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CHAPTER I: EARLY IMPLEMENTATION OF
THE CHILD HEALTH INSURANCE PROGRAM

Background
Research has demonstrated that children with health insurance coverage have greater access to medical care than those without coverage. On average, those with health insurance visit doctors more frequently than those without coverage. A 1993 survey, for example, found that of all children who had no physician visits in the past year, 39 percent were uninsured compared to 20 percent of children with private coverage. (See Exhibit 1.) Children with health insurance coverage pay fewer visits to the emergency room in an average year than those without coverage. Those with health insurance develop fewer chronic illnesses, and those they do develop are treated more successfully than the chronic illnesses of uninsured children.

Parents report that children with health insurance are able to obtain regular primary and preventive care. With the help of proper preventive care, including immunizations and regular check-ups, it is possible to identify children’s problems as they occur, treat them as early as possible and avoid unnecessary complications. A common adage among health policy analysts, researchers, and service providers is, "Children are not little adults."

Recent trends in health insurance coverage have not been kind to the nation’s children. The Census Bureau estimates that at least 10.7 million children lacked health insurance coverage in 1997, up from 9.8 million in 1995.1 The proportion of all children with no health insurance increased from 13.8 percent in 1995 to 15 percent in 1997. The proportion of poor children with no health insurance rose to nearly 24 percent in 1997, from 21.4 percent in 1995.2

The Medicaid program, begun in 1965, was designed to cover the health care costs of children and families in poor and near-poor households. For children, Medicaid, which includes Early and Periodic Screening, Diagnosis and Treatment (EPSDT) Program provides comprehensive benefits including preventive, primary, developmental and long-term care services to eligible children. Under current Federal law, States must cover all children up to age six with family incomes up to 133 percent Federal poverty level (FPL) and children age six and older and born after September 30, 1983, with family incomes at or under 100 percent FPL. Under this provision, States must phase in coverage one year at a time so that by September 2002, all children under age 19 living below poverty will be eligible.
 
Exhibit 1
Source: National Center for Health Statistics, 1997.  Kaiser/Commonwealth Survey, 1997.

States have flexibility to extend Medicaid coverage beyond the Federal requirements and a number have done so.

However, even when there is expanded coverage, States have consistently fallen short of enrolling all children who qualify for Medicaid. The American Hospital Association estimates that as many as 4.3 million of the nation’s 10.7 million uninsured children may be eligible for but not enrolled in Medicaid.3 Reasons for the gap include inadequate marketing and outreach by State public assistance offices, families unaware of their eligibility, and families reluctant to apply because of the stigma they associate with Medicaid — a government assistance program too much like welfare. Recently, the gap in coverage between those eligible and those enrolled has increased even more.

One segment of the population that, historically, has been enrolled in Medicaid is families on welfare. Until recent changes, families with children who were receiving cash payments from the most prominent welfare program — Aid to Families with Dependent Children — were automatically eligible for Medicaid. The new welfare law, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, separated Medicaid and welfare eligibility for the first time. Now families losing eligibility for cash assistance may continue to qualify for Medicaid under other eligibility categories. States are required to make a separate determination about Medicaid eligibility when a family no longer qualifies for cash assistance. However, many parents do not know about the possibility of continued Medicaid and workers often fail to provide them with appropriate information about their potential ongoing eligibility.

To help reduce the number of uninsured children and to increase their access to medical care Congress established, in 1997, a new Children’s Health Insurance Program (CHIP) as Title XXI of the Social Security Act. Intended to supplement — not supplant — Medicaid, CHIP is designed to find and enroll "targeted low-income children" whose family income puts them above the Medicaid eligibility threshold, but below an income level that makes private health insurance premiums affordable. A targeted low-income child is one whose family income does not qualify for Medicaid, but is lower than 200 percent of the FPL — approximately $32,000 for a family of four, in 1998.4

The statute clearly requires States to first screen every child for Medicaid eligibility before determining eligibility for CHIP. In this way, Congress sought to ensure that every child is enrolled in the correct program and that CHIP would help increase the number of insured children across the nation.

