United States General Accounting Office

GAO Report to the Ranking Minority Member,

Subcommittee on Children and Families,

Committee on Labor and Human

Resources, U.S. Senate

July 1995 HEALTH INSURANCE

FOR CHILDREN

Many Remain

Uninsured Despite

Medicaid Expansion

GAO/HEHS-95-175

GAO United States

General Accounting Office

Washington, D.C. 20548

Health, Education, and

Human Services Division

B-260450 

July 19, 1995

The Honorable Christopher J. Dodd

Ranking Minority Member

Subcommittee on Children and Families

Committee on Labor and Human Resources

United States Senate

Dear Senator Dodd:

Access to needed medical care can detect and prevent problems affecting

the future health and lives of children. Many U.S. children, however,

receive less health care than others because they lack health insurance. In

1993, 9.3 million U.S. children did not have health insurance coverage at

any time during the year. These 9.3 million children account for almost

one-quarter of all uninsured people.

Since the 1980s, the Congress has expanded Medicaid eligibility so that

more children could have health care coverage. Currently, the 104th

session of the Congress is considering making the Medicaid program a

block grant to states, limiting the growth of program expenditures, and

removing eligibility and other requirements. Such changes could greatly

impact children’s health care coverage if states choose to remove

guaranteed eligibility for children or reduce current state eligibility levels.

Concerned about these issues, you asked us to

• determine the impact of the Medicaid expansion on children’s health

insurance coverage since 1989,

• identify changes in the demographic profile of children enrolled in the

Medicaid program and uninsured children since the Medicaid expansion,

and

• estimate the number of uninsured children who might be eligible for

Medicaid.

To answer these questions, we analyzed data from the Bureau of the

Census’ March 1990 and March 1994 Current Population Survey (CPS),

linking information on children’s health insurance status and their parents’

Page 1 GAO/HEHS-95-175 Medicaid and Uninsured Children
B-260450 

demographic characteristics.1,2 (See app. III.) To estimate the number of

Medicaid-eligible children that were uninsured and not enrolled in the

Medicaid program, we defined a group of children from the March 1994

CPS data file that were Medicaid eligible according to federal rules and

analyzed their insurance status.3

 We also analyzed relevant laws to

understand changes in Medicaid eligibility criteria affecting children. We

released some of the findings from our analysis in a correspondence to

you.4

 Our work was conducted between October 1994 and April 1995 in

accordance with generally accepted government auditing standards.

Results in Brief Policy changes to expand Medicaid eligibility for children helped to

increase the number of children enrolled in Medicaid by 4.8 million

between 1989 and 1993. However, the overall number of children who are

uninsured did not decline because employment-based coverage for adults

and children also declined during the same period.5

 Because of expanded

Medicaid coverage, children were not as affected by the loss of

employment-based insurance as adults. Without expanded Medicaid

coverage, many more children would have been uninsured in 1993.

Medicaid primarily serves children who are poor or near poor, so

expanding Medicaid eligibility primarily affected the insurance status of

these children.6

 The percentage of poor children who were uninsured

declined from 25 percent in 1989 to 20 percent in 1993. In contrast, the

1

Each March, the Census Bureau asks questions about health insurance coverage during the previous

year. Thus, the 1990 and 1994 surveys report information for 1989 and 1993.

2

The CPS data we are reporting include only those children we were able to pair with an adult—98.4

percent of the sample in 1993. We could not pair 1.6 percent of the children. Thus, in 1993, 9.6 million

children (13.7 percent) were uninsured and 14 million (20.2 percent) received Medicaid, while

39.7 million (57 percent) had employment-based insurance.

3

We define the group of Medicaid eligible as children age 0 to 5 with family income at or below

133 percent of the federal poverty level and children 6 to 10 with family incomes at or below the

federal poverty level. The Congress mandated Medicaid coverage for all of these children born after

September 30, 1983.

4

Uninsured and Children on Medicaid (GAO/HEHS-95-83R, Feb. 14, 1995).

5

Some children, particularly children on Medicaid, have multiple sources of insurance. We define

“children on Medicaid” as children on Medicaid who did not have any employment-based insurance.

(See app. III.)

6

Poor children are children living in families with income at or below the federal poverty level. For

July 1, 1992, through June 30, 1993, the federal poverty income for a family of three was an annual

income of $11,570 or less. For this report, we define “near-poor” children as children living in families

with income between 101 and 150 percent of the federal poverty level. For a family of three, this means

an annual income between $11,571 and $17,357.

Page 2 GAO/HEHS-95-175 Medicaid and Uninsured Children
B-260450 

percentage of children in families with above near-poor income who were

uninsured increased.7

The Medicaid expansion has increased the enrollment of children less

likely to be on Medicaid previously—children in working families and

children not receiving Aid to Families With Dependent Children (AFDC). By

1993, more than half of Medicaid children had a working parent and

almost half were not on AFDC.

8

 The greatest increase in coverage has been

among children with at least one full-time9

 working parent, which

increased from 13.2 percent in 1989 to 20.1 percent in 1993. The proportion

of children in two-parent families on Medicaid has also increased. Of all

regions, the South10 had the greatest increase in the number of children

enrolled in Medicaid, though it still has the greatest number of uninsured

children.

Although the Medicaid expansion has increased Medicaid coverage for

children in working families, these children remain the largest segment of

uninsured children. In fact, more uninsured children—61 percent—had a

full-time working parent in 1993 than in 1989. Like most U.S. children,

most uninsured children live in two-parent families with at least one

working parent—but they have lower than average income. Compared

with more affluent workers, lower income workers are more likely to

work for businesses that do not offer employee coverage, and, if they do,

do not offer dependent coverage.

While the Medicaid expansion allowed many children to be covered who

might otherwise be uninsured, a substantial number of uninsured children

in 1993 were eligible but not enrolled in the program. At least one-quarter

of currently uninsured children—2.3 million—met federal Medicaid age

and income eligibility standards. Reasons that eligible children are not

covered may include their parents’ lack of knowledge about their potential

eligibility and difficulties in applying for Medicaid.

7

We define “above near-poor” children as children living in families with income above 150 percent of

the federal poverty level. For a family of three, this means an annual income above $17,357.

8

Nor were they on other assistance.

9

In this report, “full-time” work refers to working full time for the entire year with no lapses in full-time

employment. Parents who worked full time for only part of the year are classified with part-time

workers as working less than full time.

10The South includes Alabama, Arkansas, Delaware, the District of Columbia, Florida, Georgia,

Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee,

Texas, Virginia, and West Virginia.

Page 3 GAO/HEHS-95-175 Medicaid and Uninsured Children
B-260450 

Background Most U.S. families access the health care system through health insurance

coverage. Without health insurance, many families face difficulties getting

preventive and basic care for their children. Uninsured women, for

example, are less likely to get early and adequate prenatal care. Late and

inadequate prenatal care is associated with higher rates of low birth

weight and prematurity, serious illness, and handicap for children.11

Children without health insurance are less likely to have routine doctor

visits, get care for injuries, or have a regular source of medical care. When

they do seek care, they are more likely to get it through a clinic rather than

a private physician or health maintenance organization (HMO).12,13,14

Uninsured children are also less likely to be appropriately

immunized—important in preventing childhood illness.15,16

Insured children in the United States either have privately or publicly

funded health insurance. In 1993, 89 percent of children with private

insurance got coverage through their parents’ employment. A small

percentage of children have private, individually purchased policies. An

even smaller percentage are children of military personnel who get

publicly funded insurance through their parents’ employment. Most

children with publicly funded insurance get coverage through Medicaid.

The Medicaid program is a jointly funded federal-state entitlement

program that provides health insurance for both children and adults. It is

implemented through 56 separate programs (including the 50 states, the

District of Columbia, Puerto Rico, and the U.S. territories). States are

required to cover some groups of children and adults and may extend

coverage to others. Children and their parents must be covered if they

receive benefits under the AFDC program. In the past, most children

received Medicaid because they were on AFDC. Children and adults may

11Prenatal Care: Medicaid Recipients and Uninsured Women Obtain Insufficient Care

(GAO/HRD-87-137, Sept. 30, 1987).

12Barbara Bloom, Health Insurance and Medical Care: Health of Our Nation’s Children, United States,

Advance Data from Vital and Health Statistics; No. 188, National Center for Health Statistics

(Hyattsville, Md.: 1990).

13David L. Wood and others, “Access to Medical Care for Children and Adolescents in the U.S.,”

Pediatrics, Vol. 86, No. 5 (1990), pp. 666-673.

14Mary D. Overpeck and Jonathan B. Kotch, “The Effect of U.S. Children’s Access to Care on Medical

Attention for Injuries,” American Journal of Public Health, Vol. 85, No. 3 (1995) pp. 402-404.

15Charles N. Oberg, “Medically Uninsured Children in the United States: A Challenge to Public Policy,”

Pediatrics, Vol. 85, No. 5 (1990), pp. 824-833.

