Health Insurance for Children: Many Remain Uninsured Despite Medicaid Expansion
Published: 1995-07-19T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Pursuant to a congressional request, GAO reviewed the status of health insurance for children, focusing on: (1) the impact of the Medicaid expansion on children's health insurance coverage since 1989; (2) changes in the demographic profile of children enrolled in the Medicaid program and uninsured children since the Medicaid expansion; and (3) the number of uninsured children who might be eligible for Medicaid.
section_title: What GAO Found
paragraphs: GAO found that: (1) policy changes helped increase the number of children enrolled in Medicaid by 4.8 million between 1989 and 1993, but the overall number of uninsured children did not decline because employment-based coverage for adults and children declined during the same period; (2) children were not as affected by the loss of employment-based insurance as adults because of expanded Medicaid coverage; (3) the percentage of poor children who were uninsured declined from 25 percent in 1989 to 20 percent in 1993, while the percentage of near-poor children who were uninsured increased during that time; (4) the Medicaid expansion increased the enrollment of children less likely to be on Medicaid and by 1993, more than half of Medicaid children had a working parent and almost half were not receiving Aid to Families with Dependent Children benefits; (5) the greatest increase in coverage was among children with at least one full-time working parent; (6) the South region had the greatest increase in the number of children enrolled in Medicaid, although it still has the greatest number of uninsured children; and (7) at least 2.3 million uninsured children were eligible but not enrolled in Medicaid because their parents were unaware of their eligibility or had difficulty in applying for Medicaid coverage.

section_title: Letter
paragraphs: Access to needed medical care can detect and prevent problems affecting the future health and lives of children. Many U.S. children, however, receive less health care than others because they lack health insurance. In 1993, 9.3 million U.S. children did not have health insurance coverage at any time during the year. These 9.3 million children account for almost one-quarter of all uninsured people.
Since the 1980s, the Congress has expanded Medicaid eligibility so that more children could have health care coverage. Currently, the 104th session of the Congress is considering making the Medicaid program a block grant to states, limiting the growth of program expenditures, and removing eligibility and other requirements. Such changes could greatly impact children’s health care coverage if states choose to remove guaranteed eligibility for children or reduce current state eligibility levels.
Concerned about these issues, you asked us to determine the impact of the Medicaid expansion on children’s health insurance coverage since 1989, identify changes in the demographic profile of children enrolled in the Medicaid program and uninsured children since the Medicaid expansion, and estimate the number of uninsured children who might be eligible for Medicaid.
To answer these questions, we analyzed data from the Bureau of the Census’ March 1990 and March 1994 Current Population Survey (CPS), linking information on children’s health insurance status and their parents’ demographic characteristics. (See app. III.) To estimate the number of Medicaid-eligible children that were uninsured and not enrolled in the Medicaid program, we defined a group of children from the March 1994 CPS data file that were Medicaid eligible according to federal rules and analyzed their insurance status. We also analyzed relevant laws to understand changes in Medicaid eligibility criteria affecting children. We released some of the findings from our analysis in a correspondence to you. Our work was conducted between October 1994 and April 1995 in accordance with generally accepted government auditing standards.
subsections: section_title: Background
paragraphs: Most U.S. families access the health care system through health insurance coverage. Without health insurance, many families face difficulties getting preventive and basic care for their children. Uninsured women, for example, are less likely to get early and adequate prenatal care. Late and inadequate prenatal care is associated with higher rates of low birth weight and prematurity, serious illness, and handicap for children.Children without health insurance are less likely to have routine doctor visits, get care for injuries, or have a regular source of medical care. When they do seek care, they are more likely to get it through a clinic rather than a private physician or health maintenance organization (HMO).Uninsured children are also less likely to be appropriately immunized—important in preventing childhood illness.
Insured children in the United States either have privately or publicly funded health insurance. In 1993, 89 percent of children with private insurance got coverage through their parents’ employment. A small percentage of children have private, individually purchased policies. An even smaller percentage are children of military personnel who get publicly funded insurance through their parents’ employment. Most children with publicly funded insurance get coverage through Medicaid.
The Medicaid program is a jointly funded federal-state entitlement program that provides health insurance for both children and adults. It is implemented through 56 separate programs (including the 50 states, the District of Columbia, Puerto Rico, and the U.S. territories). States are required to cover some groups of children and adults and may extend coverage to others. Children and their parents must be covered if they receive benefits under the AFDC program. In the past, most children received Medicaid because they were on AFDC. Children and adults may also be eligible for the program if they are disabled and have low incomes or if their medical expenses are extremely high relative to family income.
Beginning in 1986, the Congress passed a series of laws that expanded Medicaid eligibility for pregnant women, infants, and children. (See table I.1 in app. I.) Before 1989, coverage expansions were optional, although many states had expanded coverage. Starting in July 1989, states had to begin covering pregnant women and infants with family incomes at or below 75 percent of the federal poverty level. The Omnibus Budget Reconciliation Acts of 1989 and 1990 added additional requirements that states had to implement in 1990 and 1991.
