Federal Funds Allowed States To Maintain Health Care For Poor Children

Even as states grappled with crippling budget deficits and the political fallout of the deeply divisive health care overhaul, they maintained high rates of coverage for children in low-income families-thanks to enhanced federal Medicaid funding.

That’s according to a report released today by the Kaiser Family Foundation (KFF), which tracks trends in enrollment procedures, eligibility rules and cost-sharing practices in Medicaid programs, the joint federal-state health coverage for low-income people. (KHN is a project of the KFF.)

“Unlike other insurers, Medicaid is designed to expand its reach in difficult times,” said Cindy Mann, who directs the Center for Medicaid, CHIP and Survey & Certification within the federal Centers for Medicare & Medicaid Services (CMS). Mann called the findings of the KFF report “heartening.”

Job losses prompted by the continuing economic recession last year swelled the ranks of the country’s uninsured — estimated at 50 million in 2009 — as a growing number of families turned to Medicaid and the Children’s Health Insurance Program (CHIP) for health coverage. Were it not for extra federal funds provided as part of the stimulus package in 2009, many cash-strapped states would have slashed coverage in 2010, according to the report.

Instead, only two states-Arizona and New Jersey-did so, leveraging exceptions in the policies designed by the federal government to prevent coverage reductions. Other states sought to keep costs down without narrowing eligibility rules–by eliminating benefits, raising premiums, or increasing copayments. Those changes were “modest” overall, according to the foundation’s report.

In addition, 13 states made Medicaid coverage available to a wider segment of the population, and six states used federal funding from the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA) to fund coverage for lawfully residing immigrant children or pregnant women.

Oregon expanded income eligibility for children from 200 percent to 300 percent of the federal poverty level, and now allows families above that limit to buy into the program at full cost. Colorado also expanded eligibility for children, pregnant women and parents last year under its own Healthcare Affordability Act.

“There was huge pent-up demand and unmet need among parents of our low-income children,” said Joan Henneberry, echoing a key finding of the Kaiser Family Foundation report. Henneberry, who is the executive director of Colorado’s Department of Health Care Policy and Financing, said most of the new entrants into the state’s newly expanded Medicaid program were adults.

But in most other states, health coverage for parents and childless, non-disabled adults was marginal or nonexistent last year, the KFF report found. Childless adults make up 60 percent of the uninsured population, while those with children account for 24 percent, according to the foundation. The remaining 17 percent are uninsured children.

“Access to care for parents does not come close to matching that of children, and for non-disabled adults it lags even further behind,” said Tricia Brooks, a senior fellow at the Georgetown University Health Policy Institute Center for Children and Families and a co-author of the report.

Parents in a family of three making $18,310 per year-100 percent of the federal poverty level-didn’t qualify for coverage in 33 states last year, the study found. As of January 2011, only six states and the District of Columbia provided Medicaid benefits to adults without dependent children.

Under the federal health overhaul law, Medicaid eligibility will be extended to adults who earn up to 133 percent of the federal poverty level-with an option for individual states to expand eligibility if they choose to. Unless states decide to expand their current Medicaid coverage rules, most adults will have to wait until 2014, when most of the health law’s provisions kick in, to find affordable health coverage.

Under the federal stimulus act, states received a temporary boost in the share of Medicaid costs covered by the federal government. As a condition of receiving the funds, states were locked into a “maintenance of effort” requirement-prohibiting them from making their Medicaid programs’ eligibility rules or enrollment procedures any stricter than they were as of July 2008.

Those terms will end when states stop receiving stimulus funds in June, but similar provisions in the new health law will take their place.

Several state officials have called those requirements excessive. Last week, 33 governors sent letters to federal leaders criticizing the maintenance of effort provisions, saying they “prevent states from managing their Medicaid programs for their unique Medicaid populations.”

The governors are requesting that federal leaders remove the restrictions immediately-but state Medicaid officials and health care advocates fear that move would pave the way for states to reverse the coverage improvements they’ve made thus far.

“If the protections for Medicaid and CHIP are dismantled, the success we’ve achieved in covering a record 90 percent of children will be very much at risk,” Brooks said. Instead, she said, governors “should request that extra financial help for Medicaid be extended.”

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