Washington State’s Initiative: Cover all children by 2010

1. Washington State’s Initiative:Cover all children by 2010 June 24-27, 2006 Seattle, Washington Robin Arnold-Williams, SecretaryDepartment of Social and Health Services, Washington State AcademyHealth Annual Research Meetings 2006

2. The Evergreen State story • Part I: A national leader • Basic Health plan • Pregnant women, children’s coverage • 1994 expansion of ceiling to 200% FPL • Established Healthy Options • SCHIP lets state raise eligibility to 250% • Part II: Cutbacks and transitions • Children’s Health Program (CHP) • Unsuccessful CHP transition to Basic Health • Budget shortfalls impact Medicaid • Part III: New approaches • Governor pledges coverage by 2010 for all children • CHP restored; Eligibility hurdles removed • Enrollment increases in forecast • Employer-Sponsored Insurance

3. PART ONE • In the 1990s, Washington State emerged as a national leader among states expanding public-financed health insurance for children

4. Beginnings… • In 1988, Washington created its Basic Health Plan (BHP) – a managed care pilot for the working poor. • In 1989, Washington expanded coverage for pregnant women and infants to 185% FPL. • In 1990, Children’s Health Program (CHP) for coverage of all children up to 100% FPL. • In 1991, coverage for citizen children converted to Medicaid, while CHP remained for non-citizen children. (Same coverage for both groups.) • In 1993, Washington adopted a “managed competition” health-care reform plan aimed at universal coverage. • As part of 1993 health reform, BHP became a permanent statewide program with funding to cover 250,000 persons.

5. An era of expansion • Under 1993 health-care reform, all Washington residents were were to receive a Uniform Benefit Package (UBP) through certified health plans by 1997. • Medicaid coverage for children expanded to 200% FPL in July 1994. (Washington was one of only four states covering children at that income level.) • Medicaid coverage for families, pregnant women and children steered to managed care (Healthy Options program), using same health plans as commercial payers. • Washington’s early move to 200% for children limited state’s ability to take advantage of State Children’s Health Insurance Program (SCHIP). • In 2000, Washington implemented SCHIP to cover children up to 250% FPL – currently sixth highest ceiling in country.

6. PART TWO • Beginning in 1995 Washington’s public health programs underwent changes that reflected a dramatically different policymaking environment.

7. National leadership • By the mid-1990s, Washington State was regarded as a leader in efforts to expand public health insurance coverage • Then, setbacks: • In 1995, state’s health-care reform law was drastically reduced by the Legislature, this time focusing just on BHP and Medicaid for low-income uninsured residents. • Welfare reform at the national level threatened current coverage of immigrant families and children. • But also, some further successes: • Washington remained among states with highest Medicaid and SCHIP eligibility coverage. • SCHIP funding used to provide prenatal care and related health care for non-citizen pregnant women, and to help finance coverage for Medicaid children in families above 150% of FPL.

8. Budget squeezes • In 2001, the state’s revenue picture darkened • DSHS developed a “Medicaid Reform Waiver” in 2002 that included flexible benefit design, cost-sharing, premiums for higher-income families and enrollment caps. • The state adopted income verification and signature requirements, eliminated 12-month continuous eligibility for children, set six-month reviews of family income. • The bulk of the waiver was never approved, but the proposal to implement premiums on higher-income Medicaid families and SCHIP children was OKd by CMS in late 2003. • Outgoing Governor Locke defers Medicaid premiums until January 2005. • In July 2004, SCHIP implemented a $5 monthly premium increase per child (to $15 total per child, capped at three children per family)

9. Medicaid premiums FY2005 revenue estimated at $30 million for Medicaid, $1 million for SCHIP

10. Children’s coverage Children’s Health Program • In 2002, Legislature ends Children’s Health Program • Legislature appropriates $20 million for additional Basic Health slots for families and children displaced from CHP and state-only family medical program. • More than 25,000 children lose fee-for-service Medicaid look-alike coverage. • State outreach successfully transitions 12,400 children into Basic Health. • By January 2005, enrollment falls to 5,700 – most of them covered through community grant programs.

11. PART THREE • Governor Chris Gregoire commits Washington State to cover all children by 2010

12. A new era in eligibility • Incoming Governor Gregoire indefinitely postpones Medicaid children’s premiums in January 2005. • 2006 Legislature later passes Governor’s request to abandon Medicaid children’s premiums altogether. • In March 2005, state re-institutes 12-month continuous eligibility for children. • Legislators re-establishes Children’s Health Program (CHP) with funding for 4,300 children’s slots beginning January 2006. • 2006 supplemental budget provides additional funding to cover 14,000 children by October 2006.

13. Restoring CHP Renewed program began Jan. 1, 2006, but with higher than expected rates of denial Target Higher Than Expected Denial Rate. • 39% of reviewed applications have been denied. •48% of denials were because family had income above 100% of poverty level. •34% of denials were for failure to complete application. • 18% of denials were because child above age 18 or was eligible for Medicaid. Actual

14. Status of children’s coverage • Medicaid and SCHIP provide health insurance coverage for 1/3 of all children in the state. • 50% of all children in households with incomes under 250% of Federal Poverty Level (FPL). • 60% (two in three) of children in families under 250% FPL are in public insurance programs. • Medicaid children’s caseload not increased at the rate assumed in earlier forecasts. • Medicaid Children’s coverage – state saw higher-than-expected exits from coverage after tougher eligibility-review rules implemented. • Medicaid family coverage - lower entry rates and higher exit rates.

