Ease Medicaid/SCHIP Eligibility Rules

Analysis of Medicaid/SCHIP Eligibility

The primary purpose of expanding eligibility for Medicaid and/or the State Children's Health Insurance Program (SCHIP) is to increase the number of people who are eligible for these public programs, with a particular focus on individuals who do not have access to employer-sponsored insurance and who cannot afford to purchase private insurance policies.

These are the nine performance dimensions against which we measured Medicaid/SCHIP eligibility:

• Spending
• Consumer Financial Risk
• Waste
• Reliability
• Patient Experience
• Health
• Coverage
• Capacity
• Operational Feasibility

Spending

Expanding federal mandatory minimum Medicaid/SCHIP income eligibility will have no discernible effect on overall health care spending, but it will increase government spending:

• Using our model, we estimate that there will be little change in aggregate national health spending associated with a Medicaid/SCHIP expansion and that there will be small decreases in out-of-pocket spending.
• Using our model, we estimate that Medicaid/SCHIP spending will increase about $18 billion to $89 billion, and that government cost per “net newly insured” will range from $4,420 to $6,420 as income eligibility increases from 100 percent of the federal poverty level (FPL) to 300 percent of FPL.
• Our estimates are consistent with the results from other researchers who have modeled the effect of Medicaid/SCHIP expansions on spending.

Consumer Financial Risk

From our model results, we find a small reduction in consumer financial risk after a Medicaid expansion, but those newly on Medicaid/SCHIP would have substantial reductions in financial risk:

• We find a 2 to 12 percent reduction in the median proportion of income spent on health care by the non-elderly overall.
• For those newly on Medicaid/SCHIP, our model shows reductions of 51 to 64 percent in the median percentage of income spent on health care for the newly insured and even larger reductions among those previously on group insurance.
• We estimate that the proportion of people living in families who spend more than 10 percent of their income on health will decline 31 to 47 percent among those newly insured; reductions among those who were previously on group insurance are much larger.

Waste

The effect of Medicaid/SCHIP expansions on waste is uncertain, because there is little direct evidence and because the theoretical relationships may have offsetting effects:

• No studies directly examine the effect of expanding Medicaid/SCHIP eligibility on waste.
• Administrative waste could increase if a significantly greater number of eligible persons are subjected to complex requirements to obtain or maintain enrollment, and it could decrease to reflect reductions in uncompensated care.
• Clinical waste could decrease if newly eligible enrollees shift their patterns of utilization from less efficient to more efficient providers, particularly if they shift from using emergency departments for primary care to visiting physicians' offices.
• Operational waste is unlikely to be affected, because the policy change does not have a direct effect on the way the delivery system is organized.

Reliability

Expanding Medicaid/SCHIP eligibility is unlikely to affect the reliability of care:

• No studies directly examine changes in the reliability of care when individuals enroll in Medicaid or SCHIP.
• Multiple studies suggest that the reliability of care does not vary significantly with insurance status; when uninsured individuals have access to health services, the reliability of these services is the same for both the insured and the uninsured.

Patient Experience

Expanding Medicaid/SCHIP eligibility will have an uncertain effect on patient experience for new enrollees:

• Multiple studies confirm that patient experience of care improves with enrollment in Medicaid/SCHIP, but this may not be true for people switching from group or non-group insurance.
• Enrollment in Medicaid/SCHIP seems to increase access to a regular source of health care, and it improves satisfaction with care among those who were previously uninsured.

Health

From our model, we estimate a small increase in life years associated with a Medicaid/SCHIP expansion:

• We estimate that a Medicaid/SCHIP expansion would result in 410,000 to 1.55 million additional life years.
• Theory and published studies suggest that, if expanding Medicaid/SCHIP increases rates of coverage, the health of some groups should improve.
• The magnitude of the effect on health may depend on the health of the individual when he or she gains insurance and other socioeconomic factors, as well as on changes in access afforded by health insurance and the reliability of care received.

Coverage

From our model and other studies, we estimate that coverage will increase 6 to 26 percent:

• About 6 to 35 million people will newly enroll in Medicaid, but just 3 to 12 million of them were previously uninsured.
• Crowd out of private insurance, whereby individuals switch from group or other coverage to Medicaid/SCHIP, may account for 30 to 60 percent of new Medicaid/SCHIP enrollees under this proposal.

Capacity

Expanding Medicaid/SCHIP eligibility will not have a direct effect on capacity:

• Given our model results, we do not estimate increased utilization of services and thus do not expect that expanding the eligibility of Medicaid/SCHIP will directly affect the capacity of the health care system.
• Prior studies consistently show that utilization of health care services increases when people gain insurance coverage; the health of new enrollees will affect the level of demand.

Operational Feasibility

Because the administrative structure already exists, expanding Medicaid/SCHIP eligibility would be relatively simple:

• Past experience with Medicaid and SCHIP expansions suggests that expanding eligibility would be relatively simple to implement.
• Because both Medicaid and SCHIP are administered at the state level, some variability may occur in the operational feasibility of this mechanism in different states.