December 27, 2010
Medicaid Bonuses to Reward States for Insuring More Children
By KEVIN SACK

The Obama administration plans to announce Monday that it will make $206 million in bonus Medicaid payments to 15 states — with more than a fourth of the total going to Alabama — for signing up children who are eligible for public health insurance but had previously failed to enroll.

The payments, which were established when Congress and President Obama reauthorized the Children’s Health Insurance Program in 2009, are aimed at one of the most persistent frustrations in government health care: the inability to enroll an estimated 4.7 million children who would be eligible for subsidized coverage if their families could be found and alerted. Two of every three uninsured children are thought to meet the income criteria for government insurance programs.

Kathleen Sebelius, the secretary of health and human services, has called the matter “a moral obligation” and has challenged health care providers, state and local governments and community groups to seek out eligible children.

The stubbornness of the problem is one reason the government expects millions of people to remain uninsured even after 2014, when the new health care law requires most Americans to have coverage and vastly expands government programs to make it affordable.

The bonus grants are distributed according to a formula. To qualify, states must have adopted at least five of eight measures aimed at streamlining enrollment for children in public insurance programs and have recorded Medicaid caseload increases that could not be attributed solely to a worsening economy. Thirty-two states did not even apply for the grants. Three of the 18 that did apply did not qualify for payments.

Alabama will receive a $55 million bonus, more than twice as much as any other state, for having 133,000 more children on its Medicaid rolls than projected by a formulated base line, according to the Department of Health and Human Services. The 15 states that will receive bonuses reported a total of 874,347 children above the baseline, which factors in population growth and, to some degree, demand driven by the economy.

To make enrollment easier, Alabama has eliminated asset tests for children, ended requirements for an in-person interview and allowed children to remain eligible for a year without renewal. It also sends out renewal forms with blanks filled in when data is known, and allows applicants to verify their forms with an electronic signature. The state has adopted “express lane eligibility” so that Medicaid application processors can use income findings from other safety net programs to validate eligibility.

“We are absolutely ecstatic about the $55 million,” said Lee A. Rawlinson, Alabama’s deputy Medicaid commissioner. “It just could not have come at a better time for the state. And had we not had all these streamlining efforts we would never have been able to get to these applications and get all these children awarded.”

Oregon, which will receive a $15 million bonus, made many of the same refinements, while also extending coverage to more children. “Without these efforts to make enrollment simplified, the resources we put into outreach and marketing would be wasted,” said Cathy H. Kaufmann, administrator of Oregon Healthy Kids, which encompasses both Medicaid and the Children’s Health Insurance Program. “We’d have driven thousands of people to the front door but many of them wouldn’t be able to get in.”

Because of the formula’s requirements, none of the money will go to California, Texas or Florida, which account for nearly 40 percent of all uninsured children. Nor will any go to the four states that do the best job of signing up eligible children — Massachusetts, Vermont, Maine and Hawaii.

A study published in the journal Health Affairs estimated the national participation rate among children eligible for Medicaid and the Children’s Health Insurance Program at 82 percent in 2008. Thirteen states had rates below 80 percent, with Nevada at only 55 percent. Ms. Sebelius said in an interview that it would be “a huge win for kids” if the rate could be pushed to 90 percent.

A third of all children are now insured by two programs, compared with 10 percent of nonelderly adults, according to the Kaiser Family Foundation. Medicaid covers 24 million children, most of them living below the poverty line, and the Children’s Health Insurance Program, or CHIP, picks up nearly eight million in families with slightly higher incomes.

The programs’ costs are shared by the federal government and the states. Washington sets income-based eligibility thresholds, which states can exceed.

But in times of economic distress, the pressure on states, which must balance their budgets, is to reduce costs in the revenue-draining programs. One traditional method for doing so has been to make enrollment cumbersome and to devote minimal resources to marketing.

“We’ve long had a problem, more in some states than others, with an application process that is riddled with red tape,” said Cindy Mann, who oversees the federal Medicaid program.

The bonus grants are intended to make it worth a state’s while to enroll and retain eligible children. That has been crucial, officials said, at a time when job losses have increased the number of people who qualify for assistance.

Recessionary pressures drove total Medicaid enrollment to 50 million in 2009, up 2.4 million over 2008, with half the increase among children.

“We’re still fighting a bit of an uphill battle at this particular juncture,” Ms. Sebelius said. “What’s been encouraging is that even in this time of economic downturn, states continue to push enrollment in CHIP and Medicaid.”

Because of expanded eligibility and simplified enrollment, the percentage of children without insurance has actually declined this decade, even as the percentage of uninsured adults has soared, according to a study by John Holahan, director of the Urban Institute Health Policy Center. He estimated that about 10 percent of children were uninsured in 2009, the lowest rate in more than a quarter-century. That compares with 23 percent of nonelderly adults.

The Children’s Health Insurance Program reauthorization, a Democratic initiative that passed with modest Republican support, also authorized grants to states and community groups to help identify eligible children. The Department of Health and Human Services awarded $40 million in such grants last year, along with $75 million to 10 states in the first round of bonus payments.

Alabama was the big winner last year, too. Other states receiving bonus payments this year are Alaska, Colorado, Illinois, Iowa, Kansas, Louisiana, Maryland, Michigan, New Jersey, New Mexico, Ohio, Washington and Wisconsin.

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