Coordinating Publicly Funded Healthcare Coverage for Children

Introduction

Beginning in 1997, with the enactment of the State Children's Health Insurance Program (SCHIP), more than $40 billion in Federal funds became available to States over a 10-year period to expand health coverage to uninsured low-income children. These funds have sparked major new State initiatives, along with the expectation that as many as five million uninsured children will gain coverage.

The Federal SCHIP law offers States the option of using SCHIP funds to expand coverage for children through Medicaid, through separate State child health programs, or through a combination of these approaches. As of August 1999, more than half of all the States had Federal approval to expand coverage, either through a separate child health program or through a child health program combined with a Medicaid expansion. Regardless of the program design, States need to devise policies and procedures to coordinate enrollment and transitions between Medicaid and their separate SCHIP-funded child health programs.

This report reviews various strategies States have used to coordinate their child health programs and identifies policies and procedures that promote coordination between separate SCHIP-funded child health programs and Medicaid. While there is no one way or right way to coordinate child coverage programs, State practice in this area demonstrates that certain strategies make it easier for States to assure that children are enrolled and able to remain covered as long as they are eligible for any coverage program.

Congress recognized the importance of establishing links between the new SCHIP-funded programs and existing systems for providing coverage to children. The Federal SCHIP law specifically directs States to screen all children applying for coverage to determine whether they are Medicaid eligible and, if so, to enroll them in Medicaid.¹ Effective coordination between Medicaid and separate SCHIP-funded programs helps States meet their enrollment goals by preventing uninsured children from falling through the cracks of a dual-program system. In a coordinated system, families do not need to anticipate which is the right program for their children or navigate two application processes in order to obtain or maintain coverage for their children. Effective coordination also maximizes the dollars available to cover children by assuring that only newly eligible children are covered with SCHIP dollars.

Although the Federal coordination requirement promotes enrollment of eligible children, it can create some tensions for States. States are required to coordinate their separate SCHIP-funded program with Medicaid, but the Federal law accords them broad flexibility to use their SCHIP funds to create separate child health programs that may look and operate very differently from traditional Medicaid programs.

Despite this apparent conflict, however, many States appear to have achieved a significant degree of coordination, at least at the initial enrollment stage. In part, this is because the need to coordinate has prompted States to reexamine their Medicaid policies and simplify their Medicaid application procedures. States that have revamped their Medicaid procedures, eliminated unnecessary paperwork, and dispensed with burdensome verification requirements have been able to coordinate enrollment procedures between Medicaid and their separate SCHIP program and at the same time make the enrollment process easier.

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