CHILDREN’S HEALTH 

INSURANCE

Opportunities Exist 

for Improved Access 

to Affordable 

Insurance 

Report to Congressional Requesters

June 2012

GAO-12-648

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United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-12-648, a report to 

congressional requesters

June 2012

CHILDREN’S HEALTH INSURANCE

Opportunities Exist for Improved Access to 

Affordable Insurance 

Why GAO Did This Study

PPACA sought to increase access to 

affordable health insurance, and major 

provisions, such as a tax credit to 

offset the cost of private insurance 

premiums, will become effective in 

2014. GAO estimated the extent to 

which (1) uninsured children would be 

eligible for Medicaid, CHIP, or the 

premium tax credit under PPACA, and 

(2) children would experience a 

change in eligibility among Medicaid, 

CHIP, and the premium tax credit 

under PPACA because of income 

changes. GAO also assessed CMS 

steps thus far to help states enroll 

children and related state challenges. 

GAO applied proposed and final 2014 

PPACA eligibility rules to nationally 

representative 2009 data from the U.S. 

Census Bureau and interviewed 

officials from CMS and IRS, two 

federal agencies responsible for 

implementing relevant PPACA 

provisions, and six states that received 

federal funds for enrollment efforts.

What GAO Recommends

GAO recommends that in future rule 

making, the Secretary of the Treasury, 

in consultation with the Commissioner 

of Internal Revenue, consider the 

impact of the proposed standard for 

determining affordability of employersponsored insurance on eligible family 

members, and whether it would be 

consistent with PPACA to adopt an 

approach that would consider the cost 

of insuring eligible family members, or 

as necessary, seek clarification from 

Congress regarding its intent with 

respect to this standard. HHS and 

Treasury were given a draft of this 

report for review, but neither provided 

formal comments. Treasury provided 

technical comments, which GAO 

incorporated as appropriate.

What GAO Found

GAO estimates that under the 2010 Patient Protection and Affordable Care Act 

(PPACA), about three-quarters of approximately 7 million children who were 

uninsured in January 2009 would be eligible for Medicaid, the State Children’s 

Health Insurance Program (CHIP), or the new premium tax credit. The remaining 

children had family incomes too high to be eligible, were noncitizens, or would be 

ineligible for the premium tax credit because they would be considered to have 

access to affordable employer-sponsored insurance per the Internal Revenue 

Service’s (IRS) proposed affordability standard, in which IRS interpreted PPACA 

as defining affordability for an employee’s eligible family members based on the 

cost of an employee-only plan. Some commenters raised concerns that IRS’s 

interpretation was inconsistent with PPACA’s goal of increasing access to 

affordable health insurance as it does not consider the higher cost of family 

insurance and could result in some children remaining uninsured. Under PPACA, 

CHIP is not funded beyond 2015, and states may opt to reduce CHIP eligibility or 

eliminate programs in fiscal year 2020. Without CHIP, more children could 

become uninsured. In May 2012, IRS finalized its rule but deferred finalizing the 

proposed affordability standard.

Estimated Eligibility for Medicaid, CHIP, and the Premium Tax Credit under 2014 PPACA 

Rules, among Children Who Were Uninsured in January 2009

GAO estimates that about 14 percent of children in January 2009 who met 2014 

PPACA eligibility criteria for these programs experienced a change in household 

income that would affect eligibility within 1 year. Changes in eligibility among 

children in states without policies allowing them to remain eligible for Medicaid 

and CHIP for a full year were estimated to be higher than in states with such 

policies. Frequent eligibility changes could deter enrollment if the process for 

changing enrollment is burdensome.

The Centers for Medicare & Medicaid Services (CMS) has provided states with 

financial incentives and technical guidance to improve enrollment and to 

implement PPACA provisions. States reported challenges to enrolling eligible 

children, including the need for guidance to implement certain provisions—which 

CMS indicated was forthcoming—and state budget constraints.

View GAO-12-648. For more information, 

contact Katherine Iritani at (202) 512-7114 or 

iritanik@gao.gov.
Page i GAO-12-648 Children’s Access to Health Insurance

Letter 1 

Background 6

An Estimated Three-Quarters of Uninsured Children Would Be 

Eligible for Medicaid, CHIP, or the Premium Tax Credit under 

PPACA, but the Proposed Affordability Standard May Result in 

Some Children Remaining Uninsured 12

An Estimated 14 Percent of Children Eligible for Medicaid, CHIP, 

or the Premium Tax Credit under PPACA Would Experience a 

Change in Eligibility within 1 Year 17

CMS Has Provided States with Tools to Increase Enrollment, and 

States Express a Need for Further Guidance and Note Budget 

Constraints 20

Conclusions 26

Recommendation for Executive Action 27

Agency Comments 27

Appendix I Scope and Methodology of the Survey of Income and Program 

Participation Analysis 29

Appendix II Federal Initiatives and Funding Available to States to Facilitate 

Enrollment of Eligible Children and Implement PPACA 37

Appendix III GAO Contact and Staff Acknowledgments 40

Tables

Table 1: Selected PPACA Provisions for Health Plans and Issuers in 

the Private Health Insurance Market 10

Table 2: Estimated Percentage of Eligible Children Who Would 

Experience a Change in Eligibility under PPACA Because 

of Household Income Fluctuations 18

Table 3: Estimated Percentage of Eligible Children Who Would 

Experience a Change in Eligibility under PPACA Because 

of Household Income Fluctuations in States without 

Continuous Eligibility for Either Medicaid or CHIP 19

Table 4: CHIPRA Initiatives to Improve Children’s Enrollment in 

Medicaid and CHIP 21

Contents
Page ii GAO-12-648 Children’s Access to Health Insurance

Figures

Figure 1: Estimated Eligibility for Medicaid, CHIP, and the 

Premium Tax Credit under 2014 PPACA Eligibility Rules 

among Children Who Were Uninsured in 2009 14

Figure 2: Estimated Eligibility for the Premium Tax Credit among 

Children Estimated to Be Eligible for CHIP under 2014 

PPACA Eligibility Rules, Who Were Uninsured or Enrolled 

in Medicaid or CHIP in 2009 15

Figure 3: Summary of States’ Implementation of Initiatives and 

Receipt of Federal Funding to Facilitate Enrollment of 

Children and Implement PPACA 38

Abbreviations

BHP Basic Health Program

CHIP State Children’s Health Insurance Program 

CHIPRA Children’s Health Insurance Program Reauthorization 

 Act of 2009

CMS Centers for Medicare & Medicaid Services

FMAP Federal Medical Assistance Percentage 

FPL federal poverty level 

HHS Department of Health and Human Services

IRS Internal Revenue Service

MAGI modified adjusted gross income 

PPACA Patient Protection and Affordable Care Act 

SIPP Survey of Income and Program Participation 

SNAP Supplemental Nutrition Assistance Program

TANF Temporary Assistance for Needy Families

This is a work of the U.S. government and is not subject to copyright protection in the 

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Page 1 GAO-12-648 Children’s Access to Health Insurance

United States Government Accountability Office

Washington, DC 20548

June 22, 2012

The Honorable Harry Reid

Majority Leader 

United States Senate

The Honorable Max Baucus

Chairman

Committee on Finance

United States Senate

The Honorable Tom Harkin

Chairman

Committee on Health, Education, Labor, and Pensions

United State Senate

The Honorable John D. Rockefeller IV

Chairman

Committee on Commerce, Science, and Transportation

United States Senate

Approximately 7 million children in the United States had no health 

insurance for some or all of 2010, many of whom were in families with low 

incomes.1 Medicaid and the State Children’s Health Insurance Program 

(CHIP), federal-state programs that finance health care for certain lowincome populations, play an important part in providing health insurance 

for low income children.2

Recent federal legislation has aimed to maintain and increase Americans’ 

access to affordable health insurance. The Patient Protection and 

However, not all children who lack health 

insurance are eligible for these publicly financed programs. In addition, 

some uninsured children who are eligible for these programs do not 

enroll.

 

1

Carmen DeNavas-Walt, Bernadette D. Proctor, and Jessica C. Smith, U.S. Census 

Bureau. “Income, Poverty, and Health Insurance Coverage in the United States: 2010,” 

Current Population Reports, P60-239 (Washington, D.C.: U.S. Government Printing 

Office, September 2011).

2

In 2011, according to the Medicaid and CHIP Payment Access Commission’s March 

2012 report, nearly 44 million low-income children were enrolled in Medicaid or CHIP.

 
Page 2 GAO-12-648 Children’s Access to Health Insurance

Affordable Care Act (PPACA), as amended by the Health Care and 

Education Reconciliation Act of 2010,3 extended CHIP funding through 

2015, prohibited states from lowering children’s existing Medicaid and 

CHIP eligibility through 2019,4 and included provisions that aim to expand 

adults’ and certain children’s eligibility for and enrollment in these 

programs.5

• American Health Benefit Exchanges (hereafter referred to as 

exchanges), which are marketplaces where eligible families and 

individuals can purchase private health insurance.

While the majority of uninsured individuals gaining eligibility 

for health insurance under PPACA are adults, who make up the majority 

of the uninsured population, children also gain new eligibility—particularly 

beginning in 2014, by which time major provisions of PPACA must be in 

place, including the following:

• A new refundable health insurance premium tax credit generally paid 

on an advance basis (hereafter referred to as the premium tax credit) 

to offset the cost of health insurance purchased through state 

exchanges by eligible low- to moderate-income families with incomes 

too high to qualify for Medicaid or CHIP.6

 

3

Hereafter, “PPACA” will refer to PPACA as amended by the Health Care and Education 

Reconciliation Act of 2010. See Patient Protection and Affordable Care Act, Pub. L. 

No. 111-148, 124 Stat. 119 (Mar. 23, 2010), and Health Care and Education 

Reconciliation Act, Pub. L. No. 111-152, 124 Stat. 1029 (Mar. 30, 2010). 

4

For purposes of this report, we refer to Washington, D.C. as a state. PPACA specifically 

required states to maintain current Medicaid and CHIP eligibility levels, policies and 

procedures for children until fiscal year 2020. If CHIP funding is not available beyond fiscal 

year 2015, states will have to transition children enrolled in CHIP to other health insurance 

programs available at that time. 

5

The expansion of eligibility to adults is accompanied by an increase in the Federal 

Medical Assistance Percentage, the federal share of Medicaid expenditures, which is 

based on a statutory formula. 

6

Advance payments of the premium tax credit are made directly to the issuer of the 

qualified health plan in which a taxpayer enrolls. The amount of the advance payments is 

determined based on expected annual household income, and a taxpayer must reconcile 

the amount of the advance payments with the actual premium tax credit for the taxable 

year as computed on the taxpayer’s tax return. For purposes of this report, we refer to 

both advance payments of the premium tax credit and the actual premium tax credit 

amount as the premium tax credit.
Page 3 GAO-12-648 Children’s Access to Health Insurance

• Methods to determine eligibility and increase enrollment, which will 

generally be consistent across Medicaid, CHIP, and the new premium 

tax credit.

