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)
||Washington Basic Health Plus
||No Income Limits
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.
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.
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.