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States Sustain and Expand Coverage For Low-Income Children and Families Despite Recession, But Gains Are Threatened By Impending End of Federal Assistance

New 50-State Survey Illustrates Key Role of CHIP Reauthorization and the Federal Stimulus Law in Safeguarding Coverage   

WASHINGTON  – Despite the deep recession, most states have managed to safeguard and, in some cases, expand health coverage for children and parents in their Medicaid and Children’s Health Insurance Programs in 2009, according to a new survey from the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured.  But the gains, which could serve as a base for covering millions more people under health reform, are threatened by the impending end of key federal assistance at the end of 2010 and before health reform coverage would begin.

The annual 50-state survey of eligibility rules, enrollment and renewal procedures and cost-sharing practices in Medicaid and CHIP for children and parents found that, overall, most states in 2009 continued to expand and simplify their Medicaid and CHIP programs, the main vehicles for providing coverage to low-income children and families, even as they faced the bleakest economic picture in years and severe budget pressures.  However, budget shortfalls did result in cutbacks in some states.

“The renewal of CHIP and the fiscal relief and eligibility and enrollment protections for Medicaid in the American Recovery and Reinvestment Act (ARRA) proved critical to enable states to continue their commitment to providing coverage to millions of low-income families,” said Diane Rowland, Executive Vice President of the Foundation and Executive Director of the KCMU.  “However, even with signs of economic recovery, state revenues are still mired in a severe slump and, faced with the end of enhanced federal money after 2010, fiscal shortfalls are likely to cause states to consider significant cuts to Medicaid and CHIP.”

Despite National Gains, Prominent Disparities Remain 

While the survey reveals significant overall progress nationally in expanding public coverage or making it easier to access, wide variations in coverage persist.  Among the survey findings:

  • Currently, 47 states cover children in families with an annual income at or higher than 200 percent of the federal poverty level ($36,620 for a family of three), with half (24 states) covering children in families with incomes at or greater than 250 percent of poverty ($45,775 for a family of three).
  • Parent eligibility levels continue to lag far behind, and the disparity between children and parents is growing.  Currently, the median income eligibility limit for children is 235 percent of the federal poverty level ($43,029 for a family of three) compared to the median for a working parent at 64 percent of the federal poverty level ($11,718 for a family of three).
  • More than half of states (26, shown below) bolstered coverage for low income children, parents and pregnant women, either by expanding eligibility, simplifying enrollment procedures or reducing financial barriers. Children were the chief beneficiaries of expansions in 2009, with 19 of those 26 states improving access to coverage for children by increasing eligibility, simplifying procedures and eliminating premiums.  These 26 states included Alabama, Alaska, California, Connecticut, Florida, Idaho, Iowa, Indiana, Kansas, Louisiana, Maryland, Montana, North Dakota, Nebraska, New Mexico, New Jersey, New York, Ohio, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Virginia, Washington and West Virginia.
  • Fifteen states, shown below, scaled back coverage in their CHIP programs during 2009.  Although no state reduced eligibility for children, two states (California and Tennessee) froze CHIP enrollment for some period of time in 2009 and one state reduced eligibility for parents.  Other actions included increases in waiting periods, retractions in eligibility simplifications, and relatively modest increases in CHIP premiums. Even after recent increases, the median CHIP premium payment for two children in a family with income at 200 percent of poverty remains modest at $480 annually, representing 1.3 percent of family income.  These 15 states included Arizona, California, Montana, Tennessee, Florida, Maine, Maryland, Missouri, North Carolina, New Hampshire, New York, Pennsylvania, Utah, Washington and Wisconsin. Arizona also eliminated parent coverage, and Montana retracted its simplified income verification procedures in CHIP.

Gains Could Be Eroded By The Recession, Weakening the Coverage Base for Health Reform

States’ commitment to providing Medicaid and CHIP coverage to low-income children and families will continue to be tested in 2010 as dismal state budget circumstances persist. Recent forecasts indicate states will face even bigger shortfalls in the upcoming fiscal year. At the same time, the federal assistance that states have relied on under ARRA is scheduled to expire at the end of the 2010 calendar year, and along with it the requirement that states maintain eligibility levels and refrain from imposing enrollment barriers. That raises the prospect of substantial state cuts in Medicaid and CHIP that could reverse recent expansions and undermine the base of coverage for low-income families upon which broader health reform efforts seek to build.

The leading reform bills in Congress build on Medicaid to expand health coverage to millions of people, but differ in the scope of the expansion they envision, the level of federal support they would provide to states, and in how they treat coverage for children.  These survey findings provide a baseline against which future progress can be measured.  Further, as policymakers attempt to craft final legislation, they can draw on what states have learned about the importance of simplifying enrollment and renewal procedures, covering parents, and limiting cost sharing.  The simple and coordinated procedures that have helped assure that eligible children and parents secure and retain coverage, and that have enabled families to transition smoothly between programs when family circumstances change, will be essential in a new health insurance system.

Today’s report, A Foundation for Health Reform: Findings of a 50-State Survey of Eligibility Rules, Enrollment and Renewal Procedures, and Cost-Sharing Practices in Medicaid and CHIP for Children and Parents During 2009, and related materials, including a new issue paper on key issues to consider in health reform regarding coverage of low-income children, are available online here. In addition, an audio press briefing on the release will be available after 6 p.m. ET today.

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The Kaiser Family Foundation is a non-profit private operating foundation, based in Menlo Park, California, dedicated to producing and communicating the best possible information and analysis on health issues. 

The Kaiser Commission on Medicaid and the Uninsured provides information and analysis on health care coverage and access for the low-income population, with a special focus on Medicaid’s role and coverage of the uninsured. Begun in 1991 and based in the Kaiser Family Foundation’s Washington, D.C. office, the Commission is the largest operating program of the Foundation. The Commission’s work is conducted by Foundation staff under the guidance of a bipartisan group of national leaders and experts in health care and public policy.