Fiscal Fitness: How States Cope

Eligible but not enrolled: 12 million people—half of them children—could have coverage

Some 25% of people in the United States who lack health coverage are eligible for public insurance programs but are not enrolled due to barriers that make it difficult for them to do so. That's the conclusion drawn in a National Institute for Health Care Management Foundation (NIHCM) report. The group, whose principal sponsor is Blue Cross and Blue Shield plans, says that about 12 million people (half of them children) are reachable by Medicaid and SCHIP programs but fail to enroll because they're not aware the programs exist, they don't know how to enroll, or they fear being linked with a publicly financed program. NIHCM also found it can be difficult for those people to stay enrolled if they do enroll.

Although childless adults comprise more than half of the uninsured, NIHCM says there is little public assistance available for them. Since 2001, states have been allowed to expand coverage to childless adults and others who have been traditionally ineligible for Medicaid. But only seven states (Arizona, Idaho, Indiana, Michigan, New Mexico, Oregon, and Utah) currently have such coverage, and the programs often have low enrollment caps, cost-sharing requirements, or other eligibility limitations.

"The paucity of public coverage for low-income childless adults is really troubling," says NIHCM CEO Nancy Chockley. "This is a population that really can only be helped by an expansion of public programs or some form of subsidy, yet we don't see a lot of that out there across the states."

The 12 million people who are eligible for public coverage but are not enrolled are primarily low-income children and parents. This includes 6.1 million uninsured children, 64% of all uninsured children. Ms. Chockley says the vast majority of these children are in families with incomes below 200% of the federal poverty level. Since public program eligibility is more restrictive for adults, only 29% of uninsured parents (3.6 million people) and 10% of uninsured childless adults (2.4 million people) are reachable through public programs, according to the report.

The researchers found that administrative hassles can inhibit both program enrollment and retention. New enrollees often can feel daunted by the paperwork required to enroll in a program, while existing enrollees can be involuntarily disenrolled if they don't complete renewal forms. In Florida, for example, multiple administrative barriers reportedly led to a 39% drop in Florida's SCHIP rolls (a loss of 128,000 children). This was the largest decline reported in the United States. Ms. Chockley says the state has since made efforts to reverse the decline and early reports were that 16,000 children had been added to the rolls.

DRA continues to pose problems

Another barrier is the 2005 Deficit Reduction Act provision requiring those who want to enroll to show proof of U.S. citizenship. The law was intended to restrict enrollment among undocumented immigrants, but NIHCM cites concerns that it has led to inappropriate enrollment denials and/or delays for large numbers of citizens.

Ms. Chockley says children have the most to gain from solutions aimed at increasing enrollment in Medicaid and SCHIP, but since those programs already reach 79% of targeted children, more aggressive strategies are needed to reach remaining children. Ideas states could consider include automatic enrollment methods, removing binding enrollment caps, and simplifying the renewal process.

The report says improving program take-up among eligible people will not significantly reduce the ranks of uninsured parents and childless adults. There are 9.1 million uninsured childless adults and 4.8 million parents with incomes below 200% of the federal poverty level. One-third of each group has income below 100% of the federal poverty level. "These adults could be helped by extending current public programs or providing public subsidies," Ms. Chockley says. "With only seven states now providing public assistance to low-income childless adults and half of all states denying access to traditional Medicaid benefits for working parents in families above 63% of the federal poverty level, there is ample room for expansion just to reach the poorest adults. Covering more parents also would be expected to increase Medicaid and SCHIP enrollment among eligible children since there is evidence that children are more likely to be enrolled in these programs if their parents also are eligible."

Another challenge to be faced is that more than 40% of the uninsured have moderate to higher incomes. And since the vast majority of those with incomes above 200% of the federal poverty level have insurance, it is difficult to find affordable solutions without disrupting those who are insured. Policy options include mandates, tax credits, tax system changes, high-risk pools, and reinsurance. Ms. Chockley also notes that the private sector is beginning to develop insurance products tailored to previously uninsured people.

