The 110th Congress marks the beginning of the first reauthorization for the State Children’s Health Insurance Plan (SCHIP). As the debate begins, primary issues up for discussion involve appropriate funding levels and the choice of some states to use waivers to expand coverage to slightly higher income groups, parents, and childless low-income adults.
SCHIP, established by the 1997 Balanced Budget Act, covers 6 million low-income children who do not qualify for Medicaid but fall below specified income thresholds. Specifically, 24 states set their income threshold at 200 percent of the Federal Poverty Level (FPL), 10 states are set below 200 percent FPL, and 17 states are set above 200 percent FPL.1 Twelve states have waivers to expand coverage to parents and six states have waivers to cover some childless adults.2
Due to the maturation of state programs, economic downturns, and increasing healthcare costs, FY2007 marks the first year that a significant portion of states (17) will face a budget shortfall. In some states, budget constraints have led to enrollment freezes, waiting lists, lowering income eligibility, decreasing outreach efforts, and various enrollment barriers.3
The President’s FY2008 budget proposes $4.8 billion annually over five years. It also would limit coverage of new enrollees to children and decrease federal matching rates for enrollees who are above 200 percent FPL.4 Critics argue that this proposal would eliminate insurance coverage for more than one million persons over the next four years.5
Reports from the Congressional Research Service estimate that to maintain coverage for the current level of enrollees would require an additional $12.1 billion above and beyond the program’s current FY2007 baseline funding level of $5 billion per year.6
Several financing options have been proposed, but federal budget rules require that additional funding be offset elsewhere in the federal budget. Some proposals being considered include readjusting reimbursement to Medicare Advantage plans and increasing the federal cigarette tax.7 Congress is simultaneously working to address FY2008’s budget and the SCHIP shortfalls faced in FY2007.
Some view the reauthorization process as an opportunity for expansion. This may include more aggressive strategies to cover the 2 million eligible but uninsured children, encompassing low-income parents, including currently excluded groups of low-income children, and providing wrap-around benefits to private insurance covering low-income children. Some have even advocated the use of SCHIP as a vehicle for achieving universal insurance. The argument for expansion is based on research showing that SCHIP has had a positive impact on improving access to care and preventative services, meeting unmet needs, and reducing hospital admissions.8
Linda Blumberg, Ph.D. and Lisa Dubay, Ph.D. of the Urban Institute looked at the effect of SCHIP enrollment over time in their HCFO-funded project. Their findings, detailed in the June 2006 HCFO Findings Brief, indicate that over the study period, SCHIP decreased uninsurance among the target population and did not lead to significant “crowd-out,” the substitution of public coverage for private.9 Another HCFO grantee, Ted Joyce, Ph.D. of the Research Foundation of CUNY, found that SCHIP may not have a significant impact on all areas of child health care needs. Joyce examined the effect of SCHIP implementation on immunization rates. He found that while insurance coverage may be necessary, SCHIP had little impact on narrowing the gap of immunization rates between low-income children and non-poor children.10
Despite outreach efforts, 9 million children are still uninsured, the majority of whom are eligible for either Medicaid or SCHIP.11 HCFO grantee Chyongchiou Lin, Ph.D. of University of Pittsburgh, examined possible factors that may be impeding enrollment of eligible children into SCHIP and Medicaid. Lin identified welfare and citizenship documentation reforms in addition to language barriers as factors related to whether eligible children were in enrolled in either program. She recommends that the enrollment process and outreach activities be culturally and linguistically sensitive to non-English speaking populations.12
As the reauthorization process begins, there will be multiple opportunities for research-based evidence to contribute to the debate about funding levels and distribution, program participation, retention, benefits, and quality.
Related HCFO Funded Research
Title: The Dynamics of Health Insurance Coverage: 1996 to 2000
Institution: The Urban Institute
Principal Investigator: Linda Blumberg, Ph.D.
Grant Duration: September 2003 - October 2005
What are the effects of certain insurance market reforms that were designed to expand coverage? Researchers at the Urban Institute examined the dynamics of health insurance for children and adults under age 65 from 1996 to 2000, a dynamic period characterized by the implementation of national welfare reform, SCHIP, and an economic boom. They documented the patterns of insurance coverage and public program eligibility, estimating the impact of the implementation of SCHIP on insurance coverage for eligible children and previously Medicaid eligible children, and assessing the extent to which the economic expansion affected the insurance coverage of previously uninsured adults. The objective of this project was to inform the design of more effective strategies to maintain or increase insurance coverage and to understand better the determinants of participation and crowd-out that can be useful when considering coverage expansions. The findings will also help to better predict the implications of reductions in coverage resulting from states’ efforts to balance their budgets or in the economic context of a recession.
