Health insurance helps children obtain health care. Children without health insurance are less likely to have routine doctor visits, seek care for injuries, and have a regular source of medical care. Their families are more likely to take them to a clinic or emergency room (ER) rather than a private physician or health maintenance organization (HMO). Children without health insurance are also less likely to be appropriately immunized—an important step in preventing childhood illnesses. During the 1980s, employment-based health insurance—the most common source of health coverage for Americans—decreased. By 1993, more than 39 million Americans lacked any type of health insurance. Almost one-quarter of these people were children, despite the relative affordability of providing insurance for children. Uninsured children are generally children of lower-income workers. Lower-income workers are less likely than higher-income workers to have health insurance for their families because they are less likely to work for a firm that offers insurance for their families. Even if such insurance is offered, it may be too costly for lower-income workers to purchase. In 1993, 61 percent of uninsured children were in families with at least one parent who worked full time for the entire year the child was uninsured. About 57 percent of uninsured children had family income at or below 150 percent of the federal poverty level. Recognizing the need to provide insurance for children, the federal government and the states expanded children’s eligibility for Medicaid, a jointly funded federal/state entitlement program. Beginning in 1986, the Congress passed a series of Medicaid-expansion laws that required states to provide coverage to certain children and pregnant women and gave states the option to expand eligibility further. Many states opted to use this approach instead of funding their own programs, because expanding Medicaid allowed them to get matching federal funds. As of April 1995, 37 states and the District of Columbia had expanded coverage for infants or children beyond federal requirements. In addition to these expansions, between 1991 and August 1995, five states implemented Medicaid demonstration waivers, some of which included coverage expansions to some uninsured children. Between 1989 and 1993, Medicaid expanded from covering 14 percent of U.S. children (8.9 million) to 20 percent (13.7 million). Nevertheless, many uninsured children remain ineligible for Medicaid. Beginning in 1985, states and private entities began to fund programs that provided insurance for children who were ineligible for or not enrolled in Medicaid and did not have private or comparable insurance coverage.The programs we visited varied in several respects, but all were limited in how many children they could cover by the size of their budgets, which depended on their funding sources. Every state had substantially more uninsured children than children enrolled in one of these programs. Almost all of these programs have had to restrict enrollment and develop waiting lists of children who could not enroll because of insufficient funding. To target their funding, most programs restricted enrollment to low-income, uninsured children not enrolled in Medicaid. In 1995, 31 states had either a publicly or privately funded program that provided health insurance coverage for children. (See app. I for a list of these states.) Fourteen states had publicly funded programs that provided insurance for children, which generally relied heavily on state funding. In 1994, these programs enrolled from 39 to 98,538 children and had budgets ranging from about $240,000 to about $71.5 million. In addition to state-level efforts, the private sector developed voluntary insurance programs supported through philanthropic funding. The best known of these are the Caring Programs, sponsored by 24 Blue Cross/Blue Shield organizations in 22 states. The Caring Programs, which served more than 41,000 children in 1994, ranged in size from 400 to almost 6,000 enrolled children and had budgets from $100,000 to $4.3 million. The four state- and two privately funded programs that we visited varied in enrollments and funding sources. They provided insurance coverage to between 5,532 and 104,248 children under set yearly budgets. Much of the state programs’ funding came from state general revenues, cigarette or tobacco taxes, or health care provider taxes; counties; and foundations and other private-sector entities. The private programs each received funding from Blue Cross/Blue Shield and from private individuals and organizations. The programs’ costs, covered services, and premium subsidies also varied. Moreover, four of the programs operated statewide, but Florida Healthy Kids and the Western Pennsylvania Caring Program for Children operated only in certain counties. (See table 1.) Unlike state Medicaid programs, which operate as open-ended federal/state entitlements, all the programs we reviewed operated within limited and fixed budgets. These budgets did not allow them to cover most of the uninsured children in their states. The private program budgets were limited by the amount that could be raised by corporate donors, such as Blue Cross/Blue Shield, and individual donors. The state-funded programs had larger budgets, but they, too, were limited by the amount of funding states were willing to devote to insuring children. All the states in