Innovative State Strategies to Insure Children. New York


I. Overview


A. History and General Description of Program

The Child Health Plus program was created by the New York State legislature in 1990, and by August of 1991, children had begun receiving coverage under the program. Child Health Plus originally provided outpatient services to children under age 13, but after January 1997, the program expanded to include children up to age 19. It is the largest of the thirteen non-Medicaid, taxpayer-funded child health insurance programs in the country. Fifteen insurance plans participate in Child Health Plus. Four are indemnity plans and eleven are managed care plans. The risk sharing between the state and insurers covers medical expenses only, with the agreements varying slightly according to insurer. As of July 1, 1997, the program was providing coverage to over 135,000 children. The program has estimated target enrollment over the next few years to total 250,000; this number may increase significantly due to recent federal legislation. The overall intent of the Child Health Plus Program is the following:

To improve the health status of children participating in the program by providing a "medical home";

To provide primary, preventive, outpatient and inpatient health insurance coverage to low income children by removing financial barriers to purchasing such coverage through an individual subsidy program;

To increase children’s access to primary comprehensive, preventive and inpatient health care services; and

To reduce and more effectively target bad debt and charity care expenditures in the state of New York.

B. Support/Opposition for Program in State

New York has a long history of strong child advocacy. In the Year of the Child, 1989, a strong focus was placed on increasing preventive health services for children. Governor Pataki has taken a great interest in expanding the Child Health Plus program.

C. Number of Uninsured Children in State

The number of children under 19 years of age whose family income is at or below 200 % FPL, and who are reported to be not covered by health insurance is 399,000 in New York State. The U.S. Bureau of the Census determined this number based on the arithmetic average of the number of low-income children and low-income children with no health insurance as calculated from the 1995-1997 March supplements to the Current Population Survey.1


II. Program Design


A. Options Considered for Coverage

Child Health Plus initially had only a $20 million budget, so the benefit package was limited to the services that children utilize most. Only preventive and primary outpatient services were provided in the beginning. In the last legislative session, it was debated whether inpatient, dental, vision, and hearing benefits should be included in the benefit package. Inpatient care was deemed the most important to include, and was added to the benefit package in the fall of 1997.

B. Target Population

Children considered eligible for the program must be either uninsured or underinsured, residents of New York State, under the age of 19, and not eligible for state Medicaid benefits. Children under age 19 in families with an income below 222% FPL are eligible for an income-variable premium subsidy. Children in families above 222% FPL are permitted to buy into the program without any premium subsidy. In 1993, 37% of children throughout New York State who were eligible for Child Health Plus were enrolled in the program (29% of eligibles in New York City and 50% from the other regions).2

C. Services Included in Benefit Package

Child Health Plus initially provided subsidized primary and preventive outpatient care to children under age 13. In 1997, the program extended benefits to include inpatient care, excluding inpatient services for mental health and substance abuse, and extended coverage to include children through age 18. Consumer and anti-poverty groups advocated unsuccessfully for other alternatives to a hospitalization benefit, mainly expanding the benefits to include dental care and offering families the option of buying a cheaper, basic plan without hospitalization.

The benefit package covers preventive care, ambulatory surgery, emergency care, prescription drugs, health screenings, immunization, inpatient and outpatient care, and outpatient alcohol and drug abuse services. New York State allowed insurers to offer optional benefits that included dental, vision, hearing, and speech therapy, but none of the insurers chose to offer these optional benefits.

D. Provider Network

The provider network currently consists of 15 insurance plans contracted to provide health services to enrollees, of which 11 are MCOs and 4 are traditional indemnity plans. As of October 1, 1997, 24 insurance plans, with almost all providing a managed care product, began participating in Child Health Plus. The reimbursement of providers varies by the insurer and its arrangement with providers

E. Sources of Financial Support for the Program

The program is financed through a provider surcharge established under the New York Health Care Reform Act of 1996. The premium contribution from families participating in the program is an additional funding source. Appropriations have been increased every year.

