GAO-10-258R Medicaid and CHIP Premium Assistance Programs 

United States Government Accountability Office

Washington, DC 20548 

January 19, 2010 

The Honorable Max Baucus 

Chairman 

The Honorable Charles E. Grassley 

Ranking Member 

Committee on Finance 

United States Senate 

The Honorable Henry A. Waxman 

Chairman 

The Honorable Joe Barton 

Ranking Member 

Committee on Energy and Commerce 

House of Representatives 

Subject: Medicaid and CHIP: Enrollment, Benefits, Expenditures, and Other 

Characteristics of State Premium Assistance Programs

Fiscal pressures, rising health care costs, and increases in the number of uninsured may lead 

states to look toward public-private partnerships to help finance health insurance coverage. 

Through Medicaid and the State Children’s Health Insurance Program (CHIP), states have 

had long-standing authority to operate premium assistance programs that subsidize the 

purchase of private health insurance.1

 Enacted in February 2009, the Children’s Health 

Insurance Program Reauthorization Act of 2009 (CHIPRA), which reauthorized CHIP and 

made changes to Medicaid, provided states with additional options for operating premium 

assistance programs. As of November 2009, states had not implemented premium assistance 

programs under the new authorities provided by CHIPRA, but, as allowed by CHIPRA, states 

were continuing to operate their programs under preexisting authorities. 

Through premium assistance programs, states use Medicaid funds, CHIP funds, or both to 

subsidize the cost of private health insurance—such as employer-sponsored insurance 

(ESI)—for eligible individuals. As such, premium assistance programs contrast with direct 

coverage, where states provide Medicaid or CHIP benefits to enrollees by paying doctors and 

other providers directly or contracting with managed care organizations. Previous reports on 

premium assistance programs have described the programs’ potential benefits, as well as 

 

1

Medicaid and CHIP are joint federal-state programs that finance health insurance coverage for certain 

categories of low-income adults and children. 
potential issues that have been raised about them.2

 One potential benefit reported is that 

premium assistance programs could generate cost savings for Medicaid and CHIP by 

leveraging private financial resources for health insurance coverage—such as employer 

contributions—and decreasing enrollment in direct coverage. Additional potential benefits 

include helping families make the transition to private health insurance, expanding coverage 

to family members who are not themselves eligible for coverage under Medicaid or CHIP, and 

supporting the private insurance market. In contrast, a reported issue with premium 

assistance programs is that there may be disparities in the benefits and cost-sharing 

protections offered to enrollees in such programs compared with those in direct coverage. 

Reports also note that premium assistance programs may not be cost-effective—that is, 

premium assistance may be more expensive than providing direct coverage through states’ 

Medicaid and CHIP programs. Finally, reports have raised the possibility that premium 

assistance programs may create incentives for families to reduce their contributions toward 

the cost of health insurance coverage, thus shifting the costs of coverage to public funds. 

CHIPRA required GAO to study cost and coverage issues related to state premium assistance 

programs receiving Medicaid and CHIP funds.3

 In this report, we describe states’ premium 

assistance programs, including the (1) funding source, operating authority, and type of 

private health insurance coverage subsidized; (2) policies regarding eligibility and enrollment; 

(3) benefits, premiums, and cost sharing; (4) expenditures and cost-effectiveness policies; 

and (5) challenges program officials reported in implementing and operating such programs, 

as well as the effect that CHIPRA may have on these challenges. 

To describe these programs, we administered a Web-based survey to officials from the states 

that had premium assistance programs funded by Medicaid, CHIP, or both. To identify which 

states had premium assistance programs funded by Medicaid or CHIP, we asked Medicaid 

and CHIP officials in each state and the District of Columbia if the state used Medicaid or 

CHIP funds to subsidize the purchase of private health insurance.4

 We compared the 

information we received from state officials with information in published reports and with 

information received from the Centers for Medicare & Medicaid Services (CMS)—the agency 

within the Department of Health and Human Services (HHS) that oversees states’ Medicaid 

and CHIP programs—about which states have authority to operate premium assistance 

programs. On this basis, we identified 47 premium assistance programs in 39 states.5

 Officials 

 

2

See J. Alker, Choosing Premium Assistance: What Does State Experience Tell Us? (Washington, D.C.: 

Henry J. Kaiser Family Foundation, Kaiser Commission on Medicaid and the Uninsured, May 2008); 

D. Belnap and S. Schwartz, Premium Assistance, Pub. No. 2007-109 (Portland, Maine: National 

Academy for State Health Policy, October 2007); M. Herman, Premium Assistance Programs: 

Potential Help for the Uninsured? (Washington, D.C.: Forum for State Health Policy Leadership, 

National Conference of State Legislatures, 2004); C. Shirk and J. Ryan, Premium Assistance in 

Medicaid and SCHIP: Ace in the Hole or House of Cards? Issue Brief no. 812 (Washington, D.C.: 

National Health Policy Forum, The George Washington University, July 2006); and C. Williams, A 

Snapshot of State Experience Implementing Premium Assistance Programs (Portland, Maine: 

National Academy for State Health Policy, April 2003). 

3

See Children’s Health Insurance Program Reauthorization Act of 2009, Pub. L. No. 111-3, § 301(c), 123 

Stat. 8, 11-15, 57-63. 

4

Our review of premium assistance programs did not include Medicaid- or CHIP-funded programs in 

which the states only subsidize premiums for insurance packages they created, as opposed to private 

health insurance packages created by employers or insurance companies. At least three states—

Arkansas, Massachusetts, and New Mexico—have such programs. 

5

Officials from 11 states and the District of Columbia reported not having a Medicaid- or CHIP-funded 

premium assistance program. An official representing 1 of those states reported having a premium 

assistance program in the past that was discontinued, and an official representing another state 

reported plans to implement a program in the future. 

2 GAO-10-258R Medicaid and CHIP Premium Assistance Programs
in 8 of the 39 states reported having 2 premium assistance programs; states with more than 

one program may have separate programs for different populations or one program funded 

by Medicaid and another funded by CHIP. From August through October 2009, we 

administered a survey to officials representing the 47 premium assistance programs we 

identified.6

 To ensure the clarity and precision of our survey questions, we pretested the 

survey with officials from 3 states and with a researcher who has extensively studied 

premium assistance programs. The survey requested information about several dimensions of 

a state’s premium assistance program, including funding sources, operating authorities, type 

of private health insurance subsidized, eligibility, enrollment, covered benefits, premiums, 

cost sharing, expenditures, and cost-effectiveness. The survey also asked respondents about 

any challenges faced in implementing and operating their premium assistance programs, as 

well as for their views on the effect that CHIPRA may have on those challenges. Of the 47 

Medicaid- or CHIP-funded premium assistance programs we identified, we received survey 

responses from officials representing 45 programs in 37 states, although not every official 

responded to every question.7

 We relied on the data as reported by the state officials who 

were identified as the primary contact for the premium assistance program and did not 

independently verify these data or ask CMS to verify them. However, we reviewed all 

responses for reasonableness and internal consistency, and followed up with state officials 

for clarification where necessary. Based on these activities, we determined these data were 

sufficiently reliable for the purpose of our report. 

We conducted our work from June 2009 through January 2010 in accordance with all sections 

of GAO’s Quality Assurance Framework that are relevant to our objectives. This framework 

requires that we plan and perform the engagement to obtain sufficient and appropriate 

evidence to meet our stated objectives and to discuss any limitations in our work. We believe 

that the information and data obtained, and the analysis conducted, provide a reasonable 

basis for any findings and conclusions in this product. 

Background 

Before the enactment of CHIPRA, states had the authority to operate premium assistance 

programs under Medicaid and CHIP. CHIPRA provides states with additional options for 

operating premium assistance programs. 

Premium Assistance Authorities that Preceded CHIPRA

The Medicaid and CHIP statutes authorize states to obtain federal funding for the operation 

of state premium assistance programs. A key authority to operate a Medicaid-funded 

premium assistance program was provided through section 1906 of the Social Security Act 

(SSA),8

 which authorizes states to use Medicaid funds to purchase group health plan 

 

6

In states with more than one Medicaid- or CHIP-funded premium assistance program, officials were 

asked to complete a separate survey for each program. 

7

We did not receive completed surveys from North Carolina or West Virginia and thus were unable to 

include information about these two states’ premium assistance programs. 

8

Section 1906 of the SSA was enacted in the Omnibus Budget Reconciliation Act of 1990 and amended 

in the Balanced Budget Act of 1997. See Pub. L. No. 101-508, title IV, § 4402(a)(2), 104 Stat. 1388-161, as 

amended by Pub. L. No. 105-33, title IV, § 4741(b), 111 Stat. 523. 

3 GAO-10-258R Medicaid and CHIP Premium Assistance Programs
coverage for eligible individuals.9

 Programs operated under section 1906 of the SSA are 

commonly referred to as Health Insurance Premium Payment programs. The authority to 

operate CHIP-funded premium assistance programs was first provided in section 2105(c)(3) 

of the SSA, which permits states to provide coverage to CHIP-eligible children and their 

families by subsidizing premiums for group health plan and nongroup coverage.10 Table 1 

compares requirements for premium assistance programs under these two authorities, both 

of which existed prior to the enactment of CHIPRA. 

 

9

Other, less frequently used authorities through which states can operate Medicaid-funded premium 

assistance programs are provided in sections 1902 and 1905 of the SSA. Section 1902(a)(10)(F) of the 

SSA allows states to use Medicaid funds to pay premiums for COBRA continuation coverage for 

certain low-income individuals who are not currently eligible for Medicaid but who are likely to 

become Medicaid eligible in the future and have high health care costs. COBRA, an acronym for the 

Consolidated Omnibus Budget Reconciliation Act of 1985, included provisions giving employees the 

opportunity to remain in their employer’s group coverage when they would otherwise lose coverage. 

Section 1905(a) of the SSA allows states to use Medicaid funds to subsidize premiums for group or 

nongroup health coverage. In this report, we define nongroup health coverage as coverage purchased 

from the individual market. 

10States with CHIP Medicaid expansion programs can operate CHIP-funded premium assistance 

programs through Medicaid authorities, such as section 1906 of the SSA. States may use one of three 

basic options for structuring their CHIP programs: (1) a Medicaid expansion program, (2) a separate 

child health program, or (3) a combination program that includes both a Medicaid expansion and a 

separate child health program. States operating CHIP Medicaid expansion programs must follow 

Medicaid rules, while states operating separate child health programs follow CHIP rules. Section 

2105(c)(3) of the SSA permits payment to a state for family coverage under a group health plan or 

health insurance coverage. Regulations at 42 C.F.R. § 457.1010 implement the provisions of the statute 

related to family coverage. 42 C.F.R. § 457.10 implements requirements related to premium assistance 

programs in connection with group health plan coverage. For this report, we consider programs 

operated under either authority to be premium assistance programs. 

4 GAO-10-258R Medicaid and CHIP Premium Assistance Programs
Table 1: Requirements under Two Premium Assistance Operating Authorities that Existed Prior to 

CHIPRA 

Category Section 1906 of the SSA Section 2105(c)(3) of the SSA 

Eligibility Individuals eligible for Medicaid or for CHIP 

Medicaid expansion programs.a

Individuals eligible for separate child 

health programs.a

Type of coverage 

subsidized 

Group health coverage, such as employersponsored insurance. Group health coverage, such as 

employer-sponsored insurance, and 

nongroup coverage. 

