not
enrolled in Medicaid.
The President's budget preserves and strengthens Medicaid's guaranteed coverage for low-
income children. In addition to protecting coverage for the 18 million children already on
Medicaid, the President continues the current law expansion to children aged 13 to 18.
12
State Partnership Program for Children
The President proposes a grant program for States to develop innovative health coverage
programs for children. The President's budget provides $3.8 billion between 1998 and 2002
($750 million a year) in grants to States. States will use these grants to provide insurance for
children, leveraging State and private investments in children's coverage through a matching
system.
The Federal grants, in combination with State and private money, will target uninsured children
whose families earn too much to qualify for Medicaid but too little to afford private coverage.
States have flexibility in designing eligibility rules, benefits (subject to minimums set by the
Secretary) and delivery systems. In return for this flexibility, States will provide annual evidence of
positive outcomes of the grant money - including the number of previously uninsured children
helped by the program.
The program builds upon the successful efforts of States that have tailored programs to address
the particular gaps in coverage for their children. For example, the Florida Healthy Kids program
enlists schools to enroll and insure 40,000 previously uninsured children.
13
Workers Between Jobs Initiative
The President's budget will give States grants to temporarily cover workers between jobs,
including their children, at a cost of $9.8 billion over the budget window.
The initiative will offer temporary assistance (up to 6 months) to families who would otherwise lose
their coverage. This assistance may be used to purchase coverage from the worker's former
employer (through COBRA) or other private plans, at States' discretion. State participation in this
grants program is optional.
Families are eligible for full premium assistance if their monthly income is below 100 percent of
poverty, and partial premium assistance if their income is below 240 percent of poverty. This
assistance is accessible for most middle class families since income drops for the months between
jobs.
This program, which is structured as a four-year demonstration, will help an estimated 3.3 million
working Americans and their families, including 700,000 children, in any given year.
14
FY 1998 President's Budget Medicaid Proposals:
Welfare Reform Policies Related to Children
Retain Medicaid for Disabled Children who Lose SSI
The President's proposal would retain Medicaid coverage for children currently receiving Medicaid who lose their
Supplemental Security Income (SSI) benefits because of changes in the definition of childhood disability.
The welfare law provides a new definition of disability for children separate from that for adults. The comparable
severity standard was repealed and replaced with a new, statutory definition of disability for children¹. The new
statutory definition requires a child's impairment or combination of impairments to cause more serious functional
limitations in order to be considered disabled than did the old law.
Under current law, many of these disabled children could lose their Medicaid coverage if they lost their SSI cash
assistance due to the new definition and could not requalify for Medicaid based on poverty standards for Medicaid
eligibility. States are required to perform a redetermination of Medicaid eligibility in any case where an individual
loses SSI and that determination could affect the individual's Medicaid eligibility.
HCFA's Office of the Actuary (OACT) estimates Federal Medicaid costs of $0.3 million between FY 1998 and FY
2002. This provision would retain Medicaid coverage for approximately 30,000 disabled children in FY 1998.
CBO estimates Federal Medicaid costs of $1.0 billion between FY 1998 and FY 2002.
1 Before P.L. 104-193, a child was considered disabled for purposes of eligibility for SSI if he or she suffered from any medically
determinable physical or mental impairment of "comparable severity" to an impairment(s) that would make an adult disabled.
15
Exempt Immigrant Children from the Medicaid Bans and Deeming
The President's budget would exempt immigrant children from the bans on Medicaid eligibility for
current and future "qualified aliens." Immigrant children would also be exempt from the new deeming
requirements that require the income and resources of an immigrant's sponsor to be counted when
determining Medicaid eligibility.
Under current law, immigrant children could lose their Medicaid eligibility if a state chose to deny
Medicaid assistance to immigrants who resided in the U.S. on or before August 22, 1996.
Immigrants who enter the country after August 22, 1996 are banned from receiving Medicaid for five
years. Current law also requires deeming the income and resources of their sponsors for
determining Medicaid eligibility.
OACT estimates Federal Medicaid costs of $0.2 billion between FY 1998 and FY 2002. This
provision would retain Medicaid coverage for approximately 30,000 non-disabled children in FY 1998.
CBO estimates Federal Medicaid costs of $0.4 billion between FY 1998 and FY 2002.
17
UNINSURED CHILDREN IN AMERICA:
THE FACTS AND THE FUTURE
PRELIMINARY DRAFT
FOR REVIEW ONLY
THIS HAS NOT YET INCORPORATED ALL OF THE EDITS
CITATIONS, TECHNICAL APPENDIX FORTHCOMING
NOTE: PRELIMINARY DRAFT, May 18, 1997: #2
HIGHLIGHTS
I.
UNINSURED CHILDREN: A SERIOUS PROBLEM IN THE UNITED STATES
About 10 million children under age 18 are uninsured.
However, fully 20 million children are uninsured for at least one month
over the course of a 28-month period.
Lack of insurance has become a middle class problem. The number of
uninsured children above 133 percent of poverty (about $21,000 for a family of
four) has risen by over 50 percent since 1987. Today, almost 90 percent of
uninsured children have a parent who works.
Uninsured children have worse access to health care. One in 5 uninsured
children who are sick delays or does not receive needed care.
The United States ranks poorly when compared to other nations. It:
Remains the only industrialized nation that does not extend basic health
protection to its children;
Ranks 22nd in its infant mortality rate, 26th for its low birth weight babies,
and 22nd for its infants' probability of dying before turning 5 years old.
11.
THERE IS NO SINGLE REASON WHY CHILDREN ARE UNINSURED
Poverty alone cannot explain the lack of insurance. About one-third are
poor, one-third have income between 100 and 200 percent of poverty, and
another third have income above 200 percent of poverty.
The three main reasons why children are uninsured include:
Lack of access to employer-based insurance
-
Health coverage is typically not offered in:
Small businesses: The number of children with parents in small
firms has increased by 20 percent since 1987; today, 46 percent of
uninsured children have parents who work in small firms.
Certain types of firms: Employment has also shifted to firms less
likely to offer insurance. About 25 percent of children of workers in
the service, construction, and agriculture sectors are uninsured.
Part-time employment: Part-time workers are often ineligible for
health insurance; 22 percent of their children are uninsured.
NOTE: PRELIMINARY DRAFT, May 18, 1997: #2
1
Change in employment leads to loss of coverage. Over half of
children became uninsured because their parents lost or changed
jobs.
-
Unemployment can cause coverage loss. About 42 percent of
children whose parents left a job with health insurance and became
unemployed became uninsured.
Lack of affordability of insurance
-
Employer-based insurance can be expensive, as is
individually purchased insurance. Over three-fourths of families
who do not take employer-based insurance when offered cannot
afford it.
Problems accessing existing programs
-
Eligible but not enrolled in Medicaid. About 3 million children at
any point in time are eligible but not enrolled in Medicaid.
-
Limited size of state programs. While over 30 states have either
a state-funded or a private children's health program, few are large
and almost all have waiting lists.
III.
LESSONS FROM MEDICAID, STATES AND THE 1990 TAX CREDIT
Medicaid has made important inroads into children's health coverage.
Beginning in 1990, Medicaid began covering all poor children. Between 1987
and 1995, the number of poor, uninsured children declined by about 10 percent,
with much larger reductions in the South.
Some states have used innovative programs to target uninsured children.
A number of states have private or state-funded programs to expand coverage to
children. These experiences suggest that efficient, creative programs can cover
uninsured children without causing major substitution of existing coverage.
The 1990 child health tax credit does not appear to have improved
coverage. The child health tax credit was difficult to administer, had low
participation rates, and may not be the best way to improve children's coverage.
IV.
CONCLUSION
Carefully designed policies can improve health coverage for American
children. A sharp focus on the causes of the problem and the lessons learned
from past efforts can lead to policies that expand children's health coverage.
NOTE: PRELIMINARY DRAFT, May 18, 1997: #2
2
I.
UNINSURED CHILDREN: A SERIOUS PROBLEM
While the United States has the best health care system in the world, the key to
accessing it is health insurance. Although there are systems to care for people without
coverage, the facts show that the uninsured have greater problems getting needed
health care.
A. THE NUMBERS OF UNINSURED CHILDREN
One in seven right now. In recent years, one in seven children - about 10 million
children under 18 years old - lack health insurance at any point during the year. This
represents one in seven children or 14 percent of all children. This proportion has
remained about the same for the last 10 years. (For details on uninsured children's
characteristics, see "Census Bureau Releases New Findings on Health Insurance
Coverage for Children in the U.S.", 3/13/97.)
One in three over the course of two years.
Chart 1. More Children Are
Yet, looking at more than a snapshot suggests
Uninsured Over Longer Time
40%
Frame
that the problem is much larger. Over a 28-
30%
month period, the proportion of children who
30%
spent some time without insurance rises to
20%
14%
nearly one in three children (Chart 1). In other
10%
words, 20 million American children spent at
0%
During the
Over 28
least one month without health insurance over
Year
Months
the course of two-years (Census, 1996).
Source: Census Bureau, Current Population Survey and SIPP
Problem increasing for middle class families. While the proportion of children who
are uninsured has remained relatively
constant, this masks an underlying trend.
Chart 2. The Number of Uninsured
The number of poor, uninsured children
Children Above Poverty Has Increased
10
9.8 Million
has been decreasing while the number of
8.5 Million
8
middle class uninsured children has been
3.3
>133 %Poverty
5.1
6
increasing. The number of uninsured
4
children above 133 percent of poverty has
5.2
%Poverty
2
4.7
risen from 3.3 to 5.1 million - more than a
50 percent increase between 1987 and
0
1987
1995
1995 (Chart 2).
Source: EBRI analysis of the 1988 & 1996 CPS
NOTE: PRELIMINARY DRAFT, May 18, 1997: #2
3
B. WHAT IT MEANS TO BE UNINSURED
Despite their general good health, children have a special set of preventive and
primary care needs. Children are generally healthy. Only about 3 percent of children
have fair or poor health, relative to 8 percent of 25 to 44 year olds, and 28 percent of
people 65 years and older (NCHS, 1995). Yet, children tend to have more acute
illnesses than adults. Children under 5 years old experienced an average of 3.6 acute
illnesses per child in 1994, relative to 2.2 illnesses per child 5 through 17 years and 1.1
per adult 45 years and older (NCHS, 1995). Children also require immunizations in the
early years of life to prevent lifelong health
Chart 3. Children In Poor Health Are
problems. Primary and preventive health care
More Likely to Have Learning
for children allows them to develop to their full
40%
Problems
30%
capacity (CEA, 1997). In fact, when asked
what indicates that a child is ready for
kindergarten, teachers overwhelmingly
20%
responded that the most essential factor is a
10%
child's physical health (NCES, 1996). Children
in poor health are three times more likely to
0%
Good Health
Poor Health
experience difficulties in learning than healthy
Source: CDC/NCHS National 1994
children (Chart 3).
Uninsured children have more difficulty getting health care. About 86 percent of
children have some type of health coverage.
For children without insurance, Federal, state
Chart 4. More Uninsured Children
and local governments have developed a set of
30%
Have No Usual Source of Care
"safety net" or publicly supported providers,
21%
including community health centers, public
20%
health departments and children's hospitals.
10%
5%
These providers give critical health services to
3%
children with and without insurance (see
0%
Uninsured
Medicaid
Private
Appendix A for details). Despite these systems,
Source: CDC/NCHS, National Health Interview Survey, 1995
one in five uninsured children has no usual
source of health care (Chart 4).
The lack of access appears to lower the use
Chart 5. Uninsured Children <6
of care as well. Young children usually visit
Less Likely to See A Doctor
doctors at least once a year for preventive and
15%
15%
primary care, since they often experience
8%
10%
frequent, minor illnesses at this age. However,
15 percent of uninsured children less than 6
5%
years old did not visit a doctor at all in the past
0%
Uninsured
Private
year compared to 8 percent of insured children
Source: CDC/NCHS, National Health Interview Survey, 1995
(NCHS, 1997a).
NOTE: PRELIMINARY DRAFT, May 18, 1997: #2
4
The problems of uninsured children grow worse when they get sick. Uninsured
children are more than four times as likely to
Chart 6. Uninsured, Sick Children
delay or not receive needed care as are insured
Are More Likely to Delay or Not Get
30%
children (Chart 6). Over 40 percent of acute
Needed Care
20%
conditions for uninsured kids went unattended
20%
as compared to about 30 percent for privately
10%
5%
insured children (NCHS, 1997b). This is
consistent with other studies that have found
0%
Uninsured
Medicaid &
that health insurance is essential to connecting
Private
Source: CDC/NCHS, National Health Interview Survey, 1995
children with the health care system (Donnelan,
1996).