By 1993, states were required to cover (1) pregnant women, infants, and children up to age 6 with family income at or below 133 percent of the federal poverty level and (2) children aged 6 to 10 (born after September 30, 1983) with family income at or below 100 percent of the federal poverty level. Current law also requires that the group of poor children over age 6 eligible for Medicaid continue to expand year by year until all poor children up to age 19 are eligible in the year 2002. In addition, states may expand Medicaid eligibility for infants and children beyond these requirements by either phasing in coverage of children up to age 19 more quickly than required or by increasing eligibility income levels or both. As of April 1995, 37 states and the District of Columbia had expanded coverage for children beyond federal requirements. (See app. I.)
Children represent a large proportion of Medicaid recipients but a small proportion of Medicaid expenditures. In 1993, 49 percent of Medicaid recipients were children under age 21, but only 16 percent of Medicaid medical vendor payments were for their care.
Nonetheless, Medicaid’s overall cost and the rate of cost increases have raised concerns about the program’s impact on the federal budget. Medicaid costs are projected to increase from about $131 billion to $260 billion by the year 2000, according to the Congressional Budget Office. The Congress is currently considering different options to lower the cost of the program, including removing guaranteed eligibility and giving capped funding to the states as block grants.
section_title: The Increased Number of Children on Medicaid Helped Offset the Decline in Employment-Based Insurance for Children
paragraphs: Medicaid has become an increasingly important source of health insurance for low-income children as employment-based insurance has declined for both children and adults. Between 1989 and 1993, the number of children covered by Medicaid increased 54 percent—from 13.6 percent of U.S. children in 1989 (8.9 million children) to 19.9 percent in 1993 (13.7 million children). This could have led to a major decrease in the percentage of children uninsured. It did not, however, because the decrease in children covered by employment-based insurance offset the increase in U.S. children insured through Medicaid. (See fig. 1.)
Comparing trends between children and adults clarifies Medicaid’s role. Between 1989 and 1993, the percentage of children with employment-based health insurance decreased 9 percent. During the same period, the percentage of adults aged 18 to 64 with such insurance decreased 7 percent. Both children and adults lost employment-based coverage.
Because of the Medicaid expansion, however, the decline in employment-based insurance for children did not lead to an increase in the proportion of uninsured children. Adults had a different experience. (See fig. 2.) Between 1989 to 1993, the proportion of adults who were uninsured rose 16 percent. In contrast, the proportion of children who were uninsured was similar in 1989—13.3 percent—and 1993—13.5 percent.
Comparing the experience of adults and children suggests that expanding Medicaid for children did not displace privately purchased individual insurance. The proportions of children and adults with privately purchased insurance were similar in 1989 and changed little in 1993. An increased proportion of adults did not purchase individual policies as more adults became uninsured. If Medicaid had displaced privately purchased insurance for children, the proportion of children with privately purchased insurance would have decreased, but it did not.
The question of whether parents who could have employment-based insurance for their families chose to drop or refuse coverage to get Medicaid coverage for their children is more complicated. The longitudinal data that would be needed to directly answer this question are not available. Two researchers attempted to overcome this limitation by developing an economic model using CPS data from 1987 through 1992. They estimated that expanding Medicaid coverage for pregnant women and children did partially displace employment-based coverage, being responsible for about 17 percent of the decline in private insurance coverage between 1987 and 1992. The rest of the decline in coverage was due to macroeconomic factors, changes in the demographic mix of population, or changes in employers’ offering or generosity in covering health insurance for workers and their families. For children, their analysis leads to an estimate that 37 to 47 percent of children’s increase in Medicaid coverage was linked to a reduction in employment-based insurance coverage.
Although the Medicaid expansion offset the decrease in employment-based insurance, an increasing number of children either have no health insurance or depend on publicly funded health insurance. In 1993, 9.3 million children were uninsured, and 13.7 million were on Medicaid. These totals represent over one-third of U.S. children.
subsections: section_title: Medicaid Expansion Had Greater Impact on Insurance Status of Poor and Near-Poor Children
paragraphs: The effect of the Medicaid expansion is clear when considering how poor children, near-poor children, and higher income children fared in the health insurance marketplace between 1989 and 1993. During this period, the percentage of children of all income levels with employment-based insurance declined, and Medicaid coverage for all income levels expanded but to different degrees.
Employment-based insurance declined most for near-poor children. (See table 1.) Meanwhile, an additional 11 percent of these children obtained coverage under Medicaid. The proportion of near-poor children who were uninsured did not change significantly. These children were still most likely to be uninsured in 1993 and most likely to be on Medicaid.
Poor children had a smaller decline in employment-based insurance than near-poor children and a large increase in Medicaid coverage. As a result, the percentage of poor children who were uninsured actually declined from 25 percent in 1989 to 20 percent in 1993.