which these programs operated had more uninsured children than children enrolled in the programs.For example, New York’s Child Health Plus Program represented a substantial investment for the state in children’s health coverage—$55 million—and it had the largest enrollment: 104,248. But in 1993, New York State had almost half a million uninsured children. Other programs could only cover a small fraction of their uninsured. For example, Alabama had 156,000 uninsured children in 1993, and its Caring Program covered 5,922 in 1995—only about 3 percent. MinnesotaCare had the highest ratio of enrolled children in 1995 to uninsured children in 1993: 44,689 to 76,517, or 58 percent. Lack of funding forced all the programs we visited (except Minnesota’s) to restrict enrollment at times and to relegate children who applied for the program to waiting lists. According to child advocates and officials of these programs, restricting enrollment and developing waiting lists undermine program credibility. In addition, Florida has been unable to start its Healthy Kids Program in many interested counties because the program has lacked funding. The programs we visited limited program eligibility to cover children most in need of insurance. Generally, they tried to cover low-income, uninsured children not enrolled in Medicaid in order not to duplicate existing public coverage. Four programs limited eligibility to families on the basis of their income, although each program’s income eligibility differed. All six were designed to complement Medicaid coverage for children, since none enrolled children who had Medicaid coverage and most tried to steer possibly eligible children to Medicaid first. Four programs required children to be uninsured, although two allowed children with limited and noncomparable coverage to enroll. (See fig. 1.) d 275% of FPL 185% of FPL 235% of FPL All eligible children in a family must be enrolled. Enrollment in other health insurance is allowed as long as the coverage is not equivalent to the coverage offered under Florida Healthy Kids Program or New York’s Child Health Plus Program. Children must also be enrolled in the National School Lunch Program. Federal poverty level. Children whose family incomes are between 150 and 275 percent of FPL cannot have had insurance for the 4 months before applying for MinnesotaCare and cannot have had access to employer-paid insurance for the 18 months before applying for MinnesotaCare. The maximum eligible age will increase by 1 year each year on October 1, until the maximum age of 17 is reached in 1996. Two programs—New York’s Child Health Plus and Florida’s Healthy Kids—covered uninsured children at any income level as long as their families paid the full premium costs. These two programs also extended coverage to insured children if their health insurance was not comparable to what the programs offered. In western Pennsylvania, state- and privately funded programs developed eligibility criteria to minimize duplication of coverage. The three children’s health insurance programs in western Pennsylvania—Medicaid, the state-funded Children’s Health Insurance Program, and the privately funded Western Pennsylvania Caring Program for Children—in combination provided coverage to children under 6 with family income at or below 235 percent of FPL and to children from 6 to 19 with family income below 185 percent of FPL. The Western Pennsylvania Caring Program for Children changed its eligibility criteria after the Children’s Health Insurance Program was developed to complement its coverage and provide coverage for children that it did not cover. (See fig. 2.) Health insurance costs for individuals were partially dependent on the costs of covered medical services, but other factors influenced costs as well. Some programs covered inpatient care and other expensive services, while others chose to limit or exclude expensive services. Moreover, the premium costs per child were similar in some of the programs that covered inpatient care and other expensive services and in some that limited such services or did not cover them. In addition to limiting services, state and private programs used other strategies to manage costs, such as sharing costs with patients and using competitive bidding and managed care. One factor that did not significantly increase costs as had been expected by program administrators was excessive use of health services. On the contrary, program children’s use of services was similar to that of privately insured children. The state and private programs’ benefit packages varied from providing only primary and preventive care and emergency and accident services to providing a comprehensive range of benefits, including inpatient services. Costs to provide coverage for children varied from $20 to $70.60 per month, partly because of the kinds of services covered and the limitations on those services. All programs provided a core set of services that program officials cited as most important for most children. These services included primary and preventive services—such as well-child visits, immunization, outpatient surgery, outpatient physician services, and diagnostic testing—and outpatient emergency services. In addition, most programs offered other benefits, such as mental health services, vision and hearing care, and prescription drugs. Three of the state- and privately financed programs also provided some dental services.