The United States stands alone. The United States leads the world in many
important respects, including size of the gross domestic product (GDP) (WHO, 1997)
and real level of family income (Luxembourg Income Study, 1995). However, the
United States is the only industrialized
country that does not extend health
Chart 7. Ranking of the U.S. In Child Health Statistics
protections to its children. Through
some combination of regulated private
Highest Total Health Spending as Percent of GDP:
1st
Highest Public Spending on Health as Percent of GDP:
13th
insurance, compulsory coverage for
Highest Percent of Infants Immunized for DPT:
30th
lower-income workers, and publicly
Highest Percent of Infants Immunized for Measles:
52th
Lowest Infant Mortality Rate:
22nd
provided benefits, other industrialized
Lowest Percent of Babies who are Low Birthweight:
26th
nations have ensured that all children
Highest Life Expectancy at Birth:
12th
Lowest Odds that a Newborn Dies before Reaching 5 yrs:
22nd
have basic health coverage (Williams &
Highest Mortality Rate Due to Violence for Children 0-24:
1st
Miller, 1992; OTA, 1993). These
Lowest Child Poverty After Taxes and Transfers:
18th
countries also do more to lift their
Sources: WHO, 1997; OTA, 1992; Rainwater & Smeeding, 1995
children out of poverty; a survey of 18
industrialized nations found that the
U.S. had the highest child poverty rate even after taxes and transfers (Rainwater &
Smeeding, 1996). And while it is first in the world in its health spending, it ranks 13th in
its public spending on health as a percent of GDP (Chart 7). [check immun. stats]
The United States also ranks low on child health statistics. The United States does
not lead other nations in any of the major child
Chart 8. Infant Deaths per 1,000 Live
health indicators. Its immunization rates, while
Births in Selected Countries
8
improving, still are worse than most
8
7
6
industrialized nations. Twenty-one nations
6
4
have lower infant mortality rates than the U.S.
4
and 25 have fewer low birthweight babies
2
(Chart 8). Babies born in the United States
0
have lower life expectancies than 10 other
Japan,
Canada,
Slovenia,
U.S.
Singapore
Australia
Italy
nations, and are more likely to die of violence
Source: World Health Organization, 1997
than in any industrialized nation (OTA, 1992).
NOTE: PRELIMINARY DRAFT, May 18, 1997: #2
5
System failure. The number of uninsured children in the United States is particularly
alarming because there are systems in place to insure them. The United States has
developed a unique, employer-based health insurance system that covers 60 percent of
the nonelderly population. Preferential tax treatment valued at more than $60 billion
per year is intended to encourage health coverage in this way. Additionally, Medicaid,
the joint Federal-state health insurance program, offers coverage to virtually all poor
children who do not usually have access to employer-sponsored insurance. Yet, as
described in greater detail below, about 87 percent of uninsured children have working
parents, and nearly 3 million children are eligible but not enrolled in Medicaid. This
leads to the question: why are there large gaps in the health insurance system for
children?
II.
THERE IS NO SINGLE REASON WHY CHILDREN ARE UNINSURED
Probably the largest challenge in covering uninsured children stems from the fact that
there is no single cause of the problem. Uninsured children are not a homogenous
group, nor are there one or two distinct reasons why children are uninsured. One third
are near poor (100-199% of poverty),
Chart 9. Uninsured Children By
suggesting that the family probably earns too
Income
much to qualify for Medicaid but too little to
Poor
afford private insurance. In fact, nearly one in
34%
Middle Class
five children of these children are uninsured
30%
(CPS, 1996). Another one-third of uninsured
children have family income above 200
Near Poor
percent of poverty (Chart 9). While every
36%
uninsured child has his or her own reasons
Source: March 1996 Current Population Survey
for being uninsured, several patterns emerge.
Children appear to be uninsured because of:
Lack of access to employer-based insurance
Lack of affordability of insurance
Problems accessing existing programs.
A. LACK OF ACCESS TO EMPLOYER-BASED INSURANCE
Employers play a central role in providing health insurance to workers and their
families. Over 60 percent of nonelderly Americans are covered through employer-
based plans. In 1994, employers paid for about one-fifth of all health expenditures
accounting for 6.7 percent of all compensation (Cowan et al., 1996; DOL, 1995).
NOTE: PRELIMINARY DRAFT, May 18, 1997: #2
6
Nearly all of uninsured children have a connection to the workforce. Most
employers cover their workers' children. About 60
Chart 10. Uninsured Children
percent of children have employer-based health
Come from Working Families
insurance (CPS, 1996). However, most uninsured
Non-
Working
children also have parents who work as well.
Parents
Nearly 90 percent of uninsured children's parents
Working
Parents
work, and about two-thirds of uninsured children
87%
have parents who work full time (Chart 10).
Note: 62 %of uninsured children's parents work full-year, full-time
Source: March 1996 Current Population Survey
Many uninsured children's families work in businesses without health coverage.
Many workers and their children lack insurance because their employers do not offer it
to them. Nearly 20 percent of all children with
working parents do not have the option of
family coverage through work (NCHS, 1997b).
Chart 11. More Than Half of
Uninsured Children's Parents Who
In contrast, more than half of uninsured
Work Aren't Offered Health
children with working parents are not offered
Insurance
health coverage through work (Chart 11). This
Parents
Not Offered
Covered
is especially true for low-income workers.
55%
25%
Nearly 70 percent of uninsured children of
workers below poverty and 51 percent of
Offered but
uninsured children of workers between 100 and
Declined
20%
200 percent of poverty are not offered
Source: CDC/NCHS, National Health Interview Survey, 1994
employer-based insurance (NCHS, 1997b).
These families are most likely to work in (1) small businesses, (2) industries like
services and construction; and (3) and part-time jobs.
1. Small businesses are less likely to offer insurance. Children whose parents work
in firms with fewer than 25 employees are more than twice as likely to be uninsured as
those whose parents work in medium to large firms (Chart 12). This is especially true
for low-income children. Over 35 percent of children whose parents work in small
businesses and earn between 100 and
Chart 12. Children with Parents in Small
200 percent of poverty are uninsured,
Firms More Likely to Be Uninsured
22%
compared to 20 percent of children with
25%
20%
17%
family income between 200 and 299
12%
15%
9%
percent of poverty and 10 percent of
10%
7%
children with incomes of 300 percent of
5%
0%
poverty or more (CPS, 1996). Children of
<25
25-99
100.
500-
1,000 +
self-employed parents also frequently lack
499
999
Source: March 1996 Current Population Survey
insurance; about 23 percent are uninsured
(CPS, 1996).
NOTE: PRELIMINARY DRAFT, May 18, 1997: #2
7
Small businesses pay much more for group insurance. A central problem with the
employer-based health insurance system is that the same coverage is more expensive
for small groups. When a small business wants to purchase health insurance for its
employees, it is faced with higher premiums. Insurers charge higher premiums
because the administrative costs and risk of covering fewer employees are greater. As
a consequence, only about 40 percent of employees in businesses with fewer than 10
employees were offered coverage in 1993, compared to about 70 percent of employees
in firms with 10 to 24 employees, and nearly 100 percent of employees in firms with 100
or more employees (NEHIS, 1993).
More children's parents work in small businesses. In 1988, 40 percent of
uninsured children had parents who worked in small firms; in 1995, this rose to 46
percent (Chart 13). This did not result from an increased rate of uninsured kids among
employees of small businesses. In fact, in both 1987 and 1995, about 22 percent of
children with workers in small firms were
uninsured. However, since the last
Chart 13. Uninsured Children in Small
decade, there has been a very large
Firms: 1987 & 1995
50%
46%
increase in the number of workers with
40%
40%
1987
1995
children in small businesses. The total
number of children whose parents work in
30%
23%
22%
firms with fewer than 25 employees
20%
increased by over 20 percent between
10%
1987 and 1995 (CPS, 1988; 1996). In
0%
Rate of
Proportion of
contrast, the number of children with
Uninsured in
All Uninsured
parents working in medium and large firms
Small Firms
Kids in Small
Source: March 1988 & 1996 Current Population Survey Firms
dropped over the same period.
2. Companies in certain types of industries are less likely to offer insurance.
Certain industries are less likely to offer coverage than others. Specifically, the rate of
uninsured children whose parents work in the service (e.g., restaurants, hair cutters),
construction and agriculture sectors is about twice as high as that for kids with parents
in other types of jobs (Chart 14). In part, this reflects the fact that many of these
businesses are small or have low-wage, part-time or part-year jobs. Nearly 60 percent
of children whose parents work in these
Chart 14. Uninsured Children by Parents'
types of jobs have incomes below 200
Place of Employment
30%
26%
27%
percent of poverty (CPS, 1996). It may
25%
also reflect the higher cost of insurance for
20%
these types of employers. Traditionally,
health insurers have "red lined" or charged
8%
10%
4%
higher rates for certain kinds of
businesses. While this practice has been
0%
Gov't
Financing
Constuct.
Services
Agriculture
limited in many states, it may still account
Source: March 1996 Current Population Survey
for some of the lack of insurance (cite).
NOTE: PRELIMINARY DRAFT, May 18, 1997: #2
8
Like the trend for small business employment, there is an increase in the number of
children with parents in service, construction and agriculture jobs - not an increase in
the rate of uninsurance in those industries. Over 20 percent more children had parents
working in these types of jobs in 1995 than in 1987 (CPS, 1996).
3. Part-time workers are less likely to be insured. Part-time and outsourced workers
have less access to employer-based health insurance. Many employers only offer
coverage to permanent employees or those who work more than 30 hours per week.
As a result, children of part-time workers are more likely to be uninsured. About 22
percent lack health insurance compared to 12
Chart 15. Children of Part-Time
percent of full-time workers' children (Chart
Workers Are More Likely to Be
15). This rate of uninsured children is slightly
Uninsured
25%
22%
lower than it was in 1987, when 26 percent of
20%
part-time workers' children lacked insurance.
15%
12%
However, there has been a slight increase in
10%
the number of children whose parents hold
5%
part-time work, dampening the effect of the
0%
lower rate of uninsurance. In 1995, about 8
Part Time
Full Year, Full
Time
percent of all children and 15 percent of all
Source: March 1996 Current Population Survey
uninsured children had a parent who worked
part-time (CPS, 1996).
Parents changing jobs often means children lose coverage. Given the strong link
between health insurance coverage and employment, it is not surprising that changes
in employment disrupt coverage. In fact, over half of uninsured children who had
coverage within the past three years lost their coverage because their parents lost or
changed jobs (Chart 16). This reason for losing insurance is more prevalent among
children whose parents work in small firms
- over 60 percent of these children lose
Chart 16. Most Children Who Had Insurance
coverage because of job change (NCHS,
and Lost It Did So Because Their Parents
Lost or Changed Jobs
1997b). It is also the reason 54 percent of
53%
uninsured children above 250 percent of
poverty and 58 percent with income
between 100 and 250 percent of poverty
lost coverage in 1994.
47%
Source: CDC/NCHS, National Health Interview Survey, 1994
NOTE: PRELIMINARY DRAFT, May 18, 1997: #2
9
Changing jobs leaves children with breaks in coverage. Probably because of job
transitions, over 50 percent of all children
Chart 17. Children of the Working Poor
between 100 and 200 percent of poverty
Are More Likely to Have Breaks in
51%
Insurance
had a lapse in their health insurance
60%
coverage over a 28-month period (Chart
40%
17). This compares to 16 percent of
16%
20%
children in families with income greater than
0%
200 percent of poverty.
100 200%of
> 200%of
Poverty
Poverty
Source: U.S. Bureau of the Census, SIPP, 1992-1994
For families who spend time unemployed between jobs, the problem is worse.
Some of the uninsured families who lose
insurance when their parents lose or change
Chart 18. Children of Unemployed
jobs do not immediately gain jobs and
Parents Often Become Uninsured
insurance. About 13 percent of uninsured
children have parents who are unemployed or
out of the labor force. Over 40 percent of
Uninsured
41%
children with unemployed parents who had
Insured
received employer-based insurance become
59%
uninsured (Chart 18). Most of these children
have parents who worked in manufacturing,
Source: RAND analysis of SIPP, 1989-1994
transportation, communication, or construction
jobs (RAND, 1997). The typical family spends
about [check] looking for a job.
Parents cannot afford insurance when unemployed. In part, the loss of insurance
for these children results from the dramatic change in family income during these
periods without work. When looking at
Chart 19. Poverty Status of Uninsured Children
uninsured children of unemployed
Whose Families Lost their Insurance When Their
Parents Lost Their Jobs
parents, only 20 percent were in poverty
80%
70%
when the parents worked while 70
60%
percent are in poverty when the parent
40%
loses his or her job (Chart 19). While
21%
these periods are usually short-lived,
20%
they are problematic because children
0%
Before
After
need preventive and primary care,
Source: RAND analysis if SIPP, 1989-1993
which may be neglected if there is no
coverage.
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10
COBRA and HIPAA are just first steps to helping insure children. Several policies
have been enacted to increase access to employer-based insurance for families who
are between jobs. In 1985, the Consolidated Omnibus Budget Reconciliation Act
(COBRA) required employers with 20 or more employees to allow former employees
and their families to buy into their health insurance plan for up to 18 months at their
group rate (but without an employer contribution plus an additional 2 percent for
administration costs). This is intended to give these families an alternative to the
expensive nongroup health insurance market. Further, in 1996, the Health Insurance
Portability and Accountability Act (HIPAA) limited preexisting condition exclusions and
other practices that bar children from re-entering group insurance when their families
change jobs. However, studies have shown that participation in COBRA is relatively
low (Flynn, 1992; Klerman & Rahman, 1992; Klerman, 1996), and if children whose
parents are between jobs spend enough time without insurance, they lose their recently
gained portability protections.
