SCHIP Gives States Better Deal Than Medicaid - Brief Article

0 Comments | Family Practice News, March 1, 2001 | by Jennifer Silverman

States wanting to expand insurance coverage for low-income families have found a better option than Medicaid to access funds: the State Children's Health Insurance Program.

Waivers granted to Rhode Island, New Jersey, and Wisconsin in January gave those states an enhanced federal match to boost health insurance coverage for low-income families whose incomes exceed Medicaid levels but who can't afford private coverage. Other states want this flexible option to help their uninsured citizens, but there are concerns that carving out funds from a children's program for parents will eventually undermine its intent--to insure children.

The waiver approvals are the first ever to be granted by the Department of Health and Human Services under the State Children's Health Insurance Program (SCHIP) statute, which contains an option for states to include parents under certain circumstances.

The deal gives states the flexibility to use existing allocated SCHIP funds for parents; it does not give states more money, said Cindy Mann, director of Family and Children's Health Programs with the Health Care Financing Administration's Center for Medicaid and State Operations, Washington, D.C.

Once a state has covered its needy children with SCHIP funds, the waiver enables remaining funds to be used for parents, Ms. Mann said in an interview.

All three states have been covering parents under Medicaid or SCHIP/Medicaid programs for some time, but the SCHIP waivers give parents a higher match rate than if they just went through Medicaid, said Joan Alker, deputy director of government affairs for Families USA in Washington, D.C., a group that supports family coverage efforts.

For every dollar that the federal government gives to Medicaid, the state has to match that rate at a certain percentage. The national average for the Medicaid match rate is 50% federal and 50% state. In a state where the rate is 50%, the SCRIP rate might be 60%, so the state has to spend only 40 cents per dollar under SCHIP instead of 50 cents per dollar under Medicaid.

Wisconsin's waiver hikes its federal match rate from 60% to 71%, increasing federal funds to the state by $2 million for the remainder of 2001. This allows Wisconsin to maximize health care coverage and reduce pressure on a tight state budget, said Joe Leean, secretary for the state's Department of Health and Family Services in Madison, Wis. Families eligible for these funds must make below 185% of the federal poverty level.

The Rhode Island Department of Human Services estimates that shifting the funding stream to SCRIP will increase the federal share of the match rate from 54% to 67%.

The higher rate will assist Rhode Island parents with incomes at or below 185% of the federal poverty level, who have been eligible for the state's Medicaid/SCRIP program since 1998.

New Jersey plans to enroll the parents of children eligible for Medicaid and SCRIP who have family incomes of up to 200% of the federal poverty level. The target enrollment for parents with the aid of the waiver is 80,000, said Michelle Walsky, chief of operations with the New Jersey Department of Human Service's Division of Medical Assistance and Health Services in Trenton, N.J.

Once adult enrollment reaches that mark, adults will be placed on a waiting list to make room for children needing coverage, Ms. Walsky said.

Expanding SCRIP funds to parents fulfills a Clinton administration initiative to advance the program to the next logical step, a spokeswoman for HCFA told this newspaper.

Coverage of children from low-income families will remain the program's first priority, the HCFA spokeswoman said. "It is not our intent to cover parents in lieu of children."

Ms. Mann of HCFA's Center for Medicaid and State Operations said the program's 5-year, $24 billion cap prevents SCHIP from making any long-term commitments to parents. The waivers extend some coverage to parents while promoting coverage of children--which is a better option than not covering parents at all.

But Dr. Leonard Kirschner, a health care consultant with William M. Mercer in Phoenix, Ariz., a human resources benefits consulting firm, disagreed. Because the S CHIP funds are finite, the federal matching funds that states are getting from the waivers to expand family coverage is a good policy idea--but a bad budget idea.

"You can't fund that many kids if you're going to be spending the money on parents," Dr. Kirscbner said. Including a new population under a program that was once exclusively for children also creates a hodgepodge of new rules that will receive inconsistent treatment from the courts.

The need for long-term funding concerns Alan Weil, director of the Assessing the New Federalism project at the Urban Institute, Washington, D.C. Money for SCHIP is plentiful right now because not all of the states have used up their SCHIP allocations, he said. Adding parents currently doesn't take money away from kids, but funding restraints are bound to materialize in a few years, as the funding level for SCHIP goes down and state SCHIP programs mature.