16David U. Himmelstein and Steffie Woolhandler, “Care Denied: U.S. Residents Who Are Unable to

Obtain Needed Medical Services,” American Journal of Public Health, Vol. 85, No. 3 (1995), pp. 341-344.

Page 4 GAO/HEHS-95-175 Medicaid and Uninsured Children
B-260450 

also be eligible for the program if they are disabled and have low incomes

or if their medical expenses are extremely high relative to family income.17

Beginning in 1986, the Congress passed a series of laws that expanded

Medicaid eligibility for pregnant women, infants, and children. (See table

I.1 in app. I.) Before 1989, coverage expansions were optional, although

many states had expanded coverage.18 Starting in July 1989, states had to

begin covering pregnant women and infants with family incomes at or

below 75 percent of the federal poverty level. The Omnibus Budget

Reconciliation Acts of 1989 and 1990 added additional requirements that

states had to implement in 1990 and 1991.

By 1993, states were required to cover (1) pregnant women, infants, and

children up to age 6 with family income at or below 133 percent of the

federal poverty level and (2) children aged 6 to 10 (born after September

30, 1983) with family income at or below 100 percent of the federal poverty

level. Current law also requires that the group of poor children over age 6

eligible for Medicaid continue to expand year by year until all poor

children up to age 19 are eligible in the year 2002. In addition, states may

expand Medicaid eligibility for infants and children beyond these

requirements by either phasing in coverage of children up to age 19 more

quickly than required or by increasing eligibility income levels or both. As

of April 1995, 37 states and the District of Columbia had expanded

coverage for children beyond federal requirements. (See app. I.)

Children represent a large proportion of Medicaid recipients but a small

proportion of Medicaid expenditures. In 1993, 49 percent of Medicaid

recipients were children under age 21, but only 16 percent of Medicaid

medical vendor payments were for their care.19

Nonetheless, Medicaid’s overall cost and the rate of cost increases have

raised concerns about the program’s impact on the federal budget.

Medicaid costs are projected to increase from about $131 billion to

$260 billion by the year 2000, according to the Congressional Budget

Office. The Congress is currently considering different options to lower

the cost of the program, including removing guaranteed eligibility and

giving capped funding to the states as block grants.

17This applies in states with Medically Needy programs.

18Thirty-two states and the District of Columbia had expanded coverage for pregnant women and

infants, and 26 states and the District of Columbia had expanded coverage for older children as of

December 1988.

19If disabled children under 21 are included, 23 percent of Medicaid medical vendor payments in 1993

were for children under age 21.

Page 5 GAO/HEHS-95-175 Medicaid and Uninsured Children
B-260450 

The Increased

Number of Children

on Medicaid Helped

Offset the Decline in

Employment-Based

Insurance for

Children

Medicaid has become an increasingly important source of health insurance

for low-income children as employment-based insurance has declined for

both children and adults. Between 1989 and 1993, the number of children

covered by Medicaid increased 54 percent—from 13.6 percent of U.S.

children in 1989 (8.9 million children) to 19.9 percent in 1993 (13.7 million

children). This could have led to a major decrease in the percentage of

children uninsured. It did not, however, because the decrease in children

covered by employment-based insurance offset the increase in U.S.

children insured through Medicaid. (See fig. 1.)

Figure 1: Medicaid Insured One-Fifth of U.S. Children in 1993

13.3%

13.6%

2.2%

CHAMPUS

Medicaid

Uninsured

7.7%

Private Individual


Insurance

13.5%

19.9%

1.8%

CHAMPUS

Medicaid

Uninsured

7.2%

Private


Individual 


Insurance

57.6% Employment-


Based


Insurance

63.2% Employment-


Based


Insurance

1989 1993

Note: CHAMPUS stands for the Civilian Health and Medical Program of the Uniformed Services.

Page 6 GAO/HEHS-95-175 Medicaid and Uninsured Children
B-260450 

Comparing trends between children and adults clarifies Medicaid’s role.

Between 1989 and 1993, the percentage of children with

employment-based health insurance decreased 9 percent. During the same

period, the percentage of adults aged 18 to 64 with such insurance

decreased 7 percent. Both children and adults lost employment-based

coverage.

Because of the Medicaid expansion, however, the decline in

employment-based insurance for children did not lead to an increase in the

proportion of uninsured children. Adults had a different experience. (See

fig. 2.) Between 1989 to 1993, the proportion of adults who were uninsured

rose 16 percent. In contrast, the proportion of children who were

uninsured was similar in 1989—13.3 percent—and 1993—13.5 percent.20

20The proportion declined between 1989 and 1992 and then rose 8 percent from 1992 to 1993.

Page 7 GAO/HEHS-95-175 Medicaid and Uninsured Children
B-260450 

Figure 2: Percentage of Uninsured

Adults Increased More Than the

Percentage of Uninsured Children

Between 1987 and 1993

Percent

10

11

12

13

14

15

16

17

18

19

20

1987 1988 1989 1990 1991 1992 1993

Year

Children Under Age 18

Adults Aged 18-64

Notes: Data through 1991 are weighted to the 1980 census. Data from 1992 and 1993 are

weighted to the 1990 census.

Data collection method changed in 1993 to computer-assisted interviewing.

Source: Bureau of the Census, Income Statistics Branch.

Comparing the experience of adults and children suggests that expanding

Medicaid for children did not displace privately purchased individual

insurance. The proportions of children and adults with privately

purchased insurance were similar in 1989 and changed little in 1993. An

increased proportion of adults did not purchase individual policies as

more adults became uninsured. If Medicaid had displaced privately

purchased insurance for children, the proportion of children with privately

purchased insurance would have decreased, but it did not.

The question of whether parents who could have employment-based

insurance for their families chose to drop or refuse coverage to get

Medicaid coverage for their children is more complicated. The longitudinal

data that would be needed to directly answer this question are not

Page 8 GAO/HEHS-95-175 Medicaid and Uninsured Children
B-260450 

available. Two researchers attempted to overcome this limitation by

developing an economic model using CPS data from 1987 through 1992.

They estimated that expanding Medicaid coverage for pregnant women

and children did partially displace employment-based coverage, being

responsible for about 17 percent of the decline in private insurance

coverage between 1987 and 1992. The rest of the decline in coverage was

due to macroeconomic factors, changes in the demographic mix of

population, or changes in employers’ offering or generosity in covering

health insurance for workers and their families. For children, their

analysis leads to an estimate that 37 to 47 percent of children’s increase in

Medicaid coverage was linked to a reduction in employment-based

insurance coverage.21

Although the Medicaid expansion offset the decrease in

employment-based insurance, an increasing number of children either

have no health insurance or depend on publicly funded health insurance.

In 1993, 9.3 million children were uninsured, and 13.7 million were on

Medicaid. These totals represent over one-third of U.S. children.22

Medicaid Expansion Had

Greater Impact on

Insurance Status of Poor

and Near-Poor Children

The effect of the Medicaid expansion is clear when considering how poor

children, near-poor children, and higher income children fared in the

health insurance marketplace between 1989 and 1993. During this period,

the percentage of children of all income levels with employment-based

insurance declined, and Medicaid coverage for all income levels expanded

but to different degrees.

Employment-based insurance declined most for near-poor children. (See

table 1.) Meanwhile, an additional 11 percent of these children obtained

coverage under Medicaid. The proportion of near-poor children who were

uninsured did not change significantly. These children were still most

likely to be uninsured in 1993 and most likely to be on Medicaid.

Poor children had a smaller decline in employment-based insurance than

near-poor children and a large increase in Medicaid coverage. As a result,

the percentage of poor children who were uninsured actually declined

from 25 percent in 1989 to 20 percent in 1993.

21David M. Cutler and Jonathan Gruber, Does Public Insurance Crowd Out Private Insurance? National

Bureau of Economic Research, Working Paper No. 5082 (Cambridge, Mass.:1995).

22In fact, this underrepresents the importance of Medicaid, since it does not include children who had

both employment-based and Medicaid coverage in these years. If those children are included,

23.9 percent of U.S. children were on Medicaid in 1993.

Page 9 GAO/HEHS-95-175 Medicaid and Uninsured Children
B-260450 

Unlike poor and near-poor children, children with family incomes above

150 percent of the federal poverty level were more likely to be uninsured

in 1993 than 1989. This group of children had the highest rates of

employment-based coverage in 1989 (80.2 percent) and the smallest

decrease in such coverage. The Medicaid expansion cushioned this group

less since few of these children depend on Medicaid for their coverage.

However, the percentage of these children covered by Medicaid had a

small and statistically significant increase—from 7.5 percent to

9.1 percent.