15. Status of children’s coverage • Children’s program growth rates are expected to remain above population growth rates during FY2007-09. • Federal Medicaid citizenship verification requirements will probably have repercussions for children’s Medicaid caseload.

16. Status of children’s coverage Comparison of forecasts: Children covered through state-financed health programs Difference between baseline and June forecast = 78,238 Governor’s eligibility policy implemented

17. Employer-Sponsored Insurance • Part of Governor’s strategy is to partner with employers in order to offer coverage to all children. • Funded by 2006 Legislature. • Employer-Sponsored Insurance (ESI) pilot program pays family’s portion of premiums for employer coverage of Medicaid dependents when arrangement is cost-effective for the state. • Enrollment reached 1,283 clients in May 2006. • Preliminary estimates show 37% reduction in monthly client costs. • In utilization, that is a savings of $64 per client per month. • Governor and Health Care Authority also are working on health insurance options for small business.

18. ESI on track to hit target

19. Lessons learned • Integrated programs: Washington had the advantage of integrating children’s health programs regardless of funding source. This allows a seamless transition with the same benefit design as children move up in income levels. • Children’s outreach: In the 99-01 biennium, we received $10 million from CMS for outreach.  Growth in the CN-children’s caseload continued at a steady pace, above the growth in state population. • Implementation of SCHIP: SCHIP got off to a late start in 2000 because we were already covering children up to 200% FPL under Medicaid. The program has remained small since there are fewer uninsured children at those income levels. • CHP transition: The Legislature’s plan to move CHP (immigrant children) to the Basic Health Plan was ultimately unsuccessful. The families had no experience with managed care, they were switched to a subsidized-premium system, and they eventually dropped out of coverage.

20. Lessons learned, continued • CHP revival: By the time the CHP program was re-implemented, the demographics had changed.  We expected large numbers of unserved clients and developed processes to deal with the crunch. So far, we have had trouble meeting our targeted enrollments. • FPL standards: One of the things that has changed is the Federal Poverty Level (FPL) indicators. Today, many families on minimum wage still exceed the 100% FPL standard. • Income verification: An experiment in 2003 ended automatic annual eligibility for children, replacing it with tighter income verification procedures and more frequent reviews. Research showed the decline in caseload was due to healthy eligible families dropping off the rolls. • Immigrant health: Historically, CHP children cost us about 20% less than Medicaid children. Pregnant immigrant women are among the healthiest members of the pregnant population.

21. APPENDIX • Program characteristics of children’s coverage in Washington State. • Programs based on Medicaid benefit design.

22. Children’s program characteristics Medicaid Program • Coverage: Citizen children up to age 19 in households up to 200% FPL ($33,200 for family of 3) • Benefit design: Full-scope medical, dental, vision, hearing behavioral health and EPSDT coverage. Long-term care services for disabled children through State Plan and waiver services. • Cost sharing: None • Delivery system: Managed care “Healthy Options” program, except for Foster Care and SSI and related disabled children. • Financing: Title XIX – 50% FMAP • Number of children: 542,165 (Feb06)

23. Children’s program characteristics State Children’s Health Insurance Program • Coverage: Citizen children up to age 19 in households between 200% and 250% FPL ($41,500 for family of 3) • Benefit design: Full-scope medical, dental, vision, hearing, behavioral health, and EPSDT coverage. • Cost sharing: $15 per-month per-child premium, with three-child maximum • Delivery system: Managed care “Healthy Options” program • Financing: Title XXI – 65% FMAP • Number of children: 11,825 (February 06)

24. Children’s program characteristics Children’s Health Program • Coverage: Non-citizen children up to age 18 in households up to 100% FPL ($16,600 for a family of three) • Benefit design: Full-scope medical, dental, vision, hearing, and EPSDT coverage. • Cost sharing: None • Delivery system: Fee-for-service system (will be reviewed after one-year) • Financing: State-only program. • Number of children: 4,839 (May 2006)

25. Children’s program characteristics Basic Health Program • Coverage:Children up to age 22 in families up to 200% FPL ($33,200 for family of three) • Benefit design:Inpatient and outpatient hospital, physician services, laboratory and x-ray services, chiropractic and physical therapy, chemical dependency and mental heath services. • Cost sharing:$15 co-payments for office visits; multi-tier drug co-payments; and, 20% hospital, laboratory and x-ray coinsurance with $150 deductible. $17 to $56 per-month premium depending on family income and health plan. • Delivery system:Managed care (same plans as Medicaid Healthy Options program). • Financing:State-only program • Number of children:13,705 -- does not include Medicaid BHP+ children (*) ( * ) Parents enrolled in BHP are able to have their Medicaid eligible children receive full-scope Medicaid coverage with no cost-sharing and be enrolled in the same health plan. This is called BHP+ coverage.