Unlike poor and near-poor children, children with family incomes above 150 percent of the federal poverty level were more likely to be uninsured in 1993 than 1989. This group of children had the highest rates of employment-based coverage in 1989 (80.2 percent) and the smallest decrease in such coverage. The Medicaid expansion cushioned this group less since few of these children depend on Medicaid for their coverage. However, the percentage of these children covered by Medicaid had a small and statistically significant increase—from 7.5 percent to 9.1 percent.
section_title: The Medicaid Expansion Increased the Number of Medicaid Children in Working and Non-AFDC Families, Among Other Changes
paragraphs: Because of policy changes to expand children’s eligibility, Medicaid has become a more important source of insurance for children who were less likely to get Medicaid in the past, such as children in working families. The proportion of Medicaid children who had a working parent increased between 1989 and 1993. By 1993, more than half the children on Medicaid had a working parent, and almost half did not depend on AFDC. Medicaid coverage also increased more during this period among other children less likely to receive Medicaid in the past—children in two-parent families, children of more educated parents, white non-Hispanic and Hispanic children, and children living in the South.
subsections: section_title: Medicaid Now Insures More Children in Working, Non-AFDC, and Two-Parent Families
paragraphs: Changing Medicaid eligibility policies so that children are eligible on the basis of income and age, even if they are not on AFDC, allowed uninsured children of low-income working families to get health insurance through Medicaid. A significant increase in the number of children with a working parent on Medicaid has resulted.
Over half of Medicaid children had a working parent in 1993. (See fig. 3.) The proportion of children in working families on Medicaid grew, and the number of Medicaid children with a working parent increased from 4 million in 1989 to 7.3 million in 1993—an 83 percent increase. Most working parents with children on Medicaid worked less than full time for the entire previous year. However, the percentage of Medicaid families with a full-time worker increased. By 1993, 1 child in 5 on Medicaid had a parent who worked full time all year.
Expanding Medicaid eligibility on the basis of income and age was a major reason for the increase in Medicaid enrollment, but not the only reason. AFDC enrollment also increased between 1989 and 1993. The number of children in Medicaid on AFDC or AFDC combined with other assistance increased by 1.3 million children—a 25 percent increase. But the expansion in non-AFDC children on Medicaid was much greater.
Between 1989 and 1993, the number of non-AFDC children on Medicaid doubled—from 3.2 million to 6.4 million children. This greater increase in non-AFDC children increased the proportion of non-AFDC children on Medicaid. (See fig. 4.) The percentage of children not receiving AFDC or other assistance in 1993 increased from 36 percent of all children on Medicaid in 1989 to 47 percent—almost half.
The Medicaid program now serves more children in two-parent families, another group of children less likely to receive Medicaid in the past. The percentage of Medicaid children in two-parent families grew from 29.7 percent in 1989 to 35.6 percent in 1993. Children on Medicaid in two-parent families were more likely to have a working parent in 1993 than in 1989 (78.5 percent compared with 72 percent) and also more likely to have at least one parent who worked full time (40.6 percent compared with 29.2 percent).
section_title: Medicaid Coverage Increased More Among Some Groups of Children
paragraphs: In addition to an increase in the proportion of working and two-parent families on Medicaid, Medicaid enrollment also increased more for other groups of children less likely to receive Medicaid in the past. Children whose parents lack a high school diploma are most likely to receive Medicaid, since lower education and lower income are related. However, enrollment increased for some children less likely to be on Medicaid—those whose most educated parent had a high school diploma up through a bachelor’s degree. Meanwhile, employment-based insurance decreased for children whose parents’ education varied from less than high school to those whose parents had some college education. (See app. II.)
Also, although a higher proportion of African American children receive Medicaid coverage than children in other racial/ethnic groups, Medicaid coverage expanded more for white, non-Hispanic children, and Hispanic children than for African American children.
In 1989, a child in the South was less likely to receive Medicaid than a child in any other region, even though the South had the highest percentage of poor, uninsured children (47 percent). With the Medicaid expansion, enrollment increased most in the South, so by 1993 the percentage of poor, uninsured children in the South had declined. Despite this decline, the South remains the region with the highest percentage of uninsured children and the largest number of poor, uninsured children. (For more detail on these changes, see app. II.)
section_title: Most Uninsured Children Have Working Parents With Lower Than Average Income
paragraphs: Despite the Medicaid expansion, children of working parents with lower than average income still predominate among uninsured children. Living with a full-time working parent was even less of a guarantee that children would have health insurance coverage in 1993 than it was in 1989. Most uninsured children live with a full-time working parent, generally in a two-parent family. They differ from most children and especially from insured children because many more of them are poor or near poor.
subsections: section_title: Most Uninsured Children Have at Least One Working Parent
paragraphs: In 1989 and 1993, 89 percent of uninsured children had at least one working parent. The expansion in Medicaid coverage for children in working families did not decrease the percentage of uninsured children with a working parent. In some respects, the status of children in working families worsened. This is because the percentage of uninsured children with a full-time working parent grew between 1989 and 1993—from 57.2 percent (5 million) to 61.4 percent (5.7 million), respectively. (See fig. 5.)