Key Requirements for CHIP
The law allows States to provide children’s health insurance in one of three ways: 1) by developing a State-initiated plan for children’s health insurance; 2) by expanding current State Medicaid provisions to incorporate more uninsured non-Medicaid children; or 3) a combination of both. The law further lays out options for the benefits package of CHIP programs in States choosing to implement a State-initiated program. Those States must provide benefits equivalent to one of the following: benchmark coverage (i.e., the standard Blue Cross/Blue Shield Preferred Provider Option, the health plan that is provided for State employees, or the HMO plan with the largest enrollment in the State); benchmark-equivalent coverage (any other health plan that is equivalent to the benchmark plans); existing comprehensive State-based coverage (coverage that already exists in another Statewide program in Florida, Pennsylvania and New York); or other coverage approved by the Secretary of HHS.

States are required to submit, for approval by the Secretary of HHS, a detailed plan of the proposed CHIP program. States need to include the following information in their State Plans:

The law provides for higher Federal matching funds to States for CHIP than the regular Medicaid program. Because of this "enhanced matching rate" for CHIP, additional provisions were added to ensure that Medicaid eligible children are enrolled in Medicaid and not CHIP, and that CHIP coverage does not substitute for private coverage. These potential substitutions of coverage are called "crowd-out." See the sections in this chapter on Federal/State Financing and Crowd-out Prevention for additional details on the statutory requirements and HCFA(now known as CMS) guidance to States.

The Study
The Assistant Secretary for Planning and Evaluation(ASPE) in the Office of the Secretary, U.S. Department of Health and Human Services(HHS) commissioned the American Institutes for Research to conduct this study — intended to be one of the earliest studies of CHIP implementation.

Purpose
ASPE commissioned in the spring of 1998 a study of the early implementation of CHIP. The study was designed to understand and document the decisions in six States regarding the:
  • planning process;
  • key factors affecting the program design in their initial plans submitted to HHS;
  • CHIP program design as a separate State-initiated program, a Medicaid expansion, or a combination;
  • choice of income eligibility levels;
  • parameters of State-initiated health insurance programs implemented prior to CHIP; and
  • implementation of specific features of their CHIP programs during the early months.
  • ASPE intends the resulting report and the information collected about different State practices to be shared with other States, particularly those that might not be as far along in their own implementation.

    Issues Selected
    ASPE staff chose, for its first study of CHIP, to focus on three issues of particular interest to them and the Health Care Financing Administration(now known as Centers for Medicare and Medicaid Services(CMS)) (HCFA(now known as CMS)), the agency administering the CHIP program. These issues are the States’ efforts to:

    Methodology
    The methods utilized for this study emphasized site visits to selected States, and in-depth interviews with gubernatorial, executive agency, legislative, and advocacy organization staff. The information presented in this report, unless otherwise noted, reflects data and opinions presented by each State’s officials. AIR staff supplemented the interviews with reviews of relevant research on children’s health insurance and access to care, State Plans, State design papers, outreach materials, applications and enrollment packets, and available State research reports. Staff also interviewed national experts on children’s health, insurance coverage, welfare and Medicaid from the Center for Law and Social Policy, Institute for Health Policy Solutions, National Conference of State Legislatures, and National Governors’ Association. State visits were conducted between September 1998 and January 1999.

    The product of those interviews and reviews are individual State case studies of the early implementation of CHIP. The case studies generally reflect conditions in the fall and winter of 1998/99, except in Colorado where significant changes occurred later that warranted inclusion in that State’s case study. All case study drafts were thoroughly reviewed for accuracy by State officials and advocacy staff who were interviewed.

    States Selected
    Selection of States to be the subjects of site visits and case studies was a group effort. In June 1998, ASPE convened an informal working group of representatives from their own office and from other divisions in HHS including HCFA(now known as CMS), the Health Resources and Services Administration, Agency for Health Care Policy and Research, and Administration for Children and Families.

