A Report from Families USA
October 1999

ONE STEP FORWARD, ONE STEP BACK: Children's Health Coverage after CHIP and Welfare Reform

INTRODUCTION

The passage of the Children's Health Insurance Program (CHIP) in 1997 reflected a bipartisan consensus that children in this country should have affordable health coverage. CHIP was designed to expand and complement the Medicaid program, which already provided health coverage for 23 million of the poorest children. By building on this existing foundation, the architects of CHIP hoped to significantly reduce the number of children in the United States who had no health insurance by making from three to five million more children eligible for coverage.

Around the same time, the Medicaid program's coverage of poor families with children was undermined by implementation of welfare reform. Historically, welfare had been closely tied to Medicaid: Families who qualified for welfare automatically received Medicaid as well. The 1996 welfare reform law severed this tie, instead requiring that low-income families with children be covered irrespective of their eligibility for welfare benefits. However, as the states implemented welfare reform, many children and parents lost welfare benefits-and, in the process, lost Medicaid coverage.

In order to assess the early progress of CHIP and to understand the effects of welfare reform on the health coverage of low-income children, Families USA collected data on 1996-1999 enrollment in these programs from the 12 states with the largest number of uninsured children. Those states are: Arizona, California, Florida, Georgia, Illinois, Louisiana, New Jersey, New York, North Carolina, Ohio, Pennsylvania, and Texas. Taken together, these 12 states account for almost two-thirds of the uninsured children in the United States.

These state enrollment numbers paint a disturbing picture. In 1999, two years after the passage of CHIP and three years after passage of national welfare reform, fewer children in these states are enrolled in federally funded children's health programs than were enrolled in Medicaid alone in 1996. CHIP enrollment is increasing significantly, but these gains have been offset by reductions in children's Medicaid coverage-largely due to welfare reform. Recently released Census data for 1998 confirm that, nationwide, there has been no reduction in the number of children without health insurance coverage. The number of poor children declined in 1998, but the number of poor children without health insurance did not.

Despite this net reduction in children covered by federal-state health programs, there are some encouraging developments. CHIP is reaching uninsured children in lower-income families whose income levels previously made them ineligible for public coverage. Although CHIP got off to a slow start, enrollment is now growing at a rapid pace and is likely to continue growing. Furthermore, there are promising signs that CHIP is also helping to find children who were already eligible for Medicaid but were not enrolled.

Nonetheless, Medicaid and CHIP programs face a challenge if they are to succeed in reducing the number of children without health insurance. In addition to the challenges inherent in setting up new state programs and enrolling children through those initiatives, states must find ways to turn around recent declines in children's Medicaid coverage. Success in reducing the number of uninsured children in the years to come will require not only reaching out to the 11.1 million children who are now uninsured, but retaining coverage for the millions of children currently insured by Medicaid as well.

[Return to top]

KEY FINDINGS

• In the 12 states with the largest number of uninsured children, children's enrollment in federal-state health programs (Medicaid and CHIP) declined from 11,166,178 in 1996 to 10,946,268 in 1999, a drop of 219,910, or 2.0 percent.
• In these 12 states, children's enrollment in Medicaid declined by nearly a million children (975,038) from 1996 to 1999. There were 11,000,510 children enrolled in Medicaid in these 12 states in 1996, but only 10,025,472 in 1999. This is an 8.9 percent decline in Medicaid coverage for children.
• In these 12 states, nearly a million children (920,796) were added to the Medicaid rolls or enrolled in separate state insurance programs by 1999 as a result of CHIP. (165,668 children were already covered by state-only programs in New York and Pennsylvania in 1996, so only 755,128 of these children represent new enrollment since 1996.)
• In five of the 12 states studied, there was a net decline in the number of children covered by Medicaid and CHIP from 1996 to 1999. Those states are: Arizona, California, Ohio, Pennsylvania, and Texas.
•  In the remaining seven states, there was a net increase from 1996 to 1999. Those states are: Florida, Georgia, Illinois, Louisiana, New Jersey, New York, and North Carolina.
• The three states with the greatest numerical drop from 1996 to 1999 are: Texas (-193,400), California (-121,788), and Ohio (-40,475).
•  The three states with the greatest percentage drop are: Texas (-14.2 percent), Ohio (-7.3 percent), and Arizona (-6.5 percent).
•  The three states with the greatest numerical increase are: North Carolina (+78,796), New York (+50,755), and Louisiana (+35,466).
•  The three states with the greatest percentage increase are: North Carolina (+15.8 percent), Louisiana (+8.4 percent), and New York (+3.2 percent).
•  The 12 states were slow to start implementing CHIP, but recently, enrollment has grown significantly. There were no children enrolled in CHIP in December of 1997. By June 1998, there were 333,498 children enrolled, but that figure includes 175,005 children converted into CHIP from New York's pre-existing state program; only 158,493 new children were enrolled. By the end of 1998, enrollment had grown to 593,868, including 54,789 children converted into CHIP from Pennsylvania's pre-existing state program. By June of 1999, total CHIP enrollment in the 12 states had reached nearly one million children (920,796).

Click here for pdf version of the report. For a print copy, contact Families USA at 202-628-3030.

[Return to top]