Evolution of a Children’s Health Insurance Program:
Lessons From New York State’s Child Health Plus
Sarah Trafton, JD‡; Laura Pollard Shone, MSW*; Jack Zwanziger, PhD‡; Dana B. Mukamel, PhD‡; Andrew W. Dick, PhD‡; Jane L. Holl, MD, MPH¶; Lance E. Rodewald, MD*#; Richard F. Raubertas, PhD储;
and Peter G. Szilagyi, MD, MPH*
ABSTRACT. The State Children’s Health Insurance Pro-gram (SCHIP) was passed by Congress in 1997. It provides almost $40 billion in federal block grant funding through the year 2007 for states to expand health insurance for children. States have the option of expanding their Medic-aid programs, creating separate insurance programs, or de-veloping combination plans using both Medicaid and the private insurance option. New York State’s child health insurance plan, known by its marketing name Child Health Plus, was created by the New York Legislature in 1990. New York’s program, along with similar ones from several other states, served as models for the federal legislation, espe-cially for state health insurance plans offered through pri-vate insurers. New York’s program provides useful data for successful implementation of SCHIP. Pediatrics2000;105: 692– 696; SCHIP, children, uninsured, underinsured, health insurance, health policy, legislation.
ABBREVIATIONS. SCHIP, State Children’s Health Insurance Pro-gram; CHPlus, Child Health Plus; HCFA, Health Care Financing Administration; NYSDOH, New York State Department of Health; RFP, request for proposals.
W
hen Congress passed the State Children’s Health Insurance Program (SCHIP), Title XXI of the Social Security Act,1in August 1997, it effectively shifted more responsibility for health care reform and resolution of the issue of children’s access to health insurance to the states. The SCHIP legislation allows states some flexibility in the design of their programs. Thus, the states have become the primary breeding ground for new ap-proaches to insuring children. Established SCHIP-like programs provide the opportunity to examine the effectiveness of a variety of approaches to im-proving access to high-quality health care for chil-dren.New York State’s Child Health Plus program
(CHPlus) was created in 1990.2,3This article describes the history and design of CHPlus, offering insight into one option available to states as they implement SCHIP—that is, developing a new program to com-plement a state Medicaid plan.
BACKGROUND SCHIP
SCHIP provides states with $24 billion over 5 years and almost $40 billion through the year 2007 to ex-pand health insurance for children. Title XXI allows states 3 options in implementing SCHIP: 1) expand-ing Medicaid, 2) createxpand-ing a separate program that provides coverage through private insurers, or 3) a combination of the Medicaid and private insurer ap-proaches.4,5
Each option poses dilemmas for the states. Title XXI effectively established SCHIP as an entitlement for the states, but not for individuals. Medicaid, on the other hand, creates an entitlement for those chil-dren who meet eligibility requirements, and states choosing Medicaid expansion to implement SCHIP must meet Medicaid benefit and cost-sharing re-quirements. Although states building on Medicaid may find efficiencies in administration, the imple-mentation of SCHIP based on Medicaid runs the risk that additional state funding may be necessary to match federal Medicaid funds once the federal SCHIP allotment is exhausted. Although, in theory, states can seek a Section 1115 Medicaid waiver from the Health Care Financing Administration (HCFA) to minimize this risk, HCFA has requested that states delay such requests pending greater experience with Title XXI.6 A further potential drawback to imple-menting SCHIP by expanding Medicaid is the stigma associated with Medicaid as a welfare program. Many of SCHIP’s beneficiaries will be from working families and such a stigma may discourage enroll-ment. Additionally, the Medicaid expansion option for SCHIP offers enrollees a single choice, while the private insurers model may offer enrollees a choice of plans.
States choosing to implement SCHIP by creating a new program that uses plans offered by private in-surers have greater flexibility. A state can fashion its own SCHIP eligibility requirements and benefit package as long as Title XXI requirements for target-ing low-income children and limittarget-ing cost-shartarget-ing are met. A new program, however, may require a
From the Departments of ‡Community and Preventive Medicine, *Pediat-rics, and 储Biostatistics, University of Rochester School of Medicine and Dentistry, Rochester, New York; ¶Children’s Memorial Hospital, Depart-ment of Pediatrics and Institute for Health Services Research and Policy Studies, Northwestern University, Chicago, Illinois; and #National Immu-nization Program, Centers for Disease Control and Prevention, Atlanta, Georgia.
Received for publication Oct 25, 1999; accepted Dec 6, 1999.
