Journal Issue: Health Insurance for Children Volume 13 Number 1 Spring 2003
The Spectrum of Children's Health Coverage
Children in the United States receive health coverage from a variety of sources. In general, coverage falls into one of five different categories.1 As Figure 1 shows, the majority of children (51 million) have private health insurance. Another 18 million children are covered by the two major public health insurance programs: Medicaid (15 million) and SCHIP (3 million); meanwhile, 2 million children have some other form of health coverage, such as military health care or Medicare.2 Despite the range of coverage options, approximately 9 million children remain uninsured. A range of factors contributes to this problem, including the ways in which programs are designed and implemented.
Private Health Insurance
In 2000, 51 million children in the United States had private health insurance coverage.3 The majority (94%) obtained this coverage through their parents' employers. The remaining 6% were in families with individual health insurance policies. Most privately insured children were in families with incomes over 200% of the federal poverty level (FPL), or $36,200 for a family of four. In 2000, employer coverage cost $202 per month for an individual and $529 per month for a family.4 While employers paid most of these premiums, employees paid an average of $54 per month for individual coverage and $180 per month for family coverage.5 Three-quarters of private health insurance policies had deductibles, and more than one-half of the deductibles were greater than $150 per year.6 Co-payments of $10 to $20 were typical for office visits.
Private health insurance policies tend to cover physician services, hospital services, prescription drugs, and limited mental health and long-term care services.7 Transportation, translation, and long-term behavioral health and physical health care services are not included in most private benefit packages. Almost all private health insurance is delivered through some form of managed care, with 38% of enrollees in preferred provider organizations, 28% in health maintenance organizations (HMOs), and 25% in point-of-service plans. Only 9% of policies are delivered through fee-for-service (FFS). More than one-third of all enrollees in employer-based coverage are in self-funded plans.8
About one-fifth of American children receive health coverage through Medicaid.9 A federal program, Medicaid is jointly funded by the federal and state governments. Overall, the federal government pays 57% of Medicaid costs, and states pay 43%, though the actual matching rates range from 50% to 77%, according to each state's ability to contribute.10 States administer their own Medicaid programs following statutes and rules set out by the federal government. The federal Centers for Medicare and Medicaid Services (CMS), a division of the U.S. Department of Health and Human Services (DHHS), oversees Medicaid.
Medicaid is an entitlement program, meaning that applicants who meet eligibility criteria will receive coverage. Most children with Medicaid coverage are in very low-income families, usually under 100% or 133% of the FPL, or $17,050 per year for a family of four (see Appendix 1 at the end of this article for a list of Medicaid income-eligibility levels for children). Medicaid enrollees, in most cases, do not pay premiums. The vast majority of children in Medicaid do not have co-payments or other forms of cost sharing. Others in Medicaid can have nominal, very low co-payments (for example, one dollar to three dollars for an office visit).
Enacted in 1997, SCHIP is another federal program jointly funded by the federal government and the states. Its purpose is to cover uninsured children in families with incomes above Medicaid eligibility but below the level needed to afford private coverage (see Figure 2). The federal share of funding is higher for SCHIP than for Medicaid, and states have greater flexibility in administering SCHIP than Medicaid. Overall, the federal government funds 75% of SCHIP costs, and states fund the rest, with actual matching rates ranging from 65% to 84%.11
Unlike Medicaid, SCHIP is not an entitlement program. The federal government has budgeted a specific amount per year for the program through 2007. When either state or federal funding limits are reached, states may (and have) impose waiting lists or enrollment freezes on SCHIP.12
While states may establish their own income-eligibility criteria for SCHIP, and income ceilings range from 133% to 350% of the FPL, about two-thirds of states enroll children in families up to 200% of the FPL (see Appendix 1 at the end of this article). Two-thirds of the states charge monthly or annual premiums, which by law may not exceed 5% of family income (see Appendix 2 at the end of this article for state premium levels). SCHIP enrollees typically make co-payments of five dollars for office visits, with a range from $0 to $15, depending on the state and the family's income (see Appendix 2).
The U.S. Census Bureau reports that 2.1 million U.S. children obtain health coverage through the military.13 Military health care includes CHAMPUS (Comprehensive Health and Medical Plan for Uniformed Services)/Tricare, CHAMPVA (Civilian Health and Medical Program of the Department of Veterans' Affairs), as well as care provided by the Veterans' Administration and the military. An additional half million children qualify for Medicare, usually because of their disability status. Other miscellaneous types of health coverage include health services provided to children in prison or juvenile detention centers. Children of public employees are considered to have private insurance as described above.
Although determining the precise number is difficult, approximately 9.2 million children lack health insurance. (See the article by Holahan, Dubay, and Kenney on uninsurance trends in this journal issue.) An estimated 5 million of these children are thought to be eligible for either Medicaid or SCHIP. Two out of three uninsured children (67%) are in families with incomes under 200% of the FPL. More than three-quarters of uninsured children (76%) have at least one parent who works full time.14
Uninsured children can obtain health care at hospital emergency rooms, from physicians providing charity care, and from public clinics. Many public clinics receive federal funding. Nonetheless, the parents of uninsured children are more likely than those of insured children to forgo and delay needed health care for their children.15 Uninsured children are three times more likely than those with Medicaid not to have a regular physician or other type of medical home.16 Uninsured children are three to six times more likely than their insured peers to go without needed medical care, medications, eyeglasses, or mental health services.17