In SCHIP reauthorization, sound and fury surround the following question: What should be the highest income level for SCHIP-eligible children? The more important challenge facing policymakers, however, is covering low-income, uninsured children who already qualify for Medicaid or SCHIP, since these children comprise the bulk of uninsured youngsters. To reach them, SCHIP reauthorization needs to do three things: clear away current obstacles to coverage; empower states to use 21st century methods for enrolling and retaining eligible children; and establish a stronger federal financial partnership with states that increases their capacity to provide eligible children with health coverage.
Inflexible federal procedural requirements prevent many families from enrolling. Enacted as part of the Deficit Reduction Act of 2005, detailed, proscriptive federal requirements for citizenship documentation have deterred applications by thousands of U.S.-citizen children. Along similar lines, an obsolete, 1986 federal law requires non-citizens to present paper documents showing satisfactory immigration status, rather than allowing states to use electronic evidence. Both House and Senate bills seek to address the first requirement, but only the House bill addresses the latter.
A 21st Century Approach To Child Health:
High-Tech And High-Touch
A largely unheralded accomplishment of the Bush Administration is its modernized method of determining income for low-income Medicare subsidies. With Medicare Part D, for example, beneficiaries can receive low-income subsidies for prescription drug coverage without completing a single application form. Subsidies are provided automatically whenever data show that a beneficiary receives Medicaid or Supplemental Security Income. Because of this “express lane” to enrollment, 74 percent of eligible individuals received low-income subsidies before the new Part D program was six months old. This was the highest take-up rate achieved in the nation’s history during the first year of a new, federal means-tested benefit.
By contrast, without such an express lane, SCHIP reached only 60 percent of eligible children by its fifth year of operation, despite unprecedented outreach and streamlining of enrollment.
The Bush Administration has also harnessed 21st century technology to expedite income determination for Medicare Part B. Under the Medicare Modernization Act of 2003, premium subsidies for this portion of Medicare were means-tested beginning in January 2007. Regardless of one’s perspective on this controversial shift, the Administration’s methods for determining income are exemplary, in many ways. Seniors are not required to fill out forms. Instead, for purposes of Medicare Part B subsidies, a beneficiary’s income throughout a given year is determined automatically based on data matches with the Internal Revenue Service showing taxable income two years in the past. Premium subsidies for 2007, for example, are based on taxable income in 2005. Beneficiaries can apply for larger subsidies by showing reduced income from 2005 to 2007, but increased income does not reduce eligibility for subsidies.
When it comes to child health insurance coverage, the story is quite different. Before coverage starts or is renewed, a family typically must complete paper application forms and fulfill numerous procedural requirements – even if the state already has access to data showing eligibility.
To update these procedures for children will require some common-sense adjustments to eligibility rules. For example, if another need-based program has already determined that a child is poor, the child could be deemed income-eligible for health coverage, even if the other means-tested program determines income by using slightly different methodologies (e.g., household definitions and income disregards). If the most recent available income data (including both prior-year tax data and more recent quarterly earnings and new hires data reported to state workforce agencies) show that a child is sufficiently indigent to qualify for Medicaid or SCHIP, that could establish income eligibility without requiring families to complete additional forms.
Both House and Senate bills address these issues to some extent, creating a new state option for “Express Lane Eligibility” that covers children based on the findings of other need-based programs (although the Senate bill limits this option to 10 demonstration states). The Senate bill (but not the House proposal) provides new federal funds for IT development.
A second feature of a 21st century child health insurance program involves intensive application assistance to help families surmount the final procedural hurdles that, in many cases, will continue to precede enrollment. Such assistance can dramatically increase take-up rates in underserved communities. The House and Senate bills both provide for outreach, which can encompass this kind of focused effort, along with ongoing publicity reminding families about available health coverage.
A Stronger Federal Financial Partnership
At a minimum, federal SCHIP grants must be large enough that states can aggressively enroll eligible children without serious financial risk. Current allotments are not sufficient to pay for children presently enrolled in SCHIP, much less the additional children who qualify but are not enrolled. Both the House and Senate bills increase allotments above current levels, substantially lowering the risk that aggressive states would exhaust their allotments. With funding that goes beyond the Senate bill, the House proposal would lower that risk even more.
However, to change state behavior substantially, lawmakers must undertake a more thoroughgoing revision of the financial partnership between states and the federal government. The majority of eligible but uninsured children qualify for Medicaid. Accordingly, increased enrollment of such children will have a greater impact on Medicaid than on SCHIP caseloads.
Unfortunately, the federal government reimburses a smaller share of health care spending for Medicaid than for SCHIP. Both the House and Senate bills include important incentive payments that could make a dramatic difference encouraging effective outreach and enrollment by helping defray the state costs that result when uninsured children join, not just SCHIP, but also the Medicaid program.
Within the country’s grasp is an SCHIP reauthorization bill that would allow extraordinary progress enrolling and retaining low-income, eligible children. Such legislation could give children the benefit of the same successful strategies that Medicare uses to reach eligible seniors without interposing burdensome red tape. SCHIP reauthorization could also establish a fairer partnership between states and the federal government that realistically permits a large number of states to move forward and aggressively cover their children.
Across the political spectrum, political leaders voice strong support for covering eligible, low-income children who are not yet enrolled in Medicaid and SCHIP. In the coming weeks, we will see whether this support translates into effective action.