New Survey Reports Children's Enrollment in SCHIP Coverage Dropped for the First Time in the Six-Year History of the Program

Enrollment Declines in 11 States and Washington, DC More Than Offset
Increases in 37 Other States During the Second Half of 2003

WASHINGTON-- Reflecting both the economic downturn and the significant drop in state revenues over the past two years, enrollment of children in the State Children's Health Insurance Program (SCHIP) declined during the second half of 2003 for the first time since enactment of SCHIP in 1997 (see Figure 1). Enrollment declines in 11 states and the District of Columbia more than offset moderate increases in 37 other states, according to the new 50-state survey. More than half of the national enrollment decline is attributable to the drop in coverage in Texas.

The new report, SCHIP Program Enrollment: December 2003 Update, prepared with researchers at Health Management Associates for the Kaiser Commission on Medicaid and the Uninsured, finds that while annual enrollment in the SCHIP program increased by 4.2 percent in 2003, the increase was less than half the 9.7 percent rate in 2002.

"The drop in SCHIP enrollment is a major set back when millions of uninsured children are eligible, but not yet enrolled in public coverage programs," said Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured. "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."

National Trends Indicate a Mix of SCHIP Policy and Program Changes

As part of the survey of states on their December 2003 SCHIP enrollment, states reported SCHIP policy changes for FY 2004, including:
* Enrollment caps -- five states indicated they had enrollment caps for their SCHIP programs as of December 2003, but three have since removed the caps;
* Premiums and enrollment fees -- 29 states indicated they required premiums or an enrollment fee for SCHIP;
* Eligibility -- 10 states indicated changes to eligibility levels (six increasing eligibility and four cutting); and
* Benefits and copays -- 13 states indicated changes to benefits (four added or restored benefits and nine restricted or eliminated benefits, or increased copays).

A Few States Experienced Dramatic Declines

While states have used SCHIP as an effective way to expand health coverage for low-income children, fiscal pressures of recent years forced many states to scale back their focus on SCHIP outreach and enrollment. Although 37 states -- more than four out of every five states -- saw an increase in enrollment from June 2003 to December 2003, the increases were offset by declines in enrollment in 11 states and Washington, DC (see Figure 2). However, nearly all of the national enrollment decline (99 percent) is attributable to three large states: Maryland, New York, and Texas. While some SCHIP enrollment declines can be credited to properly transferring children to Medicaid when they are eligible, there were state actions to cut eligibility, raise copays and premiums, and institute administrative requirements that contributed to enrollment declines.

A related state case study, Children's Medicaid and SCHIP in Texas: Tracking the Impact of Budget Cuts, prepared with the Center on Public Policy Priorities details the impact of Texas' legislative actions on enrollment in its Medicaid and SCHIP programs. One-third of low-income children in Texas are uninsured-the highest rate in the nation. The case study reviews the enrollment reductions in Texas' SCHIP program in 2004 and the slowing of enrollment growth in Medicaid for the past two years, in part due to procedural complexities added to the application and renewal process in September 2003 to address the state's budget deficit.

Texas accounted for over 50 percent of the national enrollment decline in the second half of 2003. The study indicates that state officials are projecting $1.6 billion in cuts to Medicaid and SCHIP for the fiscal years (FY) 2004-05 biennium budget. These cuts have led to more than 149,000 children (29 percent decline) being removed from the SCHIP program since the beginning of FY2004.

Beyond actual benefit reductions in SCHIP services such as dental, mental health, vision care, and skilled nursing Texas passed some eligibility and administrative changes that suppressed enrollment. Some examples of Texas' actions to SCHIP include:
* Elimination of income deductions such as child care costs in determining income eligibility;
* Establish an asset test beginning in August 2004 for families above 150 percent of federal poverty level (FPL), or roughly $23,500 for a family of three;
* Increase premiums for children above 100 percent FPL and cost-sharing for children below 185 percent of FPL;
* 90-day waiting period to receive coverage after a child is deemed eligible; and
* 6-month continuous coverage period, shortened from 12 months.

The new reports can be viewed at http://www.kff.org/medicaid/kcmu072304pkg.cfm . A webcast of the Washington policy briefing can be viewed after 5 p.m. EDT.

The Kaiser Commission on Medicaid and the Uninsured provides information and analysis on health care coverage and access for the low-income population, with a special focus on Medicaid's role and coverage of the uninsured. Begun in 1991 and based in the Kaiser Family Foundation's Washington, DC office, the Commission is the largest operating program of the Foundation. The Commission's work is conducted by Foundation staff under the guidance of a bipartisan group of national leaders and experts in health care and public policy. The Kaiser Family Foundation is a non-profit, private operating foundation dedicated to providing information and analysis on health care issues to policymakers, the media, the health care community, and the general public. The Foundation is not associated with Kaiser Permanente or Kaiser Industries.
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