PPACA builds upon prior federal legislation, namely the Children’s Health 

Insurance Program Reauthorization Act of 2009 (CHIPRA), which 

established new Medicaid and CHIP enrollment policy options for states, 

and incentives, such as performance bonuses, for adopting them.7

States, the Department of Health and Human Services (HHS), and the 

Department of the Treasury all play a role in implementing this 

legislation.8

Because of your interest in ensuring that all children have access to 

affordable health insurance, you asked for information about children’s 

access to health insurance under PPACA. This report examines the 

following questions:

While states manage and run their individual Medicaid and 

CHIP programs, and may choose to run their own exchanges, HHS’s 

Centers for Medicare & Medicaid Services (CMS) and the Department of 

the Treasury’s Internal Revenue Service (IRS) are responsible for 

implementing PPACA’s eligibility rules. For example, CMS is responsible 

for implementing changes to Medicaid eligibility under PPACA in addition 

to providing guidance, grant funding, and other assistance to the states; 

overseeing enrollment provisions of CHIPRA and PPACA; and providing 

performance bonuses to states that meet or exceed specified Medicaid 

enrollment goals. IRS is responsible for overseeing tax-related provisions 

of PPACA, including issuing regulations to implement certain eligibility 

rules for the premium tax credit. As states, CMS, and IRS work to 

implement the various PPACA provisions, questions remain regarding 

PPACA’s anticipated effect on children’s access to affordable health 

insurance. For example, uncertainty exists regarding whether some lowincome children will remain ineligible for any of these types of assistance, 

whether changes in eligibility caused by shifting family circumstances or 

differences in eligibility between children and their parents could deter 

enrollment, and whether states will be able to fully implement key 

provisions of PPACA by 2014.

 

7

See Pub. L. No. 111-3, 123 Stat. 8 (Feb. 4, 2009).

8

Other federal entities, such as the Department of Labor, also have roles in implementing 

certain provisions of PPACA.
Page 4 GAO-12-648 Children’s Access to Health Insurance

1. To what extent would uninsured children be eligible for Medicaid, 

CHIP, or the premium tax credit under PPACA?

2. To what extent would children experience a change in eligibility 

among Medicaid, CHIP, or the premium tax credit because of 

changes in household income during the course of a year, under 

PPACA?

3. What steps has CMS taken thus far to help states enroll eligible 

children, and what challenges have states encountered?

To examine the extent to which uninsured children would be eligible for 

Medicaid, CHIP, or the premium tax credit under PPACA, we analyzed 

2009 data from the Survey of Income and Program Participation (SIPP)—

a nationally representative survey conducted by the U.S. Census Bureau. 

The SIPP follows households over a multiple-year period and collects 

relevant information for each individual on a monthly basis, such as type 

of health insurance (if any), amount and types of income, age, citizenship 

status, and state of residence. To determine the reliability of SIPP data, 

we reviewed related documentation and conducted electronic testing for 

missing data, outliers, and apparent errors, and determined that the SIPP 

data were sufficiently reliable for our purposes. For purposes of this 

analysis, we used final or proposed 2014 eligibility rules in place as of 

April 2012. To estimate the percentage of uninsured children that would 

be eligible for Medicaid, CHIP, or the premium tax credit, we applied final 

CMS and proposed IRS 2014 PPACA eligibility rules to SIPP data 

representing the United States population of noninstitutionalized children 

ages 0 through 18 in January 2009.9 Specifically, we calculated 

household income expressed as a percentage of the federal poverty level 

(FPL),10

 

9

As discussed later in this report, IRS’s proposed rule was finalized in May 2012, after we 

had completed our analysis; however, the eligibility standards we used were consistent 

with the final rule.

based on IRS and CMS rules for counting household income and 

family size for Medicaid, CHIP, and the premium tax credit. We compared 

these calculations to federally specified FPL eligibility levels for the 

premium tax credit and Medicaid and to state-specific Medicaid and CHIP 

FPL eligibility levels, accounting for variation in eligibility levels for 

10We use FPL to refer to federal poverty guidelines issued by HHS each year in the 

Federal Register. These guidelines provide poverty income thresholds that vary by family 

size and for certain states and are updated using the consumer price index. 
Page 5 GAO-12-648 Children’s Access to Health Insurance

children of specific ages. We also considered other eligibility criteria, such 

as citizenship status, in our analyses. The estimates are based on 2009 

data and do not project forward to 2014; rather, they illustrate what 

uninsured children’s eligibility for health insurance assistance would be 

had 2014 PPACA eligibility rules as issued by CMS and IRS to date been 

in place in 2009. (See app. I for more information on our analysis of SIPP 

data and limitations of the analysis.) We also interviewed IRS officials and 

reviewed comments submitted by state agencies and certain other 

organizations in response to IRS’s 2011 proposed rule implementing the 

premium tax credit.11

To estimate how many changes in eligibility within 1 year would have 

occurred among children eligible for Medicaid, CHIP, or the premium tax 

credit because of changes in household income if the proposed IRS and 

final CMS 2014 PPACA eligibility rules had been in place in 2009, we also 

relied on the SIPP analysis. In developing our estimates, we considered 

whether states had policies—known as continuous eligibility—that 

allowed children to remain eligible for Medicaid and CHIP for a full year, 

regardless of changes in household income. We also analyzed the extent 

to which the frequency of eligibility changes differed among children living 

in states with such policies versus children in states without such policies.

To identify the steps that CMS has taken to help states enroll eligible 

children, and the challenges that states have encountered, we reviewed 

CMS data on grants and bonuses awarded to states, reviewed CMS 

guidance implementing relevant provisions of CHIPRA and PPACA, and 

interviewed CMS officials about plans for future guidance. To identify the 

challenges that states have encountered, we spoke to Medicaid, CHIP, 

and exchange officials from six states, which we selected from among 

those states that had received a CHIPRA performance bonus reflecting 

state progress in increasing enrollment of uninsured children in Medicaid, 

or a PPACA grant reflecting state progress in implementing an 

exchange.12

 

11Health Insurance Premium Tax Credit, 76 Fed. Reg. 50931 (Aug. 17, 2011).

We also reviewed all comments submitted by state agencies 

and national associations of state officials in response to CMS’s 2011 

12At the time we selected the 6 states, CHIPRA performance bonuses were awarded to 

16 states, and PPACA exchange implementation grants were awarded to 17 states. The 

6 states are California, Illinois, Indiana, Maryland, Oregon, and Washington.
Page 6 GAO-12-648 Children’s Access to Health Insurance

proposed rules implementing PPACA eligibility and enrollment 

provisions.13

We conducted this performance audit from June 2011 through June 2012 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

The federal government has historically established minimum eligibility 

requirements for Medicaid and CHIP and provided states with 

considerable flexibility in expanding eligibility to individuals in households 

with higher incomes. PPACA made numerous changes to existing federal 

Medicaid and CHIP eligibility requirements and specified eligibility criteria 

for new types of assistance, such as the premium tax credit. PPACA also 

provided for a continued focus on certain CHIPRA initiatives; specified 

additional policies to facilitate eligible children’s enrollment in Medicaid, 

CHIP, and the premium tax credit; and included provisions to facilitate 

children’s access to private health insurance. Federal and state 

implementation of PPACA enrollment and eligibility provisions is under 

way.

Eligibility for Medicaid and CHIP is limited to U.S. citizens and certain 

legally residing immigrants and is generally based on household income 

in relation to the FPL. For Medicaid, the federal government requires that 

states cover children with household incomes at or below specific 

eligibility levels, which range from 100 through 133 percent of FPL 

depending on the age of the child. States have flexibility to increase 

eligibility levels beyond the federally required levels for children of 

specific ages. For example, several states have Medicaid eligibility levels 

of 185 percent of FPL for infants, and a more limited number of states 

also have eligibility levels higher than the federal requirement for children 

older than age 1. Because Medicaid eligibility levels vary by children’s 

 

13Medicaid Program: Eligibility Changes Under the Affordable Care Act of 2010, 76 Fed. 

Reg. 51148 (Aug. 17, 2011) and Exchange Functions in the Individual Market; Eligibility 

Determinations; Exchange Standards for Employers 76 Fed. Reg. 51202 (Aug. 17, 2011).

Background 

Current Eligibility 

Requirements and 

Enrollment Policies for 

Medicaid and CHIP
Page 7 GAO-12-648 Children’s Access to Health Insurance

age, some members of a given family may qualify for Medicaid, while 

others do not. With CHIP programs, states cover children whose 

household incomes are too high for Medicaid eligibility; most states’ CHIP 

eligibility levels are between 200 and 300 percent of FPL.14

State enrollment policies, which encompass state efforts to identify, 

enroll, and retain eligible individuals in publicly financed health programs, 

are also important to children’s access to Medicaid and CHIP. States 

have authority to coordinate Medicaid and CHIP enrollment with other 

human services programs; this coordination can occur through a variety 

of mechanisms. For example, some states have joint applications for 

Medicaid, CHIP, and other human service programs, such as the 

Supplemental Nutrition Assistance Program (SNAP),

States use 

different methods for counting household income; for example, some 

states disregard portions of certain types of income, such as earned 

income, and states have varying standards regarding which household 

members to include when determining family size.

15

 

14States have the choice of three design approaches for their CHIP programs: (1) a CHIPfunded Medicaid expansion, (2) a separate CHIP program, or (3) a combination program, 

which has both a Medicaid expansion program and a separate CHIP program.

while other states 

have implemented “express lane” eligibility, a relatively new tool 

authorized by CHIPRA, whereby they use eligibility information such as 

household income data from a separate human service program, such as 

SNAP, or other public agency to determine eligibility for Medicaid or 

CHIP. In addition to coordination with other human service programs, 

states may adopt other optional policies to facilitate Medicaid and CHIP 

enrollment and retention, such as 12-month continuous eligibility policies 

for children, under which children who are determined to be eligible for 

Medicaid or CHIP generally remain eligible for 12 months, despite any 

fluctuations in household income within this time frame. CHIPRA 

authorized an incentive to encourage states to adopt such policies by 

providing performance bonuses beginning in fiscal year 2009 through 

2013 to states that both employed at least five policies to facilitate 

enrollment and achieved specific goals with respect to the enrollment of 

eligible children in Medicaid. Beginning in fiscal year 2009, CHIPRA also 

provided outreach grants for efforts to identify and help enroll Medicaidand CHIP-eligible children.

