Perspective: Insuring Children: The Next Steps

A growing body of evidence continues to document the obvious: Kids are better off when insured. The scope of the problem is known. Cited often is the figure used by Kenneth Thorpe in this volume of Health Affairs that more than ten million children (14 percent of the under-age-nineteen population) are uninsured. However, like adults, the uninsured child population is not static, and point-in-time estimates fail to capture coverage gaps. Two recent studies report virtually identical findings with respect to this aspect of the problem. The consensus that one child in seven is uninsured on any given day, and more than two in seven are either never covered or experience a gap in coverage over a given two-year period has not varied significantly for several years. Nonetheless, these proportions appear to be alarming enough in the era following the defeat of universal coverage to motivate several state legislatures and Congress to act. Although the federal legislative proposals outlined in Thorpe’s paper surely will change by press time, the trade-offs he explores will not. n To Medicaid or not to Medicaid? The first issue Thorpe raises is whether Medicaid expansions should be the vehicle to expand children’s coverage, or if a new federally funded program, which purchases private health plans, should be created. Given budget constraints, it seems unlikely that Congress will enact supplemental insurance coverage for children (and pregnant women) beyond income levels already available and operational in some states under existing Medicaid law (for example, Hawaii and Minnesota at 275 percent of the federal poverty level). Some analysts have proposed an enriched federal match for children to induce states to consider expansions. However, many states that have expanded coverage for children and pregnant women far beyond federal requirements have a relatively low federal match (for example, Minnesota, NewHampshire,Washington, and Hawaii), whereas some states with a high federal match (for example, Alabama and Montana) have not expanded coverage. Absent an illegal “unfunded mandate,” the Medicaid solution adds nothing that states do not already have. Even if new federal incentives circumvented the unfunded mandate issue and states voluntarily expanded their eligibility levels, there still is the beneficiary participation problem. In spite of broad benefits and prohibition on copayments for children’s services, Medicaid has too much baggage (for example, welfare stigma and complex application procedures) to become working families’ safety net. The participation rate for children who were made eligible for Medicaid during the first six years after itwas “delinked” fromwelfare was at most 60 percent. However, if a new program similar to MinnesotaCare were created that used a single application process to determine eligibility for either Medicaid or subsidized private insurance, it is likely that the enticement of gaining private coverage could locate many of the three million uninsured, Medicaid-eligible children. It would require good-faith state outreach efforts, supported by new federal penalties for underenrollment, in addition to the current disincentives for enrolling ineligible persons.