Address correspondence to Sarah Trafton, JD, Department of Community and Preventive Medicine, University of Rochester School of Medicine, Box 644, Strong Memorial Hospital, 601 Elmwood Ave, Rochester, NY 14642. E-mail: sarah [email protected]
new infrastructure to support its implementation. If the costs for the new program exceed the federal SCHIP funds allotted to the state, the state may have an obligation to eligible children even after all Title XXI funds allotted to the state have been exhausted, necessitating either long waiting lists or additional state appropriations to meet demand.4
SCHIP requires that states agree to maintain their Medicaid programs at June 1997 levels. States also must maintain other state spending on children’s health insurance at 1996 levels.1These provisions are included in SCHIP to prevent states from shifting state expenses onto programs for which federal funds are available. At the same time, states as well as HCFA are concerned that SCHIP may encourage families of children covered by private health insur-ance to switch to publicly funded programs, a phe-nomenon typically called crowd out. SCHIP is likely to be watched closely for its effects on sources of coverage for eligible children.
New York State’s CHPlus
New York State’s child health insurance program, known by its marketing name CHPlus, was created by state legislation in 1990,2one of a series of state initiatives addressing lack of health insurance.7The overall goal for CHPlus was to provide comprehen-sive outpatient health care services to low-income children. Legislative objectives for the program are to: 1) provide primary and preventive health insur-ance coverage to low-income children by removing financial barriers to purchasing such coverage through an individual subsidy program; 2) increase eligible children’s access to primary and preventive health care services; 3) improve the health status of children participating in the program, and 4) reduce and target outpatient bad debt and charity care ex-penditures more efficiently in New York State.8
Funding for CHPlus
Like programs before it, CHPlus funds come from New York’s Statewide Bad Debt and Charity Care Pool. An initial annual appropriation of $20 million from the pool covered subsidized insurance for eli-gible children, as well as marketing and outreach activities.2 Enrollment fees and premiums paid on behalf of children not eligible for full subsidy (ini-tially $25 per child per year, with $100 maximum per family per year) provide additional funding. Subse-quent legislation has authorized additional funds from the Statewide Bad Debt and Charity Care Pool to cover the administrative costs incurred by the New York State Department of Health (NYSDOH) related to the program as well as age eligibility and benefit expansions (see Table 1).
Eligibility for CHPlus Subsidy
Eligibility for CHPlus is based on 4 criteria: 1) the child’s age, 2) residence, 3) household income, and 4) health insurance or Medicaid status. In the original legislation, CHPlus was available only to children ⬍13 years old2; the maximum age of eligibility in-creased over several years until 1997 when it was increased to children under 19 years old.
Addition-ally, children must be residents of New York State, must reside in a household having a net income at or below 222% of the nonfarm federal poverty level, must be ineligible for Medicaid, and must not have equivalent health care coverage.
Eligible children receive state subsidy of part or all of the cost of the health insurance premium. Chil-dren from families whose income is below 160% of the gross federal poverty level and who meet the other eligibility criteria, receive full subsidy. Chil-dren who are otherwise eligible whose family in-comes are between 160% and 222% of the gross fed-eral poverty level are eligible for partial subsidy of premiums. Children who are not Medicaid-eligible, have no equivalent health coverage, but whose household income exceeds income eligibility level, can purchase CHPlus for a premium cost set by the Commissioner of Health.
New York State designed CHPlus with several ways to deter crowd out. Most important was requir-ing that children be uninsured or without equivalent coverage by other health insurance. Equivalent cov-erage for CHPlus purposes is defined as covcov-erage for primary health care services provided in a physi-cian’s office or other outpatient sites, which is con-sistent with the CHPlus benefit package.2 Even if such insurance plans do not include prescription drug or preventive care services, they are considered equivalent coverage for purposes of this definition.
Statutory criteria stipulate that any child eligible for Medicaid is not eligible for CHPlus. Early in CHPlus, insurers interpreted this to mean that chil-dren not actually enrolled in Medicaid could be en-rolled in CHPlus if they met income eligibility re-quirements. Over time, however, insurer scrutiny of Medicaid eligibility has tightened. Because concur-rent enrollment of a child in both Medicaid and CHPlus is not allowed, insurers must assess CHPlus applicants for Medicaid eligibility based on house-hold income. Insurers refer children apparently eli-gible for Medicaid to the appropriate local County Department of Social Services. Households with a CHPlus-enrolled child may qualify for Medicaid via spending down (ie, paying for medical expenses, including CHPlus-related costs, to reduce their in-come) to Medicaid eligibility.