Enrollees’ 

existing or prior 

insurance 

coverage 

Enrollees’ existing insurance coverage does not 

affect eligibility. 

Enrollees must not have had group 

health coverage for at least 6 months 

prior to enrollment in the premium 

assistance program; reasonable 

exceptions are permitted.b

Mandatory 

enrollment 

Can be mandatory at state option.cCan be mandatory at state option.d

Benefits States must ensure that enrollees have access 

to the full range of Medicaid benefitse

 either 

through the group health coverage or 

wraparound coverage.f

States must ensure that children receive 

benefits meeting requirements for CHIP 

benchmark coverage, benchmarkequivalent coverage,g

 or Secretaryapproved coverage, either through the 

group health coverage or wraparound 

coverage.f

Premiums and 

cost sharingh

Same as for direct coverage in Medicaid.i

Premiums are prohibited for individuals with 

incomes at or below 150 percent of the federal 

poverty level (FPL) and for pregnant women 

and certain children at higher incomes. Cost 

sharing is prohibited for some services and 

groupsj and is otherwise limited to nominal 

amounts for individuals with incomes below 100 

percent of the FPL but is allowed to be as much 

as 20 percent of service costs for individuals 

with higher incomes. Total premiums and cost 

sharing for eligible individuals in the family 

cannot exceed 5 percent of family income. 

Same as for direct coverage in CHIP.i

Specific limits on premiums and cost 

sharing exist for families with incomes at 

or below 150 percent of the FPL. Cost 

sharing is prohibited for preventive care. 

Total premiums and cost sharing for 

eligible individuals in the family cannot 

exceed 5 percent of family income. 

Costeffectiveness States may enroll eligible individuals as long as 

the cost, including premiums and cost sharing 

under the group health plan and any additional 

administrative costs, is likely to be less than the 

cost of an equivalent set of Medicaid services.k

Cost-effectiveness can be measured on an 

individual or aggregate basis. 

States may enroll eligible individuals in 

health coverage as long as the cost is 

not greater than the cost of direct 

coverage.i

 Cost-effectiveness can be 

measured on an individual or aggregate 

basis. 

Covering 

noneligibles 

States may pay premiums to enroll noneligible 

family members in a group health plan if costeffective and needed to obtain coverage for the 

Medicaid-eligible family members. Federal 

matching funds are not available to pay cost 

sharing for noneligibles. 

States can purchase coverage for 

noneligible family members, provided 

the family includes at least one CHIPeligible child. Coverage for the family 

must cost no more than direct coverage 

for the eligible children.i

Employer 

contribution 

No minimum contribution specified. States must identify a minimum 

contribution representative of the 

employer-sponsored market in their 

state and evaluate whether substitution 

of public for private coverage is 

occurring. 

Source: GAO analysis of Medicaid and CHIP statutes and regulations, and interviews with CMS officials. 

a

Individuals eligible for Medicaid include certain mandatory populations, such as low-income pregnant women and children. 

Other populations, including those with higher incomes, can be covered at state option. CHIP was designed to provide health 

care coverage to children in families whose incomes, while low, are above Medicaid’s eligibility requirements. States may use 

one of three basic options for structuring their CHIP programs: (1) a Medicaid expansion program, (2) a separate child health 

program, or (3) a combination program that includes both a Medicaid expansion and a separate child health program. States 

operating CHIP Medicaid expansion programs must follow Medicaid rules, while states operating separate child health 

programs follow CHIP rules. 

5 GAO-10-258R Medicaid and CHIP Premium Assistance Programs
b

See 42 C.F.R. § 457.810 (2009). Requiring enrollees to be without coverage for at least 6 months is intended to discourage 

crowd-out—the substitution of public health insurance for private insurance. Separate child health programs are required to 

monitor the extent to which crowd-out may be occurring among enrollees in direct coverage, and programs with eligibility 

thresholds above 200 percent of the FPL may be required to implement policies to minimize crowd-out. For more information 

on state efforts to monitor crowd-out, see GAO, State Children’s Health Insurance Program: CMS Should Improve Efforts to 

Assess whether SCHIP Is Substituting for Private Insurance, GAO-09-252 (Washington, D.C.: Feb. 20, 2009). 

c

Eligible children cannot be denied direct coverage if their parent fails to enroll them in the group health plan. 

d

States must offer individuals the option, at initial enrollment and at redetermination of eligibility, of enrolling in direct coverage if 

their group health plan does not provide certain enrollee protections specified in the CHIP regulations, including the opportunity 

for external review of delays or denials of health services. 

e

Medicaid requires certain mandatory benefits, such as physician and hospital services, and states can also cover optional 

benefits such as dental services and prescription drugs. 

f

Benefits wraparound coverage refers to states’ direct coverage of any services to which premium assistance enrollees are 

entitled but which are not covered under their private health insurance plan. 

g

A benchmark benefits package is a package substantially equivalent to the benefits provided by the Federal Employee Health 

Benefits Program’s Blue Cross/Blue Shield Standard Option, a health benefits plan offered by the state to its own employees, 

or a plan offered by the HMO with the largest commercial enrollment in the state. A benchmark equivalent package has the 

same actuarial value as one of the benchmark plans. 

h

Premiums are payments required for insurance coverage for a given period of time. Cost sharing is an out-of-pocket payment 

for part of the cost of services used by an enrollee and can include coinsurance, copayments, and deductibles. 

i

Direct coverage refers to the coverage provided to Medicaid or CHIP enrollees who are not in premium assistance. For 

example, in Medicaid, direct coverage includes all mandatory benefits and any optional benefits that the state has chosen to 

provide. 

j

Cost sharing is largely prohibited for children in mandatory coverage groups; for any preventive services for children, 

regardless of income; and for pregnancy-related services. 

k

Cost-effectiveness is defined in section 1906(e)(2) of the SSA and further explained in section 3910 of the State Medicaid 

Manual. 

Under certain circumstances, a state may operate a premium assistance program that does 

not follow the Medicaid or CHIP statutory requirements that usually apply. To do so, states 

must obtain a waiver under section 1115 of the SSA. Section 1115 of the SSA allows the 

Secretary of HHS to waive certain statutory requirements in the case of experimental, pilot, 

or demonstration projects that are likely to promote program objectives.11 According to CMS 

officials, section 1115 waivers have been used to permit states to provide premium assistance 

to populations not otherwise eligible for coverage and to subsidize the cost of nongroup 

health coverage. Additionally, premium assistance programs operated under section 1115 

waivers may not have to comply with all of the benefits, premiums, cost sharing, and costeffectiveness requirements outlined in table 1 above. 

Additional Options for Premium Assistance Available under CHIPRA

When CHIPRA was enacted in February 2009, it created additional options for premium 

assistance in Medicaid and CHIP, including allowing states to subsidize ESI for Medicaid- and 

CHIP-eligible children and their parents if the employer’s contribution is at least 40 percent of 

the total premium cost, enrollment in the program is voluntary, and the ESI meets certain 

criteria.12 CHIPRA requires states that operate premium assistance programs under these 

new options to provide the full range of Medicaid or CHIP benefits through benefits 

wraparound coverage, where states directly cover any services to which premium assistance 

enrollees are entitled but which are not covered under their private health insurance. 

Additionally, CHIPRA specifies limits on the amount of enrollee cost sharing. Premium

 

11Through a waiver under section 1115 of the SSA, the Secretary of HHS could, for example, allow 

states to provide services or cover individuals not normally eligible for Medicaid and CHIP and provide 

federal funds for costs not otherwise eligible for payment. 

12See Pub. L. No. 111-3, § 301, 123 Stat. at 57-63. While CHIPRA provided additional options for states to 

operate premium assistance programs, no state had implemented a program under these new options 

as of November 2009. 

6 GAO-10-258R Medicaid and CHIP Premium Assistance Programs
assistance programs that operate under the new Medicaid option created through CHIPRA do

not have to meet a cost-effectiveness requirement. 

CHIPRA also amended the Employee Retirement Income Security Act (ERISA) of 1974, the 

Internal Revenue Code of 1986, and the Public Health Service Act to make eligibility for 

Medicaid or CHIP a basis for enrollment in a group health plan for which the Medicaid or 

CHIP enrollees are otherwise eligible to enroll. As a result of this change, new Medicaid or 

CHIP enrollees may not be required to wait for an open enrollment period to enroll in a group 

health plan and participate in the state’s premium assistance program because Medicaid or 

CHIP eligibility would be considered a qualifying event. CHIPRA also requires health plan 

administrators to provide information about plan benefit packages when requested by states 

and requires employers to provide written notice to employees about the availability of 

premium assistance if their state operates a program. 

Results In Brief 

Funding Source, Operating Authority, and Type of Insurance Coverage Subsidized

• Based on our survey results from 45 of the 47 premium assistance programs, 30 premium 

assistance programs were funded solely by Medicaid, 6 programs were funded solely by 

CHIP, and 9 programs were funded by both Medicaid and CHIP. 

• According to our survey results, most premium assistance programs operated under the 

authority of section 1906 of the SSA (29), while 16 programs operated under section 1115 

waivers, 1 program operated under section 2105(c)(3) of the SSA, and 9 programs operated 

under other authorities. These other authorities included section 1902(a)(10)(F) of the SSA 

which allows states to use Medicaid funds to pay premiums for COBRA continuation 

coverage for certain low-income individuals and section 1905(a) of the SSA which allows 

states to use Medicaid funds to subsidize private health insurance premiums. In some cases, 

states’ premium assistance programs operated under multiple authorities. 

• All but two premium assistance programs operated statewide. The two exceptions were 

Florida’s program, which operated in five counties, and Colorado’s CHP+ at Work program, 

which operated only in the metropolitan Denver area. 

• Based on our survey results, all 45 of the premium assistance programs subsidized premiums 

for some type of group coverage, with 32 of the programs subsidizing premiums for multiple 

types of group coverage. More specifically, 43 programs subsidized coverage for ESI, 32 

subsidized COBRA coverage, and 17 subsidized other group health coverage. Of the 43 

premium assistance programs that subsidized ESI, 

• 8 required that employers contribute a minimum amount toward the cost of enrollees’ 

premiums, with the required minimum contribution ranging from 25 to 50 percent; 

• 5 limited participation to employers with a certain number of employees, typically fewer 

than 100; and 

• 8 had data on the number of participating employers; among those 8 programs, the 

number of participating employers ranged from less than 30 to nearly 4,800. 

• Twenty-one of the 45 premium assistance programs subsidized nongroup coverage, namely 

policies purchased from the individual market. 

7 GAO-10-258R Medicaid and CHIP Premium Assistance Programs
Enclosure I provides additional information on the funding source, operating authority, and 

type of insurance coverage subsidized for states’ premium assistance programs. 

Eligibility and Enrollment Policies

• Twenty-five of the 37 premium assistance programs that provided eligibility information 

covered only low-income individuals—which the Census Bureau defines as those with family 

incomes at or below 200 percent of the FPL. The remaining 12 programs covered at least 

some individuals with family incomes above 200 percent of the FPL, but only 2 of the 12 

covered any individuals with incomes above 300 percent of the FPL. 