Unlike children on Medicaid, uninsured children generally resemble most U.S. children because they live in two-parent families, generally with a working parent. (See fig. 6.) In comparison with all U.S. children, uninsured children in two-parent families are less likely to live with a parent who worked full time the entire previous year. Uninsured children are also slightly more likely to live in one-parent families than are U.S. children in general.
section_title: Uninsured Children’s Families Have Lower Incomes
paragraphs: The families of uninsured children have less income than families of insured children. In 1993, 24.7 percent of all U.S. children lived in poor families. A larger proportion of uninsured children—36.7 percent—lived in poor families while only 6 percent of children with employment-based insurance did (see fig. 7). About 57 percent of uninsured children have family income at or below 150 percent of the federal poverty level, compared with 14 percent of children with employment-based insurance.
In previous work, we found that poor workers may not have employment-based insurance for several reasons:
Health insurance is a more substantial share of total employee compensation for low-wage workers than for higher wage workers, so firms with predominantly low-wage workers are less likely to offer health insurance—or, if they do, may not offer dependent coverage since doing so is more expensive than covering the worker alone.
A large share of small firms that employ low-wage workers are less likely to offer health insurance. Small firms pay higher health insurance premiums because insurers incur higher administrative costs to serve small firms.
Even if coverage is offered, health insurance cost sharing represents more of the household budgets of poor and near-poor families so that families may decide they cannot afford health insurance even if available.
section_title: Many Uninsured Children Are Medicaid Eligible but Not on Medicaid
paragraphs: Although many uninsured children could be covered by Medicaid, they are not. At least one-quarter of uninsured children in 1993—2.3 million—had family incomes that should have made them eligible for Medicaid. That year, at least 13.8 million children met the federal age and poverty income eligibility requirements for the program. Of these children, 2.4 million (17.3 percent) had employment-based insurance. Almost 8.4 million (60.9 percent) were on Medicaid, and about 675,000 (5 percent) either had individually purchased private insurance or Civilian Health and Medical Program of the Uniformed Services (CHAMPUS) insurance. Another 16.9 percent—2.3 million children—were uninsured. More than half of these uninsured Medicaid-eligible children—over 1.4 million—were under age 6.
Compared with children on Medicaid, these children are more likely to live in working, two-parent families. In 1993, 79.5 percent had at least one working parent, and 42.5 percent had at least one parent working full time. A total of 1.3 million (57.6 percent) of the Medicaid-eligible uninsured children are in two-parent families; 1.2 million of these children have a working parent. The South has more uninsured Medicaid-eligible children than any other region—1.4 million. In comparison to all uninsured children, uninsured Medicaid-eligible children are more likely to be African American or Hispanic.
subsections: section_title: Possible Reasons Why More Medicaid-Eligible Uninsured Children Are Not Enrolled
paragraphs: Several possible reasons may explain why these families might not have enrolled their children in Medicaid. Low-income families may not know that their children could be eligible for Medicaid even if a parent works full time or if the family has two parents. In a study that interviewed AFDC recipients and former recipients who had begun working but were still receiving Medicaid (so-called Transitional Medicaid) in Charlotte, North Carolina, and Nashville, Tennessee, researchers found that 41 percent of AFDC recipients and 23 percent of former recipients did not understand that a parent could work full time and receive Medicaid for his or her children. Sixty-two percent of the AFDC recipients and 37 percent of the Transitional Medicaid recipients did not know that children could be eligible for Medicaid if they lived in an intact, two-parent family.
Another reason so many uninsured children are not on Medicaid may be that getting enrolled in Medicaid is difficult for low-income families. Many people who are potentially eligible for Medicaid never complete the application process, and about half the denials are for procedural reasons—that is, applicants did not or could not provide the basic documentation needed to verify their eligibility or did not appear for all the eligibility interviews.
Finally, some families may not seek Medicaid until they face a medical crisis because they are not used to regular or preventive medical care. In addition, medical and social service providers report that some families do not want to enroll in Medicaid because they consider it a welfare program and consider it stigmatizing.
section_title: Conclusion
paragraphs: Expanding children’s Medicaid eligibility has significantly increased the number of children with Medicaid as their health insurance. It has also helped cushion the effect of declining employment-based health insurance coverage for children. Because of expanded eligibility, the proportion of children on Medicaid in working and in two-parent families has grown. The Congress is currently considering legislation to reform AFDC to encourage low-income mothers to work. However, work for many lower income families does not include the benefit of health insurance that it more often does for higher income families. Clearly, having a full-time working parent and being in a two-parent family does not ensure that a child will have health insurance. Although Medicaid has begun to help close that gap for some families, many more uninsured children are eligible for Medicaid than have been enrolled.