'Complicated proposition'

"What this report shows us is that reaching universal coverage is a very complicated proposition, but that we can get a quarter of the way there by getting more people who are eligible for public programs enrolled and we can make a lot of headway, too, by looking for subsidies for low-income childless adults and parents," she says.

Ms. Chockley acknowledges that current state budget problems make it less likely that states will be able to increase enrollment among people who are currently eligible and also dampen the outlook for expanding eligibility to others.

The report says strategies and solutions to increase enrollment and retention among those eligible for public programs include increasing outreach and education activities, simplifying eligibility determination, and facilitating enrollment and reenrollment processes.

One possible avenue for improving program uptake, it says, would be for Medicaid and SCHIP to adopt automatic enrollment methods that dispense with the need for individuals to complete applications. Such automatic enrollment relies on data sharing with other means-tested programs to determine categorical eligibility after eligibility in a more restrictive public program is verified. Removing binding eligibility caps would be another way to increase enrollment among eligible people.

Most strategies for reducing program dropout, according to the report, revolve around simplifying the renewal process. Options would include changing from biannual to annual re-enrollment, providing enrollees with renewal forms that have already been filled out with their prior-year information, and using passive enrollment for SCHIP programs so that families must update their eligibility information only when there have been significant changes in their situations. NIHCM says there also is evidence that programs covering parents and children together result in higher retention of eligible children.

"It is worth noting that improving outreach and facilitating program enrollment and retention among currently eligible persons will have limited appeal to states if their budgets and federal matching funds are not sufficient to support higher enrollment levels," the report cautions. "Faced with budget constraints, states may be fearful of making enrollment too easy for current eligibles and being overwhelmed by enrollment and burgeoning program costs."

Solutions for reaching the 34.5 million uninsured nonelderly people who are not eligible for current public programs may include expansions of these public programs, strengthening private market options, or some combination of those two approaches. NIHCM says the cost and political feasibility of those options will be linked in some fashion to the income level and characteristics of the groups being targeted.

Comprehensive reform choices

Choices also must be made about how comprehensive reforms should and can be. While some favor a comprehensive approach using a mix of public- and private-sector solutions in a coordinated manner in an effort to achieve universal coverage, others believe that incremental reforms designed to address priority subpopulations of the uninsured may be more pragmatic.

Efforts to increase coverage through expanded public programs or improvements in the private market need to be coupled with initiatives to control health care spending, NIHCM says. Since increased spending on health care translates into higher health insurance premiums, failing to control spending will exacerbate insurance affordability issues for both public and private payers and can cause coverage rates to decline.

Policy options to address uninsured young adults include increasing age cutoffs for eligibility, mandating coverage in college, and creating more affordable insurance options. The report says young adults could benefit from extending dependents' eligibility on private family coverage. As of November 2007, 17 states had increased the age of dependency on private insurance, with upper age limits ranging from 24 to 30 years old.

Low-income uninsured young adults also could be helped by expanding eligibility for children's public programs beyond age 18 or by expansions of public programs for adults. Ensuring that colleges require students to have health insurance and offer coverage also would help to reduce the number of uninsured in that age group.

At the other end of the age range, there are a number of potential policy solutions for the near-elderly. One that directly targets that age group would allow near-elderly adults to buy insurance through Medicare. Other possible solutions are more general and attempt to make private coverage more accessible and affordable, especially for people with higher risks. Such options include approaches as supporting state high-risk pools by federal grants and funding state-based reinsurance for private coverage.

Reference with benchmarks

Ms. Chockley tells State Health Watch that although the NIHCM report came out at the height of the 2008 presidential primary campaign, the group is not political and was not trying to create a political health care agenda for the next president. "We're trying to produce an important reference document with some very important benchmarks," Ms. Chockley says. "We don't make policy recommendations and we don't say how to make any changes. We've tried to address all the different issues that people are talking about."

She notes that the United States is, in many ways, a very generous country and its people want to do the right thing. But those in Europe's industrialized countries look at us and can't understand why we have so many uninsured, she says. "There's lot of political rhetoric about covering the uninsured," she says, "but not much political will. And yet covering the uninsured should be a priority. The rhetoric and the reality are very far apart right now."

Download the report at Contact Ms. Chockley at (202) 296-4426.