    The group determined that they would select States from among those with plans approved by HCFA(now known as CMS), as of June, 1998, that represented a mix along the following dimensions:
     


    Additional criteria for selection were that a State be far enough along in implementation (at least six months) that they have experiences to report, that there is evidence they have (or have plans to collect) data for evaluation, and that they subsequently indicate a willingness to participate in the study.

    Based on these criteria, the working group chose the following States for inclusion in the study:
     


    However, by the time the site visit was scheduled in South Carolina, the Governor had lost his re-election and it was difficult for the outgoing staff to participate. To replace South Carolina with another southern State, Alabama was chosen. Exhibit 2 displays selected characteristics of the six States and their CHIP programs.

    Organization of the Report
    Chapter I is a cross-case analysis of early implementation in the six study States. It opens with an analysis of common themes and contrasts in the States’ legislative history and implementation of children’s health insurance, Federal/state financing of the programs, and key players in the administration of CHIP. The remaining sections focus on analysis of outreach activities, crowd-out prevention strategies, and data collection and evaluation methods.

    Chapters II — VII are devoted to an in-depth case study of each State. Each case study is organized in the following manner:

    Featured in the section on outreach is advice the State officials chose to share with other States. Where available, the individual case studies provide Web addresses for other States to access outreach materials, application forms, research studies, and other reports.

    Exhibit 2

    CROSS-CASE ANALYSIS

    HISTORY AND IMPLEMENTATION
    A history of pre-CHIP programs in most of these States helped smooth enactment of conforming legislation. Since five of the States were poised to expand health insurance for low-income children at the time that Title XXI passed, it made it easier to quickly conform with Title XXI provisions. In all six States, implementation of CHIP was smoothed by broad-based advisory boards of private and public officials, gradual expansion of coverage, and targeted outreach to known pools of CHIP-eligible children who were already enrolled in State-funded (pre-CHIP) public health insurance programs.

    History
     

    Precedence was helpful. Five States had a history of State-initiated programs to provide public insurance or direct services for uninsured, low-income children. Those States were able to build on existing administrative structures, outreach, enrollment practices, and provider networks.
    Timing was critical. Five States were poised to expand coverage for more uninsured, low-income children when Title XXI passed. This facilitated their efforts to comply with the new Federal requirements for Title XXI and allowed them to quickly initiate CHIP.
    Bipartisanship prevailed. Interviews with legislative and executive officials testify to the bipartisanship that is a hallmark of both pre-CHIP and CHIP enabling legislation. Officials reported that "doing good things for children’s health" is endorsed by both parties in all States.
    Finding State matching funds was easier in some States than others. The strong fiscal condition of some States, and their attendant budget surpluses helped. In two States, statutory limitations on expenditure growth capped funding. In two States, increased tobacco taxes provided additional revenues for children’s health.
    States’ experience with Medicaid played a role in the debates in two State Legislatures.
    Implementation
     
    Advisory groups helped some States secure buy-in from a wide group of interested stakeholders. Through a variety of mechanisms, private sector CEOs, physicians, family representatives, and executive agency officials helped design programs and built broad support among Governors, legislators, advocates, and other stakeholders.
    Children’s advocacy organizations in all six States substantially influenced the planning and implementation of CHIP. They helped influence the design of benefit packages, advocated for low or no cost-sharing by families (premiums and co-payments), collaborated on outreach strategies and, in some cases, encouraged States to collect specific types of data.
    Implementation is proceeding in phases in all six States. Some are first expanding their State-initiated programs and expanding Medicaid later while others are doing the reverse. Most States, but not all, are planning an employer buy-in program for a later phase.
    FEDERAL/STATE FINANCING

    Title XXI of the Social Security Act authorizes $24 billion over five years for CHIP with specific allocations to each State.5 The formula for allocating funds is based on each State’s share of the nation’s low-income uninsured children in families with income below 200 percent of the Federal poverty level (FPL), adjusted for a geographic health care cost factor for each State. Federal matching contributions are called the "Enhanced FMAP."

