Part 3

What Explains the Coverage Decline?

Rapidly rising health care costs-or, more precisely, employers’ responses to costs-have contributed to the widespread erosion of employer coverage. As employers have shifted costs to workers, participation has dropped. Low-wage workers have been disproportionately affected by rising costs, losing access to coverage as well as finding participation more difficult. Their problems have been exacerbated by structural changes in labor markets, which have weakened the tie between jobs and health insurance.⁹

Constrained Employer Spending. A key factor behind the decline in employer coverage has been the rapid rise in health care costs. The cost of health insurance grew rapidly in the 1980s and early 1990s, far exceeding the growth in consumer prices generally. Between 1988 and 1996, the average premium for family coverage rose 9.8% per year, the premium for individual coverage increased 7.5% per year, while prices overall increased about 4% annually.¹⁰

Employers’ primary response to rapidly rising health care costs has not been to drop health care coverage for full-time workers. However, employers have constrained spending by requiring workers to pay a larger share of health insurance premiums, by tightening eligibility requirements for part-time workers (whose coverage has long been restricted) and, increasingly, in recent years, by replacing regular full-time employees with part-time and contingent workers.¹¹

Workers’ average monthly contributions for single and family coverage rose steadily between 1988 and 1996 as workers paid a larger share of higher premiums.¹² In fact, as shown in Figure 9, workers’ contributions rose more rapidly than premiums as employers shifted more of the costs of health insurance to workers, especially for non-family coverage. While average premiums for non-family coverage rose an average of 7.5% per year between 1988 and 1996, employees’ contributions rose much more rapidly–increasing by 18.3% per year.¹³

As employers have shifted costs to workers, some workers have dropped coverage, while those who have kept coverage are paying more. As shown in Figure 10, the proportion of workers participating in employer plans to which they had access fell from 93% in 1987 to 89% in 1996. Access to employer coverage was basically unchanged over this period–about 82 percent. Although the fact remains that most (about 70 percent) of the working uninsured lack access to coverage, the decline in coverage between 1987 and 1996 mostly reflects a drop in participation.¹⁴

This overall pattern obscures a worsening of access, as well as participation, for low-wage workers. Although participation rates have dropped most rapidly for the lowest wage workers, access to employer coverage has also declined for these workers. For example, among workers earning more than $15 per hour, the proportion with access to employer coverage increased from 92% in 1987 to 96% in 1996. In contrast, the proportion of low-wage workers (those earning less than $7 per hour) with access to employer coverage declined 5 percentage points over this same time period, from 60% to 55% [Table 2]. The large drop in coverage rates for the lowest wages workers is thus explained by a combination of declining participation and a decline in employer offerings.

Changes in Low-wage Labor Markets. For low-wage workers, costs and employer cost containment are not the only factors producing this deterioration. Structural changes in labor markets, that have occurred throughout the 1980s and 1990s, have contributed to the decline in coverage.

The main change in the labor market over the past two decades has been the widespread deterioration of wages, especially for those workers who initially had low wages, were without a college degree, were in blue collar or service occupations, or were in younger age brackets.¹⁵ From 1989 to 1996, the real hourly wage of the typical (median) worker fell 5.2%, while the wages of high-wage workers (90th percentile) increased 0.4%, and wages for low-wage workers (20th percentile) declined by 2.3%. Among low-wage men, the wage declines were even greater. Wages for low-wage men fell 6.4% between 1989-96.¹⁶ That is, wages for workers at the middle and at the bottom of the pay scale have not only failed to keep up with health care costs, they have declined in real terms. The large drop in participation rates for the lowest wage workers is understandable in light of the deterioration in wages for these workers. Employer actions that have led to coverage declines for all workers have thus had a disproportionate effect on the lowest wage workers.

Table 2 Change in Access, Family Take-up and Coverage, by Wage1987-1996 Wage Level 1987 1996 Change 1987-96

Coverage $15 87 90 +3

Access to Employer Coverage* $15 92 96 +4

Family Take-Up Rate** $15 94 94 0 * Percent of workers with access to job-based insurance through their own employer or a family member s employer.** Percent of workers with access to job-based insurance who are actually covered by it.Source: Cooper and Schone, 1997.

The decline in access for low-wage workers also is rooted in structural labor market changes. Shifts in employment to low-paying sectors may account for most of this decline in access. As jobs have shifted from high-paying industries like manufacturing to low-paying sectors like retail trade and services, health insurance coverage has declined.¹⁷ In addition, the proportion of the workforce in “nontraditional” work arrangements–such as regular part-time work, contingent work, and self-employment–has grown in the past decade. The expansion of employment in these jobs is not large enough to explain much of the decline in coverage; nevertheless, since these jobs are less likely to come with health insurance benefits, the expansion of nontraditional work has contributed to the overall decline in coverage.¹⁸

Conclusion

Over the past decade, there has been a decline in employment-based health insurance coverage. The fall in coverage is a widespread phenomenon that goes beyond low-income families. However, often overlooked is that low-wage workers and low-income families–who started out at a disadvantage, with low rates of coverage–have borne the brunt of the decline. The gap in coverage between low-wage and high-wage workers has grown between 1987 and 1996 because the decline in coverage has been greatest for low-wage workers. Although Medicaid plays an important role in providing insurance coverage for many low-income families, including working families, Medicaid’s eligibility levels are constrained. Workers without children are, for the most part, precluded from coverage. Beyond Medicaid’s reach, therefore, many low-income working families are likely to be uninsured.

This paper was prepared for the Kaiser Commission on Medicaid and the Uninsured by Ellen O’Brien and Judith Feder, Institute for Health Care Research and Policy, Georgetown University.

Notes

¹ In this Issue Paper, we rely on Current Population Survey estimates of employer health coverage and trends. Estimates of the proportion of families with various sources of insurance by income level are based on the Urban Institute’s TRIM-II model, which produces a different total estimate because it adjusts for the undercount of Medicaid beneficiaries in the CPS.

² Workers ages 21-64 who are not self-employed.

³ The tax treatment of employment-based health insurance provides an incentive for employers to provide compensation to workers in the form of health coverage rather than in the form of wages subject to current taxation. The tax preference that the exclusion provides is substantial and has resulted in widespread access to health coverage. Yet, despite this fact–as this Paper describes–coverage rates for the lowest wage workers have traditionally been quite low and have declined significantly in the past two decades. The specific provisions of the exclusion provide a partial explanation. To qualify for the exclusion of employer-provided health coverage, employers’ health plans do not need to cover all workers. Although the tax code requires “non-discrimination”–a self-insured health plan may not discriminate in favor of highly compensated individuals as to ability to participate–employees who have not completed three years of service, those under age 25, and part-time or seasonal employees may be excluded from consideration. Moreover, insured health plans, as opposed to self-insured plans, are generally not subject to non-discrimination rules.

⁴ According to the Employee Benefits Supplement to the Current Population Survey, 51 million of the nearly 89 million private wage and salary workers in 1993 (or about 57% of private industry workers) had health care coverage through their employer. Of the 38 million workers without such coverage, about 50% were in firms that did not offer coverage, and 40% were in firms that offered benefits to at least some employees. (Information on whether the employer sponsored a health plan was not available for the remaining 10% of workers). See tabulations of the CPS Employee Benefits Supplement in U.S. Department of Labor. Report on the American Workforce (Washington, DC: GPO, 1995).

⁵ Based on an average premium for family coverage of $5,349 in 1996. KPMG Peat Marwick data cited in AFL-CIO, Paying More and Losing Ground: How Employer Cost-Shifting is Eroding Coverage of Working Families (Washington, DC: AFL-CIO,1998), p. 16.

