Interim Evaluation Report: Congressionally Mandated Evaluation of the State Children’s Health Insurance Program. A. Background and Policy Development


The increase in managed care arrangements in this country's health systems are well- documented. Today, nationally, more than half of all privately insured persons receive their care through risk-based (capitated, pre-paid) managed care arrangements. For Medicaid, managed care penetration is similar--just under 46 percent of all Medicaid beneficiaries are covered by managed care in the average state. 50

Consistent with the extensive use of risk-based managed care in the United States today, five of the six study states set out to make managed care the cornerstone of their SCHIP delivery systems. 51 California, Colorado, Missouri, and New York each launched their programs with the goal of implementing risk-based managed care statewide for SCHIP; in Texas, policymakers acknowledged that managed care implementation would not be possible in many rural areas, but committed to using prepaid arrangements as extensively as possible. State officials embraced managed care for several reasons. First, managed care was described as an efficient way to leverage limited SCHIP dollars. Second, it was viewed as a vehicle for improving delivery systems for low-income children. Third, it was seen as a means of modeling delivery arrangements on those found in private insurance markets. Finally, in some states, managed care offered an opportunity to test new approaches for delivering care that were not feasible within the larger Medicaid program.

Existing service-delivery arrangements, including those in the Medicaid programs, greatly influenced the nature of SCHIP delivery systems in all six states. Missouri built on the managed care delivery system it had launched successfully several years earlier, in counties in the state's more populated east-west corridor. In California, Colorado, New York, and Texas, state officials sought to align SCHIP and Medicaid delivery systems whenever possible, while also extending managed care to a larger number of counties, including rural ones.

Louisiana was exceptional among the study states in that it has experienced minimal managed care penetration in both the private and Medicaid markets and, thus, could not consider using risk-based arrangements for SCHIP. Rather, at the time of our visit, the state had implemented a Primary Care Case Management system in 20 of the state's 64 parishes, and plans called for expanding this system statewide by 2004.

50. This percentage excludes people enrolled in primary care case management. With these people, the percentage in managed care is almost 56 percent. Centers for Medicare & Medicaid Services. "Medicaid Managed Care State Enrollment as of June 30, 2000."

51. Managed care here is generally defined as prepaid, capitated arrangements, as in the model of Health Maintenance Organizations. It does not include managed fee-for-service models such as Primary Care Case Management systems.

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