State efforts put more children on health insurance rolls, despite economic downturn

December 27, 2011

Publicly funded programs have enabled 1.2 million more children to gain health insurance since 2008 — at least in part due to extra work by many states to ensure that more of the children who are eligible for the programs are actually signed up, Obama administration officials plan to announce Wednesday.

Twenty-three states are to be awarded federal performance bonuses totaling nearly $300 million for these efforts.

Maryland and Virginia have qualified for the two largest amounts — $28.3 million and $26.7 million, respectively — under an incentive plan aimed at improving child enrollment rates in Medicaid and the Children’s Health Insurance Program, or CHIP.

Jointly funded by states and the federal government, CHIP supplements Medicaid, the health insurance program for the poor, by offering insurance to children in low-income families.

Together, the two programs are responsible for reducing the number of uninsured children from 6.6 million in 2008, just before CHIP was reauthorized, to 5.4 million in 2011, according to an analysis of survey data from the Centers for Disease Control and Prevention to be released Wednesday.

In addition to the 1.2 million newly insured children, 3 million children who formerly had private insurance were picked up by CHIP or Medicaid over the same period, said Sherry Glied, assistant secretary for planning and evaluation at the Department of Health and Human Services.

As a result, children have been largely shielded from the decade-long erosion of health insurance among Americans that resulted as employers dropped coverage, workers with insurance lost their jobs to the recession, and individuals whose only option was to buy insurance on their own faced increasingly prohibitive costs.

Since 1997, when CHIP was first established, the share of adults ages 26 to 64 with a health plan dipped from 83 percent to 80 percent. By contrast, in the same period, the share of children with insurance grew from 86 percent to 93 percent.

“It’s very encouraging, because it shows that even in an economic downturn, CHIP really made a difference,” Glied said.

At least some of the increase was attributable to state initiatives to solve a persistent challenge for Medicaid and CHIP: many children who qualify are never signed up.

Some parents are not aware that their children are eligible. Others have difficulty gathering cumbersome documentation required for state application or renewal forms.

To combat the problem, Congress offered states performance bonuses for each year through 2013 as part of the 2009 law reauthorizing CHIP. To qualify in 2011, states had to take specific steps to streamline procedures and had to increase enrollment by more than 3.5 percent from 2010.

The bonuses offset at least 15 percent of the added cost to states of covering the additional children. States that increase enrollment more than 10 percent above the baseline get a “Tier 2” bonus covering 62.5 percent of the extra cost.

The 23 states that will be awarded bonuses for this year achieved increases ranging from 4 percent to 27 percent, with 16 states, including Maryland and Virginia, topping 10 percent.

All of the 16 states that were awarded bonuses in 2010 also qualified this year. Cindy Mann, deputy administrator of the Centers for Medicaid and Medicare Services, said this was evidence of both a continued commitment by state leaders to cover more children and the lasting impact of steps taken to improve the process in prior years.

Measures taken by states include adopting one form for both Medicaid and CHIP applications and using an “express lane” system in which a state official considering a Medicaid or CHIP application is permitted to accept prior income determinations made by officials who approved enrollment in programs such as food stamps.

“Once you simplify a program, what we’ve seen is the benefits can be provided continuously, without interruption,” Mann said. “So it makes sense that enrollment continues to grow because states have a continued ability to bring in more children who are eligible but not enrolled.”

Other strategies that count toward the performance bonus include automatically renewing children for whom no new information is needed and allowing children on Medicaid or CHIP to remain enrolled for a full year even if their parents’ income fluctuates. This ensures that a child’s access to health care is not disrupted if a parent cycles through jobs that temporarily increase the household income above the limit.

Studies suggest that such measures can have an impact within a short time.

According to an August report by the Urban Institute, looking at 2008 and 2009, the most recent year for which data were available, the participation rate in Medicaid and CHIP — meaning the share of eligible children who were enrolled — increased from 82.1 percent to 84.8 percent.

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