⁶ These are “family take-up rates.” They measure the proportion of workers who take-up any employer plan available to them — through their own employer or through a family member’s employer. Workers’ participation rates in their own employer plans are lower (63% of the lowest wage workers and 85% of the highest wage workers participated in own employer plans they were offered) since some workers turn down their employer’s plan and choose to be covered under a family member’s plan.

⁷ Because of changes to the survey beginning with the March 1995 CPS, however, the estimates of employer coverage rates for 1994-96 are not comparable to data for prior years. The observed increase in employer coverage rates may be an artifact of changes in the survey questions.

⁸ John Holahan, Colin Winterbottom, and Shruti Rajan, “A Shifting Picture of Health Insurance Coverage,” Health Affairs 14(Winter 1995): 253-264.

⁹ On the more rapid drop in coverage for less educated workers see Peter Gottschalk, Trends in Wages and Health Insurance Status of Less Educated Workers. Menlo Park, CA: The Henry J. Kaiser Family Foundation; and Sherry Glied and Mark Stabile, “Graduation to Health Insurance Coverage: 1981-1996,” Working Paper 6276. (Cambridge, MA: National Bureau of Economic Research, 1997). Other studies of the decline in employer coverage include: Richard Kronick, “Health Insurance 1979-1989: The Frayed Connection between Employment and Insurance,” Inquiry 28(Winter 1991): 318-332; Deborah Chollet, “Employer-Based Health Insurance in a Changing Workforce,” Health Affairs 13(Spring 1, 1994): 315-26; Gregory Acs, “Trends in Health Insurance Coverage Between 1988 and 1991,” Inquiry 32(Spring 1995): 102-110; and Stephen Long and Joel Rogers, “Do Shifts Toward Service Industries, Part-time Work, and Self-Employment Explain the Rising Uninsured Rate?” Inquiry 32(Spring 1995): 111-117; and Paul Fronstin and Sarah Snider, “An Examination of the Decline in Employer Sponsored Health Insurance Between 1988 and 1993,” Inquiry 33(Winter 1996/1997): 317-325.

¹⁰ Data from KPMG Peat Marwick and Health Insurance Association of America, cited in General Accounting Office. “Private Health Insurance: Continued Erosion of Coverage Linked to Cost Pressures.” GAO/HEHS-97-122 (Washington, DC: GPO, 1997).

¹¹ See Arne Kalleberg, Edith Rassell, and Ken Hudson, et. al., Nonstandard Work, Substandard Jobs (Washington, DC: Economic Policy Institute, 1997) and Thomas Rice, Nadereh Pourat, Rebecka Levan, et. al., “Trends in Job-Based Health Insurance Coverage.” (Los Angeles, CA: UCLA Center for Health Policy Research, June 1998).

¹² The total nonfederal employer premium contribution fell from 85.1% to 83.9% between 1990 and 1996. In 1996 alone, this 1.2-percentage-point decrease in the employer’s share would represent a cost-shift of $3.6 billion to employees enrolled in employer-sponsored health plans. See Katherine R. Levit, Helen C. Lazenby, Bradley R. Braden, et. al. “National Health Spending Trends in 1996,” Health Affairs 17(January/February 1998), p. 46.

¹³ KPMG Peat Marwick data for 1991-1996 and HIAA data for 1988-1990 cited in AFL-CIO, “Paying More and Losing Ground: How Employer Cost-Shifting is Eroding Coverage of Working Families” (Washington, DC: AFL-CIO,1998), p. 16.

¹⁴ Philip Cooper and Barbara Schone. “More Offers, Fewer Takers for Employment Based Health Insurance: 1987 and 1996,” Health Affairs 16(November/December 1997): 142-149.

¹⁵ Lawrence Mishel, Jared Bernstein, and John Schmitt. The State of Working America, 1996-97 (Armonk, NY: M.E. Sharpe, 1997), p. 139.

¹⁶ Lawrence Mishel, Jared Bernstein, and John Scmitt. “Finally Real Wage Gains.” Issue Brief #127, July 17, 1998. Washington, DC: Economic Policy Institute.

¹⁷ See especially Chollet (1994).

¹⁸ See Arne Kalleberg, Edith Rassell, and Ken Hudson, et. al., Nonstandard Work, Substandard Jobs (Washington, DC: Economic Policy Institute, 1997). Return to top

Policy Brief Part 1 Part 2 Part 3Library Index

This paper provides an overview of Medicaid spending growth in 1996. It updates earlier analyses conducted by the Kaiser Commission on Medicaid and the Uninsured.

• Issue Paper
• Issue Paper

This paper provides an overview of Medicaid eligibility policy and examines two groups of Americans in particular – low-income children and nondisabled adults under 65 – and summarizes the statutory and regulatory pathways to Medicaid eligibility available to them as individuals. The paper concludes with a discussion of policy options available to states under current law for increasing Medicaid eligibility for these two groups.

• Issue Paper
• Issue Paper

How Well Does the Employment-Based Health Insurance System Work for Low-Income Families?

September 1998

Most Americans receive health insurance coverage through the workplace. Unfortunately, however, many workers are left out, especially low-wage workers and their families. Being a low paid worker does not mean just that wages are low. It also means a lower likelihood of receiving health insurance protection on the job. Low-wage workers have never been as likely as the better paid to get coverage from their employers. And, as employers try to limit what they spend on coverage, the gap is growing worse. Although recent employer actions have reduced coverage for workers at all wage levels, low-wage workers have been the hardest hit.

Medicaid has made an enormous difference to health insurance protection for low-income families. But Medicaid eligibility is limited to the poorest of the poor, especially mothers and children. Although Medicaid has been expanded in recent years to reach near-poor pregnant women and children, many low-income working families have not been eligible for coverage. Employer protection is therefore critical for workers with low and modest incomes.

The purpose of this Issue Paper is to describe the nature of employer coverage; its decline, especially among low-wage workers and low-income families; and the factors that are undermining its reach. In summary, this paper documents the following:

Low wage workers are least likely to have employer coverage.

• Whether they work in large or small firms, low-wage workers are far less likely than the better paid to have employer coverage. Although 90% of the highest wage workers had employment-based health insurance in 1996, only 42% of the lowest wage workers were covered.
• The primary reason low-wage workers lack coverage is that their employers do not offer them health insurance benefits. Despite substantial costs, most low-wage workers (76% in 1996) participate in employer plans to which they have access.

As coverage has declined, the gap between high wage and low wage workers has grown.

• Between 1987 and 1996, the proportion of workers with employer coverage fell by 3 percentage points, with the decline in coverage concentrated on the lowest wage workers. Coverage declined by 12 percentage points among the lowest wage workers, while coverage among the top wage earners increased by 3 percentage points. As a result, the gap in coverage between high-wage and low-wage workers has grown.

The decline in coverage for low-wage workers is a function of the decline in employer offerings and participation.

• The proportion of low-wage workers with access to employer coverage declined 5 percentage points between 1987 and 1996 and the participation rate dropped by 13 percentage points. By contrast, access for high-wage workers improved.
• The fall in participation for the lowest wage workers coincided with the deterioration in wages for these workers. From 1989 to 1996, the real hourly wage of the typical (median) worker fell 5.2%. Among low-wage men (20th percentile), wages declined even more- by 6.4%. Increases in employees’ contributions to premiums have therefore had a disproportionate effect on low wage workers.

