Since the demise of Health Care Reform, the number of uninsured Americans has only increased. We know, however, that the majority of the uninsured are concentrated in lower-income, working families. The FamilyCare bill, introduced by Congressmen Dingell, Waxman Stark, and Brown and Senators Kennedy and Rockefeller, targets health insurance coverage to uninsured working families. It also gives states a number of new tools to help improve outreach and enrollment in Medicaid and the Children’s Health Insurance Program. The bill also provides assistance to increase coverage for workers in small businesses by providing grant money for states to pursue new and innovative approaches to expand health insurance coverage through small businesses as well as grant money to improve and expand access to care in areas with high numbers of uninsured or under-insured individuals and families.

In keeping with efforts to provide health insurance coverage to families, the bill would rename the CHIP program as "FamilyCare."

New Option to Cover Targeted Low-income Parents: The Family Care bill establishes a new optional category under Medicaid and CHIP for coverage of parents of children who are enrolled in Medicaid and CHIP. The bill provides $50 billion of new federal money for this coverage expansion. A parent may not otherwise be eligible for assistance under another Medicaid category. Beginning in October of 2000, states would receive enhanced federal Medicaid assistance percentage for any parent covered through FamilyCare above the income level the state had established as of January 1, 2000. The enhanced matching would be the same under FamilyCare as under CHIP. Beginning in 2006, states will be required to cover parents up to 100% of poverty.

Under FamilyCare, the definition of a parent is the same as the definition of a caretaker under section 1931 of the Social Security Act. A state may not cover parents at higher income levels than children nor may they cover higher income parents before covering lower income parents. Generally, parents would be enrolled in the same program as their children. However, in the case of a parent who has children in both Medicaid and CHIP, the state may elect on a uniform basis to cover these parents in either Medicaid or CHIP. Unless otherwise stated in the legislation, all references to a targeted low-income child in title XXI would also apply to a targeted low-income parent.

In order to access the new federal money for coverage expansions to parents, states must first cover children up to 200% of poverty, must eliminate any waiting lists or enrollment barriers for enrollment of children in CHIP, and must expand coverage of targeted low-income parents. In the case of a state that has used its CHIP allotment and still is not able to cover children to 200% of poverty, the state may access FamilyCare funding to bring children up to 200% in order to also expand coverage to parents.

New Option to Cover Targeted Low-income Pregnant Women: States may also elect to cover first-time pregnant women under the FamilyCare proposal in the same way they are covered under Medicaid today. In order to exercise this option, a state must first cover pregnant women to 185% of poverty through Medicaid and elect the new FamilyCare option to increase coverage for targeted low-income parents. States that have not yet covered pregnant women to 185% of poverty may access FamilyCare funding at the enhanced matching rate in order to extend coverage to this group up to 185% of poverty (and beyond).

More Equitable Matching Rate Structure: FamilyCare would make the current system of federal matching payments more equitable. In 2006, states will receive enhanced matching payments for any covered child with a family income above the federal minimum Medicaid coverage requirements (including children covered prior to the enactment of CHIP). In addition, states will get enhanced matching payments for any parents with incomes above 100% of poverty that they covered prior to FamilyCare.

In order to ensure that the new FamilyCare dollars are available to their maximum extent for new coverage, the bill changes the accounting mechanism for charging costs to titles XIX and XXI. Although States will be getting new enhanced matching payments for all previously covered adults above 100% of poverty and all previously covered children above the Medicaid mandatory minimums, only the enhanced portion of the payments will be charged against the title XXI capped allotments. The remainder of the payments will continue to be charged to the uncapped title XIX grant awards just as they had been in the past for these Medicaid eligible populations. The table below explains the matching structure outlined in the bill.

1) New coverage (after 1/1/2000) of parents under 100% FPL under FamilyCare.
2) New coverage (after 1/1/2000) of parents over 100% FPL under FamilyCare.
3) New coverage (after 3/31/97) of children under CHIP and FamilyCare.
4) Existing coverage of parents above 100% FPL but below FamilyCare expansion levels.
5) Existing coverage of kids above Medicaid mandatory levels but below CHIP expansion levels.

Permanent Funding Stream for FamilyCare and CHIP: FamilyCare creates a permanent funding stream for both FamilyCare and CHIP. The $50 billion in FamilyCare money would be distributed under the same formula as CHIP. Beginning in 2002 the money would be allotted as follows:

In 2011 and after, the 2010 global allotment is increased by medical inflation. In addition, beginning in 2008, the CHIP allotment would be increased annually by the amount of medical inflation. States that choose the FamilyCare option can combine their FamilyCare and CHIP allotments into one funding pot to maximize use of the money.

Distribution of New Allotments: FamilyCare uses the same formula for distribution of allotments to individual states as under CHIP, but without taking into account the floors and ceilings applied to the CHIP allotments. FamilyCare also ensures adequate funding for the Territories by providing 1.05% of the total funding to the Territories and Commonwealth of Puerto Rico, leaving 98.95% for distribution among the 50 states.

