Center for Public Policy Priorities 1 The Nuts and Bolts of the T exas CHIP Coalition/ Insure Texas Kids Campaign Agenda for the 80 th Texas Legislature Building on the Success of Texas Medicaid and CHIP The Nuts and Bolts of the T exas CHIP Coalition/ Insure Texas Kids Campaign Agenda for the 80 th Texas Legislature Building on the Success of Texas Medicaid and CHIP House Committee on Human Services Austin, Texas March 1, 2007 Anne Dunkelberg, Associate Director 900 Lydia Street - Austin, Texas Phone (512) – fax (512)

Center for Public Policy Priorities 2 Uninsured Texas Children: We CAN Cut the Number in Half by Enrolling Kids Who are Eligible Right Now Texas Children who are Uninsured, – U.S. Census All incomes, under age 19 (0-18*; 2-year average Census CPS) 20.4%1.367 million < 200% FPL; under age 19 (0-18; 2-year average Census CPS) 28% of <200%; 13.4% of all kids 919,000 Texas is home to nearly 1.4 million uninsured children. 2/3 of these uninsured Texas children are below 200% of the federal poverty line, despite Medicaid and CHIP. More than HALF our uninsured Texas Kids Could be enrolled in Medicaid or CHIP today! (Adjusting for ~230,000 undocumented kids; another 160,000 legal immigrant (LPR) children can participate in CHIP (Pew Hispanic Center)).

Center for Public Policy Priorities 3 CHIP and Medicaid: Helping Texas Kids As of February 2007: 1.77 million Texas children (under age 19) were enrolled in Medicaid about 100,700 of these children get Medicaid because of a serious disability About 122,000 in TANF cash assistance families (7% of the kids) About 12,700 pregnant teens (less than 1% of the children) Other 1.53 MILLION predominantly in WORKING poor families 325,479 Texas children were enrolled in CHIP. “CHIP stands on the broad shoulders of Medicaid” That’s 2.09 million Texas children – nearly one-third of all our kids.

Center for Public Policy Priorities 4 Income Caps for Texas Medicaid and CHIP, 2006 $22,078/yr $30,710/yr 185% 133% $16, % $2,256$3, %22.3% 74% $7, % $21,708 $33, % Income Limit as Percentage of Federal Poverty Income Annual Income is for a family of 3, except Individual Incomes shown for SSI and Long Term Care

Center for Public Policy Priorities 5 Texas Kids’ Uninsured Rate Drops, Thanks to CHIP and Medicaid BEFORE CHIP and streamlined Children’s Medicaid In 1997, When Congress created the CHIP Block Grant, U.S. Census estimated that: 24%-25% of Texas children were uninsured (about 1.4 million children), –and over three quarters (76%) of these were in families at or below 200% FPL. There were about 5.95 million Texas children (under age 19). SINCE CHIP and Streamlined Children’s Medicaid: 20.4% of Texas children under age 19 (1.37 million) are uninsured –just over two-thirds (68%) are in families below 200% FPL. There are about 6.6 million Texas children (under age 19). Texas CHIP and streamlined children’s Medicaid have provided health coverage for about 1 million more Texas children. Uninsured Texas children below 200% FPL have dropped from 35% to 29% (kids potentially served by children's Medicaid and CHIP).

Center for Public Policy Priorities 6 The Insure Texas Kids Campaign and the Texas CHIP Coalition urge the following plan of action for the 80th Texas Legislature: Implement 12 months continuous eligibility for CHIP and Children’s Medicaid Eliminate bureaucratic roadblocks to encourage personal responsibility and help low income families achieve self- sufficiency: –Fix problems with the Integrated Eligibility System to prevent eligible kids from losing CHIP and Medicaid coverage –Eliminate the CHIP asset test –Eliminate the CHIP 90 day delay of coverage for uninsured children –Deduct childcare and child support expenses when calculating income for CHIP Provide adequate reimbursement for Medicaid and CHIP providers Invest in outreach and education to ensure that all eligible children get the care that they need

Center for Public Policy Priorities 7 Texas Child Medicaid Enrollment (February 2001-February 2007) Source: Texas Health and Human Services Commission Simplified Enrollment begins High: 1,838,239

Center for Public Policy Priorities 8 Texas CHIP Enrollment (May 2000-February 2007) Source: All figures from Texas Health and Human Services Commission; Compares most recent month with September 2003 Highest, 5/02: 529,271 9/03: 507,259 2/07: 325,479