• Most of the 37 programs that provided eligibility information covered children (32 programs), 

parents (29 programs), or pregnant women (27 programs).13 Fewer covered childless adults 

(13 programs) or other groups (12 programs).14

• Thirty-three of the 45 premium assistance programs subsidized premiums for noneligible 

family members under certain circumstances—for example, if the noneligible family member 

had to be enrolled in the health plan for the eligible family member to obtain coverage. 

• At least 8 programs targeted premium assistance to individuals with high health care costs, 

such as pregnant women, premature or low birth weight infants, or individuals with human 

immunodeficiency virus/acquired immunodeficiency syndrome (HIV/AIDS), diabetes, or 

cancer. 

• According to our survey results, fewer than half of the premium assistance programs (20) 

mandated enrollment for any eligible individuals. Programs with mandatory enrollment 

required individuals to enroll in the premium assistance program if they had access to private 

health insurance and met the program’s eligibility requirements; individuals who chose not to 

enroll in premium assistance would not be eligible for direct coverage from the state.15 Of the 

20 programs with mandatory enrollment, 19 required all eligible individuals to enroll, while 

the remaining program required only certain individuals to enroll. 

• Eleven programs, 10 of which were at least partially funded by CHIP, imposed waiting 

periods, requiring individuals to be without group health insurance for some period of time—

typically either 3 or 6 months—before they could enroll in the premium assistance program. 

• All 45 programs collected documentation of individuals’ enrollment in private health 

insurance. Most also reported collecting a description of benefits offered by that insurance 

plan (38 programs), as well as documentation of premiums (35 programs). 

• Reported premium assistance program enrollment—generally as of June 30, 2009—ranged 

from fewer than 10 individuals in 5 programs to more than 10,000 individuals in 4 programs—

including 1 program with more than 30,600 individuals. Over half of the programs (25) had 

fewer than 1,000 enrollees. 

 

13The “parents” coverage group includes legal guardians, and the “pregnant women” coverage group 

includes unborn children. Under CHIP, states may choose to extend eligibility to unborn children and 

provide prenatal care and delivery. See 67 Fed. Reg. 61956 (Oct. 2, 2002). 

14The “other” coverage groups most commonly reported were certain unemployed individuals, aged or 

disabled individuals, or individuals receiving Supplemental Security Income benefits. 

15Certain exceptions may apply. For example, states that operate their premium assistance programs 

under the authority of section 1906 of the SSA cannot deny direct coverage to eligible children if their 

parent fails to enroll them in a group health plan. 

8 GAO-10-258R Medicaid and CHIP Premium Assistance Programs
Enclosure II provides additional information about eligibility and enrollment policies for 

states’ premium assistance programs. 

Benefits, Premiums, and Cost Sharing

• Officials from almost three-quarters of the state premium assistance programs (33) reported 

that the program has minimum requirements that private health insurance benefit packages 

must meet in order to qualify for a state subsidy. The most commonly reported requirements 

were requiring coverage of certain services specified by the state (20 programs)—such as 

inpatient and outpatient hospital and physician services—and meeting state health insurance 

regulations (16 programs). Twelve programs did not have any requirements for the private 

health insurance benefit package. 

• Thirty-three premium assistance programs provided complete benefits wraparound coverage 

to some or all eligible individuals, meaning the state supplemented private insurance benefits 

up to the level individuals would receive under direct coverage.16 Of the remaining 12 

programs, 3 programs provided partial benefits wraparound coverage to some or all eligible 

individuals17 and 9 programs provided no benefits wraparound coverage.18

• Officials from 34 premium assistance programs reported that they did not monitor access to 

care or utilization of services for individuals enrolled in the premium assistance program. Of 

the remaining 11 programs, 7 programs monitored utilization of services, 3 programs 

monitored both utilization of services and access to care, and 1 program did not report 

whether it conducted either type of monitoring. Programs’ monitoring efforts typically 

involved examining enrollees’ private insurance claims, often in the process of determining 

whether their enrollment in premium assistance was cost-effective for the state. 

• According to our survey results, at least 26 programs paid 100 percent of the enrollee’s share 

of the premium. Officials from a few other programs indicated that the program may pay 100 

percent of the enrollee’s share of the premium under certain circumstances. Other programs 

varied in the extent to which they subsidized premiums. For example, some programs paid a 

specified dollar amount and some paid a percentage that was less than 100 percent of the 

enrollee’s share of the premium. Officials from 2 programs did not provide information on the 

way in which the program subsidizes enrollees’ premiums. 

 

16Two programs also provided at least some benefits wraparound coverage to noneligible family 

members. 

17In programs that provide partial benefits wraparound coverage, the state supplements private health 

insurance benefits, but not to the level an individual would receive under direct coverage. For 

example, states may supplement only certain benefits, such as dental care, mental health care, or 

immunizations. 

18The authority under which a premium assistance program operates determines whether or not the 

program has to provide benefits wraparound coverage. For example, programs operating under 

section 1115 waivers may not have to provide benefits wraparound coverage. Of the nine programs 

that provided no benefits wraparound coverage, two had a mandatory enrollment policy for eligible 

individuals. Additionally, three of the nine programs that provided no benefits wraparound coverage 

subsidized premiums for nongroup coverage. 

9 GAO-10-258R Medicaid and CHIP Premium Assistance Programs
• Officials from most programs (34) reported that the programs paid some or all cost sharing 

for at least some eligible individuals; cost sharing refers to out-of-pocket costs other than 

premiums, such as copayments.19 The remaining 11 programs did not pay cost sharing for any 

eligible individuals.20

• At least 5 programs limited the amount of out-of-pocket costs, such as premiums and cost 

sharing, which an individual enrolled in the premium assistance program would have to pay 

in a year. 

Enclosure III provides additional information about benefits, premiums, and cost sharing in 

states’ premium assistance programs. 

Expenditures and Cost-Effectiveness Policies

• Among the 42 premium assistance programs that provided expenditure data, annual 

expenditures for premium assistance totaled at least $222 million.21 Actual expenditures, 

however, were higher, because 32 of the 42 programs did not provide data for all program 

activities. For example, 19 of the 42 programs did not report the amount of expenditures for 

program administration.22 Furthermore, 3 premium assistance programs did not provide any 

data on program expenditures. 

• Thirty-eight programs required premium assistance to be cost-effective, meaning that the cost 

for Medicaid or CHIP to provide premium assistance is likely less than the cost to provide 

direct coverage. Of those 38 programs, 32 assessed cost-effectiveness on an individual or 

family level, while the remaining 6 assessed cost-effectiveness on an aggregate (or 

programwide) level. To calculate cost-effectiveness, 18 of the 38 programs reported using the 

method outlined in the State Medicaid Manual—referred to as the Secretary’s method—and 

20 used another method.23

 

19Of the 34 programs that reported paying at least some cost sharing, 21 reported paying all cost 

sharing for all eligible individuals covered through premium assistance, 12 reported paying some cost 

sharing for all eligible individuals, and 1 reported paying all cost sharing for some eligible individuals 

and no cost sharing for the other eligible individuals. Additionally, 1 program reported paying some 

cost sharing for noneligible family members.

20Of those 11 programs that did not pay cost sharing for any groups covered by premium assistance, 2 

programs were mandatory programs, in that individuals eligible for premium assistance were required 

to enroll. 

21Data were generally for the 12-month period from July 1, 2008, through June 30, 2009, and included 

both the state and federal share. 

22Additionally, 24 of the 36 programs that provided benefits wraparound coverage did not report the 

amount of expenditures in this category. Twenty-six of the 34 programs that paid at least some cost 

sharing did not report the amount of expenditures in this category. 

23Section 3910 of the State Medicaid Manual indicates that an individual’s enrollment in premium 

assistance is cost-effective if the amount paid for premiums, coinsurance, deductibles, other cost 

sharing, as well as administrative costs, is likely to be less than the Medicaid expenditures for an 

equivalent set of services. To determine whether premium assistance is cost-effective, section 3910 

offers a calculation states can use. This calculation—referred to as the Secretary’s method—involves a 

seven-step process that takes into account information on the group health plan, average Medicaid 

costs, Medicaid cost for services included in the group health plan, the group health plan cost for 

included services, an adjustment for coinsurance and deductible amounts, and additional 

administrative costs for processing the group health plan information. States that use another method 

for determining cost-effectiveness must have their methodology approved by CMS. 

10 GAO-10-258R Medicaid and CHIP Premium Assistance Programs
• Officials from 18 programs reported having conducted an analysis to assess whether any cost 

savings were realized as a result of their state’s premium assistance program. Twelve 

programs submitted documentation that showed cost savings relative to direct coverage, but 

we could not calculate average savings due to differences in the types of documentation 

provided. 

Enclosure IV provides additional information about expenditures for and cost-effectiveness 

policies in states’ premium assistance programs. 

Challenges Officials Reported to Program Implementation and Operation, and the Effect of 

CHIPRA

• Program officials who responded to our survey identified several challenges to premium 

assistance program implementation and operation. The two most frequently identified 

challenges were a limited number of individuals with access to private health insurance 

(18 programs), and difficulty identifying individuals with access to private health insurance 

(17 programs). 

• Officials from 13 programs reported that the provisions in CHIPRA would have an effect on 

the challenges they identified to premium assistance program implementation or operation. 

For example, officials from 9 of the 13 programs specifically noted that the CHIPRA 

provision making eligibility for premium assistance a qualifying event for enrollment in a 

group health plan would have an effect on the challenges; officials from some of the 

programs noted that this provision will make it easier to enroll individuals in the premium 

assistance program. 

• Officials from 11 programs reported that they were planning or considering premium 

assistance program changes due to CHIPRA. For example, officials from 5 of these programs 

reported that as a result of CHIPRA the state may expand its existing program—by including 

new populations, such as CHIP-eligible individuals, or expanding benefits, such as adding 

benefits wraparound coverage for dental services. 

Enclosure V provides additional information about challenges states reported in 

implementing and operating their premium assistance programs. 

Agency Comments 

We provided a draft of this report to HHS for comment, which in turn provided us with 

written comments from CMS (see encl. VI). Overall, CMS commended GAO’s data collection 

efforts and noted that the data will provide a useful baseline to inform Congress and other 

stakeholders about Medicaid- and CHIP-funded premium assistance programs. CMS noted 

that while it did due diligence to verify the accuracy of the information we presented in the 

report, the agency was unable to verify all of the data reported by the state officials who 

responded to our Web-based survey. As we explained in the description of our methodology, 

this report presents information provided to us by the state officials identified as primary 

contacts for each premium assistance program; we did not ask CMS to verify states’ 

responses. Finally, in its comments, CMS summarized some of the findings from our draft 

report, including information on state premium assistance program operating authorities and 

the extent to which programs provided benefits wraparound coverage. We have updated 

these data in our final report based upon further clarification we received from state officials. 

CMS also provided technical comments, which we incorporated as appropriate. 

11 GAO-10-258R Medicaid and CHIP Premium Assistance Programs
– – – – – 

We are sending copies of this report to the Administrator of CMS and other interested parties. 

In addition, the report is available at no charge on the GAO Web site at http://www.gao.gov. 

If you or your staff have any questions about this report, please contact me at (202) 512-7114 

or yocomc@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 major contributions 

Carolyn L. Yocom 

to this report are listed in enclosure VII. 