15SNAP was formerly known as the Food Stamp Program.
Page 8 GAO-12-648 Children’s Access to Health Insurance

With regard to changes to children’s eligibility for Medicaid and CHIP and 

eligibility specifications for the new premium tax credit, which are to be 

fully effective in 2014, PPACA included the following provisions.

• PPACA expanded Medicaid eligibility to children and adults under age 

65 with household incomes at or below 133 percent of FPL.16 As a 

result, minimum eligibility levels for Medicaid will generally be the 

same for all family members.17 Some children with household 

incomes higher than 133 percent of FPL will continue to be eligible for 

Medicaid in states that have established higher eligibility levels for 

children. These states are not allowed to lower their Medicaid 

eligibility levels for children until fiscal year 2020.

• PPACA required a uniform method of counting household income, 

based on a household’s modified adjusted gross income (MAGI) to 

determine eligibility for Medicaid, CHIP, and the premium tax credit. 

As a result, household income for Medicaid and CHIP, as well as for 

the premium tax credit, will be determined consistently in all states.18

• PPACA defined eligibility criteria for the new premium tax credit, 

which will apply in all states. Similar to Medicaid and CHIP, eligibility 

for the premium tax credit will be limited to U.S. citizens and legally 

residing immigrants. Eligibility will also be limited to individuals with 

household incomes between 100 and 400 percent of FPL. In addition, 

to be eligible for the premium tax credit, an individual cannot have 

access to public insurance such as Medicaid or CHIP or to affordable 

 

16Medicaid eligibility will remain limited to U.S. citizens and certain legally residing 

immigrants. In addition, income equivalent to 5 percent of FPL will be disregarded when 

determining Medicaid eligibility. Therefore, the effective federally required income eligibility 

level will be 138 percent of FPL.

17We previously reported that children are more likely to be insured if their parents are 

insured. See GAO, Medicaid and CHIP: Given the Association between Parent and Child 

Insurance Status, New Expansions May Benefit Families, GAO-11-264 (Washington, 

D.C.: Feb. 4, 2011).

18Some Medicaid eligibility categories, such as the blind or disabled, will not be subject to 

the MAGI income counting method; eligibility for these populations will continue to be 

determined based on existing criteria.

Eligibility Requirements 

for Medicaid, CHIP, and 

the Premium Tax Credit 

under PPACA
Page 9 GAO-12-648 Children’s Access to Health Insurance

employer-sponsored health insurance that provides a minimum 

value.19,20

A child’s eligibility for Medicaid, CHIP, and the premium tax credit can 

change over time under PPACA as his or her household income 

fluctuates. For example, a child who begins the year eligible for the 

premium tax credit may become eligible for Medicaid or CHIP if 

household income declines during the year. Conversely, depending on 

the state, a child who begins the year eligible for Medicaid or CHIP may 

lose eligibility for these programs if household income increases.

PPACA also contained provisions to facilitate eligible children’s 

enrollment in Medicaid, CHIP, and private health insurance subsidized by 

premium tax credits. For example, PPACA extended funding for CHIPRA 

outreach and enrollment grants through fiscal year 2015, prohibited states 

from requiring in-person interviews for enrollment beginning in 2014, 

provided for income to be verified through a federally managed hub of 

data electronically accessible to states, and specified a coordinated 

enrollment process, whereby with one federally defined uniform 

application, states will assess families for eligibility for Medicaid, CHIP, or 

the premium tax credit. PPACA also made funding available to states to 

plan and implement exchanges, which will provide eligible individuals and 

families—including those eligible for premium tax credits—the ability to 

compare, select, and enroll in participating private health insurance plans 

with standardized benefit and cost-sharing packages. Under PPACA, 

exchanges must be established in every state by January 1, 2014, either 

by the state itself or by the Secretary of HHS.

Although not the focus of this report, PPACA also contained provisions to 

facilitate children’s access to private health insurance, apart from the 

provision of the premium tax credit. For example, as of September 2010, 

PPACA prohibited health plans and issuers from limiting or denying 

 

19Effective January 1, 2014, PPACA also provides for cost-sharing subsidies for 

individuals and families with household incomes up through 250 percent of FPL to reduce 

out-of-pocket costs for deductibles, co-payments, and other costs.

20PPACA also provides states with the option to create a new public health insurance 

program, called the Basic Health Program, for children and adults whose household 

incomes are low—less than or equal to 200 percent of FPL—but too high to qualify for 

Medicaid or CHIP.

Enrollment Policies for 

Medicaid, CHIP, and the 

Premium Tax Credit under 

PPACA 

PPACA’s Private Health 

Insurance Market 

Provisions
Page 10 GAO-12-648 Children’s Access to Health Insurance

coverage for children under age 19 because of preexisting health 

conditions. (See table 1.)

Table 1: Selected PPACA Provisions for Health Plans and Issuers in the Private Health Insurance Market

Provision Description 

Annual limit Generally prohibits health plans and issuers from imposing annual limits on the dollar value of certain 

covered health benefits, effective January 2014; restricted annual limits on the value of those benefits 

are allowed until that timea,b 

Appeals process Requires an internal appeals process for determinations and claims, and an external review process 

that meets certain standards, effective September 2010a,c

Dependent coverage Requires health plans and issuers offering dependent coverage to continue to make such coverage 

available to unmarried children until they reach age 26, effective September 2010a,d

Lifetime limit Prohibits lifetime limits on dollar value of certain covered health benefits for any individual, effective 

September 2010e

Patient protections Establishes patient protections, such as coverage of emergency services without prior authorization, 

effective September 2010a,f

Preexisting condition Prohibits health plans and issuers from imposing any preexisting condition exclusions for children 

under age 19, effective September 2010; this prohibition will be extended to adults effective January 

2014a,g

Preventive services Requires coverage of preventive health services, effective September 2010; for example, for children 

these services include behavioral assessments, obesity counseling, and immunizationsa,h

Rescissions of coverage Prohibits health plans and issuers from rescinding coverage, except in the case of fraud or intentional 

misrepresentation of material fact, effective September 2010i

Source: PPACA and Health Care and Education Reconciliation Act. 

a

Not applicable to certain health plans that were in effect as of March 23, 2010.

b

PPACA, § 10101(a), 124 Stat. at 883, adding § 2711(a)(2) of the Public Health Service Act.

c

PPACA, § 10101(g), 124 Stat. at 887, adding § 2719 of the Public Health Service Act.

d

PPACA, § 1001, 124 Stat. at 132, adding § 2714 of the Public Health Service Act.

e

PPACA, § 10101(a), 124 Stat. at 883, adding § 2711(a)(1) of the Public Health Service Act.

f

PPACA, § 10101(h), 124 Stat. at 888, adding § 2719A of the Public Health Service Act.

g

PPACA, §§ 1201, 10103(e)(2), 124 Stat. at 154, 895, adding § 2704 of the Public Health Service Act.

h

PPACA, § 1001, 124 Stat. at 131, adding § 2713 of the Public Health Service Act; Health Care and 

Education Reconciliation Act, § 2301(b), 124 Stat. at 1082, amending § 2713 of the Public Health 

Service Act.

i

PPACA, § 1001, 124 Stat. at 131, adding § 2712 of the Public Health Service Act.

Implementing PPACA’s changes to Medicaid and CHIP eligibility 

determination and enrollment policies and preparing for implementation of 

the premium tax credit and other provisions of PPACA will require 

significant state and federal efforts. In August 2011, CMS and IRS 

Implementation of PPACA 

Eligibility and Enrollment 

Provisions
Page 11 GAO-12-648 Children’s Access to Health Insurance

separately issued three proposed rules to implement key PPACA 

provisions related to eligibility and enrollment for Medicaid, CHIP, and the 

premium tax credit; the CMS rules were finalized in March 2012.21

According to CMS, more detailed guidance, such as the specific 

information to be collected in the uniform application or the nature of the 

data available from the federal hub, will be distributed at a later date. The 

IRS proposed rule specified how to calculate household MAGI for 

determining premium tax credit eligibility, and the CMS rules adopted 

these methods for determining Medicaid and CHIP eligibility, with certain 

exceptions.22 IRS finalized its proposed rule in May 2012 with minimal 

change to these methods.23

 

21See Medicaid Program; Eligibility Changes Under the Affordable Care Act, 77 Fed. 

Reg. 17144 (Mar. 23, 2012) and Patient Protection and Affordable Care Act; 

Establishment of Exchanges and Qualified Health Plans; Exchange Standards for 

Employers, 77 Fed. Reg. 18310 (Mar. 27, 2012).

The IRS proposed rule also described the 

standard for determining whether an individual has access to affordable 

employer-sponsored insurance for purposes of determining eligibility for 

the premium tax credit. Under the proposed affordability standard, 

employer-sponsored insurance is considered affordable if the cost of a 

self-only plan—meaning a plan that only covers the employee—does not 

exceed 9.5 percent of household income. Under the proposed standard, if 

one family member has access to affordable self-only employersponsored insurance, all other family members who are eligible to enroll 

in the employee’s plan are also considered to have access to affordable 

insurance and are therefore ineligible for the premium tax credit. In this 

manner, the proposed rule applied the same standard to all family 

members eligible for the employee’s plan, even if the cost of enrolling the 

family as a whole exceeds the 9.5 percent threshold. In the preamble to 

its proposed rule, IRS stated that the PPACA statute specifies using the 

self-only insurance affordability standard for employees as well as for

spouses and dependents of an employee, citing a report issued by the 

Joint Committee on Taxation that similarly interpreted the law. Some who 

commented on the proposed rule suggested that it would be more 

22For example, how certain types of income, such as lump sum payments and educational 

grants, are treated in calculating MAGI differ when determining Medicaid and CHIP 

eligibility versus eligibility for the premium tax credit.

23The definition of MAGI was, however, revised to include Social Security benefits, as 

required by the Three Percent Withholding Repeal and Job Creation Act, Pub. L. No. 112-

56, § 401, 125 Stat. 711, 734 (Nov. 21, 2011).See Health Insurance Premium Tax Credit, 

77 Fed. Reg. 30377 (May 23, 2012).
Page 12 GAO-12-648 Children’s Access to Health Insurance

consistent with congressional intent to interpret the statute to require the 

use of the cost to an employee of insuring all eligible family members in 

determining access to affordable employer-sponsored insurance.24 In its 

final premium tax credit rule, IRS confirmed that the proposed self-only 

insurance affordability standard would apply to employees, but it deferred 

a decision on the affordability standard for other eligible family members, 

such as children, to future rule making. Therefore, because this report 

focuses on children, the relevant affordability standard remains a 

proposed standard, and is referred to as such for the remainder of the 

report.

