Simulation of Medicaid and SCHIP Eligibility: Implications of Findings From 10 States. Final Report.. III. Implications for Comparing Eligibility Among States and Programs

08/16/2000

As we show in Chapter II, the variability of income eligibility rules for Medicaid and SCHIP programs is staggering. While we expected to find marked differences in rules across states, the degree of within-state differences was somewhat surprising. This level of variability has two important implications for efforts to simulate Medicaid and SCHIP eligibility and derive estimates of the number of children who are eligible but remain uninsured. First, policymakers, advocates, and researchers cannot simply compare the income thresholds states use in their programs and fully understand how the various Medicaid or SCHIP programs have expanded eligibility for low-income children. For example, when a state uses a Medicaid income threshold of 133 percent of FPL and an S-SCHIP threshold of 200 percent of FPL, the coverage expansion is not a simple difference of 67 percentage points when the Medicaid program uses net income and narrow definitions of "family" and the S-SCHIP program uses gross income and inclusive definitions of family. In reality, the effective difference is much less, as we will demonstrate in this chapter.

Second, the level of variability makes it a challenging task to simulate eligibility for Medicaid and SCHIP, particularly when a high level of precision is desired. Not only must Medicaid and SCHIP rules be programmed separately, but multiple sets of rules may be necessary for each state, in order to identify situations where a child is found eligible under programs thought to have more restrictive income requirements, but who is ineligible for programs with less restrictive income criteria (but, also, less generous disregards). For example, it may be possible that, under certain circumstances, a child may qualify for Medicaid through the TANF program and its generous earnings disregards, but not under poverty expansion rules.

To develop a better understanding of the implications of the variation in eligibility rules, we determined maximum allowable earnings for Medicaid and SCHIP programs in our sample of 10 states. More specifically, we took into account the rules regarding the counting of income and disregards for earnings and child care to determine the maximum amount a family of three can earn and remain eligible for the program. Child care disregards were included in this calculation because, after earnings, they are the most common type of disregard.

The top panel in Table III.1 presents the income threshold for a family of three used by each program in each state. Maximum allowable earnings for a family of three are presented in the bottom panel. The dollar amounts in Table III.1 are translated into the percentage of the 1999 FPL in Table III.2. Maximum allowable earnings for TANF programs range from 23 percent of FPL in Arkansas to 95 percent of FPL in Massachusetts. The Medicaid 1931 levels range from 22 percent of FPL in Alabama to 133 percent in Massachusetts.

In most states, the Medicaid 1931 program either covers the same range of income as the TANF program, or extends coverage to children at slightly higher earnings levels. The one exception is Arkansas, where the TANF program has an effective income level slightly higher than that of the Medicaid 1931 program. Although both programs use a net income test, the threshold used by the TANF program is greater than that of the Medicaid 1931 program.19

For the Medicaid poverty expansion programs, we calculated the maximum allowable earnings for three different age groups--preschool-age children, children ages 6 through 15, and children 16 and older if the Medicaid program extended coverage to older adolescents. In 9 of the 10 states, the Medicaid poverty expansion programs expand coverage for children in families with incomes substantially above the limits for the TANF and 1931 programs (Massachusetts is the exception). All the states in our sample establish eligibility at maximum allowable earnings that exceed the mandated threshold of 100 percent of FPL for children age 6 and older, and all meet or exceed the mandate of 133 percent of FPL for children age 1 through 5. Connecticut is the most generous; maximum allowable earnings for eligibility are slightly above 200 percent of FPL for all children born after September 30, 1983.

  Alabama Arkansas California Colorado Connecticut Florida Massachusetts Michigan New Jersey New York