Benefit Package
Children who are eligible for CHPlus receive a stan-dard health insurance benefit package. Until December 31, 1996, benefits covered were outpatient visits, in-cluding routine well-child visits, laboratory tests, diag-nostic radiographs, prescription drugs, emergency de-partment services, and outpatient alcohol and substance abuse services (Table 2). Beginning in 1997, CHPlus added coverage for inpatient care.
Insurer Selection Process
15 insurers in response to the RFP. Only not-for-profit insurers (ie, Blue Cross/Blue Shield), health mainte-nance organizations, and comprehensive health ser-vices plan providers submitted proposals. None was received from commercial insurers despite attempts by the NYSDOH and the New York State Insurance De-partment to encourage them.8
There was wide variation in the premiums re-quested in insurers’ proposals for CHPlus. During the review process, the NYSDOH and the New York State Insurance Department worked with insurers to modify premiums, while at the same time, maintain the fiscal viability of the program. NYSDOH estab-lished a risk-sharing arrangement to protect insurers from major financial risk while ensuring the appro-priate use of state funds. The risk-sharing between the state and insurers covers medical expenses only. Finally, proposed marketing plans were examined for cost, effectiveness, and interaction with commu-nity-based networks to ensure strong grassroots out-reach and sensitivity to different communities.8
CHPlus Evaluation
An important element of CHPlus was a require-ment in the original legislation for a comprehensive
evaluation of the implementation and effectiveness of CHPlus by an outside person or party (ie, not a state employee, official, or agency).2,3Questions to be addressed in the evaluation included the effects of CHPlus on access to, utilization of, and quality of care, health status, emergency department use, and community-based and statewide outreach and edu-cation efforts related to program enrollment.2
A RFP from the NYSDOH in May 1993 resulted in a contract with the University of Rochester’s Child Health Studies Group for the evaluation, and results of the statewide evaluation are published else-where.3,9This supplement toPediatricssummarizes a separate study, performed in the 6-county region in upstate New York, and funded by The David and Lucile Packard Foundation and the Monroe Plan for Medical Care. The statewide CHPlus evaluation used methods similar to those used in this study.10
Enrollment in CHPlus
Enrollment in CHPlus started slowly. In 1989, the rate of New York State children without health in-surance was estimated to be 8.7%; 19.2% more re-ceived Medicaid; the rate of those without insurance increased to 10.7% by 1992.3,9The CHPlus legislation
TABLE 1. Child Health Plus Legislative History (New York State Legislature)
Year Statute Applicability Funds
1990 Chapters 922/923, Laws of 1990 Amends Article 25 of Public Health Law, adds Sections 2521, 2511, to create Child Health Insurance Program (CHPlus) 1990 Public Health Law
§2807-al-aa(19)(b)(1)
Annual appropriation from Statewide Bad Debt and Charity Care Pool to cover CHPlus
$20M annual appropriation from Statewide Bad Debt and Charity Care Pool to fund CHPlus
1991 Chapter 50, Laws of 1991 Appropriation to New York State Department of Health for administrative costs of CHPlus
$22M through December 31, 1993
1992 Chapter 797, Laws of 1992 Authorization to New York State Department of Health to use previous year’s
unexpended funds for CHPlus 1993 Public Health Law
§2511(14), as amended
Allows pooled funds from previous years to expand scope of thirds party evaluation of CHPlus. Based on this, New York State Department of Health released a Request for Proposals for CHPlus evaluation, awarded to University of Rochester. The statewide evaluation methodology builds on the approach used by the same researchers to evaluate CHPlus in 5 upstate counties, funded by the David and Lucile Packard Foundation.
$500 000 total funds for New York State Department of Health-funded evaluation.
1993 Chapter 731, Laws of 1993 [NYPHRM-V]
Appropriation for CHPlus $35M for 1993, $55M for 1994, and
$65M for 1995 1994 Chapter 170, Laws of 1994
[Amends Public Health Law §§2510(4)]
Extends eligibility to 13-year-olds in 1994 and to 14-year-olds in 1995; provides new funds to cover these additional children in CHPlus
Adds $5M ($60M total) for 1994, and adds $12M ($77M total) for 1995
1996 (NY) Health Care Reform Act of 1996
Continues CHPlus through December 31, 1999; extends age to 17 for January 1, 1996– December 31, 1996; effective January 1, 1997, up to age 19 years, and inpatient care is added as benefit.