B. LACK OF AFFORDABILITY OF HEALTH INSURANCE
While access to insurance is important, it may not be sufficient. A growing number of
families cannot afford to purchase employer-based insurance. Furthermore, insurance
in the private, nongroup market can be prohibitively expensive. This suggests that
making insurance accessible is only the first step in covering children: making it
affordable is at least as important.
High cost of employer-based insurance. While employers typically pay for some of
their employees' family coverage, the family contribution can be expensive. Nearly
three-quarters of uninsured children whose parents were offered coverage at work are
uninsured because their families cannot afford coverage (Chart 20). In 1993, 16 percent
of employees paid $150 or more a month for family coverage (DOL, 1993). While
affordable for middle and upper class
Chart 20. Most Children with Access to
families, such premiums are often out of
Employer-Based Insurance Remain
range for low-wage workers. In part
Uninsured Because of Cost
because they face higher premiums, small
73%
businesses typically ask families to pay
more of the premium costs (DOL).
[ADD}
27%
Source: CDC/NCHS, National Health Interview Survey, 1994
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11
Family contributions are increasing. Between 1988 and 1993, the average family
contribution for employees in large firms
Chart 21. Employee Contributions
increased 20 percent faster than did the
to Family Policies Increased Faster
contribution for employee-only policies (Chart
than for Employee-Only Policies:
21). Part of this stems from rapid cost growth in
1988-1993
12%
12%
10%
family premiums. Family premiums grew 13 to
23 percent faster than did employee-only
8%
premiums between 1989 and 1996 (GAO, 1997).
4%
[ADD]
0%
Employee-
Family
Only
Source: U.S. GAO based on DOL data, 1997
Individual insurance is an option for families without access to employer-based
insurance but is expensive or may be hard to obtain. Families without access to
employer-based insurance may turn to the individual insurance market. About 4
percent of American children are covered by individual insurance (U.S. GAO,
November 1996). Through insurance agents, associations, or direct marketing, these
families can purchase one of a multitude of health benefits packages. The variation in
the individual market is huge, since premiums depend on the amount of cost sharing,
covered benefits and, in most cases, health status, age, and other sociodemographic
characteristics of the individual. This means that a large family or one with a sick child
will likely face premiums that are much higher than if obtained through a group. More
dramatically, in most states, applicants can be denied coverage based on health status.
Insurers in states without guaranteed issue and renewal in the individual market deny
nearly 20 percent of applicants (U.S. GAO, November 1996).
Family coverage is more expensive than children-only coverage. Additionally,
most policies offered in the individual market are for families, not for children alone.
This means that a family interested in insuring its children will likely be offered family
coverage, which can be three to five times as expensive as kids' only coverage.
However, even children's policies may be costly for low-income families. One analyst
estimated that the monthly premium for two children without their parents would be
about $100, or $1,200 per year (Lack, 1997). While affordable for most middle class
families, this represents a large proportion of income for a family just above Medicaid
eligibility (about $16,000 for a family of four).
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12
C. PROBLEMS ACCESSING EXISTING PROGRAMS
A third reason why children lack health insurance is that they do not or cannot take
advantage of available options. The Federal and state governments have developed
programs to help insure children. However, many families whose children would be
eligible for such programs are barred due to lack of information or lack of program
funding.
Medicaid has become a major insurer of children. Medicaid is the joint Federal-
state health insurance program that serves 37 million Americans, including over 18
million children. States are required to cover poor children under the age of 14 (for
1997) and will cover all poor children through 18 by 2002. Additionally, most states
have taken advantage of the options available to cover older and/or higher income
children (see Appendix B).
Many children are eligible but not enrolled in Medicaid. While most poor children
are eligible for Medicaid, about three million
Chart 22. Nearly 30%of Uninsured
uninsured children are not enrolled (Chart 22).
Children Are Medicaid Eligible
Researchers estimate that participation rates for
Eligible for
Medicaid-eligible children range from about 40 to
Medicaid
70 percent (Center on Budget, 1997; Urban
28%
72%
Institute, 1995). However, Medicaid in general
has the highest participation rate of all types of
Source: ASPE Analysis of March 1996 CPS
public assistance programs (Census, 1996).
Why children who are eligible for Medicaid remain uninsured. There is no
conclusive research on why eligible children without insurance do not enroll in this
program which offers free insurance. Suggested explanations include lack of
awareness of the option, the fear that work disqualifies children, the uncertainty of
Medicaid coverage, and the extent of states' outreach efforts.
Families' lack awareness of Medicaid eligibility. One of the main reasons why
children are not enrolled is that their families do not know that they are eligible. One
study that interviewed AFDC recipients - who are or were on Medicaid -found that 23
to 41 percent did not know that their children could remain on Medicaid if they lost
AFDC but remained poor (Shuptrine et al., 1994). A study of uninsured people in
Minnesota who were eligible for MinnesotaCare (the Medicaid buy-in program for low-
income families, described later) found that many were not certain if they were eligible
or did not know enough to be able to enroll (Call et al., 1996).
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13
Fear that work disqualifies them. Many workers do not know that their children may
qualify for Medicaid so long as their family
Chart 23. Most Uninsured
Children Who Are Eligible For
income is below poverty. In fact, most eligible
Medicaid Have Parents Who Work
(through poverty-related coverage) but
unenrolled children do have working parents
Unemployed
Full Time
19%
42%
(Chart 23). However, Medicaid's historical
connection as a "welfare" program may lead
Part Time &
families to believe that they are not eligible.
Seasonal
Source: ASPE Analysis 39% of March 1996 CPS
Uncertainty of Medicaid coverage. For a significant number of children, Medicaid
coverage does not last long. About 37 percent of children spend less than one year on
Medicaid (Chart 24). Short spells probably result from the Federal requirement that
monthly changes in income or family status must be reported, which can disqualify the
child from Medicaid. There appear to be many families whose incomes fall below and
rise above the poverty threshold regularly.
Over half of children eligible for Medicaid at
Chart 24. Children's Medicaid
some point during a 28-month period were
Coverage Over 28 Months
not continuously poor (and thus Medicaid
12 Mo. or
Longer than
24 Mo.
Less
eligible) but went in and out of poverty (ASPE,
40%
37%
1997). The family income for about half of
children on Medicaid for a short period of time
13-24 Mo.
is typically just above poverty when they are
23%
off Medicaid (ASPE, 1997).
Source: U.S. Bureau of the Census, SIPP, 1992-1994
States' emphasis on Medicaid outreach. The lack of awareness of eligibility for
Medicaid can be - and has been, in many states - addressed through outreach
efforts. The Medicaid program has requirements, options, and incentives for states to
reach out to eligible but unenrolled children. States have used a variety of these
measures, including simplified applications, mail-in applications, no assets test
(meaning only income and not assets like cars are counted toward eligibility), annual
rather than 6-month redetermination, and
Chart 25. States' Efforts to Simplify
outstationed eligibility workers (Chart 25). In
Applying for Medicaid
New York, for example, there is a single, one-
45
50
41
page application for both WIC and Medicaid. In
30
Ohio and Arkansas, coupon books are used as
States
25
an incentive for families to seek health care: if
they receive care, the provider validates the
0
coupon which may be used for discounted baby
Mail-In
Short
No Assets
Eligibility
Application
Test
care and health products. Many states have hot
Source: NGA, 1997
lines that direct families to needed health
services and media campaigns (NGA, 1997).
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14
State and private programs offer an option for many children's families. In over
30 states, families may have access to either a state run or a private program for
children's coverage. These programs have developed outside of Medicaid for a variety
of reasons, including their ability to limit the size of the program since there is no
entitlement; limit benefits; offer coverage at the county or city level; and use private
donations as a funding source. This flexibility has produced wide variation in the size
and scope of the programs. However, they are similar in that they target children who
are not eligible for Medicaid.
Outreach is central to these program. One of the features of these state programs
has been their innovative efforts to enroll children. In several programs, private
businesses helped advertise; for example, one fast-food restaurant used tray liners to
describe the program and several chain stores hung posters and distributed fliers.
Some states have solicited the help of church groups, parents' groups, and other
community-based organizations to educate families about eligibility. One program uses
school coaches and shop teachers to promote the program. In a state with a privately
sponsored plan, Blue Cross/Blue Shield produced radio and TV announcements using
college football coaches to encourage enrollment. Another state used Mister Rogers
television ads (U.S. GAO, 1996).
However, enrollment is low since budgets are limited. While these outreach efforts
have generally been successful, state and private programs may not cover all eligible
children due to funding limits. None of the state-funded or private programs are
entitlement programs, or programs that guarantee coverage for all children meeting the
eligibility criteria. Most programs have "enrollment caps" so that only a certain number
of children may be enrolled. Others limit the program's size through restricting where in
a state it is offered. According to a recent study, only half a million children are covered
through these programs (Gauthier & Schrodel, forthcoming).
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15
III.
LESSONS FROM MEDICAID, STATES AND THE 1990 TAX CREDIT
On the face of it, the problems that come with being uninsured, coupled with many
reasons why children are uninsured, seem difficult if not impossible to address.
Undoubtedly, no simple answer exists. However, there is considerable experience in
Medicaid and state programs that can tell us how to expand coverage. Additionally, a
child health tax credit was tried; its failure has implications for future attempts at using
this type of approach.
A. MEDICAID
When created in 1965, Medicaid was intended to consolidate spending for the low-
income elderly and public assistance recipients into one program. Children were
eligible for Medicaid if their family received cash assistance or were income eligible for
such assistance ("Ribicoff" children). Enrollment of children remained at about 10
million for the first 25 years of the program (HCFA, 1996). Beginning in the mid- to late
1980s, however, changes were made that began de-linking children's eligibility for
Medicaid from welfare. A series of bills first offered states the option of covering certain
groups of poor children, then required this coverage. This led to the final piece of
legislation, OBRA 1990, which made all poor children born after September 30, 1983,
are eligible for Medicaid.
Millions more children covered. Today, about 18 million children receive Medicaid
coverage. In 1995, a large proportion of poor children received Medicaid's basic health
protections (Chart 26). It also has been
Chart 26. Most Poor Children Are
instrumental in keeping the proportion of uninsured
Covered By Medicaid
76%
children from rising. As seen in Chart 2, the
72%
80%
63%
number of uninsured children below 133 percent of
52%
60%
poverty has fallen - probably because of Medicaid
40%
- while the number of children above this level
20%
has increased dramatically. Had Medicaid not
0%
been expanded, more children would likely be
Infants
1to 5
6 to 12
13 to 17
Source: March 1996 Current Population Survey
uninsured today.
Major improvements in children's coverage in the South. One of the most
pronounced effects of the Medicaid expansion occurred in the South. Southern states
have historically had low welfare eligibility levels, which leads to low Medicaid eligibility
levels. This meant that the Medicaid expansion to 100 percent of poverty was a larger
increase for these than for states with more generous welfare eligibility. In fact,
between 1989 and 1993, the number of Southern, uninsured, poor children declined by
over 60 percent for children ages 0 to 5 and nearly 40 percent for children ages 6 to 12.
At the same time, the number of uninsured poor children ages 13 to 18 - who were not
included in the Medicaid expansion - increased (Shuptrine & Grant, 1996). While
there is still a higher proportion of uninsured children in the South, the expansion has
reduced the disparity in children's coverage across the nation.
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16
Has Medicaid "crowded out" private coverage? One question raised about the
Medicaid expansion is whether all of the children gaining Medicaid were uninsured
before enrolling. Some families, faced with the choice of paying the family share of a
premium or enrolling their children in Medicaid, may chose the latter. This substitution
of public for private coverage is known as "crowding out". While almost all researchers
acknowledge that the incentive exists, there is some disagreement on the degree to
which this occurred (Cutler & Gruber, 1996; Dubay & Kenney, 1995; Shore-Sheppard,
1996; Yazici, 1996). However, evidence of a decline in the number of poor children
who are uninsured, as well as the fact that there is not that much private coverage for
families in Medicaid eligibility range, suggests that if it did occur, it was not on a large-
scale basis.
Medicaid improves access to care. While Medicaid children do not have the same
level of access to care that privately insured children do, they are better off than
uninsured children on all measures. Only 5 percent of children with Medicaid lack a
regular source of care, compared to 20 percent of uninsured children (NCHS, 1997a).
Whereas 20 percent of uninsured children
Chart 27. About the Same
delays or does not get needed care, only 6
Proportion of Medicaid As Privately
Insured Children Delay or Do Not
percent of Medicaid children experience these
Get Needed Care
problems (Chart 27). One study found that
6%
6%
5%
children with Medicaid coverage had significantly
4%
more preventive care visits than did uninsured
children (Gavin & Bencio, 1995). Another found
2%
that for illness-related care (physician visits and
0%
Medicaid
Private
hospitalization), Medicaid children appeared to
Source: CDC/NCHS, National Health Interview Survey, 1995
have better access than uninsured children
(Gavin & Bencio, 1996).
B. STATE EXPERIENCES
In addition to their role in Medicaid, many states have expanding coverage to children
through state-funded or private programs. From these experiences, different lessons
may be learned. The approach that each state has taken is unique, reflecting its
particular problem, availability of funding, and health care system among other factors
(see Appendix B). The following is a description of several of the largest programs (in
alphabetical order) that have been operational for several years and have been
evaluated for their preliminary successes and failures.
