Stimulus Money Protected Medicaid/CHIP, Says Kaiser Survey

John Commins, for HealthLeaders Media , December 9, 2009

Thanks largely to federal stimulus money, most states protected and even expanded coverage under Medicaid and CHIP for children and parents in 2009, despite a deep recession, according to a new 50-state survey from the Kaiser Family Foundation's Commission on Medicaid and the Uninsured.

However, that coverage could be threatened if the economy continues to sputter, when the temporary federal assistance under the $787 billion American Recovery and Reinvestment Act expires at the end of 2010, and before any health reform coverage would begin, the survey found.

The annual survey of eligibility rules, enrollment and renewal procedures, and cost-sharing practices in Medicaid and CHIP for children and parents found that most states in 2009 continued to expand and simplify their Medicaid and CHIP programs even as they faced the bleakest economic picture in years and severe budget pressures. However, budget shortfalls did result in cutbacks in some states.

"The renewal of CHIP and the fiscal relief and eligibility and enrollment protections for Medicaid in the ARRA proved critical to enable states to continue their commitment to providing coverage to millions of low-income families," said Diane Rowland, executive vice president of the foundation and executive director of the KCMU, in a media release. "However, even with signs of economic recovery, state revenues are still mired in a severe slump and, faced with the end of enhanced federal money after 2010, fiscal shortfalls are likely to cause states to consider significant cuts to Medicaid and CHIP."

The survey found overall progress nationally in expanding public coverage or making it easier to access. However, wide variations in coverage persist. Among the survey findings:

  • Forty-seven states cover children in families with an annual income at or higher than 200% of the federal poverty level ($36,620 for a family of three), with almost half (24 states) covering children in families with incomes at or greater than 250% of FPL ($45,775 for a family of three).
  • Parent eligibility levels continue to lag, and the disparity between children and parents is growing. Currently, the median income eligibility limit for children is 235% of FPL ($43,029 for a family of three) compared to the median for a working parent at 64% of FPL ($11,718 for a family of three).
  • Twenty-six states bolstered coverage for low-income children, parents, and pregnant women, either by expanding eligibility, simplifying enrollment procedures or reducing financial barriers. Children were the chief beneficiaries of expansions in 2009, with 19 of those 26 states improving access to coverage for children by increasing eligibility, simplifying procedures, and eliminating premiums.
  • Fifteen states scaled back coverage in their CHIP programs in 2009. Although no state reduced eligibility for children, California and Tennessee froze CHIP enrollment for some time in 2009. Other actions included increases in waiting periods, retractions in eligibility simplifications, and relatively modest increases in CHIP premiums. Even after recent increases, the median CHIP premium payment for two children in a family with income at 200% of FPL remains modest at $480 annually, representing 1.3% of family income. Arizona also eliminated parent coverage and Montana retracted its simplified income verification procedures in CHIP.

The survey found that states’ commitment to providing Medicaid and CHIP coverage to low-income children and families will continue to be tested in 2010 as dismal state budget circumstances persist. Recent forecasts indicate states will face even bigger shortfalls in the upcoming fiscal year.

ARRA assistance will expire at the end of December 2010, and with it the federal requirement that states maintain eligibility levels and impose no enrollment barriers. KFF said that that raises the prospect of substantial state cuts in Medicaid and CHIP that could reverse recent expansions and undermine the base of coverage for low-income families upon which broader health reform efforts seek to build.

John Commins is a senior editor with HealthLeaders Media.

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