Covering all Florida s Children with Health Insurance

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1 Introduction Florida ranks at the bottom among the 50 states and the District of Columbia in covering children with health insurance. Only the State of Texas is behind Florida. 1 An estimated one in five children goes without health insurance in Florida, nearly double the national average (KFF). 2 The 2008 U.S. Census data shows 676,000 of our children were uninsured. 3 Other estimates show 800,000 or more uninsured children.. 4, 5 Health insurance coverage matters a great deal for children and for Florida. Children with health insurance are more likely to have a usual source of care such as their neighborhood pediatrician, rather than the emergency room. They are more likely to get their preventive health visits and timely, appropriate management of both acute and chronic diseases. They are more likely to visit the dentist. In short, they are healthier. 6,7 But that s not all. When children have health insurance, parents report less family stress and increased ability of children to participate in normal activities. 8 Health insurance coverage for children means improved reading scores, better school attendance and greater ability to pay attention in school. 9,10 Overview of Children s Health Insurance Without health insurance, our children and consequently our families and our schools are not as healthy they ought to be. Study after study shows that children without insurance do not receive adequate care. One in 3 uninsured children does not have a regular source of care, compared with only 7 percent of insured children. 11 Hence, uninsured children do not get treatment when they need it; acute illness becomes an emergency, and preventable complications from chronic illness result in unnecessary hospitalizations. 12 When they do need hospital care, uninsured children are more likely to require longer hospital stays and even worse they are 1.5 times as likely to die in the hospital as insured children. 13 Health insurance for children means preventive and early care. It means detection and treatment of disease, including contagious and potentially fatal disease. It means partnership with a family and a health provider to keep children healthy and succeeding in school. Without health insurance, the personal and economic costs are steep. Barriers to access of preventive and early health care mean, for instance, that children in Florida with asthma are three times as likely to be hospitalized as those in states where children are assured health insurance and coordinated care. In fact, uninsurance is by far the most significant single factor in determining higher hospitalization rates for children with asthma, and asthma accounts for a quarter of pediatric hospitalizations in our state. 14,15 Childhood vaccinations are perhaps the greatest and most cost effective public health measure of the last century, sparing children from meningitis, paralytic polio and the iron lung, congenital blindness and death. Vaccination rates are directly proportionate to income and access to health care. Nearly one in five children is not properly vaccinated by age 2. By kindergarten Florida s vaccination rates are better, but more than 10% are still missing vaccines, putting at risk the children, their classmates and teaching staff. Health insurance coverage substantially increases rates of vaccination. 16,17

2 In 2000, the Surgeon General declared tooth decay as the most common chronic disease of childhood and a national health priority with long-term impact on health and well-being, including infections, heart disease, school functioning and work loss. Yet, of the 50 states, Florida is dead last in providing children with preventive dental check-ups. 18 Poor dental care leads to serious chronic infections and even early heart disease. Florida is 47 th in the nation for child access to mental health care. Nearly half of all Florida s children 2-18 years of age who need mental health care are not able to access that care. 19 Timely and adequate access to mental health care can improve child and family functioning, school attendance and performance and future employability. Return on Investment Why do health, access to health care and care coordination matter? There are as many concrete, moral and practical reasons as there are children in our state. There are also strong economic reasons. State spending on health care for children brings in federal dollars. The current federal Medicaid match is 67.6%, and will increase to more than 90% under health care reform. The federal match on Healthy Kids (SCHIP) is 68.5% increasing to 68.8% in October Thus, every dollar spent on children s health insurance coverage brings two dollars into our state. When Florida does not cover its uninsured children, our own tax dollars go to federal coffers to be disbursed to other states. Research has established the link between access to health care and reading scores, school attendance and academic performance, higher graduation rates, employment rates, reduced teen pregnancy and substance use. Further, health insurance coverage increases preventive care, and prevention pays. Getting children the care they need early assures that children stay healthy, that disease is prevented and chronic diseases are optimally managed. Access to health care for children saves on more expensive medical costs in the short-term, avoiding complications that lead to hospitalization and increased pharmaceutical use. In the longer-term, it increases the likelihood that children grow to learn, complete their education and social development, and reach their potential as contributing members of both society and its economy. A healthy childhood is the foundation of a productive life. Research shows that those with better childhood health earn and save more money, are more productive, and are less dependent on welfare and public subsidies. 20 Providing appropriate health care to children without access results in life time financial benefits on a net present value basis of just over $6,000 per child. For Florida s children this is an annual benefit of almost $269 million. 21 Analyzing the benefits of improved health care for children, The Washington Economics Group makes note of the capacity for health care access to improve both health and education outcomes, which increase the likelihood of higher education and employability. Were all Florida s children covered with health insurance, the Washington Economics Group identifies the creation of 215,140 permanent jobs in Florida and $3.6 billion annual return in direct, indirect and induced impact. In other terms, the state s return of investment is more than 450 percent $4.55 for each dollar. 22