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17
Florida
School-based system. Using schools to educate and enroll children, the Florida
Healthy Kids program began as a demonstration in one county and has expanded to 13
counties, with plans to expand further. This program offers comprehensive coverage to
uninsured children aged 5 to 19 and, in some counties, their pre-school siblings.
Parents pay a sliding-scale premium for the coverage; the amount of the premium is
determined by a child's eligibility for the School Lunch Program. There is no upper
income limit for participation. Families with incomes above 185% of federal poverty pay
the full premium. Services are funded by a mix of state, local public and private funds,
and family premiums.
Not displacing private insurance. About 40,000 children are covered through the
Florida Healthy Kids program. Almost all of the
Chart 28. Previous Insurance
children were uninsured before enrolling (Chart
Status of Children Enrolled in
28). Of the 7 percent of children who were
Florida Healthy Kids
insured, 94 percent had been on Medicaid. This
Medicaid &
suggests that the program is not serving as a
Other
7%
substitute for existing coverage, but is efficiently
Uninsured
93%
targeting uninsured children. About 80 percent of
the children are in families with incomes below
Source: Florida Institute for Child Health Policy (check)
185 percent of poverty.
Lower emergency room use. An evaluation of the original demonstration project
found that children enrolled in Florida Healthy Kids program were much less likely to
use emergency rooms. It also found that the health care utilization patterns of these
children more closely resembles those of privately insured than Medicaid covered
children (Abt, 1996). This suggests that the program is not attracting "bad risks" and is
successful at insuring children without creating excessive demand. The program has
received a grant from the Robert Wood Johnson Foundation to promote replication in
other states, and also recently received an Innovations in American Government award
from the Ford Foundation and Harvard University.
Minnesota
Evolution from a small state program to a large Medicaid expansion. In the late
1980s, Minnesota established the Children's Health Plan that offered subsidized
coverage to uninsured children. In 1992, it replaced this program with MinnesotaCare
that covers children as well as some uninsured adults. Minnesota is using an 1115
Medicaid waiver to cover children and pregnant women enrolled in MinnesotaCare; the
state finances its share of the program through a 2 percent provider tax.
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18
Nearly 50,000 children covered. As of July 1995 MinnesotaCare covered
approximately 44,000 children. They receive comprehensive benefits provided through
the state's network of Medicaid providers. Children are eligible if (1) their family income
is below 275 percent of the federal poverty level, (2) they are uninsured for four months
prior to enrollment, and (3) are ineligible for employer-subsidized insurance (where the
employer subsidizes at least 50 percent of the cost of the premium). Exceptions to the
disqualifications are made for children with income less than 150 percent of poverty.
One study found that only 2.8 percent of MinnesotaCare participants gave up private
employer-based insurance to join (Lurie et al., 1995).
Positive attitude toward MinnesotaCare. One of the concerns about publicly
subsidized programs is stigma: the negative "welfare"
Chart 29. Good Feeling About
association with such a program that can discourage
Contributing to Costs of Health
enrollment. In a study of enrollees of
Insurance in MinnesotaCare
MinnesotaCare, however, researchers found that
enrollees felt positive about the program (Lurie et al.,
Agree
Neutral,
1995). About 85 percent of enrollees responding to
96%
Disagree
4%
the survey felt as though they were treated like
anyone else. They also felt good about toward
Source: Lurie et al., 1995
contributing to the cost of coverage (Chart 29).
New York
Insurer-based children's program. New York's Child Health Plus program was
enacted in 1990, became operational in 1991, and was expanded in June 1996 to
cover additional age groups and include inpatient services. Unlike most states, New
York pays direct subsidies to 15 participating insurers to provide health insurance
coverage to children meeting eligibility criteria. Children are eligible for Child Health
Plus if they (1) are under the age of 19, (2) reside in New York State in a household
having a gross income at or below 222 percent of the federal poverty level, (3) are not
eligible for Medicaid, and (4) do not have equivalent health coverage. This is the
largest state program; the funding appropriated for 1997 is $109 million. The program is
funded by the Statewide Health Care Initiatives Pool as well as from premium
contributions from families.
Enrollment is expanding. In September 1996, about 110,000 children were enrolled
in Child Health Plus. About 383,000 children will be eligible for enrollment after the
expansion of age limits (to include ages 15-18 years old). Families whose incomes are
between 160 and 222 percent of poverty pay $25 per child per year (up to a $100
maximum per family per year). Families with gross incomes that exceed 222 percent of
the federal poverty level can purchase Child Health Plus for the cost of the full premium
(ranging from $498 to $798 per year). The program provides comprehensive primary,
preventive, outpatient care, inpatient care (in the process of implementation),
prescription drugs and therapeutic services, with no pre-existing condition exclusions.
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19
Fills important gaps in insurance coverage for children. An evaluation of the Child
Health Plus program found that the program filled an important, unmet need. As
indicated in national statistics, most children
Chart 30. Reasons Why NY Child
enrolled in the program had become uninsured
Health Plus Enrollees Became
because their parents lost or changed jobs;
Uninsured Before Enrolling
others lost Medicaid or could not afford coverage
Other
9%
(Chart 30). The evaluation also found significant
Cannot
Parent Job
Afford
Change
improvements in access and quality of care. For
24%
45%
example, parents of children with asthma
Los
Medicaid
reported that their children received more
22%
primary and specialist visits, and that the health
Source: Szigalyi et al., 1996
status of their child had improved (Szilagyi et al.,
1996).
Pennsylvania
Seamless health coverage for children. One of the earliest state programs for
children developed in western Pennsylvania. In 1985, steel mills in that region shut
down, leaving many children and their families without insurance. In response, the
Western Pennsylvania Caring Foundation was created by local ministers in cooperation
with Blue Cross of Western Pennsylvania. It began by providing only preventive and
primary care, but now provides comprehensive coverage. Pennsylvania now has a
three-tiered, comprehensive, seamless
insurance program for children (Chart 31). The
Chart 31. Eligibility for
Pennsylvania's Children's Health
first tier is Medicaid, which covers poor children.
Programs
The second is the Children's Health Insurance
250%
200%
Caring Program
Program (CHIP), funded by a dedicated two-
150%
CHIP
cent state cigarette tax and administered by the
Poverty
100%
Caring Foundations. Third, the Caring Program
50%
subsidizes children who fall between Medicaid
0%
o
2
4
6
8
10
12
14
16
18
and CHIP eligibility and 235 percent of poverty.
Age
The Caring Program is funded by BC/BS and
Source: Pennsylvania programdata
private donations.
Successful outreach. Currently, approximately 50,000 children are enrolled in these
programs and there is a waiting list of 5,000 children. Children receive comprehensive
benefits, and families above 185 percent of poverty contribute toward this coverage.
The state's high participation is due to aggressive outreach. For example, members of
the Pittsburgh Steelers football team have been active in educating families about their
eligibility. [add information from J. Lave evaluation; other state caring programs.]
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20
C. 1990 CHILD HEALTH TAX CREDIT
The tax system offers an alternative to state administration of subsidies for health
coverage. Today, most insured Americans benefit from preferential tax treatment of
health insurance. Extending deductibility of health insurance or creating a tax credit for
children's health coverage could encourage some families to insure their children.
The use of child health tax credits was tried in 1991 to 1992. The Omnibus Budget
Reconciliation Act (OBRA) of 1990 included a tax credit for health insurance that covers
children. It was added to the earned income tax credit (EITC). An EITC-eligible family
could receive a tax credit for its health insurance premium payments if its plan was not
an indemnity type and included coverage for children. It was administered as an end-
of-the-year credit against taxes or refund if it exceeded the family's tax liability. Unlike
the EITC, it could not be received in "advances". About 2.3 million families received the
health tax credit in 1991 at a cost of $496 million.
This health insurance credit was repealed in OBRA 1993. Following two years of
experience, the President and Congress repealed this provision in 1993. The Treasury
Department itself recommended its repeal. There are two main reasons for this. First,
it was difficult for the Internal Revenue Service (IRS) to efficiently and accountably
administer the credit. For example, the IRS could not determine whether a health
insurance plan met the eligibility criteria for the credit. The only information that the IRS
received was the amount of the premium paid and (in 1991 only) the name of the
insurance plan. A House oversight committee study found that families often bought
ineligible policies like cancer and dread disease policies and policies with two-year pre-
existing condition restrictions. The IRS could not prevent this.
A second problem was low participation. The GAO estimated that only 26 percent of
the people eligible for the credit received it. Of those, who received it, it is not clear
how many, if any, of these families had previously been uninsured. However, given the
low subsidy (the average credit was $233) it is unlikely that it served as a great
incentive for many uninsured families to purchase coverage.
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21
IV.
CONCLUSION [NOTE: VERY PRELIMINARY: STILL WORKING ON IT]
The lack of insurance for millions of American children is clearly a problem.
About 10 million American are uninsured during the year, 20 million over the course of
28 months. These children have difficulty accessing the United States' health care
system, which is arguably the best in the world. This lack of access may contribute to
the relatively low standing of the U.S. in international comparisons. We rank lower than
29 nations on immunization rates and 21 nations in both infant mortality and the
probability that an infant will die before reaching the age of 5 years old.
Yet the cause of the problem is not simple or easily addressed. American children
receive health coverage through a fragmented system of employer-based coverage,
individually purchased coverage, Medicaid, state programs, the public safety net and
philanthropy. Employer-based insurance is the primary source of coverage, so it is not
surprising that most coverage loss relates to changes in employment. The dynamic
U.S. economy has caused shifts of employment to firms that typically do not offer
coverage: small business, service jobs, and part-time work, for example. Yet, even if
they have access to employer-based insurance or individual market insurance, families
may not be able to afford it. Family premiums have rapidly risen, as has the share of
the premium paid for by the family. And, simply navigating this complex system to find
affordable options presents a challenge to many. Millions of uninsured children have
the opportunity to be covered through public or private programs but do not take
advantage of it. This complexity suggests that, in the absence of a requirement that
every employer and / or family purchase health coverage, the problem cannot be
completely solved. However, past and present experience provides ideas on how to
design, implement and operate efforts that can make significant improvements in
coverage for children.
State experiences. Through Medicaid, state-funded, and private programs, states
have led the way in improving children's coverage. Beginning in 1990, states began to
phase in nationwide eligibility for poor children for Medicaid. This has resulted in major
gains for children in the South, where eligibility through welfare has historically been
low. States have also demonstrated that they can efficiently target coverage toward the
children who need it. In Florida, the Healthy Kids program appears to be filling an
important need while not substituting for existing coverage. Similarly, Pennsylvania
was able to coordinate its Medicaid, state-funded, and private efforts to most efficiently
create seamless coverage for children. We have also learned from the state
experiences that funding is a major barrier; most of the programs have waiting lists.
Tax credits. The Federal government has tried using tax credits to encourage low-
income families to purchase coverage for their children. However, this attempt was
aborted given oversight problems and low participation. Some of the reasons for the
failure could have been addressed with policy changes. For instance, some type of
state certification of health plans eligible for the credit could have limited the mistaken
NOTE: PRELIMINARY DRAFT, May 18, 1997: #2
22
purchase of substandard plans. However, the experience raises serious questions
about the effectiveness of tax approaches at encouraging families to cover their
children.
Nationwide initiative is needed. The President and the Congress have agreed that
additional funding for children's health coverage is needed. Balancing the budget is
critical to our children's future. So, too, is investing in children's health coverage so that
they will be able to take full advantage of that future. This priority is reflected in the
Budget Agreement, which dedicates $16 billion between 1998 and 2002 to expand
health coverage for children. This amount represents a meaningful commitment toward
covering up to 5 million uninsured children.
Policies should reflect the problem: targeted and state-based. This study focuses
on the problem of uninsured children and existing efforts to alleviate it. However,
several of its findings may also be useful in establishing policies for this investment.
First, since there is no single group of uninsured children, a targeted approach is
needed. Groups of uninsured children to target include: children of workers without
access to employment-based insurance; families who cannot afford premiums; children
whose parents change or lose jobs; and children for whom Medicaid is an untried or
temporary option. For example, Medicaid could be extended for longer periods of time
since many children are covered only for several months. Focusing on children whose
parents are changing jobs may help to lower the 50 percent of children between 100
and 200 percent of poverty who experience breaks in their private coverage. Or,
creating an affordable insurance option for families just above Medicaid eligibility may
improve children's coverage.
Second, states may be the best partner for this investment. States have considerable
experience in designing and implementing children's health programs. They have also
proved that they are interested in expanding coverage to children. This spring alone,
about 15 states have planned and/or implemented new or expanded programs for
children. Both a grant program and Medicaid options could build upon states'
experiences and interest.
Regardless of the specific approach, the policies should build upon the facts and
experiences of the past. The problem of 10 million uninsured children is both critical
and complicated. This presents policy makers with an enormous challenge, and an
enormous opportunity. Carefully designed policy can - and hopefully will - make
significant improvements in children's coverage.
NOTE: PRELIMINARY DRAFT, May 18, 1997: #2
23
APPENDIX A. HEALTH CARE SAFETY NET FOR CHILDREN
The nation's health care provider safety net consists of hospitals, ambulatory care
facilities, and other providers who offer care to all regardless of their ability to pay.
