While SCHIP enrollment declines in 11 states, it increases in 37 others

While the latest reports show enrollment of children in SCHIP declined during the second half of 2003 — the first enrollment decline since the program was enacted in 1997 — the need for it remains great, and the American Academy of Pediatrics (AAP) said more federal funding support for the program is needed.

Officials of the Kaiser Commission on Medicaid and the Uninsured, who released the enrollment statistics, said declines in 11 states and the District of Columbia more than offset moderate increases in 37 other states. The 50-state survey report was prepared by Health Management Associates for the commission and discussed at a July 23 news conference.

"The drop in SCHIP enrollment is a major setback when millions of uninsured children are eligible but not yet enrolled in public coverage programs," said Kaiser Commission executive director Diane Rowland at the briefing. "States have shown that bipartisan initiatives like SCHIP can work to reduce the number of uninsured children, but state budget constraints mean even this popular program has not escaped cutbacks."

Health Management Associates principal Vern Smith said a relatively modest SCHIP growth in 2003 (4.2%, compared with 9.7% in 2002) and the enrollment decline in the second half of the year can be attributed in part to state policy changes. In most states, he said, outreach funds were cut in 2002 and not restored in 2003.

Also, four states cut eligibility levels, one imposed an enrollment cap, several increased premiums, and nine states cut or restricted benefits.

Broad political support

On the positive side, reflecting, according to Mr. Smith, broad political support for SCHIP even in difficult fiscal times, one state eliminated an enrollment cap, six states expanded eligibility, and four states added or restored benefits.

As of December 2003, he said, SCHIP provided coverage nationally to 3.93 million children, a drop of roughly 37,000 from June 2003, when enrollment in the program reached 3.96 million.

Despite this nearly 1% decline in national enrollment, the majority of states continued to experience enrollment increases during the period. But the increases were offset by declines of nearly 145,000 spread across 11 states and the District of Columbia, with Texas accounting for 52% of the total decrease over the six-month period.

Ms. Rowland told the news conference that it has become clear over the years of SCHIP’s existence "that this expanded coverage . . . has not only helped millions of children to obtain health care coverage, but it’s also served a very important role in holding down our nation’s growing uninsured population. . . . We see increases in the number of the uninsured largely now coming from the adult population where coverage through public programs is far less available. What we’ve seen with the advances in coverage of low-income children is that they have offset many of the increases in uninsurance among adults, and therefore, we’ve held down the number of uninsured through our progress on children."

Striking contrasts

Mr. Smith said the contrast between two groups of states — those that increased enrollment and those where declines took place — was striking.

"In some states, the rate of growth was very impressive," he said. "California continued to have a high rate of growth in this program, growing by around 85,000 over the course of the year. Florida had a large increase over the year. Georgia and Illinois had very significant increases. Double-digit growth occurred in 18 states, so even among the smaller states who don’t make this list of states on the basis of the number of children, Hawaii had a 23% increase, Nebraska a 20% increase, North Carolina 17%, and Iowa 16%.

"On the other hand, there’s a group of states where enrollment is not growing over this year. When you look at it, there were three states — Texas, Maryland, and New York — that accounted for almost all of the decline, 99.3% of the drop in enrollment among those states that had the drop in enrollment."

Mr. Smith explained that New York went through an eligibility review to make sure those who were enrolled in SCHIP were, in fact, eligible for the program, and many of those dropped from SCHIP were transferred to Medicaid based on that review. "So there weren’t so many children who actually lost coverage in New York," he said.

In discussing the situation in Texas, Anne Dunkelberg of the Center for Public Policy Priorities in Austin, said many of the changes there were in response to a dire budget situation as they entered the 2003 legislative session and cuts to Medicaid and SCHIP were intended to save $1.6 billion for 2004 and 2005.

Changes to SCHIP involved elimination of some benefits and reduction of others, she said. "We completely eliminated dental coverage, vision coverage (including both eyeglasses and exams), as well as hospice care, school nursing, tobacco cessation, and chiropractic," she added.