Who’s Covered and Who’s Left Out? The large majority of Americans have some kind of private or public health insurance, but more than 41 million nonelderly Americans are uninsured. Since almost all Americans over age 65 are covered by Medicare, lack of insurance is primarily a problem for working age adults and for children. In 1995, about 72% of the nonelderly had private health insurance (mostly employer coverage and some private, nongroup coverage) and 12% were covered by Medicaid. Approximately 16% of the nonelderly were uninsured [Figure 1].¹

Whether individuals have any insurance coverage and what kind of insurance they have are closely related to family income. Over half of the uninsured are in families with incomes below 200% of poverty. In 1995, 88% of individuals in families with incomes above 200% of poverty had private (primarily employer-sponsored) health insurance and only 11% were uninsured. Not surprisingly, health insurance coverage for poor families looks very different. Only a small proportion of poor families (with incomes below 100% of the federal poverty level) have employer coverage. A large proportion are covered by Medicaid, but a substantial proportion remain uninsured. In 1995, 55% of individuals in poor families were covered by Medicaid and only 22% had private insurance. Despite Medicaid’s substantial contribution, however, 23% of the poor lacked health insurance [See Figure 1].

Near-poor families (those with incomes between 100-199% of poverty) are somewhat worse off than poor families with respect to health insurance coverage. Affordable private health insurance is only available to individuals in near-poor families if it is employer-sponsored. Only 55% of individuals in near-poor families had private (primarily employer-sponsored) insurance in 1995, compared to 88% of individuals in families with incomes above 200% of poverty. For certain groups, such as pregnant women and children, Medicaid has played a strong role, but Medicaid’s income and categorical restrictions result in limited coverage of the near-poor–only 17% of individuals in near-poor families had Medicaid coverage. As a result, 27% were uninsured [See Figure 1].

Lack of insurance does not mean that the poor and near-poor are not working. Rather, the vast majority of the uninsured are workers or are in working families. In 1995, most uninsured adults and children–79 percent–lived in families where there was at least one full-time worker. Another 11% lived in families where there was at least one part-time worker. Only 10% of the uninsured lived in families where there were no employed adults [Figure 2]. The same is true even of the poor and near-poor uninsured. Among the near-poor, the proportion of uninsured who are in full-time workers’ families (83 percent) is nearly as high as among higher income workers (92 percent). The differences in their insurance coverage are therefore not explained by substantially different levels of employment.

Although Medicaid’s coverage of the near-poor is limited by its eligibility criteria, many working families do qualify for Medicaid. About half of Medicaid’s nonelderly beneficiaries (low-income, working age adults and children) are in working families. In 1995, 18% of Medicaid’s nonelderly beneficiaries were in families where the family head worked full-time and full-year, while 34% were in families where at least one adult worked part-time or part-year [Figure 3].

Why Don’t Low-Income Families Have Employer Coverage?

Since most of the uninsured and half of low-income adults and children with Medicaid coverage are in working families, an important question is why so many low-income working families lack employer coverage. There are a number of factors associated with jobs without health care coverage, but a key factor is low wages. Figure 4 presents data on employer coverage rates for workers differentiated by wage.² These data show there is a strong positive relationship between wages and health insurance coverage. In 1996, 90% of workers who earned more than $15 per hour had employer coverage, while only 42% of workers who earned less than $7 per hour had employment-related health insurance.

The primary problem for low-wage workers is that their employers not only pay them low wages, but they also offer them lower nonwage compensation-including health insurance and pensions.³ In 1996, only 43% of workers who earned less than $7 per hour were offered health benefits by their employer, compared to 93% of workers who earned more than $15 per hour [Figure 5].

Uninsured low wage workers, like all uninsured workers, are in large as well as small firms, and are in firms that offer coverage to none of their workers as well as firms that offer coverage to some. Although data make it difficult to distinguish precisely between these categories, an estimate from available data suggests that uninsured workers are about equally split between firms that do not offer coverage and firms that offer coverage to some workers.⁴

Unfortunately, many low-wage employees offered limited benefits do not have alternative access to employment-based coverage through a spouse or other family member. Even when other sources of insurance are taken into account, the gap between low and high-wage workers is still quite large. In 1996, 55% of low-wage workers had access (through their own employer or a family member’s employer) to employer coverage, compared to 96% of high-wage workers [See Figure 5].

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How Well Does the Employment-Based Health Insurance System Work for Low-Income Families?Policy Brief Part 1 Part 2 Part 3

30. Are you currently involved in a sexual relationship?

Based on those not currently married or living as married; n=479

38 Yes 60 No 2 Don’t know/Refused 100

CURRENT RELATIONSHIP STATUS (Q29, Q30):60 Married/Living as 15 Unmarried and involved 24 Unmarried and not involved 1 Don’t know/Refused 100

31. How long have you (been married /been together with this person)?

Based on those married, living as married, or involved in a sexual relationship; n=916

20 2 years or less 25 3 to 9 years 20 10 to 19 years 35 20 years or more * Don’t know/Refused 100

32. These next few questions are about your sexual health and behavior. Please keep in mind that all of your answers are private. First, have you had sexual intercourse within the last TWELVE months?

75 Yes 25 No 5 Don’t know/Refused 100

33. Have you ever had sexual intercourse?

98 Yes 2 No * Don’t know/Refused 100

34. When you were growing up, did you have sex education courses in school?

Based on those currently or ever married, n=910

66 Yes 30 No 4 Don’t know/Refused 100

35. Since you become sexually active, about how many sexual partners have you had? Would you say more than twenty, eleven to twenty, seven to ten, three to six, two or one?

29 One 11 Two 24 3 to 6 11 7 to 10 10 11 to 20 9 More than 20 6 Don’t know/Refused 100

36. How often (do you and your spouse /do you and your partner/did you and your most recent partner) have sex . . .

9 Everyday or almost everyday 33 Several times a week 28 About once a week 11 About once a month 10 Less often than that 9 Don’t know/Refused 100

37. In general, how do think you compare with most of Americans your AGE…

a. Are you MORE comfortable talking about sexual issues than most Americans your AGE, LESS comfortable, or about as comfortable?

34 More comfortable 10 Less comfortable 51 About as comfortable 5 Don’t know/Refused 100

a. Do you think (you and your spouse have/you and your partner have/you and your most recent partner had) a BETTER sex life than most of Americans your age, NOT as good as sex life, or about the same?

Based on those who have had intercourse (excluding widows and widowers not currently involved in a relationship); n=1109

29 Better 9 Not as good 53 About the same 9 Don’t know/Refused 100

38. How often do you think the average American couple your AGE has sex . . .

7 Everyday or almost everyday 28 Several times a week 36 About once a week 10 About once a month 4 Less often than that 15 Don’t know /Refused 100

39. Thinking about (your SEXUAL relationship with your spouse, how often do you feel that the SEXUAL relationship is/your SEXUAL relationship with your partner, how often do you feel that the SEXUAL relationship your most recent SEXUAL relationship, how often did you feel that the SEXUAL relationship was) (INSERT) always, often, sometimes, or hardly ever?

Based on those who have had intercourse (excluding widows and widowers not currently involved in a relationship); n=1109

Always Often Sometimes Hardly ever Never (VOL.) DK/Ref. a. Loving 62 17 12 4 1 4 =100 b. Passionate 40 26 21 6 1 6 =100 c. Routine 10 13 32 32 6 7 =100 d. Creative 19 22 37 12 2 8 =100

40. How often (do you and your spouse/do you and your partner/did you and your most recent partner) (INSERT) very often, often, sometimes, or hardly ever?

