Overview of Medicaid/SCHIP Eligibility

Expand Medicaid/SCHIP Eligibility to Cover More Uninsured Adults and/or Children

What is it?

The primary purpose of expanding eligibility for Medicaid and/or the State Children's Health Insurance Program (SCHIP) is to increase the number of people who are eligible for these public programs, with a particular focus on individuals who do not have access to employer sponsored insurance and who cannot afford to purchase private insurance policies.

Poor and near poor adults and children are the most likely to lack health insurance. More than a third of adults with incomes below 100 percent of the federal poverty level (FPL) and nearly a third of adults with incomes less than 200 percent of the FPL are uninsured, compared with 18.1 percent of those with incomes between 200 and 300 percent of the FPL, 10.7 percent of those with incomes between 300 and 400 percent of the FPL, and 5.4 percent of those with incomes equal to or greater than 400 percent of the FPL (Hoffman, Schwartz, and Tolbert, 2007). In general, health insurance can potentially improve access to care, increase use of optimal health care, improve quality of care received, and reduce consumer financial risk. However, factors such as type of benefit design, levels of cost sharing, size and composition of the network of providers, levels of provider reimbursement, supply of health care resources within certain areas, access to transportation, language barriers, and existing racial and ethnic health care disparities can mitigate the health benefits that health insurance may offer.

Medicaid and SCHIP are public health insurance programs that provide health benefits to certain low income groups. Medicaid is a federally regulated, state administered, jointly funded health insurance program for low income families and individuals who meet certain eligibility requirements under federal and state law. Although the federal government provides general guidelines regarding which individuals must be covered under Medicaid, states set their own guidelines regarding eligibility, for determining income and resources, and for deciding the breadth of services covered. Eligible individuals typically fall under three types of groups: categorically needy, medically needy, or special groups. States may extend eligibility, under the medically needy option, to include additional individuals who may have incomes too high to qualify under mandatory or optional categorically needy groups.

SCHIP was authorized by the Balanced Budget Act of 1997, and it extended health insurance coverage to children in families with incomes slightly higher than the Medicaid income eligibility cutoff. States were granted substantial flexibility by the federal government in designing their programs with regard to eligibility, benefits, cost sharing, and administrative structure. SCHIP allows states to provide coverage to children in families with incomes up to 200 percent of the FPL or up to 50 percentage points above the state's Medicaid income eligibility threshold. As of 2006, twenty six states had set SCHIP income eligibility at 200 percent of the FPL, 15 states had set income eligibility above this threshold, and 9 had set it below. SCHIP was recently reauthorized by Congress with new provisions (see discussion below).

States were granted substantial flexibility in how they administered SCHIP. States were allowed to implement SCHIP by extending Medicaid through SCHIP funding, by instituting a separate SCHIP, or by implementing a combination of Medicaid and SCHIP. Most states have implemented a separate SCHIP, because this allows states more flexibility in designing the benefits covered, setting cost sharing requirements, and controlling enrollment. Under expanded Medicaid, or combined Medicaid and SCHIP, states were prohibited from instituting any cost sharing requirements. Under a separate SCHIP, states are allowed to implement such cost sharing requirements as premiums, deductibles, or copayments as well as other mechanisms to limit enrollment, such as waiting periods or enrollment caps. Cost sharing requirements, however, were prohibited from exceeding five percent of a person's household income. States operating a separate SCHIP were required to provide a minimum set of benefits as mandated by the federal government. Most states operating a separate SCHIP provide benefits similar to those provided under Medicaid (Dubay and Kenney, 2002).

How would it work?

Possible policy options include increasing income eligibility cutoffs to allow higher income individuals to enroll in Medicaid and/or SCHIP (e.g., up to 300 percent of the FPL or higher) or easing age requirements to allow parents of eligible children or childless adults to enroll. Other proposals would grant universal coverage to all children.

The Children's Health Insurance Program Reauthorization Act was signed into law by President Obama on 2/4/09. It reauthorizes the State Children's Health Insurance Program (SCHIP) through fiscal year (FY) 2013 at increased levels and provides for the determination of allotments for the states, territories and District of Columbia for FY 2009—2013. The new law allows states to use certain funds to pay for medical assistance to individuals under age 19 whose family income exceeds 150 percent of the poverty line. It also gives states the option to cover targeted low income pregnant women under SCHIP through a state plan amendment if certain conditions are met, including that the state has established an income eligibility level of at least 185 percent of FPL for pregnant women under Medicaid. The law sets the minimum eligibility level for children under age 19 at 200 percent of FPL. It also provides for automatic enrollment for children born to women receiving pregnancy related assistance. The law provides for phaseout of SCHIP coverage for nonpregnant childless adults, leaving states the option to apply for a Medicaid waiver to continue such coverage. Finally, it limits the federal matching rate for states that propose to cover children with effective family income that exceeds 300 percent FPL but "grandfathers in" states that already have an approved plan amendment or waiver to provide such expenditures.

Has it been tried before?

Some states have expanded eligibility to people who enroll in Medicaid managed care programs under federal waivers available to states under Section 1115 of the Social Security Act. States have also utilized Section 1115 waivers to expand SCHIP eligibility to parents of eligible children, pregnant women, related caregivers or legal guardians, and/or adults without children. States also have flexibility in calculating an individual? income and resources and in setting income and resources eligibility limits. However, for certain groups, income and resource calculations cannot result in the individual? income exceeding the prescribed limit for federal matching. Although expansions in Medicaid and SCHIP in some states have successfully expanded coverage to children, many children remain uninsured. Children who are very young (less than one year old) and children nearing the age of 18 are the most likely to be uninsured (Hoffman, Schwartz, and Tolbert, 2007).