    The Enhanced FMAP for a State for a fiscal year is "equal to the Federal medical assistance percentage (i.e., the State’s Federal Medicaid matching rate6) increased by 30 percent of the difference between its regular Federal Medicaid matching rate and 100 percent; but in no case shall the enhanced FMAP for a State exceed 85 percent. Thus, the Federal contribution to total expenditures is higher in CHIP, vis-a-vis the State contribution, than it is in Medicaid. For example, a State that pays 50 percent of its Medicaid costs (with the Federal government paying the other 50 percent) has an enhanced Federal match of 65 percent and is responsible for 35 percent of the new CHIP costs.7
     

    None of the six States have drawn down their full Federal allocation of matching funds in the first year.

    First, some States designed limited "placeholder" plans that are starting small. In addition, as is common with all new Federal public assistance programs, these States need time to fully implement CHIP. Considerable staff time and attention is required to plan, analyze data for program design, obtain State legislatures’ approval, obtain Federal approval of official State Plans, design procedures and forms, select or expand on outreach strategies, collaborate with other public agencies and private organizations, and initiate or modify media campaigns. Implementing a new program must necessarily begin slowly, to allow time to test and redesign along the way, before full operation is feasible.

    As a result, none of the six States are enrolling all eligible children or expending their full allotment of Federal funds in the first year. Even States with fully matured pre-CHIP health insurance programs cannot become fully operational in the first year or two. It has taken time for media campaigns and other marketing and outreach to succeed. States are, however, making concerted efforts to locate traditionally hard-to-reach populations, such as ethnic minorities and families living in rural areas.

    Exhibit 3 portrays the allocation of Federal matching funds and State matching rates.

    Exhibit 3
    Federal/State Financing FY98

    Federal Matching 
    Funds Allocated
    State 
    Matching Rate
    Alabama $85.6 million 21 percent
    Colorado $42 million 34 percent
    Massachusetts $45 million 35 percent
    New York $257 million 35 percent
    Ohio $116 million 29 percent
    Oregon $40 million 27 percent

    KEY PLAYERS AND ADMINISTRATION

    Title XXI granted States considerable discretion to decide which agencies will oversee program administration, including outreach, eligibility determination, final enrollment, monitoring crowd-out, and collecting data for evaluation.
     

    CHIP implementation and administration in the six States reflects a rich mosaic of State agency partnerships and collaboration with other State and county agencies, community organizations, advocates, and the private sector. Many States also rely on different types of advisory groups to recommend policies, program design, and phased expansions.

    The individual case studies reveal the broad array of State agencies, county agencies, community organizations, advocacy groups and private sector organizations involved in design, administration, outreach, crowd-out prevention and data collection for evaluation.
     

    Alabama
    Lead agency: Department of Public Health
    Key collaborators: State Medicaid Agency, State Employees Insurance Board, Department of Education, Children’s Hospital, State Hospital Association, Children’s Rehabilitation Services, State Medical Association
    Colorado
    Lead agency: Department of Health Care Policy and Financing
    Key collaborators: Foundation for Children and Families (since replaced by a private, non-profit contractor), Department of Public Health and Environment, Division of Insurance, Community Health Network
    Massachusetts
    Lead agency: Department of Health
    Key collaborators: Department of Public Health, Area Health Education Center, Department of Transitional Assistance, Department of Education, Office of Child Care Services
    New York
    Lead agency: Department of Health
    Key collaborators: New York Health Plan Association, Unemployment Insurance Division, Child Support Enforcement Office, Department of Education
    Ohio
    Lead agency: Department of Human Services
    Key collaborators: 88 county agencies or non-profit organizations in those counties, Department of Health, Governor’s Ohio Family and Children First Council, Bureau for Children with Medical Handicaps, Child Care Centers, Medical and School Nurse Associations
    Oregon
    Lead agency: Office of Medical Assistance Program
    Key collaborators: Insurance Pool Governing Board, Office for Oregon Health Plan Policy and Research, 924 "community partners" representing a wide variety of State and local agencies and service providers


    OUTREACH

    Title XXI requires each State plan to describe its efforts to identify and enroll all uncovered children who are eligible to participate in public health insurance programs. By law, enhanced Federal matching funds for spending on administration (direct services, administration, and outreach and data evaluation) cannot exceed ten percent of the State’s benefit expenditures. This limit may be waived by the Secretary, allowing the State to use more than ten percent for direct services, if these services are considered to be cost-effective. For States choosing to expand Medicaid, once they reach the ten percent limit for CHIP, they may only claim the regular Federal match rate for administrative expenditures.

