Eligibility Options for Children and Families

Moving Forward in an Uncertain World: SCHIP Reauthorization and Implications for State Coverage Initiatives

January 2008

Cindy MannExecutive Director

Georgetown University Health Policy InstituteCenter for Children and Families

ccf.georgetown.edu

Issues

• What are the coverage options for children under Medicaid/SCHIP?– Federal law– August 17th directive

• Strategies to address the August 17th directive– Legal– Legislative

• Eligibility for parents and pregnant women

Why Do We Care?

• Affordability gap is growing• Differences in cost of living• Broader coverage promotes enrollment among

lower income eligible but unenrolled children

Growth in Private Premiums for Families Far Outpacing Growth in Poverty Level

103%

0%

24%

0%

20%

40%

60%

80%

100%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Family Premium Federal Poverty Level

Note: These data represent the cumulative growth in employee premium contributions for employer-sponsored family coverage and the federal poverty level for a family of three.Source: Agency for Healthcare Research and Quality estimates of 1996-2005 Medical Expenditure Panel Survey Insurance Component Tables, generated using MEPSnet/IC (August 21, 2007); and CCF analysis of 1996-2005 Federal Poverty Guidelines.

$59,099

$50,445

$51,128

$34,477$31,078 $31,352$28,552

$0

$10

$20

$30

$40

$50

$60

Houston,TX

DesMoines, IA

Columbia,SC

Salt LakeCity, UT

Newark,NJ

Stanford,CT

San Fran,CA

Thousands

The Cost of Living Varies Widely

Note: In 2007, 200% of the federal poverty level for a family of three was $34,340 annually. Source: Center for Children and Families, “The Growing Health Insurance Affordability Gap For Children and Families,” (October 2007).

The cost of goods and services worth $34,340 in the average city, adjusted for the cost of living.

200% FPL for a family of 3

Children’s Eligibility

• Bottom line: Longstanding federal law grants states flexibility to set eligibility levels in Medicaid & SCHIP

• But– CMS directive imposes new barriers effectively stopping coverage

with SCHIP funds > 250% FPL -G– CMS intent on stopping new coverage in SCHIP and Medicaid– Rollbacks in eligibility levels likely by August ‘08 unless

courts/congress intervene– Bipartisan group of lawmakers concerned, but so far concern

hasn’t translated into action

Key Routes to Eligibility for Children

• Multiple, overlapping eligibility categories in Medicaid– Mandatory minimum income levels– No upper limit; statute allows expansions through use of

deductions/disregards

• Similarly, SCHIP law establishes a minimum income level (no less than a state’s 1997 Medicaid eligibility level) and no upper income limit– Statute allows states to use income deductions and

disregards

“These (eligibility) expansions (for children) have been accomplished because the law gives states great flexibility to define income. Through income disregards, states effectively raise the income eligibility threshold. Under current regulations, we have no authority to disapprove amendment solely based on income disregards.”

-Secretary Michael Leavitt(letter to Senator Grassley, July 31,

2007)

Before Directive 14 States Covered Children Above 250% FPL Under Approved Plans

AZAR

MS

LA

WA

MN

ND

WYID

UTCO

OR

NV

CA

MT

IA

WIMI

NE

SD

ME

MOKS

OHIN

NY

IL

KY

TNNC

VT

PA

VAWV

CTNJ

DE

MD

HI

DC

AK

SCNM

OK

GA

TX

FL

AL

MA

RI

NH

Source: Center for Children and Families, “Moving Backward: Status Report on the Impact of the August 17 SCHIP Directive To Impose New Limits on States’ Ability to Cover Uninsured Children,” (December 2007)

And 10 More States Had Enacted Expansions

AZAR

MS

LA

WA

MN

ND

WYID

UTCO

OR

NV

CA

MT

IA

WIMI

NE

SD

ME

MOKS

OHIN

NY

IL

KY

TNNC

VT

PA

VAWV

CTNJ

DE

MD

HI

DC

AK

SCNM

OK

GA

TX

FL

AL

MA

RI

NH

IL

Source: Center for Children and Families, “Moving Backward: Status Report on the Impact of the August 17 SCHIP Directive To Impose New Limits on States’ Ability to Cover Uninsured Children,” (December 2007)

What Happened?

There Is No $83,000 SCHIP Child

Note: Medicaid, not SCHIP, covers children below 100% FPL. Source: Center for Children and Families, “Coverage of Uninsured Children in Moderate-Income Families Under SCHIP,” (October 2007).

Income RangePercent of

SCHIP Enrollees

Above 350% FPL None

301-350% FPL 0.05%

201-300% FPL 8.65%

100-200% FPL 91.30%

Total SCHIP Children = 6.7 Million

99.95% Below

300% FPL

August 17th Directive

• Issued as a letter by CMS to state Medicaid directors

• Not precipitated by any change in law or regulations

August 17th Directive: What Does it Say?