They operate under both public and private auspices. As a group they are diverse, with
varied funding sources which include Medicaid and Medicare, Federal grant support,
state and local public funding, a limited amount of private third party insurance, patient
fees (often sliding scale), and private philanthropy.
Federal support for safety net providers of particular importance to uninsured children
includes:
The Maternal and Child Health Block Grant The Maternal and Child Health Block
Grant is funded at $681 million in FY 1997. Of this amount, $565 million is
allocated to States on a formula based on FY 1981 levels of funding for related
activities and the relative number of low income children in the State. States
must match Federal funds at the rate of three State dollars for every four Federal
dollars. They must earmark at least 30 percent of their Federal allotment for
preventive and primary care for children and at least 30 percent for children with
special health care needs. States use these earmarked funds in a variety of
ways: they may provide services directly, award funds to counties and other sub-
state units for the direct provision of services, or purchase services either directly
or through contract with individual providers, professional groups or health care
institutions. In addition to primary and preventive care, services provided
through these funds can include enabling services, including outreach, case
management, transportation and translation and population-based services such
as newborn screening and lead paint screening Approximately 17 million
women, infants, children, adolescents and children with special health care
needs receive services of some type through this program.
Community Health Centers (CHCs) The Federal appropriation for health centers
for FY 1997 totals $802 million. Funds support community health centers,
migrant health centers, health centers for the homeless, health centers in and
near public housing and the school health centers funded under the umbrella
Healthy Schools, Healthy Communities. Federal grants represent about 30
percent of CHC funding: other funding sources include Medicaid; Medicare; other
third party payers; patient fees, which are on a sliding scale, and State, local and
other sources of funds. On the average, Federal grant funding per CHC user is
approximately $100 for a comprehensive package of primary care and
preventive health services. In FY 1995, approximately 42 percent of health
center patients were uninsured. Approximately 44 percent of the FY 1997
estimated 8.3 million CHC users are children through age 19.
NOTE: PRELIMINARY DRAFT, May 18, 1997: #2
24
The Indian Health Service (IHS) funds the delivery of health care to 555 federally
recognized Indian tribes and 34 urban health projects located in 35 States. Its
FY 1997 appropriation totals $2.054 billion. Care is provided through 49
hospitals, 195 health centers, 8 school health centers, and 289 health stations,
satellite clinics, and Alaska village clinics which are administered either by the
Tribes or directly by the IHS. Of the 1.3 million active users of the system, about
43.8 percent are children through age 19. The IHS collects payments from those
it serves who are insured through Medicaid, Medicare or private insurance, but
provides care without charge to those without insurance.
Federal Disproportionate Share Hospital Payments/Hill Burton Uncompensated
Care Obligations Federal funds help to subsidize hospital costs for
uncompensated care for uninsured children are provided through payments to
States under the Medicaid Disproportionate Share Hospital (DSH) program. It is
estimated that Federal payments will total $9.8 billion in FY 1997 for this
purpose. Hospitals which received construction funds through the Hill Burton Act
are required to provide a reasonable volume of support for persons unable to
pay for services for a 20 year period. In FY 1996, approximately 1650
institutions had such obligations. They provided approximately $700 million in
care to about 2 million individuals. The number of obligated facilities is
decreasing: by 2000, fewer than 700 institutions will have Hill-Burton obligations.
Childhood Immunization The Vaccines for Children (VFC) program provides for
the purchase of vaccines for all children who are uninsured, those eligible for
Medicaid, Native American children, and for those children whose insurance
does not cover immunization who receiving care through Federally Qualified
Health Centers (FQHCs) and Rural Health Clinics (RHCs). Vaccines are now
provided to private providers at 28,000 sites with multiple providers and to
approximately 9,000 public clinics in addition to FQHCs and RHCs. Expected
expenditures in FY 1997 for VFC are $373 million.
Much of the care delivered to children through the safety net is provided by public
health clinics and children's hospitals. Public health clinics operated by the State,
county, or local municipality are a significant source of ambulatory care for uninsured
children. Freestanding children's hospitals represent only one percent of all hospitals
but are a particularly important source of care for uninsured children. Most children's
hospitals are affiliated with academic institutions. Roughly half of the care they provide
is to poor children and three quarters of their care is to children with chronic or
congenital conditions. In FY 1995, they were responsible for 4.6 million primary and
specialty outpatient visits, over 1.6 million emergency department visits, and 2.1 million
inpatient days, with gross patient revenues of $7.8 billion. On average, 42 percent of
the care they provide is to Medicaid children, an additional 5 percent is to uninsured
children.
NOTE: PRELIMINARY DRAFT, May 18, 1997: #2
25
APPENDIX B: STATE PROGRAMS
[note: to be checked; will add initiatives from the Spring of 1997]
State
Uninsured
Medicaid
State Program
State
Current
under 19
Expansions
Funds?
Enrollment
AK
19,000
None
None
AL
193,000
None
Alabama Caring Program for
N
6,353
Children
AR
129,000
None
None
AZ
248,000
Infants: 140%
CA
1,775,000
Infants: 200%
Access to Infants and Mothers (AIM)
Y
11,000 (AIM)
13-19: 100%
(pregnant women and infants <2;
8500 (CalifKids)
<300%)
N
CaliforniaKids (Caring Program)
CO
125,000
None
Child Health Plan (public/private)
Y
6,200 (CHP)
School Connections (Kaiser
New (SC)
Permanente)
3,500 (CP)
Caring Program
CT
85,000
0-13: 185%
Healthy Steps
Y
DC
25,000
None
DE
22,000
Infants: 185%
None
13-19: 100%
FL
652,000
Infants: 185%
Florida Healthy Kids Program (1-19;
Y
36,000
no income limits, sliding scale
premium)
GA
319,000
Infants: 185%
Caring Program for Children
N
900
13-19: 100%
HI
24,000
0-19: 300%
IA
92,000
Infants: 185%
Caring Program for Children
Y
2000
ID
49,000
None
Caring Program for Children
N
490
IL
344,000
None
None
IN
184,000
Infants: 150%
None
KS
82,000
Infants: 150%
Kansas Caring Program for Children
Y
2700
13-17: 100%
Caring Program of Kansas City
KY
139,000
Infants: 185%
13-19: 100%
LA
268,000
None
Caring Program for Children
N
375
MA
140,000
Infants: 185%
Children's Medical Security Plan
Y
20,000
NOTE: PRELIMINARY DRAFT, May 18, 1997: #2
26
MD
158,000
0-13: 185%
Kids Count (Caring Program for
N
1300
(primary and
Children)
preventive care
only)
ME
40,000
Infants: 185%
None
6-19: 125%
MI
235,000
Infants: 185%
Caring Program for Children
Y
4,650
6-15: 150%
MN
85,000
0-21: 275%
MO
155,000
Infants: 185%
Caring Foundation for Children--St. L
N
5500
13-19: 100%
Caring Foundation for Children--K
City
MS
146,000
Infants: 185%
Caring Program for Children
N
860
(Discontinued)
MT
29,000
None
Caring Program
Y
1400
NC
221,000
Infants: 185%
Caring Program
Y
5,500
13-19: 100%
ND
16,000
13-18: 100%
Caring Program for Children
N
450
NE
47,000
Infants: 150%
None
NH
31,000
0-19: 185%
Healthy Kids
Y
1,600
NJ
243,000
Infants: 185%
Health Access New Jersey
Y
5800
NM
137,000
0-19: 185%
None
NV
76,000
None
None
NY
627,000
Infants: 185%
New York's Child Health Plus
Y
110,500
Program
OH
317,000
None
Caring Program for Children (Closed
N
2680
to new participants)
OK
216,000
Infants: 150%
Oklahoma Caring Program for
N
760
Children
OR
109,000
13-19: 100%
None
PA
323,000
Infants: 185%
Pennsylvania's Children's Health
Y
43,000
Insurance Program and Caring
Programs for Children
RI
28,000
0-7: 250%
RiteCare (1115)
SC
157,000
Infants: 185%
None
SD
23,000
13-19: 100%
Caring Program for Children
Y
370
TN
182,000
Infants: 185%
None
13-18: 100%
NOTE: PRELIMINARY DRAFT, May 18, 1997: #2
27
TX
1,347,000
Infants: 185%
Caring Program for Children
N
UT
72,000
13-18: 100%
Caring Program for Children
N
1,100
VA
204,000
13-19: 100%
VT
13,000
0-18: 225%
WA
141,000
0-19: 200%
WI
98,000
0-5: 185%
None
WV
60,000
Infants: 150%
Caring Program
Y
149
13-19: 100%
WY
22,000
Minimum
Caring Program
N
400
NOTE: PRELIMINARY DRAFT, May 18, 1997: #2
28
May 14, 1997
MEMORANDUM
TO:
Frank Raines
FROM:
Marian Wright Edelman
RE:
Child Health in the Budget
1 understand that the budget agreement may be finished in the next couple of days. I urge
you to make sure that there is no language in the documents or the White House description of
the budget agreement that in any way interferes with our ability to build on the budget agreement
this year and to pass legislation to cover all uninsured children through the Hatch-Kennedy bill.
I was encouraged by the President's statement a couple of weeks ago on "Face the
Nation" that he would like to find a way to combine the various child health proposals and cover
all 10 million children. As you know, the Children's Defense Fund's top priority this year is
passage of the Hatch/Kennedy CHILD health bill, S. 525 and S. 526. Momentum is growing for
insuring all 10 million uninsured children through Hatch/Kennedy and the complementary
Medicaid initiatives.
In this context:
Language about the money in the budget agreement representing "full
funding" to cover uninsured children would not be helpful, since fewer than
half of uninsured children are covered within its parameters.
Any other language in the budget agreement or documents describing it that
suggests the money in the budget agreement finishes the process of covering
uninsured children or precludes other steps also would be unhelpful.
Any language that suggests the next 5 million uninsured children are a more
complicated group to cover (for reasons of employer crowd-out or otherwisc)
would be counter-productive, particularly since we believe the Hatch/Kennedy
bill solves these problems.
Also, I hope that the rumors I am hearing that the budget agreement's health money may
be described as a tax credit in order to improve the distribution tables for the tax cuts are wrong.
Given the failed history of tax credits for child hcalth and the momentum in Congress in more
positive directions, it would be a shame to harm children's health in order to give the appearance
that the tax cuts are less regressive. Anything that moves child health money toward tax credits
will undercut all of the good work that has been done to build momentum for Medicaid
expansions and vouchers to cover children.
20'd
May-14-97 06:20P
H-KREVIS.WPD
Page 1
Q:
WHY DID YOU OPPOSE THE HATCH-KENNEDY AMENDMENT TO
EXPAND HEALTH CARE COVERAGE TO MORE CHILDREN?
The President's position on extending health coverage to children has
been clear. The debate on the Senate floor did not reflect our overall
position on this issue. We have an agreement --to which both sides have
committed --to not attach anything to the resolution.
We support the efforts of Hatch-Kennedy. But a deal is a deal and
passing Hatch- Kennedy as an amendment to the budget resolution
would be inconsistent with that agreement. Our commitment to
health care coverage is well known, and I will fight this year and
beyond to build on the $16 billion investment for children's health
we have already achieved in the balanced budget agreement.
H-K.DEF
Page 1
Q:
WHY DID YOU OPPOSE THE HATCH-KENNEDY AMENDMENT TO EXPAND
HEALTH CARE COVERAGE TO MORE CHILDREN?
I do not oppose the tobacco tax to be used as a financing mechanism for
more health coverage, nor do I oppose the goals of the Hatch-Kennedy
legislation. In fact, I am committed to building on the $16 billion we have
achieved in the balanced budget agreement. I look forward to working with
Senator Hatch, Senator Kennedy, and other members in this regard.
My primary concern with the budget amendment offered yesterday was that
I feared that it would severely undermine the possibility of a balanced budget
agreement, including the $16 billion investment for children. My
commitment to health care coverage is well known, and I will fight this year
and beyond to expand health care coverage.
Q:
REP. GEPHARDT CRITICIZED THE BUDGET AGREEMENT BECAUSE AT THE
SAME TIME YOU STRESS THE IMPORTANCE OF INVESTING IN
CHILDREN'S COVERAGE YOU CUT MEDICAID SPENDING, WHICH HELPS
HOSPITALS THAT SERVE UNINSURED CHILDREN. HOW DO YOU
RESPOND TO THIS CRITICISM?
A:
Studies have shown strong evidence that our Medicaid disproportionate
share spending is not being appropriately allocated to hospitals that serve a
greater portion of low-income and uninsured populations (e.g. Urban
Institute). It is for this reason that even the public hospitals have said that
we can get more savings from DSH if we better target this funding to these
types of hospitals. We are currently working with the public hospitals to
push the Congress to do just that.
Moreover, since we are investing $16 billion to cover millions of uninsured
children, these hospitals will treat more children who have health care
coverage, thereby reducing their need for DSH funding to help offset
uncompensated care.
Q:
DOESN'T YOUR CHALLENGE TO DEVELOP AN AIDS VACCINE IN TEN
YEARS RING HOLLOW SINCE YOU ARE NOT INVESTING ANY ADDITIONAL
FUNDING IN THIS EFFORT?
