The number of uninsured children who appear to be eligible for Medicaid, according to survey estimates, has raised concerns about the adequacy of Medicaid outreach. In Appendix B we presented findings from the 1992 SIPP panel that suggest that: (1) most uninsured children who become eligible for Medicaid remain eligible for very short periods of time, (2) more than two-thirds of all spells of Medicaid-eligible uninsurance are preceded or followed by periods of uninsurance without Medicaid eligibility, and (3) about one-third of spells of Medicaid-eligible uninsurance are preceded and followed by spells of uninsurance without Medicaid eligibility. The often transitory nature of Medicaid eligibility during spells of uninsurance may help to explain why many uninsured children who appear to be eligible for Medicaid do not enroll. In addition, we found that more than 40 percent of spells of Medicaid-eligible uninsurance were preceded or followed by Medicaid enrollment, and perhaps one fifth of such spells were preceded and followed by Medicaid enrollment. In other words, a significant share of Medicaid-eligible uninsured children appear to have initiated their spells of uninsurance by leaving Medicaid or to have ended their spells of Medicaid-eligible uninsurance by enrolling in Medicaid. For the first group, the key policy question is not why these children have not enrolled in Medicaid but, rather, why they left Medicaid. For the second group the key policy question is not why have these children not enrolled in Medicaid but why have they not enrolled sooner. Thus our analysis of the dynamics of uninsurance, Medicaid eligibility, and Medicaid participation suggests that inferences about the inadequacy of Medicaid outreach from the observation that three or four million uninsured children appear to be eligible for Medicaid at any point in time are overly simplistic and may be only partially supported by a closer examination of this population--particularly before and after the period of Medicaid eligibility. In the first subsection below we examine the demographic and socioeconomic characteristics of uninsured children who appear to be eligible for Medicaid, and in the second subsection we look at Medicaid participation rates among all eligible children by their demographic and socioeconomic characteristics.
1. Medicaid Eligibility among Uninsured Children
Table 8 looks at Medicaid eligibility among uninsured children by demographic characteristics, and Table 9 does so by socioeconomic characteristics. Each table presents the number uninsured and the percent of these who are Medicaid-eligible for each demographic or socioeconomic group.
Each table also indicates what share of the Medicaid-eligible uninsured and the Medicaid-ineligible uninsured each demographic or socioeconomic group represents.
Overall, 33 percent of the uninsured were estimated to be eligible for Medicaid in September 1994.6 The sharpest differentials in this percentage are by age of child. The eligibility rate is 68 percent among infants, then drops to between 42 percent and 48 percent among children age 1 to 10, then drops further to 18 or 19 percent among older children. Children 1 to 5 represent 32 percent of Medicaid-eligible uninsured children while children 6 to 10 combine to represent 34.5 percent of this population. Infants represent 6 percent of the Medicaid-eligible uninsured. Children 11 to 15 represent less than 17 percent of the Medicaid-eligible uninsured but 35 percent--the largest share--of children who are uninsured but not Medicaid-eligible. Similarly, children 16 to 18 account for 24 percent of the Medicaid-ineligible uninsured but only 10 percent of the Medicaid-eligible uninsured.
Racial and ethnic differences in the proportion of uninsured children who are eligible for Medicaid reflect differences in family composition and income level. Non-Hispanic blacks have the highest eligibility rate at 45 percent despite the fact that blacks also have the highest rate of Medicaid coverage by far (Table 3). Hispanic children and those of races other than white or black have eligibility rates between 37 and 40 percent while non-Hispanic whites have a 27 percent eligibility rate. Because of their overall numbers, non-Hispanic whites account for the largest shares of both the Medicaid-eligible and Medicaid-ineligible uninsured at 44 percent and 58 percent, respectively. Hispanic children account for the next largest shares of both groups: 29 percent of the Medicaid-eligible and 25 percent of the ineligible uninsured.
Nearly 51 percent of uninsured children in mother-only families are eligible for Medicaid compared to 33 percent in father-only families, 27 percent in two-parent families and 17 percent among children living without their parents. Again, because of size, two-parent families account for the largest shares of both the Medicaid-eligible and ineligible uninsured at 52 percent and 71 percent respectively. Children in mother-only families represent 42 percent of the Medicaid-eligible uninsured and 20 percent of the Medicaid-ineligible. Children in father-only or no parent families account for 5 percent or less of either group.
Uninsured children living in metropolitan areas are somewhat more likely to be eligible for Medicaid than those living in non-metropolitan areas (35 versus 28 percent), and they account for 74 percent of the Medicaid-eligible uninsured and 69 percent of the Medicaid-ineligible uninsured.