Based on those who have had intercourse (excluding widows and widowers not currently involved in a relationship); n=1109

Always Often Sometimes Hardly ever Never (VOL.) DK/Ref. a. Do romantic things like eat by candlelight 8 18 35 30 6 3 =100 b. Act out your fantasies together 4 10 28 39 12 7 =100 c. Based on women; n=564Wear sexy lingerie 9 10 28 35 12 6 =100 d. Try different sexual positions 11 19 35 23 4 8 =100 e. Read books or watch videos about improving your sex life 2 3 14 52 26 3 =100 f. Go out on special evenings or “dates” or go away for weekends alone 11 22 37 22 5 3 =100

41. Still thinking about (your sexual relationship with your spouse, your sexual relationship with your partner/your most recent sexual relationship) please tell me whether each of the following topics is something you would (like/have liked) to talk about MORE, something you (talk/talked) about enough, or something that you (don”t/didn”t) need to talk about at all?

Based on those who have had intercourse (excluding widows and widowers not currently involved in a relationship); n=1109

More Enough No need to talk about DK/Ref. a. Concerns about AIDS or HIV or othersexually transmitted diseases 12 34 51 3 =100 b. Birth Control 8 27 62 3 =100 c. Your sex life generally 19 44 33 4 =100 d. Your sexual wants and desires 21 45 30 4 =100

READ: Now I have just a few more questions so we can learn more about the people who took part in our survey . . . 42. RECORD RESPONDENT”S GENDER

48 Male 52 Female 100

43. And, what is your age?

23 18-29 21 30-39 19 40-49 14 50-59 22 60 plus 1 Refused 100

44. What is the LAST grade or class you completed in school?

4 None, or grade 1 to 8 13 High school incomplete (Grades 9 – 11) 34 High school graduate (Grade 12), GED 3 Business, technical or vocational school after high school 23 Some college, no four-year degree 14 College graduate, four-year degree 8 Post-graduate or professional schooling, after college 1 Don’t know/Refused 100

45. Are you, yourself, of Hispanic or Latino background, such as Mexican, Puerto Rican, Cuban, or some other Spanish background?

7 Yes 92 No 1 Don’t know/Refused 100

46. What is your race? Are you white, black or African American, Asian or some other race?

84 White 11 Black 1 Asian 3 Other or Mixed race 1 Don’t know/Refused 100

47. Last year, that is in 1997, what was your total family income from all sources, BEFORE taxes? Just stop me when I get to the right category.

6 Less than $10,000 12 $10,000 to under $20,000 18 $20,000 to under $30,000 16 $30,000 to under $40,000 18 $40,000 to under $60,000 13 $60,000 to under $100,000 6 $100,000 or more 11 Don’t know/Refused 100

READ: Thank you very much for taking the time to answer the questions on this survey. We really appreciate it. Have a nice day/evening.

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Sex In The 90s:Kaiser Family Foundation/ABC Television 1998 National Survey of Americanson Sex and Sexual Health:Survey Part One Part Two Part Three ABC Television

This paper examines Medicaid enrollment and its relation to the rise and fall of enrollment in Aid to Families with Dependent Children (AFDC) or Temporary Assistance to Needy Families (TANF) programs.

• Issue Paper
• Issue Paper

Medicaid Eligibility for Families and Children

September 1998

Measured by enrollment, Medicaid is the largest health insurer in the country. According to the Urban Institute’s estimates, Medicaid covered 41.3 million Americans in 1996; Medicare, in comparison, covered 38 million. Moreover, millions of low-income Americans without private health insurance coverage are eligible for Medicaid but are not enrolled in the program. For example, researchers at the Agency for Health Care Policy Research recently estimated that in 1996 about 4.7 million uninsured children were eligible for Medicaid but not enrolled.¹ If all of these children were enrolled in Medicaid, the number of children without some form of health insurance coverage would drop by 40 percent.

There are numerous reasons why Medicaid does not cover all of the children or adults who qualify. This Issue Paper focuses on one of those reasons: the complexity of Medicaid eligibility policy. This complexity makes the program difficult for low-income Americans to understand and for state Medicaid officials to administer. Yet within this complexity are options that enable states, if they so choose, to use their Medicaid programs as a policy tool to reduce — potentially dramatically — the number of children and adults without basic health care coverage.

This paper begins with an overview of Medicaid eligibility policy. It then turns to two groups of Americans — low-income children and nondisabled adults under 65 — and summarizes the statutory and regulatory “pathways” to Medicaid eligibility available to individuals to them.² The paper concludes with a discussion of policy options available to states under current law for increasing Medicaid eligibility for these two groups. It also reviews the policy options available to the federal government for altering current law to expand Medicaid eligibility.

The complexity of Medicaid eligibility policy is just one reason why Medicaid does not cover all of the children or adults who qualify. Other reasons include burdensome application forms and procedures, lack of outreach efforts, and negative perceptions of Medicaid among low-income families.³ These issues are the subject of other analyses and are being explored in related Kaiser Commission projects.⁴

As CBO has recognized, states have Aa great deal of flexibility in operating the Medicaid program.⁵ For this reason, Medicaid eligibility policy, like Medicaid coverage policy and Medicaid payment policy, varies from state to state. This paper does not attempt to describe Medicaid eligibility policy in each state.⁶ Instead, the focus is on the federal policies that structure the eligibility choices that states make.

I. Overview of Medicaid Eligibility Policy

Medicaid eligibility policy reflects the basic structure of the program. Medicaid is a means-tested, federal-state, individual entitlement program with historical ties to the Aid to Families with Dependent Children (AFDC) and Supplemental Security Income (SSI) cash assistance programs. Medicaid’s policy premise of means-testing explains much about its income and resource rules. Medicaid’s association with AFDC and SSI has guided Medicaid’s historical eligibility categories. Finally, because Medicaid is an individual entitlement, both the states and the federal government have relied on eligibility policy as a tool for limiting their financial exposure for the cost of covered benefits.

Medicaid’s role is to cover basic health and long-term care services for low-income Americans. However, being poor does not assure Medicaid coverage. As shown in Figure 1, Medicaid in 1995 covered only about 55 percent of the nonelderly poor, earning less than $12,590 for a family of three. Medicaid’s reach to individuals with incomes just above the poverty line is even more limited, covering only 17 percent of the near-poor. Despite Medicaid, low-income people are considerably more likely to be uninsured than those with higher incomes. While a portion of the low-income uninsured are eligible for Medicaid but not enrolled, a substantial share are excluded from Medicaid coverage by program eligibility rules that reflect policy choices at both the federal and state level.

At the federal level, eligibility policy choices are reflected in the authorization of federal Medicaid matching funds (on an open-ended basis) for the costs incurred by a state in paying for covered services on behalf of certain low-income individuals. Federal Medicaid matching funds are available to states for the costs of covering some categories of individuals but not others. If federal matching funds are not available for a particular category, it is unlikely that a state will extend Medicaid coverage to those categories of individuals, because the state would then bear the costs of care entirely at its own expense.

At the state level, eligibility policy choices are reflected in state decisions as to which optional eligibility categories and which income and resource criteria to adopt. There are certain eligibility groups — for example, pregnant women with family incomes at or below 133 percent of the federal poverty level ($1,513 per month for a family of three in 1998) — that all states opting to participate in Medicaid must cover. In addition, there are other categories for which states may receive federal matching funds if they choose to extend Medicaid coverage. However, the availability of federal matching funds for a particular category of individuals does not necessarily mean that a state will cover that category, since the state must still contribute its own matching funds toward the costs of coverage.

