Medicaid’s Role for Children in the United States

Jocelyn GuyerGeorgetown University Health Policy Institute

Center for Children and FamiliesWashington, D.C.

jag99@georgetown.eduwww.ccfgeorgetown.edu

February 27, 2006

Children’s Sources of Health Care Coverage, 2003-2004

Uninsured11.7%

Individual 4.3%

Medicaid26.1%

Other1.3%

Employer 56.6%

Note: Medicaid includes the State Children’s Health Insurance Program (SCHIP).Source: Health Insurance In America: 2004 Data Update. Kaiser Commission on Medicaid and the Uninsured, November 2005.

Uninsured19.9%

Employer 24.8%

Other1.5%

Medicaid50.3%

Individual 3.5%

All Children Low-Income Children

Total: 77.7 million Total: 33.3 million

Children 19%

Children 48% Adults 12%

Adults 27%

Disabled 43%

Disabled 16%Elderly 26%

Elderly 9%

Enrollees Expenditures

Medicaid Enrollees and Expenditures by Enrollment Group, 2003

Note: Total expenditures on benefits excludes DSH paymentsSource: Kaiser Commission on Medicaid and the Uninsured estimates based on CBO and OMB data, 2004.

(Total= 52 million) (Total= $252 billion)

Changes in Children’s Health Insurance Coverage Rates, 2003-2004

(Percentage Point Differences)

-0.5%

0.6%

-0.2%

Employer Medicaid Uninsured

Children Adults

Source: Health Insurance Coverage in America: 2004 Data Update. Kaiser Commission on Medicaid and the Uninsured, November 2005.

Change in Number of Uninsured 2000-2004-400,000 children

Trends in the Uninsured Rate of Low-Income Children, 1997 - 2004

22.6% 22.1%21.5% 21.1%

17.8%

15.8%15.0% 15.5%

1997 1998 1999 2000 2001 2002 2003 2004

Uninsured rate of children under 18

Source: Georgetown CCF analysis based on R.A. Cohen, M.E. Martinez. Health Insurance Coverage: Estimates from the National Health Interview Survey, January-March 2005.

Emerging Issues in Medicaid

• Federal Developments– Reconciliation bill– President’s budget and other developments in

Washington

• State Developments

Medicaid Cuts in the Deficit Reduction Act

Reduced Benefits

Higher Cost Sharing

Reducing Payments for Prescription Drugs

Tighter Restrictions on Asset Transfers

Other (e.g., restrictions on provider taxes)

Size of Cut Share of Total

1.3

1.9

3.9

2.4

2.1

11%

17%

33%

21%

18%

*28%

*More than a quarter of all cuts come from increases in reduced benefits and increased cost sharing.

Source: Georgetown CCF analysis based on CBO’s estimate of the Budgetary Effects of Title V of the Deficit Reduction Act of 2005. December 18, 2005.

5-year numbers

(in billions)

Benefit Changes

• New state option to provide reduced package of benefits (“benchmark” benefits) to some groups

• No real standard for “benchmark” benefits, particularly for dental care

• Flexibility applies primarily to parents not on welfare and children

• Cannot be used when a state newly expands coverage• For children, states required to provide an EPSDT

“wrap-around” benefit• States can vary the benefits provided within a group

Cost Sharing Changes - State Options

• State option to allow providers to deny care when people are unable to make a co-payment

• For people above 100% of federal poverty level (“FPL”), copayments up to 10% or 20% of cost

• Drafting error leaves unclear the rules that apply to people below 100% of FPL

• Option to impose premiums above 150% of FPL• Aggregate cap of 5% of income

Proposed Medicaid Cuts in the President’s FY 2007 Budget

Gross Cuts

New Initiatives

Net Cuts

Legislative Regulatory Total

+

-4.9

3.2

-1.7

-12.2

0

-12.2

17.2

3.2

-14.0

87% of proposed cuts are from

regulatory proposals

Note: Numbers may not add up due to rounding.Source: Georgetown CCF analysis based on the Budget of the United States Government, FY 2007.

State Developments

• State fiscal pressures easing, but Medicaid remains a strain

• Waivers in a “new era” that allows for far more sweeping changes– Major shifts in financing (VT)– “Defined contribution” plans (FL)– “Tiering” of benefits (KY)

• States continue to use state plan amendments to reduce/expand coverage

Federal Waiver Guidelines Have Changed

1115 Waivers Before HIFA• States were required to maintain Medicaid and SCHIP benefits and cost sharing protections

Under the HIFA Waivers:• States have no limitations on cost sharing for optional Medicaid beneficiaries and for “expansion” populations who don’t meet Medicaid’s categorical criteria

• States are not required to provide wrap-around coverage for optional Medicaid or SCHIP beneficiaries

• Benefit requirements for mandatory Medicaid beneficiaries are waived if participation is voluntary for the beneficiary

Upcoming Debates

• President’s Fiscal Year 2007 Budget– Medicaid legislative proposals unlikely to be seriously

considered– BUT, Administration may move forward on its own

• New Medicaid waiver initiative• Changes to Medicaid regulations

• Medicaid Commission• SCHIP Reauthorization

Medicaid Standards Matter

Kevin has asthma and at one point needed 13 medications a day

Brandie has multiple medical and developmental problems. She needs daily speech and occupational therapy