• Two preconditions before a state can receive SCHIP funds to cover children with incomes above 250% FPL (gross)– 95% participation rate in Medicaid/SCHIP among low-

income children

– ESI for low-income children cannot have dropped by more than two percentage points over the past 5 years

Medicaid/SCHIP Participation Rates Among Low-Income Children Under 19, 2005-2006

AZAR

MS

LA

WA

MN

ND

WYID

UTCO

OR

NV

CA

MT

IA

WIMI

NE

SD

ME

MOKS

OHIN

NY

IL

KY

TNNC

NH

MA

VT

PA

VAWV

CTNJ

DE

MD

RI

HI

DC

AK

SCNM

OK

GA

Note: The Medicaid/SCHIP participation is calculated as the number of children enrolled in Medicaid or SCHIP as a percentage of the sum of these enrollees and the number of uninsured children. Low-income is defined as below 200 percent of the federal poverty level. Data is averaged over two years to improve the reliability of the estimates. The sample size however is still small particularly for smaller states and the only available data (CPS) does not account for children eligible for Medicaid or SCHIP due to immigration status.Source: Center for Children and Families, “American Families Face Harsh Reality: 2,000 Children Join the Ranks of Uninsured Each Day,” (October 2007).

TX

IL

FL

AL

< 70% 13 states

70%-79.9% 19 states

80%-85.9% 13 states

86%-90% 6 states

including D.C.

> 90% 0 states

• If a state meets the two preconditions, it must:– Force eligible uninsured children who had ESI to

remain uninsured for 12 months (no exceptions?)

– Charge maximum cost sharing (5% of income; alternative posed but not practically possible)

August 17th Directive: What Does it Say?

• States that already have approved plans must comply by August ‘08– Eligibility levels would be rolled back

– CMS says children already enrolled could still be covered, but even those children could lose coverage (if coverage gap)

August 17th Directive: What Does it Say?

Impact So Far

• No state expansion has been approved – Missouri snuck in (?)

• Coverage denied (4 states)– Ohio (200-300% FPL)– New York (250-400% FPL)– Louisiana, Oklahoma (250-300% FPL); 200 - 250% expansions

pending

• Coverage expanded, but only with state funds (2 states)– Illinois (200-300% FPL)– Wisconsin (250-300% FPL)

Responses

• Broad, strong opposition• Letter to CMS signed by 30 Governors• Letter to President Bush signed by 44 Senators• Letter to Congress signed by 40 Senators• Litigation filed by several states

CHIPRA 1: No Income Cap

• CHIPRA 1 maintained state flexibility to set eligibility levels– Regular Medicaid match for coverage above 300% FPL

– Replaced August 17th directive with studies, data collection, new requirements beginning in 2010 for expansions over 300% FPL

CHIPRA 2: 300% Income Gap

• CHIPRA 2 included 300% FPL income cap for coverage financed with SCHIP funds – Replaced August 17th directive similar to CHIPRA 1

SCHIP Extension

• Directive not addressed• Other opportunities will arise over next few

months

23 States Currently Affected by The August 17th Directive

AZAR

MS

LA

WA

MN

ND

WYID

UTCO

OR

NV

CA

MT

IA

WIMI

NE

SD

ME

MOKS

OHIN

NY

IL

KY

TNNC

NH

MA

VT

PA

VAWV

CTNJ

DE

MD

RI

HI

DC

AK

SCNM

OK

GA

TX

IL

FL

AL

Expansion states already negatively impacted: 6 states

Expansion states with 2008 implementation

dates: 4 states

States with approved plans that must comply by Aug. 2008: 14 states

including DCSource: Center for Children and Families, “Moving Backward: Status Report on the Impact of the August 17 SCHIP Directive To Impose New Limits on States’ Ability to Cover Uninsured Children,” (December 2007)

Parent Eligibility

• As with children, federal Medicaid law sets minimum eligibility standards with state option to expand; no upper income cap– Minimum standard much lower than for children

• No option under SCHIP; some states had waivers– CHIPRA would have stopped future waivers and

transitioned current waivers out of SCHIP with reduced match

– Secretary Leavitt: no new waivers or waiver renewals

Some Renewed Interest in Parent Expansions

• Logical next step for many states

• Restoration of coverage

• Recent advances

Pregnant Women Eligibility

• Federal Medicaid minimum standard with option to expand; no upper income cap

• “Unborn child” option under SCHIP

– CHIPRA also would have allowed a pregnant woman coverage option

• SCHIP waivers still available• Beware of CMS: Wisconsin

SCHIP Timeline

10 states adopt expansions over 250% FPL

14 states have implemented plans covering children over 250% FPL

PA plan approved

House adopts SCHIP bill - no income cap

Senate adopts SCHIP bill - no income cap

Secretary Leavitt informs Sen. Grassley that he has no

authority to deny state income expansions

CMS effectively imposes an income cap on SCHIP at 250% (gross)

CMS denies NY’s plan; by December, 6 states either halt expansions, or state-

fund them

Bipartisan group of Senators from 19 of the states affected

call on Congress to end the directive

Congress extends SCHIP to March

‘09, fails to address the directive

NY et al. file suit, NJ files suit

Governors from 30 states send letter to Secretary Leavitt regarding the

directive