Acting Director, Health Care 

Enclosures – 7 

12 GAO-10-258R Medicaid and CHIP Premium Assistance Programs
Enclosure I 

13 GAO-10-258R Medicaid and CHIP Premium Assistance Programs 

States’ Premium Assistance Programs’ Funding Source, Operating Authority, 

and Type of Insurance Coverage Subsidized 

Table 2: Program Name, Implementation Year, and Source of Federal Funds, by State Premium 

Assistance Program, 2009 

Federal funding 

source 

State Program name 

Implementation 

year Medicaid CHIP 

Alabama Health Insurance Premium Program 1993 •

Alaska Health Insurance Premium Payments 2006 • •

Arizona Employer Sponsored Insurance Program 2008 •

California Health Insurance Premium Payment 1989 •

Colorado-1 CHP+ at Work 2007 •

Colorado-2 Health Insurance Buy-In 1992 •

Florida Medicaid Reform Opt Out Program 2006 •

Georgia Medicaid Health Insurance Premium Payment 

Program 

1994 •

Idaho-1 Children’s Access Card 2004 •

Idaho-2 Access to Health Insurance 2005 •

Illinois Health Insurance Premium Payment Program 1994 •

Iowa Health Insurance Premium Payment Program 1991 •

Kansas Health Insurance Premium Payment System 1991 •

Kentucky Health Insurance Premium Payment Program 1994 •

Louisiana Health Insurance Premium Assistance 

Program 

1991 • •

Maine Private Health Insurance Premium 1992 •

Massachusetts-1 MassHealth Premium Assistance 1997 • •

Massachusetts-2 Medical Security Program 1997 •

Minnesota Cost-effective health insurance reviews for 

Medical Assistance 

1990 •

Missouri Health Insurance Premium Payment Program 1992 • 

Montana Health Insurance Premium Payment 1992 •

Nebraska Health Insurance Premium Payment Program 1994 •

Nevada-1 Check Up Plus 2006 •

Nevada-2 Health Insurance Premium Program 1992 •

New Hampshire Health Insurance Premium Payment Program 1991 • 

New Jersey-1 Payment of Premiums Program 1993 •

New Jersey-2 Premium Support Program 2001 • •

New York Employer Sponsored Health Insurance 

Initiative 

2008 •

North Dakota Cost Effective Employer-Based Group Health 

Plans 

1993 • •

Oklahoma Insure Oklahoma/Oklahoma Employer and 

Employee Partnership for Insurance Coverage 

(O-EPIC) 

2006 •
Enclosure I 

14 GAO-10-258R Medicaid and CHIP Premium Assistance Programs

 

Federal funding 

source 

State Program name 

Implementation 

year Medicaid CHIP 

Oregon-1 Family Health Insurance Assistance Program 

(FHIAP) 

2002 • •

Oregon-2 Health Insurance Premium Payment/Private 

Health Insurance Premium Payment 

1992 •

Pennsylvania Health Insurance Premium Payment Program 1994 •

Rhode Island RIte Share 2001 • •

South Carolina Health Insurance Premium Payment 1994 •

South Dakota Private Health Insurance Premium Payment 2000 •

Texas Health Insurance Premium Payment Program 1994 •

Utah-1 Premium Partnership for Health Insurance 2003 • •

Utah-2 Medicaid Operations Buyout Program 1990 •

Vermont Catamount Health & Employer-sponsored 

premium assistance 

2007 •

Virginia-1 Family Access to Medical Insurance Security 

(FAMIS) Select 

2005 •

Virginia-2 Health Insurance Premium Payment 1993 •

Washington Premium Payment Program 1988 •

Wisconsin BadgerCare Health Insurance Premium 

Program 

2001 • •

Wyoming Health Insurance Premium Payment Program 1993 •

Total 39 15 

Source: GAO Web-based survey administered to states’ premium assistance programs. 

Legend: 

• = Federal funding source used. 

Note: Data were obtained from surveys administered from August through October 2009 to officials in 39 states representing 

47 premium assistance programs funded by Medicaid, the State Children’s Health Insurance Program (CHIP), or both. We 

received responses from officials representing 45 programs in 37 states; officials from 2 states with premium assistance 

programs, North Carolina and West Virginia, did not respond to the survey. 
Enclosure I 

15 GAO-10-258R Medicaid and CHIP Premium Assistance Programs

Table 3: Operating Authority, by State Premium Assistance Program, 2009 

Statea

Section 1906 of the 

SSAb

Section 1115 

waiver 

Section 2105(c)(3) 

of the SSAc

Other 

Alabama •

Alaska •

Arizona •

California •

Colorado-1 •

Colorado-2 • •d

Florida •

Georgia •

Idaho-1 •

Idaho-2 •

Illinois •

Iowa • •e

Kansas •

Kentucky •

Louisiana •

Maine •

Massachusetts-1 • • •

Massachusetts-2 •

Minnesota • •e

Missouri •

Montana •

Nebraska •

Nevada-1 •

Nevada-2 •

New Hampshire •

New Jersey-1 • •e

New Jersey-2 •

New York •

North Dakota • •d,e

Oklahoma •

Oregon-1 •

Oregon-2 •

Pennsylvania •

Rhode Island •

South Carolina • •d

South Dakota •f

Texas •

Utah-1 •

Utah-2 • •e

Vermont •
Enclosure I 

16 GAO-10-258R Medicaid and CHIP Premium Assistance Programs

Statea

Section 1906 of the 

SSAb

Section 1115 

waiver 

Section 2105(c)(3) 

of the SSAc

Other 

Virginia-1 •

Virginia-2 •

Washington • •d,e

Wisconsin •

Wyoming •

Total 29 16 1 9 

Source: GAO Web-based survey administered to states’ premium assistance programs. 

Legend: 

• = Operating authority used. 

Note: Data were obtained from surveys administered from August through October 2009 to officials in 39 states representing 

47 premium assistance programs funded by Medicaid, CHIP, or both. We received responses from officials representing 

45 programs in 37 states; officials from 2 states with premium assistance programs, North Carolina and West Virginia, did not 

respond to the survey. 

a

Some states operated two premium assistance programs. For program names, see table 2. 

b

SSA is an abbreviation for the Social Security Act. 

c

Section 2105(c)(3) of the SSA permits payment to a state for family coverage under a group health plan or health insurance 

coverage. Regulations at 42 C.F.R. § 457.1010 implement the provisions of the statute related to family coverage. 42 C.F.R. 

§ 457.10 implements requirements related to premium assistance programs in connection with group health plan coverage. 

For this report, we consider programs operated under either authority to be premium assistance programs. 

d

These programs also operated under the authority of section 1902(a)(10)(F) of the SSA, which allows states to use Medicaid 

funds to pay premiums for COBRA continuation coverage. COBRA, an acronym for the Consolidated Omnibus Budget 

Reconciliation Act of 1985, allows employees the opportunity to remain in their employer’s group coverage when they would 

otherwise lose coverage. 

e

Officials representing this program also reported that the program operated under the authority of section 1905(a) of the SSA, 

which allows states to use Medicaid funds for the cost of insurance premiums for certain Medicaid-eligible individuals. 

f

According to state officials, this program operated under the authority of section 1903(a)(7) of the SSA, which allows for federal 

funding for the proper and efficient administration of states’ Medicaid programs. 
Enclosure I 

17 GAO-10-258R Medicaid and CHIP Premium Assistance Programs

Table 4: Type of Private Health Insurance Coverage Subsidized, by State Premium Assistance Program, 

2009 

Group health insurance coverage 

Statea

Employersponsored COBRAbOther group 

coverage Nongroup coverage 

Alabama • • • 

Alaska • • 

Arizona • 

California • • • 

Colorado-1 • 

Colorado-2 • • • • 

Florida • • 

Georgia • • • • 

Idaho-1 • • 

Idaho-2 • 

Illinois • • • • 

Iowa • • • 

Kansas • • 

Kentucky • 

Louisiana • • 

Maine • • • 

Massachusetts-1 • • 

Massachusetts-2 • • 

Minnesota • • • • 

Missouri • • • • 

Montana • • • • 

Nebraska • • • • 

Nevada-1 • 

Nevada-2 • 

New Hampshire • • • • 

New Jersey-1 • • • 

New Jersey-2 • 

New York • • 

North Dakota • • • • 

Oklahoma • 

Oregon-1 • • • • 

Oregon-2 • • 

Pennsylvania • • 

Rhode Island • • • 

South Carolina • • • 

South Dakota • • • 

Texas • • 

Utah-1 • 

Utah-2 • • • • 
Enclosure I 

18 GAO-10-258R Medicaid and CHIP Premium Assistance Programs

Group health insurance coverage 

Statea

Employersponsored COBRAbOther group 

coverage Nongroup coverage 

Vermontc

• • 

Virginia-1 • • • • 

Virginia-2 • • 

Washington • • • • 

Wisconsin • 

Wyoming • 

Total 43 32 17 21 

Source: GAO Web-based survey administered to states’ premium assistance programs. 

Legend: 

• = Type of insurance coverage subsidized. 

Note: Data were obtained from surveys administered from August through October 2009 to officials in 39 states representing 

47 premium assistance programs funded by Medicaid, CHIP, or both. We received responses from officials representing 45 

programs in 37 states; officials from 2 states with premium assistance programs, North Carolina and West Virginia, did not 

respond to the survey. 

a

Some states operated two premium assistance programs. For program names, see table 2. 

b

COBRA, an acronym for the Consolidated Omnibus Budget Reconciliation Act of 1985, allows employees the opportunity to 

remain in their employer’s group coverage when they would otherwise lose coverage. 

c

Officials representing this program indicated that the program also subsidized premiums for “Catamount Health,” a statesponsored program in the nongroup market. 
Enclosure I 

19 GAO-10-258R Medicaid and CHIP Premium Assistance Programs

Table 5: State Premium Assistance Programs with Employer Contribution or Size Requirements, 2009 

StateaMinimum employer contribution 

Limits on participation 

based on employer size 

Arizona 30 percent No requirement 

Colorado-1 50 percent No requirement 

Idaho-2 50 percentb2 to 50 employees 

Massachusetts-1 50 percentcNo requirement 

Nevada-1 50 percentb2 to 50 employees 

New Jersey-2 50 percent 2 or more employees 

Oklahoma 25 percentbLess than 100 employees 

South Dakota No requirement d 

Utah-1 50 percentb No requirement 

Source: GAO Web-based survey administered to states’ premium assistance programs. 

Note: Data were obtained from surveys administered from August through October 2009 to officials in 39 states representing 

47 premium assistance programs funded by Medicaid, CHIP, or both. We received responses from officials representing 45 

programs in 37 states; officials from 2 states with premium assistance programs, North Carolina and West Virginia, did not 

respond to the survey. 

a

Some states operated two premium assistance programs. For program names, see table 2. 

b

The survey response indicated that the minimum employer contribution applied to the premium for the employee, while other 

responses did not make this distinction. 

c

The employer contribution requirement pertained only to certain groups covered by Massachusetts’ premium assistance 

program, specifically children and childless adults. 

d

Officials from this program indicated that the program had a requirement on employer size, but did not indicate the limit on the 

size of employers. 
Enclosure I 

20 GAO-10-258R Medicaid and CHIP Premium Assistance Programs 

Table 6: State Premium Assistance Programs with Data on the Number of Employers Participating, 

June 30, 2009 

Employer size 

Statea

Fewer than 

50 employees

50 to 199 

employees

200 or more 

employees Total employers

Colorado-1 — — 1 1

Florida 1 — — —

Idaho-2 121 NA NA 121

Nevada-1 27 NA NA 27

Oklahoma 4,529 223 NA 4,752

Texas b b b 3,500c

Washington b b b 782d

Wisconsin b b b 172e

Source: GAO Web-based survey administered to states’ premium assistance programs. 