A:
According to National Institutes of Health Director, Dr. Varmus, and Director
of the Office of AIDS Research at NIH, Dr. Paul, challenging the scientific
community greatly enhances the likelihood that we will develop an AIDS
vaccine. Moreover, we have backed this challenge with a series of
H-K.DEF
Page 2
investments and initiatives to increase the likelihood that we will reach our
goal. In the last two years, I have increased funding for the AIDS vaccine by
33 percent, and my FY 1998 budget increases spending for AIDS vaccine
research by $17 million.
Moreover, I have announced that there will be a new AIDS Vaccine Center at
NIH. Our medical and scientific leaders believe that uniting scientists in
immunology, virology, and vaccinology will create a highly collaborative
effort to help develop an AIDS vaccine. I am also asking the leaders of the
eight major industrialized nations meeting at the Denver summit in June to
support a worldwide AIDS vaccine research initiative. To fully commit
ourselves to developing an AIDS vaccine, we need to make sure that the
best minds throughout the world are working together towards this goal.
Q:
FOLLOW: WHY ARE YOU ISSUING THIS CHALLENGE NOW? AND WHY
ARE YOU FOCUSING ON AN AIDS VACCINE RATHER THAN OTHER
DISEASES?
A:
In the last twelve months we have made tremendous progress in our
understanding of the AIDS virus. The leaders at NIH have told me that we
are moving forward on developing a vaccine for AIDS and that we have an
opportunity now to focus our efforts on developing an AIDS vaccine. They
believe that by issuing a challenge to the scientific community, bolstered by
our new investments and initiatives, will greatly increase the likelihood that
we will be able to develop a vaccine in the next decade.
Scientific leaders have also told me that we have made progress in our
understanding of immunology. They believe that bringing together all of this
new knowledge will not only increase the likelihood that we will develop an
AIDS vaccine but also could provide a new paradigm for vaccines that will
help develop effective vaccines for other diseases.
While developing an AIDS vaccine is an important priority, it in no way
undermines our commitment to biomedical research in other areas. Since I
took office, we have increased overall spending at the National Institutes of
Health by 16 percent, including a 76 percent increase in breast cancer
research. My FY 1998 budget allocates $13.1 billion for NIH.
It is also important to note that this commitment in no way undermines our
investments in AIDS treatment and prevention, both of which have
consistently received increased funding since I have been in office. We
recognize that millions of people around the world already have AIDS, and
we must continue to develop treatments and provide them to as many people
H-K.DEF
Page 3
as possible, while at the same time stressing prevention. I will continue to
bolster our efforts in those areas.
Q:
REPORTS HAVE SUGGESTED THAT THE ORIGINAL MEDICARE PREMIUM
ESTIMATES WERE TOO LOW AND THE ACTUAL INCREASE WILL BE TWICE
AS HIGH AS PREVIOUSLY PROJECTED (ABOUT A DOLLAR A MONTH). IS
THIS TRUE?
A:
While original preliminary CBO projections may have been slightly off, we still
estimate that the Part B premium will be only about $1 more in 1998 than
under current law. In subsequent years within the 5-year Budget Agreement,
the annual increase should be no more than about $2 more per month. As a
result, by 2002,
we project the premium being approximately $8
more than it otherwise would have been without the home health
reallocation.
Regardless of the final projection, the Part B premium will be almost $20 per
month less than it would have been if it was set at the same 31.5 percent
level that I vetoed. The monthly premium under the 1997 Budget Agreement
will be about $69 in 2002. If the policy were a 31.5 percent premium
instead of 25 percent, the premium would be about $87. In 2002 alone, this
would equate to about $215 a year more for a single beneficiary, $430 for a
couple.
Low-income beneficiary protections are expanded. Unlike the 1995 Budget
Agreement that I vetoed, which eroded current-law low-income protections,
the 1997 Balanced Budget Agreement invests $1.5 billion to expand
premium assistance to low-income beneficiaries. We believe this
commitment will help many of the estimated 2.5 million Medicare
beneficiaries who have incomes between 125 and 150 percent of poverty--
just above the current eligibility level for Medicare premium protection.
Savings from the new premium are offset by investments in beneficiary
improvements. The $9 billion in savings that comes from gradually including
home health in the 25 percent premium is virtually identical to the amount of
money dedicated to the investment in new benefits. Specifically, the 1997
H-K.DEF
Page 4
Balanced Budget Agreement invests $3-4 billion in new preventive benefits
(which will, for example, detect breast and colon cancer, and cover the
management of diabetes), $4 billion to limit excessive hospital outpatient
coinsurance to beneficiaries, and $1.5 billion in premium protections for
low-income Medicare beneficiaries. (This contrasts with the vetoed 1995
balanced budget agreement, which reinvested virtually none of its much
greater beneficiary savings for benefit enhancements.)
I know that many of you may be thinking about children's health because of the
action taken in Congress yesterday. In fact, I wrote my column about children's
health this week.
I want you to know that the President is committed to children's health, which is
why he worked so hard to get a $16 billion investment in the budget resolution.
He couldn't support the Hatch-Kennedy proposal yesterday because he had to
safeguard this agreement. But he supports the thrust of the bill, and he will look
for ways to advance this effort in the months ahead.
[OPTION: I believe the tobacco tax is one good way of addressing the many needs
of children that confront our nation while reducing dependence on tobacco,
especially by young people.]
June Shih
05/20/97 01:03:46 PM
Record Type: Record
To:
cre8ors @ aol.com @ inet, Jennifer L. Klein/OPD/EOP
CC:
Subject: HRC COLUMN
FIRST LADY HILLARY RODHAM CLINTON
COLUMN FOR RELEASE MAY 21, 1997
TALKING IT OVER/CREATORS SYNDICATE
When my daughter Chelsea was 9, she had to have her tonsils taken out. Though we
knew it was a low-risk medical procedure, Bill and I were nervous wrecks.
But we knew that our family was lucky because we had health insurance. Paying for
Chelsea's hospital stay was the least of our worries.
Given the stress we felt when our own child was hospitalized overnight for a relatively
minor illness, I can barely imagine the heartache parents who can't afford health insurance for
their children must feel each time a child becomes ill. In too many cases, they are
overwhelmed by questions not only of how and when their sick child will respond to
treatment, but of whether they will be able to afford the necessary medical care in the first
place.
The time is long overdue for all of us to address what I believe is an economic, social,
and moral crisis in our country. The United States is the only industrialized nation that does
not extend health coverage to all of its children. There is no good reason why our country,
which is blessed with the most advanced and innovative medical facilities and talent in the
world, continues to allow so many of our children to grow up without regular access to basic
health care.
Today, nearly 10 million American children under 18 have no health insurance. A
recent study has shown that 20 million children were without insurance for at least one month
over a two-year period. As health care costs and insurance premiums continue to rise, fewer
employers are offering health insurance to their workers. And more and more working
parents are finding that, after paying the rent, heat, electricity and grocery bills, they cannot
afford insurance for their children.
What is most surprising is that the majority of our uninsured children is not poor. At
least two-thirds of all uninsured children are being raised by working parents whose incomes
are above the official poverty level. In fact, the number of poor, uninsured children has been
decreasing, (thanks to Medicaid), while the number of uninsured middle class children has
been increasing.
What this means is that too many children having trouble seeing a blackboard do not
get the glasses they need to correct their vision; too many nagging coughs go untreated until
they worsen into life-threatening conditions that may require costly treatments and lengthy
hospital stays; too many parents are forced to forbid their children to play sports or visit the
a
playground for fear that every scrape or fall could lead to an impossible choice between
buying medicine for that sick child or food for the entire family.
Some people believe we cannot guarantee health care to all children because of cost.
But, as other countries have already found, a sensible child health insurance system is a
critical, cost-effective investment. That's because most children who become seriously ill or
injured are eventually treated somewhere and at a much greater cost than their parents -- or we
-- would have paid if their symptoms had been treated earlier.
In negotiations over the new balanced budget, the President has made sure that as many
as five million children currently living without health insurance can get the coverage and care
they deserve. And this Spring, several bills are making their way through Congress that build
on innovative efforts begun in individual states to cover uninsured children and make it easier
for working parents to buy health insurance for their children.
In recent years, many states have been able to insure thousands of children by
expanding Medicaid benefits to cover older children and children living in families whose
incomes are slightly above the poverty level. Others have created new state-funded child
insurance programs or joined forces with private insurance companies to subsidize premiums
for needy families. Some states have even implemented a combination of all these strategies.
These efforts represent a good start. But the question of whether a sick American
child gets needed medical treatment should not depend on where he or she lives. We must
encourage members of Congress to create a plan that ensures every single child in our country
enjoys the health care and security Bill and I would provide our own daughter.
Providing health care to all of our children is more than just a political challenge. It is
a test of our faith in the future and of whether our rhetoric about family values will be
translated into action on behalf of our children. We can not afford to fail.
###
May 5, 1997
Jordan J. Cohen, M.D.
President
Association of American
Medical Colleges
2450 N Street, N.W.
Washington, D.C. 20037-1127
Dear Dr. Cohen:
Thank you SO much for your letter. I
appreciate the AAMC's strong support of my
Administration's efforts to extend health care
coverage to millions of our nation's uninsured
children.
Hillary and I were delighted that
you attended the Conference on Early Child
Development and Learning. Your participation
that day set a wonderful example for all the
leaders in the field of health care. I am
confident that with the continued support of
leaders like you and groups like the AAMC, we
can succeed in our mission and create a stronger,
healthier future for our children.
Hillary joins me in sending best wishes.
Sincerely,
BILL CLINTON
BC/SSF/RLM/jfc
(Corres. #3489073)
(5.cohen.jj)
CC: Jim Dorskind/TDS, 94 OEOB
CC: Jenn Klein, West Wing
CC: Wayna Wondwossen, 93 OEOB
THE WHITE HOUSE
WASHINGTON
April 14, 1997
Mr. Ronald Compton
Chairman and Chief Executive Officer
Aetna, Inc.
151 Farmington Avenue
Hartford, Connecticut 06156
Dear Mr. Compton:
As you may know, this Thursday, April 17, 1997, the
First Lady and I will host the White House Conference on Early
Childhood Development and Learning: What New Research on the
Brain Tells Us About Our Youngest Children. This conference
will showcase current scientific research on early brain
development and examine applications of this research for
parents, caretakers, and policy makers. The conference is
designed to give all of us - - families, medical, business, and
faith communities, policy makers, and caretakers -- the best
information on how to enhance our children's development during
their earliest years of life.
I understand that our conference coincides with a forum
you are convening with representatives of teaching hospitals
and medical schools from around the country on Academic Medicine
and Managed Care, and I commend you for your efforts to address
this issue.
I am pleased that medical schools and teaching colleges
have been important leaders in the struggle to improve health
care for our nation's children. Because of our mutual deter-
mination to achieve this goal, I would like to invite you and
your forum participants to the reception that follows the
White House Conference. I believe that you will all find this
reception to be a wonderful opportunity to meet a broad-based
group of experts who share your commitment to children's health.
My staff will provide you with details, and I hope that many
participants in your forum will choose to join us here.
Sincerely,
Rin Chinten
FROM : CHILD TRENDS, INC.
TEL: 202 362 5533
APR. 10. 1997 3:25 PII P 2
NATIONAL CENTER FOR EDUCATION STATISTICS
Digest of
Education Statistics
1996
Thomas D. Snyder
Project Director
Charlene M. Hoffman
Production Manager
Claire M. Geddes
Program Analyst
U.S. Department of Education
Office of Educational Research and Improvement
NCES 96-133
ELEMENTARY AND SECONDARY: ENROLLMENT 63
Table 47.-Chlld care arrangements of preschool children, by age and household characteristics: 1991 and 1095
Children'
Persons In nonparental arrangaments
Percent with
Characteristice
Number. in
Percent
Helative care
Center baced
parental care
thousands
Nonrelative care
program3
only
1
2
3
4
5
6
,
1991
Age. total
8,428
100.0
16.9
14.8
52.8
31.0
3 years old
3.749
44.6
16.1
14.8
42.3
37.8
4 years old
3,638
43.1
181
14.8
60.4
26.9
5 years old
1,044
12.4
15.6
15.0
A3A
24.3
Race/athnicity white. non-hispanic
5,867
69.6
14.8
17.3
54.0
30.6
Black, non-hispanic
1,239
14,7
24.1
7.8
58.2
25.0
Hispanio
1,002
11.9
19.5
8.7
38.9
40.6
Other
319
3.8
19.3
12.1
63.2
32.6
Household Income
$10.000 or 1000
1,405
17.7
16.8
6.3
44.0
42.4
10,001 to 20,000
1,437
17.0
10.3
11.8
44.5
35,0
20,001 10 30,000
1,711
20.3
18.9
12.9
44.8
38.5
30,001 to 40,000
1,319
15.7
15.9
15.7
63.2
20,7
40,001 to 50,000
938
11.1
16.6
21.4
60.0
23.1
00.001 to 75,000
974
11.8
15.6
21.9
68.4
15.2
More than 76,000
666
6.6
9.6
25.9
80.4
8.8
1005
Ago. total
9.232
100.0
19.4
180
55.1
25.9
3 years old
4,126
44.7
214
185
407
320
4 years old
4.065
44.0
18.3
16.3
64.7
22.2
6 years old
1,041
11.3
15.1
17.2
74.5
16.2
Race/ethnicity
White, non-hispanic
6,337
68.6
16.6
19.4
55.9
26.2
Black. non-hispanic
1,396
15.1
28.6
11.3
59.6
20.3
Hispanic
1,042
11.3
22.8
12.8
37.4
36.4
Other
457
6.0
22.0
10.5
66.7
24.2
Household income
$10,000 or less
1,795
19.4
18.1
10.5
48.8
34,4
10,001 to 20,000
1,204
13.0
25.2
15,1
44.8
32.7
20.001 10 30,000
1,494
16.1
20.7
13.5
46.5
21.2
30,001 to 40,000
1,319
14.3
20.0
20.3
46.1
29.7
40,001 to 50,000
1,037
11.2
18.1
108
65.5
23.1
50,001 to 76,000
1,381
18.0
18.8
10.1
711
118
More than 75,000
1.012
11.0
13.7
26.2
B2.2
7 A
Estimates are based only on underen 3 to B years ord who have not entered ainder-
SOURCE: U.S. Department of Education, National Center for Education Statistice Na.
gamen.
tional Mousehold Education Survey (NMES), 1891 and 1995. (This Table was prepared
. Columns do not add up to total because some children participated in more then one
July 1986.)
type of nonparental arrangement.
