Studies have shown that insured children are more likely than uninsured children to get preventive and primary health care. Insured children are also more likely to have a relationship with a primary care physician and to receive required preventive services, such as well-child checkups. In contrast, lack of insurance can inhibit parents from trying to get health care for their children and can lead providers to offer less intensive services when families seek care. Several studies have found that low-income and uninsured children are more likely to be hospitalized for conditions that could have been managed with appropriate outpatient care. Most insured U.S. children under age 18 have health coverage through their parents’ employment—62 percent in 1996. Most other children with insurance have publicly funded coverage, usually the Medicaid program. Medicaid—a jointly funded federal-state entitlement program that provides health coverage for both children and adults—is administered through 56 separate programs, including the 50 states, the District of Columbia, Puerto Rico, and the U.S. territories. Historically, children and their parents were automatically covered if they received benefits under the Aid to Families With Dependent Children (AFDC) program. Children and adults may also be eligible for Medicaid if they are disabled and have low incomes or, at state discretion, if their medical expenses are extremely high relative to family income. Before 1989, coverage expansions for pregnant women and children based on family income and age were optional for states, although many states had expanded coverage. Starting in July 1989, states were required to cover pregnant women and infants (defined as children under 1 year of age) with family incomes at or below 75 percent of the federal poverty level. Two subsequent federal laws further expanded mandated eligibility for children. By July 1991, states were required to cover (1) infants and children up to 6 years old with family income at or below 133 percent of the federal poverty level and (2) children 6 years old and older born after September 30, 1983, with family income at or below 100 percent of the federal poverty level. Since 1989, states have also had the option of covering infants with family income between 133 percent and 185 percent of the poverty level. States may expand Medicaid eligibility for children by phasing in coverage of children up to 19 years old more quickly than required, by increasing eligibility income levels, or both. The demographic analysis in this report, however, focuses on the group of children for whom coverage is mandated. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L 104-193), also known as the Welfare Reform Act, substantially altered AFDC and Supplemental Security Income (SSI) but made relatively few changes to the Medicaid program itself. The law replaced AFDC with a block grant that allowed states to set different income and resource (asset) eligibility standards for the new program—Temporary Assistance for Needy Families (TANF)—than for Medicaid. To ensure continued health coverage for low-income families, the law generally set Medicaid’s eligibility standards at AFDC levels in effect July 16, 1996, thereby ensuring that families who were eligible for Medicaid before welfare reform continued to qualify, regardless of their eligibility for states’ cash assistance programs. The law tightened the criteria for children to qualify for disability assistance through SSI, thus tightening eligibility for Medicaid. In addition, the law restricted aliens’ access to benefit programs, including SSI, and Medicaid benefits that were conditional on receipt of SSI. State and local governments were given some flexibility in designing policies that governed aliens’ eligibility for TANF, Medicaid, and social services. In a recently released report, we studied the Welfare Reform Act and its impact on Medicaid and found that in the states we visited, most chose to continue to provide Medicaid coverage to previously covered groups. The Balanced Budget Act of 1997 (P.L. 105-33) restored SSI eligibility and the derivative Medicaid benefits to all aliens receiving SSI at the time welfare reform was enacted and to all aliens legally residing in the United States on the date of enactment who become disabled in the future. At the same time, states continued to have flexibility in implementing certain benefits policies for aliens. Current law allows states the option of providing Medicaid coverage to aliens who were legal permanent residents in the country before August 23, 1996. States also have the option of covering legal residents who arrived after August 22, 1996, once they have resided in the United States for 5 years. Illegal aliens are eligible only for emergency services under Medicaid. (See table 1.) The Balanced Budget Act also made two changes that directly affect children’s coverage in the Medicaid program. It gives states the option of providing 12 months of continuous eligibility to children without a redetermination of eligibility, thereby avoiding the problem of children frequently moving on and off Medicaid as their parents’ circumstances change. The act also allows states to extend Medicaid coverage to children on the basis of “presumptive eligibility” until a formal determination is