Legend: 

— = Response not provided. 

NA = Not applicable; the program does not allow participation by employers of this size. 

Note: Data were obtained from surveys administered from August through October 2009 to officials in 39 states representing 

47 premium assistance programs funded by Medicaid, CHIP, or both. We received responses from officials representing 45 

programs in 37 states; officials from 2 states with premium assistance programs, North Carolina and West Virginia, did not 

respond to the survey. 

a

Some states operated two premium assistance programs. For program names, see table 2. 

b

Officials with these programs reported that data by employer size were not available. 

c

Program officials reported the total number of employers as of August 24, 2009. 

d

Program officials reported the total number of employers as of June 26, 2009. 

e

Program officials reported the total number of employers as of June 30, 2008.
Enclosure II 

21 GAO-10-258R Medicaid and CHIP Premium Assistance Programs 

States’ Premium Assistance Programs’ Policies Regarding Eligibility 

and Enrollment 

Table 7: Income Eligibility Standards as a Percentage of the Federal Poverty Level (FPL) and State Subsidy of 

Premiums for Noneligible Family Members, by State Premium Assistance Program, June 30, 2009 

Children 

Statea

Under 

age 1 

year 

Ages 1 

through 

5 years 

Ages 6 

through 

18 years

Pregnant 

women/

unborn 

childrenb

Parents/

legal

guardians

Childless 

adults

Other 

individualsc

Subsidize 

premiums for 

noneligible 

family 

membersd

Alabama 0-133 0-133 0-100 0-133 0-11 Yes 

Alaska 150-185 150-185 150-185 150-185 150-185 150-185 100-250 Yes 

Arizona 140-200 133-200 100-200 Yes 

California — — — — — — — No 

Colorado-1 134-205 134-205 100-205 134-205 Yes 

Colorado-2 0-133 0-133 0-100 0-133 0-60 Yes 

Florida — — — — — — — Yes 

Georgia — — — — — — — Yes 

Idaho-1 133-185 133-185 100-185 No 

Idaho-2 133-185 25-185 0-185 No 

Illinois 0-200 0-133 0-133 0-200 0-133 0-100 Yes 

Iowa 0-200 0-133 0-133 0-200 0-133 0-133 0-250 Yes 

Kansas 100-150 100-149 100-132 Yes 

Kentucky — — — — — — — Yes 

Louisiana 0-250 0-250 0-250 0-200 0-250 Yes 

Maine 0-185 0-150 0-150 0-200 0-200 0-100 Yes 

Massachusetts-1 0-300 0-300 0-300 0-200 0-133 0-200 No 

Massachusetts-2 0-400 Yes 

Minnesota 0-275 0-150 0-150 0-275 0-100 0-100 Yes 

Missouri 0-299 0-299 0-299 0-185 — 0-85 Yes 

Montana 0-133 0-133 0-100 0-150 0-40 0-58 Yes 

Nebraska — — — — — — — No 

Nevada-1 133-200 133-200 100-200 100-200 100-200 No 

Nevada-2 0-133 0-133 0-100 0-185 0-130 133-185 Yes 

New Hampshire 0-185 0-185 0-185 133-185 Yes 

New Jersey-1 — — — — — — — Yes 

New Jersey-2 0-350 0-350 0-350 0-200 No 

New York 0-150 0-100 0-150 Yes 

North Dakota 0-133 0-133 0-100 0-133 0-83 0-225 Yes 

Oklahoma 0-200 0-200 0-200 No 

Oregon-1 0-185 0-185 0-185 0-185 0-185 0-185 No 

Oregon-2 0-185 0-133 0-100 0-185 0-41 Yes 

Pennsylvania — — — — — — — Yes 

Rhode Island 0-250 0-250 0-250 0-250 0-185 Yes 
Enclosure II 

22 GAO-10-258R Medicaid and CHIP Premium Assistance Programs

Children 

Statea

Under 

age 1 

year 

Ages 1 

through 

5 years 

Ages 6 

through 

18 years

Pregnant 

women/

unborn 

childrenb

Parents/

legal

guardians

Childless 

adults

Other 

individualsc

Subsidize 

premiums for 

noneligible 

family 

membersd

South Carolina — — — — — — — Yes 

South Dakota 0-140 0-140 0-140 0-133 0-52 No 

Texas 0-185 0-133 0-100 0-185 0-13 Yes 

Utah-1 133-200 133-200 0-200 0-150 0-150 No 

Utah-2 0-133 0-133 0-100 0-133 0-42 0-150 0-185 Yes 

Vermont 0-200 0-200 No 

Virginia-1 134-200 134-200 134-200 Yes 

Virginia-2 0-133 0-133 0-133 0-133 0-30 Yes 

Washington 0-200 0-200 0-200 0-185 0-79 0-100 Yes 

Wisconsin 0-250 0-250 0-250 0-300 0-200 0-200 Yes 

Wyoming 0-133 0-133 0-100 0-133 0-36 Yes 

Source: GAO Web-based survey administered to states’ premium assistance programs. 

Legend: 

— = Response not provided. 

Blank = Population not covered. 

Notes: Data were obtained from surveys administered from August through October 2009 to officials in 39 states representing 47 

premium assistance programs funded by Medicaid, the State Children’s Health Insurance Program (CHIP), or both. We received 

responses from officials representing 45 programs in 37 states; officials from 2 states with premium assistance programs, North Carolina 

and West Virginia, did not respond to the survey. 

The FPL is updated annually to reflect changes in the cost of living and varies according to family size. 

a

Some states operated two premium assistance programs. For program names, see table 2. 

b

Under CHIP, states may choose to extend eligibility to unborn children and provide prenatal care and delivery. See 67 Fed. Reg. 61956 

(Oct. 2, 2002). 

c

Individuals commonly included in this group were certain unemployed individuals, aged or disabled individuals, or individuals receiving 

Supplemental Security Income benefits. 

d

Programs may subsidize premiums (provide incidental coverage) for noneligible family members under certain circumstances—for 

example, if the noneligible family member must be enrolled in the health plan for the eligible family member to obtain coverage. 
Enclosure II 

23 GAO-10-258R Medicaid and CHIP Premium Assistance Programs 

Figure 1: Number of State Premium Assistance Programs that Set Maximum Family Income Eligibility 

Thresholds within Selected Ranges, Expressed as Percentages of the FPL, by Coverage Group, 

June 30, 2009 

Source: GAO Web-based survey administered to states’ premium assistance programs.

Maximum 

threshold 

at or below 

100 percent 

of the FPL

Maximum 

threshold 

between 

101 and 200

percent of 

the FPL

Maximum

threshold 

between 

201 and 300

percent of 

the FPL

Maximum 

threshold 

between 

301 and 400

percent of 

the FPL

Program

Parents/

legal

guardians

1

16

12

Other 

individualsb

1

3

4

4

Children 

under 

age 1

1

7

24

Children ages

1 through 5 

years

1

6

25

Children ages

6 through 18

years

1

6

16

9

Pregnant 

women/unborn 

childrena

4

23

Childless

adults

10

3

Notes: Data were obtained from surveys administered from August through October 2009 to officials in 39 states representing 

47 premium assistance programs funded by Medicaid, CHIP, or both. We received responses from officials representing 45 

programs in 37 states; officials from 2 states with premium assistance programs, North Carolina and West Virginia, did not 

respond to the survey. Officials from 8 premium assistance programs did not provide information on income eligibility 

thresholds. 

The FPL is updated annually to reflect changes in the cost of living and varies according to family size. 

a

Under CHIP, states may choose to extend eligibility to unborn children and provide prenatal care and delivery. See 67 Fed. 

Reg. 61956 (Oct. 2, 2002). 

b

Individuals commonly included in this group were certain unemployed individuals, aged or disabled individuals, or individuals 

receiving Supplemental Security Income benefits. 
Enclosure II 

24 GAO-10-258R Medicaid and CHIP Premium Assistance Programs

Table 8: Enrollment Policies, by State Premium Assistance Program, 2009 

Mandatory enrollmentb

Statea

Yes, for all 

individuals 

Yes, for some 

individuals 

No, enrollment is 

voluntary for all 

individuals 

Months individuals are 

required to be without 

group health insurance 

before enrollment in 

premium assistance is 

permittedc

Alabama • d 

Alaska • d 

Arizona • 3

California • d 

Colorado-1 • d 

Colorado-2 • d 

Florida • d 

Georgia • d 

Idaho-1 • 6

Idaho-2 • 6

Illinois • d 

Iowa • d 

Kansas • d 

Kentucky • d 

Louisiana • d 

Maine • d 

Massachusetts-1 • 6e

Massachusetts-2 • d 

Minnesota • d 

Missouri • d 

Montana • d 

Nebraska • d 

Nevada-1 • 6

Nevada-2 • d 

New Hampshire • d 

New Jersey-1 • d 

New Jersey-2 •f 3

New York • d 

North Dakota • d 

Oklahoma • d 

Oregon-1 • 6

Oregon-2 • d 

Pennsylvania • d 

Rhode Island • d 

South Carolina • d 

South Dakota • d 

Texas • d 
Enclosure II 

25 GAO-10-258R Medicaid and CHIP Premium Assistance Programs

 Mandatory enrollmentb 

Statea

Yes, for all 

individuals 

Yes, for some 

individuals 

No, enrollment is 

voluntary for all 

individuals 

Months individuals are 

required to be without 

group health insurance 

before enrollment in 

premium assistance is 

permittedc

Utah-1 • 3

Utah-2 • d 

Vermont • 12

Virginia-1 • 4

Virginia-2 • d 

Washington • d 

Wisconsin • 3g

Wyoming • —

Total 19 1 25 

Source: GAO Web-based survey administered to states’ premium assistance programs. 

Legend: 

• = Enrollment policy used. 

— = Response not provided. 