Center for Public Policy Priorities 9 Texas Child Medicaid and CHIP Enrollment Sources: Enrollment from Texas Health and Human Services Commission; Texas State Demographer's 0-17 Population Estimates Sept. ’03: 2,150,543 Feb. ’07: 2,094,723 Estimated child population growth of almost 70,000 per year Combined CHIP/Child Medicaid Enrollment

Center for Public Policy Priorities 10 Implement 12 months continuous eligibility for CHIP and Children’s Medicaid Federal Medicaid law allows states to offer periods of guaranteed eligibility up to 12 months. Re-certification is required at least every 12 months. 12-month eligibility for kids would allow Texas’ struggling private and public eligibility systems to cut workload in half: from 4.2 million renewals per year, to 2.1 million. As you have heard today, 12 month coverage dramatically improves continuity of care for children, and reduces the average cost per child. What Other States Do: Seventeen states offer 12-month continuous coverage for children’s Medicaid, and 25 states do so for CHIP. Texas provides 6 months of continuous coverage in both children’s Medicaid and CHIP. (36 states including Texas operate separate CHIP programs, and the other 14 use their CHIP funds to expand children’s Medicaid.)

Center for Public Policy Priorities 11 Implement 12 months continuous eligibility for CHIP and Children’s Medicaid Does the shorter 6-month period reduce state budget costs by shifting kids more quickly to CHIP, with its higher federal match rate? HHSC data from 2004 showed that the number of kids moving from CHIP to Medicaid (with a lower match) each year is far higher than the number of children moving from Medicaid to CHIP, resulting in a net loss in state dollars. Achieving “savings” by leaving eligible children uninsured should not be a public policy strategy.

Center for Public Policy Priorities 12 Most Kids who lose Medicaid or CHIP are Uninsured Afterwards The 12/2004 independent ICHP disenrollment report found: –52% of kids leaving CHIP remained uninsured. –of the 47% who got coverage later, 31% went to Medicaid and only 11% got employer-sponsored insurance (ESI) New ICHP studies of children losing CHIP or children’s Medicaid in 2006 found: –only 28% of kids who lost CHIP (and 24% of kids losing Medicaid) had any kind of health coverage afterwards, and –only 19% (i.e., about two-thirds of the 28%) moved to Medicaid.

Center for Public Policy Priorities 13 Eliminate bureaucratic roadblocks to encourage personal responsibility and help low income families achieve self-sufficiency: –Fix problems with the Integrated Eligibility System to prevent eligible kids from losing CHIP and Medicaid coverage –Eliminate the CHIP asset test –Eliminate the CHIP 90 day delay of coverage for uninsured children –Deduct childcare and child support expenses when calculating income for CHIP

Center for Public Policy Priorities 14 Fix problems with the Integrated Eligibility System to prevent eligible kids from losing CHIP and Medicaid coverage Adequate numbers of state eligibility workers to process applications, renewals within federal law timeframes –and preferably faster than that! Zero tolerance for gaps in coverage when kids move from Medicaid to CHIP, or CHIP to Medicaid. More improvement needed in CHIP contractor performance: prompt processing, eliminate staff policy errors, fix ongoing computer problems. Set high performance standards in both the public and private systems to try to minimize “missing info” requests, eliminate “procedural” denials, and raise renewal rates. In Louisiana: –children’s Medicaid/CHIP cases closed for failure to return renewal forms dropped from 17% to 2%, –renewal rates increased to 92%, and –children with gaps in Medicaid-CHIP coverage reduced from 18% to 6% over 2 years.

Center for Public Policy Priorities 15 Eliminate the CHIP asset test No asset limits are required in either children’s Medicaid or CHIP. What Other States Do: Texas is one of only 4 states (Montana, South Carolina, Utah) with an asset test for children’s Medicaid. –And, Texas’ asset tests for both Medicaid and CHIP are far more restrictive than those of the small group of states who also use asset tests. –Montana and South Carolina’s assets limit for children’s Medicaid are $15,000 and $30,000 respectively. Texas is one of only 2 states (Oregon is the other) with an asset test for CHIP, –and Oregon’s CHIP asset limit is $10, twice as high. –In a rush to implement the unplanned CHIP asset provision, HHSC simply adopted the Food Stamp limits, designed for a population with half the income. In contrast, Texas children’s Medicaid limits assets to $2,000, and Texas CHIP sets the limit at $5,000.