Over three-quarters of uninsured children in January 2009 would be 

eligible for Medicaid, CHIP, or the premium tax credit under 2014 PPACA 

eligibility rules, according to our estimates.25 Applying final CMS and 

proposed IRS rules for 2014 program eligibility to 2009 SIPP data, we 

estimate that on the basis of household income and other eligibility 

criteria, such as citizenship, nearly 68 percent of the approximately 

7 million children who were uninsured in January 2009 would be eligible 

for Medicaid or CHIP—about 48 percent for Medicaid and about 

20 percent for CHIP.26 In addition, 7.5 percent of the uninsured children 

would be eligible for the premium tax credit. Nearly 13 percent of the 

uninsured children were noncitizens for whom we did not estimate 

eligibility because of limitations in the data.27

 

24GAO did not conduct an independent analysis of the scope of IRS’s authority with 

regard to this issue.

We estimate that the final 

approximately 12 percent of uninsured children would be ineligible for 

25Researchers estimated that in 2008, 65 percent of uninsured children were eligible for 

Medicaid or CHIP but not enrolled. Genevieve M. Kenney, Victoria Lynch, Allison Cook, 

and Samantha Phong, “Who and Where Are the Children Yet to Enroll in Medicaid and the 

Children’s Health Insurance Program?” Health Affairs, vol. 29, no. 10 (2010): 1920-1929.

26The 20 percent includes children who would be eligible for either a CHIP-funded 

Medicaid expansion or a separate CHIP program.

27SIPP data generally do not provide information about the documentation status of 

children who are noncitizens. We treated noncitizen children as eligible legally residing 

immigrants if they or their parents participated in public assistance programs such as 

SNAP, which require documentation of legal residence, and treated other noncitizen 

children as potentially ineligible noncitizens. SIPP data do include information on whether 

certain noncitizens who were aged 15 and older were permanent U.S. residents; we did 

not incorporate this information into our analysis.

An Estimated ThreeQuarters of Uninsured 

Children Would Be 

Eligible for Medicaid, 

CHIP, or the Premium 

Tax Credit under 

PPACA, but the 

Proposed 

Affordability Standard 

May Result in Some 

Children Remaining 

Uninsured 
Page 13 GAO-12-648 Children’s Access to Health Insurance

Medicaid, CHIP, or the premium tax credit. Specifically, 5.5 percent would 

be ineligible because they were in families with a household income that 

was too high—at greater than 400 percent of FPL. The remaining 

6.6 percent would be ineligible because, though their families were 

considered low-income in that they met the household income 

requirements for the premium tax credit, they were considered to have 

access to affordable employer-sponsored insurance based on IRS’s 

proposed affordability standard. In particular, these children had at least 

one parent with employer-sponsored insurance that had an estimated 

cost below 9.5 percent of household income for a self-only plan.28

 

28Our analysis used 2011 data on costs of employer- sponsored insurance and did not 

estimate or otherwise consider how the affordability standard or other PPACA provisions 

could affect employers’ contributions to employees’ premiums in the future.

(See 

fig. 1.)These children would not be automatically eligible for the premium 

tax credit if the affordability standard were instead based on a family plan; 

their eligibility would depend on the cost of the family plan to which they 

had access. See appendix I for more information about our estimates.
Page 14 GAO-12-648 Children’s Access to Health Insurance

Figure 1: Estimated Eligibility for Medicaid, CHIP, and the Premium Tax Credit 

under 2014 PPACA Eligibility Rules among Children Who Were Uninsured in 2009

Notes: Percentages and estimated numbers of children reflect proposed IRS and final CMS 2014 

PPACA eligibility rules applied to uninsured children in January 2009. The CHIP category includes 

children eligible for CHIP-funded Medicaid expansion and separate CHIP programs.

The proposed affordability standard could potentially affect significantly 

more children than the approximately 460,000 uninsured children we 

estimated above under certain scenarios. Many children eligible for CHIP 

have a parent with employer-sponsored insurance.29 Under PPACA, 

CHIP is not funded beyond 2015, and, even if federal funding is 

extended, states may opt to reduce eligibility levels for CHIP or eliminate 

CHIP programs altogether beginning in fiscal year 2020.30

 

29We limited our estimates of the effect of the affordability standard to uninsured and 

CHIP-eligible children and did not consider the effect of the standard on additional 

populations, such as children with private health insurance. 

Without CHIPfunded Medicaid expansion or separate CHIP programs, we estimate that 

30The CHIP maintenance of eligibility provision expires in fiscal year 2020, at which time 

states may opt to eliminate CHIP programs or limit CHIP eligibility. The Congressional 

Budget Office has projected that about half of states will eliminate CHIP programs at that 

time.
Page 15 GAO-12-648 Children’s Access to Health Insurance

an additional 1.9 million children who would otherwise be eligible for CHIP 

would be considered to have access to affordable insurance under this 

proposed standard and would be ineligible for the premium tax credit.31

Figure 2: Estimated Eligibility for the Premium Tax Credit among Children 

Estimated to Be Eligible for CHIP under 2014 PPACA Eligibility Rules, Who Were 

Uninsured or Enrolled in Medicaid or CHIP in 2009

(See fig. 2.)

Notes: Percentages and estimated numbers of children reflect proposed IRS and final CMS 2014 

PPACA eligibility rules, applied to uninsured or publicly insured children in January 2009. The CHIP 

category includes children eligible for CHIP-funded Medicaid expansion and separate CHIP 

programs.

In commenting on IRS’s proposed rule on eligibility for the premium tax 

credit, some states and other organizations noted that IRS’s proposed 

interpretation of access to affordable employer-sponsored insurance—

defining affordability on the basis of the cost of a self-only plan, and not 

on the cost of a family plan—could result in some children remaining 

uninsured. They explained that although a self-only plan for the employee 

 

31This estimate included both children who were uninsured and children who were 

participating in CHIP or Medicaid in 2009. 
Page 16 GAO-12-648 Children’s Access to Health Insurance

may cost less than the 9.5 percent threshold, a family plan that would 

also insure the employee’s eligible family members could exceed it. As a 

result, some employees would not be able to afford the higher premiums 

to insure their family members, who therefore could remain uninsured. 

We did not estimate the cost associated with defining the affordability 

standard based on the cost of a family plan. The cost of such a change 

would depend on multiple factors, many of which remain uncertain, such

as the availability of CHIP funding beyond 2015, the extent to which 

eligible families avail themselves of the premium tax credit, employer 

decisions, and the extent to which additional enrollees could affect the 

aggregate cost of premiums. The Congressional Budget Office has 

commented on the high degree of uncertainty inherent in projecting the 

future actions of employees and employers under PPACA as well as 

other factors that may affect federal costs, such as the number of 

individuals and families who will have household income in specific 

eligibility ranges in future years.

We did not examine how many of the children estimated to be ineligible 

for the premium tax credit because of access to affordable employersponsored insurance would become eligible if the affordability standard 

were instead based on the cost of a family plan; the cost of family plans 

available to employees who chose not to purchase them was not 

available in the data we analyzed. However, separate data on the cost of 

family plans among employees who purchased a family plan suggest that 

some of these uninsured children, particularly those in families facing 

higher-than-average premium contributions, could become eligible for the 

premium tax credit if the affordability standard were based on the cost of 

a family plan. For example, in a 2011 survey, the Kaiser Family 

Foundation and Health Research & Education Trust found that on 

average, employees contributed $4,129 annually for a family plan, or 

28 percent of the total cost to the employer of an annual family premium, 

which averaged $15,073.32

 

32Kaiser Family Foundation and Health Research & Education Trust, Employer Health 

Benefits 2011 Annual Survey (Menlo Park, Calif., and Chicago, Ill.: September 2011).

For a family of four with household income 

equivalent to 250 percent of the FPL, $4,129 represents about 7 percent 

of household income. However, the percentage of the annual premium 

paid by employees ranged widely around this average, and 15 percent of 

employees with family plans paid more than 50 percent of the annual 

premium. For a family of four with household income equivalent to 
Page 17 GAO-12-648 Children’s Access to Health Insurance

250 percent of the FPL, paying 51 percent of the average annual 

premium (or $7,687) would represent just over 13 percent of household 

income, exceeding the 9.5 percent threshold. Whether families ultimately 

choose to purchase insurance for children will depend on many factors, 

including individual decisions regarding what they can afford for health 

insurance.

Applying final CMS and proposed IRS 2014 PPACA eligibility rules to 

children in 2009, we estimate that nationally, 9 percent of children eligible 

for Medicaid, CHIP, or the premium tax credit experienced a change in 

household income within 6 months that would affect their eligibility for a 

specific form of assistance, and 14 percent of these children experienced 

at least one such change within 1 year.33 (See table 2.) In addition, some 

children experienced multiple income changes within these time periods 

that would affect their eligibility for assistance more frequently. We 

estimate that, nationally, 2 percent of eligible children experienced 

changes in household income that would affect eligibility two or more 

times within 6 months, and 6 percent experienced two or more such 

changes within 1 year.

 

33This analysis considered state-specific continuous eligibility policies in place as of March 

2012. We did not count Medicaid- and CHIP- eligible children who lived in states with 

applicable continuous eligibility policies as experiencing changes in program eligibility, 

regardless of any change in household income. According to CMS data, as of March 2012 

there were 23 states with continuous eligibility policies for Medicaid and CHIP. We 

estimate that 52 percent of eligible children in our analysis lived in these states. There 

were 18 states without continuous eligibility policies for Medicaid or CHIP; we estimate 

that 22 percent of eligible children in our analysis lived in these states. An additional 

10 states have adopted continuous eligibility for CHIP but not Medicaid. Although children 

who become eligible for Medicaid or CHIP mid-year do not necessarily lose eligibility for 

the premium tax credit, we considered such children as having experienced a change in 

eligibility because they would gain eligibility for potentially lower-cost insurance through 

Medicaid or CHIP.

An Estimated 14 

Percent of Children 

Eligible for Medicaid, 

CHIP, or the Premium 

Tax Credit under 

PPACA Would 

Experience a Change 

in Eligibility within 1 

Year 
Page 18 GAO-12-648 Children’s Access to Health Insurance

Table 2: Estimated Percentage of Eligible Children Who Would Experience a 

Change in Eligibility under PPACA Because of Household Income Fluctuations 

Type of eligibility change 6 months 1 year

Between Medicaid and CHIP 2 4 

Between Medicaid and the premium tax credit 3 4 

Between CHIP and the premium tax credit 1 2 

Between Medicaid or CHIP and ineligibility for any assistance 3 4 

Total 9 14

Source: GAO analysis of 2009 SIPP data.