Note: Data were obtained from surveys administered from August through October 2009 to officials in 39 states representing 

47 premium assistance programs funded by Medicaid, CHIP, or both. We received responses from officials representing 45 

programs in 37 states; officials from 2 states with premium assistance programs, North Carolina and West Virginia, did not 

respond to the survey. 

a

Some states operated two premium assistance programs. For program names, see table 2. 

b

Enrollment was considered to be mandatory if individuals who met the program’s eligibility requirements—which may have 

included having access to cost-effective private health insurance—were required to enroll in the premium assistance program 

in order to get Medicaid or CHIP benefits. Although a premium assistance program may have mandatory enrollment for all 

eligible individuals, under section 1906 of the Social Security Act (SSA), eligible children cannot be denied direct coverage if 

their parent fails to enroll them in a group health plan. 

c

Programs may permit reasonable exceptions. 

d

This program does not require individuals to be uninsured for any period of time before enrolling in premium assistance. 

e

Officials from this program reported that only children receiving premium assistance through CHIP were required to be 

uninsured for the 6 months prior to enrollment in premium assistance. 

f

Officials from this program reported that the program did not have mandatory enrollment for individuals with incomes less than 

134 percent of the FPL. 

g

Officials from this program reported that childless adults were required to be uninsured for the 12 months prior to enrollment in 

premium assistance. 
Enclosure II 

26 GAO-10-258R Medicaid and CHIP Premium Assistance Programs

Table 9: Number of Individuals and Families Covered, by State Premium Assistance Program, June 30, 

2009 

Statea

Number of 

Medicaid- or CHIPeligible individualsb

Number of 

noneligible family 

membersb

Total number of 

individualsb

Number of 

familiesc

Alabama 6 0 6 0

Alaska 16 29 71d14

Arizona 3 — 3 1

California 1,033 e f e 

Colorado-1 103 61 164 42

Colorado-2 432 e 432 403

Florida 21 e f 13

Georgia 937 e f 882

Idaho-1 133 0 133 0

Idaho-2 347 0 347 e 

Illinois 145 e f 67

Iowa 3,019 4,319 8,086d 1,949

Kansas e e e e 

Kentucky 6 — f 6

Louisiana 2,621 831 3,452 743

Maine 869 172 1,041 314

Massachusetts-1 30,653 0 30,653 18,397

Massachusetts-2 3,500 2,034 5,534 3,500

Minnesota 20,276 — 20,276 6,569

Missouri 1,549 1,297 2,846 781

Montana 747 e 747 267

Nebraska 320 750 1,070 285

Nevada-1 4 0 4 4

Nevada-2 48 110 158 e 

New Hampshire 127 98 229d94

New Jersey-1 73 58 131 64

New Jersey-2 300 0 300 95

New York 1,380 — f 255

North Dakota 54 24 78 e 

Oklahoma 14,217 e 14,217 e 

Oregon-1 6,692 0 6,692 3,506

Oregon-2 658 205 863 e 

Pennsylvania 26,693 e f 12,462

Rhode Island 8,493 e 8,493 e 

South Carolina 215 40 255 211

South Dakota 70 e f e 

Texas 7,822 849 8,671 1,351

Utah-1 728 0 728 331

Utah-2 200 5 205 200
Enclosure II 

27 GAO-10-258R Medicaid and CHIP Premium Assistance Programs

Statea

Number of 

Medicaid- or CHIPeligible individualsb

Number of 

noneligible family 

membersb

Total number of 

individualsb

Number of 

familiesc

Vermont 6,989 0 6,989 0

Virginia-1 449 342 791 147

Virginia-2 2,199 e f 1,489

Washington e e 6,041 3,393

Wisconsin 1,110 e f 304

Wyoming 8 — 8 5

Source: GAO Web-based survey administered to states’ premium assistance programs. 

Legend: 

— = Response not provided. 

Note: Data were obtained from surveys administered from August through October 2009 to officials in 39 states representing 

47 premium assistance programs funded by Medicaid, CHIP, or both. We received responses from officials representing 

45 programs in 37 states; officials from 2 states with premium assistance programs, North Carolina and West Virginia, did not 

respond to the survey. 

a

Some states operated two premium assistance programs. For program names, see table 2. 

b

The data on the number of individuals enrolled in states’ premium assistance programs were generally as of June 30, 

2009. However, the following programs provided data as of a different date: Arizona – April 1, 2009; Georgia – July 31, 2009; 

Maine – August 19, 2009; Minnesota – January 1, 2009; Nevada-2 – August 14, 2009; New Hampshire – July 17, 2009; Texas 

– August 24, 2009; Utah-1 – August 1, 2009; Washington – June 26, 2009; and Wisconsin – June 30, 2008. 

c

The data on the number of families enrolled in states’ premium assistance programs were generally as of June 30, 2009. 

However, the following programs provided data as of a different date: Alaska – July 31, 2009; Arizona – April 1, 2009; Georgia 

– July 31, 2009; Minnesota – January 1, 2009; New Hampshire – July 17, 2009; Texas – August 24, 2009; Utah-1 – August 1, 

2009; Virginia-1 – July 1, 2009; Washington – June 26, 2009; and Wisconsin – June 30, 2008. 

d

We have reported the data as they were reported to us in states’ survey responses even though the data on the number of 

individuals and noneligible family members enrolled in these states’ premium assistance programs did not equal the data 

provided on the total number of individuals enrolled in the programs. 

e

According to program officials, data on enrollment were not available for the specified category. 

f

These programs provided data on the number of eligible individuals enrolled in premium assistance, but either indicated that 

data were not available on the total number of individuals enrolled in premium assistance programs or did not provide data on 

the total number of individuals enrolled in premium assistance programs. 
Enclosure III 

28 GAO-10-258R Medicaid and CHIP Premium Assistance Programs 

States’ Premium Assistance Programs’ Benefits, Premiums, 

and Cost Sharing 

Table 10: Minimum Requirements Programs Have for Private Health Insurance Benefit Packages to 

Qualify for a State Subsidy, by State Premium Assistance Program, 2009 

Statea

No requirement 

Must cover 

certain servicesb

Must meet state 

insurance regulations 

Must meet other 

requirements 

Alabama •c

Alaska • 

Arizona • 

California •d

Colorado-1 • 

Colorado-2 • 

Florida • 

Georgia • 

Idaho-1 • • 

Idaho-2 • • 

Illinois • 

Iowa • 

Kansas • 

Kentucky • 

Louisiana • 

Maine • 

Massachusetts-1 • • •e

Massachusetts-2 • 

Minnesota • 

Missouri • 

Montana • 

Nebraska • 

Nevada-1 • 

Nevada-2 • 

New Hampshire • 

New Jersey-1 •f

New Jersey-2 •e

New York • 

North Dakota • 

Oklahoma • • • 

Oregon-1 • • •g

Oregon-2 • 

Pennsylvania • 

Rhode Island • •h

South Carolina • 

South Dakota • 

Texas • •i

Utah-1 • •i
Enclosure III 

29 GAO-10-258R Medicaid and CHIP Premium Assistance Programs

Statea No requirement 

Must cover 

certain servicesb

Must meet state 

insurance regulations 

Must meet other 

requirements 

Utah-2 • •h

Vermont • • •j

Virginia-1 • 

Virginia-2 • 

Washington • 

Wisconsin • • 

Wyoming • 

Total 12 20 16 12 

Source: GAO Web-based survey administered to states’ premium assistance programs. 

Legend: 

• = Requirement. 

Note: Data were obtained from surveys administered from August through October 2009 to officials in 39 states representing 

47 premium assistance programs funded by Medicaid, the State Children’s Health Insurance Program (CHIP), or both. We 

received responses from officials representing 45 programs in 37 states; officials from 2 states with premium assistance 

programs, North Carolina and West Virginia, did not respond to the survey. 

a

Some states operated two premium assistance programs. For program names, see table 2. 

b

See table 11 for a list of services required. 

c

In order to qualify for a state subsidy, the private insurance benefit package was required to cover the services needed to treat 

the premium assistance program applicant’s high-cost condition. 

d

In order to qualify for a state subsidy, the private insurance benefit package was required to cover the premium assistance 

program applicant’s high-cost medical condition and be a comprehensive health coverage policy. 

e

In order to qualify for a state subsidy, the private insurance benefit package was required to meet one of the CHIP 

benchmarks for benefit packages. 

f

At a minimum, the plan was required to cover the services most utilized by a client. 

g

In order to qualify for a state subsidy, the private insurance benefit package was required to be actuarially equivalent to 

federally mandated Medicaid benefits. 

h

In order to qualify for a state subsidy, the private insurance benefit package was required to be actuarially equivalent to the

benefit package eligible individuals would receive under direct coverage. 

i

In order to qualify for a state subsidy, the private insurance benefit package was required to offer a lifetime maximum benefit at 

or above a certain amount. 

j

In order to qualify for a state subsidy, the private insurance benefit package must have a deductible of $500 or less. 
Enclosure III 

30 GAO-10-258R Medicaid and CHIP Premium Assistance Programs 

Table 11: Services Programs Require Private Health Insurance Benefit Packages to Cover in Order to Qualify for a 

State Subsidy, by State Premium Assistance Program, 2009 

Statea

Inpatient 

hospital 

Physician 

services 

Outpatient 

hospital 

Pharmacy 

or 

prescription 

drugs 

Mental 

health

Well-baby 

and wellchild care Immunizations

Other 

services 

Arizona • • • • • • • 

Colorado-1 • • • • 

Colorado-2 • • • • • 

Georgia • • • • • 

Idaho-1 • • • 

Idaho-2 • • • • • • • 

Iowa • • • 

Kansas • • • • 

Louisiana • • • • 

Massachusetts-1 • • • • • • • 

Nevada-2 • • • • • • • • 

New York • • • • • • • 

Oklahoma • • • • • • 

Oregon-1 • • • • • • • • 

Texas • • • • • 

Utah-1 • • • • • 

Utah-2 • • • • • • • 

Vermont • • • • • • 

Virginia-2 • • • • • 

Wisconsin • • • 

Total 20 20 18 15 10 9 9 8 

Source: GAO Web-based survey administered to states’ premium assistance programs. 

Legend: 

• = Service required. 

Notes: Data were obtained from surveys administered from August through October 2009 to officials in 39 states representing 47 premium 

assistance programs funded by Medicaid, CHIP, or both. We received responses from officials representing 45 programs in 37 states; officials 

from 2 states with premium assistance programs, North Carolina and West Virginia, did not respond to the survey. 

Table includes only state premium assistance programs which reported a requirement that the private health insurance benefit package cover 

certain services specified by the program to qualify for the state subsidy (see table 10). States may cover directly any services to which 

eligible individuals are entitled that are not covered by the private health insurance plan; see table 12 for more information.

a

Some states operated two premium assistance programs. For program names, see table 2. 
Enclosure III 

31 GAO-10-258R Medicaid and CHIP Premium Assistance Programs 

Table 12: Level of Benefits Wraparound Provided to Eligible Individuals, by State Premium Assistance 

Program, 2009 

Statea

Complete benefits wraparound 

providedb

Partial benefits wraparound 

providedc

Alabama • {

Alaska • {

Arizona { {

California • {

Colorado-1 { {

Colorado-2 • {

Florida { {

Georgia • {

Idaho-1 { • 

Idaho-2 { {

Illinois • {

Iowa • {

Kansas • {

Kentucky • {

Louisiana • {

Mained

• {

Massachusetts-1  {

Massachusetts-2 { {

Minnesota • {

Missouri • {

Montana • {

Nebraska • {

Nevada-1 { {

Nevada-2 • {

New Hampshire • {

New Jersey-1 • {

New Jersey-2 • {

New York • {

North Dakotad

• {

Oklahoma { {

Oregon-1 { {

Oregon-2 • {

Pennsylvania • {

Rhode Island • {

South Carolina • {

South Dakota { {

Texas • {

Utah-1 { 

Utah-2 • {

Vermonte

 
Enclosure III 

32 GAO-10-258R Medicaid and CHIP Premium Assistance Programs

Statea

Complete benefits wraparound 

providedb

Partial benefits wraparound 

providedc

Virginia-1 { • 

Virginia-2 • {

Washington • {

Wisconsin • {

Wyoming • {

Source: GAO Web-based survey administered to states’ premium assistance programs. 

