How Public Health Insurance Programs for Children Work

Abstract

Despite the disturbing fact that approximately 9 million children in the United States lack insurance, without public programs such as Medicaid and the State Children's Health Insurance Program (SCHIP), many millions more would be uninsured. Since 1965, Medicaid has provided states with funding and a framework to provide a comprehensive set of health services to needy children and adults. More recently, since SCHIP's implementation in 1997, states have had another tool at their disposal with which to simplify and expand children's coverage. Through state policy decisions, each state has created a unique configuration of services and populations. This article reviews the entire spectrum of coverage for children in the United States: private and public health insurance, and no health insurance. It places particular emphasis on the main features of Medicaid and SCHIP. The ways that these programs have influenced and benefited each other are also considered, as well as their comparative strengths and weaknesses. In addition, the article discusses innovations that have emerged as states have experimented with different ways to provide health coverage to children. It concludes by considering the implications of increasing fiscal pressures on programs, and the progress that states have made in coveting children. The Spectrum of Children's Health Coverage Children in the United States receive health coverage from a variety of sources. In general, coverage falls into one of five different categories. (1) As Figure 1 shows, the majority of children (51 million) have private health insurance. Another 18 million children are covered by the two major public health insurance programs: Medicaid (15 million) and SCHIP (3 million); meanwhile, 2 million children have some other form of health coverage, such as military health care or Medicare. (2) Despite the range of coverage options, approximately 9 million children remain uninsured. A range of factors contributes to this problem, including the ways in which programs are designed and implemented. Private Health Insurance In 2000, 51 million children in the United States had private health insurance coverage. (3) The majority (94%) obtained this coverage through their parents' employers. The remaining 6% were in families with individual health insurance policies. Most privately insured children were in families with incomes over 200% of the federal poverty level (FPL), or $36,200 for a family of four. In 2000, employer coverage cost $202 per month for an individual and $529 per month for a family. (4) While employers paid most of these premiums, employees paid an average of $54 per month for individual coverage and $180 per month for family coverage. (5) Three-quarters of private health insurance policies had deductibles, and more than one-half of the deductibles were greater than $150 per year. (6) Co-payments or $10 to $20 were typical for office visits. Private health insurance policies tend to cover physician services, hospital services, prescription drugs, and limit ed mental health and long-term care services. (7) Transportation, translation, and long-term behavioral health and physical health care services are not included in most private benefit packages. Almost all private health insurance is delivered through some form of managed care, with 38% of enrollees in preferred provider organizations, 28% in health maintenance organizations (HMOs), and 25% in point-of-service plans. Only 9% of policies are delivered through fee-for-service (FFS). More than one-third of all enrollees in employer-based coverage are in self-funded plans. (8) Medicaid About one-fifth of American children receive health coverage through Medicaid. (9) A federal program, Medicaid is jointly funded by the federal and state governments. Overall, the federal government pays 57% of Medicaid costs, and states pay 43%, though the actual matching rates range from 50% to 77%, according to each state's ability to contribute. …