Page 10 GAO/HEHS-95-175 Medicaid and Uninsured Children
B-260450 

Table 1: Change in Percentage of Poor,

Near-Poor, and Above Near-Poor

Children Who Had Different Types of

Insurance or Were Uninsured, 1989

and 1993

Health insurance of children by

poverty level

Percent

1989

Percent

1993

Percentage

point

difference

Percent

change

Poora

Employment-based 17.8 14.0 –3.9d –22

Medicaid 50.7 61.3 +10.6d +21

CHAMPUS 1.0 0.9 –0.1 –8

Private/individually purchased 5.4 3.8 –1.6d –30

Uninsured 25.0 20.1 –5.0d –20

Total 100 100

Near-poorb

Employment-based 46.9 40.6 –6.2d –13

Medicaid 13.7 24.9 +11.2d +82

CHAMPUS 3.2 2.4 –0.8 –25

Private/individually purchased 9.7 7.6 –2.1d –22

Uninsured 26.5 24.5 –2.0 –8

Total 100 100

Above near-poorc

Employment-based 80.2 77.4 –2.8d –4

Medicaid 1.7 3.1 +1.5d +88

CHAMPUS 2.5 2.0 –0.5d –21

Private/individually purchased 8.1 8.4 +0.3 +4

Uninsured 7.5 9.1 +1.6d +21

Total 100 100

All U.S. children

Employment-based 63.2 57.6 –5.6d –9

Medicaid 13.6 19.9 +6.3d +46

CHAMPUS 2.2 1.8 –0.5d –21

Private/individually purchased 7.7 7.2 –0.5 –7

Uninsured 13.3 13.5 +0.1 +1

Total 100 100

Note: Column totals may not add to exactly 100 percent due to rounding. Percentages may not

exactly compute due to rounding.

aPoor families have income at or below 100 percent of the federal poverty level.

bNear-poor families have income between 101 to 150 percent of the federal poverty level.

cAbove near-poor families have income above 150 percent of the federal poverty level.

dStatistically significant at the .05 level.

Page 11 GAO/HEHS-95-175 Medicaid and Uninsured Children
B-260450 

The Medicaid

Expansion Increased

the Number of

Medicaid Children in

Working and

Non-AFDC Families,

Among Other Changes

Because of policy changes to expand children’s eligibility, Medicaid has

become a more important source of insurance for children who were less

likely to get Medicaid in the past, such as children in working families. The

proportion of Medicaid children who had a working parent increased

between 1989 and 1993. By 1993, more than half the children on Medicaid

had a working parent, and almost half did not depend on AFDC. Medicaid

coverage also increased more during this period among other children less

likely to receive Medicaid in the past—children in two-parent families,

children of more educated parents, white non-Hispanic and Hispanic

children, and children living in the South.

Medicaid Now Insures

More Children in Working,

Non-AFDC, and

Two-Parent Families

Changing Medicaid eligibility policies so that children are eligible on the

basis of income and age, even if they are not on AFDC,

23 allowed uninsured

children of low-income working families to get health insurance through

Medicaid. A significant increase in the number of children with a working

parent on Medicaid has resulted.

Over half of Medicaid children had a working parent in 1993. (See fig. 3.)

The proportion of children in working families on Medicaid grew, and the

number of Medicaid children with a working parent increased from

4 million in 1989 to 7.3 million in 1993—an 83 percent increase. Most

working parents with children on Medicaid worked less than full time for

the entire previous year. However, the percentage of Medicaid families

with a full-time worker increased. By 1993, 1 child in 5 on Medicaid had a

parent who worked full time all year.

23AFDC used to be one of the main ways children could enter the Medicaid program and receive health

insurance. Other children whom Medicaid covered were the disabled or those with extremely high

medical bills.

Page 12 GAO/HEHS-95-175 Medicaid and Uninsured Children
B-260450 

Figure 3: By 1993, More Than Half of Medicaid Children Had a Working Parent

55.1%

Working Full


Time All Year

Not Working

46.9%

Not Working

Working Full


Time All Year

33.0% Working Less


Than Full Time


All Year

31.7% Working Less


Than Full Time


All Year

1989 1993

13.2% 20.1%

At Least One Working Parent

No Working Parent

Expanding Medicaid eligibility on the basis of income and age was a major

reason for the increase in Medicaid enrollment, but not the only reason.

AFDC enrollment also increased between 1989 and 1993. The number of

children in Medicaid on AFDC or AFDC combined with other assistance

increased by 1.3 million children—a 25 percent increase.24 But the

expansion in non-AFDC children on Medicaid was much greater.

Between 1989 and 1993, the number of non-AFDC children on Medicaid

doubled—from 3.2 million to 6.4 million children. This greater increase in

non-AFDC children increased the proportion of non-AFDC children on

Medicaid. (See fig. 4.) The percentage of children not receiving AFDC or

24The growth in AFDC children probably relates to the increase in the number and proportion of

children in poverty and thus eligible for poverty-related support programs. The number of U.S.

children in poverty increased from 14 million (22 percent of U.S. children) to 17 million (25 percent) in

1993.

Page 13 GAO/HEHS-95-175 Medicaid and Uninsured Children
B-260450 

other assistance in 1993 increased from 36 percent of all children on

Medicaid in 1989 to 47 percent—almost half.

Figure 4: Children Not on AFDC Became a Larger Proportion of Children on Medicaid

58.5%

On AFDC

47.7%

On AFDC

46.9% Not AFDC

1989 1993

36.0%

Not on AFDC or Other Assistance


On AFDC or Other Assistance

1.9%

On Both AFDC


and Other


Assistance

3.6%


On Other


Assistance

Not on AFDC

1.2%

On Both AFDC


and Other


Assistance

4.2%


On Other


Assistance

The Medicaid program now serves more children in two-parent families,

another group of children less likely to receive Medicaid in the past. The

percentage of Medicaid children in two-parent families grew from

29.7 percent in 1989 to 35.6 percent in 1993. Children on Medicaid in

two-parent families were more likely to have a working parent in 1993

than in 1989 (78.5 percent compared with 72 percent) and also more likely

to have at least one parent who worked full time (40.6 percent compared

with 29.2 percent).

Page 14 GAO/HEHS-95-175 Medicaid and Uninsured Children
B-260450 

Medicaid Coverage

Increased More Among

Some Groups of Children

In addition to an increase in the proportion of working and two-parent

families on Medicaid, Medicaid enrollment also increased more for other

groups of children less likely to receive Medicaid in the past. Children

whose parents lack a high school diploma are most likely to receive

Medicaid, since lower education and lower income are related. However,

enrollment increased for some children less likely to be on

Medicaid—those whose most educated parent had a high school diploma

up through a bachelor’s degree. Meanwhile, employment-based insurance

decreased for children whose parents’ education varied from less than

high school to those whose parents had some college education. (See app.

II.)

Also, although a higher proportion of African American children receive

Medicaid coverage than children in other racial/ethnic groups, Medicaid

coverage expanded more for white, non-Hispanic children, and Hispanic

children than for African American children.

In 1989, a child in the South was less likely to receive Medicaid than a

child in any other region, even though the South had the highest

percentage of poor, uninsured children (47 percent). With the Medicaid

expansion, enrollment increased most in the South, so by 1993 the

percentage of poor, uninsured children in the South had declined. Despite

this decline, the South remains the region with the highest percentage of

uninsured children and the largest number of poor, uninsured children.

(For more detail on these changes, see app. II.)

Most Uninsured

Children Have

Working Parents With

Lower Than Average

Income

Despite the Medicaid expansion, children of working parents with lower

than average income still predominate among uninsured children. Living

with a full-time working parent was even less of a guarantee that children

would have health insurance coverage in 1993 than it was in 1989. Most

uninsured children live with a full-time working parent, generally in a

two-parent family. They differ from most children and especially from

insured children because many more of them are poor or near poor.

Most Uninsured Children

Have at Least One Working

Parent

In 1989 and 1993, 89 percent of uninsured children had at least one

working parent. The expansion in Medicaid coverage for children in

working families did not decrease the percentage of uninsured children

with a working parent. In some respects, the status of children in working

families worsened. This is because the percentage of uninsured children

with a full-time working parent grew between 1989 and 1993—from 57.2

percent (5 million) to 61.4 percent (5.7 million), respectively. (See fig. 5.)

Page 15 GAO/HEHS-95-175 Medicaid and Uninsured Children
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Figure 5: Most Uninsured Children Had

at Least One Working Parent in 1993

61.4% • Working Full Time All Year

27.1%•

Working Less Than Full Time All

Year

•

11.5%

Not Working

Working

Nonworking

Unlike children on Medicaid, uninsured children generally resemble most

U.S. children because they live in two-parent families, generally with a

working parent. (See fig. 6.) In comparison with all U.S. children,

uninsured children in two-parent families are less likely to live with a

parent who worked full time the entire previous year. Uninsured children

are also slightly more likely to live in one-parent families than are U.S.

children in general.