Changes to the Medicaid program that remove guaranteed eligibility and change the financing and responsibilities of the federal and state governments may strongly affect health insurance coverage for children in the future. Children account for only a small portion of Medicaid costs. Because they represent almost half the participants, however, any changes to Medicaid disproportionately affect children. Changes to Medicaid that result in reducing the number of children covered, without any accompanying changes in the health insurance marketplace either to encourage employers to provide dependent health insurance coverage, or to encourage families to purchase insurance, or to provide other coverage options for children, could lead to a significantly increased number of uninsured children in the future.
We did not seek written agency comments because this report does not focus on agency activities. We discussed a draft of this report with responsible Department of Health and Human Services officials in the Health Care Financing Administration and included their comments where appropriate.
As arranged with your office, unless you publicly announce its contents earlier, we plan no further distribution of this report until 30 days after its issue date. At that time, we will send copies to interested parties and make copies available to others on request.
Please contact me at (202) 512-7125 if you or your staff have any further questions. This report was prepared by Rose Marie Martinez, Sheila Avruch, Paula Bonin, and Frank Ullman.
section_title: States Have Expanded Medicaid Eligibility and Other Health Insurance Options for Children
paragraphs: The Congress passed a series of laws beginning in 1986 that substantially expanded Medicaid eligibility for pregnant women and children. Some of these laws required eligibility expansions, and others allowed states options to expand eligibility. (See table I.1.)
The Omnibus Budget Reconciliation Act of 1986 (OBRA-86)
OBRA-86 (P.L. 99-509) gave states the option to expand Medicaid income eligibility thresholds above AFDC levels up to the federal poverty level for pregnant women and infants, effective April 1, 1987. It also gave states the option of phasing in coverage for poor children up to age 5, effective October 1, 1990.
The Omnibus Budget Reconciliation Act of 1987 (OBRA-87)
OBRA-87 (P.L. 100-203) allowed states to raise Medicaid income thresholds for pregnant women and infants as high as 185 percent of the federal poverty level, effective July 1, 1988. It also amended the statute to give states the option of phasing in coverage of poor children up to age 8, effective October 1, 1988.
The Medicare Catastrophic Care Amendments of 1988 (MCCA)
MCCA (P.L. 100-360) mandated minimum coverage of pregnant women and infants at the federal poverty level, with a 2-year phase-in period, effective for calendar quarters beginning on or after July 1, 1989. Affected states were to raise income limits to 75 percent of poverty by July 1, 1989, and to poverty level by July 1, 1990. MCCA also added Section 1902 (r) (2) to the Social Security Act, which allows states to use more liberal criteria for Medicaid than is used for the AFDC program to determine Medicaid financial eligibility, effective July 1, 1988. States can disregard specific amounts of income and other resources and allow certain categories of eligible populations to qualify for Medicaid.
The Omnibus Budget Reconciliation Act of 1989 (OBRA-89)
OBRA-89 (P.L. 101-239) superseded MCCA’s mandate schedule by requiring states to cover, at a minimum, pregnant women and children up to age 6 at 133 percent of the federal poverty level, effective for calendar quarters beginning on or after April 1, 1990.
The Omnibus Budget Reconciliation Act of 1990 (OBRA-90)
OBRA-90 (P.L. 101-508) required states to begin (effective on or after July 1, 1991) to phase in coverage of children born after September 30, 1983, until all children living below poverty up to age 19 are covered; the upper age limit will be reached by October 2002.
Many states have taken advantage of the options to expand Medicaid eligibility for infants and children beyond federally required minimum eligibility levels—either by increasing the ages of children covered more quickly than the phase-in requires or increasing eligibility income levels or both. As of April 1995, 33 states and the District of Columbia had increased coverage for infants beyond federal requirements by generally expanding coverage up to 185 percent of the federal poverty level. Eight states expanded coverage for children aged 1 through 5, and 20 states expanded coverage for children aged 6 and older beyond federal requirements. In all, 37 states and the District of Columbia have expanded eligibility for either infants or children or both. (See table I.2.)
Percent of federal poverty level Children (1-5)
Children (6 and older) under 15 (born after 6/30/79) (continued)
Percent of federal poverty level Children (1-5)
Children (6 and older) under 12 (born after 6/30/83) under 12 (born after 6/30/83)
In addition, several states have recently received special waivers allowing them to undertake statewide Medicaid demonstration projects, several of which extend health insurance coverage to portions of the uninsured, including children. Authorized by section 1115(a) of the Social Security Act (42 U.S.C. 1315), these waivers typically enable states to place all or some of their Medicaid population in managed care arrangements. The waivers commonly require higher income families to pay premiums or copayments, often on a sliding scale. In addition to the states with approved waivers, other states have waivers pending. Since 1991 and as of June 15, 1995, Delaware, Florida, Hawaii, Kentucky, Massachusetts, Minnesota, Ohio, Oregon, Rhode Island, and Tennessee have had their section 1115 demonstration waivers approved. To date, only Oregon, Hawaii, Rhode Island, and Tennessee have implemented their 1115 demonstration waiver programs. Waiver applications for seven other states are pending: Illinois, Missouri, Nevada, New Hampshire, New York, Oklahoma, and Vermont.