Notes: Percentages reflect estimated eligibility changes among children, had states’ 2012 continuous 

eligibility policies and proposed IRS and final CMS 2014 PPACA eligibility rules been in place in 

2009. We defined eligibility for the premium tax credit as lasting for 1 year; however, we considered 

children who were eligible for the premium tax credit at the beginning of the year, but who were in 

families that experienced a midyear decrease in income that would make them eligible for Medicaid 

or CHIP, as having experienced a change in eligibility because they would gain eligibility for 

potentially lower cost insurance. The CHIP category includes children eligible for CHIP-funded 

Medicaid expansion and for separate CHIP programs; however, we did not consider a change in 

eligibility between Medicaid and CHIP-funded Medicaid expansions to be a change in program 

eligibility. We did not count Medicaid- and CHIP-eligible children who lived in states with applicable 

continuous eligibility policies as experiencing changes in program eligibility, regardless of any change 

in household income.

The effect of continuous eligibility policies for Medicaid and CHIP on the 

frequency of eligibility changes becomes apparent when we consider 

children in states with versus states without such policies separately. 

Eligibility changes are higher than the national average in states without 

continuous eligibility policies in either their Medicaid or CHIP programs, 

and lower than the national average in states with them. In states with 

continuous eligibility policies for Medicaid and CHIP, eligibility changes 

under PPACA would be limited to children who begin the year eligible for 

the premium tax credit but experience a decrease in household income 

that would result in eligibility for Medicaid or CHIP instead. Therefore, the 

percentage of children experiencing changes in eligibility, and at risk of 

experiencing disruptions in coverage, is lower than the national average 

among children in the 23 states that have adopted continuous eligibility in 

both their Medicaid and CHIP programs and greater than the national 

average among children in the 18 states that do not have continuous 

eligibility in either program. Specifically, we estimate that about 3 percent 

of eligible children in states with continuous eligibility for Medicaid and 

CHIP experienced a change in household income that would affect 

eligibility under PPACA within 1 year. In contrast, we estimate that about 

19 percent of eligible children in states without continuous eligibility 

experienced a change in household income that would affect program 
Page 19 GAO-12-648 Children’s Access to Health Insurance

eligibility under PPACA at least once within 6 months, and about 

30 percent experienced such a change within 1 year. (See table 3.)

Table 3: Estimated Percentage of Eligible Children Who Would Experience a 

Change in Eligibility under PPACA Because of Household Income Fluctuations in 

States without Continuous Eligibility for Either Medicaid or CHIP

Type of eligibility change 6 months 1 year

Between Medicaid and CHIP 5 9 

Between Medicaid and the premium tax credit 3 5 

Between CHIP and the premium tax credit 3 4 

From Medicaid or CHIP to ineligible for any assistance 8 12

Total 19 30

Source: GAO analysis of 2009 SIPP data.

Notes: Percentages reflect estimated eligibility changes among children living in states without 

continuous eligibility for either Medicaid or CHIP, had states’ 2012 continuous eligibility policies and 

proposed IRS and final CMS 2014 PPACA eligibility rules been in place in 2009. We defined eligibility 

for the premium tax credit as lasting for 1 year; however, we considered children who were eligible for 

the premium tax credit at the beginning of the year, but who were in families that experienced a 

midyear decrease in income that would make them eligible for Medicaid or CHIP, as having 

experienced a change in eligibility because they would gain eligibility for potentially lower-cost 

insurance. The CHIP category includes children eligible for CHIP-funded Medicaid expansion and 

separate CHIP programs; however, we did not consider a change in eligibility between Medicaid and 

CHIP-funded Medicaid expansions to be a change in program eligibility. According to CMS data, as of 

March 2012 there were 18 states without continuous eligibility policies for either Medicaid or CHIP.

Changes in eligibility caused by income fluctuations could deter children’s 

enrollment in relevant programs if the process for changing enrollment is 

burdensome for the families and could further complicate other eligibility 

complexities, such as variation in eligibility within households. Eligibility 

for specific types of assistance can vary within households because 

low- to moderate-income adults with household incomes greater than 

133 percent of FPL will typically be ineligible for any assistance or will be 

eligible for the premium tax credit rather than Medicaid or CHIP, while 

children in some of these households—particularly in states with higher 

income eligibility levels for Medicaid and CHIP—will be eligible instead for 

Medicaid or CHIP. We estimate that based on 2009 data, 21 percent of 

children eligible for Medicaid, CHIP, or the premium tax credit under 

PPACA would have different eligibility from their parents as of the 

beginning of the year. However, because of income fluctuations that 

occurred over the course of the year, we estimate that an additional 9 

percent of eligible children would encounter this situation.
Page 20 GAO-12-648 Children’s Access to Health Insurance

CMS has provided states with incentives and guidance to implement 

current initiatives to improve enrollment policies and has made progress 

assisting states in implementing PPACA requirements aimed at further 

simplifying Medicaid and CHIP enrollment. State officials reported 

ongoing challenges with regard to enrolling eligible children, including the 

need for timely guidance to implement PPACA provisions, concerns 

about enrolling family members who are not eligible for the same 

program, and state budget constraints.

Through an array of financial incentives and technical assistance, CMS 

has worked with states to enroll and retain eligible children in Medicaid 

and CHIP and to set up state exchanges under PPACA. Many of these 

efforts were initiated with funds appropriated under CHIPRA and continue 

under PPACA. For example, CHIPRA appropriated $100 million for fiscal 

years 2009 through 2013 in outreach grants and related efforts to improve 

the enrollment and retention of underserved populations in Medicaid and 

CHIP, and by the end of fiscal year 2011, CMS had awarded $80 million 

in such grants.34 CMS awarded the first round of outreach grants in fiscal 

year 2009 to 69 applicants in 43 states, which included state agencies 

and community-based and other nonprofit groups, and the second round 

in fiscal year 2011 to 39 applicants in 23 states.35

Since fiscal year 2009, CMS has also awarded performance bonuses 

annually to states that implemented at least five of the eight enrollment 

initiatives outlined in CHIPRA and met specific enrollment goals, which 

In our interviews with 

officials from selected states, officials noted that the outreach grants had 

helped the agencies reach eligible children. For example, Oregon 

Medicaid officials said that the CHIPRA outreach grant their agency 

received was crucial to reaching the state’s Hispanic population. The 

grant sought to support outreach by safety net providers, public health 

departments, and school-based health centers.

 

34PPACA amended the CHIPRA provision, appropriating an additional $40 million in grant 

funding and extending the availability of funding through fiscal year 2015. 

35Individual grants in the first round ranged from approximately $70,000 to nearly 

$1 million, and grants in the second round ranged from $200,000 to $2.5 million. Individual 

grantees were eligible to apply for grants in both rounds of funding.

CMS Has Provided 

States with Tools to 

Increase Enrollment, 

and States Express a 

Need for Further 

Guidance and Note 

Budget Constraints

CMS Has Provided States 

with Financial and 

Technical Assistance to 

Facilitate the Enrollment 

and Retention of Eligible 

Children in Medicaid and 

CHIP 
Page 21 GAO-12-648 Children’s Access to Health Insurance

are based on the state’s current Medicaid enrollment and population 

growth.36 (See table 4.) The number of states receiving these bonuses 

has more than doubled over the 3 years that bonuses have been 

awarded, increasing from 10 states in fiscal year 2009 to over 23 states in 

fiscal year 2011.37 In 2011, the amount of the performance bonuses 

ranged from approximately $1.3 million for Idaho to over $28 million for 

Maryland. (See app. II for a summary of the states that received these 

performance bonuses and the amounts of the awards.) In addition, 

among the 23 states that received a performance bonus in 2011, 

16 received an enhanced bonus for exceeding their enrollment target by 

more than 10 percent.38

Table 4: CHIPRA Initiatives to Improve Children’s Enrollment in Medicaid and CHIP

CMS plans to provide these performance 

bonuses annually through fiscal year 2013.

CHIPRA enrollment initiative Description of initiative

Elimination of in-person interview No longer require an in-person interview to enroll in Medicaid or CHIP

Liberalization of asset requirements Do not impose an asset test, or allow administrative verification of assets

Same application and renewal forms Use same or interchangeable application and renewal forms for Medicaid and CHIP

12-month continuous eligibility Assure coverage of a child for 12 months, regardless of changes in circumstances, with 

some exceptions

Automatic/administrative renewal Make renewal determinations automatically, based on information the state has available, 

provide a prepopulated renewal form to families, or both 

Presumptive eligibility Enroll children who appear to be eligible for Medicaid and CHIP pending a full determination 

of eligibility

Express lane eligibility Enroll children in Medicaid or CHIP based on information available through other public

programs

Premium assistance Provide premium assistance for private coverage through a state’s Medicaid or CHIP 

program

Source: CMS.

 

36CHIPRA authorizes performance bonuses to be awarded annually, from 2009 through 

2013.

37CMS awarded over $37 million in performance bonuses to 10 states in fiscal year 2009, 

over $167 million to 16 states in fiscal year 2010, and nearly $300 million to 23 states in 

fiscal year 2011.

38The performance bonus a state received was based on a formula that considers the 

percentage that enrollment increased and the current per capita cost of covering each 

child in the state. The enhanced bonus is based on a similar formula for rewarding 

increased enrollment but does so at a higher level per percentage point increase in 

children’s enrollment.
Page 22 GAO-12-648 Children’s Access to Health Insurance

CMS has also provided states with financial assistance to facilitate their 

implementation of PPACA provisions aimed at simplifying enrollment. For 

example, recognizing that states will need to upgrade their information 

technology systems to comply with PPACA, CMS has provided states 

with the opportunity to claim an enhanced Federal Medical Assistance 

Percentage (FMAP) through fiscal year 2015 for the costs associated with 

certain Medicaid systems improvements, such as updates to their claims 

processing and enrollment systems, and beyond 2015, for costs 

associated with administering new systems. Specifically, instead of the 

50 percent FMAP historically available for most Medicaid administrative 

expenses, qualified states can obtain a 90 percent FMAP for the costs of 

implementing new information systems and a 75 percent FMAP for the 

costs of administering these new systems.39 California officials said they 

plan to use the enhanced FMAP to better integrate their Medicaid 

eligibility systems with their SNAP and Temporary Assistance for Needy 

Families (TANF) eligibility systems and are interested in eventually using 

their Medicaid system to determine the eligibility of enrollees for other 

state programs.40 In addition to the enhanced FMAP for information 

systems improvements, CMS has awarded exchange planning grants and 

exchange establishment grants under PPACA to assist states in planning 

and developing exchanges. In September 2010, CMS awarded exchange 

planning grants totaling nearly $50 million to 50 states,41

 

39To be eligible for the enhanced FMAP, states must submit explicit plans for upgrading 

their information systems to CMS for approval. Medicaid Program; Federal Funding for 

Medicaid Eligibility Determination and Enrollment Activities, 75 Fed. Reg. 21950 (Apr. 19, 

2011). As of April 27, 2012, CMS had approved plans from 36 states, and an additional 

8 states had submitted plans for approval.

and from May 

2011 through February 2012, CMS awarded exchange establishment 

40TANF is a government program that provides cash assistance and other services to 

eligible low-income families.