Page 16 GAO/HEHS-95-175 Medicaid and Uninsured Children
B-260450 

Figure 6: Most U.S. Children and Most

Uninsured Children Lived in

Two-Parent Working Families in 1993

Percent

0

5

10

15

20

25

30

35

40

45

50

55

60

65

70

75

Two-Parent

One-Parent

Two-Parent

One-Parent

Type of Family

All Children Uninsured

Children

No Parent Working

At Least One Parent Working < Full Time

At Least One Parent Working Full Time

Uninsured Children’s

Families Have Lower

Incomes

The families of uninsured children have less income than families of

insured children. In 1993, 24.7 percent of all U.S. children lived in poor

families. A larger proportion of uninsured children—36.7 percent—lived in

poor families while only 6 percent of children with employment-based

insurance did (see fig. 7). About 57 percent of uninsured children have

family income at or below 150 percent of the federal poverty level,

compared with 14 percent of children with employment-based insurance.

Page 17 GAO/HEHS-95-175 Medicaid and Uninsured Children
B-260450 

Figure 7: More Than Half of Uninsured

Children Were Poor or Near Poor in

1993

36.7% • At or Below Poverty

20.1% • 101 to 150 Percent of Poverty

14.5%•

151 to 200 Percent of Poverty

•28.7%

Above 200 Percent of Poverty

Children in Poor or Near-Poor Families

Children Above 150% of Federal Poverty Level

In previous work, we found that poor workers may not have

employment-based insurance for several reasons:25

• Health insurance is a more substantial share of total employee

compensation for low-wage workers than for higher wage workers, so

firms with predominantly low-wage workers are less likely to offer health

insurance—or, if they do, may not offer dependent coverage since doing

so is more expensive than covering the worker alone.

• A large share of small firms that employ low-wage workers are less likely

to offer health insurance. Small firms pay higher health insurance

premiums because insurers incur higher administrative costs to serve

small firms.

• Even if coverage is offered, health insurance cost sharing represents more

of the household budgets of poor and near-poor families so that families

may decide they cannot afford health insurance even if available.

25Health Insurance: An Overview of the Working Uninsured (GAO/HRD-89-45, Feb. 24, 1989); Access to

Health Insurance: State Efforts to Assist Small Businesses (GAO/HRD-92-90, May 14, 1992); and

Employer-Based Health Insurance: High Costs, Wide Variations Threaten System (GAO/HRD-92-125,

Sept. 22, 1992).

Page 18 GAO/HEHS-95-175 Medicaid and Uninsured Children
B-260450 

Many Uninsured

Children Are Medicaid

Eligible but Not on

Medicaid

Although many uninsured children could be covered by Medicaid, they are

not. At least one-quarter of uninsured children in 1993—2.3 million—had

family incomes that should have made them eligible for Medicaid.26 That

year, at least 13.8 million children met the federal age and poverty income

eligibility requirements for the program. Of these children, 2.4 million (17.3

percent) had employment-based insurance. Almost 8.4 million (60.9

percent) were on Medicaid, and about 675,000 (5 percent) either had

individually purchased private insurance or Civilian Health and Medical

Program of the Uniformed Services (CHAMPUS) insurance. Another 16.9

percent—2.3 million children—were uninsured.27 More than half of these

uninsured Medicaid-eligible children—over 1.4 million—were under age 6.

Compared with children on Medicaid, these children are more likely to live

in working, two-parent families. In 1993, 79.5 percent had at least one

working parent, and 42.5 percent had at least one parent working full time.

A total of 1.3 million (57.6 percent) of the Medicaid-eligible uninsured

children are in two-parent families; 1.2 million of these children have a

working parent. The South has more uninsured Medicaid-eligible children

than any other region—1.4 million. In comparison to all uninsured

children, uninsured Medicaid-eligible children are more likely to be

African American or Hispanic.

Possible Reasons Why

More Medicaid-Eligible

Uninsured Children Are

Not Enrolled

Several possible reasons may explain why these families might not have

enrolled their children in Medicaid. Low-income families may not know

that their children could be eligible for Medicaid even if a parent works

full time or if the family has two parents. In a study that interviewed AFDC

recipients and former recipients who had begun working but were still

receiving Medicaid (so-called Transitional Medicaid) in Charlotte, North

Carolina, and Nashville, Tennessee, researchers found that 41 percent of

AFDC recipients and 23 percent of former recipients did not understand

that a parent could work full time and receive Medicaid for his or her

children. Sixty-two percent of the AFDC recipients and 37 percent of the

26These are children for whom the Congress mandated Medicaid coverage—either under age 6 with

family incomes at or below 133 percent of the federal poverty level or from age 6 to 10 (born after

September 30, 1983) with family incomes at or below the federal poverty level.

27This underestimates the number of uninsured children possibly eligible for Medicaid, since many

states have expanded either the age or the income eligibility criteria above the federal minimum. (See

app. I.)

Page 19 GAO/HEHS-95-175 Medicaid and Uninsured Children
B-260450 

Transitional Medicaid recipients did not know that children could be

eligible for Medicaid if they lived in an intact, two-parent family.28

Another reason so many uninsured children are not on Medicaid may be

that getting enrolled in Medicaid is difficult for low-income families. Many

people who are potentially eligible for Medicaid never complete the

application process, and about half the denials are for procedural

reasons—that is, applicants did not or could not provide the basic

documentation needed to verify their eligibility or did not appear for all

the eligibility interviews.29

Finally, some families may not seek Medicaid until they face a medical

crisis because they are not used to regular or preventive medical care. In

addition, medical and social service providers report that some families do

not want to enroll in Medicaid because they consider it a welfare program

and consider it stigmatizing.

Conclusion Expanding children’s Medicaid eligibility has significantly increased the

number of children with Medicaid as their health insurance. It has also

helped cushion the effect of declining employment-based health insurance

coverage for children. Because of expanded eligibility, the proportion of

children on Medicaid in working and in two-parent families has grown.

The Congress is currently considering legislation to reform AFDC to

encourage low-income mothers to work. However, work for many lower

income families does not include the benefit of health insurance that it

more often does for higher income families. Clearly, having a full-time

working parent and being in a two-parent family does not ensure that a

child will have health insurance. Although Medicaid has begun to help

close that gap for some families, many more uninsured children are

eligible for Medicaid than have been enrolled.

Changes to the Medicaid program that remove guaranteed eligibility and

change the financing and responsibilities of the federal and state

governments may strongly affect health insurance coverage for children in

the future. Children account for only a small portion of Medicaid costs.

Because they represent almost half the participants, however, any changes

to Medicaid disproportionately affect children. Changes to Medicaid that

28Sarah C. Shuptrine, Vicki C. Grant, and Genny G. McKenzie, A Study of the Relationship of Health

Coverage to Welfare Dependency, Southern Institute on Children and Families (Columbia, S.C.: 1994),

pp. 21-25.

29Health Care Reform: Potential Difficulties in Determining Eligibility for Low-Income People

(GAO/HEHS-94-176, July 11, 1994).

Page 20 GAO/HEHS-95-175 Medicaid and Uninsured Children
B-260450 

result in reducing the number of children covered, without any

accompanying changes in the health insurance marketplace either to

encourage employers to provide dependent health insurance coverage, or

to encourage families to purchase insurance, or to provide other coverage

options for children, could lead to a significantly increased number of

uninsured children in the future.

We did not seek written agency comments because this report does not

focus on agency activities. We discussed a draft of this report with

responsible Department of Health and Human Services officials in the

Health Care Financing Administration and included their comments where

appropriate.

As arranged with your office, unless you publicly announce its contents

earlier, we plan no further distribution of this report until 30 days after its

issue date. At that time, we will send copies to interested parties and make

copies available to others on request.

Please contact me at (202) 512-7125 if you or your staff have any further

questions. This report was prepared by Rose Marie Martinez, Sheila

Avruch, Paula Bonin, and Frank Ullman.

