Eligibility Options for Children and Families

1. Eligibility Options for Children and Families Moving Forward in an Uncertain World: SCHIP Reauthorization and Implications for State Coverage Initiatives January 2008 Cindy Mann Executive Director Georgetown University Health Policy Institute Center for Children and Families ccf.georgetown.edu

2. Issues • What are the coverage options for children under Medicaid/SCHIP? • Federal law • August 17th directive • Strategies to address the August 17th directive • Legal • Legislative • Eligibility for parents and pregnant women

3. Why Do We Care? • Affordability gap is growing • Differences in cost of living • Broader coverage promotes enrollment among lower income eligible but unenrolled children

4. Growth in Private Premiums for Families Far Outpacing Growth in Poverty Level Note: These data represent the cumulative growth in employee premium contributions for employer-sponsored family coverage and the federal poverty level for a family of three.Source: Agency for Healthcare Research and Quality estimates of 1996-2005 Medical Expenditure Panel Survey Insurance Component Tables, generated using MEPSnet/IC (August 21, 2007); and CCF analysis of 1996-2005 Federal Poverty Guidelines.

5. The Cost of Living Varies Widely The cost of goods and services worth $34,340 in the average city, adjusted for the cost of living. 200% FPL for a family of 3 Note: In 2007, 200% of the federal poverty level for a family of three was $34,340 annually. Source: Center for Children and Families, “The Growing Health Insurance Affordability Gap For Children and Families,” (October 2007).

6. Children’s Eligibility • Bottom line: Longstanding federal law grants states flexibility to set eligibility levels in Medicaid & SCHIP • But • CMS directive imposes new barriers effectively stopping coverage with SCHIP funds > 250% FPL -G • CMS intent on stopping new coverage in SCHIP and Medicaid • Rollbacks in eligibility levels likely by August ‘08 unless courts/congress intervene • Bipartisan group of lawmakers concerned, but so far concern hasn’t translated into action

7. Key Routes to Eligibility for Children • Multiple, overlapping eligibility categories in Medicaid • Mandatory minimum income levels • No upper limit; statute allows expansions through use of deductions/disregards • Similarly, SCHIP law establishes a minimum income level (no less than a state’s 1997 Medicaid eligibility level) and no upper income limit • Statute allows states to use income deductions and disregards

8. “These (eligibility) expansions (for children) have been accomplished because the law gives states great flexibility to define income. Through income disregards, states effectively raise the income eligibility threshold. Under current regulations, we have no authority to disapprove amendment solely based on income disregards.” -Secretary Michael Leavitt (letter to Senator Grassley, July 31, 2007)

9. Before Directive 14 States Covered Children Above 250% FPL Under Approved Plans NH VT ME WA MT ND MN MA OR NY SD WI ID MI RI CT WY PA NJ IA OH NE IN NV DE IL WV UT VA MD CO CA KS MO KY NC DC TN OK SC AR AZ NM AL GA MS AK TX LA HI FL Source: Center for Children and Families, “Moving Backward: Status Report on the Impact of the August 17 SCHIP Directive To Impose New Limits on States’ Ability to Cover Uninsured Children,” (December 2007)

10. And 10 More States Had Enacted Expansions NH VT ME WA MT ND MN MA OR NY SD WI ID MI RI CT WY PA NJ IA OH NE IN NV DE IL IL WV UT VA MD CO CA KS MO KY NC DC TN OK SC AR AZ NM AL GA MS AK TX LA HI FL Source: Center for Children and Families, “Moving Backward: Status Report on the Impact of the August 17 SCHIP Directive To Impose New Limits on States’ Ability to Cover Uninsured Children,” (December 2007)

11. What Happened?

12. There Is No $83,000 SCHIP Child 99.95% Below 300% FPL Note: Medicaid, not SCHIP, covers children below 100% FPL. Source: Center for Children and Families, “Coverage of Uninsured Children in Moderate-Income Families Under SCHIP,” (October 2007).

