Health Conditions, Utilization, and Expenditures of Children in Foster Care. Conclusion


The health care experiences of children in foster care varied widely across the three states in terms of the continuity of their Medicaid coverage and the level and mix of services they received. This study showed that, on average, children in foster care were more likely to have health conditions documented in the Medicaid claims files, were more intensive service users, and had higher health care expenditures than Medicaid children as a whole. The care provided to foster care children through Medicaid was more complex and costly than the care provided through Medicaid to children who received AFDC or adoption assistance. In contrast, children receiving SSI benefits tended to have higher needs, utilization, and expenditures than children in foster care. There was one important exception: children in foster care were more likely than SSI children (and all other Medicaid children) to have mental health or substance abuse conditions and were more likely to receive behavioral healthcare treatment under Medicaid. The higher use of mental health treatment may be a cause, consequence, or unrelated to foster care placement; the relationship and direction of causality are not clear.

These results have important implications for policymakers and, in some cases, raise additional questions for further research. In particular, the findings from this study have implications for the financing and delivery of services in a managed care context and for assuring continuity of health insurance coverage. The next chapter discusses the implications of study results and recaps the limitations of this study.


1.  This analysis is based on Medicaid eligibility and claims data and is limited to foster care children enrolled in Medicaid. We compared the number of foster care children enrolled in Medicaid (as reported in SMRF) to the number of foster care children reflected in the Voluntary Cooperative Information System (VCIS). In general, the numbers were very similar, suggesting that most foster care children were enrolled in Medicaid. As of January 1994, there were 9,568 children in foster care in Florida (VCIS) and 9,279 foster care children in Medicaid (SMRF). The numbers were even closer in Pennsyvania: 18,761 (VCIS) versus 18,783 (SMRF). In California, however, it would appear that foster care children living with caretaker relatives were and given AFDC but not foster care assistance and were included in the AFDC category rather than the foster care category of Medicaid eligibility. According to VCIS, there were 87,420 foster care children in California as of January 1994, compared to 72, 345 in Medicaid; the differential appears to reflects the number of children living with caretaker relatives.

2.  The other categories of Medicaid eligibility  such as poverty-related expansions, medically needy, and all other categories  comprised between 36 and 42 percent of enrollment but only 26 to 31 percent of expenditures. The data for these children are included in the totals for all children, and are not analyzed separately in this study.

3.  This is consistent with a recent study of enrollment patterns in California and Florida that found a high level of turnover in Medicaid coverage among children leaving AFDC during the year (Ellwood and Lewis 1999).

4.  This could be due to a number of factors, including the higher likelihood of out-of-state placement, the presence of other third-party insurance coverage, or variation in program rules.

5.  Some diagnoses may not be disabling per se but were considered to reflect health status and increased risk of future expenditures (Kronick et al. forthcoming).

6.  By "CDPS condition," we refer to the diagnoses identified in the CDPS, as specified in Table III.8. The rate of CDPS conditions is consistently higher in Pennsylvania than in California. Similarly, utilization and expenditures are consistently higher in Pennsylvania. It is possible that higher utilization in Pennsylvania led to increased diagnosis. It is unclear whether this is due to differences in access, casemix, or other factors. This is discussed further in Chapter IV.

7.  About 6.5 percent of children nationally had some degree of disability each year from 1992 through 1994; children living in poverty had a 1.8 higher likelihood of experiencing disability due to chronic conditions (Newacheck and Halfon 1998). This estimate is based on self-reported data collected through the National Health Interview Survey.

8.  Among adolescents in foster care (age 15 to 18), the percent with a substance abuse diagnosis was 3.4 percent in California and 4.6 percent in Pennsylvania.

9.  One caveat, however, is that the CDPS is calculated on the basis of diagnoses present in claims and, to the extent that children receiving adoption assistance have other third-party coverage, fewer diagnoses may be recorded in claims. As we will see in the next two sections, adoption assistance children have lower health care utilization and expenditures, but it is impossible to tell whether this is due to the presence of other third-party coverage, fewer health care needs, or more barriers to care.