Sincerely yours,

Mark V. Nadel

Associate Director

National and Public Health Issues

Page 21 GAO/HEHS-95-175 Medicaid and Uninsured Children
Contents

Letter 1

Appendix I 

States Have Expanded

Medicaid Eligibility

and Other Health

Insurance Options for

Children

24

Appendix II 

Medicaid Coverage

Expanded Most for

Certain Groups of

Children

30

More Children of Higher Educated Parents Are Now on Medicaid 30

Medicaid Expansion Produced Greater Coverage for Whites and

Hispanics

34

Growth in Medicaid Enrollment for Children Greatest in the

South

35

Appendix III 

Methodology

39

About the Survey 39

Definition of Insurance Status 39

Related GAO Products 44

Tables Table 1: Change in Percentage of Poor, Near-Poor, and Above

Near-Poor Children Who Had Different Types of Insurance or

Were Uninsured, 1989 and 1993

11

Table I.1: A Series of Laws Expanded Medicaid Eligibility for

Children

25

Table I.2: States That Have Expanded Medicaid Eligibility Beyond

Federal Requirements, as of April 1995

26

Table II.1: Change in Percentage of Children of Parents With

Differing Education Levels Covered by Different Types of

Insurance or Uninsured, 1989 and 1993

32

Table II.2: Children Uninsured, on Medicaid, or With

Employment-Based Insurance, by State, 1993

37

Table III.1: Definitions of Insurance Status 40

Table III.2: Number of Children by Type of Insurance in Whole

Data Set and After Matching Parents With Children

41

Page 22 GAO/HEHS-95-175 Medicaid and Uninsured Children
Contents

Table III.3: Definition of Work Status of Parent or Parents 42

Figures Figure 1: Medicaid Insured One-Fifth of U.S. Children in 1993 6

Figure 2: Percentage of Uninsured Adults Increased More Than

the Percentage of Uninsured Children Between 1987 and 1993

8

Figure 3: By 1993, More Than Half of Medicaid Children Had a

Working Parent

13

Figure 4: Children Not on AFDC Became a Larger Proportion of

Children on Medicaid

14

Figure 5: Most Uninsured Children Had at Least One Working

Parent in 1993

16

Figure 6: Most U.S. Children and Most Uninsured Children Lived

in Two-Parent Working Families in 1993

17

Figure 7: More Than Half of Uninsured Children Were Poor or

Near Poor in 1993

18

Figure II.1: Percentage of Children on Medicaid Expanded for

Children With Parents of Almost All Educational Attainments

30

Figure II.2: Children of the Least Educated Parents Were Most

Likely to Be Uninsured or on Medicaid in 1993

32

Figure II.3: Number of Children on Medicaid Increased Most for

Whites and Hispanics Between 1989 and 1993

34

Figure II.4: African American and Hispanic Children Were More

Likely to Be Uninsured or on Medicaid in 1993

35

Figure II.5: The South Had the Largest Increase in Number of

Children on Medicaid Between 1989 and 1993

36

Abbreviations

AFDC Aid to Families With Dependent Children

CHAMPUS Civilian Health and Medical Program of the Uniformed

Services

CPS Current Population Survey

EBRI Employment Benefits Research Institute

MCCA Medicare Catastrophic Care Amendments

OBRA Omnibus Budget Reconciliation Act

Page 23 GAO/HEHS-95-175 Medicaid and Uninsured Children
Appendix I 

States Have Expanded Medicaid Eligibility

and Other Health Insurance Options for

Children

The Congress passed a series of laws beginning in 1986 that substantially

expanded Medicaid eligibility for pregnant women and children. Some of

these laws required eligibility expansions, and others allowed states

options to expand eligibility. (See table I.1.)

Page 24 GAO/HEHS-95-175 Medicaid and Uninsured Children
Appendix I 

States Have Expanded Medicaid Eligibility

and Other Health Insurance Options for

Children

Table I.1: A Series of Laws Expanded

Medicaid Eligibility for Children Act Eligibility expansion

The Omnibus Budget Reconciliation Act of

1986 (OBRA-86)

OBRA-86 (P.L. 99-509) gave states the

option to expand Medicaid income

eligibility thresholds above AFDC levels up

to the federal poverty level for pregnant

women and infants, effective April 1, 1987.

It also gave states the option of phasing in

coverage for poor children up to age 5,

effective October 1, 1990.

The Omnibus Budget Reconciliation Act of

1987 (OBRA-87)

OBRA-87 (P.L. 100-203) allowed states to

raise Medicaid income thresholds for

pregnant women and infants as high as

185 percent of the federal poverty level,

effective July 1, 1988. It also amended the

statute to give states the option of phasing

in coverage of poor children up to age 8,

effective October 1, 1988.

The Medicare Catastrophic Care

Amendments of 1988 (MCCA)

MCCA (P.L. 100-360) mandated minimum

coverage of pregnant women and infants

at the federal poverty level, with a 2-year

phase-in period, effective for calendar

quarters beginning on or after July 1, 1989.

Affected states were to raise income limits

to 75 percent of poverty by July 1, 1989,

and to poverty level by July 1, 1990.

MCCA also added Section 1902 (r) (2) to

the Social Security Act, which allows states

to use more liberal criteria for Medicaid

than is used for the AFDC program to

determine Medicaid financial eligibility,

effective July 1, 1988. States can

disregard specific amounts of income and

other resources and allow certain

categories of eligible populations to qualify

for Medicaid.

The Omnibus Budget Reconciliation Act of

1989 (OBRA-89)

OBRA-89 (P.L. 101-239) superseded

MCCA’s mandate schedule by requiring

states to cover, at a minimum, pregnant

women and children up to age 6 at 133

percent of the federal poverty level,

effective for calendar quarters beginning

on or after April 1, 1990.

The Omnibus Budget Reconciliation Act of

1990 (OBRA-90)

OBRA-90 (P.L. 101-508) required states to

begin (effective on or after July 1, 1991) to

phase in coverage of children born after

September 30, 1983, until all children living

below poverty up to age 19 are covered;

the upper age limit will be reached by

October 2002.

Page 25 GAO/HEHS-95-175 Medicaid and Uninsured Children
Appendix I 

States Have Expanded Medicaid Eligibility

and Other Health Insurance Options for

Children

Many states have taken advantage of the options to expand Medicaid

eligibility for infants and children beyond federally required minimum

eligibility levels—either by increasing the ages of children covered more

quickly than the phase-in requires or increasing eligibility income levels or

both. As of April 1995, 33 states and the District of Columbia had increased

coverage for infants beyond federal requirements by generally expanding

coverage up to 185 percent of the federal poverty level. Eight states

expanded coverage for children aged 1 through 5, and 20 states expanded

coverage for children aged 6 and older beyond federal requirements. In all,

37 states and the District of Columbia have expanded eligibility for either

infants or children or both. (See table I.2.)

Table I.2: States That Have Expanded

Medicaid Eligibility Beyond Federal

Requirements, as of April 1995

Percent of federal poverty level

State Infants

Children

(1-5)

Children (6

and older)

Upper age

limit

Arizona 140 133 100 under 14

Californiaa 200 133 100 under 12b

Connecticut 185 185 185 under 12b

Delaware 185 133 100 under 19

District of Columbia 185 133 100 under 12b

Florida 185 133 100 under 12b

Georgia 185 133 100 under 19

Hawaiic 185 133 133 under 19

Indiana 150 133 100 under 12b

Iowa 185 133 100 under 12b

Kansas 150 133 100 under 15

Kentucky 185 133 100 under 19

Maine 185 133 125 under 19

Marylanda 185 133 100 under 12b

Massachusettsa 185 133 100 under 12b

Michigan

185 150 150

under 15

(born after

6/30/79)

Minnesotaa,d 275 133 100 under 12b

Mississippi 185 133 100 under 12b

Missouri 185 133 100 under 19

New Hampshire 185 185 185 under 19

New Jerseya 185 133 100 under 12b

New Mexico 185 185 185 under 19

New Yorka 185 133 100 under 12b

(continued)

Page 26 GAO/HEHS-95-175 Medicaid and Uninsured Children
Appendix I 

States Have Expanded Medicaid Eligibility

and Other Health Insurance Options for

Children

Percent of federal poverty level

State Infants

Children

(1-5)

Children (6

and older)

Upper age

limit

North Carolina 185 133 100 under 12b

Oklahoma 150 133 100 under 12b

Oregonc 133 133 100 under 19

Pennsylvaniaa 185 133 100 under 12b

Rhode Islandc

250 250 100

under 12

(born after

6/30/83)

South Carolina 185 133 100 under 12b

South Dakota

133 133 100

under 12

(born after

6/30/83)

Tennesseec 185 133 100 under 12b

Texas 185 133 100 under 12b

Utah 133 133 100 under 18

Vermont 225 225 225 under 18

Virginia 133 133 100 under 19

Washington 200 200 200 under 19

West Virginia 150 133 100 under 19

Wisconsin 155 155 100 under 12b

States with expansions 34 8 20

Source: Center on Budget and Policy Priorities.

Note: Percentages in bold type show expansions beyond federal minimum requirements, either

for age, family income, or both.

aThese states also use state funds to further expand health insurance coverage for children

through statewide programs—see discussion in following text.

bStates are required to provide Medicaid coverage to children aged 6 or over born after

September 30, 1983, with income below the federal poverty level.

cThese states are implementing 1115 Medicaid waivers, which may expand health coverage for

low-income children through Medicaid—see the following discussion.

dMinnesota also provides Medicaid coverage for children under age 21 with family income up to

133 percent of the AFDC standard.

In addition, several states have recently received special waivers allowing

them to undertake statewide Medicaid demonstration projects, several of

which extend health insurance coverage to portions of the uninsured,

including children. Authorized by section 1115(a) of the Social Security

Act (42 U.S.C. 1315), these waivers typically enable states to place all or

Page 27 GAO/HEHS-95-175 Medicaid and Uninsured Children
Appendix I 

States Have Expanded Medicaid Eligibility

and Other Health Insurance Options for

Children

some of their Medicaid population in managed care arrangements. The

waivers commonly require higher income families to pay premiums or

copayments, often on a sliding scale. In addition to the states with

approved waivers, other states have waivers pending. Since 1991 and as of

June 15, 1995, Delaware, Florida, Hawaii, Kentucky, Massachusetts,

Minnesota, Ohio, Oregon, Rhode Island, and Tennessee have had their

section 1115 demonstration waivers approved. To date, only Oregon,

Hawaii, Rhode Island, and Tennessee have implemented their 1115

demonstration waiver programs.30 Waiver applications for seven other

states are pending: Illinois, Missouri, Nevada, New Hampshire, New York,

Oklahoma, and Vermont.