3 The State of Children s Health & Health Insurance in Florida While Florida ranks 50 th of the 50 states and D.C. in covering uninsured children, yet 72% of the uninsured are income-eligible for subsidized insurance under current law. 23 The discrepancy clearly shows the need for improved awareness, outreach, simplified enrollment and retention. The University of Florida s Florida Children s Health Insurance Study (2008) estimated that 548,000 children in Florida are uninsured. Other estimates are as high as 800,000 or more (Kaiser Family Foundation, 2008; Families USA, 2008, Annie E. Casey Foundation, 2008). As OPPAGA, the Budget Estimating Conference and other state agencies use the lower estimate of Florida Children s Health Insurance Study, 548,000 is being used here for subsequent financial estimates. According to the UF study, 72% of the uninsured are income-eligible for existing subsidized insurance, 49% for Medicaid (Title XIX), 2% for Medikids (Title XXI) and 21% for Healthy Kids (Title XXI). Thus, about 400,000 uninsured children are presently income-eligible for subsidized insurance based on existing policies. Existing Florida law intends to cover these children. No changes in income-eligibility nor the recently passed health reform legislation are necessary to cover these children. Experience has shown us that policy changes regarding outreach, marketing, eligibility, enrollment and redetermination processing and customer service strongly impact enrollment numbers. Florida used to cover more eligible children. For example, soon after its launch, Florida Healthy Kids covered nearly 350,000 children. The program got the word out to those who needed it. At its peak, KidCare had an outreach budget of $10 million. KidCare now covers about 100,000 fewer children. The decreased enrollment can be associated with policy changes and budget reductions in outreach and marketing. Such policy changes tend to be driven by budget constraints that is, the desire to encourage or discourage enrollment of children in KidCare. For the last three fiscal years there have been no funds allocated y the legislature for outreach or marketing. The cost to the state for covering an uninsured child eligible for Medicaid is about $430 a year. Each child covered brings into Florida $893 in federal monies per child per year. Covering all the kids intended to be covered by Medicaid with Medicaid would amount to a planned budget increase of less than 2% of the state s Medicaid s budget. In addition, covering these children would amount to a savings of emergency Medicaid payments, made when an income eligible child is hospitalized. Similarly, the state cost of covering an uninsured child eligible for Title XXI (Healthy Kids/MediKids/CMS) is $ a year. The family portion is $240 a year and the federal pulldown is $1,234 a year per child. About 90% of uninsured children have at least one parent working outside-the-home. 24 These families may have incomes over the level to qualify for KidCare, but don t make enough to afford health insurance, and do not get insurance from their employers. An additional 11%-15% of uninsured children live in families with incomes of % FPL, not currently eligible for subsidized health insurance. Federal law permits states to cover these children under the