41Exchange planning grants were designed to provide resources for states to conduct 

research and planning and determine how exchanges will be operated and governed. 

States were able to apply for an exchange planning grant of up to $1 million, and most 

states were awarded the full amount. Louisiana returned the exchange planning grant 

money that it had received. If states choose not to set up their own exchanges, the federal 

government is required to do so.
Page 23 GAO-12-648 Children’s Access to Health Insurance

grants totaling over $600 million to 34 states.42

In addition to financial assistance, CMS has provided states with technical 

assistance to facilitate their efforts to enroll and retain eligible children. 

For example, CMS has hosted conference calls and meetings to provide 

support to outreach grantees. CMS officials told us that a conference of 

outreach grantees served as a venue for identifying best practices and 

getting state input on additional ways that CMS can assist states with 

enrollment. CMS has also helped states implement the enrollment 

initiatives outlined in CHIPRA. For example, Oregon officials worked 

directly with CMS when developing a renewal form for Medicaid and 

CHIP to make sure their approach met the administrative renewal 

requirements for the CHIPRA performance bonus. CMS has also

provided technical assistance to states on a number of PPACA 

provisions. For example, CMS has issued letters to state Medicaid 

directors, including one on the new eligibility groups for Medicaid 

(e.g., covering children up through 133 percent of FPL) and published 

frequently asked questions related to essential health benefits and 

maintenance of effort requirements. CMS officials also told us that the 

agency has contracted with groups of states to develop guidance on key 

issues, such as eligibility, enrollment, and information technology, that will 

be disseminated to all states. CMS officials said that the agency has 

offered states additional opportunities for technical assistance through 

calls, webinars, user groups, working group meetings, larger conference 

meetings, and establishment reviews, a process under which CMS 

directly assists and monitors a state’s effort to meet the requirements to 

build an exchange. Most recently, CMS’s final exchange rule, which 

allows states to hire private entities to help enroll eligible individuals into 

qualified health plans participating in their exchanges, could further 

facilitate state enrollment efforts.

(See app. II for more 

information on the initiatives and funding available to states to facilitate 

enrollment and implementation of PPACA.) CMS plans to award 

exchange establishment grants on a quarterly basis through 2014.

 

42There are two levels of exchange establishment grants. Level one grants are awarded to 

states in the earlier stages of exchange development, and award amounts have ranged 

from about $1.6 million to nearly $58 million. States receiving a level one grant can apply 

for a second year of funding, if necessary. To be eligible for a level two grant, states must 

meet a series of specific criteria, including legal authority to establish and operate an 

exchange, a budget and plan for financial stability by 2015, and a plan to prevent fraud, 

waste, and abuse. As of March 2012, Rhode Island was the only state that had received a

level two grant. 
Page 24 GAO-12-648 Children’s Access to Health Insurance

States identified incomplete federal guidance as a challenge to their 

efforts to prepare to enroll eligible children under PPACA in our interviews 

and in comments on CMS’s proposed eligibility rules. During the course 

of our review, in March 2012, CMS finalized its Medicaid and exchange 

eligibility rules, which responded to some areas of state concern. For 

example, in comments on the proposed Medicaid eligibility rule, several 

states requested that CMS’s final rule allow them to continue to use joint 

applications for Medicaid and other human services programs, such as 

SNAP and TANF, a coordinated enrollment approach that 39 states 

currently use.43

States are also seeking additional guidance from CMS on how to 

minimize the potential for negative consequences when family members 

are eligible for different types of assistance. For example, in their 

The final Medicaid eligibility rule clarified that states may 

continue to use such joint applications as long as a simplified application 

specifically for health programs is also in place. However, states’ need for 

ongoing guidance remains. For example, in addition to the need for 

finalized rules, states frequently noted, during our interviews and in 

written comments on the proposed rules, that supplementary guidance in 

key areas such as the federal data hub, the conversion to MAGI for 

eligibility determinations, and the elements of the uniform application was 

needed in order for them to make the necessary changes to their 

business processes and information systems. For example, several 

states commented that they need additional guidance on what will be 

available in the federal data hub and how to coordinate data from the 

federal data hub with their current systems. States also expressed the 

need for additional guidance on other aspects of PPACA, such as the 

Basic Health Program (BHP). CMS officials told us that the agency is in 

the process of developing additional guidance and that the agency’s 

highest priority is to provide states with guidance related to their eligibility 

and enrollment systems. For example, officials cited guidance on the 

federal data hub as a high priority.

 

43We have previously reported that differences in eligibility determination requirements 

among human services programs led to duplication of efforts, and we have an 

outstanding recommendation that HHS and the Food and Nutrition Service work together 

to (1) encourage state officials to explore better aligning participant reporting 

requirements, particularly for TANF and Medicaid, and (2) disseminate information and 

guidance to states on the opportunities available for better aligning requirements among 

Medicaid, SNAP, and TANF. See GAO, Food Stamp Program: Farm Bill Options Ease 

Administrative Burden, but Opportunities Exist to Streamline Participant Reporting Rules 

among Programs, GAO-04-916 (Washington, D.C.: Sept 16, 2004).

Challenges Reported by 

States Include Ongoing 

Need for Guidance and 

Budget Constraints
Page 25 GAO-12-648 Children’s Access to Health Insurance

comments on the proposed Medicaid eligibility rule, California officials 

requested guidance on how to handle complex situations in which family 

members are eligible for different types of assistance, including options 

for reducing the confusion and burden such families may face when 

enrolling in multiple plans. Further, Illinois officials requested permission 

to enroll children and their parents in the same type of insurance, whether 

Medicaid, a BHP, or a plan through the exchange. They suggested that 

greater harm could result from differences in insurance within families 

than any higher costs or reduced benefits that may result from enrolling 

families in the same plan. CMS officials said they would clarify policy 

options available to states to allow certain families to have the same type 

of insurance coverage. For example, to allow CHIP-eligible children and 

their parents to share the same insurance, CMS officials said that states 

could use CHIP funds to allow CHIP-eligible children to purchase the 

same private insurance plan as their parents through the exchange, 

though they had not yet provided guidance to states in this area as of 

April 2012. Recognizing the potential difficulties such families could face, 

Tennessee sought guidance from CMS in September 2011 on whether 

PPACA would allow the state to implement a “bridge plan,” where 

managed care organizations would provide a single insurance card that 

could be used by the entire family. This approach would be available to 

eligible families while at least one dependent was enrolled in Medicaid or 

CHIP and for a defined period afterward. However, Tennessee officials 

told us that as of February 2012, CMS had not indicated whether such an 

approach would be acceptable or how it could be implemented in a 

manner consistent with the law.

State officials also reported that ongoing budget constraints have affected 

their ability to enroll eligible children. A recent survey by the National 

Association of State Budget Officers found that states continue to face 

budgetary pressures as a result of the lack of a strong national economic 

recovery.44

 

44National Association of State Budget Officers, Fiscal Survey of States, Fall 2011 

(Washington D.C.: 2011).

Under these circumstances, states continue to examine all 

their state programs, including Medicaid, to identify additional 

opportunities for cost savings. Medicaid officials in the six states in our 

review also acknowledged that budget constraints have affected their 

outreach and enrollment efforts. For example, California and Illinois 

officials reported reducing funding to community groups that have 
Page 26 GAO-12-648 Children’s Access to Health Insurance

historically assisted families in applying for Medicaid. In addition, officials 

in four of the six states we interviewed added that budget constraints 

have also affected their funding of enrollment initiatives, such as express 

lane eligibility, that can increase children’s enrollment in these programs. 

For example, Washington officials said the state was considering 

implementing express lane eligibility in 2011 for Medicaid. However, when 

estimating the cost of this initiative, the state determined that the 

anticipated increases in enrollment would be too expensive—despite the 

possibility that these costs could be offset by CHIPRA performance bonus 

payments—and decided not to pursue the initiative further at the time. 

Uncertainty about the availability of additional federal funds for future 

outreach and enrollment efforts creates additional challenges for states. 

For example, CHIPRA performance bonuses and CHIPRA outreach 

grants, as extended by PPACA, will no longer be provided after 2013 and 

2015, respectively, and officials from a number of states raised concerns 

that PPACA did not authorize additional funds for outreach or enrollment.

A key goal of PPACA was to increase Americans’ access to affordable 

health insurance. PPACA expanded eligibility for existing federal health 

programs and private health insurance, offered a new premium tax credit 

to offset the cost of private health insurance for some low- to moderateincome families whose incomes are too high to qualify for Medicaid or 

CHIP, and provided means for streamlining enrollment. Although our 

estimates are based on 2009 data, they illustrate the potential impact of 

PPACA, when fully implemented in 2014, on children’s access to 

affordable health insurance, and highlight the importance of many of the 

policies introduced in CHIPRA and continued in PPACA. For example, 

our estimates suggest that about 68 percent of children who were 

uninsured in 2009 would be eligible for Medicaid or CHIP under PPACA, 

underscoring the continued importance of outreach and simplified 

enrollment policies to ensure that eligible children are enrolled in the 

appropriate program. Similarly, significantly higher estimates of changes 

in eligibility within a year among children in states without continuous 

eligibility policies compared to states with such policies underscore the 

importance of a continued emphasis on such policies to minimize 

changes in eligibility.

In addition, a small but significant number of uninsured children from lowto moderate-income families whose incomes are too high to qualify for 

Medicaid or CHIP would be ineligible for the premium tax credit under 

IRS’s proposed definition of access to affordable employer-sponsored 

insurance, which is based on the cost of a self-only plan available to the 

Conclusions 
Page 27 GAO-12-648 Children’s Access to Health Insurance

employee. Yet the cost of insuring other eligible family members could be 

higher and potentially unaffordable for some families. One implication of 

this proposal is that some families in which one member has an offer of 

self-only, employer-sponsored health insurance could be less likely to 

obtain family insurance than if no employer insurance were offered, 

because of their ineligibility for the premium tax credit. We recognize that 

in finalizing the affordability standard for an employee’s eligible family 

members, IRS must weigh many complex factors, such as costs to the 

federal government and effects on employers and families, some of which 

are difficult to predict, as well as the scope of its authority. However, 

under the proposed standard, an offer of affordable employer-sponsored 

health insurance to one family member could impede other family 

members’ access to affordable insurance—an outcome which would not 

further the broader goals of PPACA.

In the Department of the Treasury’s future rule making, we recommend 

that the Secretary of the Treasury, in consultation with the Commissioner 

of Internal Revenue, consider the impact of the proposed standard for 

determining affordability of employer-sponsored insurance on children 

and other family members who are eligible to enroll, and whether it would 

be consistent with the goals of PPACA to adopt an alternative approach 

that would consider the cost of insuring eligible family members, or as 

necessary, seek clarification from Congress regarding its intent with 

respect to this standard.