10.  The rate of MR/DD in the Medicaid population is undoubtedly understated based on claims data. Children with MR/DD tend to be low users of health services and oftentimes, a diagnosis of MR/DD is not recorded on the claim. This would result in an under-reporting of MR/DD diagnoses based on claims data (Burwell et al. 1997). The Social Security Administration (1998) estimates that 39 percent of children receiving SSI benefits are disabled due to mental retardation. It is also likely that the level of MR/DD in the foster care population is understated. To the extent that foster care children with MR/DD are also receiving SSI benefits, they may not be classified in the foster care category due to the coding limitations on the SMRF file. Only one eligibility category is recorded per month, and SSI may take precedence over foster care.

11.  A higher rate of asthma among children in foster care may be due to residual lung disease as a consequence of prematurity. Another possible explanation is that wheezing is associated with stressful life events, especially maternal separation during the first year of life (Halfon et al. 1995).

12.  For example, the state benchmarks are constructed based on 100 percent of birth certificates and they count multiple births individually. The claims-based delivery rates do not count multiple births separately. In addition, they are derived from claims that are tied to the mother's record number. In some cases, however, the delivery claim is submitted with the infants' record number and is not linked back to the mother. These methodological differences could result in an understatement of claims-based delivery rates compared to the state benchmarks.

13.  This could be a function of better health status (recall Table III.9). Alternatively, adopted children may have other sources of health insurance coverage that serve as the primary payer, and hence, such utilization would not be reflected in the Medicaid claims.

14.  National estimates are based on self-reported survey data from the 1996 round of the Medical Expenditure Panel Survey (MEPS). As such, they are not entirely comparable to estimates based on claims, but they provide a useful external benchmark for comparison.

15.  Another protocol recommends two assessments during the first year of placement and one visit every year thereafter, unless more frequent reassessment is indicated based on the child's age, a change in foster care placement, or a change in physical or mental health status (AAP 1994).

16.  The proportion of foster care children receiving mental health/substance abuse services was higher than the proportion who had a CDPS condition (recall Table III.9). This could reflect services provided to children with a mental condition that was "not well defined" (recall Table III.13) or services to children without a diagnosed mental condition who were in need of emotional support during transitions. (See Schneiderman et al. for a discussion of the continuum of mental health services for children in foster care.)

17.  This variation may be due in part to differences in state mental health benefits concerning the number of visits allowed for certain diagnoses.

18.  This differential does not appear to be due to maternity care during adolescence, because such admissions were excluded from the inpatient admission rate and days per 1,000.

19.  A hospitalization is often a reason for seeking Medicaid coverage especially for uninsured children. That could explain the higher hospitalization rate among foster care children with part-year coverage.

20.  Because the SMRF file shows only one eligibility category per month, we undoubtedly are undercounting the number of foster care children with SSI eligibility. The only way that a foster care child could be counted as having SSI eligibility in the SMRF file is if they had at least one month of Medicaid eligibility due to SSI, rather than due to foster care. To maximize the likelihood of identifying SSI eligibility, we used eligibility information for two years. Thus, it is possible that the period of SSI eligibility occurred before or after the period of foster care eligibility. In addition, it is possible that some foster care children are included only in the SSI category and not counted in the foster care category.

21.  The AAP (1994) issued a policy statement on health care for children in foster care that is substantially similar to the CWLA guidelines. For a comparison of the two protocols, refer to Rawlings-Sekunda (1999).

22.  There are a number of obstacles to providing health care services to foster care children immediately upon placement. Provider shortages often serve as a barrier to obtaining care, with the emergency room as the only alternative for children in crisis. For children enrolled in Medicaid managed care prior to foster care placement, there can be a delay of one month or longer until they are moved to a new provider.

23.  These services were classified by the state as inpatient psychiatric services although they are provided in community-based settings.