    HCFA(now known as CMS) stresses the importance of making enrollment as easy and accessible as possible for parents and communities. In a letter to State Health Officials, dated January 23, 1998, HCFA(now known as CMS) addressed the topic of outreach. For more information on HCFA(now known as CMS)’s outreach directives, see http://www.hcfa.gov/init/children.htm and click on Letters to State Officials as well as Frequently Asked Questions and Answers.

    State Approaches
     

    All six States combined Statewide and community outreach efforts. The result is a wide mixture of arrangements between public and private agencies as well as non-profit organizations and for-profit companies. Some outreach services are performed through contracts with the State’s lead CHIP agency and some are in-kind donations.
    States conduct aggressive outreach when they have the fiscal resources to enroll all the children who apply. While some States can market CHIP to "find every eligible child," others must target the children they can enroll given the State’s fiscal constraints.
    States used the existing pool of children already enrolled in public health insurance programs to target their efforts to reach newly-eligible children.
    A Seamless Health Care System for Children
    State officials recognize the need to design an insurance system for lower income children that can accommodate changes in family circumstances that affect program eligibility. It is not uncommon for children’s eligibility to fluctuate between Medicaid, CHIP, private insurance, and/or State-funded programs when employment, family income, or other circumstances change. All six States have taken steps to ensure that children have the continuity of health care that they need.
     
    States simplified application forms and eligibility determination processes for multiple programs.
    States offer presumptive and continuing eligibility to help ensure the continuity of health care.
    Collaboration Among Public and Private Agencies
    All six States are organizing creative collaborations to market CHIP to eligible families. The CHIP lead agencies have entered into innovative public-private partnerships and are also forging new relationships with other State agencies, private organizations and provider networks.
     
    CHIP lead agencies created new public-private partnerships to help market the program and to enroll eligible children by contracting with non-profit or for-profit organizations.
    CHIP lead agencies coordinated outreach with a variety of State agencies to reach large numbers of potentially eligible children.
    State Education departments and local school districts are critical outreach partners.
    CHIP lead agencies coordinated outreach with other State health agencies, especially when CHIP includes expanding Medicaid.
    CHIP lead agencies relied heavily on a wide variety of child-serving providers, including health professionals.
    Some CHIP lead agencies target outreach for children with special health care needs.
    Marketing to Hard-to-Reach Populations
    All States expressed concern about locating under-served populations and recognized the need to customize strategies for different cultural and ethnic populations.
     
    States recognize the need for local groups to conduct outreach in their own communities, in order to customize marketing approaches and materials to discrete hard-to-reach populations.
    States recognize the need to provide accessible information for bilingual families.
    States recognize that certain populations need more individual attention.
    All States use print and electronic media as part of their public education, especially to reach families living in rural areas and those who rely on their own ethnic newspapers or radio/television stations.
    Outreach Funding
     
    States are using different funding sources to cover their outreach expenses.
    States are allocating outreach funds for a variety of activities or program-related expenses.
    Woodwork Effect
    Some agency officials and legislators worry that vigorous outreach for public insurance programs will draw more eligible individuals "out of the woodwork" than originally projected, and drive costs beyond anticipated levels.
     