Except for New England, the regions vary by only 11 percentage points in the proportion of their uninsured children who are Medicaid-eligible. Children in the West South Central region have the lowest eligibility rate at 27 percent while uninsured children in the two North Central regions have a 38 percent Medicaid eligibility rate, which is 10 percentage points below that of New England. Consistent with this fairly limited variation in Medicaid eligibility, each region's share of all Medicaid-eligible uninsured children is fairly comparable to its share of Medicaid-ineligible uninsured children.
Medicaid eligibility among uninsured children is highly related to family income level, as we would expect. We see in Table 9 that uninsured children below 50 percent of poverty have a 78 percent Medicaid eligibility rate. Family composition, family resources, and low eligibility thresholds in some states account for why this eligibility rate is not even higher. The Medicaid eligibility rate among children between 50 and 100 percent of poverty is 55 percent while the rate among children between 100 and 200 percent of poverty is about half that level. Children in each of the three lowest poverty classes account for similar shares of all the Medicaid-eligible uninsured: between 28 and 35 percent. Children in families between 100 and 200 percent of poverty account for the largest share of uninsured children who are not eligible for Medicaid--41 percent--while children in families between 200 and 300 percent of poverty represent 25 percent of the Medicaid-ineligible uninsured.
Parents' employment is inversely related to uninsured children's Medicaid eligibility. Uninsured children with at least one parent working full time have a 24 percent Medicaid eligibility rate compared to 44 percent for children with parents working only part time. Children with no working parent have a 64 percent Medicaid eligibility rate, and they account for 35 percent of all Medicaid-eligible uninsured children. Children with at least one parent working full time, who represent more than two-thirds of all uninsured children, account for 50 percent of the Medicaid-eligible uninsured and 78 percent of the ineligible uninsured. Children with no parent present have the lowest Medicaid eligibility rate at 17 percent and account for only 2 percent of the Medicaid-eligible uninsured and 5 percent of the ineligible uninsured.
Medicaid eligibility varies unevenly by parents' education. Children whose parents have at most 7 to 11 years of schooling have the highest Medicaid eligibility rate at 43 percent while children whose parents are college graduates have the lowest eligibility rate at 24 to 25 percent. Children whose parents have exactly 12 years of schooling have a Medicaid eligibility rate matching the national average but because of their numbers account for 43 percent of all Medicaid-eligible uninsured children and 41 percent of Medicaid-ineligible uninsured children. Shares of both populations decline as parents' education rises or falls from this median level.
Interpretation of these very high rates of Medicaid eligibility that we see among subgroups of the uninsured must be tempered by some of our findings from the examination of eligibility over time, which suggest that spells of Medicaid-eligible uninsurance frequently end with children enrolling or re-enrolling in Medicaid or by losing their eligibility, and that spells of Medicaid-eligible uninsurance typically last just a few months. Furthermore, it is important to recognize that Medicaid enrollment of children may be underreported by more than 2 million children at a point in time (see Technical Appendix D), which is about the number of uninsured children that we estimate to be eligible for Medicaid. Now, not all of the children whose Medicaid enrollment is unreported will have been reported as uninsured, and our simulations underestimate the number of children who are eligible for Medicaid. Nevertheless, it is undoubtedly correct to infer that the Medicaid eligibility rate among uninsured children is overstated in Tables 8 and 9. What implications this has for the observed differentials is not clear, however. It is plausible that Medicaid underreporting is greatest for subgroups with the highest percentages of Medicaid eligibles among their uninsured. If so, the differentials themselves may be overstated. On the other hand, if the underreporting of Medicaid coverage is due in large part to a stigma that respondents associate with participation, then respondents who belong to subgroups with low participation could feel this stigma most strongly, with the result that Medicaid participation is more likely to be unreported in subgroups with low participation than in subgroups with high participation.
2. Medicaid Participation Rates
Tables 10 and 11 present Medicaid participation rates in September 1994 by demographic and socioeconomic characteristics among all eligible children and among children with no other
insurance coverage. The first participation rate is defined as the number of Medicaid-enrolled children who were simulated to be eligible divided by the number of all children who were simulated to be eligible.7 The second participation rate is defined as the number of Medicaid-enrolled children who were simulated to be eligible divided by the number of children who were simulated to be eligible and had no other source of insurance. That is, the participation rate is calculated as the number of Medicaid-enrolled children who are simulated to be eligible divided by the sum of these same Medicaid-enrolled children and Medicaid-eligible uninsured children.
