“Painless” Administrative Ways for
States with Budget Shortfalls to
Preserve or  Increase Medicaid and
S-CHIP Program Funding

 A: States with Parent/Caretaker Medicaid Income
 Levels over 100% of Poverty

Thomas P. McCormack 
05/07/04



 
"Painless " TOC Medicaid Main Page  

States get a matching rate for the State Child Health Insurance Program (S-CHIP) that is
roughly 15% higher than their Medicaid matching rates (which range form 50% for the
richest states to 77% for the poorest).  Hence---at least theoretically---to the extent that
a state shifted eligibles from Medicaid itself to CHIP, it could get the higher matching
rate for services received by such patients.

Medicaid law requires states to cover pregnant women and infants under age 1 with
incomes under 185% of poverty; children 1 to 6 under 133%; children 6-18 under
100%;everyone who meets the state’s 1996 AFDC income levels (including any state
raises thereto); and aged, blind and disabled persons on SSI or who meet some
stricter (“209[b]”) 1972 state eligibility rules. These “mandatory” eligibles must be
put on Medicaid if they’re eligible for it. Thus, states cannot put them on CHIP and
claim the higher CHIP matching rate for their care; they can get only the lesser
Medicaid matching rate for them.

States now covering optional persons via options such as Section 1931 expansions,
1115 waivers, regular 1902(a)(10) options or even state-only funding---especially
parents and related caretakers with incomes over 100%---could therefore lower
such liberal income limits back down to Medicaid’s mandatory federal minimum (the
1996 AFDC income levels) and then immediately just re-cover such persons with
those same liberal income levels--but using 15% higher CHIP waiver funding ! 

The CHIP law (Title XXI of the Social Security Act), regulations and policies allow
states to get waivers to add other persons to CHIP using unexpended funds from a
state’s CHIP allocation for the present or the two past fiscal years’ allocations. In fact,
Rhode Island, Minnesota and Wisconsin have had such CHIP waivers to cover parents
and other related caretakers with their states’ “surplus” CHIP allocation money for
some time----and Arizona, California and New Jersey recently received such waivers
too (although California’s budget crisis may cause it to mothball its waiver request).
And as of March, 2003, every state in the Union except Alaska and Rhode Island
does have large surplus, unexpended funds “left over” from their fiscal 2002 and/or
2003 CHIP allocations!

To get a CHIP waiver from CMS to use surplus CHIP funds to cover persons other
than children a state must:
 
 
  1. Have a CHIP income level of at least 200% for children
     
  2. Use waivered CHIP funds only for parents over 100% if they are to be included
     
  3. Have a consumer-friendly, easy-to-navigate application and public outreach
program 
     
  4. Have  in force at least three of the following CHIP program features-
     
a.

 		 a “presumptive”eligibility system to quickly cover newly-applying children with
minimal red tape;
 
    b.
 		 12 months of continuous eligibility before families must re-apply;
 
    c.
 		 no asset test for child-only coverage in CHIP or Medicaid;
 
    d.
 		 acceptance of mail-in applications; and/or
 
    e.

 		 eased procedures to transfer children back and forth between Medicaid
and CHIP as changing circumstances or incomes may dictate
 

Since the July, 2000 letter on CHIP waiver approval criteria, CMS and HHS have
moved to encourage and authorize even greater state flexibility for Medicaid and
CHIP health coverage expansion waivers (see http://cms.hhs.gov/hifa/hifagde.asp )

But such “HIFA” waivers---just as CHIP itself can---typically offer recipients benefit
packages less rich than does regular Medicaid (small premiums; bigger deductibles
and copays; no nursing home, home health or home and community-based care; no
or reduced chiropractor, dental, dentures, eyeglass, hearing aid, case management,
optometrist, audiologist, prosthetic, podiatrist or psychologist services, etc.). Most
HIFA waivers choose not to cover otherwise-eligible aged and disabled Medicare
patients---as also does the CHIP program (its statute expressly
prohibits their coverage, even with a waiver).

Still, continuing the health coverage of parents, caretakers and others now eligible
for Medicaid expansions by shifting them onto a somewhat less benefit-enriched CHIP
program (but with a 15% higher match) is far better than dropping them altogether.

For an broad overview on the value of covering uninsured parents and child caretakers
under 200% of poverty, see the March/April  2004 issue of  Health Affairs, available for
a $3 fee at http://newsrx.gsp.com with the search term "Medicaid".