The states that operate 1115 waiver programs have generally expanded eligibility:
Hawaii expanded Medicaid eligibility to all persons with income up to 300 percent of the federal poverty level, with cost sharing for most residents with incomes above the federal poverty level.
Oregon expanded Medicaid eligibility to all persons with income up to the federal poverty level while limiting health coverage to a ranked list of services.
Rhode Island expanded coverage to pregnant women and children up to age 6 with family incomes at or below 250 percent of the federal poverty level.
Tennessee expanded coverage to uninsured people without regard to income level, but cost sharing is required for people who are not Medicaid eligible or have family income above the federal poverty level. To manage the program within its planned enrollment levels, Tennessee is now only enrolling people who are Medicaid eligible or considered uninsurable.
Several states have developed other types of programs to insure children not eligible for Medicaid. Seven states have statewide programs using state and other funds to expand coverage for children beyond Medicaid eligibility levels. Some of these programs provide only limited benefits compared with the Medicaid program. For example, they may not cover inpatient care. We will issue a report on some of these programs and other nonstatewide programs later this year.
California covers children under age 2 with family income up to 250 percent of the federal poverty level.
Maryland covers children under 11 who have family income up to 185 percent of the federal poverty level with a limited benefit package.
Massachusetts has an insurance buy-in program with fees based on a sliding scale for children under 13 with no family income limit.
Minnesota has an insurance buy-in program with fees based on a sliding scale for children and adults with family income up to 275 percent of the federal poverty limit.
New Jersey covers children up to age 1 with family income up to 300 percent of the federal poverty limit.
New York covers children under 15 (born on or after June 1, 1980) with a limited benefit package. The program is open to all income levels, but only children with family income below 160 percent of the federal poverty limit are fully subsidized. Children with family income between 160 percent and 222 percent of the federal poverty level are partially subsidized.
Pennsylvania covers children under 14 with family income up to 185 percent of the federal poverty limit for fully subsidized insurance; families with income between 185 and 235 percent of the federal poverty level can buy partially subsidized insurance for their children; in some parts of the state, these children get their partial premiums paid by their insurers.
section_title: Medicaid Coverage Expanded Most for Certain Groups of Children
paragraphs: The Medicaid expansion has increased Medicaid coverage more for some groups of children—those whose parents had more than minimal education, whites and Hispanics, and children in the South. Although the Medicaid expansion had a greater impact on the South, children living in the South are still most likely to be uninsured in 1993.
subsections: section_title: More Children of Higher Educated Parents Are Now on Medicaid
paragraphs: Medicaid coverage expanded for children whose parents’ education ranged from less than high school to college degrees. (See fig. II.1.) The largest percentage increase in Medicaid coverage—92 percent—was among children whose most highly educated parent had some college education but not a 4-year college degree. Children who had a parent with a graduate education were the only group with little change in percentage covered by Medicaid.
The Medicaid expansion for children of all but the most educated parents coincided with a decline in employment-based coverage for most of the same groups. Since 1989, the percentage of children with employment-based insurance declined for children whose parents’ education ranged from less than high school to some college. (See table II.1.) The decline was greatest for children of parents with less than a high school diploma. Children with a parent who had a bachelor’s degree or more education had no decrease in employment-based coverage.
Medicaid continued to insure higher proportions of children with the least educated parents. (See fig. II.2 and table II.1.) Higher education is strongly correlated with higher income, and Medicaid predominantly serves poor children. Children with less educated parents are also more likely to be uninsured. Almost 80 percent of children whose most educated parent lacks a high school diploma were either uninsured or on Medicaid in 1993.
Less than a high school diploma (continued)
section_title: Medicaid Expansion Produced Greater Coverage for Whites and Hispanics
paragraphs: The Medicaid expansion increased the number of children on Medicaid more for whites and Hispanics between 1989 and 1993 than for African Americans. (See fig. II.3.) The number of white children on Medicaid increased 75 percent—from 3.1 million to 5.5 million—and the number of Hispanic children increased by 79 percent—from 1.8 million to 3.2 million—since 1989. In contrast, the number of African American children on Medicaid increased 30 percent—from 3.4 million to 4.4 million. In 1993, 41 percent of African American children, 35 percent of Hispanic children, and 12 percent of white children were on Medicaid. White children are less likely to be on Medicaid, but, of all children on Medicaid, they represent the largest segment (40.2 percent).