We provided a draft of this report for comment to HHS and the 

Department of the Treasury. Neither HHS nor the Department of the 

Treasury provided general comments on the report or its 

recommendation. Department of the Treasury officials provided technical 

comments, which we incorporated as appropriate.

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to relevant congressional 

committees, the Secretary of Health and Human Services, the Secretary 

of the Treasury, and other interested parties. In addition, the report will be 

available at no charge on the GAO website at http://www.gao.gov. 

Recommendation for 

Executive Action

Agency Comments
Page 28 GAO-12-648 Children’s Access to Health Insurance

If you or your staff have any questions about this report, please contact 

me at (202) 512-7114 or iritanik@gao.gov. Contact points for our Offices 

of Congressional Relations and Public Affairs may be found on the last 

page of this report. GAO staff who made key contributions to this report 

are listed in appendix III.

Katherine M. Iritani

Director, Health Care
Appendix I: Scope and Methodology of the 

Survey of Income and Program Participation 

Analysis

Page 29 GAO-12-648 Children’s Access to Health Insurance

Our first two objectives were to assess the extent to which uninsured 

children would be eligible for Medicaid, the State Children’s Health 

Insurance Program (CHIP), or the premium tax credit available under the 

Patient Protection and Affordable Care Act (PPACA) and the extent to 

which they would experience a change in eligibility among these forms of 

assistance because of changes in household income during a year. We 

identified the Survey of Income and Program Participation (SIPP), a 

nationally representative, longitudinal survey conducted by the U.S. 

Census Bureau, as a useful data set for our purposes because it provides 

detailed monthly information over a multiyear period about specific types 

of income, family relationships, and health insurance status of individuals 

and households representing the civilian, noninstitutionalized population 

of the United States. We analyzed data from the most recently available 

SIPP, which began in 2008, and surveyed the occupants of approximately 

42,000 households.

Our analysis of SIPP data is subject to limitations. The analysis uses 

2009 data to illustrate the extent to which uninsured children would be 

eligible for Medicaid, CHIP, or the premium credit program had proposed 

and final 2014 PPACA eligibility rules been in effect at that time. To the 

extent that patterns in household income, insurance status, or other 

eligibility criteria differ in 2014, eligibility in 2014 will also differ. In 

addition, the estimates are based on a sample of the population and may 

differ from estimates that would be obtained if the full population had 

been surveyed using the same methods, and the estimates are based on 

self-reported information that may contain errors because of factors such 

as differing interpretation of survey questions, inability or unwillingness of 

survey participants to provide correct information, or data processing 

errors. The Census Bureau reported that quality control and edit 

procedures were used to reduce such errors.1

 

1

For example, survey participants are encouraged to use financial records to aid their 

responses. In addition, to improve the accuracy of responses on monthly earnings, 

interviewers remind survey participants that certain months of the year contain 5 paydays 

for workers paid on a weekly basis, and 3 paydays for workers paid on a biweekly basis.

Studies of SIPP income 

data have shown that the SIPP captures less income compared to other 

Appendix I: Scope and Methodology of the 

Survey of Income and Program Participation 

Analysis
Appendix I: Scope and Methodology of the 

Survey of Income and Program Participation 

Analysis

Page 30 GAO-12-648 Children’s Access to Health Insurance

surveys, particularly for higher-income survey participants.2 While our 

analysis focuses on lower-income survey participants, to the extent that 

the SIPP data underrepresent income in this population as well, our 

estimates would indicate that more children meet income requirements 

for Medicaid or CHIP versus the premium tax credit, and for the premium 

tax credit versus being ineligible for any type of assistance, than other 

surveys might suggest. Our analysis variables approximate but do not 

always fully capture key PPACA eligibility criteria, such as household 

income or citizenship status, as described further below. To determine the 

reliability of SIPP data, we reviewed related documentation and 

conducted electronic testing for missing data, outliers, and apparent 

errors. For example, we tested whether persons who reported being 

uninsured in January 2009 had reported having health insurance in the 

prior and following month. We also compared our results to estimates 

based on data from another Census Bureau survey, the American 

Community Survey, and to other studies that addressed related research 

questions. We determined that the SIPP data were sufficiently reliable for 

the purposes of our engagement.

A child’s eligibility for Medicaid, CHIP, or the premium tax credit under 

PPACA is based in part on having household income below specified 

limits relative to the federal poverty level (FPL). The Centers for Medicare 

& Medicaid Services (CMS) and the Internal Revenue Service (IRS) have 

specified methods for determining a child’s household income under 

PPACA in final and proposed eligibility rules, and differences exist in how 

household income is determined for Medicaid and CHIP versus the 

premium tax credit. A child’s eligibility for these programs is also based 

on citizenship or legal residence, and, for the premium tax credit, on 

whether the child is considered to have access to other affordable 

insurance. From the available SIPP data, we developed variables for our 

analysis based on these eligibility rules.

 

2

For example, one study estimated that, overall, SIPP captured 89.1 percent of calendar 

year 2002 income compared to the Census Bureau and the Bureau of Labor Statistics’ 

Current Population Survey. However, for persons in the lowest three income quintiles, 

SIPP captured 105.6 percent, 97.0 percent, and 92.5 percent of income, respectively. See 

John L. Czajka and Gabrielle Denmead, “Income Data for Policy Analysis: A Comparative 

Assessment of 8 Surveys, Final Report” (Washington, D.C.: Mathematica Policy 

Research, Inc, Dec. 23, 2008) 131.

Analysis Variables
Appendix I: Scope and Methodology of the 

Survey of Income and Program Participation 

Analysis

Page 31 GAO-12-648 Children’s Access to Health Insurance

Household composition. We created two household composition 

variables for children on the basis of final CMS and proposed IRS rules 

for determining household composition for the premium tax credit and for 

Medicaid or CHIP. The premium tax credit household composition 

variable defined households as composed of a taxpayer and spouse, if 

applicable, and tax dependents. Tax dependents were defined as follows:

• Children under age 19 (or ages 19 through 23 who were full-time 

students) whose taxable income (together with a spouse’s income, if 

applicable) was not more than half of household income.

• Other family members, who (together with a spouse, if applicable), 

earned less than the IRS threshold and whose total income was not 

more than half of household income.

Taxpayers were those who did not meet the above definition of a tax 

dependent. This definition of a tax dependent excluded those with 

significant income, but did not capture tax rules about the amount of 

financial support a taxpayer must provide for children or other dependents 

in order to claim them as tax dependents.

For example, most children under age 19 were defined as tax 

dependents. Households of tax-dependent children included the child, the 

child’s taxpayer parents or guardians, and any other tax dependents of 

the taxpayers, such as the child’s siblings. When children lived with two 

unmarried parents, the parent with the higher income was designated as 

the taxpayer parent. This household composition variable did not account 

for children who may be claimed as tax dependents by a noncustodial 

parent or for spouses who choose to file taxes separately.

The Medicaid household composition variable was the same as the 

premium tax credit household composition variable, with certain 

exceptions. When a tax-dependent child did not live with a taxpayer 

parent or lived with two parents who were not married to one another, or

had household income below tax filing thresholds, the child’s household 

for purposes of determining Medicaid and CHIP eligibility was composed 

of the child, the child’s parents, siblings under age 19 (or ages 19 and 20 

who were full-time students), and any children of the child. In addition, 

pregnant women were counted as two household members when 

determining Medicaid and CHIP eligibility. Pregnancy status is not directly 

available from the SIPP data; we estimated that women were pregnant in 

a given month if they had a new infant during one of the following 

8 months.
Appendix I: Scope and Methodology of the 

Survey of Income and Program Participation 

Analysis

Page 32 GAO-12-648 Children’s Access to Health Insurance

Household income. We constructed four household income variables for 

children based on rules for counting income for Medicaid and CHIP and 

for the premium tax credit under PPACA. Tax dependent’s income was 

not included in any household income variable if it was less than the 

amount that would necessitate filing a tax return.

• To approximate modified adjusted gross income (MAGI) household 

income under PPACA, a child’s premium tax credit household income 

was defined as the sum of all income, less means-tested assistance 

income; child support or foster care payments; veterans and workers 

compensation or sickness or accident insurance payments; or gifts 

from relatives or friends—self-reported by individuals included in the 

premium tax credit household composition variable defined above, 

during calendar year 2009.3

• A child’s baseline Medicaid household income was the sum of the 

same income types in the Medicaid household composition variable 

defined above, during specific months of 2009.4

• A child’s adjusted Medicaid household income was equal to the 

baseline Medicaid household income variable, less income 

deductions applied in specific states in their Medicaid eligibility 

determination processes, including deductions of certain amounts of 

earned income and child care expenses.

• A child’s adjusted CHIP household income was equal to the baseline 

Medicaid household income variable, less income deductions applied 

in specific states in their CHIP eligibility determination processes, 

including deductions of certain amounts of earned income and child 

care expenses.

 

3

Our analysis was limited to children participating in SIPP throughout 2009. However, 

children who participated throughout 2009 could have had family members who left the 

survey or the child’s household during the year. For family members with fewer than 

12 months of 2009 income data, we divided the total income by the number of months of 

income data, and then multiplied the result by 12 to estimate full 2009 income. We did this 

in order to approximate how calendar year household income would have been projected 

for 2009, given a child’s household composition as of January 2009.

4

Our Medicaid household income variables did not capture the special treatment of lump 

sum or scholarship income for Medicaid eligibility determinations.
Appendix I: Scope and Methodology of the 

Survey of Income and Program Participation 

Analysis

Page 33 GAO-12-648 Children’s Access to Health Insurance

FPL. We constructed four percentages of FPL variables based on the 

four household income variables and two household composition 

variables defined above.

• A child’s baseline Medicaid percentage of FPL was the Medicaid 

household income variable divided by the 2009 poverty threshold 

applicable to the child’s state and family size contained in the 

Medicaid household composition variable.

• A child’s adjusted Medicaid percentage of FPL was the adjusted 

Medicaid household income variable divided by the 2009 poverty 

threshold applicable to the child’s state and family size contained in 

the Medicaid household composition variable.

• A child’s adjusted CHIP percentage of FPL was the adjusted CHIP 

household income variable divided by the 2009 poverty threshold 

applicable to the child’s state and family size contained in the 

Medicaid household composition variable.

• A child’s premium tax credit percentage of FPL was the premium tax 

credit household income variable divided by the 2009 poverty 

threshold applicable to the child’s state and household size contained 

in the premium tax credit household composition variable.