Calculated over all eligible children, the estimated Medicaid participation rate is about 65 percent. When we exclude from the denominator those eligible children who are covered by insurance other than Medicaid, the estimated participation rate rises by 14 percentage points to 79 percent.8 Neither rate includes an adjustment for the underreporting of Medicaid participation in the SIPP, and, as explained above, neither rate includes reported participants who were simulated to be ineligible. Even with these caveats, which imply that the rates may be understated, the participation rate among children who would otherwise be uninsured is quite high. While the participation rate among all eligible children is significantly lower, the fact that the difference between the two rates is attributable solely to children who were reported to have other coverage puts the overall participation rate in a new light. Certainly we should not assume that this other coverage was necessarily more comprehensive than Medicaid, and in many cases almost surely it was not. But for a significant number of children who were Medicaid-eligible but not participating the choice faced by their parents appears to have been between Medicaid and another source of coverage rather than between Medicaid and no insurance at all. Why parents in this situation may have elected not to enroll their children in Medicaid is a question whose answer may have implications for Medicaid and CHIP outreach as well as for strategies to minimize the potential crowd-out effects of CHIP.
Comparison of the two columns of Table 10 shows that in addition to raising the participation rate by 14 percentage points, on average, the effect of excluding children with other insurance from a Medicaid participation rate is to render the rates much more equal across demographic subgroups. This is most striking for race and ethnicity, where non-Hispanic whites lag behind Hispanics by 13 percentage points and behind non-Hispanic blacks by 25 percentage points when the participation rate is calculated among all Medicaid-eligible children. When children with other insurance are excluded from the participation rate, whites show effectively the same participation rate as Hispanics (75 percent versus 74 percent) and lag behind blacks by only 13 percentage points. Puzzling age differences are largely eliminated when the rate is calculated just among children who would otherwise be uninsured, and differentials by family composition are reduced as well. A small metropolitan/non-metropolitan difference is eliminated, and the surprisingly low participation rate in New England is increased by 24 percentage points with the alternative measure. While regional differences remain, only one region--the West South Central--is very far out of line with the rest with a participation rate of 69 percent or 19 percentage points below the highest participation rate. In fact, if these two regions are eliminated, the remaining seven regions fall within a 5 percentage point range.
The story is much the same for socioeconomic differentials (Table 11). When all eligible children are included in the calculation, the range of participation rates among poverty classes is 31 percentage points. This drops to 20 percentage points when children with other insurance are excluded, and the relationship between poverty and Medicaid participation becomes U-shaped, with the lowest participation rate found in the middle poverty group and the highest rates found at the ends. Parents' employment shows a similar equalizing of rates with the alternative measure of participation. There remains a monotonic, inverse relationship between the level of parents' employment and their children's participation rate in Medicaid, but the range of participation rates is reduced from 46 percentage points to 26 percentage points. Finally, differentials in children's participation rates by parents' education level are reduced as well, with a 20 point differential across the middle three levels being reduced to 4 percentage points. The children of college graduates (including those who did graduate work) remain much less likely to participate than the children of less educated parents, but instead of being 45 percentage points below the group with the highest participation rate they are less than 25 percentage points below this group. Nevertheless, we continue to see evidence suggesting that the education differential reflects more than just access to health insurance. The 70 percent participation rate for children whose parents have no more than an elementary school education contrasts with participation rates of 84 percent for children below 50 percent of poverty and 86 percent for children with no working parent. The comparatively low participation rate of children in this lowest parents' education category underscores the need for further research on the relationship between education and insurance coverage.
Why do the differentials in participation rates decline when we exclude children with other coverage, and what does this tell us about participation in Medicaid? Some compression of the differentials may have occurred simply because we reduced the variance of participation by removing a group of nonparticipants from the rates. The dominant reason for the reduction, however, is that in removing children with other sources of coverage we have removed one source of the original differentials. That is, differences in Medicaid participation rates exist in part because children in different demographic and socioeconomic groups are differentially likely to have other coverage. That we observe these reductions in differential participation rates also suggest that it is unlikely that most of this other coverage is misreported Medicaid coverage. If it were largely Medicaid, then participation rates would be boosted more uniformly--unless, of course, the misreporting itself occurred disproportionately among groups that were least likely to participate. This is not implausible--particularly if the perceived stigma attached to Medicaid contributed to the misreporting, as well it might. The Medicaid stigma might also contribute to parents' decisions to choose an alternative source of coverage over Medicaid if such coverage is available. Clearly, we have identified an area where further research would be beneficial, as there could be important policy implications in the reasons why parents may have and choose alternatives to Medicaid, as we noted previously.