The Urban Institute's estimates of the uninsured differed from others because the Institute adjusted for the underreporting of Medicaid in the CPS. The Institute used its Transfer Income Model (TRIM2), a microsimulation model, to test for Medicaid eligibility among non-reporters of Medicaid and then selected individuals to participate so that the size of the resulting Medicaid population in the model matched Health Care Financing Administration (HCFA(now known as CMS)) administrative data according to age and disability status of all persons ever enrolled in Medicaid in a given year. Using the TRIM2 model with March 1996 CPS data, the Institute found the following:
- Children age 0 to 17: 6.9 million uninsured (9.8 percent of all children)
- Children age 0 to 18: 7.6 million uninsured (10.3 percent of all children)
- Adults age 18 to 64: 28.8 million uninsured (18.0 percent of the population)
- All persons age 0 to 65: 35.7 million uninsured (15.5 percent of all persons)
The estimate of 6.9 million uninsured children in 1995 is 30 percent lower than the CPS estimates that include no adjustment for the underreporting of Medicaid. In all, the Institute simulated 2.9 million children to participate in Medicaid who reported no health insurance coverage in the CPS.
Researchers debate whether the Institute's adjustment for the underreporting of Medicaid yields improved estimates of the uninsured. One potential problem is that the Institute's adjustment may overcompensate for the underreporting because the adjustment is based on administrative estimates of the number of persons ever enrolled in Medicaid during the year, while CPS estimates of the uninsured may reflect those uninsured at a point in time. Another potential problem is that although the Institute adjusts for Medicaid underreporting, it makes no adjustment to reported private employment coverage, which could be either over- or underreported. This is important because the uninsured are calculated as a residual and, therefore, accurate estimates of the uninsured require accurate estimates of coverage for all other types of insurance. Despite these potential problems, the fact remains that Medicaid is substantially underreported in the CPS and, therefore, will affect most estimates of the uninsured in one way or another. The issues of underreporting of Medicaid and whether the CPS estimates may reflect those enrolled at a point in time are described in more detail below.