Insurance status. Employer-sponsored insurance was defined as 

insurance obtained through an individual’s or a family member’s 

employer, former employer, union, or the military. Individuals were not 

categorized as having employer-sponsored insurance if they also had 

Medicaid or CHIP coverage. We used a procedure that the Census 

Bureau has adopted for the American Community Survey to address 

under-reporting of Medicaid coverage. Specifically, respondents were 

recategorized as having Medicaid if they were one of the following:

• a child under age 19 and the unmarried child of a parent with public 

assistance or Medicaid,

• a citizen parent with public assistance,

• a citizen parent married to a citizen with public assistance or 

Medicaid,

• a foster child, or
Appendix I: Scope and Methodology of the 

Survey of Income and Program Participation 

Analysis

Page 34 GAO-12-648 Children’s Access to Health Insurance

• a Supplemental Security Income5 recipient who met one of the 

following conditions: (1) did not have children or (2) had children but 

was not working.

Individuals were defined as uninsured if they were not categorized as 

having employer-sponsored or other private insurance, Medicaid, CHIP, 

or other public insurance.

Access to affordable employer-sponsored insurance. Children who 

had a taxpayer parent as part of their household composition who had 

employer-sponsored insurance, and children who were taxpayers and 

had employer-sponsored insurance, were defined as having met the 

proposed standard for access to affordable employer-sponsored 

insurance if the average annual employee contribution for a self-only 

plan, $921, was less than or equal to 9.5 percent of premium tax credit 

household income. This definition of access to affordable employersponsored insurance did not take into account the requirement that 

employer-sponsored insurance must provide a minimum value in order to 

be considered affordable, and it assumed that children were eligible to 

enroll in a parent’s employer-sponsored insurance.

Citizenship or legal residence. Citizenship status is available in SIPP 

data, but the legal status of noncitizens is not directly available from SIPP 

data.6 We defined noncitizens as legally residing if they or a parent 

reported receiving public insurance, such as Medicaid, or other public 

assistance, which requires documentation of citizenship or legal 

residence. The remaining noncitizens were defined as potentially 

ineligible noncitizens.

Based on the variables defined above, we categorized children as eligible 

or ineligible for Medicaid, CHIP, and the premium tax credit under 

proposed and final 2014 PPACA eligibility rules.

 

5

The Social Security Administration’s Supplemental Security Income program provides 

cash benefits to eligible low-income disabled individuals, including children, as well as 

certain others.

6

SIPP data include information on whether certain non-citizens ages 15 and over were 

permanent U.S. residents; we did not incorporate this information into our analysis.

Methodology 
Appendix I: Scope and Methodology of the 

Survey of Income and Program Participation 

Analysis

Page 35 GAO-12-648 Children’s Access to Health Insurance

• We defined children as eligible for Medicaid under PPACA if they 

were citizens or legally residing noncitizens whose baseline Medicaid 

percentage of FPL was less than or equal to 138 percent, or who had 

an adjusted Medicaid percentage of FPL that was less than or equal 

to the 2012 state-specific income eligibility level for their age group.7

Foster children and Supplemental Security Income recipients were 

also defined as Medicaid eligible.

• We defined children as eligible for CHIP under PPACA if they were 

citizens or legally residing noncitizens not estimated to be eligible for 

Medicaid, with an adjusted CHIP percentage of FPL that was less 

than or equal to the applicable 2012 CHIP state-specific income 

eligibility level. CHIP included both CHIP-funded Medicaid expansion 

programs and separate CHIP programs. Children with employersponsored or other private insurance were defined as ineligible for 

separate CHIP programs.

• We defined children as eligible for the premium tax credit under 

PPACA if they were citizens or legally residing non-citizens not 

estimated to be eligible for Medicaid or CHIP, with premium tax credit 

percentage of FPL between 100 and 400 percent and without access 

to affordable employer-sponsored insurance.

Our analyses considered three groups of children: uninsured children 

ages 0 through 18, CHIP-eligible children ages 0 through 18 who were 

uninsured or publicly insured, and all children ages 0 through 18 eligible 

for Medicaid, CHIP, or the premium tax credit. We limited our analysis to 

children who participated in the SIPP for all of calendar year 2009.

• Among uninsured children, we used January 2009 SIPP data to 

estimate the percentage who would be eligible for Medicaid, CHIP, 

and the premium tax credit based on the above definitions of 2014 

PPACA eligibility rules, as well as the percentage who would be 

ineligible.

 

7

PPACA required states to maintain their existing Medicaid and CHIP income eligibility 

levels until fiscal year 2020. Prior to determining a child’s household income level, many 

states currently disregard certain amounts of specific types of income. In its Medicaid rule, 

CMS specified that states will need to convert their existing effective income eligibility 

levels to a MAGI-equivalent level that adjusts for any existing practices of disregarding 

specific types of income. The methodology for doing this conversion has not been 

finalized. To approximate this standard, we created adjusted household income variables 

that incorporated applicable state income deductions into children’s household income.
Appendix I: Scope and Methodology of the 

Survey of Income and Program Participation 

Analysis

Page 36 GAO-12-648 Children’s Access to Health Insurance

• Among uninsured or publicly insured children estimated to be eligible 

for CHIP, we used January 2009 SIPP data to estimate the 

percentage who would be eligible for the premium tax credit based on 

the above definitions of 2014 PPACA eligibility rules, as well as the 

percentage who would be ineligible, if CHIP were not available.

• Among all children estimated to be eligible for Medicaid, CHIP, or the 

premium tax credit in January 2009, we used calendar year 2009 

SIPP data to estimate the percentage who would have experienced 

one or two changes in eligibility for specific types of assistance, 

including becoming ineligible for any type of assistance, under 2014 

PPACA eligibility rules within 6 months and a year. We incorporated 

state-specific continuous eligibility policies; for children living in states 

that according to CMS had a continuous eligibility policy in place as of 

2012, we did not count them as changing eligibility for the relevant 

program even if their income eligibility changed.

• Among all children estimated to be eligible for Medicaid, CHIP, or the 

premium tax credit in January 2009, we used calendar year SIPP data 

to estimate the percentage who would be eligible for Medicaid and 

CHIP under 2014 PPACA eligibility rules with a Medicaid percentage 

of FPL higher than 138 percent in January 2009 and during 2009 as a 

whole, in order to examine the percentage of children who could be 

eligible for different program than their parents.

For all estimated percentages, we used the SIPP 2009 calendar 

year sampling weight and calculated a lower and upper bound at the 

95 percent confidence level using replicate weights that took into account 

the complex survey design.
Appendix II: Federal Initiatives and Funding 

Available to States to Facilitate Enrollment of 

Eligible Children and Implement PPACA

Page 37 GAO-12-648 Children’s Access to Health Insurance

The Children’s Health Insurance Program Reauthorization Act of 2009 

(CHIPRA) and PPACA included a number of initiatives and provisions 

under which states may obtain federal funding to assist in enrolling 

eligible children, and most states have taken advantage of at least one of 

these. For example, CHIPRA provided incentives to states to undertake 

eight enrollment initiatives. Beginning in fiscal year 2009, CMS awarded 

performance bonuses to states that implemented at least five of the eight 

enrollment initiatives and also achieved specific enrollment goals.1 (See 

fig. 3.) PPACA authorized the provision of planning grants and 

establishment grants to assist states with the implementation of the 

American Health Benefit Exchanges (referred to as exchanges)—

marketplaces where eligible families and individuals can purchase private 

health insurance.2 Recognizing that states will need to upgrade their 

Medicaid information technology systems to comply with PPACA, CMS 

has provided states with the opportunity to claim an enhanced Federal 

Medical Assistance Percentage (FMAP)—the federal share of Medicaid 

expenditures—through fiscal year 2015 for the costs associated with 

certain systems improvements, such as updates to their claims 

processing and enrollment systems. Specifically, instead of the 

50 percent FMAP that has historically been available for most Medicaid 

administrative expenses, qualified states can obtain a 90 percent FMAP 

for the costs of implementing new information systems and a 75 percent 

FMAP for the costs of administering these new systems.3

 

1

The specific enrollment goal a state needed to meet was based, generally, on the state’s 

current Medicaid enrollment and population growth.

2

States were able to apply for an exchange planning grant of up to $1 million, and most 

states applied for, and were awarded, the full amount. Louisiana returned the exchange 

planning grant money it had received. Alaska did not apply for an exchange planning 

grant. There are two levels of exchange establishment grants. Level one grants are 

awarded to states in the earlier stages of exchange development. States receiving a level 

one grant can apply for a second year of funding, if necessary. To be eligible for a level 

two grant, states must meet a series of specific criteria, including legal authority to 

establish and operate an exchange, a budget and plan for financial stability by 2015, and 

a plan to prevent fraud, waste, and abuse. As of March 2012, Rhode Island was the only 

state that had received a level two grant.

3

To be eligible for the enhanced FMAP, states must submit explicit plans for upgrading 

their information systems to CMS for approval. As of April 27, 2012, CMS had approved 

plans from 36 states, and an additional 8 states had submitted plans for approval.

Appendix II: Federal Initiatives and Funding 

Available to States to Facilitate Enrollment of 

Eligible Children and Implement PPACA
Appendix II: Federal Initiatives and Funding 

Available to States to Facilitate Enrollment of 

Eligible Children and Implement PPACA

Page 38 GAO-12-648 Children’s Access to Health Insurance

Figure 3: Summary of States’ Implementation of Initiatives and Receipt of Federal Funding to Facilitate Enrollment of Children 

and Implement PPACA
Appendix II: Federal Initiatives and Funding 

Available to States to Facilitate Enrollment of 

Eligible Children and Implement PPACA

Page 39 GAO-12-648 Children’s Access to Health Insurance

Note: In this figure, ● stands for “yes.”

a

This information covers initiatives as of January 1, 2012.

b

This information covers grants as of February 22, 2012.

c

As of April 27, 2012. CMS has provided states with the opportunity to claim an enhanced FMAP for 

the costs associated with certain systems improvements, such as updates to their claims processing 

and enrollment systems.

d

States were able to apply for to up to $1 million in funding and most states received close to 

$1 million, while Wyoming received $800,000. Alaska did not apply for an exchange planning grant. 

e

Louisiana returned the exchange planning grant money that it had received. 

f

Rhode Island has received both a level one grant, for $5,240,668, and a level two grant, for 

$58,515,871.

g

South Carolina uses express lane eligibility for Medicaid and CHIP renewal.

h

Numbers may not sum to totals because of rounding.
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 40 GAO-12-648 Children’s Access to Health Insurance

Katherine M. Iritani, (202) 512-7114 or iritanik@gao.gov

In addition to the contact named above, Susan T. Anthony, Assistant 

Director; Susan Barnidge; Emily Beller; Sandra George; Eagan Kemp; 

and Roseanne Price made key contributions to this report.

Appendix III: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 

(290937)
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