13. August 17th Directive • Issued as a letter by CMS to state Medicaid directors • Not precipitated by any change in law or regulations

14. August 17th Directive: What Does it Say? • Two preconditions before a state can receive SCHIP funds to cover children with incomes above 250% FPL (gross) • 95% participation rate in Medicaid/SCHIP among low-income children • ESI for low-income children cannot have dropped by more than two percentage points over the past 5 years

15. Medicaid/SCHIP Participation Rates Among Low-Income Children Under 19, 2005-2006 IL NH VT WA ME MT ND MN MA OR NY SD WI ID RI MI CT WY PA NJ IA OH NE IN NV DE IL WV UT VA MD CO CA KS MO KY NC DC TN OK SC AR AZ NM AL GA MS AK TX LA HI FL < 70% 13 states 70%-79.9% 19 states 80%-85.9% 13 states 86%-90% 6 states including D.C. > 90% 0 states Note: The Medicaid/SCHIP participation is calculated as the number of children enrolled in Medicaid or SCHIP as a percentage of the sum of these enrollees and the number of uninsured children. Low-income is defined as below 200 percent of the federal poverty level. Data is averaged over two years to improve the reliability of the estimates. The sample size however is still small particularly for smaller states and the only available data (CPS) does not account for children eligible for Medicaid or SCHIP due to immigration status. Source: Center for Children and Families, “American Families Face Harsh Reality: 2,000 Children Join the Ranks of Uninsured Each Day,” (October 2007).

16. August 17th Directive: What Does it Say? • If a state meets the two preconditions, it must: • Force eligible uninsured children who had ESI to remain uninsured for 12 months (no exceptions?) • Charge maximum cost sharing (5% of income; alternative posed but not practically possible)

17. August 17th Directive: What Does it Say? • States that already have approved plans must comply by August ‘08 • Eligibility levels would be rolled back • CMS says children already enrolled could still be covered, but even those children could lose coverage (if coverage gap)

18. Impact So Far • No state expansion has been approved • Missouri snuck in (?) • Coverage denied (4 states) • Ohio (200-300% FPL) • New York (250-400% FPL) • Louisiana, Oklahoma (250-300% FPL); 200 - 250% expansions pending • Coverage expanded, but only with state funds (2 states) • Illinois (200-300% FPL) • Wisconsin (250-300% FPL)

19. Responses • Broad, strong opposition • Letter to CMS signed by 30 Governors • Letter to President Bush signed by 44 Senators • Letter to Congress signed by 40 Senators • Litigation filed by several states

20. CHIPRA 1: No Income Cap • CHIPRA 1 maintained state flexibility to set eligibility levels • Regular Medicaid match for coverage above 300% FPL • Replaced August 17th directive with studies, data collection, new requirements beginning in 2010 for expansions over 300% FPL

21. CHIPRA 2: 300% Income Gap • CHIPRA 2 included 300% FPL income cap for coverage financed with SCHIP funds • Replaced August 17th directive similar to CHIPRA 1

22. SCHIP Extension • Directive not addressed • Other opportunities will arise over next few months

23. 23 States Currently Affected by The August 17th Directive IL NH WA VT ME MT ND MN MA OR NY SD WI ID RI MI CT WY PA NJ IA OH NE IN NV DE IL WV UT VA MD CO CA KS MO KY NC DC TN OK SC AR AZ NM AL GA MS AK TX LA HI FL Expansion states already negatively impacted: 6 states Expansion states with 2008 implementation dates: 4 states States with approved plans that must comply by Aug. 2008: 14 states including DC Source: Center for Children and Families, “Moving Backward: Status Report on the Impact of the August 17 SCHIP Directive To Impose New Limits on States’ Ability to Cover Uninsured Children,” (December 2007)

24. Parent Eligibility • As with children, federal Medicaid law sets minimum eligibility standards with state option to expand; no upper income cap • Minimum standard much lower than for children • No option under SCHIP; some states had waivers • CHIPRA would have stopped future waivers and transitioned current waivers out of SCHIP with reduced match • Secretary Leavitt: no new waivers or waiver renewals

25. Some Renewed Interest in Parent Expansions • Logical next step for many states • Restoration of coverage • Recent advances

26. Pregnant Women Eligibility • Federal Medicaid minimum standard with option to expand; no upper income cap • “Unborn child” option under SCHIP • CHIPRA also would have allowed a pregnant woman coverage option • SCHIP waivers still available • Beware of CMS: Wisconsin

27. SCHIP Timeline Governors from 30 states send letter to Secretary Leavitt regarding the directive Bipartisan group of Senators from 19 of the states affected call on Congress to end the directive 14 states have implemented plans covering children over 250% FPL House adopts SCHIP bill - no income cap Senate adopts SCHIP bill - no income cap PA plan approved CMS effectively imposes an income cap on SCHIP at 250% (gross) NY et al. file suit, NJ files suit Secretary Leavitt informs Sen. Grassley that he has no authority to deny state income expansions Congress extends SCHIP to March ‘09, fails to address the directive CMS denies NY’s plan; by December, 6 states either halt expansions, or state-fund them 10 states adopt expansions over 250% FPL