4 Children s Health Insurance Program, which in Florida is Healthy Kids. The federal share for this program is highly favorable a 68.5% federal match to the state s 31.5%. Florida could expand Healthy Kids coverage to children living in families with incomes % FPL. Healthy Kids families making less than 200% FPL presently pay $15-20 per month for coverage. It would be reasonable for families in the % FPL bracket to contribute a slightly higher family share. In addition to this cost offset, the federal share of coverage would result in a net positive flow of dollars into the state, even while it encouraged preventive care for children. Florida could cover children in this income bracket at a total cost to the state of less than $22 million annually, while $47 million would flow in from federal sources. Florida Healthy Kids also offers families a full-pay option. That is, families over income levels qualifying for subsidies are allowed to purchase health and dental insurance at about $ per child. This option should remain open to Florida families seeking children s health insurance. Under the Health Care and Education Reconciliation Act, additional federal subsidies will become available to families with incomes under 400% FPL. Such families will then find Healthy Kids coverage more attainable. How will Health Care Reform affect Florida s children in terms of health insurance coverage? The nuanced answer is, of course, complex. The effect on Florida s children will very much depend on how Health Care Reform is implemented, at both the state and national levels. However, some things are clear now. First, when the federal government expands Medicaid (to our 5-18 year olds living in families at % of the federal poverty level), it will also increase its Medicaid match, that is, the amount of federal funding Florida can have to pay for that coverage. In 2014, our Medicaid match rate will increase to 100, and continue for a full three years. It will gradually decrease to 90% federal share by In 2015, our Healthy Kids (CHIP/Title XXI) match will increase from 70.21% to 93.21%. Thus, the federal government will pay all but 6.8% of our Health Kids coverage, even for children up to 300% FPL. Second, unless Florida acts, unless Florida enrolls the 72% of uninsured children who are already income-eligible and the 15% who live in families up to 300% of the federal poverty line (FPL), most of our uninsured will see little change. Subsidies in Health Care Reform will provide discounts starting in 2014 for children living in families up to 400% of the FPL. Families making % of FPL will need to pay up to 9.5% of their income for health insurance coverage. If those families use subsidies to get insurance, about 25% of Florida s uninsured children will be insured. This can significantly close the gap of any remaining uninsured children not covered by the plan outlined here. However, Health Care Reform alone, without state action, is unlikely to cover all, or even a majority, of Florida s children. If instead, Florida acts to cover all our children, we can succeed in that, and pay for the vast majority of expense with federal dollars.

5 ISSUES AND RECOMMENDATIONS Issue: Hundreds of thousands of Florida s children are without health insurance. Recommendation: Use reasonable and fiscally responsible policies to cover all Florida s children. Issue: 72% of uninsured children are currently income-eligible for Medicaid (49%) or Healthy Kids (23%) subsidized insurance coverage. There has been virtually no budgeting for outreach and marketing. Enrollment and renewal processes are being simplified, but are still considered barriers for many families. Recommendations: Improve policies to enroll the 72% of uninsured children income eligible for Medicaid or Healthy Kids subsidized insurance. Nearly half (49%) of uninsured children in Florida qualify for Medicaid, yet are not enrolled. Annual Medicaid spending per enrolled child (2006) is $1,321. Using estimates from the UF Florida Children s Insurance Study, there are 268,520 Medicaid-eligible uninsured children. This would amount to an investment of $354,714,920, 67.6% of which would be paid for by federal funds (2009 match). The resulting state portion of $111,735,200 represents an increase of less than 2% of Florida s state share of total Medicaid spending. Beyond funding, policies that encourage enrollment and retention must be put in place. Single eligibility determination, redetermination dates and communication simplification are among the policies that can help families get coverage. Another quarter (23%) of uninsured children live in families making less than 200% of the federal poverty level, and therefore qualify for Florida KidCare, and yet are not enrolled. The average cost of coverage for KidCare (HealthyKids, MediKids, CMS) is $ per member monthly. 25 An estimated 126,040 uninsured children presently qualify for subsidized KidCare. Factoring in family premiums and the 68.5% federal share if costs, Florida can cover these children for $5,960, As with Medicaid enrollment and retention, policies that encourage enrollment and retention must be put in place. Sufficiently fund grassroots outreach and traditional marketing to increase awareness of the importance of health insurance and the availability of subsidized coverage. The outreach budget must return to at least its peak level with sufficient marketing to drive behavior change. Issue: Many uninsured children live in families with incomes over 200% of the FPL. Their parents work, but do not make enough money to afford health insurance. Their jobs do not provide health insurance to their children. Without some help, these children will be left without health insurance.

