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Eliminating Dropout From Public Insurance Could Cut Number Of Uninsured Children By One-Third

New Study In Health Affairs Suggests Simplifying Renewal Processes And Eliminating Separate Medicaid And SCHIP Programs

Bethesda, MD -- If Medicaid and the State Children’s Health Insurance Program (SCHIP) simply retained all children who are enrolled and have no alternative coverage in a given year, the number of uninsured children in the United States would fall by one-third, according to research published today on the Health Affairs Web site. http://content.healthaffairs.org/cgi/content/abstract/hlthaff.26.5.w560

The new study, by Benjamin Sommers of Brigham and Women’s Hospital in Boston, finds that one-third of all children who were uninsured in 2006 had lost Medicaid or SCHIP coverage in the previous year. Among the subset of uninsured children in 2006 who were eligible for public coverage, more than two in five had lost public coverage in the previous year.

These findings and others in the study are conservative estimates: “Limitations in the data suggest that if anything, [my study] underestimates the extent of dropout as a cause of uninsurance among children,” Sommers points out. His study is the first in a series of papers that Health Affairs will publish in the coming weeks addressing various aspects of the SCHIP debate. Subsequent papers will address topics such as reauthorization proposals and the number of uninsured children who are potentially eligible for the program.

Sommers finds that the problem of dropout from Medicaid and SCHIP is getting worse. The percentage of uninsured children who had lost public coverage in the previous year rose from 20 percent in 2001 to 33 percent in 2006, and the percentage of uninsured children eligible for these programs who had lost coverage in the previous year rose from 27 percent in 2001 to 42 percent in 2006.

“Unfortunately, the trend of increasing dropout is likely to accelerate because of the new 2006 federal requirement of increased citizenship documentation for Medicaid renewal,” which already appears to be causing decreases in public coverage, says Sommers, a resident in internal medicine and primary care. He calls for policy changes to combat dropout, starting with simplifying the Medicaid and SCHIP renewal processes as much as possible, and perhaps extending to integrating Medicaid and SCHIP in states that currently run them as two separate programs.

Analysts have long known that most uninsured children are eligible for SCHIP and Medicaid and that by not being enrolled, these children are missing out on the important benefits that come with health coverage, such as higher rates of check-ups and vaccinations and lower rates of illness-related restrictions on activities. However, many policymakers and analysts have assumed that the problem is primarily one of “take-up” -- finding eligible children in the first place.

Sommers’s research, which uses newly revised data from the U.S. Census Bureau’s Current Population Survey, is part of a growing body of evidence showing that dropout from Medicaid and SCHIP is “a driving factor in the problem.” The severity of the dropout problem varies from state to state: Dropout rates in Delaware and New York are statistically significantly higher than the rest of the country, while dropout rates in Colorado and Utah are lower.

The Dropout Problem:
What’s Causing It, And How To Fix It

In part, the worsening Medicaid and SCHIP retention problem Sommers documents stems from the fact that states liberalized eligibility criteria during the 2000-2006 study period, creating more children able to enroll in, and subsequently disenroll from, Medicaid and SCHIP. But in addition, “states took steps that intentionally or unintentionally exacerbated dropout,” Sommers observes. For example, “several states have responded to budget difficulties by making the renewal process more cumbersome or by increasing SCHIP premiums, both of which may exacerbate dropout.”

In addition, “the majority of states have established separate SCHIP programs, rather than using SCHIP funds to expand their existing Medicaid programs.” As of 2000, thirty-three states administered separate programs; since then, three more states have launched separate programs. “Running a separate [SCHIP] program -- a more complex administrative structure -- has been linked to significantly higher dropout rates,” Sommers notes.

Sommers offers several steps to improve Medicaid and SCHIP retention: “First and foremost, the renewal process should be simplified as much as possible, by reducing the frequency of renewal to once a year, using shared application forms for SCHIP and Medicaid, and offering forms in multiple languages -- steps that many, but not all, states have taken.” Sommers also praises passive SCHIP enrollment, “in which families are required to submit paperwork only if their circumstances have greatly changed in the previous year,” and a comparable approach to Medicaid enrollment which allows families to simply sign and return forms preprinted with the previous year’s information unless their circumstances have changed.

“A more drastic option would be to integrate separate SCHIP and Medicaid programs, running a single combined program in each state,” Sommers says. He acknowledges that persuading states to make such a large structural change “may be unlikely, [but] many states are considering major health care reforms much larger in scope than this.”


ABOUT HEALTH AFFAIRS:

Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears bimonthly in print with additional online-only papers published weekly as Health Affairs Web Exclusives at www.healthaffairs.org.

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©2007 Project HOPE–The People-to-People Health Foundation, Inc.