TABLE III.1
INCOME THRESHOLDS AND MAXIMUM ALLOWABLE EARNINGS AS OF JANUARY 1, 1999 FOR A FAMILY OF THREE

Thresholds for Income Tests for a Family of Three
TANF $164 $223 $775 $421 $872 $303 $539 $459 $636 $577
1931 $164 $204 $775 $421 $872 $303 $1,539 $459 $443 $577
Poverty
Children ages 1 through 5 $1,539 $1,539 $1,539 $1,539 $2,140 $1,539 $1,539 $1,736 $1,539 $1,539
Children ages 6 through 15 $1,157 $1,157 $1,157 $1,157 $2,140 $1,157 $1,539 $1,736 $1,157 $1,157
Children age 16 and older Not eligible $1,157 Not eligible Not eligible Not eligible Not eligible $1,539 Not eligible Not eligible Not eligible
M-SCHIP $1,157 $1,157 $1,157 NP $2,140 $1,157 $1,736 $1,736 $1,539 $1,157
S-SCHIP $2,314 $2,314a $2,314 $2,140 $3,471 $2,314 $2,314 $2,314 $2,314 $2,140
Maximum Allowable Earnings for a Family of Threeb
TANF $372 $268 $865 $511 $962 $568 $1,104 $724 $636 $842
1931 $429 $251 $1,040 $686 $962 $568 $1,538 $724 $708 $842
Poverty
Children ages 1 through 5 $1,803 $1,803 $1,803 $1,713 $2,405 $1,803 $1,538 $2,000 $1,803 $1,803
Children ages 6 through 15 $1,422 $1,422 $1,422 $1,332 $2,405 $1,422 $1,538 $2,000 $1,422 $1,422
Children age 16 and older Not eligible $1,422 Not eligible Not eligible Not eligible Not eligible $1,538 Not eligible Not eligible Not eligible
M-SCHIP $1,422 $1,422 $1,422 NP $2,405 $1,422 $1,735 $2,000 $1,803 $1,422
S-SCHIP $2,313 $2,313a $2,313 $2,313c $3,735 Healthy Kids: $2,313 MediKids: $2,578 $2,313 $2,578 $2,313 $2,230
SOURCE: MPR State Income Eligibility Requirements Database.

NOTE: NP = No program

aThis income level is for the ARKids First program. The program is currently a 1115 Medicaid Waiver program, but the state plans to convert it into an S-SCHIP program.
bCalculated as the income threshold plus any earnings and child care disregards. All income is assumed to be from earnings. Child care disregards are included because they are the most common form of disregard after earnings disregards. In addition, child care disregards are taken from earned and unearned income, unlike child support disregards which are taken from child support payments received by the family.
cThis is the lower bound and assumes no child care expenses. The S-SCHIP program in Colorado disregards all child care expenses.

 

  Alabama Arkansas California Colorado Connecticut Florida Massachusetts Michigan New Jersey New York

TABLE III.2
INCOME THRESHOLDS AND MAXIMUM ALLOWABLE EARNINGS AS OF JANUARY 1, 1999 FOR A FAMILY OF THREE AS A PERCENT OF THE 1999 FEDERAL POVERTY LEVEL (FPL)

Thresholds for Income Tests for a Family of Three as a Percent of the 1999 FPL
TANF 14 19 67 36 75 26 47 40 55 50
1931 14 18 67 36 75 26 133 40 38 50
Poverty
Children ages 1 through 5 133 133 133 133 185 133 133 150 133 133
Children ages 6 through 15 100 100 100 100 185 100 133 150 100 100
Children age 16 and older Not eligible 100 Not eligible Not eligible Not eligible Not eligible 133 Not eligible Not eligible Not eligible
M-SCHIP 100 100 100 NP 185 100 150 150 133 100
S-SCHIP 200 200a 200 185 300 200 200 200 200 185
Maximum Allowable Earnings for a Family of Threebas a Percent of the 1999 FPL
TANF 32 23 75 44 83 49 95 63 55 73
1931 37 22 90 59 83 49 133 63 61 73
Poverty
Children ages 1 through 5 156 156 156 148 208 156 133 173 156 156
Children ages 6 through 15 123 123 123 115 208 123 133 173 123 123
Children age 16 and older Not eligible 123 Not eligible Not eligible Not eligible Not eligible 133 Not eligible Not eligible Not eligible
M-SCHIP 123 123 123 NP 208 123 150 173 156 123
S-SCHIP 200 200a 200 200c 323 Healthy Kids: 200 MediKids: 223 200 223 200 193
SOURCE: MPR State Income Eligibility Requirements Database.

NOTE: NP = No program

aThis income level is for the ARKids First program. The program is currently a 1115 Medicaid Waiver program, but the state plans to convert it into an S-SCHIP program.
bCalculated as the income threshold plus any earnings and child care disregards. All income is assumed to be from earnings. Child care disregards are included because they are the most common form of disregard after earnings disregards. In addition, child care disregards are taken from earned and unearned income, unlike child support disregards which are taken from child support payments received by the family.
cThis is the lower bound and assumes no child care expenses. The S-SCHIP program in Colorado disregards all child care expenses.

Comparing maximum allowable earnings under the poverty expansion programs against the thresholds states use in their income eligibility tests is particularly illuminating. Most states in our sample establish the income threshold for determining eligibility among preschool-age children at the mandatory 133 percent of FPL. Michigan and Connecticut are more generous, at 150 and 185 percent of FPL, respectively. The maximum allowable earnings for all states exceed this level by 15 to 23 percentage points, with the exception of Massachusetts which matches the mandatory level.

The same pattern is seen for children six and older. Most states use the mandatory threshold of 100 percent of FPL--the exceptions are Connecticut (185 percent of FPL), Massachusetts (133 percent of FPL), and Michigan (150 percent FPL). The maximum allowable earnings exceed the income threshold for determining eligibility in all states except Massachusetts; nevertheless, at 133 percent of FPL, the Massachusetts level for maximum allowable earnings for children six and older is more generous than that in seven other states in our sample.