Assist Families in Affording Private Employer-Based Coverage: FamilyCare would also facilitate the option to pool state funding with employer contributions towards private insurance, which can be a cost-effective way to expand coverage. Under this option, families otherwise eligible for FamilyCare coverage could get assistance in purchasing their employers’ health plan if it meets FamilyCare standards and their employer pays for at least half of the premium. This minimum employer contribution, along with CHIP crowd-out policies, will ensure employers don’t reduce or drop existing coverage.

One of the best ways to ensure children have health insurance coverage is to make sure they are enrolled at birth. This bill would automatically enroll children born to FamilyCare parents into health insurance coverage at birth. This would work in the same manner as the Medicaid protection works today.

The FamilyCare proposal also allows states the option to cover legal immigrant children and pregnant women under the Medicaid and CHIP programs by eliminating the requirements for a five year ban and the attribution of a sponsor’s income for these groups. States that have elected the FamilyCare option as well as the option to cover all legal immigrant children (under Section 4) would also have the option to cover the parents of those children.

FamilyCare allows states the option to expand coverage to children up to age 21 in both Medicaid and CHIP. Currently states can only reach children up to age 18 in CHIP and only some 20 year olds in Medicaid, even though children up to age 21 may still be dependents in their parents’ home.

FamilyCare would simplify the enrollment for families and children in Medicaid, CHIP and FamilyCare. States would be required to align: resource standards; simplified forms (including permitting application other than in person); initial eligibility determination and redetermination processes (using the same verification policies, forms, and frequency); and face-to-face interview requirements for purposes of initial eligibility determinations and redeterminations in Medicaid and CHIP for children and separately for parents. States must also develop a uniform, simplified application for establishing eligibility for benefits for children in both Medicaid and CHIP.

FamilyCare would also expand the sites that are eligible to determine children and parents to be presumptively eligible for coverage. First, the bill provides an explicit option for states to use presumptive eligibility in the CHIP program and removes the costs of implementing the option from the 10% cap on administrative spending. Second, schools, child support enforcement agencies, homeless shelters, child care resource and referral agencies, assisted housing agencies and entities involved in Medicaid, CHIP and title IV enrollment will now be able to help children enroll in Medicaid and CHIP.

To ensure that families don’t fall through the cracks when their income or family size changes, this bill strengthens the "screen and enroll" requirement already in CHIP. It ensures that any time a family loses eligibility for one program, they will automatically be screened and enrolled for eligibility in the other program.

Estimates show that many children who are eligible for school lunches also qualify for health insurance coverage through the Medicaid or CHIP programs. The School Lunch Program currently serves more than 15 million children under 185% of poverty. This bill would take advantage of the comparable income levels between health insurance programs and school lunch programs. FamilyCare will build on the school lunch program and allow school lunch information packets to also include information about these health insurance programs for children. This would be considered an outreach function which would be reimbursable under both programs.

For many working families, the most daunting challenge they face is how to afford health insurance when their employer either doesn’t provide it or they can’t afford it. FamilyCare improves the welfare-to-work transition for families moving into the workforce. First, it makes the transitional Medicaid assistance program (TMA) permanent to allow states to continue to use this option to help families return to work and stay healthy. Second, it allows states to provide 12 months of continuous coverage for TMA regardless of changes in circumstances. Third, it eliminates the burdensome requirement that families re-document their eligibility after six months as well as the requirement that families must have previously qualified for Medicaid for three of the previous six months to qualify for TMA. Fourth, FamilyCare also allows states to expand TMA above 185% of poverty. Finally, States that have elected to provide coverage to families with gross incomes (less child care expenses) at a minimum up to 185% of the federal poverty level would be deemed to comply with the requirements to provide assistance to families transitioning to work.

Currently, many families that have two parents working in low-wage jobs are penalized under Medicaid. The "100-hour rule," a remnant of the old AFDC system which expressly limited coverage to single-parent families or families where one parent was incapacitated, restricts Medicaid coverage to families in which the principle wage-earner works fewer than 100 hours per month (or about 23 hours a week). So, poor working two-parent families who work full-time jobs, no matter how low their wages, are not able to qualify for health insurance coverage through Medicaid. The "100 hour rule" applies at State option in about one quarter of all States. This bill eliminates this archaic restriction on working families and requires states to cover two-parent working-poor families just like a single-parent family for both AFDC-related and medically needy eligibility groups.

The FamilyCare proposal also includes a grant program that allows states to find creative ways to increase access to insurance through market reform demonstrations and other innovations. Demonstrations that will be considered include: alternative group purchasing or pooling arrangements, such as purchasing cooperatives for small businesses, reinsurance pools, or high risk pools; individual or small group market reforms; consumer education and outreach; subsidies to individual, employers, or both in obtaining health insurance.