, Center based programs include day care conters, nursery schools, prohindergarten,
preschoole and Hoad Sten programo
Tablo 48.--Poroont of public school kindorgarten teachers Indicating the importance of varlous factors for
kindergarten readiness: Spring 1993
Percent rating readiness factor 86
"Very Important' or "Essendal," by
percentage of school's students
Not at all
Kindorganon readinest factors
Not very
Somewhat
Very
important
Essential
eligible for tree or reduced-price
Important
Important
important
lunches
Less than
20 to 49
50 percent
20 percent
percent
or more
1
2
3
4
8
6
7
8
9
is physically healthy, rested, and well nourished
0
(')
4
24
92
97
$5
93
Finishoe tooks
0
11
47
31
B
43
40
37
Can count to 20 of moto
00
04
3
C
0
0
0
8
Takes turne and sharoo
2
0
04
07
10
64
85
ES
Was good problem-solving
8
23
44
20
Б
29
23
23
la enthusisetic and curious in approaching now activities
1
3
19
43
33
83
76
73
Is able 10 USO pencils of paint Drushes
16
27
38
16
5
23
21
10
IS not disruptive of the class
2
8
30
36
24
61
58
61
Knows the English language
13
12
33
24
17
40
45
38
1, sensitive TO other children's feelings
1
a
30
41
17
51
58
50
Site OIL and pays attention
3
12
43
30
12
"
37
43
Knows the letters of the alphabet
27
30
33
6
4
7
0
13
Can follow directions
2
,
31
41
18
61
61
58
Identifies primary colore and basic shapes
13
24
40
17
7
22
21
27
Communicates needs, wants. and thoughts verbality in
child's primary language
1
I
15
41
43
85
64
83
" ase than 0.5 percent.
BOURCE U.S. Department of Education, National Center for Education Statiatics. Km.
dergarten Teacher Survey on Student Readiness. (Thle teble was prepared Areil (004)
THE PRESIDENT'S FY 1998 BUDGET
CHILDREN'S HEALTH INITIATIVE
Significant gaps remain in children's health coverage. In 1995, 10 million children in America
lacked health insurance. While there are many different reasons why children lack insurance,
most uninsured children face at least one of three obstacles - each of which calls for a different
policy solution.
Children at risk because their parents change jobs: Because most children receive
coverage through their parents' jobs, job changes disrupt the continuity of children's
coverage. Nearly half of all children who lose health insurance do so because their
parents lose or change jobs.
Children whose parents earn too much for Medicaid but too little for private
coverage: The highest rate of uninsured children is among families who earn too much
to qualify for Medicaid but too little to afford coverage. Nearly one in four children in
families with income just above poverty have no health insurance.
Children eligible but not enrolled in Medicaid: Medicaid has not reached all the
children who qualify for it. About 3 million children are eligible but not enrolled. In
addition, enrolled children often lose Medicaid when their family income fluctuates.
The President's children's health initiative that addresses each of these groups will extend
coverage to up to 5 million uninsured children by 2000.
Continuing Coverage for Children Whose Parents are Between Jobs
The President's budget will give States grants to temporarily cover workers between jobs,
including their children, at a cost of $9.8 billion over the budget window.
The program, which is structured as a four-year demonstration, will offer temporary
assistance (up to 6 months) to families who would otherwise lose their coverage. This
assistance may be used to purchase coverage from the worker's former employer (through
COBRA) or other private plans, at States' discretion. State participation in this grants
program is optional.
Families are eligible for full premium assistance if their monthly income is below 100
percent of poverty, and partial premium assistance if their income is below 240 percent of
poverty. Only families who do not have access to Medicaid or insurance through a
spouse's employer and are receiving unemployment compensation are eligible.
This program will help an estimated 3.3 million working Americans and their families,
including 700,000 children, in any given year.
The President's budget also makes it easier for small businesses to establish voluntary
purchasing cooperatives, increasing access to insurance for their workers' families.
Building Innovative State Programs for Children in Working Families
The President's budget provides $3.8 billion between 1998 to 2002 ($750 million a year)
in grants to States. States will use these grants to provide insurance for children,
leveraging State and private investments in children's coverage through a matching
system (using the same matching formula as in Medicaid).
The Federal grants, in combination with State and private money, will target uninsured
children whose families earn too much to qualify for Medicaid but too little to afford
private coverage. The grant program will also improve Medicaid enrollment since some
families interested in the new program will learn that their children are in fact eligible for
Medicaid.
States may use these grants to target the unique problems facing their children. States
have flexibility in designing eligibility rules, benefits (subject to minimums set by the
Secretary) and delivery systems. In return for this flexibility, States will provide annual
evidence of positive outcomes of the grant money - including the number of uninsured
children helped by the program.
The program builds upon the successful efforts of States that have tailored programs to
address the particular gaps in coverage for their children. For example, the Florida
Healthy Kids program enlists schools to enroll and insure 40,000 uninsured children.
Strengthening Medicaid for Poor Children
The President's budget gives States the option to provide one year of continuous
Medicaid coverage to children. This will cost an estimated $3.7 billion between 1998
and 2002.
Currently, many children receive Medicaid protection for only part of the year.
Medicaid eligibility is intermittent due to fluctuations in family income
throughout the year.
This policy allows States to continue coverage when family's income changes by
guaranteeing Medicaid coverage for up to one year. This benefits families who
will have the security of knowing that their children will be covered by Medicaid
for at least a full year. It also helps States by reducing administrative costs, and
managed care plans by enabling them to better coordinate care.
The President also proposes to work with the Nation's Governors, communities,
advocacy groups, providers and businesses to develop new ways to reach out to the 3
million children eligible but not enrolled in Medicaid.
The President's budget preserves and strengthens Medicaid's guaranteed coverage for
low-income children. In addition to protecting coverage for the 18 million children
already on Medicaid, the President continues the current law expansion to another one
million children between the ages of 13 and 18.
March 8, 1997
DETAILED SUMMARY
President's FY 1998 Children's Health Initiative
The Children's Health Initiative includes five different parts:
1.
State Grant Program
2.
State Option for 12-Month Medicaid Continuous Eligibility for Children
3.
Initiative for Workers Between Jobs
4.
Medicaid Outreach
5.
Continuation of the Poverty-Related Coverage Expansion for Children 14 to 18 years old
The first three elements require legislative changes which have been drafted as part of the
President's FY 1998 budget proposal. The initiative for workers between jobs includes both
adults and children and is summarized separately. Medicaid outreach will be a process set up
with Governors and the private sector. The fifth - the mandatory expansion of Medicaid
coverage to poor adolescents - is current law.
1. STATE GRANT PROGRAM
Intent:
To enable states to initiate and expand innovative programs extending
health insurance assistance to eligible children.
Type of Program:
New, mandatory grant program to states (not discretionary spending;
appropriate funds; no new entitlement)
State participation is optional. States have flexibility in designing
eligibility rules, benefits and delivery systems.
Federal funding available until expended (unexpended appropriated funds
redistributed in 2001)
Administered by Department of Health and Human Services
Funding:
$3.8 billion between FY 1998 - 2002 ($750 million for FY 1998 and each
subsequent year)
State Allotment: States & DC: Minimum of $1 million plus a share of
the remaining appropriated amount (after subtracting territories' funding
and base $1 million for each state). This share is:
-
For 1998, 1999, & 2000: each state's proportion of all uninsured
children under 19 in CY 1993-95 (on average)
March 26, 1997
1
-
2001 & subsequent years: each state with approved applications'
proportion of uninsured children under 19 in 1993-95 in all states
with approved applications. In 2001 and subsequent years, all
unexpended appropriations from previous years will be reallocate
using this formula to states with approved applications.
Territories: 1.5% ($11.25 million) of the total appropriation
State allotments adjusted for geographic price variation
Two-year carry over: allotment remains available to state for two years
Matching payments required (using Medicaid matching rate, FMAP)
No rules on what constitutes state share except that states may not use
spending on comparable programs in 1995 or earlier.
Use of Funds:
Direct purchase of health insurance or provision of vouchers to families
Insurance that qualifies for funding must cover benefits meeting minimum
standards established by the Secretary, including standards for quality and
scope of coverage
Insurance must also be provided by any entity licensed to provide health
insurance in the state
Administrative costs and outreach (no more than 10% of allotment)
Eligibility for Assistance:
Defined by states within parameters: Children must be:
Under age 21
Not eligible for Medicaid
Have no (or inadequate) health insurance and do not have access to
adequate and affordable individual or family health insurance
coverage
Premium Assistance Amount:
Defined by the state
March 26, 1997
2
State Application:
Beginning: January 1, 1998
Deadline: September 30, 2000
Must include description of:
-
Current needs and efforts
-
Program development process
-
Program design including: service area, eligibility restrictions,
health insurance coverage provided, ways to prevent substitution
for employer coverage
-
Budget
-
Outreach and coordination
-
Plan for data collection, records and reports
Plan approval: a plan is considered approved unless the Secretary notifies
the state of disapproval or of the need for new information within 90-days
Reports & Evaluation:
Annual (or more frequent) amendments to initial state application
Annual report including progress made in reducing uninsured children
States' evaluations of their own programs due on March 31, 2000
2. STATE OPTION FOR 12-MONTH CONTINUOUS MEDICAID ELIGIBILITY FOR
CHILDREN
Intent:
To ensure that once a child is determined eligible for Medicaid, he or she
maintains that coverage for a full year
Type of Program:
Medicaid state option
Funding:
An estimated $3.6 billion between FY 1998 - 2002
Provision:
"1902(e)(12) At the option of the State, the plan may provide that an
individual who is under the age specified by the State under 1905(a)(I)
[upper age limit of 18-21 years] and who is determined to be eligible for
benefits under a State plan approved under the title shall remain eligible
for those benefits until the earlier of (A) the end of the 12 month period
following the determination; or (B) the time that the individual exceeds
that age."
March 26, 1997
3
3. INITIATIVE FOR WORKERS BETWEEN JOBS
[summarized separately]
4. MEDICAID OUTREACH
Intent:
To increase enrollment of children currently eligible for Medicaid but not
enrolled
Type of Program:
No new program or funding: non-legislative approach; we will work with
relevant parties on a process to identify and implement strategy
5. CONTINUATION OF THE POVERTY-RELATED COVERAGE EXPANSION FOR
CHILDREN 14 TO 18 YEARS OLD
Intent:
To maintain current-law phase in coverage for all poor children born after
September 30, 1983 up to age 19 (currently states cover up to age 14
although 20 states have accelerated this coverage to older children).