The states that operate 1115 waiver programs have generally expanded

eligibility:

• Hawaii expanded Medicaid eligibility to all persons with income up to

300 percent of the federal poverty level, with cost sharing for most

residents with incomes above the federal poverty level.

• Oregon expanded Medicaid eligibility to all persons with income up to the

federal poverty level while limiting health coverage to a ranked list of

services.

• Rhode Island expanded coverage to pregnant women and children up to

age 6 with family incomes at or below 250 percent of the federal poverty

level.

• Tennessee expanded coverage to uninsured people without regard to

income level, but cost sharing is required for people who are not Medicaid

eligible or have family income above the federal poverty level. To manage

the program within its planned enrollment levels, Tennessee is now only

enrolling people who are Medicaid eligible or considered uninsurable.

Several states have developed other types of programs to insure children

not eligible for Medicaid. Seven states have statewide programs using state

and other funds to expand coverage for children beyond Medicaid

eligibility levels. Some of these programs provide only limited benefits

compared with the Medicaid program. For example, they may not cover

inpatient care. We will issue a report on some of these programs and other

nonstatewide programs later this year.

• California covers children under age 2 with family income up to

250 percent of the federal poverty level.

30Despite their initial interest, some states have postponed or reconsidered their waiver

implementation due to concerns about potential costs and other issues.

Page 28 GAO/HEHS-95-175 Medicaid and Uninsured Children
Appendix I 

States Have Expanded Medicaid Eligibility

and Other Health Insurance Options for

Children

• Maryland covers children under 11 who have family income up to

185 percent of the federal poverty level with a limited benefit package.

• Massachusetts has an insurance buy-in program with fees based on a

sliding scale for children under 13 with no family income limit.

• Minnesota has an insurance buy-in program with fees based on a sliding

scale for children and adults with family income up to 275 percent of the

federal poverty limit.

• New Jersey covers children up to age 1 with family income up to

300 percent of the federal poverty limit.

• New York covers children under 15 (born on or after June 1, 1980) with a

limited benefit package. The program is open to all income levels, but only

children with family income below 160 percent of the federal poverty limit

are fully subsidized. Children with family income between 160 percent and

222 percent of the federal poverty level are partially subsidized.

• Pennsylvania covers children under 14 with family income up to

185 percent of the federal poverty limit for fully subsidized insurance;

families with income between 185 and 235 percent of the federal poverty

level can buy partially subsidized insurance for their children; in some

parts of the state, these children get their partial premiums paid by their

insurers.

Page 29 GAO/HEHS-95-175 Medicaid and Uninsured Children
Appendix II 

Medicaid Coverage Expanded Most for

Certain Groups of Children

The Medicaid expansion has increased Medicaid coverage more for some

groups of children—those whose parents had more than minimal

education, whites and Hispanics, and children in the South. Although the

Medicaid expansion had a greater impact on the South, children living in

the South are still most likely to be uninsured in 1993.

More Children of

Higher Educated

Parents Are Now on

Medicaid

Medicaid coverage expanded for children whose parents’ education

ranged from less than high school to college degrees. (See fig. II.1.) The

largest percentage increase in Medicaid coverage—92 percent—was

among children whose most highly educated parent had some college

education but not a 4-year college degree. Children who had a parent with

a graduate education were the only group with little change in percentage

covered by Medicaid.

Figure II.1: Percentage of Children on

Medicaid Expanded for Children With

Parents of Almost All Educational

Attainments

Percent

0

10

20

30

40

50

Less Than High

School Graduate

High School

Graduate

Some College BA Degree Graduate

Education

Educational Level of Most Educated Parent

1989

1993

Page 30 GAO/HEHS-95-175 Medicaid and Uninsured Children
Appendix II 

Medicaid Coverage Expanded Most for

Certain Groups of Children

The Medicaid expansion for children of all but the most educated parents

coincided with a decline in employment-based coverage for most of the

same groups. Since 1989, the percentage of children with

employment-based insurance declined for children whose parents’

education ranged from less than high school to some college. (See table

II.1.) The decline was greatest for children of parents with less than a high

school diploma. Children with a parent who had a bachelor’s degree or

more education had no decrease in employment-based coverage.

Medicaid continued to insure higher proportions of children with the least

educated parents. (See fig. II.2 and table II.1.) Higher education is strongly

correlated with higher income, and Medicaid predominantly serves poor

children. Children with less educated parents are also more likely to be

uninsured. Almost 80 percent of children whose most educated parent

lacks a high school diploma were either uninsured or on Medicaid in 1993.

Page 31 GAO/HEHS-95-175 Medicaid and Uninsured Children
Appendix II 

Medicaid Coverage Expanded Most for

Certain Groups of Children

Figure II.2: Children of the Least

Educated Parents Were Most Likely to

Be Uninsured or on Medicaid in 1993

Percentage

0

10

20

30

40

50

60

70

80

90

Less Than High

School Graduate

High School Graduate

Some College, No Degree

Associate College Degree

BA Degree

Graduate Degree

Education of Most Educated Parent

Medicaid

Uninsured

Table II.1: Change in Percentage of

Children of Parents With Differing

Education Levels Covered by Different

Types of Insurance or Uninsured, 1989

and 1993

Percent of children insured by education of most

educated parent

Health insurance of child 1989 1993

Percentage

point

difference

Percent

change

Less than a high school diploma

Employment-based 24.5 17.9 –6.6a –27

Medicaid 40.9 53.0 +12.1a +29

CHAMPUS 0.3 0.3 0.0 –5

Private/individual 5.2 2.8 –2.4a –46

Uninsured 29.1 26.0 –3.1a –11

Total 100 100

(continued)

Page 32 GAO/HEHS-95-175 Medicaid and Uninsured Children
Appendix II 

Medicaid Coverage Expanded Most for

Certain Groups of Children

Percent of children insured by education of most

educated parent

Health insurance of child 1989 1993

Percentage

point

difference

Percent

change

High school graduate

Employment-based 60.7 49.5 –11.2a –18

Medicaid 14.2 25.0 +10.8a +76

CHAMPUS 2.3 1.5 –0.8a –33

Private/individual 7.7 7.2 –0.5 –6

Uninsured 15.0 16.7 +1.7a +12

Total 100 100

Some college

Employment-based 71.8 64.0 –7.8a –11

Medicaid 7.4 14.2 +6.8a +92

CHAMPUS 3.2 2.7 –0.4 –13

Private/individual 8.4 7.9 –0.5 –6

Uninsured 9.3 11.1 +1.8a +20

Total 100 100

Bachelor’s degreeb

Employment-based 81.8 79.9 –1.9 –2

Medicaid 1.8 3.3 +1.5a +80

CHAMPUS 2.1 1.7 –0.4 –18

Private/individual 8.9 8.4 –0.4 –5

Uninsured 5.4 6.6 +1.2 +22

Total 100 100

Graduate educationc

Employment-based 83.8 83.9 +0.1 0

Medicaid 0.8 1.0 +0.2 +24

CHAMPUS 3.0 1.7 –1.3a –42

Private/individual 8.3 9.3 +1.1 +13

Uninsured 4.1 4.0 –0.1 –2

Total 100 100

Notes: Educational levels were defined differently in 1989 and 1993 so that they are not exactly

comparable. Numbers may not add, subtract, or compute exactly due to rounding.

aStatistically significant at the .05 level.

bIn 1989, 4 years of college and, in 1993, a 4-year college degree.

cIn 1989, more than 4 years of college and, in 1993, a graduate degree.

Page 33 GAO/HEHS-95-175 Medicaid and Uninsured Children
Appendix II 

Medicaid Coverage Expanded Most for

Certain Groups of Children

Medicaid Expansion

Produced Greater

Coverage for Whites

and Hispanics

The Medicaid expansion increased the number of children on Medicaid

more for whites and Hispanics between 1989 and 1993 than for African

Americans. (See fig. II.3.) The number of white children on Medicaid

increased 75 percent—from 3.1 million to 5.5 million—and the number of

Hispanic children increased by 79 percent—from 1.8 million to

3.2 million—since 1989. In contrast, the number of African American

children on Medicaid increased 30 percent—from 3.4 million to 4.4 million.

In 1993, 41 percent of African American children, 35 percent of Hispanic

children, and 12 percent of white children were on Medicaid. White

children are less likely to be on Medicaid, but, of all children on Medicaid,

they represent the largest segment (40.2 percent).

