States Seek Alternatives to Medicaid Spending When Families of CYSHCN Can Least Afford Them
Many families of children and youth with special health care needs (CYSHCN) depend on public benefit programs like Medicaid and the Children’s Health Insurance Program (CHIP) to pay for their child’s health-related services. Medicaid and CHIP both provide coverage with little or no cost-sharing for families. Medicaid is particularly important to CYSHCN because enrollees under the age of 21 are entitled to Early Periodic Screening, Diagnosis and Treatment (EPSDT), which is designed to assure preventive treatment and to promote early diagnosis and treatment of identified health needs. In addition to EPSDT, Medicaid offers a wide array of services to CYSHCN, such as Home- and Community-Based Service (HCBS) waivers which allow CYSHCN who meet an institutional level of care to live at home with the right supports.
As our nation slowly recovers from the worst recession since the 1930s, many families continue to face financial challenges after becoming unemployed. In October of 2010, the national unemployment rate was 9.6 percent – up from 6.6 percent in 2008.1 Many adults who lose their jobs also lose access to their family’s employer-sponsored health insurance, putting families at risk for uninsurance at a time when they are less able to afford out-of-pocket health care costs. Fortunately, need-based public benefit programs such as Medicaid were created as a vital safety net to help pay for health care in the wake of economic challenge. This safety net appears to be working for children in general and CYSHCN in particular. While the percentage of people under the age of 65 without health insurance increased from 17.3 percent in 2008 to 18.8 percent in 2009, uninsurance rates for children under 18 remained stable2 – with much of the credit going to public benefit programs like Medicaid and CHIP.3 Thanks to these programs, the risk to would-be uninsured families that their child’s health status would worsen because of delayed or missed care was lowered.
While access to Medicaid in difficult economic times is important to CYSHCN and their families, it presents serious challenges to states. Nationally, the number of people covered by Medicaid has increased an average of 8 percent each year since 2008, with total Medicaid spending growth averaging nearly 9 percent in the 2010 fiscal year – much higher than the projected growth of only 6.3 percent.4 With the surge in Medicaid applications and imminent expansion of Medicaid eligibility in 2014 under the Affordable Care Act (ACA), many state Medicaid programs are feeling the strain of increased demand. Medicaid programs operate with joint federal and state funding, but in order to qualify for federal Medicaid funds, a state’s Medicaid program must enroll all applicants who are eligible. Thus, Medicaid spending has become a central topic in conversations about how to manage the states’ budget crises, generating concern among some states who find they have little flexibility to curb Medicaid spending without forfeiting their federal match.5 For example, under the Maintenance of Effort provision first introduced in the American Recovery and Reinvestment Act of 2009 (ARRA) and extended under the ACA, states are not permitted to cut back on Medicaid spending by making eligibility requirements more stringent or complicating the enrollment process. From a state’s fiscal perspective, more federal requirements surrounding Medicaid means fewer options to curb state spending on this jointly-funded program. States are already struggling against huge budget shortfalls, which occur when state revenues are too weak to meet the state’s financial commitments. Both ARRA and H.R. 1586, the education jobs-creation and Medicaid bill of August 2010, provided much-needed federal assistance to state Medicaid programs in the recent past – but these supplemental funds are scheduled to be available only through June 2011. The projected combined shortfalls for all 50 states between 2009-2011 total $425 billion, and the outlook for the 2012 fiscal year is just as bleak: current economic estimates suggest that shortfalls for 2012 alone may exceed $140 billion, with federal stimulus dollars depleted down to only $6 billion.6 Unemployment is also expected to remain high, keeping state income taxes low and increasing demand for public benefits such as Medicaid.7
Recent news articles report that discussions have begun in some states to drop out of the joint state-federal Medicaid partnership in an effort to conserve state dollars and enjoy more flexibility in public benefit spending. According to a recent Wall Street Journal article, officials in Texas, Wyoming, Nevada, Washington and South Carolina have begun to discuss the idea.8 Most notably, Texas Governor Rick Perry has publicly expressed interest in dropping Medicaid in favor of a similar, state-based program.9 While state budgets are strained and policymakers look for solutions, CYSHCN and their families continue to need programs like Medicaid to ensure access to comprehensive and affordable health care. Many CYSHCN currently enrolled in Medicaid could not be covered through the state Exchanges which will go into effect in 2014 because only those with incomes between 100-400% of the Federal Poverty Level qualify for the associated tax credits. Low-income CYSHCN, the ones who need affordable coverage the most, would be left out. Even if some states opt out of Medicaid and establish their own state-based insurance programs, without the help of federal money it is highly unlikely that these new plans would offer all currently enrolled CYSHCN the same robust benefits, with little or no cost-sharing, as the current state-federal joint program. If states pull out of Medicaid, a significant number of CYSHCN who currently depend on the program to access the care they need may be left uninsured.