Type of Program:
No new program or funding: Medicaid spending in the baseline
March 26, 1997
4
DETAILED SUMMARY
President's FY 1998 Budget: Workers Between Jobs Initiative
Intent:
To assist workers and their families who lose their insurance when they
lose their jobs
Type of Program:
New mandatory grants program to states (not discretionary spending;
appropriate funds; no new entitlement)
State participation is optional; for states that do not participate, the
Secretary may operate a program under this subtitle
Demonstration: sunsets at the end of FY 2001
Federal funding available until expended (unexpended appropriated funds
redistributed through the reserve fund, described below)
Administered by the Department of Health and Human Services in
consultation with the Departments of Labor (especially on data issues)
Funding:
An estimated $9.8 billion between FY 1998 - 2002;
Maximum Federal funding:
-
For CY 1998: $1.738 billion
-
For FY 1999: CY 1998 appropriation ($1.738 billion) divided by
0.75 (to make it equivalent to a full, fiscal year) multiplied by the
"growth multiplier"
-
For FY 2000 and 2001: previous year's appropriation multiplied
by the "growth multiplier"
The "growth multiplier" is the product of:
-
Growth in unemployment compensation recipients (measured as
the annual change in the number of first payment to eligibles) and
-
Nominal GDP per capita (measured as the average of the annual
change in nominal gross domestic product per capita for the
previous 5 years) plus 1 percentage point in each year
March 26, 1997
1
State Allotment: On a quarterly basis, states receive an allotment from 95
percent of the Federal appropriation. This share is:
-
Each state's proportion of the national average number of people
filing for unemployment compensation (note: includes territories)
State allotments adjusted for geographic price variation
No state carryover; unexpended allotments return to the reserve funds
No state matching funds
Reserve funds: The Secretary shall distribute the 5 percent of the annual
appropriation not allocated to states plus unexpended state allotments to
states whose allocations are insufficient to meet their need
Use of Funds:
Premium assistance payments to plans or families (state option)
Premiums used for:
-
COBRA continuation coverage or
-
Other coverage that is equivalent to the Federal Employees' Blue
Cross standard option or meets Secretarial approval, so long as
these plans are economical and comply with the new laws for
portability, availability and renewability of coverage
Administrative costs not to exceed 5 percent of the state's allotment for
that year (with exceptions approved by the Secretary up to 10 percent)
Eligibility for Assistance:
Eligible unemployed individual:
-
State resident who received unemployment compensation for at
least one week in the previous month
-
Received employer-sponsored health insurance for the previous six
months of employment
-
Not eligible for Medicaid or Medicare
-
Combined, monthly family income is less than 240 percent of
poverty
March 26, 1997
2
-
Spouse has no employer-sponsored insurance and no access to
employer-sponsored insurance with an employer contribution of
greater than or equal to 50 percent
Eligible family members:
-
Spouse or dependent of the eligible unemployed individual who is
not eligible for Medicaid or Medicare
Premium Assistance Amount:
Monthly premium assistance to individual or family:
-
100 percent of premium for families with monthly income less
than 100 percent of poverty (adjusted for family size)
-
Sliding scale subsidy for families with monthly incomes from 100-
240 percent of poverty
Limited to 6 months for each period of unemployment
State may limit either the duration or extent of premium assistance, or end
assistance at the point in the year if allotment and any reserve funds are
insufficient to cover need
State Plan:
Deadline: None
Must include description of
-
Summary of how the program will operate
-
Assurance of use of funds for premiums and administrative costs
-
Commitment to provide required coverage
-
Methodology for determining eligibility
-
Coverage formula
-
Coverage reduction method (if funding is insufficient)
-
Notices to individuals about eligibility and coverage reduction
method
-
Commitment to transfer data and furnish records and reports
Plan approval: a plan is considered approved unless the Secretary notifies
the state of disapproval or of the need for new information within 90-days
Reports & Evaluation:
Data and reports as determined by the Secretary
Evaluation by Secretaries of HHS and Labor due on January 1, 2001
March 26, 1997
3
THE PRESIDENT'S FY 1998 BUDGET:
CHILDREN'S HEALTH INITIATIVE
BACKGROUND
Numbers and Trends
Who Are Uninsured Children and Why Are Children Uninsured
Challenges to Covering Children
THE PRESIDENT'S CHILDREN'S HEALTH INITIATIVE
Medicaid Improvements for Children
State Partnership Program for Children
Workers Between Jobs Initiative
Welfare Reform Policies Related to Children
BACKGROUND
Numbers and Trends
2
One in Seven Children Are Uninsured
Uninsured
14%
9.8 million
16 (5) million
Medicaid
44.8 million
23%
Private
63%
Source: March 1996 Current Population Survey. Children are less than 18 years old.
3
While the Proportion of Uninsured Children Remains
Constant, Medicaid & Employer Coverage Have Changed
100%
13%
Uninsured
14%
80%
16%
Medicaid
23%
60%
40%
Employment-Based
67%
Coverage
59%
20%
0%
Other
1987
1995
Note: While it appears that the children losing employer coverage gained Medicaid coverage, recent studies suggest that this is not the case.
Medicaid increased coverage of poor children who do not have access to employer insurance.
Source: EBRI 1997. Children are less than 18 years old.
4
The Number of Uninsured Children Above Medicaid
Eligibility Has Increased
9.8 million
10
(14% of Children)
8.5 million
(13% of Children)
8
5.1
3.3
Above 133 Percent of
million
million
6
Poverty
4
5.2
At or Below 133 Percent
47
2
million
of Poverty
million:
0
1987
1995
Note: Beginning in 1990, states were required to cover children under 6 to 133% of poverty and phase in coverage for children 6 through 18 below poverty. In 1995, children up to age
13 were eligible for Medicaid. Many states have used options to cover children at higher incomes.
5
Source: EBRI, 1996
Who Are Uninsured Children and Why Are Children Uninsured
6
Uninsured Children Come From Working Families
Non-Working
Parents
13%
Working Parents
87%
Note: 62% of uninsured children have parents who work full year, full time
Source: March 1996 Current Population Survey. Children are less than 18 years old.
7
Not All Uninsured Children Are Poor
("Poverty" is about $16,000 for a family of four)
200% of Poverty
Poor:
and Above
Under 100% of Poverty
30%
34%
Near Poor:
100-200% of Poverty
36%
Source: March 1996 Current Population Survey. Children are less than 18 years old.
8
Why Are Children Uninsured
1.
Eligible but not enrolled in Medicaid. According to the General Accounting Office, an estimated
3 million uninsured children are eligible but not enrolled in Medicaid.
2.
Parents earn too much for Medicaid but too little for private coverage. When job-related
insurance loss is put to the side, the most important reason why children lose insurance is that it is
too expensive for the family. The highest rate of uninsured children is in families just above the
poverty line.
3.
Parents change jobs. Nearly half of all children who lose health insurance do so because their
parents lose or change jobs
9
What Is the Distribution of Uninsured Children By Income
100%
14% Private
(2.1 million)
50% Private
80%
22% Uninsured
(8.0 million)
(3.3 Million)
87% Private
(34.7 million)
60%
64% Medicaid
23% Uninsured
40%
(9.8 million)
(3.6 Million)
20%
27% Medicaid
(4.3 million)
7% Uninsured
(2,9 Million)
6% Medicaid
0%
Poor
Near Poor
Middle Class
(15.2 million)
(15.9 million)
(40 million)
"Poor" means < 100% of poverty; "Near Poor" means 100-199% of poverty; "Middle Class" means > 200% of poverty. "Private" includes nongroup and other coverage. * 2.4 million.
Note: The number of children covered by Medicaid is less than 18 million due to under-reporting on this survey. Source: March 1996 Current Population Survey.
10
Challenges to Covering Children
Costs. Although children are the least expensive population to insure, proposals to cover them
can be expensive. This results from two major challenges:
Substitution or "crowd out". Costs rise when a new program substitutes Federal dollars for
employer or state contributions for kids' coverage.
Administration. Proposals have to strike a balance between complex administrative rules and
enforcement - which aim to limit crowd out - and the goals of simplicity and small government.
11
THE PRESIDENT'S CHILDREN'S HEALTH INITIATIVE
Medicaid Improvements for Children
The President's budget gives States the option to provide one year of continuous Medicaid
coverage to children. This will cost an estimated $3.7 billion between 1998 and 2002 and help an
estimated one million children.
Currently, many children receive Medicaid protection for only part of the year. Medicaid
eligibility is intermittent due to fluctuations in family income throughout the year.
This policy allows States to guarantee Medicaid coverage for up to one year even when a
family's income changes. This means that children can remain with the same provider for up
to a year, improving continuity of care.
The President will also work with Governors to enroll eligible Medicaid children. The
President also proposes to work with the Nation's Governors, communities, advocacy groups,
providers and businesses to develop new ways to reach out to the 3 million children eligible but not
enrolled in Medicaid.
The President's budget preserves and strengthens Medicaid's guaranteed coverage for low-
income children. In addition to protecting coverage for the 18 million children already on
Medicaid, the President continues the current law expansion to children aged 13 to 18.
12
State Partnership Program for Children
The President proposes a grant program for States to develop innovative health coverage
programs for children. The President's budget provides $3.8 billion between 1998 and 2002
($750 million a year) in grants to States. States will use these grants to provide insurance for
children, leveraging State and private investments in children's coverage through a matching
system.
The Federal grants, in combination with State and private money, will target uninsured children
whose families earn too much to qualify for Medicaid but too little to afford private coverage.
States have flexibility in designing eligibility rules, benefits (subject to minimums set by the
Secretary) and delivery systems. In return for this flexibility, States will provide annual evidence of
positive outcomes of the grant money - including the number of previously uninsured children
helped by the program.
The program builds upon the successful efforts of States that have tailored programs to address
the particular gaps in coverage for their children. For example, the Florida Healthy Kids program
enlists schools to enroll and insure 40,000 previously uninsured children.
13
Workers Between Jobs Initiative
The President's budget will give States grants to temporarily cover workers between jobs,
including their children, at a cost of $9.8 billion over the budget window.
The initiative will offer temporary assistance (up to 6 months) to families who would otherwise lose
their coverage. This assistance may be used to purchase coverage from the worker's former
employer (through COBRA) or other private plans, at States' discretion. State participation in this
grants program is optional.
Families are eligible for full premium assistance if their monthly income is below 100 percent of
poverty, and partial premium assistance if their income is below 240 percent of poverty. This
assistance is accessible for most middle class families since income drops for the months between
jobs.
This program, which is structured as a four-year demonstration, will help an estimated 3.3 million
working Americans and their families, including 700,000 children, in any given year.
14
FY 1998 President's Budget Medicaid Proposals:
Welfare Reform Policies Related to Children
Retain Medicaid for Disabled Children who Lose SSI
The President's proposal would retain Medicaid coverage for children currently receiving Medicaid who lose their
Supplemental Security Income (SSI) benefits because of changes in the definition of childhood disability.
The welfare law provides a new definition of disability for children separate from that for adults. The comparable
severity standard was repealed and replaced with a new, statutory definition of disability for children¹. The new
statutory definition requires a child's impairment or combination of impairments to cause more serious functional
limitations in order to be considered disabled than did the old law.
Under current law, many of these disabled children could lose their Medicaid coverage if they lost their SSI cash
assistance due to the new definition and could not requalify for Medicaid based on poverty standards for Medicaid
eligibility. States are required to perform a redetermination of Medicaid eligibility in any case where an individual
loses SSI and that determination could affect the individual's Medicaid eligibility.
HCFA's Office of the Actuary (OACT) estimates Federal Medicaid costs of $0.3 million between FY 1998 and FY
2002. This provision would retain Medicaid coverage for approximately 30,000 disabled children in FY 1998.
CBO estimates Federal Medicaid costs of $1.0 billion between FY 1998 and FY 2002.
1 Before P.L. 104-193, a child was considered disabled for purposes of eligibility for SSI if he or she suffered from any medically
determinable physical or mental impairment of "comparable severity" to an impairment(s) that would make an adult disabled.
15
Exempt Immigrant Children from the Medicaid Bans and Deeming
The President's budget would exempt immigrant children from the bans on Medicaid eligibility for
current and future "qualified aliens." Immigrant children would also be exempt from the new deeming
requirements that require the income and resources of an immigrant's sponsor to be counted when
determining Medicaid eligibility.
Under current law, immigrant children could lose their Medicaid eligibility if a state chose to deny
Medicaid assistance to immigrants who resided in the U.S. on or before August 22, 1996.
Immigrants who enter the country after August 22, 1996 are banned from receiving Medicaid for five
years. Current law also requires deeming the income and resources of their sponsors for
determining Medicaid eligibility.
OACT estimates Federal Medicaid costs of $0.2 billion between FY 1998 and FY 2002. This
provision would retain Medicaid coverage for approximately 30,000 non-disabled children in FY 1998.
CBO estimates Federal Medicaid costs of $0.4 billion between FY 1998 and FY 2002.
17
Cost Estimates for FY98 President's Budget Children's Health Proposals
(In Billions)
Total
Total
FY1998
FY1999
FY2000
FY2001
FY2002
FY2003
FY2004
FY2005
FY2006
FY2007
1998 - 2002
1998 2007
Children's Health - OMB Scoring
New Mandatory Spending
State Partnership Demos
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
3.8
7.5
Medicaid Spending
MCD Outreach Impact of State Demos
0.1
0.1
0.2
0.3
0.4
0.4
0.4
0.5
0.5
0.5
1.1
3.4
12-mo Continuous Eligibility for Children
0.3
0.5
0.7
1.0
1.2
1.3
1.4
1.5
1.6
1.8
3.6
11.2
Total
1.1
1.3
1.7
2.1
2.3
2.4
2.6
2.7
2.9
3.0
8.5
22.1
Children's Health - CBO Scoring
New Mandatory Spending
State Partnership Demos
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
3.8
7.5
Medicaid Spending
MCD Outreach Impact of State Demos
0.1
0.1
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.8
1.8
12-mo Continuous Eligibility for Children
0.9
0.9
1.0
1.0
1.1
1.1
1.2
1.3
1.3
1.4
4.9
11.2
Total
1.8
1.8
2.0
2.0
2.1
2.1
2.2
2.3
2.3
2.4
9.5
20.5
In addition, the Administration has an initiative for Health insurance for workers in-bewteen jobs. CBO and OMB estimate that this will cost $9.8 billion from 1998 - 2002.
Heatlh insurance for workers in-between jobs will assist approximately 3.3 million people in FY 1998, including 700,000 children.