6 Expand Florida Healthy Kids to children in families at % FPL Federal law permits states to expand coverage of state children s health insurance to families with incomes up to 300% of the federal poverty level. Further, the state can receive the full federal share of cost for such coverage. In Florida, if such families paid a dollar a day, or $360 a year, for their coverage and the state paid $ a year, $1, could be pulled down from federal sources Actively engage Florida in the changes of Health Care Reform that will benefit children. Health care reform passage will expand Medicaid to more poor children, living in families up to 133% of the FPL. That will mean that children 5 to 18 years of age who currently qualify for Florida Healthy Kids. The federal government will pay a higher share of the Medicaid costs. health care reform will extend subsidies to families with incomes less than 400% of the FPL. Florida should enact policies that will help families qualify for this aid as soon funds are made available, currently slated for 2014.

7 Attachment Improve policies to enroll the 49% of uninsured children in Medicaid-eligible families. Medicaid spending per child enrollee, (2006) (annual) $1,321 # uninsured children income eligible for Medicaid 268,520 Public (state and federal) cost for coverage (annual) $354,714,920 Less federal share (funds brought into Florida; 67.6%, 2009) $239,787,290 State share (32.4%) $111,735,200* *This would represent an increase of less than 2% of Florida s state share of total Medicaid spending and would result in a significant increase in pull down of federal dollars. Improve policies to enroll the 23% of uninsured children in families at <200% FPL for which KidCare is intended. Avg. cost of coverage for Kidcare (HealthyKids, MediKids, CMS) $ per member per month # uninsured children living <200% FPL (23% of 548,000) is 126,040 children Assume 1.7 children per family 74,141 families Total cost of coverage $20,404,616 Less monthly family share of assumed $20 (67,694 families) $1,482, Public (state and federal) cost for coverage $18,921,792 Less federal share (funds brought into Florida; 68.5%, 2010) $12,961,428 Annualized $155,537,130 State share (31.5%) $5,960, Annualized $71,524,374 Total state cost to cover 72% of uninsured children currently income-eligible: $183,259,574 (includes Medicaid, HealthyKids, Medikids and CMS) Costs per child/family for the currently income-eligible Medicaid State cost per child per year in Medicaid $428 Federal pulldown per child per year in Medicaid $893 KidCare-Title XIX: Medikids, Healthy Kids, non-medicaid CMS State cost per child per year $ Federal pulldown per child per year $ Family share per year $240

8 Expansion of Healthy Kids to children in families at % FPL Avg. cost of coverage for Kidcare (HealthyKids, MediKids, CMS) $ per member per month # uninsured children living % FPL (11% of 548,000) is 60,280 children Assume 1.7 children per family 35,458 families Assume 50% HK market penetration 30,140 children/17,729 families Total cost of coverage at 50% market penetration $4,879,365 Less monthly family share of assumed $30 (17,729 families) $531,882 Public (state and federal) cost for coverage $4,347,482 Less federal share (new funds brought into Florida) $2,977,591 Annualized $35,731,087 State share (31.5%) $1,369,892 Annualized $16,438,700 Coverage of the 13,000 children in families at %, currently enrolled in HK as Full Pay Avg. cost of coverage for Kidcare (HealthyKids, MediKids, CMS) $ per member per month Current Enrollees at % FPL 13,000 children Assume 1.7 children per family 7647 families Cost of coverage $2,104,570 Less monthly family share of assumed $30 (13000/1.7) $229,412 Public (state and federal) cost for coverage $1,875,158 Less federal share (new funds brought into Florida) $1,284,296 Annualized $15,411,551 State share (31.5%) $590,862 Annualized $7,090,348