The terms on which federal Medicaid matching funds are available to states include five broad requirements relating to eligibility: categorical; income; resources; immigration status; and residency. Two of these broad requirements — income and resources — are financial in nature. The other three — categorical, immigration status, and residency — are non-financial. In order to qualify for Medicaid, an individual must meet both its financial and non-financial requirements.

Within each of these five broad requirements are “mandatory” and “optional” elements. It is important to understand the context in which these terms are used. State participation in Medicaid is voluntary, not mandatory. The federal government makes Medicaid matching funds available on an open-ended, entitlement basis to states that elect to participate in the program. In order to participate, states must offer coverage for basic benefits to certain populations — e.g., medically necessary physician and hospital services to certain low-income families and children.

States receive federal Medicaid matching funds for at least 50 percent and as much as 80 percent of the costs of this mandatory coverage, depending on the state. In exchange, states are also able to draw down federal Medicaid matching funds at the same rate for optional populations and services such as the low-income elderly and disabled at risk of nursing home and other expensive long-term care services. Similarly, within each of the five major eligibility requirements there are minimum policies states must follow and there are more expansive policies that states may adopt. According to the Health Care Financing Administration, 55 percent of all Medicaid spending paid for optional populations or optional services.⁷

A child or adult who establishes Medicaid eligibility is not, on the basis of that initial determination, entitled to maintain eligibility indefinitely. Federal Medicaid regulations require that states redetermine eligibility of a Medicaid beneficiary at least once every 12 months. This redetermination, like the original determination, is designed to ensure that a beneficiary continues to meet each of the financial and non-financial requirements for eligibility. Those beneficiaries, who due to a change in income, resources, or family composition no longer meet the eligibility requirements of their state through any pathway, lose their entitlement to Medicaid. There are some limited exceptions for certain categories such as pregnant women, who are entitled to continue Medicaid coverage for 60 days post-partum regardless of any change in financial or non-financial circumstances.

Fluctuations in monthly income are common among low-income families. These changes can lead to the loss of Medicaid coverage by a child or family whose income may spike during one part of the year but spends most of the year earning under the federal poverty level. This occurs commonly in states that use 1-month, 3-month, and 6-month redetermination periods. To address eligibility “churning,” the Balance Budget Act of 1997 gave states the option of extending Medicaid coverage with federal matching funds to children under 19 for a period of up to 12 months after the initial determination of eligibility regardless of any change in financial or non-financial circumstances that would otherwise make them ineligible. This option does not extend to low-income adults with dependent children.

Medicaid does not require that an individual who meets its categorical, income, resource, immigration status, and residency requirements also be uninsured. Medicaid treats insurance coverage as a payment source, not as an eligibility criterion. More specifically, private insurance coverage under Medicaid is a type of “third party liability” that the program uses to reduce its costs of coverage. In most cases, when a Medicaid beneficiary also has private coverage, the private insurer must pay first. Then Medicaid will pay for Medicaid-covered services for which the private insurer is not obligated to pay. This policy stands in sharp contrast to the approach taken under the new Child Health Insurance Program (CHIP), under which states are expressly prohibited from using federal CHIP matching funds to pay for services to children with private health insurance.⁸

Unlike employer-based insurance coverage, Medicaid eligibility is not directly tied to employment for many of the Medicaid coverage categories. For example, a pregnant woman whose income is equal to or less than 133 percent of the federal poverty level is eligible for Medicaid coverage in every state whether or not she worked before or during her pregnancy. On the other hand, as a result of the 1996 welfare law, a state has the option to deny Medicaid eligibility to non-pregnant women with dependent children with respect to whom the state has terminated cash assistance for refusal to work (states are not permitted to terminate Medicaid coverage to children for this reason).

The earnings flowing to an individual or a family from work will affect income eligibility for Medicaid. At income levels near Medicaid eligibility thresholds, a small increase in earnings can result in a loss in Medicaid eligibility even though the increase in earnings may not be sufficient to enable the worker to afford private health insurance coverage. To mitigate this disincentive to work or to increase the hours worked, states are required to extend “transitional” Medicaid coverage for up to one year to women (and their dependent children) who lose cash assistance due to earnings.

Figure 2: Major Medicaid Eligibility Pathways for Selected GroupsMandatory Coverage Optional Coverage Low-income Children Primary Pathways Infants under age 1 with income < 133% FPL Infants under age 1 with income < 185% FPL Children age 1 to 6 with income < 133% FPL Children age 1 to 6 with income < 185% FPL Children age 6 to 15 with income < 100% FPL Children age 6 to 15 with income < 133% or 185% FPL Section 1931 children Targeted low-income children (CHIP children) Children in welfare-to-work families Transitional coverage for children in welfare-to-work families Title IV-E foster care children Non-Title IV-E foster care children Title IV-E adoption assistance children Non-Title IV-E adoption assistance children Other Pathways Medically needy Ribicoff children Children with Disabilities Primary Pathways Supplemental Security Income (SSI) recipients Katie Beckett children Home or community-based waiver children Other Pathways SSI recipients as of 8/22/96 Medically needy Pregnant Women Primary Pathways Pregnant women with income < 133% FPL Pregnant women with income < 185% FPL Other Pathways Medically needy Low-Income Adults Primary Pathways Certain adults in low-income families with children Adults in two-parent households with dependent children Other Pathways Medically needy COBRA continuation beneficiaries Return to top

Medicaid Eligibility for Families and ChildrenPolicy Brief Part 1 Part 2 Part 3 Part 4 Part 5

The Decline In Medicaid Spending Growth In 1996:Why Did It Happen?

September 1998

Medicaid spending grew by only 2.3 percent in 1996, the lowest rate of growth in the history of the program. After a period of explosive growth between 1988 and 1992, averaging over 20 percent per year, Medicaid spending slowed to 9-10 percent per year between 1992 and 1995.¹ In 1996, Medicaid financed acute and long-term care services for 41.3 million people at a cost of $155.4 billion. Spending growth in 1996 was extremely low, and slow growth seems to have continued in 1997. The primary reason for the low rate of growth in 1996 was a nearly 20 percent drop in disproportionate share hospital (DSH) payments. A reduction in adult and children enrolled through cash assistance in response to state welfare reforms and an improving economy as well as moderation in enrollment growth of elderly and disabled beneficiaries also contributed to the slowdown.

Medicaid spending growth has slowed to unprecedented levels and, for the first time in the program’s history, enrollment has fallen. This policy brief updates earlier analyses conducted for the Kaiser Commission on Medicaid and the Uninsured by researchers at the Urban Institute. It critically examines Medicaid enrollment and spending trends from 1990 to 1996, highlighting periods of extensive growth between 1990 and 1992, moderate growth between 1992 and 1995, and limited growth between 1995 and 1996. It then reviews the primary factors contributing to the dramatic slowdown in both spending and enrollment growth between 1995 and 1996. The final section presents preliminary estimates of spending for 1997 and projects Medicaid spending growth over the next five years.

Medicaid Spending: 1990 to 1992

Between 1990 and 1992, Medicaid grew at an extraordinary 27.1 percent annual growth rate, with expenditures increasing from $73.7 billion to $119.9 billion in just two years. During the same period, Medicaid spending on the elderly and disabled increased by 16.7 and 17.6 percent per year, respectively, while expenditures on adults and children increased by 21.4 and 23.8 percent per year, respectively (Table 1). Disproportionate share payments increased by over 250 percent per year. There were several reasons for these high growth rates.