Center for Public Policy Priorities 16 Texas CHIP Asset Test, 8/ /2005 Source: THHSC. Latest available data as of 1/26/07; 11/06-2/07 an average of children/month denied CHIP due to assets. 9,446 children 6,205 4,791

Center for Public Policy Priorities 17 Eliminate the CHIP 90 day delay of coverage for uninsured children Texas’ 2003 changes converted the original CHIP 90-day crowd-out prevention policy into an across-the-board 90-day delay of coverage This had the effect of delaying health care for newborns, and for children who have been uninsured for years, or their entire lives, instead of acting as a disincentive to dropping private coverage. No other state has, or has ever had such a policy. The original Texas CHIP policy should be restored.

Center for Public Policy Priorities 18 Deduct child care and child support expenses when calculating income for CHIP Texas’ original CHIP policy gave parents credit for: –A portion of their child care expenses, –A small work expenses deduction (same as Medicaid) –All child support payments to another household (a positive incentive to make payments) elimination of income deductions has had unintended consequences. –Parents of youngest children (infants, toddlers, and pre-school age) face the highest child care costs, & are much more likely to have to choose between child care and health care than parents whose children are school aged. –No deduction for child support payments means that that 2 different households have to claim the same child support income: both the household of the parent who makes the payment, and the household that receives the payment. Texas children have denied CHIP as a result of this nonsensical policy. Texas’ original policy worked well, supported responsible parental behaviors, and should be restored.

Center for Public Policy Priorities 19 Provide adequate reimbursement for Medicaid and CHIP providers Many physicians, dentists and other providers severely restrict participation in Medicaid & CHIP, or choose not to serve them at all, because of inadequate reimbursement that is well below Medicare and commercial payment rates. Rate cutbacks have reduced physicians’ fees to 1993 levels for most services. Rate cuts were the largest HHS cut made in 2003; even larger than the CHIP cuts. TMA surveys of Texas doctors show that the percentage of doctors taking new Medicaid patients dropped from 75% in 1996 to 39% in Restoration to 2003 rates has been requested as an HHSC exceptional item; and rate increases are requested as part of Consolidated HHS budget.

Center for Public Policy Priorities 20 Invest in outreach and education to ensure that all eligible children get the care that they need Responsible parents need help understanding the complexity of the health care system--what care is available for children, and what the parents’ responsibilities are in enrolling and accessing that care. Ongoing outreach and assistance programs are vital to connecting children with a medical home and keeping them healthy. The Coalition applauds HHSC’s recent marketing and public education efforts to inform families about the availability of children’s Medicaid and CHIP. These initiatives also educate families about the importance of keeping their children enrolled, and inform them about how to effectively and appropriately use health care services.

Center for Public Policy Priorities 21 Invest in outreach and education to ensure that all eligible children get the care that they need Texas should leverage this marketing spending by preserving and expanding the role of Community-Based Organizations in outreach and education, proven effective in the CHIP-building years. In , community-based organization (CBOs) outreach was funded at $6.1 million, and direct marketing at $3.8 million. April 2006 HHSC announced $3 million in marketing of CHIP/children’s Medicaid. HHSC has announced $3.5 million contract, but this will expand CBOs’ responsibilities for outreach to approximately 2 million adults, in addition to the 2 million+ children already targeted. We must ensure that funding for children’s insurance programs continues at or above 2002 levels, and provide additional funding to support the new CBO responsibilities. Special resources are needed to remedy the higher lost CHIP enrollment among preschool children, and rural Texas children.

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Center for Public Policy Priorities 23 Texas Medicaid & CHIP Background Information

Center for Public Policy Priorities 24 Age Distribution Of Children in CHIP (FY 2003 vs. December 2006) In FY 2003, children aged 0-5 made up 23% of enrollment; as of 12/2006 they had dropped to 17%. Source: HHSC

Center for Public Policy Priorities 25 Change in Texas CHIP Enrollment, by Income (as percentage of Federal Poverty income Level) November 2003* – December 2006 Source: CPPP analysis of Texas Health and Human Services Commission data Total Enrollment * Enrollment dropped by 49,093 from 9/ /2003; thus totals shown here understate full decline number and percent since September , ,935-4,866-44,616-14,010

Center for Public Policy Priorities 26 Poorest Children Now Make up Much Smaller Share of CHIP December % FPL Source: HHSC