The Catalyst Center is committed to providing you with the most recent developments in coverage and financing of care for CYSHCN. We will continue to share the latest information on policy changes that could impact CYSHCN and their families. Look for further updates on this topic and more in Catalyst Center Coverage and our quarterly e-newsletter.
1 Bureau of Labor Statistics. October 2010. “News Release: The Employment Situation – October 2010.” Accessed November 29, 2010 at
http://www.bls.gov/news.release/pdf/empsit.pdf.
2 DeNavas-Walt, Proctor, & Smith. 2009. Income, Poverty, and Health Insurance Coverage in the U.S.: 2009. US Census Bureau. Accessed November 29, 2010 at http://www.census.gov/prod/2010pubs/p60-238.pdf
3 Sell, Zlotnik, Noonan, & Rubin. November 2010. The Effect of the Recession on Child Well-Being. First Focus. Accessed November 30, 2010 at http://www.firstfocus.net/library/reports/the-effect-of-the-recession-on-child-well-being.
4 State fiscal conditions and Medicaid. October 2010. Kaiser Commission on Medicaid Facts. Accessed November 30, 2010 at http://www.kff.org/medicaid/upload/7580-07.pdf.
5 Adamy & King. November 22, 2010. “Some states weigh unthinkable option: Ending Medicaid.” The Wall Street Journal. Accessed November 24, 2010 at http://online.wsj.com/article/SB10001424052748704444304575628603406482936.html.
6 McNichol, Oliff, & Johnson. October 7, 2010. “States continue to feel recession’s impact.” Center on Budget and Policy Priorities. Accessed November 24, 2010 at http://www.cbpp.org/cms/index.cfm?fa=view&id=711.
7 Ibid..
8 Adamy & King..
9 Ibid.
References
Adamy & King. November 22, 2010. “Some states weigh unthinkable option: Ending Medicaid.” The Wall Street Journal. Accessed November 24, 2010 at http://online.wsj.com/article/SB10001424052748704444304575628603406482936.html.
Bureau of Labor Statistics. October 2010.“News Release: The Employment Situation – October 2010.” Accessed November 29, 2010 at http://www.bls.gov/news.release/pdf/empsit.pdf.
DeNavas-Walt, Proctor, & Smith. 2009. Income, Poverty, and Health Insurance Coverage in the U.S.: 2009. US Census Bureau. Accessed November 29, 2010 at http://www.census.gov/prod/2010pubs/p60238.pdf.
McNichol, Oliff, & Johnson. October 7, 2010. “States continue to feel recession’s impact.” Center on Budget and Policy Priorities. Accessed November 24, 2010 at http://www.cbpp.org/cms/index.cfm?fa=view&id=711.
Sell, Zlotnik, Noonan, & Rubin. November 2010. The Effect of the Recession on Child Well-Being. First Focus. Accessed November 30, 2010 at http://www.firstfocus.net/library/reports/the-effect-of-the-recession-on-child-well-being.
State fiscal conditions and Medicaid. October 2010. Kaiser Commission on Medicaid Facts. Accessed November 30, 2010 at http://www.kff.org/medicaid/upload/7580-07.pdf.