Nevertheless, children of racial and ethnic minorities are still more likely to be uninsured. (See fig. II.4.) While only 10.5 percent of white children were uninsured in 1993, 25.6 percent of Hispanic children and 15.2 percent of African American children were uninsured. Minority children have higher rates of being uninsured, but white children make up about half (51.6 percent) of all uninsured children.
section_title: Growth in Medicaid Enrollment for Children Greatest in the South
paragraphs: Between 1989 and 1993, the number of children on Medicaid increased in all regions, but the greatest increase occurred in the South. (See fig. II.5.) Compared to the Northeast and Midwest, the South had higher percentages of uninsured children in poverty in both 1989 and 1993—38.7 percent in 1993. Despite this, the South had the lowest percentage of its children on Medicaid in 1989—12.7 percent in the South compared with 15.3 percent in the West. Southern states historically have had stricter AFDC eligibility requirements relative to the federal poverty level than other regions. Thus, Southern poor children were less likely to be on AFDC and covered by Medicaid through AFDC. When Medicaid coverage became mandated by age and poverty, the greatest number of children benefiting were in the South. Medicaid coverage increased to 20.5 percent of southern children in 1993. Not surprisingly, the four states with the highest Medicaid coverage of children are all in the South—the District of Columbia (45.4 percent), Louisiana (29.9), Mississippi (27.9), and Tennessee (26.8); 8 of the top 15 states for Medicaid coverage of children are southern states. (See table II.1 for percentages of Medicaid, uninsured, and employment-based insured children by state.) Overall, the percentage of children on Medicaid increased for all regions, and the disparities between regions decreased between 1989 and 1993.
Nevertheless, despite the Medicaid expansion, more uninsured children live in the South than in any other region of the country. The South has 43 percent of uninsured children—almost 4 million children. Businesses in the South are less likely to offer health insurance than businesses in other regions. Regional differences in health insurance coverage among the employed may also reflect the greater degree of industrialization and unionization in other parts of the country and higher incidence of small and service-sector businesses in the South.
Table II.2: Children Uninsured, on Medicaid, or With Employment-Based Insurance, by State, 1993 95% S. E.
95% S.E.
95% S.E.(continued)
95% S. E.
95% S.E.
95% S.E.
S.E. represents sampling error. Each reported percent and number estimate from the Current Population Survey has an associated sampling error, the size of which reflects the precision of the estimate. Sampling errors for percentage estimates were calculated at the 95-percent confidence level, which means that the chances are about 19 out of 20 that the actual percentage being estimated falls within the range defined by our estimate, plus or minus the sampling error. For example, we estimate that 13.5 percent of U.S. children are uninsured; a 95-percent chance exists that the actual percentage is between 12.9 percent and 14.1 percent.
section_title: Methodology
paragraphs: To examine the impact of the Medicaid expansion on children, we analyzed the Current Population Survey (CPS). The method we used to define insurance status and to match children to parents resulted in a conservative estimate of the number of children uninsured and on Medicaid. In addition, two other aspects of our analysis affected the results in different ways. First, we counted parental work effort on the basis of whichever parent had the highest level of work (such as working full time as opposed to part time), and we counted parental education on the basis of whichever parent had attained the highest educational level. Second, we used recently released sample weights for the March 1990 CPS, which makes the data more equivalent to the March 1994 CPS, although it would differ slightly from previously published analyses of the March 1990 CPS.
subsections: section_title: About the Survey
paragraphs: The CPS is the source of official government statistics on employment and unemployment. Although the main purpose of the survey is to collect information on employment, an important secondary purpose is to collect information on the demographic status of the population, such as age, sex, race, marital status, educational attainment, and family structure. The CPS survey conducted every March also collects additional data on work experience, income, noncash benefits, and health insurance coverage of each household member at any time during the previous year.
The CPS sample is based on the civilian, noninstitutionalized population of the United States. About 57,000 households with approximately 112,000 persons 15 years old and older and approximately 33,000 children aged 0 to 14 years old are included. It also includes Armed Forces members living in households with civilians either on or off base. The households sampled by the CPS are scientifically selected on the basis of area of residence to represent the United States as a whole, individual states, and other specified areas.
section_title: Definition of Insurance Status
paragraphs: We defined insurance status using a hierarchy. If a child had multiple coverage during the year, we counted that child under only one type of coverage. (See table III.1.) We counted employment-based insurance, which is the most common type for children to have, as the primary insurance. If a child had both employment-based insurance and Medicaid, that child was counted as having employment-based insurance. Since most Medicaid children with multiple coverage had Medicaid and employment-based coverage, our count of Medicaid children better represents children who depended entirely on Medicaid for any insurance coverage.
Did not have any health insurance during the entire year.
Had health insurance purchased through a parent’s employer or union for at least part of the year.
Did not have employment-based health insurance at all, but had Medicaid or Medicare coverage for at least part of the year.
Did not have employment-based insurance or Medicaid or Medicare coverage at all, but had CHAMPUS coverage for at least part of the year.
