1. Overview of Programs Reviewed

    2. A brief overview is presented here to help understand the context for the nine programs whose benefit packages and cost-sharing arrangement are described. Short profiles of each program are also included as an attachment to this paper and other aspects of these programs are described in additional papers.

    1. Medicaid Expansion Programs: Minnesota, Tennessee and Washington

      2. Prior to the enactment of Title XXI, states expanding health insurance coverage for children used both expansions of their Medicaid programs beyond Federally mandated eligibility levels and private insurance programs. States that decided to expand Medicaid generally did so to take advantage of the existing administrative structure and to benefit from the ability to get federal support in sharing the costs of the expansion. While states could expand coverage in their programs under Section 1902(r)(2) of the Social Security Act, these expansions generally had to conform to existing Medicaid provisions and expansions were limited to those who met the programs categorical requirements. Those states wanting to expand eligibility more broadly (e.g., include all individuals below a given income threshold) and receive federal match for these expansions were required to apply for federal approval of demonstration waivers under Section 1115 of the Social Security Act. The 1115 waivers also were used by the states to expand the use of mandatory managed care in the Medicaid program in order to obtain cost savings that could be used to finance coverage expansions. 1115 waivers are granted for a five year period (they can be renewed for three years) and are subject to evaluation of cost neutrality.

      Of the nine states examined for this paper, three have enacted Medicaid expansions to insure additional children: Minnesota, Tennessee and Washington. Eligibility requirements for these programs are detailed in Table 1. All three states currently are operating their programs under 1115 waivers although two of the programs did so after having implemented state only efforts.

      Table 1: Eligibility for Children in Medicaid Expansion Programs
      (as of August 1997)

        Minnesota Care TennCare Washington Basic Health Plus
      Age <21 <18 <19
      Income <275% FPL No Income Limits <200% FPL
        1. Minnesota

          2. MinnesotaCare began as a private program in 1992. It was created by the MinnesotaCare Act, legislation that included a variety of laws aimed at reducing costs and expanding access to health care for the uninsured. In 1995, MinnesotaCare was approved as an 1115 waiver demonstration. Because the MinnesotaCare benefit package for children was already very comprehensive, the waiver had little impact on benefits for this population. The implementation of the waiver did, however, change MinnesotaCare's funding stream by making it eligible for federal matching funds. The program moved all AFDC-related families and poverty-related pregnant women and children into mandatory managed care. Phase I extended Medicaid coverage to uninsured families with children under 275% FPL, adding 100,000 more children. Phase II extended Medicaid coverage to uninsured low-income adults without dependent children. Children and pregnant women in the demonstration receive all benefits available to traditional Medicaid enrollees. On May 19, 1996, legislation expanded the income threshold for families without children from 135% FPL to 175% FPL. Families with children will still remain covered up to 275% FPL. Current program enrollment for children up to 21 years of age was 54,428 as of August 1997.

        2. Tennessee

          3. TennCare is a Medicaid 1115 waiver program that began on January 1, 1994, when the existing Medicaid population was shifted into managed care, and the program was opened up to uninsured Tennesseans. Tennessee residents were eligible for TennCare under the uninsured category if they did not have insurance on March 1, 1993. If enrollees have income levels above 100% of the poverty level, they are charged premiums and copayments based on an income sliding scale. The impetus for TennCare was fiscal, as the Medicaid program could not afford to continue operating under a fee for service arrangement. The rapid changeover to managed care resulted in cost savings that allowed more than 400,000 uninsured Tennesseans to obtain coverage through the program. On January 1, 1995, the state closed enrollment to the uninsured population, but remained open to those who were eligible for Medicaid. Enrollment was reopened for children under age 18 who did not have access to insurance on April 1, 1997. Adding another relatively healthy population (uninsured children) to the patient mix has contributed to keeping TennCare's costs low.

        3. Washington

          4. Washington State created the Basic Health Plan for its uninsured population under 200% FPL in 1988. In 1993, in order to expand the state-only sponsored program to more participants, the state decided to seek a federal match for part of the population through a Medicaid expansion for children ages 0-19 under 200% FPL. This Medicaid expansion was called Basic Health Plus in order to avoid the stigma of Medicaid and to correlate it to the Basic Health Plan, the program with a more limited benefit package. The Basic Health plan is offered to both adults and children and had almost 8,000 children in this subsidized plan as of November 1997.