The grant program will be administered by the Department of Health and Human Services and will provide $100 million per year over five years to up to 10 states that submit proposals which meet the criteria. The Secretary may allot up to $5 million for initial planning grants for any state to develop a proposal that would be eligible for the grants. Each grant will be of sufficient size and duration to permit significant experimentation at the state level.

To be eligible for a grant a state would have to demonstrate: (1) the potential to increase access to insurance for some portion of the existing uninsured population; (2) market innovation (not simply a funding of expansions of existing efforts); (3) compliance with existing federal laws; and (4) non-discrimination on the basis of health status.

In addition, proposals would have to address issues such as governance, targeted population, expected cost, and the ability to continue successful programs after the completion of the grant period.

Grantees would be required to conduct an evaluation as to any improvement in quality of care, access, cost, or choice of coverage at the end of the grant period. At the end of five years, the Department of Health and Human Services would be required to contract with an outside entity to perform an overall evaluation of the grant program.

Families should be able to make a fair, informed choice about what health insurance coverage is right for them. They should not be influenced or seduced by a HMO to enroll in a plan that may not meet their needs. FamilyCare includes a provision to ensure that health plans serving as enrollment brokers and providing marketing and enrollment information on behalf of the state to eligible beneficiaries, may not also serve beneficiaries in that area. This is to ensure that these vendors are not inappropriately influencing a family’s choice of health plan.

FamilyCare also prohibits any entity which furnishes items or services under FamilyCare, CHIP or Medicaid from having affiliations with any person who is debarred, suspended, or otherwise excluded from participating in procurement or non-procurement activities under the Federal Acquisition Regulation. Entities also may not enter into an employment, consulting, or other agreement for the provision of items or services that are material to such entity’s obligations under the program with any individual who is excluded from participation under the Federal Acquisition Regulation.

This section authorizes an additional one billion dollars in each of fiscal years 2002 through 2004 to maintain an even funding stream under the CHIP program over these years.

The Secretary of Health and Human Services is authorized to award demonstration grants to not more than 7 States or other qualified entities for innovative programs designed to improve outreach to homeless individuals and families under the Medicaid and SCHIP programs under titles XIX and XXI of the Social Security Act, and coordination of Medicaid and SCHIP services to homeless individuals and families with programs like TANF, SAMHSA, Food Stamps, Welfare-to-Work, and the Workforce Investment Act for the purpose of increasing enrollment of homeless individuals in, and effectiveness of services to homeless individuals under, all such programs.

FamilyCare corrects a technical problem regarding the funding mechanism for Medicaid expansions in CHIP. Under current law, state allotments under title XXI, rather than being made available to pay the costs of Medicaid expansion CHIP programs under XIX, are instead simply reduced by the amount of such costs (i.e., there is no mechanism for real money transfers). Consequently, HCFA must use title XIX appropriations, rather than title XXI appropriations, to pay these costs. This results in a double appropriations and related accounting problems. Specifically because HCFA can not move money for Medicaid-CHIP costs out of XXI, HCFA must keep two accounts open, XIX and XXI, to pay the costs for what is really only one program in Medicaid-CHIP states. Last year, HCFA had to request an additional appropriation of $1.2 billion to XIX to make Medicaid whole for the XXI costs charged to it. This resulted in a total of $5.4 billion available for a program that is capped at $4.2 billion under statute. This violates basic accounting principles and makes it impossible to properly display costs to Medicaid and CHIP.

The bill authorizes payment of the costs of Medicaid expansions under CHIP from the title XXI appropriation; removes the requirement that title XXI allotments be reduced by the amount of CHIP-related Medicaid expenditures; and authorizes transfers of funds from the title XXI to the title XIX appropriation account to reimburse CHIP-related Medicaid outlays through FY 2000. This is purely a technical adjustment.

Section 15. Creation of community access program

The Secretary of Health and Human Services is authorized to make grants to assist in the development of integrated health care delivery systems to serve communities of individuals who are under-insured, to expand the scope of services provided in those communities, and to improve the efficiency and coordination among providers of these services in under-served communities. Entities eligible to receive the grants include Federally qualified health centers, hospitals that provide a substantial volume of non-emergency health services to uninsured individuals and families without regard to their ability to pay or a public health department.

The program authorizes $125 million in fiscal year 2001 and such sums as necessary for 2002 through 2005. The grant dollars are intended to be used for direct expenses associated with planning, developing. and operating the greater integration of a health care delivery system so that it either directly provides or ensures the provision of a broad range of services, including primary, secondary, and tertiary services as well as substance abuse treatment and mental health services. No more than 15% of the grant funds may be used for direct patient care. Specifically, some examples of uses for the funding include increased outreach activities, improvements in case management, improvements in the coordination of transportation to health care facilities, development of provider networks, recruitment, training, and compensation of necessary personnel, and acquisition of technology.