    Many States are using CHIP to surface children eligible for Medicaid, as well as CHIP. Some are concerned about the effect of CHIP outreach on Medicaid growth. Still others are concerned about exceeding initial target enrollments for CHIP, itself.
    CROWD-OUT PREVENTION

    Congress has a longstanding concern about whether Federally subsidized health insurance programs unintentionally encourage families to substitute free or low-cost public insurance for their existing private health coverage. In addition, Congress is concerned that the increased availability of public insurance through CHIP may encourage companies to drop coverage for their employees or dependents. This concern about whether public insurance will substitute for private coverage is commonly referred to as "crowd-out." Congress is also concerned about another potential form of crowd-out — that States may substitute CHIP coverage for Medicaid coverage in the face of the enhanced Federal matching rate for CHIP. With the passage of Title XXI, Congress expressly directed States to guard against crowd-out and, where necessary, adopt measures to prevent it.

    Employee crowd-out occurs when families drop employer-provided insurance coverage altogether, or disenroll their children in the dependent portion of that coverage, in order to enroll them in public insurance. It may also occur with families already enrolled in public health insurance who obtain a job with employer-provided dependent coverage, but do not switch their children to that coverage.

    Employer crowd-out occurs when employers cease offering health insurance, or cease offering dependent coverage, because they believe the children could be enrolled in public insurance plans. It may also occur where employers might otherwise offer health insurance with dependent coverage (especially new businesses) were it not for their awareness of public health insurance available for children.

    Some State officials believe that employee crowd-out is not a genuine concern, at least until the income eligibility levels for public insurance reach at least twice the Federal poverty level. Officials often point to a study in Minnesota8 that documented little to no crowd-out.9 Others believe that some small amount of crowd-out is a price the nation should be willing to pay in exchange for providing low-income children with health insurance that provides access to medical care.

    According to the Institute for Health Policy Solutions, little is known about what policies effectively reduce crowd-out. Only a handful of States have State-only programs that pre-date CHIP and offer comprehensive health benefits coverage for children in families with incomes up to 200 percent of poverty. Even fewer have implemented direct measures intended to reduce crowd-out. Further, no empirical evaluations have been conducted of programs that have adopted these measures.10

    There has been no research on employer crowd-out. There is, however, a national trend towards reducing employer-provided health insurance — a trend that has not yet been correlated with growth in public insurance programs for low-income children. This trend is evident in all of the case study States, except Oregon.

    "Title XXI requires that every State Plan include a description of procedures to ensure that the insurance provided by CHIP does not substitute for coverage under (private) group health plans." Policy options identified by States to mitigate or prevent crowd-out include:

    In States with CHIP Medicaid expansions, Title XXI requires that a State: must assure that it will coordinate its program with other public and private programs; may not make its Medicaid eligibility requirements stricter (to crowd children out of Medicaid and into CHIP to claim the enhanced matching rate) than those already in place on June 1, 1997; and must screen CHIP applicants for Medicaid eligibility and enroll them in the latter, if eligible.

    On February 13, 1998, HCFA(now known as CMS) issued guidance for States intending to use CHIP funds to subsidize employer-sponsored group plans. They must develop provisions for their plan that are equivalent to the following:

    The six case-study States adopted a variety of policy options to prevent employee crowd-out. Some State officials dismiss employee crowd-out as a problem, especially where a pre-CHIP program was operating that showed no evidence of crowd-out. They adopted one or two policies, nevertheless, because the statute requires it. One State is taking a wait-and-see policy. Other State officials are concerned about employee crowd-out and adopted multiple policies to prevent it.
    Some officials were sanguine about employee crowd-out, but genuinely concerned about employer crowd-out. One State is subsidizing employers’ premiums with the goal of sustaining employer-provided health insurance for children and attracting more small employers into the employer-provided insurance market.

    Setting the FPL Level

    Waiting Periods
    Waiting periods are policies that require families currently enrolled in, or who recently dropped, employer coverage to have no coverage for some months before their children qualify for CHIP. Waiting periods are sometimes also called "look-back periods." Some States have raised equity concerns about waiting periods: should the waiting period for eligibility apply to families currently or recently insured or should it also apply to those with access to employer coverage that chose not to enroll?
     