Title: The Effect of the State Children’s Health Insurance Program on Immunization Rates: Evidence from the National Immunization Survey
Institution: Research Foundation of CUNY
Principal Investigator: Ted Joyce, Ph.D.
Grant Duration: January 2003 - June 2004
What is the effect of the State Children’s Health Insurance Program (SCHIP) on children’s immunization rates? Specifically, what is the likelihood that low-income children, after the implementation of SCHIP, are up to date on vaccinations, receive their immunizations on time, and receive vaccinations from a provider that offers comprehensive pediatric services (instead of a vaccine-only public health setting)? The researchers compared immunization coverage rates and the sites where the vaccines were received before SCHIP was implemented with those after implementation in all 50 states. The results for low-income children were compared to a control group of non-low-income households. This project evaluated the effectiveness of SCHIP in accomplishing the specific objective of increasing immunization among low-income children.
Title: Factors Associated With Health Insurance Coverage for Low-Income Children
Institution: University of Pittsburgh
Principal Investigator: Chyongchiou Jeng Lin, Ph.D.
Grant Duration: March 1999 - July 2000
What factors impede enrollment into Medicaid by children who are eligible based on their family’s income level? Using data from the Community Tracking Study Household Survey, state Medicaid and CHIP eligibility data and the Area Resource File, researchers at the University of Pittsburgh tested two hypotheses: 1) that the decision to enroll a child is a function of family, child, and other characteristics; and 2) the more widespread poverty is in a community the less likely a child is to be enrolled by the family into Medicaid. The analyses also explored the interaction between utilization of health care services and propensity to enroll in Medicaid. This study had the following three objectives in mind: 1) to identify the factors that influence enrollment of Medicaid-eligible children into the program that will inform policy recommendations to help increase enrollment of children, 2) to develop baseline data on children who would presumably be eligible for the Children’s Health Insurance Program (CHIP); and 3) to describe the utilization of health services by children.
1 Kaiser Commission on Medicaid and the Uninsured. “State Children’s Health Insurance Program (SCHIP) at a Glance,” Kaiser Family Foundation, January 2007.
2 Kaiser Commission on Medicaid and the Uninsured. “A Decade of SCHIP Experience and Issues for Reauthorization,” Kaiser Family Foundation, January 2007.
3 Ibid.
4 Kaiser Daily Health Policy Report. “Democrats Focus on President Bush’s SCHIP Funding, Eligibility Proposals,” Kaiser Family Foundation, February 7, 2007.
5 Center for Children and Families, “SCHIP’s Financing Structure,” Georgetown University Health Policy Institute, October 2006
6 Peterson, C. “SCHIP Financing: Funding Projections and State Redistribution Issues,” Congressional Research Service, Order Code RL32807, Updated January 30, 2007.
7 Kaiser Daily Health Policy Report. “HHS Secretary Leavitt Says Administration Opposes Reducing Medicare Advantage Payments to Shift Funds to SCHIP,” Kaiser Family Foundation, March 23, 2007.
8 Kenney, G. and J. Yee. “SCHIP at a Crossroads: Experience to Date and Challenges Ahead,” Health Affairs, March/April 2007, Vol. 26, No. 2, pp. 356-369.
9 Brodt, A. “The Dynamics of Health Insurance Coverage: 1996 to 2000,” HCFO Findings Brief, Vol. 9, No. 3, June 2006.
10 Joyce, T. and A. Racine. “CHIP Shots: Association Between the State Children's Health Insurance Programs and Immunization Rates,” Pediatrics, May 2005, Vol. 115, No. 5, pp. 526-534.
11 Urban Institute analysis of the 2005 Annual and Social Economic Supplements to the CPS for Kaiser Commission on Medicaid and the Uninsured. Presented by Diane Rowland on February 9, 2007.
12 Lin, C.J., et al. “Factors Associated with Medicaid Enrollment for Low-Income Children in the United States,” Journal of Health and Social Policy, March 2003, Vol. 16, No. 3, pp. 35-51.