Figure II.3: Number of Children on

Medicaid Increased Most for Whites

and Hispanics Between 1989 and 1993

Number in Millions

0

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

5.50

6.00

White

Non-Hispanic

Black

Non-Hispanic

Hispanic Other

3.13

5.48

3.40

4.42

1.80

3.22

0.52 0.53

1989

1993

Nevertheless, children of racial and ethnic minorities are still more likely

to be uninsured. (See fig. II.4.) While only 10.5 percent of white children

were uninsured in 1993, 25.6 percent of Hispanic children and 15.2 percent

of African American children were uninsured. Minority children have

Page 34 GAO/HEHS-95-175 Medicaid and Uninsured Children
Appendix II 

Medicaid Coverage Expanded Most for

Certain Groups of Children

higher rates of being uninsured, but white children make up about half

(51.6 percent) of all uninsured children.

Figure II.4: African American and

Hispanic Children Were More Likely to

Be Uninsured or on Medicaid in 1993

Percent

0

10

20

30

40

50

60

70

White

Black

Hispanic

Other

Medicaid

Uninsured

Growth in Medicaid

Enrollment for

Children Greatest in

the South

Between 1989 and 1993, the number of children on Medicaid increased in

all regions, but the greatest increase occurred in the South. (See fig. II.5.)

Compared to the Northeast and Midwest, the South had higher

percentages of uninsured children in poverty in both 1989 and

1993—38.7 percent in 1993. Despite this, the South had the lowest

percentage of its children on Medicaid in 1989—12.7 percent in the South

compared with 15.3 percent in the West. Southern states historically have

had stricter AFDC eligibility requirements relative to the federal poverty

level than other regions. Thus, Southern poor children were less likely to

be on AFDC and covered by Medicaid through AFDC. When Medicaid

coverage became mandated by age and poverty, the greatest number of

children benefiting were in the South. Medicaid coverage increased to

20.5 percent of southern children in 1993. Not surprisingly, the four states

with the highest Medicaid coverage of children are all in the South—the

Page 35 GAO/HEHS-95-175 Medicaid and Uninsured Children
Appendix II 

Medicaid Coverage Expanded Most for

Certain Groups of Children

District of Columbia (45.4 percent), Louisiana (29.9), Mississippi (27.9),

and Tennessee (26.8); 8 of the top 15 states for Medicaid coverage of

children are southern states. (See table II.1 for percentages of Medicaid,

uninsured, and employment-based insured children by state.) Overall, the

percentage of children on Medicaid increased for all regions, and the

disparities between regions decreased between 1989 and 1993.

Figure II.5: The South Had the Largest

Increase in Number of Children on

Medicaid Between 1989 and 1993

Number in Millions

0

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

Northeast Midwest South West

1.72

2.52

2.04

3.09

2.84

4.80

2.26

3.25

1989

1993

Nevertheless, despite the Medicaid expansion, more uninsured children

live in the South than in any other region of the country. The South has 43

percent of uninsured children—almost 4 million children. Businesses in

the South are less likely to offer health insurance than businesses in other

regions. Regional differences in health insurance coverage among the

employed may also reflect the greater degree of industrialization and

unionization in other parts of the country and higher incidence of small

and service-sector businesses in the South.

Page 36 GAO/HEHS-95-175 Medicaid and Uninsured Children
Appendix II 

Medicaid Coverage Expanded Most for

Certain Groups of Children

Table II.2: Children Uninsured, on Medicaid, or With Employment-Based Insurance, by State, 1993

Uninsured Medicaid Employer-based Insurance

State Number Percent 95% S. E.a Number Percent 95% S.E.a Number Percent 95% S.E.a

Alabama 156,223 15.1 5.1 168,530 16.2 5.3 627,161 60.4 7.0

Alaska 13,063 8.3 3.4 31,180 19.7 4.9 84,929 53.8 6.1

Arizona 207,039 19.5 5.4 160,819 15.1 4.8 615,417 57.9 6.7

Arkansas 127,869 20.2 5.6 127,139 20.0 5.5 322,260 50.8 6.9

California 1,611,965 17.5 1.9 2,361,248 25.7 2.2 4,539,114 49.3 2.5

Colorado 87,008 9.8 4.4 124,759 14.0 5.1 555,319 62.3 7.2

Connecticut 72,225 9.1 4.8 107,173 13.5 5.7 533,584 67.3 7.8

Delaware 20,398 11.6 5.0 27,906 15.9 5.7 115,257 65.6 7.4

District of

Columbia 23,850 16.7 6.4 64,962 45.4 8.6 49,740 34.8 8.2

Florida 622,312 17.5 2.6 803,814 22.6 2.9 1,766,901 49.7 3.4

Georgia 270,989 15.6 5.0 304,000 17.5 5.2 924,668 53.3 6.9

Hawaii 25,549 9.2 4.4 40,909 14.8 5.4 159,978 57.7 7.5

Idaho 51,836 14.4 4.0 51,257 14.2 4.0 219,765 61.1 5.6

Illinois 330,054 10.6 2.3 637,299 20.4 3.0 1,848,756 59.2 3.6

Indiana 139,019 8.9 4.0 253,099 16.1 5.2 1,021,912 65.1 6.7

Iowa 61,839 8.0 3.7 65,398 8.5 3.8 534,200 69.3 6.2

Kansas 87,787 12.5 4.3 104,965 15.0 4.7 443,272 63.2 6.3

Kentucky 107,526 11.5 4.6 241,621 25.7 6.3 534,602 57.0 7.1

Louisiana 275,284 22.2 5.7 369,699 29.8 6.3 510,248 41.2 6.8

Maine 30,728 8.7 3.9 62,208 17.5 5.3 218,182 61.4 6.7

Maryland 106,628 9.4 4.6 155,802 13.8 5.4 721,222 63.9 7.6

Massachusetts 122,238 8.6 2.2 258,123 18.2 3.1 919,497 65.0 3.8

Michigan 207,667 7.9 1.9 603,880 23.1 3.0 1,646,967 62.9 3.5

Minnesota 76,517 6.9 3.7 182,121 16.5 5.5 726,118 65.7 7.0

Mississippi 123,223 16.8 4.8 204,050 27.8 5.8 344,812 47.0 6.4

Missouri 125,942 9.3 4.2 288,754 21.4 6.0 850,457 63.0 7.1

Montana 33,356 14.2 4.6 34,836 14.8 4.7 140,217 59.7 6.4

Nebraska 45,361 9.2 3.6 69,565 14.1 4.3 295,759 60.1 6.1

Nevada 63,168 17.4 5.1 33,158 9.1 3.9 230,981 63.7 6.5

New

Hampshire 32,073 11.0 5.0 33,129 11.3 5.1 208,658 71.3 7.3

New Jersey 227,401 11.4 2.4 338,488 17.0 2.8 1,244,667 62.5 3.6

New Mexico 112,261 24.2 5.5 79,222 17.1 4.8 232,445 50.2 6.4

New York 490,466 10.9 1.8 1,111,452 24.8 2.5 2,581,922 57.6 2.8

North Carolina 214,184 13.7 2.6 286,519 18.4 2.9 890,646 57.2 3.8

(continued)

Page 37 GAO/HEHS-95-175 Medicaid and Uninsured Children
Appendix II 

Medicaid Coverage Expanded Most for

Certain Groups of Children

Uninsured Medicaid Employer-based Insurance

State Number Percent 95% S. E.a Number Percent 95% S.E.a Number Percent 95% S.E.a

North Dakota 18,571 10.9 4.1 20,793 12.2 4.3 101,831 59.7 6.4

Ohio 274,445 8.8 2.0 630,547 20.2 2.8 1,976,099 63.5 3.4

Oklahoma 252,555 25.5 5.6 145,107 14.7 4.5 519,572 52.5 6.4

Oregon 93,859 11.8 4.8 107,335 13.5 5.1 527,175 66.4 7.0

Pennsylvania 295,077 9.8 2.2 525,999 17.4 2.8 1,918,598 63.6 3.6

Rhode Island 26,058 11.3 5.3 53,741 23.3 7.1 139,569 60.4 8.2

South Carolina 126,046 13.5 4.3 204,240 21.8 5.2 506,030 54.1 6.3

South Dakota 26,192 12.2 3.8 32,810 15.2 4.2 122,156 56.8 5.8

Tennessee 131,678 10.3 4.1 344,251 26.8 6.0 715,545 55.8 6.7

Texas 1,110,747 21.1 2.7 1,031,685 19.6 2.6 2,675,381 50.9 3.3

Utah 69,240 10.1 3.4 49,813 7.3 2.9 489,701 71.6 5.0

Vermont 11,387 7.1 3.9 28,204 17.6 5.8 102,276 63.9 7.3

Virginia 215,873 12.9 4.1 226,281 13.5 4.2 1,038,898 62.0 6.0

Washington 119,225 9.1 4.0 151,198 11.6 4.4 854,264 65.4 6.6

West Virginia 76,217 18.6 5.9 92,902 22.7 6.4 221,320 54.0 7.6

Wisconsin 96,832 7.2 3.4 204,573 15.2 4.7 962,469 71.7 5.8

Wyoming 19,841 13.8 5.2 19,444 13.5 5.2 89,421 62.1 7.4

United States 9,266,892 13.5 0.6 13,656,027 19.9 0.7 39,619,937 57.7 0.8

aS.E. represents sampling error. Each reported percent and number estimate from the Current

Population Survey has an associated sampling error, the size of which reflects the precision of the

estimate. Sampling errors for percentage estimates were calculated at the 95-percent confidence

level, which means that the chances are about 19 out of 20 that the actual percentage being

estimated falls within the range defined by our estimate, plus or minus the sampling error. For

example, we estimate that 13.5 percent of U.S. children are uninsured; a 95-percent chance

exists that the actual percentage is between 12.9 percent and 14.1 percent.