     
    Four States use waiting periods as an explicit strategy to prevent employee crowd-out. They only apply the waiting periods to children currently or recently insured by employers. (Alabama, Colorado, Ohio (Phase II), Oregon) Three States use a three-month waiting period (Alabama, Colorado and Ohio) while another uses six months. (Oregon)

    One State currently has no waiting period, but is monitoring quarterly information. If evidence shows that CHIP is substituting for private coverage in excess of eight percent, then the State will impose a six month waiting period. (New York)

    In two States, the equity issue was debated.

    Cost-Sharing
     
    Four States impose premiums on families at graduated levels depending on family income (Alabama, Colorado, Massachusetts, New York). Two of these States also require co-payments.

    A Task Force planning Phase II/CHIP recommended that the legislature impose both premiums and co-payments. The issue will be debated as part of the legislature’s biennial budget for State fiscal years 2000 and 2001. (Ohio) See Exhibit 4 for cost-sharing levels.

    Lock-out Periods
    When States use premiums as a crowd-out prevention strategy, they may impose lockout periods as a sanction against families who fail to pay their premiums. A lockout is a period of time when children are excluded from coverage, or disenrolled by the administering agency, for an arrearage in premium payments.

    Two States impose lockout periods.

    Alabama has no lockout period, but children cannot re-enroll for a new year if premium payments are not current.

    Employer Buy-in
    Title XXI permits States, under certain circumstances, to "buy in" to employer insurance, by subsidizing employee premiums.

    Exhibit 4
     

    Among the six States, three have or are planning a program to help employees buy in to employer insurance by subsidizing their premiums. One State’s program is operating while two others are planning pilot programs later in their CHIP implementation.
    Two States want to pilot programs with a purchasing cooperative of employers.
    Data Collection and Evaluation
    In order to insure that State programs are effective and are reaching the intended populations, States need to collect information and report back to the Federal government on their progress. Evaluations for States with approved plans are due to the Secretary by March 31, 2000. The evaluation will include (but is not limited to) discussion of: the effectiveness of the program in reducing the number of uninsured children in the State; the characteristics of the population being served; quality of services; coordination with other public and private health care programs; analysis of changes that may affect access to coverage; and recommendations for improving the program.

    In addition, States must submit annual reports every January. On a quarterly basis, States must report expenditure data to support their claims for federal matching funds and financial/statistical data for program monitoring and evaluation purposes. States are required to collect data in the following areas:

    The six case study States are now refining their CHIP data collection and evaluation efforts. Several States reported that their efforts initially focussed on establishing the program and the requisite administrative infrastructures so they are only now turning their attention to data collection and evaluation. Several States recommended that data collection and evaluation efforts be planned in the initial program planning. This was often something that they were not able to do due to the quick turnaround in launching their CHIP programs.

    Data Used for Program Design
    All six States are collecting and reporting the required data. However, baseline estimates of the number of uninsured in the State will be difficult for some States to obtain.
     

    The sample size used by CPS is considered too small to accurately estimate the number of uninsured in most states. In some cases CPS data were used in conjunction with other data collection to provide more precise estimates. In other cases, estimates were achieved through State-sponsored surveys.
    During the planning phase, States relied on data from a variety of sources to make decisions about program design.
    CHIP lead agencies contracted with private actuarial companies to help establish reimbursement rates for the program. (Alabama, Colorado, Ohio)

    Data Used for Program Evaluation
     

    States added questions to their CHIP applications or to existing surveys to collect specific information about the CHIP program.
    CHIP lead agencies are monitoring outreach through toll-free hotlines used by families to apply.
    States are measuring quality of care by collecting claims and encounter data as well as consumer satisfaction surveys.
    Other Data Collection Methods
     
    Three States are conducting their own population surveys in order to gather comprehensive information about health care, monitor health care trends, and evaluate the impact of changes in health care.
    Conclusion
    The foregoing analysis focuses on one point in time in the early implementation of CHIP in only six States. That time is the late fall or early winter of 1998/99. In the process of sending draft case studies back to the States for review and fact-checking, some changes in policy and practice were revealed in a couple of States. Since that time and the publication of this report, there are likely to have been changes in the other States, as well.