$109M: January 1, 1997–December 31, 1997; $150M: January 1,
1998–December 31, 1998; $207M: January 1, 1999–December 31, 1999
1998 New York Public Health Law §2110(7) as amended by Chapter _, Laws of 1998; signed 9/24/98.
http://www.state.ny.us/governor/ press/sept24_1_98.htm
projected 37 000 enrolled children in the first year; in fact, by the end of 1991, 16 319 children had been enrolled.3,9Slow enrollment was in large part attrib-utable to enrollment caps maintained by insurers as they projected the number of enrollees available funds would support.3 With more funds and ex-panded age eligibility, enrollment growth increased somewhat, reaching 71 031 children by 1993.3By Au-gust 30, 1997, enrollment statewide exceeded 140 000 children,11 and after the major expansion in 1997, enrollment has doubled.
CHPlus and SCHIP
CHPlus is the basis for New York State’s SCHIP submission to the HCFA. Under Title XXI require-ments, New York State’s CHPlus as well as similar programs in Florida and Pennsylvania are eligible to be those states’ SCHIP plans. Technically the Title XXI requirements are for these states to maintain their state-only programs.1 CHPlus meets many of the minimum SCHIP requirements, including age and income eligibility. Additionally, New York State has chosen to use its allotment of federal SCHIP funds, an estimated $256 million annually, to expand CHPlus beyond the SCHIP’s family income require-ment of 200% of the federal poverty level, to include children in families whose income is up to 250% of the federal poverty level by July 1, 2000.12On April 1, 1998, CHPlus was approved by the HCFA as New York State’s SCHIP submission.13
DISCUSSION
There is much to learn from New York State’s experience with CHPlus. Although the evaluation described here examined the early years of CHPlus, it appears that New York State’s partnership with private insurers has been a successful means of in-suring uninsured children. Using private insurers to
handle much of the program’s implementation re-moves the burden of instituting a new program from public resources.
In New York State, advocacy from physicians played an important role in shaping CHPlus. Through the involvement of the American Academy of Pediatrics—Division II (New York)—in the Cam-paign for Healthy Children, physicians were instru-mental in the passage of the initial CHPlus legisla-tion in 1990, and in the major expansion and revision in 1997. In 1998, pediatricians and other physicians have been instrumental in convincing Governor Pataki and the New York State legislature to agree to expand CHPlus beyond the scope of the program as submitted to HCFA for SCHIP approval.14The orig-inal CHPlus benefit package did not include routine hearing, vision, and dental care, which parents re-ported were among the most problematic gaps in CHPlus coverage for families and children.3 Exten-sive advocacy efforts by pediatricians and child ad-vocacy groups successfully encouraged the state leg-islature and Governor Pataki to expand the benefit package to include emergency, preventive, and rou-tine dental care; speech and hearing services; emer-gency, preventive and routine vision care; inpatient mental health alcohol and substance abuse services; and durable medical equipment, hearing devices, wheelchairs and leg braces. These benefits as well as a raise in family income levels for CHPlus eligibility became effective on January 1, 1999.15
Physicians, especially pediatricians, have had an important role with respect to the evaluation of CHPlus, and can have a critical role in the evaluation of SCHIP programs. Under the provisions of Title XXI, Section 2108, federal law requires states to eval-uate various aspects of their SCHIP plans. Require-ments include assessing the numbers of covered chil-dren; the effectiveness of the state’s plan in such
TABLE 2. Original Child Health Plus Benefit Package (Before 1996 Expansion)
Well-child care Includes well-baby care, check-ups and physical examinations following
American Academy of Pediatrics Guidelines.
Immunizations Follows New York State Department of HealthImmunization Guidelines for Health
Care Providers.17
Radiograph and laboratory tests Prescribed ambulatory clinical laboratory tests and diagnostic radiographs.
Outpatient surgery Performed within a provider’s office and in a hospital-based or freestanding
ambulatory surgery center. Diagnosis and treatment of accident, injury,
and illness
Includes wound dressings and casts to immobilize fractures, injections and medications provided at the time of office visit.
Emergency care For sudden and unexpected illnesses and accidental injuries. “The medical
condition must be of such a nature that failure to render immediate care could reasonably result in deterioration where the patient’s life would be in jeopardy. Accidents must be treated within 72 hours of injury. Certified and licensed facilities must be used.”8
Prescription drugs $1 to $3 copayment may be charged per prescription. Prescriptions must be
medically necessary and may be limited to generic medications where medically acceptable. All medications used for preventive and therapeutic purposes will be covered.