9 Total annual cost of coverage of children in families at % FPL Family portion $9,135,528 Federal portion $51,142,638 State portion $23,529,048 Summary per child/family of expansion to children in families at % FPL State share of cost of coverage per child ( % FPL) $ a year Family share of cost of coverage $360 a year Federal share of cost of coverage per child ( % FPL) $1, a year Total cost to state all income-eligible children, expand to % FPL families: $206,788,622 Additional outreach and marketing costs must be appropriately included.

10 1 Kaiser Family Foundation, accessed 7/24/ National Survey of Children s Health accessed 7/24/10 at 3 US Census Bureau, Current Population Survey, Annual Social and Economic Supplement, accessed 7/24/ Families USA 5 The Policy Group, Investing in Florida s Children: Good Policy, Smart Economics, %20Good%20Policy%20Smart%20Economics.pdf 6 Szilagyi P, Improved Access and Quality of Care After Enrollment in the New York State Children's Health Insurance Program (SCHIP), PEDIATRICS Vol. 113 No. 5 May 2004, pp. e395-e Klein J, et al, Impact of the State Children's Health Insurance Program on Adolescents in New York, PEDIATRICS Vol. 119 No. 4 April 2007, pp. e885-e Lave JR, et al, Impact of a children's health insurance program on newly enrolled children. JAMA Jun 10;279(22): Levine PB and Schanzenbach DWReading scores The Impact of Children's Public Health Insurance Expansions on Educational Outcomes NBER Working Paper No ; 2009; accessed 7/24/ Kaiser Commission on Medicaid and the Uninsured, 2009, The Impact of Medicaid and SCHIP on Low-Income Children s Health, accessed 7/24/ The Impact of Medicaid and SCHIP on Low-Income Children s Health. The Kaiser Commission on Medicaid and the Uninsured. February Jeffrey J. Stoddard, Robert F. St. Peter, and Paul W. Newacheck. Health Insurance Status and Ambulatory Care for Children. New England Journal of Medicine. May 19, Volume 330: The Great Divide: When Kids Get Sick, Insurance Matters. Families USA. February Knudson A et al, Disparities in Pediatric Asthma Hospitalizations. Journal of Public Health Management & Practice, Volume 15 - Issue 3 - p Pediatric Hospitalizations, , Agency for Health Care Administration State Center for Health Statistics, 2002 accessed 7/24/10 at pediatric_hosp.pdf 16 Rodewald LE Health Insurance for Low-Income Working Families: Effect on the Provision of Immunizations to Preschool-Age Children. Arch Pediatr Adolesc Med. 1997;151: Allred NJ et al The Association of Health Insurance and Continuous Primary Care in the Medical Home on Vaccination Coverage for 19- to 35-Month-Old Children. Pediatrics Vol. 119 Supplement February 2007, pp. S4- S11.

11 18 National Survey of Children s Health accessed 7/24/10 at ViewDocument.aspx?item= Child and Adolescent Health Measurement Initiative National Survey of Children's Health, Data Resource Center for Child and Adolescent Health website. Retrieved 7/24/10 from 20 James Smith. (The Impact of Childhood Health on Adult Labor Market Outcomes. August RAND Labor and Population Working Paper. 21 Freedman Consulting, LLC. 22 Washington Economics Group, 2010, The Impacts and the Return on Investment (ROI) from Early Investment in Children and Families in Florida. 23 Herndon JB and Shenkman EA, The Florida Children s Health Insurance Study, 2008, accessed 7/24/10 at 24 Kaiser/Urban Institute analysis of March 2007 CPS. 25 Florida Healthy Kids, 2009.