Table 1 Medicaid Expenditures by Group and Type of Service, 1990-1996 Year Average Annual Growth 1990 1992 1995 1996 1990-96 1990-92 1992-95 1995-96 Total Expenditures (billions) $73.7 $119.2 $157.4 $161.0 13.9% 27.1% 9.7% 2.3% Benefits Only By Service $69.2 $97.7 $133.1 $140.3 12.5% 18.8% 10.9% 5.4% Acute Care 37.0 55.3 79.4 84.7 14.8 22.3 12.8 6.6 Long-Term Care 32.3 42.4 53.7 55.6 9.5 14.6 8.2 3.5 By Group $69.2 $97.7 $133.1 $140.3 12.5% 18.8% 10.9% 5.4% Elderly 23.6 32.1 40.9 42.4 10.3 16.7 8.4 3.7 Blind and Disabled 25.9 35.8 52.1 56.6 13.9 17.6 13.3 8.6 Adults 8.8 13.0 16.8 16.9 11.5 21.4 9.1 0.6 Children 11.0 16.8 21.4 23.3 14.2 23.8 11.4 4.5 DSH $1.3 $17.7 $18.8 $15.1 49.7% 263.4% 2.0% -19.6% Administration $3.2 $3.8 $5.4 $5.6 10.0% 9.8% 12.8% 2.3% Source: Urban Institute estimates based on data from HCFA-2082 and HCFA-64 reports.Note: Does not include the U.S. Territories or accounting adjustments. Acute care services include inpatient, physician, lab and x-ray, outpatient, clinic, EPSDT, dental, vision, other practicioners, payments to managed care organizations, payments to Medicare, and all other unspecified care services. Long-term care includes nursing facilities, intermediate care facilities for the mentally retarded, mental health services, and home health services. DSH refers to disproportionate share hospital payments. Payments to Medicare are distributed among aged, blind, and disabled enrollees. Payments to managed care are primarily distributed.

The major reason is the aggressive use of DSH payments often financed by provider taxes and donations. The DSH payments grew at an average annual rate of 263 percent, accounting for about $1.3 billion in 1988 and growing to more than $17 billion by 1992. A second reason was the high rate of inflation in health care prices (8.3 percent per year between 1990 and 1992), which affects Medicaid provider payment rates. States became increasingly adept at shifting services previously financed by other programs into Medicaid. This allowed states to use federal matching funds to replace programs previously funded entirely by the state.

Expenditures also seem to have grown during this period because of significant increases in health care utilization. Medicaid began covering a population with greater needs, including pregnant women, AIDS patients, and people with problems with drugs and alcohol. In addition, states increased the provision of Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) services to children.The final reason is a large increase in the number of beneficiaries. In the late 1980s, Congress enacted a series of expansions of coverage for pregnant women, infants and children. By 1990, Medicaid programs were required to cover all pregnant women, infants, and children under age 6 with family incomes up to 133 percent of the Federal Poverty Level (FPL), and they were given the option to expand coverage to pregnant women and infants up to 185 percent of the FPL. States were also required to cover children below the FPL born after September 30, 1983; in effect, older children were scheduled to be phased in one year at a time until all children through age 18 are covered by the year 2002.² In addition, states were required to cover Medicare premiums and cost sharing for all Medicare-eligible persons with incomes below the FPL and to cover premiums for Medicare-eligibles with incomes between 100 and 120 percent of poverty. Finally, the SSI program grew for a number of reasons, particularly as a result of court decisions and Congressional mandates that extended coverage to learning-disabled children.Medicaid Spending: 1992 to 1995

Medicaid spending growth fell after 1992, increasing by only 9.7 percent per year on average between 1992 and 1995 (Table 1). There were three principal reasons for the reduction in the rate of growth: slower enrollment growth, slower growth of spending per enrollee, and a leveling off of DSH payments. First, enrollment growth among adults and children declined because of improving state economies and tougher AFDC work requirements imposed by states. In addition, the Medicaid expansions to pregnant women and children were more fully phased in and began to experience lower rates of growth. Growth rates among the blind and disabled also declined, because the court decisions and coverage changes responsible for the increases in enrollment of disabled children in the 1988 to 1992 period were fully phased in. Finally, enrollment growth among the elderly also declined because of a slowdown in enrollment of Qualified Medicare Beneficiaries (QMBs) as well as a decline in the number of elderly receiving cash assistance through SSI.

Table 2 Medicaid Expenditures, Enrollment, and Expenditures per Enrollee, 1990-1996 Year Average Annual Growth 1990 1992 1995 1996 1990-96 1990-92 1992-95 1995-96 Total Expenditures Benefits Only (billions) $69.2 $97.7 $133.1 $140.3 12.5% 18.8% 10.9% 5.4% Total Enrollment (millions) 28.9 35.8 41.7 41.3 6.2% 11.3% 5.3% -1.0% Elderly 3.4 3.8 4.1 4.1 3.1 5.1 2.9 0.0 Blind and Disabled 4.0 4.9 6.4 6.7 8.8 9.8 9.3 5.2 Adults 6.7 8.3 9.6 9.2 5.5 11.4 5.0 -4.1 Children 14.7 18.8 21.6 21.3 6.4 13.1 4.8 -1.6 Expenditures per Enrollee $2,400 $2,732 $3,192 $3,397 6.0% 6.7% 5.3% 6.4% Elderly 6,906 8,504 9,965 10,336 7.0 11.0 5.4 3.7 Blind and Disabled 6,410 7,348 8,182 8,447 4.7 7.1 3.6 3.2 Adults 1,312 1,557 1,750 1,837 5.8 8.9 4.0 5.0 Children 747 897 1,078 1,145 7.4 9.5 6.3 6.2 Source: Urban Institute estimates based on data from HCFA-2082 and HCFA-64 reports.Note: Does not include the U.S. Territories. Expenditures shown do not include disproportionate share hospital payments, administrative costs, or accounting adjustments. States are not consistent in the way they report payments to Medicare or to managed care organizations (MCOs). For states where reported data are either missing or appear unreliable, formulas were used to distribute these payments to appropriate enrollee groups. Payments to Medicare are distributed among aged, blind, and disabled enrollees. Payments to MCOs are primarily distributed to adults and children. Enrollees are people who sign up for the Medicaid program for any length of time in a given fiscal year.

Second, spending per enrollee also declined from 6.7 percent to 5.3 percent per year (Table 2). There are a number of possible explanations, including the reduction in health care inflation (5.1 percent between 1992 and 1995). Another factor explaining the lower growth in spending per enrollee could be rapid growth in Medicaid managed care which may have achieved at least short-term savings in several states in these years. Finally, DSH payments began to level off due to 1991 and 1993 legislation restricting the use of these payments. The 1991 legislation banned the use of private donations, and severely restricted the kind of provider taxes the state could employ. The 1991 legislation also limited the growth of DSH payments to that of overall program expenditures and also capped DSH payments at 12 percent of program expenditures. The 1993 legislation made it illegal for states to pay a hospital more than what the hospital was losing through uncompensated care or through low Medicaid reimbursement rates. This severely restricted states’ ability to pay large amounts of money to specific hospitals, which in turn reduced Medicaid expenditures in some states.

