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Medicaid Restructuring and Children with Special Health Care Needs

Medicaid and CHIP cover 44% of children with special health care needs, providing access to a broad range of medical and long-term care services that enable many to live at home with their families and making coverage affordable.  This brief includes state-level data on the share of children with special health care needs covered by Medicaid and describes Medicaid’s role for these nearly five million children to help inform the debate about current proposals in Congress to reduce federal Medicaid funding under a per capita cap or block grant.

Nearly ¾ of all children with special health care needs live in low or middle income families, below 400% of the federal poverty level (FPL). About one in five are below 100% FPL (<$20,420/year for a family of three in 2017), and another one in five are between 100-199% of poverty.

Medicaid/CHIP children with special health care needs have significantly greater health needs compared to those with private insurance alone, with children covered by both Medicaid/CHIP and private insurance having the greatest needs.  Medicaid/CHIP children with special health care needs are nearly two and one-half times as likely (24%), and those with both Medicaid/CHIP and private insurance are three times as likely (30%), to have four or more chronic conditions, compared to those with private insurance alone (10%).  Medicaid/CHIP children are more than one and one-half times as likely (58%), and those with both Medicaid/CHIP and private insurance are nearly twice as likely (63%), to have four or more functional difficulties compared to those with private insurance (33%).  Medicaid/CHIP cover 60% of the 2.9 million children with special health care needs whose health conditions consistently and often greatly affect their daily activities, with Medicaid/CHIP as the sole source of coverage for nearly half of these children.

Medicaid/CHIP children with special health care needs have access to care on par with those with private insurance alone. For example, Medicaid/CHIP children (92% for both those with and without private insurance) are about equally as likely to have had a preventive care visit in the last year compared to those with private insurance alone (91%).  Medicaid/CHIP children are significantly more likely than those with private insurance to report that their coverage is adequate to meet their needs (69% vs 64%).

Medicaid/CHIP children with special health care needs are significantly more likely to report that their coverage is affordable compared to those with private insurance alone.  Medicaid/CHIP children are more than five times less likely (6%), and those with Medicaid/CHIP and private insurance are half as likely (16%), to incur out-of-pocket costs of $1,000 or more, compared to those with private insurance alone (32%). Medicaid/CHIP is a safety net, covering 59% of the 2.7 million children with special health care needs whose families have had to reduce their work hours or stop working altogether due to their child’s health status, and serving as the sole source of coverage for nearly half of these children.

Medicaid children with special health care needs may be particularly affected by changes currently being considered by Congress, including the shift to per capita capped federal financing.  Per enrollee spending for Medicaid children who use long-term care services is over 12 times higher ($37,084) compared to those who do not ($2,836), due to these children’s greater health needs and reliance on Medicaid for expensive but necessary services that are generally unavailable through private insurance and too costly to afford out-of-pocket.  Many Medicaid coverage pathways for children with disabilities, and some community-based long-term care services provided through waivers, are offered at state option, making them subject to potential cuts as states adjust to substantial federal funding reductions under a per capita cap.  While the Better Care Reconciliation Act proposed in the Senate would exempt Medicaid children who are eligible based on a disability from the per capita cap, most Medicaid children with special health care needs are eligible based on their family’s low income and not based on a disability and therefore would be subject to the per capita cap.

Issue Brief

The Henry J. Kaiser Family Foundation Headquarters: 2400 Sand Hill Road, Menlo Park, CA 94025 | Phone 650-854-9400
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Filling the need for trusted information on national health issues, the Kaiser Family Foundation is a nonprofit organization based in Menlo Park, California.