    This report describes briefly the history of child health insurance programs prior to CHIP in the six States, the locus of administration and collaboration with other public and private administrative entities, and federal/state financing, then focuses the remainder of attention on outreach strategies, crowd-out prevention policies, and data collection and analysis plans.

    The cross-case analyses in this report, and the case studies from which the analyses draw, are based on six States that are not necessarily representative of all the States. Nevertheless, these States were selected from those approved as of June 1998, to represent a mix of program options (state-initiated program vs. Medicaid-expansion, or a combination), income eligibility levels, existence of pre-CHIP State health insurance programs, geographic distribution of the States, and demographic mix of the population. As such, their policies, practices and experiences are likely to be found in many other States. Thus, some general conclusions can be drawn from these States about the early implementation of CHIP.

    States are moving aggressively in the variety, scope, and intensity of their marketing and outreach campaigns to find and enroll both children eligible for but not enrolled in Medicaid, and enroll them in Medicaid, and children eligible for CHIP. The campaigns are both broad-based and targeted to find children among traditionally hard-to-reach families. Statewide mailings and media campaigns are supplemented with targeted outreach to families in deeply rural areas of the States, ethnic minorities, children of foreign-born parents, Native American children, and families known to be traditionally resistant to enroll in government programs. And the most significant feature of States’ outreach strategies appears to be the broad collaboration with other public and private agencies and organizations.

    Crowd-out is not universally embraced as a problem. This is especially the case in the five States with pre-CHIP health insurance programs for low-income children, where staff assert that no credible evidence of crowd-out emerged. Moreover, advocacy organization staff and other researchers note that the adoption of crowd-out prevention policies (e.g., waiting periods and cost-sharing) may thwart the very policy for which Congress adopted CHIP — reduction in the numbers of low-income, uninsured children in the United States. Nevertheless, five States adopted at least preliminary crowd-out prevention methods. The sixth State is taking a wait-and-see approach, carefully monitoring for the potential emergence of crowd-out, and planning to adopt prevention methods if it exceeds a threshold level.

    Finally, data collection for the evaluation of CHIP’s outcomes is nascent. For the most part, States took quick advantage of the availability of Title XXI funding to expedite planning, program design, operational decisions, State Plan submittal and approval, and to vigorously undertake outreach, application processing, and enrollment. At the time of the State visits for this study, data collection was beginning. Perhaps the most developed data collection and analysis activities are those in the two States that have population surveys that include questions on health insurance coverage and access to care. But those surveys are not specific to CHIP, as they were initiated at least one year prior to CHIP implementation.


    1 - American Hospital Association, Campaign for Coverage: A Community Health Challenge, Washington, DC. SPring 1998.
    2 - U.S. Bureau of the Census, March 1996, 1998 Current Population Survey.
    3 - American Hospital Association, Campaign for Coverage: A Community Health Challenge, Washington, DC. SPring 1998.
    4 - States are permitted flexibility to set lower or, in some cases, higher income eligibility levels.
    5 - Total allocations are approximately $4.3 billion for FY 1998-2001, decreasing to $3.2 billion for FY 2002-2004, and rising again through 2007.
    6 - Medicaid matching rates vary by State.  See Exhibit 3 for the six States' matching rates.
    7 - Ullman, F., Bruen, B., and Holihan, J., The State Children's Health Insurance Program: A Look at the Numbers, The Urban Institute, Washington, DC, March 1998.
    8 - Private Market Crowd Out and Minnesota Care: Evidence to Date, Minnesota Department of Human Services, July 1998, p. 4.
    9 - Other researchers caution that Minnesota's experience is not a good case in point.  The State adopted extraordinary crowd-out prevention policies that no other State has so far adopted.  For example, applicants are not eligible if (1) they now have access to or had access to employer-subsidized insurance during the 18 months prior to applying or (2) had any health insurance in the four months prior to applying.
    10 - Hearn, Jean, Coordinating Children's Coverage Expansions with Employer-Sponsored Coverage, Institute for Health Policy Solutions, Washington, DC, March 1998.
    11 - February Letter HCFA(now known as CMS).
     
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