The Projected Slowdown

In 1997, both the Urban Institute (UI) and the Congressional Budget Office (CBO) projected that Medicaid spending growth would continue to slow down. They projected that Medicaid spending would increase by 7.5 percent (UI) and 7.7 percent (CBO), through the year 2002. However, the most recent experience for 1993 was 2.3 percent and recent evidence suggests that future spending will continue to slow. There were three principal reasons for these lower projected rates of expenditure growth. First, enrollment growth was likely to slow down for a number of reasons. One is that the majority of mandated expansions of coverage for pregnant women and children had already been implemented and had achieved relatively high participation. In addition, cash assistance AFDC rolls were expected to decline due to the rapidly growing economy, state efforts to reduce welfare program participation, and the recent enactment of the Temporary Assistance to Needy Families (TANF) program, which promised to cut welfare enrollment even further. Finally, the number of disabled beneficiaries was expected to grow, but at a slower rate, reflecting the lower rate of increase in SSI enrollment. Since the disabled are a high-cost population, slower growth in enrollment could have a significant effect on expenditures.

Second, spending per enrollee was expected to moderate due to the increased use of managed care and low health care inflation. Long-term care spending was likely to remain low because of limits on the rate of growth in nursing home beds and the use of community-based alternatives to nursing home care, particularly for the disabled. Third, the 1991 and 1993 DSH legislation seemed to have successfully restricted states’ ability to expand DSH payments. For these reasons, both the Urban Institute and the CBO projected Medicaid spending to grow by about 7.5 percent through 2002.Return to top

The Decline In Medicaid Spending Growth In 1996:Why Did It Happen?Policy Brief Part 1 Part 2 Part 3

This survey takes an in-depth look at Americans’ attitudes about sex and sexual health issues in the 90s, including sex education, sex in the media, sexually transmitted disease and unintended pregnancy, and how we talk (or not) about sexual issues with children and partners.

Part 5

Appendix Table 1: Medicaid Eligibility Levels for Pregnant Women and Children Pregnant Women, Infants and Children(as of May 20, 1998) Other Eligibility Categories Pregnant Women and Infants Children Under Age 6 Children Ages 6 to 14 Children Ages 14 to 19 Asset Test Required for Children (4) Max. AFDC Payments (7/16/96) (5) Medically Needy, 1996 (percent of Federal Poverty Level) United States 133 133 100 45 49 Alabama 133 133 100 100 No 15 N/A Alaska 133 133 100 90 No 76 N/A Arizona 140 133 100 30 No 32 N/A Arkansas (2,3,4) (133) (200) 200 200 200 Yes 19 25 California (1) 200 133 100 100 No 56 86 Colorado (1,4) 133 133 100 37 Yes 39 N/A Connecticut 185 185 185 185 No 81 71 Delaware 185 133 100 100 No 31 N/A District of Columbia 185 133 100 37 No 37 N/A Florida (1) 185 133 100 100 No 28 28 Georgia 185 133 100 100 No 39 35 Hawaii 185 133 100 100 No 57 57 Idaho (4) 160 160 160 160 Yes 29 N/A Illinois 200 133 130 133 No 35 45 Indiana 150 133 100 100 No 27 N/A Iowa (4) 185 133 100 37 Yes 39 52 Kansas 150 133 100 100 No 40 44 Kentucky 185 133 100 46 No 49 28 Louisiana 133 133 100 17 No 18 N/A Maine 185 133 125 125 No 51 42 Maryland (2) 185 185 185 33 No 34 40 Massachusetts (1) 185 133 133 133 No 52 72 Michigan 185 150 150 150 No 45 52 Minnesota (3) 275 275 275 275 No 49 66 Mississippi 185 133 100 32 No 34 N/A Missouri 185 133 100 100 No 27 N/A Montana (4) 133 133 100 48 Yes 41 46 Nebraska 150 133 100 100 No 34 45 Nevada (4) 133 133 100 31 Yes 32 N/A New Hampshire 300 185 185 185 No 51 60 New Jersey (1) 185 133 133 133 No 41 52 New Mexico 185 185 185 185 No 36 N/A New York (1) 185 133 100 51 No 61 76 North Carolina 185 133 100 100 No 50 34 North Dakota (4) 133 133 100 100 Yes 40 47 Ohio 150 150 150 30 No 32 N/A Oklahoma 185 185 185 185 No 28 42 Oregon (4) 133 133 100 100 Yes 43 57 Pennsylvania (1) 185 133 100 37 No 39 43 Rhode Island (3,4) 250 250 250 250 Yes 51 69 South Carolina 185 150 150 150 No 18 N/A South Dakota 133 133 100 100 No 47 N/A Tennessee (3) 400 400 400 400 No 54 23 Texas (4) 185 133 100 17 Yes 17 25 Utah (4) 133 133 100 100 Yes 53 53 Vermont (3) (200) (225) 225 225 225 No 59 81 Virginia 133 133 100 100 No 22 33 Washington (185) (200) 200 200 200 No 50 62 West Virginia 150 133 100 100 No 24 27 Wisconsin 185 185 100 45 No 48 64 Wyoming (4) 133 133 100 52 Yes 55 N/A SOURCE: Center on Budget and Policy Priorities. 1998 and National Governors’ Association. 1996 and 1997. N/A: No medically needy programNote: The 1998 Federal poverty guideline for a family of three was $13,650; for Alaska $17,070 and Hawaii $15,700.(1) The state operates separate child health insurance programs for children not eligible for Medicaid. Such Programs may provide benefits similar to Medicaid or they may provide a limited benefits package and may include premiums and cost-sharing.(2) Children covered under Medicaid expansion programs in Arkansas and Maryland receive reduced benefits package pursuant to federal waivers.(3) The Medicaid programs in AR, MN, RI, TN, and VT may impose some cost-sharing-premiums and/or co-payments for some children pursuant to federal waivers.(4) The states noted count assets, in addition to income, in determining Medicaid eligibility for children; Utah does not consider assets for young children. An assets test in NOT required in Arkansas for its Medicaid expansion program.(5) The United States figure represents the median maximum AFDC payment level.

