Children's Health Insurance Patterns: A Review of the Literature. Chapter IV. How Many Uninsured Children Are Eligible for Medicaid and What Is the Medicaid Participation Rate for Children?

12/19/1997

This chapter examines the literature on two related estimates: (1) how many uninsured children appear to be eligible for Medicaid, but are not participating, and (2) how many children overall are eligible for Medicaid and how many participate.(1) More published research has addressed the first estimate than the second, using the family income and age of the uninsured child to calculate the number or proportion of uninsured children eligible for Medicaid, but not participating. In most instances, family income and the child's age are compared to a uniform set of national income standards based on the poverty-related Medicaid expansions.

In reality, though, Medicaid eligibility is much more complex, and it varies substantially by state. State income and asset thresholds for different age groups vary significantly (some state income thresholds now reach 250 percent of poverty for all children under age 18), the majority of states have medically needy programs (with the spend-down component), and the majority of states also extend coverage to so-called Ribicoff children (children in families not meeting AFDC dependent child requirements).(2) Moreover, children with private insurance coverage can be eligible for Medicaid if family income is low enough, if coverage is limited, or if uncovered medical expenses are high enough to reduce family income to medically needy levels. As a result of these complexities, few researchers have attempted to use simulation models to estimate overall Medicaid eligibility for children, accounting for state variation, family structure, and uncovered medical expenses. Even when they have attempted to simulate these more complex provisions, the literature is sparse, largely unvalidated, and tends to lack details on the eligibility simulation algorithms used.

Estimates of the number of uninsured eligible for Medicaid may tend to be too high because of the Medicaid underreporting problem that plagues most of the survey data used for the estimates. Medicaid underreporting suggests that some of the Medicaid-eligible uninsured may actually be enrolled in Medicaid but not reporting it during the survey. Only one organization, The Urban Institute, attempts to adjust for Medicaid underreporting when estimating the number of uninsured eligible for Medicaid. As a result, the Institute's estimate is about half that of the estimates of other organizations using the same data. To complicate matters further, recall from Chapter II that there is some evidence that The Urban Institute may over-adjust for Medicaid underreporting, making their estimate of the Medicaid-eligible uninsured too low. In conclusion, the combined effects of Medicaid underreporting and the difficulty of simulating Medicaid eligibility make estimates of the Medicaid-eligible uninsured variable and inexact.

This chapter first examines the literature on the estimates of the number of uninsured children who are eligible for Medicaid. Then, this chapter examines the more general question of how many children overall are eligible for Medicaid and how many participate.