Legend: 

• = All individuals. 

 = Some individuals. 

{ = No individuals. 

Note: Data were obtained from surveys administered from August through October 2009 to officials in 39 states representing 

47 premium assistance programs funded by Medicaid, CHIP, or both. We received responses from officials representing 45 

programs in 37 states; officials from 2 states with premium assistance programs, North Carolina and West Virginia, did not 

respond to the survey. 

a

Some states operated two premium assistance programs. For program names, see table 2. 

b

States that offer complete benefits wraparound coverage supplement private insurance benefits up to the level an individual 

would receive under direct coverage. 

c

States that offer partial benefits wraparound coverage supplement private insurance benefits, but not to the level an individual 

would receive under direct coverage. For example, states may supplement only certain benefits, such as dental care, mental 

health care, or immunizations. 

d

State also provided benefits wraparound coverage to noneligible family members. 

e

Individuals eligible for the state’s Vermont Health Access Program and receiving subsidized employer-sponsored insurance 

(ESI) through the premium assistance program received complete benefits wraparound coverage. Individuals receiving 

subsidized ESI but not eligible for the Vermont Health Access Program receive benefits wraparound coverage for prevention 

and maintenance of specified chronic conditions. 
Enclosure III 

33 GAO-10-258R Medicaid and CHIP Premium Assistance Programs

Table 13: Monitoring of Enrollees’ Access to Care and Utilization of Services, by State Premium 

Assistance Program, 2009 

Statea

State monitors access to care State monitors utilization of services 

Alabama 

Alaska 

Arizona 

California 

Colorado-1 

Colorado-2 

Florida — — 

Georgia •

Idaho-1 

Idaho-2 

Illinois •

Iowa 

Kansas • •

Kentucky 

Louisiana 

Maine •

Massachusetts-1 

Massachusetts-2 

Minnesota 

Missouri 

Montana 

Nebraska 

Nevada-1 

Nevada-2 

New Hampshire •

New Jersey-1 

New Jersey-2 

New York 

North Dakota 

Oklahoma 

Oregon-1 

Oregon-2 

Pennsylvania 

Rhode Island • •

South Carolina •

South Dakota 

Texas • •

Utah-1 

Utah-2 •

Vermont 
Enclosure III 

34 GAO-10-258R Medicaid and CHIP Premium Assistance Programs

StateaState monitors access to care State monitors utilization of services 

Virginia-1 

Virginia-2 

Washington 

Wisconsin •

Wyoming 

Total 3 10 

Source: GAO Web-based survey administered to states’ premium assistance programs. 

Legend: 

• = State monitors. 

— = Response not provided. 

Note: Data were obtained from surveys administered from August through October 2009 to officials in 39 states representing 

47 premium assistance programs funded by Medicaid, CHIP, or both. We received responses from officials representing 

45 programs in 37 states; officials from 2 states with premium assistance programs, North Carolina and West Virginia, did not 

respond to the survey. 

a

Some states operated two premium assistance programs. For program names, see table 2. 
Enclosure III 

35 GAO-10-258R Medicaid and CHIP Premium Assistance Programs

Table 14: Description of Monthly Premium Subsidy Provided, by State Premium Assistance Program, 

2009 

Statea

Premium subsidy 

Alabama 100 percent of enrollee’s share of premium 

Alaska 100 percent of enrollee’s share of premium 

Arizona Up to $100 per eligible child 

California 100 percent of enrollee’s share of premium 

Colorado-1 Up to $100 per eligible enrollee 

Colorado-2 Portion of premium that covers eligible enrollee (amount policyholder would save if 

eligible enrollee were not covered) 

Florida Pays up to amount state would pay if individual were in a Medicaid Reform Plan which 

varies between individualsb

Georgia 100 percent of policyholder’s share of premium 

Idaho-1 Up to $100 per enrollee with $300 family cap 

Idaho-2 Up to $100 per member 

Illinois 100 percent of enrollee’s share of premium 

Iowa — 

Kansas 100 percent of enrollee’s and policyholder’s share of premium 

Kentucky 100 percent of enrollee’s share of premium 

Louisiana 100 percent of enrollee’s share of premium, up to $200 

Maine 100 percent of enrollee’s share of premium 

Massachusetts-1 Portion of enrollee’s premium 

Massachusetts-2 80 percent of enrollee’s share of premium, up to $450 per individual or $1,110 per 

family 

Minnesota 100 percent of enrollee’s share of premium 

Missouri 100 percent of policyholder’s share of premium 

Montana 100 percent of enrollee’s share of the premium 

Nebraska 100 percent of enrollee’s share of premium 

Nevada-1 50 percent of employee’s coverage cost, up to $100 per enrollee 

Nevada-2 100 percent of enrollee’s share of premium 

New Hampshire 100 percent of enrollee’s share of premium 

New Jersey-1 100 percent of enrollee’s share of premium 

New Jersey-2 100 percent of employee’s share of premium 

New York 100 percent of employee’s share of premium 

North Dakota • 100 percent of individual/family’s share of premium 

• If an individual has to spend down assets to qualify for Medicaid, then the premium 

subsidy is reduced by that amount 

Oklahoma • At least 60 percent of the cost of covering the employee and 

85 percent of the cost of covering the spouse 

• Employee’s premium contributions are limited to 3 percent of gross income 

Oregon-1 50 to 95 percent of eligible family member’s premium 

Oregon-2 100 percent of enrollee’s share of premium 

Pennsylvania — 

Rhode Island 100 percent of enrollee’s share of premium 
Enclosure III 

36 GAO-10-258R Medicaid and CHIP Premium Assistance Programs

Statea Premium subsidy 

South Carolina • 100 percent of enrollee’s share of premium 

• If necessary to cover enrollee, program will pay the policyholder’s share of premium 

South Dakota 100 percent of enrollee’s share of premium 

Texas 100 percent of policyholder’s share of premium 

Utah-1 • Up to $150 for covered adults 

• $120 for children whose insurance covers dental services and $100 for children 

whose insurance does not cover dental services 

Utah-2 Up to 100 percent of enrollee’s share of premiumc

Vermont Percentage of enrollee’s share of premium based on enrollee’s income 

Virginia-1 Up to $100 per month towards enrollee’s share of premium 

Virginia-2 The lesser of the cost-effective rate for each Medicaid-eligible individual or the 

employee’s share of premiumd

Washington 100 percent of enrollee’s share of premium 

Wisconsin 100 percent of enrollee’s share of premium 

Wyoming 100 percent of enrollee’s share of premium 

Source: GAO Web-based survey administered to states’ premium assistance programs. 

Legend: 

— = Response not provided. 

Note: Data were obtained from surveys administered from August through October 2009 to officials in 39 states representing 

47 premium assistance programs funded by Medicaid, CHIP, or both. We received responses from officials representing 45 

programs in 37 states; officials from 2 states with premium assistance programs, North Carolina and West Virginia, did not 

respond to the survey. 

a

Some states operated two premium assistance programs. For program names, see table 2. 

b

A Medicaid Reform Plan is a managed care health plan—chosen by Medicaid-eligible individuals—which provides them with 

health coverage. 

c

Officials from this premium assistance program indicated that, depending on the cost-effectiveness calculation, the state’s 

premium subsidy may be negotiated with the enrollee to be an amount less than 100 percent of the enrollee’s share of the 

premium. 

d

Officials from this premium assistance program indicated that the cost-effective rate was based on several factors including 

age, gender, and region of the state where the eligible individual lived. 
Enclosure III 

37 GAO-10-258R Medicaid and CHIP Premium Assistance Programs

Table 15: Extent to Which the State Paid for Cost Sharing Expenses (Excluding Premiums), by Coverage 

Group and State Premium Assistance Program, 2009 

Coverage groups 

StateaChildren 

Pregnant women/ 

unborn children Parents Childless adults Other individuals 

Alabamab

   NA c

Alaska • • • • • 

Arizona { { { { {

Californiad

    

Colorado-1 { { NA NA NA 

Colorado-2 • • • • • 

Florida { { { { — 

Georgia • • • • — 

Idaho-1 { NA NA NA NA 

Idaho-2 NA { { { NA 

Illinoisb

   { 

Iowa • • • • — 

Kansas • • • • •

Kentucky • • • • — 

Louisiana • • • NA NA 

Maine • • • • {

Massachusetts-1 • • • { {

Massachusetts-2 NA NA NA NA {

Minnesota • • • NA •e

Missourif

   — g

Montana • • • • — 

Nebraska     NA 

Nevada-1 { NA { NA {

Nevada-2 • • • • — 

New Hampshireb

  NA NA h

New Jersey-1f

 NA   — 

New Jersey-2 • NA • NA — 

New York NA • • • — 

North Dakota • • • NA •i

OklahomajNA    — 

Oregon-1 { { { { NA 

Oregon-2f

   NA — 

Pennsylvania • • • • • 

Rhode Island • • • NA — 

South Carolina     — 

South Dakota { { { { {

Texas • • • NA NA 

Utah-1 { NA { { NA 
Enclosure III 

38 GAO-10-258R Medicaid and CHIP Premium Assistance Programs

 Coverage groups 

Statea Children 

Pregnant women/ 

unborn children Parents Childless adults Other individuals 

Utah-2     — 

Vermont NA NA k k — 

Virginia-1 { NA NA NA NA 

Virginia-2 • • • NA NA 

Washington • • • • — 

Wisconsin • • • • NA 

Wyoming • • • NA NA 

Source: GAO Web-based survey administered to states’ premium assistance programs. 

Legend: 

• = State pays all cost sharing for the coverage group.

 = State pays some cost sharing for the coverage group.

{ = State pays no cost sharing for the coverage group.

NA = Not applicable; the coverage group is not eligible for the premium assistance program. 

— = Response not provided. 