Treatment for alcoholism and substance abuse Services must be provided by certified and/or licensed professionals. At least 60 outpatient visits per year must be covered. A minimum of 20 of the 60 visits may be used for family therapy visits related to the alcohol and substance abuse problem.
Short-term therapeutic services such as chemotherapy, hemodialysis, radiation therapy, occupational therapy, and physical therapy
areas as demographics of children served, and qual-ity, amount, and level of assistance; and coordination with other public and private programs for children.1 States could meet these evaluation requirements al-though a number of approaches. Physicians would add credibility to those asking states to evaluate their SCHIP plans with rigorous, scientific methodology, conducted by an independent, third party.16
REFERENCES
1. Balanced Budget Act of 1997, Public Law 105-33, Subtitle J—State Chil-dren’s Health Insurance Program
2. New York State Public Health Law, Article 25, Title I-A, Child Health Insurance Plan (Chapters 922 and 923 of the Laws of 1990), as amended 3. Szilagyi PG, Zwanziger J, Rodewald LE, et al.Evaluation of Child Health Plus in New York State.Albany, NY: Department of Pediatrics, Univer-sity of Rochester; 1996
4. Rosenbaum S, Johnson K, Sonosky C, Markus A, DeGraw C. The children’s hour: the State Children’s Health Insurance Program.Health Aff (Millwood).1998;17:75– 89
5. Robert Wood Johnson Foundation. Expanding health insurance for children: Congress passes bucks to the states.Advances.1997;4:1–2. http://www.rwjf.org./library/97_4_2.htm
6. Center for Health Policy Research. Implementing Title XXI: states face choices.Health Policy Child Health.1997;4:4
7. Holl JL, Dick AW, Shone LP, et al. A profile of the population enrolled
in New York State’s Child Health Plus.Pediatrics. 2000;105(suppl): 706 –710
8. New York State Department of Health.Child Health Plus Health Plan for Kids: Annual Report 1991.New York, NY: New York State Department of Health; 1991:5
9. Szilagyi PG, Zwanziger J, Rodewald LE, et al. Evaluation of a state health insurance program for low-income children: implications for State Child Health Insurance Programs.Pediatrics.2000;105:363–371 10. Szilagyi PG, Shone LP, Holl JL, et al. Evaluation of New York State’s
Child Health Plus: methods.Pediatrics.2000;105(suppl):697–705 11. New York State Department of Health. State Child Health Plan under
Title XXI of the Social Security Act, State Children’s Health Insurance Program. New York submission to the Health Care Financing Admin-istration.http://www.health.state.ny.us/nysdoh/child/chcont.htm
12. George Pataki, Governor. Child Health Plus Program reaches milestone. Press release, July 22, 1998. http://www.state.ny.us/governor/press/ july232 98.htm
13. Health Care Financing Administration, HCFA Press Office. HHS ap-proves New York plan to insure more children. Press release, April 1, 1998.http://www.hhs/gov/news/press/1998pres/980401b.html
14. George Pataki, Governor. Child Health Plus expansion means healthier kids. Press release, June 18, 1998.http://www.state.ny.us/governor/press/ june18 2 98.htm
15. George Pataki, Governor. Governor Pataki signs expanded Child Health Plus legislation: nation’s largest best health insurance program for children gets even better. Press release, September 24, 1998.http:// www.state.ny.us/governor/press/sept24 1 98.htm
16. Szilagyi PG, Holl JL, Rodewald LE, et al. Evaluation of children’s health insurance: from New York State’s Child Health Plus to SCHIP.Pediatrics
2000;105;692
Pediatrics
Dick, Jane L. Holl, Lance E. Rodewald, Richard F. Raubertas and Peter G. Szilagyi
Sarah Trafton, Laura Pollard Shone, Jack Zwanziger, Dana B. Mukamel, Andrew W.
State's Child Health Plus
Evolution of a Children's Health Insurance Program: Lessons From New York
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2000;105;692
Pediatrics
Dick, Jane L. Holl, Lance E. Rodewald, Richard F. Raubertas and Peter G. Szilagyi
Sarah Trafton, Laura Pollard Shone, Jack Zwanziger, Dana B. Mukamel, Andrew W.
State's Child Health Plus
Evolution of a Children's Health Insurance Program: Lessons From New York
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