The impact of M-SCHIP programs in the 10 states is primarily to extend coverage among teens and older adolescents. Until the introduction of M-SCHIP in states such as Alabama, California, Connecticut, Florida, Michigan, New Jersey, and New York, children born before September 30, 1983 were eligible for Medicaid coverage only through TANF and the Medicaid 1931 programs. 20 In these states, M-SCHIP represents a significant extension of coverage for teenagers from maximum allowable earnings for the TANF and Medicaid 1931 programs, which are frequently below poverty, to levels slightly above poverty for the M-SCHIP programs.

Because Medicaid poverty expansion and M-SCHIP programs substantially extend the level of earnings families can have and remain eligible for the Medicaid program, the value of simulating the generally more complex TANF and 1931 Medicaid rules may appear to be limited, but it is not. Establishing eligibility for older teenagers still requires simulating eligibility for these programs. Further, there are several reasons why it is important to simulate full family eligibility--for example, to investigate whether participation rates are higher when the parents are eligible along with the children or when all children in a family are eligible to participate. In these cases, the simulation of TANF and Section 1931 Medicaid program eligibility becomes relevant for all children.

S-SCHIP programs in our sample expand eligibility for children but not to the extent suggested by the income thresholds used to determine eligibility. When comparing income thresholds between the Medicaid poverty expansion programs and the S-SCHIP programs, states such as Alabama, Arkansas, California, Florida, and New Jersey appear to extend eligibility from 133 to 200 percent of FPL for preschool-age children, an expansion of 67 percentage points. When maximum allowable earnings are the basis of comparison, S-SCHIP expands coverage from 156 to 200 percent of FPL, an expansion of 44 percentage points--still a considerable expansion, but less than that suggested by the difference in the income thresholds used in income eligibility tests.

To demonstrate more fully how the variations in the design of income tests and disregards impact the program eligibility of children we chose a hypothetical three-person household, a mother and her two children ages three and nine, and simulated the children's eligibility at two different levels of gross income and under two different assumptions about the family's qualifications for child care and child support disregards.21, 22 Table III.3 presents the results of our simulations. More detailed information about the results of the simulations is presented in Appendix Tables 1 through 4.

The first two simulations (shown in the top panel of Table III.3) assume the mother works full-time at minimum wage ($5.15 per hour) and receives $100 per month in child support payments, for an annual gross income of $11,912, which is 86 percent of the 1999 FPL. These simulations demonstrate that when gross family income is slightly below poverty, young children typically are eligible for Medicaid coverage through the poverty expansion provisions. Only in California, Connecticut, and Massachusetts are the children eligible for Medicaid through 1931 provisions. The difference in the two simulations reflects the impact of child care and child support disregards on eligibility. At this level of gross income these disregards have little impact on overall eligibility for Medicaid. Only in California and Connecticut does the children's eligibility group change--from the 1931 program to the poverty expansion group--when disregards are limited to earnings.

The second set of simulations (shown in the bottom panel of Table III.3) demonstrates eligibility when gross family income is slightly above the poverty level. These simulations assume the mother works full-time at $7 per hour and she receives $100 a month in child support payments, for an annual gross income of $15,760, which is 114 percent of the 1999 FPL. Both children are eligible for Medicaid coverage through the poverty expansion provisions when the family qualifies for all earnings, child care, and child support disregards, except in Massachusetts where the children are eligible through the 1931 program. At this income level, however, the child care and child support disregards in seven states determine whether both children are covered by the Medicaid poverty expansion program or the mother must negotiate two insurance programs, Medicaid for the preschooler and SCHIP for the school age child.23 Negotiating two insurance programs may not be difficult if the two programs are well integrated in terms of eligibility and redetermination processes, covered benefits, and provider networks. But if they are not, the mother may face considerable challenges to understanding and using the Medicaid and SCHIP health care systems.

Disregards Alabama Arkansas California Colorado Connecticut Florida Massachusetts Michigan New Jersey New York

TABLE III.3
IMEDICAID AND SCHIP ELIGIBILITY AS OF JANUARY 1, 1999 OF TWO CHILDREN AGES THREE AND NINE IN A THREE-PERSON FAMILYa BY STATE, BY INCOME, AND BY DISREGARDS

Gross Income Slightly Below Poverty (86 percent of FPL)b
All Disregardsc Poverty Poverty 1931 Poverty TANF/1931 Poverty 1931 Poverty Poverty Poverty
Earnings only Poverty Poverty Poverty Poverty Poverty Poverty 1931 Poverty Poverty Poverty
Gross Income Slightly Above Poverty (114 percent of FPL)d
All Disregardsc Poverty Poverty Poverty Poverty Poverty Poverty 1931 Poverty Poverty Poverty
Earnings only Poverty
3 year old S-SCHIP 9 year old
Poverty
3 year old ARKids 9 year old
Poverty
3 year old S-SCHIP 9 year old
Poverty
3 year old S-SCHIP 9 year old
Poverty Poverty
3 year old S-SCHIP 9 year old
1931 Poverty Poverty
3 year old  M-SCHIP 9 year old
Poverty
3 year old S-SCHIP 9 year old
SOURCE: MPR State Income Eligibility Requirements Database.