made. Under this provision, certain qualified providers can make an initial determination of eligibility, based on income, that an individual is eligible. The individual is then required to apply formally for the program by the last day of the month following the month in which the determination of presumptive eligibility was made. Finally, the Balanced Budget Act created the Children’s Health Insurance Program (CHIP), a grant program for uninsured children, through which $20.3 billion in new federal funds will be made available to states over the next 5 years. CHIP has a number of implications for Medicaid. If a state chooses to offer coverage through a separate program, the state must coordinate activities with the Medicaid program to ensure that Medicaid-eligible children are enrolled in Medicaid. The Congressional Budget Office estimated that the “outreach effect” of CHIP will result in an additional $2.4 billion in Medicaid spending over the same 5 years due to increased enrollment of 460,000 Medicaid-eligible children each year. States may also use the grant funds to expand coverage under their state Medicaid programs to reach additional low-income children, increasing the number of children potentially eligible for Medicaid. Uninsured Medicaid-eligible children differ somewhat from those currently enrolled in Medicaid, and these differences can be used by states to focus their outreach and enrollment efforts. Overall, about 23 percent—or 3.4 million—of the 15 million children who were eligible for Medicaid were uninsured in 1996. Slightly over half of the Medicaid-eligible children are insured solely by Medicaid, while about 7 percent have both Medicaid and private coverage. The remainder have coverage through other public programs, such as the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS) or the Indian Health Service. (See fig. 1.) Medicaid-eligible children who are uninsured have characteristics closer to Medicaid-eligible children who are privately insured than to those with Medicaid. They are disproportionately children of the working poor, Hispanic, and U.S.-born children of foreign-born parents or foreign-born, and they are more likely to live in the West and the South. Medicaid-eligible children are more likely to be uninsured if their parents work, if their parents are self-employed or employed by a small firm, or if they have a two-parent family. Children whose parents worked at all during the year—whether full-time, part-time, or for part of the year—are about twice as likely to be uninsured as those whose parents were unemployed. However, these children are more likely to be covered by employment-based insurance. The explanation for this apparent paradox is that children with employed parents are less likely to be covered by Medicaid, and employment-based coverage does not fully compensate for low rates of Medicaid participation. (See table 2.) Small firms are less likely than larger firms to offer health insurance; therefore, it is not surprising that children whose parents are self-employed or employed by small firms are less likely to be insured. This could suggest selective targeting of smaller firms in Medicaid outreach efforts, especially if it is known that they do not offer insurance. Half of all uninsured Medicaid-eligible children are in two-parent families, compared with only about 28 percent of those insured by Medicaid. The uninsured rate for Medicaid-eligible children is also higher in two-parent families than in single-parent families—30 percent compared with 18 percent. This again underscores that successful outreach efforts need to reach beyond the single unemployed mothers generally associated with both cash assistance programs and Medicaid. Among racial and ethnic groups, the proportion of uninsured Medicaid-eligible children, as well as the proportion enrolled in Medicaid, varies by racial and ethnic group. Among uninsured Medicaid-eligible children, Hispanics have the highest uninsured rate, while blacks are most likely to be enrolled in Medicaid. (See table 3 and table II.1 in app. II.) In 1996, almost 9 out of every 10 uninsured Medicaid-eligible children were U.S.-born, but many—over one-third—lived in immigrant families. In addition to the 11 percent who were immigrants, another one-quarter had at least one foreign-born parent. (See fig. 2.) The large number of children in immigrant families and the high proportion that are uninsured suggest that immigrant communities may be promising targets for outreach. (See table 4.) Over 70 percent of children in immigrant families are Hispanic, suggesting that outreach efforts be targeted to the Hispanic community as well as use Spanish-language outreach materials and applications. Medicaid eligibility criteria allow younger children with higher family income to enroll. Children under 6 years old in families with income at or below 133 percent of the federal poverty level are eligible for the program, according to federal mandate, as compared with older children whose families’ income must be at or below 100 percent of the federal poverty level. As a consequence, 54 percent of children who are Medicaid-eligible but uninsured are less than 6 years old. Nevertheless, outreach through schools could reach some of these younger children, since 42 percent have a school-age sibling aged 6 to 17.