The state originally had proposed to virtually eliminate mental health care from the package as well, according to Ms. Dunkelberg, but through conversations with Medicaid and SCHIP authorities, came to realize the need to retain those benefits, although they were cut to roughly half of what was in the program in 2003.

Also enacted was a change in the coverage period from 12 months to six months, meaning beneficiaries have to renew twice a year rather than once. And premiums and copayments were increased across the board. Income deductions were eliminated, and an asset test was put in place.

"One of the most distressing things about what’s happened with our program," Ms. Dunkelberg said, "is that virtually all of the decline in enrollment of SCHIP children in Texas has been among the lowest income families. Enrollment has always been concentrated in the lower income families, but we have seen an actual, possibly even a slight growth in the higher income folks between 150% and 200% of poverty, where virtually all the decline has been below poverty."

She also pointed out the decline in SCHIP enrollment has not been matched by an increase in Medicaid enrollment, so it appears that at least some people are being completely lost to the system.

Maryland medical program finance director John Folkemer said the drop in Maryland SCHIP enrollment "is really more illusion than reality." He said when combined enrollment in SCHIP and Medicaid is considered, there has been growth each year, although that growth is now easing.

The Maryland legislature in 2003 imposed a $37 per month premium for families with incomes between 185% and 200% of the poverty level and also froze enrollment for those between 200% and 300% of poverty.

According to Mr. Folkemer, the impact of the new premium was immediate but also temporary. There was a drop over a two-month period, but since then, enrollment has been growing, he said, and they have seen 14% of those who dropped come back to the program.

When Maryland did a disenrollment survey, the state found many people who said the premium was not the main reason their child left SCHIP. Other reasons included availability of other insurance or other issues. Some 63% of survey respondents said they thought $37 per month per family was affordable, and more than half said they had obtained other health insurance for their children after dropping out of the program.

Maryland also looked at population characteristics and found that generally the children who seemed to be the healthiest were the ones who tended to drop coverage. The state also found that those who had fewer children were more likely to drop the coverage, not surprising since the premium remains the same no matter how many are covered.

Even with all the changes, the AAP said in a statement that "millions of working families depend on Medicaid and SCHIP for their health care. The government helped give birth to these programs, and its continued support is critical."

AAP officials said they are working at the federal and state level to protect Medicaid and SCHIP from funding cuts and harmful changes. Among its interests are:

1. passing the CHIP Act (S. 2759/H.R. 4936) to stop $1 billion in federal SCHIP funds from reverting to the federal government in September;
2. providing a federal financial incentive to states to enroll eligible children;
3. expanding coverage to include pregnant women and legal immigrant children;
4. simplifying the enrollment process;
5. increasing Medicaid physician payment because inadequate payment has an impact on access to care;
6. improving SCHIP to ensure states have adequate funds to be able to enroll and retain all eligible children.

"If these ideas are adopted, we can reduce the number of uninsured children in this country by 70%," said AAP president Carden Johnston. "Children need the guaranteed coverage and benefits that Medicaid and SCHIP provide. An investment in the health of children is an investment in the future of our country," he explained.

AAP State Government Affairs Committee chairman Dave Clark, an Albany, NY, pediatrician, tells State Health Watch that the combination of state economic problems and an increase in the number of uninsured, especially children, has led to the problem, with many states choosing not to spend the money necessary to draw down federal funds that are available.

"But ultimately, they do pick up the bill because they are paying for kids coming to the emergency room for minor problems and other inappropriate care," Mr. Clark notes. "The academy would like each child to have a medical home so there is consistency and so care is given in the most appropriate setting."

He says it is difficult to tell what states will do because there are so many variables within each state. Some state health departments are finding innovative ways to fund prevention, Mr. Clark points out, and some smaller states are getting money from foundations for some preventive items such as bicycle helmets or improved prenatal care.

[The Kaiser report is available on-line at www.kff.org. Contact the American Academy of Pediatrics at (202) 347-8600 or go to www.aap.org.]