NOTE:
SCHIP=State Children's Health Insurance Program.
M-SCHIP=Medicaid expansion
S-SCHIP=State-designed program
FPL=1999 Federal Poverty Level
TANF=Transitional Assistance for Needy Families

aFamily composition assumes a mother and her two children ages three and nine.
bThe mother works 40 hours/week at minimum wage ($5.15/hour). The family receives $100/month in child support payments. Annual gross income is $11,912.
cFamily qualifies for all earnings, child care, and child support disregards used by the state's TANF, 1931, Poverty, M-SCHIP, and S-SCHIP programs.
dThe mother work 40 hours/week at $7/hour. The family receives $100/month in child support payments. Annual gross income is $15,760.

We conducted a second set of simulations to look at how eligibility changes for a range of income levels. In these simulations we assumed a three-person family with two earners and one child. The child's program eligibility is determined at four levels of gross income, 100, 150, 200, and 250 percent of FPL. Table III.4 presents the results of these simulations. Detailed simulation results are presented in Appendix Tables 5 through 12.

The top panel of Table III.4 shows the program eligibility if the child is five years old and the family qualifies for all child care disregards in addition to disregards for earnings. The bottom panel shows the program eligibility if the child is 17 years old. These simulations demonstrate that as income increases, SCHIP becomes a critically important program. The five year old is primarily covered by the poverty expansion provisions when income is at or below 150 percent of FPL. Note, however, that when income as at 150 percent of FPL this child would not have been eligible for federally financed public insurance in Colorado and Massachusetts if SCHIP was not available. When income reaches 200 percent of FPL, the child would be covered by SCHIP in all states but Connecticut. At 250 percent of FPL the child is only eligible for coverage in Connecticut. For the adolescent, SCHIP coverage is extremely important, even when income is as low as 100 percent of FPL. At that level the child would not have been eligible for federally financed public insurance coverage if SCHIP was not available in 6 of the 10 states. At 150 and 200 percent of FPL, the child is eligible for SCHIP coverage in all states. Only Connecticut covers the child when income reaches 250 percent of FPL.

Income as a percent of FPL Alabama Arkansas California Colorado Connecticut    Florida    Massachusetts  Michigan  New Jersey New York

TABLE III.4
MEDICAID AND SCHIP ELIGIBILITY AS OF JANUARY 1, 1999 OF A CHILD IN A THREE-PERSON FAMILY WITH TWO EARNERSa BY STATE AND BY INCOME

5 year old child
100   Poverty   Poverty Poverty Poverty Poverty Poverty 1931 Poverty Poverty Poverty
150 Poverty Poverty Poverty S-SCHIP Poverty Poverty M-SCHIP Poverty Poverty Poverty
200 S-SCHIP ARKids S-SCHIP S-SCHIP Poverty S-SCHIP S-SCHIP S-SCHIP S-SCHIP S-SCHIPb
250 Not eligible Not eligible Not eligible Not eligible S-SCHIP Not eligible Not eligible Not eligible Not eligible Not eligible
17 year old childd
100 M-SCHIP Poverty M-SCHIP S-SCHIP Poverty M-SCHIP 1931 Poverty M-SCHIP M-SCHIP
150 S-SCHIP ARKids S-SCHIP S-SCHIP M-SCHIP S-SCHIP M-SCHIP M-SCHIP S-SCHIP S-SCHIP
200 S-SCHIP ARKids S-SCHIP S-SCHIP M-SCHIP S-SCHIP S-SCHIP S-SCHIP S-SCHIP S-SCHIPb
250 Not eligible Not eligible Not eligible Not eligible S-SCHIP Not eligible Not eligible Not eligible Not eligible Not eligible
SOURCE: MPR State Income Eligibility Requirements Database.

NOTE:
SCHIP=State Children's Health Insurance Program.
M-SCHIP=Medicaid expansion
S-SCHIP=State-designed program
FPL=1999 Federal Poverty Level

aThe simulations for the 5 year old include child care disregards where applicable.
bIn another simulation that assumed only one earner, the child is not eligible for coverage at this level of income.

The simulations presented in this chapter involved hypothetical families and simplified assumptions about their income and expenses. In the next chapter we discuss what the complexity of the Medicaid and SCHIP eligibility rules implies about the simulation of eligibility with national household data.