State- and Privately Funded Programs Improved Children’s Coverage

Beginning in 1985, states and private entities began to fund programs that provided insurance for children who were ineligible for or not enrolled in Medicaid and did not have private or comparable insurance coverage.The programs we visited varied in several respects, but all were limited in how many children they could cover by the size of their budgets, which depended on their funding sources. In 1994, these programs enrolled from 39 to 98,538 children and had budgets ranging from about $240,000 to about $71.5 million. The Caring Programs, which served more than 41,000 children in 1994, ranged in size from 400 to almost 6,000 enrolled children and had budgets from $100,000 to $4.3 million. Much of the state programs’ funding came from state general revenues, cigarette or tobacco taxes, or health care provider taxes; counties; and foundations and other private-sector entities. 1.) 2.) In addition to limiting services, state and private programs used other strategies to manage costs, such as sharing costs with patients and using competitive bidding and managed care. Costs to provide coverage for children varied from $20 to $70.60 per month, partly because of the kinds of services covered and the limitations on those services. 3.) 4.) The programs used existing billing systems and generally had reimbursement levels that approximated market rates—factors that were attractive to providers. The programs guaranteed access to a provider network, used simple enrollment procedures, and in many ways appeared similar to private insurance, which helped the programs avoid the stigma of welfare. Most notably, the state- and privately funded programs we visited covered some children who would not otherwise have been covered; complemented existing Medicaid coverage; kept per child costs to a minimum; provided preventive and primary care services—the services children are most likely to need; offered a wide network of providers; required families to share part of the cost; used HMOs frequently to manage children’s health care; and used existing administrative systems of state, nonprofit, and private organizations. Despite these state and private efforts, many children remained uninsured. I.1.) The program’s budget for 1994 was approximately $1.7 million, and the estimated budget for 1995 is approximately $2 million. Children on the waiting lists may participate in the program by paying an at-cost premium. Enrollment procedures vary somewhat among insurers. Access to Health Insurance: State Efforts to Assist Small Businesses (GAO/HRD-92-90, May 14, 1992).
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed state and private efforts to insure children who are not eligible for Medicaid and whose parents cannot purchase private insurance, focusing on: (1) enrollment, costs, funding sources, and annual budgets of these state and private programs; (2) state strategies to manage costs while providing children access to health care; and (3) program design elements that have facilitated program implementation.

What GAO Found

GAO found that: (1) by 1995, 14 states and at least 24 private-sector entities had programs to increase health care access for uninsured children; (2) the number of children enrolled in the state programs reviewed ranged from 5,000 to over 100,000 children and state budgets ranged from $1.7 million to $55 million; (3) private-sector programs enrolled up to 6,000 children and had budgets of $100,000 to $4.3 million; (4) state program funding sources included state general revenues, donations, and small insurance premiums and copayments; (5) budget limitations have reduced the number of Medicaid-eligible children served and have forced these programs to cap enrollment and place eligible children on waiting lists; (6) the programs' per-child costs ranged from $20 to $70.60 per-month; (7) state programs have attempted to reduce costs by limiting eligibility and covered services, relying on Medicaid to provide inpatient care, and using patient cost-sharing, managed care, and competitive bidding among insurers; (8) state efforts to attract providers included using insurers' existing payment systems and physician networks and paying near-market reimbursement rates, while their efforts to attract families included guaranteeing patient access to providers, having simple enrollment procedures, and avoiding the appearance of a welfare program; and (9) surveys showed that families were generally satisfied with state insurance programs, since the programs increased childrens' access to appropriate health care services.