The Georgia Scroll
October 1997
1997 was proclaimed as the "Year of
the Child" as Congress convened earlier this year.
Pundits coined the phrase "Kiddycare" as analogous to
Medicare for what was predicted to occur.
Fortunately, some of these predictions came true.
By:
Susan Sciullo, CPA, Chief Financial Officer, Egleston Children's
Health Care System; and
David Tatum, Executive Director - Government Relations, Egleston
Children's Health Care System
Despite several starts and stops, the failure of an independent bill and embroilment in the debate over tobacco, a bipartisan effort (which brought together such disparate politicos as conservative Senator Orrin Hatch, R-UT and liberal Senator Ted Kennedy, D-MA) did occur as part of the federal budget deal which will be substantial in addressing the problem of uninsured children.
The nationwide problem of uninsured children is serious. It is estimated that more than 10 million children in the United States are without health insurance. In Georgia, figures from the Georgia Health Policy Center (a think tank associated with Georgia State University) indicate that some 286,000 children fall into the uninsured "gap," that is, their family's income is too great for the child to qualify for Medicaid, yet not high enough for their family to afford health insurance for the child through their employer or through an individual policy.
The Balanced Budget Act of 1997, passed by Congress earlier this year and signed into law by President Clinton on August 5, 1997, creates a new Title XXI in the Social Security Act called the "State Children's Health Insurance Program (SCHIP)". This will provide states with approximately $24 billion in new funds over the period 1998-2002 to expand children's health coverage, with approximately $40 billion going to states over a ten-year period. These monies will be available effective October 1, 1997. Many children's advocacy groups worked hard to maintain this level of funding (the House version of the bill only provided $16 billion over 5 years, the Senate version provided the $24 billion, the Senate version was preserved in conference committee).
Georgia will receive $126 million of these funds in year one of the program, which can be "banked" for up to three years as the state determines how to utilize these funds. Similar amounts will be available to Georgia in years two and three, with slightly lesser amounts calculated for years four and five. It is estimated that Georgia will receive approximately $594 million over five years, at which point the program will be reevaluated. States will receive allotments based on a formula factoring in the level of low income uninsured children.
There is a state match required for these dollars, however, the matching ratio is estimated to be less than the ratio for Medicaid dollars. It is estimated that the state will need to add approximately $30 million in order to receive the year one Federal dollars, which will provide a total of $156 million for the care of uninsured children.
The new law will provide Georgia with several options regarding how to utilize these funds. The state could choose to raise the income level for Medicaid eligibility (with an enhanced federal matching rate), purchase insurance in the private market for uninsured children or utilize some combination of both. The state may also use some portion of these funds for direct contracting with service providers for care of uninsured children.
The state must provide and receive approval of it+s plan from the Department of Health and Human Services, delineating, among other things, eligibility standards and outreach activities, how the SCHIP plan will be coordinated with other state efforts (including a listing of what those other state efforts are) and quality and access assurances. Targeted low income children are defined as under the age of 19, NOT eligible for Medicaid or are already covered by insurance, and with a family income of less than 200% of the federal poverty level.
Under this law, a state has several options to provide health care coverage to eligible children, in addition to expanding Medicaid. First, states can purchase health care insurance for eligible children would be equivalent to a "benchmark" package, defined as the standard Blue Cross/Blue Shield preferred provider option under the Federal Employee Health Benefits Plan; the state employee health plan; or the coverage offered by the largest (in terms of covered lives) commercial, non-Medicaid HMO in the state. A state also has the option of creating its own benefit plan, however, this plan must provide the same actuarial value for the benefits in the basic benefits category of the benchmark plan.
Current discussion on how these monies will be used center around a proposal being developed by the Georgia Health Policy Center as an alternative to simply expanding Medicaid. The Policy Center has looked closely at the "Healthy Kids" initiative in Florida, which provides health insurance for uninsured children through the private insurance market, and is administered by a not-for-profit entity through the school systems. In Florida, insurance carriers and HMOs competitively bid to provide health insurance to eligible children, who are identified by their participation in the federal School Lunch Program. All health plans currently participating in the program are managed care organizations.
The Florida "Healthy Kids" initiative also states that an advantage of operating as a not-for-profit entity is that the entity has one focus, which is insuring children, and that focus does not falter with changes in government leadership or philosophy.
The Health Policy Center is considering building upon the Florida model for use in Georgia, and addressing several concerns with that model, including how to provide coverage for those children not of school age enrollment. The benefit package must be designed, the service areas defined, any bidding process outlined as well as a host of other details.
There are other changes in Medicaid that occur with the implementation of the Balanced Budget Act which bear mentioning as well. Effective October 1, 1997, states will be able to require enrollment of Medicaid beneficiaries into managed care plans without seeking a waiver. However, states cannot require enrollment of children with special needs under this new flexibility.
Also, states operating managed care programs will be required to make Disproportionate Share Hospital (DSH) payments directly to hospitals - not managed care plans - and cannot include DSH monies in a capitation rate.
Establishing and implementing a program to address the needs of Georgia's uninsured children through this new funding stream should be a high priority for the 1998 session of the General Assembly. Enabling legislation must be passed establishing authority and mechanism for the use of these federal dollars, and the state match to the federal dollars must go through the legislative appropriation process. How this program is developed will have a wide reaching impact upon access to primary and preventative health care services for children.