Appendix Table 2: Expansion Population Eligibility in State Medicaid Programs Operating Under Statewide Section 1115 Demonstration Waivers*State ExpansionPopulation FamilyIncomeRequire-ment ResourceRequire-ment CategoricalRequire-mentWaived Premium/Cost-Sharing EnrollmentCap Alabama Children aged 6-19 < 133% FPL N/A Change in income requirement No premium/cost-sharing No Women for 24 months post-partum^a < 133% FPL Pregnancy Arizona Children up to age 14 < 100% FPL N/A Change in income requirement $1-5 copay, depending on service. No copay for prescription drugs, prenatal care, EPSDT care, nursing facility services, and primary care visits not scheduled by the patient. No Pregnant women and infants < 140% FPL N/A Change in income requirement Arkansas Children up to age 19 < 200% FPL No resource test Change in income requirement $5 copay for prescriptions, $10 copay for outpatient services, percentage copay for hospital per diem No Delaware Low-income children and adults < 100% FPL N/A Changes income requirement for children, waives requirement of pregnancy, disability, or dependent children No premium/cost-sharing No Hawaii Low-income children and adults < 300% FPL < $2,000 for single person, < $3,000 for couple Changes income requirement for children, waives requirement of pregnancy, disability, or dependent children All persons (except pregnant women) making over 100% FPL pay 100% of medical, dental, and catastrophic care premiums. Sliding payment scale for children under 200% FPL. No Kentucky No eligibility expansion Maryland No eligibility expansion Massachusetts Low-income employed < 200% FPL No resource test Dependent child, pregnancy, disability Cost-sharing on a sliding scale based on income No Low-income unemployed < 133% FPL No resource test Dependent child, pregnancy, disability Unemployed persons receiving state or federal unemployment benefits < 400% FPL No resource test Dependent child, pregnancy, disability State ExpansionPopulation FamilyIncomeRequire-ment ResourceRequire-ment CategoricalRequire-mentWaived Premium/Cost-Sharing EnrollmentCap Minnesota Pregnant women and children up to age 19 < 275% FPL No resource test Changes income requirement Premiums range from 1.5 to 8.8% gross income, $4/month premium for families with children < 150% FPL, non-pregnant adults pay 10% of inpatient hospital costs with $1,000 maximum No Planned extension to low-income adults N/A N/A Dependent child, pregnancy, disability New Jersey Low-income individuals < 200% FPL < $7,500 for individual, < $15,000 per family Dependent child, pregnancy, disability Individuals with income below 200% FPL receive fully subsidized care; individuals with income below 300% FPL receive partially subsidized care. No Low-income individuals < 300% FPL < $7,500 resources for individual, < $15,000 per family New York Home Relief population N/A Dependent child, pregnancy, disability No premium/cost-sharing No Women for 24 months post-partum^a< 185% FPL Pregnancy Ohio No eligibility expansion Oklahoma No eligibility expansion Oregon Low-income children and adults < 100% FPL < $5,000 Dependent child, pregnancy, disability Cost-sharing on sliding scale for adult, non-pregnant new eligibles. No Rhode Island Pregnant women and children under age 8 < 250% FPL N/A Change in income requirement Individuals with family incomes between 185-250% FPL subject to cost-sharing requirements. No Women for 24 months post-partum^a < 250% FPL Pregnancy Tennessee Uninsurable individuals N/A No resource test Dependent child, pregnancy Individuals with family incomes > 100% FPL subject to cost-sharing requirements on sliding scale based on income. Enrollment capped at 1,775,000^b Persons ineligible for employer- or government-sponsored health plans No resource test Dependent child, pregnancy, disability Vermont Low-income children and adults < 150% FPL N/A Dependent child, pregnancy, disability No premium/cost-sharing *Based on data collected by the George Washington University Center for Health Policy Research. N/A indicates that this information was not clear based on the information reviewed.a. Only family planning services are covered under this extension.b. Tennessee does not cap enrollment of traditional eligibles meeting the state’s 1993 Medicaid eligibility criteria and uninsurable persons. The enrollment of uninsured persons is limited by the difference between 1,775,000 and the sum of traditional eligibles and uninsurable persons.

¹ Thomas Selden, Jessica Banthin, and Joel Cohen, “Medicaid’s Problem Children: Eligible but not Enrolled,” Health Affairs. May/June 1998: 192-200.

² Medicaid eligibility policy vis-a-vis the disabled and the elderly will be the focus of subsequent analyses.

³ See Lake Snell Perry & Associates, Barriers to Medi-Cal Enrollment and Ideas for Improving Enrollment: Findings from Eight Focus Groups with Parents of Potentially Eligible Children. Kaiser Family Foundation, September 1998.

⁴ See Kaiser Commission on Medicaid and the Uninsured, “Medicaid Eligibility and Enrollment Projects,” September 1998; Donna Cohen Ross, Child Health Outreach Handbook , Center on Budget and Policy Priorities, July, 1998; Sarah Shuptrine, Vicki Grant, and Genny McKenzie, Southern Regional Initiative to Improve Access to Benefits for Low-income Families with Children, Southern Institute on Children and Families, February 1998.

⁵ Congressional Budget Office, Behind the Numbers: An Explanation of CBO’s January 1997 Medicaid Baseline, April 1997, p. 7.

⁶ For detailed state-by-state data on the number and type of beneficiaries covered, see David Liska, Brian Bruen, Alina Salganicoff, Peter Long, and Bethany Kessler, Medicaid Expenditures and Beneficiaries: National and State Profiles and Trends, 1990-1995, Third Edition, Kaiser Commission on the Future of Medicaid, November 1997.

⁷ Statement of Bruce C. Vladeck, Administrator, Health Care Financing Administration, “1998 Budget for Medicaid and Medicare Part B” presented to the House Commerce Committee, Subcommittee on Health and Environment, February 12, 1997.

⁸Choices Under the New State Child Health Insurance Program: What Factors Shape Cost and Coverage? Kaiser Commission on Medicaid and the Uninsured, January 1998.

⁹MCH Update: State Medicaid Coverage of Pregnant Women and Children, National Governors’ Association, September 1997, www.nga.org.

¹⁰ See David Super, Sharon Parrott, Susan Steinmetz, Cindy Mann, The New Welfare Law, Center on Budget and Policy Priorities, August 14, 1996, http://www.cbpp.org.

¹¹ For a discussion of eligibility rules relating to two-parent families, see Jocelyn Guyer and Cindy Mann, Taking the Next Step: States Can Now Take Advantage of Federal Medicaid Matching Funds to Expand Health Care Coverage to Low-Income Working Parents, Center on Budget and Policy Priorities, July 1998, www.cbpp.org.

¹² 63 Fed. Reg. 42270 (August 7, 1998.)

¹³ Jeff Harris and Jane Horvath, The Administrative Impact of the Medicaid Eligibility Resource Test, Kaiser Commission on the Future of Medicaid, April 1993.

¹⁴ Marilyn Moon, The Urban Institute, Asset Limits and Medicaid, Kaiser Commission on the Future of Medicaid, April 1993.

¹⁵ See Leighton Ku and Bethany Kessler, The Number and Cost of Immigrants on Medicaid: National and State Estimates, Urban Institute, December 1997. For a discussion of the impact of the welfare law changes on elderly legal immigrants, see Robert B. Friedland and Veena Pankaj, Welfare Reform and Elderly Legal Immigrants, Henry J. Kaiser Family Foundation, July, 1997. For a review of the options remaining to states with respect to coverage of this population through either federally-funded or state-funded programs, see Kelly Carmody, State Options to Assist Legal Immigrants Ineligible for Federal Benefits, Center on Budget and Policy Priorities, February 1998, http://www.cbpp.org.

¹⁶ Sara Rosenbaum, Medicaid and Migrant Farmworker Families: Analysis of Barriers and Recommendations for Change, National Association of Community Health Centers, 1991.

¹⁷ Guyer and Mann. July 1998.

¹⁸www.hcfa.gov/init/chip-map.cfm

¹⁹ Guyer and Mann. July 1998.

²⁰ For a summary of the expansion populations covered by some states under section 1115 waivers, see Sara Rosenbaum and Julie Darnell, Statewide Medicaid Managed Care Demonstrations under Section 1115 of the Social Security Act: A Review of the Waiver Applications, Letters of Approval, and Special Terms and Conditions, Kaiser Commission on the Future of Medicaid, May 1997.

²¹ Under section 1931 of the Social Security Act, States have the option of liberalizing their financial eligibility standards for adults in one-parent and certain two-parent families by adopting “less restrictive” income or resource methodologies. They do not, however, have the option to liberalize the non-financial eligibility rules. In order to receive federal Medicaid matching funds for the coverage of childless non-disabled adults who do not meet these family composition requirements, states must obtain a waiver from the Secretary of HHS under section 1115.

²² Schoen, C., B. Lyons, D. Rowland et al, “Insurance Matters for Low-Income Adults: Results from a Five-State Survey” Health Affairs, Sept/Oct 1997.

²³ Selden, Banthin, and Cohen, May/June 1998.

²⁴ See Alina Salganicoff and Patricia Seliger Keenan, Child Health Facts: National and State Profiles of Coverage, Kaiser Commission on Medicaid and Uninsured, January 1998. Return to top

Policy Brief Part 1 Part 2 Part 3 Part 4 Part 5Library Index