F. Estimation of Initial Costs

$20 million was originally appropriated for the program.

G. Cost-Sharing Arrangements

With the expansion of the benefit package to include inpatient care, a $2 co-payment was implemented for all physician visits, except for those provided on an inpatient basis, for well child care, or as otherwise prohibited by insurance law. As authorized in Chapter 922 of the Laws of 1990, a reasonable (i.e. $1 to $3) co-payment will be charged for prescriptions and nutritional supplements as defined in the original and expanded benefit packages. Insulin has no co-payment. A $35 co-payment for failure to notify an insurer within 24 hours of emergency room use and/or inappropriate emergency room use may be charged.

Premiums were also increased with the advent of expanded benefits. There is some concern that the higher premiums might affect participation, but the Department of Health felt that families would be willing to pay for the peace of mind that the inpatient benefit provides. Families with incomes between 120% and 160% of the federal poverty level will now go from paying no premium to a maximum of $36/month. Those with incomes above 160% of the poverty level will see their premiums rise 400% or more. Children in families earning less than 120% of the poverty level will continue to receive coverage for free.

New York Child Health Plus Premium Sliding Scale3

Monthly Premium


$9 per child up to family maximum of $36

$13 per child up to family maximum of $52

Full premium:
$58-99 per member 4

Percentage of Poverty





H. Marketing of Program

The New York Child Health Plus Program allots approximately 1-2% of the total budget to outreach and marketing. Outreach and marketing materials are prepared by three different sources: Child Health Plus staff, the contracting HMO plans, and by marketing contractors. Specific state staff act as liaisons to the marketing departments of the HMO plans and to the marketing contractors. One marketing contractor was hired for New York City and one for the rest of the state. Both engaged in major activities including targeting schools and health centers, producing large volumes of mailings, and organizing meetings and presentations at which over 16,000 people attended. Any materials developed outside of Child Health Plus must be submitted and approved by the state office. There are also specific clauses in the contracts with the plans and contractors that prohibit them from using fraudulent marketing and enrollment activities.

A 1996 evaluation of Child Health Plus by The Rochester Child Health Studies Group found that rural and inner city minority children were not being reached by marketing efforts. The extent to which marketing contributed to heightened demand for Child Health Plus was not clear. Most parents heard about Child Health Plus from a friend, school, or their doctor. Very few individuals were reached as a direct result of a marketing activity such as TV, mailings, or community meetings.

I. Eligibility Criteria

Children considered eligible for the program must be either uninsured or underinsured, residents of New York State, under the age of 19, and not eligible for state Medicaid benefits.

J. Verification Process

Child Health Plus relies on the HMOs that they contract with to collect applications and determine eligibility. All insurers must request a pay stub or W2 form to verify income eligibility. There is presumptive eligibility so if a child wants to enroll in the program, but doesn’t have the paperwork completed, they can be enrolled for 60 days. Enrollment under presumptive eligibility begins as soon as the application is received and is made permanent when the necessary documentation is submitted. The child is dropped from CHP if the family does not submit documentation by the end of the presumptive eligibility period.

K. Enrollment Process and Waiting Period

Enrollment is done by mail. There is a 1-800 number for assistance in filling out the form. Some plans reported that the staff available to process incoming applications was only one half-time employee. If the number of applications exceeded the staff resources available to process applications, the result was a longer waiting period for potential applicants’ coverage to be approved and instituted.5 Children are enrolled for a 12-month period, and they are recertified annually based on their family's gross income.


III. Implementation


A. Amount of Time it Took to Implement the Program and Begin Enrollment

The Child Health Plus program was passed by the New York State legislature in 1990, and by August of 1991, children began receiving coverage under the program.

