Reaching Low-Income, Uninsured Children: Are Medicaid and SCHIP Doing the Job?

Publication Date: January 2001

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Health

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Abstract:

Congress has shown an on-going commitment to improving children's access to health care as demonstrated through eligibility expansions of the Medicaid program since the 1980s, and the introduction of the State Children's Health Insurance Program (SCHIP) in the fall of 1997. The majority of poor and near poor children are financially eligible for one of these programs.

Until recently, there was general disappointment with the implementation progress under SCHIP, due to low enrollment rates early in the program. Furthermore, after steady increases in the early 1990s, Medicaid caseloads showed an aggregate decline between 1995 and 1997. By FY2000, the pace of enrollment under SCHIP had improved, and data for 1998-1999 suggest that the decline in Medicaid participation may be reversing.

States have instituted a variety of outreach activities to bring eligible children into these two programs. Substantial progress has been made in simplifying the application and enrollment process under SCHIP, and also to a lesser extent under Medicaid. Budget limitations require state administrators to think carefully about their choice of outreach and enrollment facilitation strategies. However, current research assessing the cost-effectiveness of these strategies is inconclusive. Future state and federal evaluations of both Medicaid and SCHIP may start to identify what works, what does not, for whom, and at what cost.

Outreach funding is structured very differently under Medicaid and SCHIP. Medicaid does not have a specific limit on program spending for outreach, although the federal matching rate for such administrative activities can be lower than that for direct services. To date, there has been relatively low use by states of a special $500 million fund for Medicaid outreach to children losing welfare. For federal matching purposes under SCHIP, there is a limit on spending for administrative expenses including outreach and education. This cap in a given fiscal year is 10% of the amount states actually spend on benefits, rather than 10% of appropriated levels. Recent legislation changes SCHIP outreach funding.

Medicaid and SCHIP enrollment patterns are affected by complex interactions between economic trends, federal and state policies, program administrative procedures, and beneficiary perceptions. These interactions result in enormous enrollment variability across states, suggesting that some solutions may need to be state-specific. Given significant reductions in Medicaid enrollment among adults with children, some have argued that providing Medicaid and SCHIP to whole families may be a more effective mechanism for reducing the number of low-income children without health insurance than the current fractured set of eligibility rules. Further simplification of such rules, streamlining enrollment processes, and additional outreach are also important to improving coverage rates. These goals must be balanced with budget constraints that may result from any future economic downturns that may increase the number of individuals eligible for, and enrolling in these programs.