CHIP waiver requirements are set forth at in a July 3, 2000 letter to State Health Officials
from HCFA (now CMS); go to http://www.cms.hhs.gov/schip/ch73100.asp 
(see especially Questions #2 and #6 of the Enclosure to the letter). However, CMS
has already gone on record as rejecting a state CHIP waiver application that
sought to merely and only substitute CHIP money for title XIX money to fund
an already-existing expansion coverage of parents. Its not unreasonable rationale
was that a waiver should offer new, additional coverage---and not just a more
lucrative, substitute funding source. Even so, there’s nothing to prevent a state
from requesting a CHIP waiver that adds additional, higher-income parents (e.g.,
raising a 150% income level to, say, 160%) which at the same time coincidentally
switches the funding source for the whole expansion group (old and new) from
Title XIX funding to 15% higher CHIP surplus funds!  

  States Now Covering Parents/Caretakers With Income Levels Over 100%
  AZ
 		 200%/250%/
400%		 all parents, apparently except for Medicare eligibles
 
  DC  
 		 200% 
 		 all parents, including Medicare eligibles
 
  HI 
 		 200%
 		 all persons , except aged & disabled
 
  MA
 		 133%
 		 all adults
 
  ME
 		 150%/200%
 		 all parents
 
  MN 
 		 275%
 		 all parents, including Medicare eligibles  
 
  NJ*
 		 133%/400%
 		 parents under 133% & grandfather cases from prior 400% 
waiver
  NM
 		 200%   
 		 all adults not on Medicare, beginning 7/03 (HIFA waiver)
 
  NY* 
 		 150%
 		 all parents, including Medicare eligibles
 
  OR***
 		 170%
 		 all persons
 
  PA***
 		 200%
 		 all persons, except for Medicare eligibles.
 
  RI
 		 185% 
 		 all parents, including Medicare eligibles
 
  TN 
 		 400% 
 		 some grandfathered cases from prior 400% waiver
 
  UT
 		 150%
 		 all uninsurable adults & parents, except  for Medicare
eligible
  VT
 		 185%   
 		 all parents, including Medicare eligibles
 
  WA***    200%
 		 all grandfathered cases from closed Basic Health program
 
  WI 
 		 185% 
 		 all parents, including Medicare eligibles who pay premium
 
 

  * NJ, as of 1/03,  already uses CHIP waiver funds to finance care for parents from 100% to 133%.

  ** Also, New York City’s “DASIS” program uses individualized income levels—which are often well
  over 100% --to give Medicaid (or state/local funds-only Medicaid) to a very large caseload of parents,
  caretakers, childless disabled and even childless “pre-disabled” clients who are HIV-positive.

  ***OR, PA & WA offer non-Medicaid state-subsidized health coverage to those under these income levels.
 

Since the July, 2000 letter on CHIP waiver approval criteria, CMS and HHS have
moved to encourage and authorize even greater state flexibility for Medicaid and
CHIP health coverage expansion waivers (see http://cms.hhs.gov/hifa/hifagde.asp )

But such “HIFA” waivers---just as CHIP itself can---typically offer recipients benefit
packages less rich than does regular Medicaid (small premiums; bigger deductibles
and copays; no nursing home, home health or home and community-based care; no
or reduced chiropractor, dental, dentures, eyeglass, hearing aid, case management,
optometrist, audiologist, prosthetic, podiatrist or psychologist services, etc.). Most
HIFA waivers choose not to cover otherwise-eligible aged and disabled Medicare
patients---as also does the CHIP program (its statute expressly
prohibits their coverage, even with a waiver).

Still, continuing the health coverage of parents, caretakers and others now eligible
for Medicaid expansions by shifting them onto a somewhat less benefit-enriched CHIP
program (but with a 15% higher match) is far better than dropping them altogether.

For an broad overview on the value of covering uninsured parents and child caretakers
under 200% of poverty, see the March/April  2004 issue of  Health Affairs, available for
a $3 fee at http://newsrx.gsp.com with the search term "Medicaid".

Section B: States With Non-Federally-Funded Health and Pharmacy Assistance
Programs that Could Drop Veterans and/or Get Medicaid Waiver Matching

"Painless " TOC Medicaid Main Page  

“Painless” Administrative Ways For States With Budget
Shortfalls To Preserve or Even Increase Medicaid and
S-CHIP Program Funding
Section A
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