Did not have employment-based insurance, Medicaid or Medicare coverage, or CHAMPUS at all, but had private/individually purchased health insurance coverage for at least part of the year.
The Census has published a table with information from the CPS that reports multiple coverage. It has different numbers and percentages for insurance status of children with Medicaid, CHAMPUS, and private/individually purchased health insurance than we reported because it reports multiple coverage on the unmatched data set. (See table III.2.)
subsections: section_title: Matching Children With Parents
paragraphs: We matched children with parents to analyze family characteristics. The Census considers a family to be two or more persons residing together and related by birth, marriage, or adoption. The Census develops family records for the householder (a person in whose name the housing unit is owned, leased, or rented, or if no such person, an adult in the household), other relatives of the householder with their own subfamilies, and unrelated subfamilies. If the house is owned, leased, or rented jointly by a married couple, the householder may be either the husband or wife. We paired children to an adult (aged 18 through 64) in their immediate family whom we call a parent. After this pairing, we matched the adult family member to a spouse, if any, to get “parents” in our file.
We were not able to match all children with parents. Because data in this report are based only on the matched files, the number of children reported in every insurance category is conservative. The estimates of Medicaid and uninsured children are more conservative than the estimate of children with employment-based insurance because we were able to pair fewer Medicaid and uninsured children with an adult than children with employment-based insurance. (See table III.2.)
section_title: Determining Parents’ Work and Educational Status
paragraphs: The way we matched parents with children to analyze the association of work effort, education, and insurance for children helped develop a more accurate picture of uninsured and Medicaid children with working and more highly educated parents. We analyzed parent work status on the basis of information about the parent who worked the most. (See table III.3.) We also reported educational status on the basis of whichever parent had the highest educational status—graduate education, bachelor’s degree or 4 years of college, some college, high school diploma, or less than a high school diploma. This allowed us to more accurately portray the work status or education of parents in two-parent families.
Either parent worked full time/full year.
No parent worked full time/full year, but at least one worked full time part of the year.
No parent worked full time, but at least one parent worked part time for the entire year.
No parent worked either full time or full year, but at least one parent worked part time for part of the year.
No parent worked at all during the entire year.
Conducting the analysis in this way allowed us to search for a parent more likely to have insurance—either because they worked more or were more educated. We found some interesting results from this analysis. For example, we found more uninsured and Medicaid children living with at least one parent who worked full time than if we had not searched for employment status of both parents in two-parent families. We also found fewer uninsured and Medicaid children who lived with a parent who had less than a high school diploma.
section_title: Using Weights Based on the 1990 Census
paragraphs: The CPS is based on a sample of the U.S. population, and weights are used to compute the estimates for the total population. The basic weight represents the probability that individuals will be included in the survey. The weights are computed on the basis of information from the decennial censuses.
We used weights based on information from the 1990 census for both 1989 and 1993 to make them more equivalent. Information from the 1990 census was not available when the March 1990 CPS public use survey tapes were first released so those tapes were originally released with weights established through information from the 1980 decennial census. Since then, the Census Bureau released adjusted weights for the March 1990 CPS that can be used in analyzing that CPS file. We used weights adjusted to the 1990 census provided by the Census Bureau for both the 1989 and 1993 data to make the data more comparable and to make the 1989 data more accurate. We also did a sample run on the 1989 data using the earlier census weights to compare the differences. Using the more recent weights yields slightly different results, such as a small increase in the number and percentage of children uninsured or on Medicaid.
section_title: Related GAO Products
paragraphs: Medicaid: Spending Pressures Drive States Toward Program Reinvention (GAO/HEHS-95-122, Apr. 4, 1995).
Medicaid: Restructuring Approaches Leave Many Questions (GAO/HEHS-95-103, Apr. 4, 1995).
Medicaid: Experience With State Waivers to Promote Cost Control and Access Care (GAO/HEHS-95-115, Mar. 23, 1995).
Uninsured and Children on Medicaid (GAO/HEHS-95-83R, Feb. 14, 1995).
Health Care Reform: Potential Difficulties in Determining Eligibility for Low-Income People (GAO/HEHS-94-176, July 11, 1994).
Medicaid Prenatal Care: States Improve Access and Enhance Services, but Face New Challenges (GAO/HEHS-94-152BR, May 10, 1994).
Employer-Based Health Insurance: High Costs, Wide Variation Threaten System (GAO/HRD-92-125, Sept. 22, 1992).
Access to Health Insurance: State Efforts to Assist Small Businesses (GAO/HRD-92-90, May 14, 1992).
Mother-Only Families: Low Earnings Will Keep Many Children in Poverty (GAO/HRD-91-62, Apr. 2, 1991).
Health Insurance Coverage: A Profile of the Uninsured in Selected States (GAO/HRD-91-31FS, Feb. 8, 1991).
Health Insurance: An Overview of the Working Uninsured (GAO/HRD-89-45, Feb. 24, 1989).
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subsections: section_title: Address Correction Requested