Page 38 GAO/HEHS-95-175 Medicaid and Uninsured Children
Appendix III 

Methodology

To examine the impact of the Medicaid expansion on children, we

analyzed the Current Population Survey (CPS). The method we used to

define insurance status and to match children to parents resulted in a

conservative estimate of the number of children uninsured and on

Medicaid. In addition, two other aspects of our analysis affected the

results in different ways. First, we counted parental work effort on the

basis of whichever parent had the highest level of work (such as working

full time as opposed to part time), and we counted parental education on

the basis of whichever parent had attained the highest educational level.

Second, we used recently released sample weights for the March 1990 CPS,

which makes the data more equivalent to the March 1994 CPS, although it

would differ slightly from previously published analyses of the March 1990

CPS.

About the Survey The CPS is the source of official government statistics on employment and

unemployment. Although the main purpose of the survey is to collect

information on employment, an important secondary purpose is to collect

information on the demographic status of the population, such as age, sex,

race, marital status, educational attainment, and family structure. The CPS

survey conducted every March also collects additional data on work

experience, income, noncash benefits, and health insurance coverage of

each household member at any time during the previous year.

The CPS sample is based on the civilian, noninstitutionalized population of

the United States. About 57,000 households with approximately 112,000

persons 15 years old and older and approximately 33,000 children aged 0

to 14 years old are included. It also includes Armed Forces members living

in households with civilians either on or off base. The households sampled

by the CPS are scientifically selected on the basis of area of residence to

represent the United States as a whole, individual states, and other

specified areas.31

Definition of

Insurance Status

We defined insurance status using a hierarchy. If a child had multiple

coverage during the year, we counted that child under only one type of

coverage. (See table III.1.) We counted employment-based insurance,

which is the most common type for children to have, as the primary

31In January 1994, the survey was changed to improve data quality by introducing computer-assisted

data collection with a revised questionnaire. The Census used both the old and new questionnaire and

methods to test differences between the two methods and found some differences, such as in

employment categorization. However, the differences that they noted should not affect the variables

reported here.

Page 39 GAO/HEHS-95-175 Medicaid and Uninsured Children
Appendix III 

Methodology

insurance. If a child had both employment-based insurance and Medicaid,

that child was counted as having employment-based insurance. Since most

Medicaid children with multiple coverage had Medicaid and

employment-based coverage, our count of Medicaid children better

represents children who depended entirely on Medicaid for any insurance

coverage.32,33

Table III.1: Definitions of Insurance

Status Insurance status Definition

Uninsured Did not have any health insurance during

the entire year.

Employment-based Had health insurance purchased through a

parent’s employer or union for at least part

of the year.

Medicaid Did not have employment-based health

insurance at all, but had Medicaid or

Medicarea coverage for at least part of the

year.

CHAMPUS Did not have employment-based insurance

or Medicaid or Medicare coverage at all,

but had CHAMPUS coverage for at least

part of the year.

Private/individually purchased Did not have employment-based

insurance, Medicaid or Medicare

coverage, or CHAMPUS at all, but had

private/individually purchased health

insurance coverage for at least part of the

year.

aFew children have Medicare coverage—37,000 in 1993.

The Census has published a table with information from the CPS that

reports multiple coverage. It has different numbers and percentages for

insurance status of children with Medicaid, CHAMPUS, and

private/individually purchased health insurance than we reported because

it reports multiple coverage on the unmatched data set. (See table III.2.)

Matching Children With

Parents

We matched children with parents to analyze family characteristics. The

Census considers a family to be two or more persons residing together and

related by birth, marriage, or adoption. The Census develops family

32The Census has published a table that reports multiple coverage, which can be used for comparison.

(See table III.2.)

33The Employment Benefit Research Institute (EBRI) reports multiple coverage for children but

defines some of its variables differently than the Census does. Its estimates of uninsured children and

children with employment-based insurance coverage differ from those of the Census, whereas ours do

not.

Page 40 GAO/HEHS-95-175 Medicaid and Uninsured Children
Appendix III 

Methodology

records for the householder (a person in whose name the housing unit is

owned, leased, or rented, or if no such person, an adult in the household),

other relatives of the householder with their own subfamilies, and

unrelated subfamilies. If the house is owned, leased, or rented jointly by a

married couple, the householder may be either the husband or wife. We

paired children to an adult (aged 18 through 64) in their immediate family

whom we call a parent. After this pairing, we matched the adult family

member to a spouse, if any, to get “parents” in our file.

We were not able to match all children with parents. Because data in this

report are based only on the matched files, the number of children

reported in every insurance category is conservative. The estimates of

Medicaid and uninsured children are more conservative than the estimate

of children with employment-based insurance because we were able to

pair fewer Medicaid and uninsured children with an adult than children

with employment-based insurance. (See table III.2.)

Table III.2: Number of Children by Type of Insurance in Whole Data Set and After Matching Parents With Children

Bureau of the Census

GAO—children before

matching with parents

GAO—children after

matching with parents

Lost by

matching

Numbers in thousands

Insurance type Numbera Percent Number Percent Number Percent Percent

Employment-based 39,745 57.0 39,745 57.0 39,620 57.7 0.3

Medicaida 16,693 23.9 14,128 20.3 13,656 19.9 3.3

CHAMPUS 2,307 3.3 1,215 1.7 1,209 1.8 0.5

Private/individual 7,272 10.4 5,103 7.3 4,927 7.2 3.5

Uninsured 9,574 13.7 9,574 13.7 9,267 13.5 3.2

Total 69,766 100 69,766 100 68,679 100 1.6

Notes: Numbers or percents may not add or compute exactly due to rounding.

aOur analysis combined Medicaid and Medicare for children.

Determining Parents’ Work

and Educational Status

The way we matched parents with children to analyze the association of

work effort, education, and insurance for children helped develop a more

accurate picture of uninsured and Medicaid children with working and

more highly educated parents. We analyzed parent work status on the

basis of information about the parent who worked the most. (See table

III.3.) We also reported educational status on the basis of whichever

parent had the highest educational status—graduate education, bachelor’s

Page 41 GAO/HEHS-95-175 Medicaid and Uninsured Children
Appendix III 

Methodology

degree or 4 years of college, some college, high school diploma, or less

than a high school diploma. This allowed us to more accurately portray the

work status or education of parents in two-parent families.

Table III.3: Definition of Work Status of Parent or Parents

Work status Reported as Definition

Full time/full year Full time/full year Either parent worked full time/full year.

Full time/part year Less than full time/full year No parent worked full time/full year, but at

least one worked full time part of the year.

Part time/full year Less than full time/full year No parent worked full time, but at least one

parent worked part time for the entire year.

Part time/part year Less than full time/full year No parent worked either full time or full

year, but at least one parent worked part

time for part of the year.

Not working Not working No parent worked at all during the entire

year.

Conducting the analysis in this way allowed us to search for a parent more

likely to have insurance—either because they worked more or were more

educated. We found some interesting results from this analysis. For

example, we found more uninsured and Medicaid children living with at

least one parent who worked full time than if we had not searched for

employment status of both parents in two-parent families. We also found

fewer uninsured and Medicaid children who lived with a parent who had

less than a high school diploma.34

Using Weights Based on

the 1990 Census

The CPS is based on a sample of the U.S. population, and weights are used

to compute the estimates for the total population. The basic weight

represents the probability that individuals will be included in the survey.

The weights are computed on the basis of information from the decennial

censuses.

We used weights based on information from the 1990 census for both 1989

and 1993 to make them more equivalent. Information from the 1990 census

was not available when the March 1990 CPS public use survey tapes were

first released so those tapes were originally released with weights

established through information from the 1980 decennial census. Since

then, the Census Bureau released adjusted weights for the March 1990 CPS

that can be used in analyzing that CPS file. We used weights adjusted to the

34EBRI reports parental work status, and other statuses in two-parent families, on the basis of the

parent (in two-parent families) who earns the larger income.

Page 42 GAO/HEHS-95-175 Medicaid and Uninsured Children
Appendix III 

Methodology

1990 census provided by the Census Bureau for both the 1989 and 1993

data to make the data more comparable and to make the 1989 data more

accurate. We also did a sample run on the 1989 data using the earlier

census weights to compare the differences. Using the more recent weights

yields slightly different results, such as a small increase in the number and

percentage of children uninsured or on Medicaid.

Page 43 GAO/HEHS-95-175 Medicaid and Uninsured Children
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(108217) Page 44 GAO/HEHS-95-175 Medicaid and Uninsured Children
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