    2. Stand-alone Insurance Programs: California, Colorado, Florida, Massachusetts, New York, and Pennsylvania

      3. Many states have developed children's health insurance subsidy programs independent of Medicaid in order to have greater flexibility in program design. These states were not required to obtain federal approval, but also were not able to obtain federal matching funds that were available to the states using Medicaid waivers to achieve their coverage objectives. Out of the nine selected states, six have stand-alone programs: Colorado, California, Florida, Massachusetts, Pennsylvania, and New York. Eligibility requirements for these six programs are detailed in Table 2.

      Table 2: Eligibility for Children in Standalone Programs (as of August 1997)

       

      CaliforniaKids

      Colorado Children's Basic Health Plan

      Florida Healthy Kids

      Massachusetts Children's Medical Security Plan

      New York Child Health Plus

      Pennsylvania CHIP
      Age 2-18 <13 5-19 <19 1< 19 <16
      Income 150-200% FPL <185% FPL No Income Limits No Income Limits <222% FPL <185% FPL
      0-6 years: 185-235% FPL
      Medicaid Ineligibility Required Yes Yes Yes No Yes Yes
        1. The Three Caring Programs

          2. Three of these state-sponsored programs were modeled after the Blue Cross Blue Shield Caring Programs: the Pennsylvania Children's Health Insurance Program (CHIP), which was implemented in 1993 and serves children up to age 16 under 185% FPL; the Colorado Children's Health Plan (CCHP), which was implemented in 1992 and serves children up to age 13 under 185% FPL; and the CaliforniaKids program, which was implemented in 1992 and serves children ages 2-18 under 200% FPL. All three programs were initially designed to provide coverage for a population of low-income uninsured children in a specific region of each state. While the CaliforniaKids program has remained somewhat localized, serving 33 counties in California, the programs in Colorado and Pennsylvania have expanded in order to serve children statewide. Among the stand-alone insurance programs examined in this paper, CaliforniaKids is unique in that it is entirely a privately funded initiative. CaliforniaKids is a corporate-sponsored, community-based program that was originally piloted in 1992 as part of Blue Cross of California's Partnerships Program. The Pennsylvania Children's Health Insurance Program is supported by a two cent per pack state cigarette tax, generating approximately $21.5 million annually. In 1996, the program's request for an additional one cent per pack did not pass but the state Legislature appropriated an additional $10 million for the program. Colorado's program receives support from a combination of state appropriations and private donations including the state general fund, a portion of the Medicaid teaching adjustment paid to the University Hospital, state cash reserves and interests paid on those reserves, private donations, and enrollment fees.

        2. New York

          3. New York's Child Health Plus program was originally implemented to provide a modest benefit package to as many children as possible within the state. The program initially served only children under age 13 and provided only outpatient benefits. A series of expansions have occurred in both the size and the scope of the program, and New York's Child Health Plus is currently the largest of the non-Medicaid children's insurance programs, serving 135,000 children as of August 1997. New York's Child Health Plus serves children up to age 19 under 222% of the poverty level. Inpatient benefits were added to the program in October 1997. Financing for Child Health Plus comes from the statewide bad debt and charity care pool established under the New York Prospective Hospital Reimbursement Methodology.

        3. Massachusetts

          4. The Massachusetts Children's Medical Security Plan (CMSP) was created in response to the national focus on health care reform. Another driving force behind the formation of the plan was an interest in reducing infant mortality in Massachusetts. Massachusetts was the first state to offer prenatal care up to 200% of the FPL, and CMSP evolved out of this initiative. The program initially began as a program for preschoolers age 0-6, but was subsequently expanded to include children up to age 13, and then up to age 18. Currently, the program is open to families up to 400% of the poverty level. CMSP provides premium-free services to children up to the age of 18 under 200% FPL, with families between 201-400% FPL charged a reduced premium rate based on income and family size. There are three sources of funding for the program: tobacco taxes; general funds; and family contributions.

        4. Florida

          5. The Florida Healthy Kids program requires local counties to participate in the finance and benefit package design of their individual county health insurance program. Local counties contribute 40% and state government contributes 25% of the total medical costs. In addition, the state appropriated $13 million from general revenue funds in 1996 to 1997. Children are grouped together for insurance purposes according to their school districts, and counties determine if they would like to provide benefits for the children in their school districts beyond the standard Healthy Kids package (e.g., add dental benefits or allow children who are younger than school age to enroll). The school lunch program determines eligibility for subsidized health insurance under Healthy Kids. There are three tiers of premiums: children on the free lunch program (less than 133% FPL); children on the reduced lunch program (less than 185% FPL); and all other children, who are required to pay the full premium.