Note: Data were obtained from surveys administered from August through October 2009 to officials in 39 states representing 

47 premium assistance programs funded by Medicaid, CHIP, or both. We received responses from officials representing 45 

programs in 37 states; officials from 2 states with premium assistance programs, North Carolina and West Virginia, did not 

respond to the survey. 

a

Some states operated two premium assistance programs. For program names, see table 2. 

b

Officials representing these programs indicated that the state paid cost sharing up to the Medicaid allowed payment for a 

particular service if the enrollee received that service from a Medicaid participating provider. The officials noted that if the 

enrollee sees a provider that does not participate in Medicaid, the state did not pay cost sharing. 

c

Officials representing this program indicated that the state paid some cost sharing for individuals eligible for the Supplemental 

Security Income program. 

d

Officials representing this program indicated that the state paid cost sharing up to the Medicaid allowed payment for a 

particular service if the enrollee received that service from a Medicaid participating provider. The officials noted that if the 

enrollee sees a provider that does not participate in Medicaid, the state did not pay cost sharing. Additionally, if the enrollee 

were required to spend down income to qualify for Medicaid, then the state did not pay for cost sharing until the enrollee 

contributed his or her spend-down amount. 

e

Officials representing this program indicated that the state paid cost sharing for elderly and disabled individuals. 

f

Officials representing these programs indicated that the state paid cost sharing for Medicaid covered services only. 

g

Officials representing this program indicated that the state paid some cost sharing for individuals who are aged, blind, or 

permanently disabled. 

h

Officials representing this program indicated that the state paid cost sharing for individuals who are blind, disabled, or in foster 

care. 

i

Officials representing this program indicated that the state paid some cost sharing for individuals who are aged or disabled. 

j

Officials representing this program indicated that the state paid up to $900 for cost sharing if the household’s out-of-pocket 

expenses had exceeded 5 percent of their gross income. 

k

Officials representing this program indicated that the state paid all cost sharing for parents with incomes below 185 percent of 

the federal poverty level (FPL) and childless adults with incomes below 150 percent of the FPL. 
Enclosure IV 

39 GAO-10-258R Medicaid and CHIP Premium Assistance Programs 

States’ Premium Assistance Programs’ Expenditures and CostEffectiveness Policies 

Table 16: Program Expenditures, by Type of Expenditure and State Premium Assistance Program, July 1, 

2008, through June 30, 2009 

Statea

Premium 

subsidies

Benefits 

wraparound

Cost 

sharing Administration Total

Alabama $17,051 $31,176 $0 $0 $48,227b

Alaska 34,498 — — — 34,498b

Arizona 900 NA NA 0 900b

California 5,845,615 c c 590,606 6,436,221b

Colorado-1 63,018 NA NA — 63,018b

Colorado-2 935,864 c 7,246 c 943,110b

Florida 10,023 NA NA 23,400 33,423

Georgia 2,915,713 — — — 2,915,713b

Idaho-1 130,258 0 NA 18,795 149,053b

Idaho-2 305,151 NA NA 41,348 346,499

Illinois 391,744 c 0 c 391,744b

Iowa 6,498,885 c c 1,140,909 7,639,794b

Kansas c c c c 736,763b

Kentucky 1,073 c c c 1,073b

Louisiana 2,037,783 5,553,673 0 382,875 7,974,331

Maine 885,834 c c 410,000 1,295,834b

Massachusetts-1 49,000,000 c c c 49,000,000b

Massachusetts-2 19,792,990 NA NA 737,046 20,530,036

Minnesota 14,712,740 c — c 14,712,740b

Missouri 3,495,089 c 30,179 c 3,525,268b

Montana 990,551 c c 44,935 1,035,486b

Nebraska 1,035,560 0 c 62,501 1,098,061b

Nevada-1 3,574 NA NA 39,388 42,962

Nevada-2 173,940 407,931 — — 591,219b,d

New Hampshire 911,581 0 0 82,686 994,267b

New Jersey-1 584,943 c 16,638 c 601,581b

New Jersey-2 206,980 c 32,408 c 239,388b

New York c c c c c 

North Dakota 140,590 c c c 140,590b

Oklahoma c NA c c c 

Oregon-1 20,792,412 NA NA 3,824,058 24,616,470

Oregon-2 724,360 c c c 724,360b

Pennsylvania — — — — —

Rhode Island 8,174,977 1,793,526 — c 9,968,503b

South Carolina 493,659 c c 119,042 612,701b

South Dakota 268,568 NA NA 50,000 318,568

Texas 17,478,158 4,330,790 c 917,042 22,725,990b
Enclosure IV 

40 GAO-10-258R Medicaid and CHIP Premium Assistance Programs

Statea

Premium 

subsidies

Benefits 

wraparound

Cost 

sharing Administration Total

Utah-1 609,042 19,200 NA 64,235 823,155e

Utah-2 — c c c 520,000b

Vermont 23,697,720 454,787 — 1,278,217 25,430,724

Virginia-1 448,288 1,034 NA 83,617 532,939

Virginia-2 4,968,135 c c 342,367 5,365,702b,f

Washington 6,738,384 — — 1,040,267 7,778,651b

Wisconsin 915,495 764,977 c c 1,680,472b

Wyoming 50,758 — — — 50,758b

Total 196,481,904 13,357,094 86,471 11,293,334 222,670,792g

Source: GAO Web-based survey administered to states’ premium assistance programs. 

Legend: 

NA = Not applicable; the premium assistance program did not pay for this item. 

— = Response not provided. 

Notes: Data were obtained from surveys administered from August through October 2009 to officials in 39 states representing 

47 premium assistance programs funded by Medicaid, the State Children’s Health Insurance Program (CHIP), or both. We 

received responses from officials representing 45 programs in 37 states; officials from 2 states with premium assistance 

programs, North Carolina and West Virginia, did not respond to the survey. 

Amounts shown are combined federal and state expenditures. 

Data on program expenditures were generally for the period of July 1, 2008, through June 30, 2009. However, the following 

programs provided data for a different period: Idaho-1 and Idaho-2 – October 1, 2007, through September 30, 2008; Rhode 

Island and Wisconsin – July 1, 2007, through June 30, 2008; Texas – September 1, 2008, through August 31, 2009; Virginia-2 

– 2007 for data on program administration and other expenditures, including Medicaid Management Information System 

enhancements. 

a

Some states operated two premium assistance programs. For program names, see table 2. 

b

This figure is the total of all reported expenditures. However, actual total expenditures for the program are likely higher 

because the program did not provide data for all applicable types of expenditures. 

c

Program officials reported that data were not available. 

d

This figure includes $9,349 in other reported expenditures. 

e

This figure includes $130,678 in other reported expenditures. 

f

This figure includes $55,200 in other reported expenditures. 

g

This figure includes $195,227 in other reported expenditures, as well as $736,763 in total expenditures reported for the 

Kansas program and $520,000 in total expenditures reported for the Utah-2 program. Additionally, this figure is the total of all 

reported expenditures. However, actual total expenditures for the programs are likely higher because some programs did not 

provide data for all applicable types of expenditures. 
Enclosure IV 

41 GAO-10-258R Medicaid and CHIP Premium Assistance Programs

Table 17: Cost-Effectiveness Requirements and Methods Used, by State Premium Assistance Program, 

2009 

Level at which costeffectiveness is assessed 

Method used to calculate 

cost-effectiveness 

Statea

Cost-effectiveness 

requirement Individual/family Aggregate 

Secretary’s 

methodb

Other 

methodc

Alabama • • • 

Alaska • • • 

Arizona • • • 

California • • • 

Colorado-1 NA NA NA NA 

Colorado-2 • • • 

Florida NA NA NA NA 

Georgia • • • 

Idaho-1 • • • 

Idaho-2 • • • 

Illinois • • • 

Iowa • • • 

Kansas • • • 

Kentucky • • • 

Louisiana • • • 

Maine • • • 

Massachusetts-1 • • • 

Massachusetts-2 NA NA NA NA 

Minnesota • • • 

Missouri • • • 

Montana • • • 

Nebraska • • • 

Nevada-1 NA NA NA NA 

Nevada-2 • • • 

New Hampshire • • • 

New Jersey-1 • • • 

New Jersey-2 • • • 

New York • • • 

North Dakota • • • 

Oklahoma NA NA NA NA 

Oregon-1 NA NA NA NA 

Oregon-2 • • • 

Pennsylvania • • • 

Rhode Island • • • 

South Carolina • • • 

South Dakota • • • 

Texas • • • 

Utah-1 NA NA NA NA 

Utah-2 • • • 
Enclosure IV 

42 GAO-10-258R Medicaid and CHIP Premium Assistance Programs

Level at which costeffectiveness is assessed 

Method used to calculate 

cost-effectiveness 

Statea

Cost-effectiveness 

requirement Individual/family Aggregate 

Secretary’s 

methodb

Other 

methodc

Vermont • • • 

Virginia-1 • • • 

Virginia-2 • • • 

Washington • • • 

Wisconsin • • • 

Wyoming • • • 

Total 38 32 6 18 20 

Source: GAO Web-based survey administered to states’ premium assistance programs. 

Legend: 

• = Requirement or method used. 

NA = Not applicable; the program does not have a cost-effectiveness requirement. 

Note: Data were obtained from surveys administered from August through October 2009 to officials in 39 states representing 

47 premium assistance programs funded by Medicaid, CHIP, or both. We received responses from officials representing 45 

programs in 37 states; officials from 2 states with premium assistance programs, North Carolina and West Virginia, did not 

respond to the survey. 

a

Some states operated two premium assistance programs. For program names, see table 2. 

b

Section 3910 of the State Medicaid Manual indicates that an individual’s enrollment in premium assistance is cost-effective if 

the amount paid for premiums, coinsurance, deductibles, other cost sharing, as well as administrative costs, is likely to be less 

than the Medicaid expenditures for an equivalent set of services. To determine whether premium assistance is cost-effective, 

section 3910 of the State Medicaid Manual offers a calculation states can use. This calculation—referred to as the Secretary’s 

method—involves a seven-step process that takes into account information on the group health plan, average Medicaid costs, 

Medicaid cost for services included in the group health plan, the group health plan cost for included services, an adjustment for 

coinsurance and deductible amounts, and additional administrative costs for processing the group health plan information. 

c

Respondents who indicated “other method” used a method designed by the state and approved by the Centers for Medicare & 

Medicaid Services. 
Enclosure V 

43 GAO-10-258R Medicaid and CHIP Premium Assistance Programs 

Challenges to States’ Premium Assistance Programs’ Implementation 

and Operation 

Table 18: Challenges to Premium Assistance Program Implementation or Operation, 2009 

Factor 

Number of programs where officials 

indicated that factor posed a challenge 

Limited number of individuals with access to private health 

insurance 

18

Difficulty identifying individuals with access to private health 

insurance 

17

Difficulty enrolling individuals due to limits in the enrollment periods 

for the private health insurance 

16

Difficulty getting necessary information from health plans or 

employers 

16

Limited participation due to voluntary enrollment 16

Difficulty meeting cost-effectiveness standards 13

Program administrative costs too high 6

Available private health plans often do not meet the minimum 

benefit requirements 

4

Challenges providing benefits wraparound coverage 3

State fiscal challenges and other budget constraints 3

Source: GAO Web-based survey administered to states’ premium assistance programs. 

Notes: Data were obtained from surveys administered from August through October 2009 to officials in 39 states representing 

47 premium assistance programs funded by Medicaid, the State Children’s Health Insurance Program (CHIP), or both. We 

received responses from officials representing 45 programs in 37 states; officials from 2 states with premium assistance 

programs, North Carolina and West Virginia, did not respond to the survey. 

Responses from program officials (representing 45 premium assistance programs) were included in this table if they indicated 

that the factor posed either a great or moderate challenge to program implementation or operation. 
Enclosure VI 

44 GAO-10-258R Medicaid and CHIP Premium Assistance Programs 

Agency Comment Letter 
Enclosure VI 

45 GAO-10-258R Medicaid and CHIP Premium Assistance Programs
Enclosure VI 

46 GAO-10-258R Medicaid and CHIP Premium Assistance Programs
Enclosure VI 

47 GAO-10-258R Medicaid and CHIP Premium Assistance Programs
Enclosure VII 

48 GAO-10-258R Medicaid and CHIP Premium Assistance Programs 

GAO Contact and Staff Acknowledgments 

GAO Contact 

Carolyn L. Yocom, (202) 512-7114 or yocomc@gao.gov 

Acknowledgments 

In addition to the contact named above, Michelle Rosenberg, Assistant Director; Christie 

Enders; Nancy Fasciano; Martha R. W. Kelly; Drew Long; Kevin Milne; Dan Ries; Lillian 

Shields; Malissa G. Winograd; and Suzanne Worth made key contributions to this report. 

(290763) 
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