In September 1990, organizations that met the statutory criteria were invited to submit proposals to implement Child Health Plus. This noncompetitive submission was pursuant to a Request for Plans process issued by the Department of Health in consultation with the State Department of Insurance and the Department of Social Services; 1,600 qualifying organizations received the RFP. Nine proposals representing 15 insurers were received in response to the RFP. Reviewers assessed the submitting entity’s knowledge, experience and capability, project design, cost, implementation time frame, sufficiency of provider panel to meet demands of target enrollment, as well as provision of primary and preventive care. Insurer marketing plans were examined for their cost, effectiveness and interaction with community-based networks to assure strong grass roots outreach and sensitivity to different communities.


IV. Administration


A. How Program Fits within the State Structure


B. Administrative Costs of the Program

Administrative expenses represent 10% of total costs.5

C. How Premiums, Copays, and Deductibles are Collected

Individual providers collect co-payments. A family is given a thirty-day grace period when they fail to pay their child's premium. During this time they are sent a letter reminding them to pay the premium. If they do not pay by the end of the thirty-day grace period, they are dropped from the program.

D. Cost-Shifting to Medicaid

The package includes inpatient care.

E. Interaction with Other Children’s Programs at the State Level

Child Health Plus interacts with Medicaid, Welfare, WIC, and the Prenatal Care Assistance Program (PCAP). The closest interaction is with the Medicaid program.

F. Coordination with Medicaid

The State Department of Social Services (DSS) coordinates with Child Health Plus on referrals between the Medicaid and children's programs. The county DSS offices refer children and families to Child Health Plus. In addition, DSS provides guidance to families regarding assessment of Medicaid and/or Child Health Plus eligibility and procedures for terminating Child Health Plus when Medicaid eligibility is established. Families are not required to participate in spend-down, although they are encouraged to apply for Medicaid if their family income situation changes and it appears that they might be eligible.

G. Coordination with Other Children’s Programs

Other state programs refer to Child Health Plus on an informal basis. These include Welfare, WIC, and the Prenatal Care Assistance Program (PCAP).

H. State Laws the Program is Required to Comply With

Child Health Plus must comply with state insurance law. The program’s legislation required that an evaluation of the program be conducted.


V. Policy Issues


A. Adverse Selection

When insurers submitted premium requests, the premium was structured to account for adverse selection. An extra 10% was added to the premium to compensate for adverse selection.

B. Substitution of Employer Coverage

While the increase in monthly premiums was not created as a mechanism to deal specifically with substitution, limiting substitution will be one of the outcomes. The premium of $9-$13 is more than most people will pay for employer-based insurance, so families will be discouraged from dropping employer coverage for the Child Health Plus Program.


VI. Program Impact


A. Impact on Number of Uninsured Children in State


B. Other Direct Impacts



VII. Future of Program


A. Lessons Learned

Outreach and marketing are very important. Even with current marketing efforts, Child Health Plus still only has 30% penetration.7 States creating new children’s health insurance plans should decide on a package that will serve the most children. Processes to monitor enrollment and quality should also be developed.

B. Vision of the Future of the Program

The only changes in the future to Child Health Plus will be changes that are necessary to comply with federal legislation. Due to Title XXI, there will be many states struggling in the next few months. The impact of federal dollars will be tremendous. Child Health Plus did a procurement in February 1997 that will need to be adjusted for the federal dollars.

1. Final Federal Register notice: State Children's Health Insurance Program; Reserved Allotments to States for Fiscal Year 1988; enhanced Federal Medical Assistance Percentages -- September 9, 1997.

2. Evaluation of Child Health Plus in New York State: Summary. The Rochester Child Health Studies Group. April 1996.

3. Child Health Plus: Your Kids need healthcare. Now you can affort it! Percent of pverty calculated from this NY Department of Health pamphlet.

4. The full premium for NY Child Health Plus depends on the insurance company and the location. For example, insurance companies in NY City have the highest premiums.

5. Evaluation of Child Health Plus in New York State: Summary. The Rochester Child Health Studies Group. April 1996.

6. Evaluation of Child Health Plus in New York State: Summary. The Rochester Child Health Studies Group. April 1996.

7. Interview conducted, Summer 1997.