Center for Public Policy Priorities 27 Average Monthly Enrollment Growth for Texas Children in Medicaid, FY 2001 – FY 2007* Source: CPPP analysis of Texas Health and Human Services Commission data 68,189 Change in Enrollment: 285,584280,594122,402 Rolled back some simplification measures Simplification of application and renewals 67,084 *FY 2007 YTD; Avg. annual TX child population growth rate 1.2% ( ) -35,679-15,058

Center for Public Policy Priorities 28 Texas CHIP Enrollment by Service Area, September 2003 and December 2006 CHIP Service Area Sept Dec. 2006Decline% Decline 1 Amarillo/Lubbock 13,5416,639-6, % 2 Dallas-Fort Worth 100,65473,745-26, % 5 Austin 25,03817,011-8, % 6 Houston 137,63993,219-44, % 7 San Antonio 38,06025,810-12, % 8 Corpus Christi 18,33210,349-7, % 10 Laredo 10,0805,869-4, % 11 El Paso 22,21613,842-8, % Total EPO [1] [1] 141,69979,747-61, % Statewide Total 507,259326, , % Source: Texas Health and Human Services Commission [1] [1] Exclusive Provider organization. All areas of Texas not served in one of the large areas listed above are served by the EPO. All EPO regions have had CHIP declines significantly worse than the state average. See HHSC web site for a map of service areas:

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Center for Public Policy Priorities 30 Oct 04 Apr 05 Oct 05 May 06 Oct 06 HHSC Eligibility Staff Reductions, Source: HHSC

Center for Public Policy Priorities 31 Texas Unspent CHIP Funds Lost to Other States FFY 1998 Federal SCHIP Funds Lost - $170 million FFY 1999 Federal SCHIP Funds Lost - $324.5 million FFY 2000 Federal SCHIP Funds Lost - $123.7 million FFY 2001 Federal SCHIP Funds Lost - $85.3 million FFY 2002 Federal SCHIP Funds Lost - $104.6 million FFY 2003 Federal SCHIP Funds Lost - $23.8 million FFY 2004 Federal SCHIP Funds Lost - $61.5 million* Total lapsed to date ( ): $893.4 million Scheduled to lapse on March 31, 2007: $20 million, for a total of million This total is more than 3 times the federal SCHIP funds Texas used to run the program for an entire year in 2005 (total Texas federal SCHIP spending in FY 2005 was $288 million). Source: Center on Budget and Policy Priorities, analysis of CMS data. *Lapse of 2004 allocation based on Congressional Research Service reports as of 12/13/2006.

Center for Public Policy Priorities 32 Texas Needs the Federal SCHIP Block Grant to Grow - Or Else Texas CHIP Cannot Grow! Had CHIP enrollment stayed at 2003 levels (or grown), Texas would need more federal funds TODAY In order for Texas CHIP to grow, and to cover the hundreds of thousands of eligible, but not enrolled, kids, we WILL need Congress to increase the block grant. The new Texas CHIP perinatal program will also speed up Texas’ need for more federal SCHIP funds. BUT, Texas’ CHIP allocation (share of the pie) will likely be targeted for cuts by some in Congress based on our recent lower enrollment.

Center for Public Policy Priorities 33 Federal SCHIP Reauthorization, 2007: The National Picture The Original SCHIP block grant did not grow with population or inflation, so more funds are needed JUST to let states keep serving their current children with the same income limits Federal CHIP officials estimate that without more money in the block grant CHIP enrollment will have to be cut by one-third—from 4.4 million to 2.9 million children nationwide. Many other states also want to reach their eligible, but not enrolled children! More Block Grant funds will be needed to allow us to provide all eligible kids with cost- effective health care.

Center for Public Policy Priorities 34 Too Close to Turn Back: States Move to Give Every Child Access to Comprehensive Health and Mental Health Coverage Inspired by the success of Medicaid and SCHIP, three states have begun implementing programs with a goal of covering all children with no upper income limit. Building on their child Medicaid-CHIP programs Massachusetts, Illinois, and Pennsylvania provide subsidized coverage of children up to 300% to 400% of poverty, and allow buy-in for children at higher incomes. A number of other states (CA, CO, MN, NM, NY, OR, WA, WI) are currently considering similar major expansions of access to care for children, designed to ultimately reach coverage for every child.

Center for Public Policy Priorities 35 What Texas Kids Need Federal SCHIP Reauthorization, 2007 SCHIP Block Grant must grow to allow states to: –Keep their current programs, without cuts to enrollment or benefits –Cover all eligible/not enrolled current eligibility thresholds. Texas needs this to cut the number of uninsured children in half! If Texas only focuses on the issue of how long we can carry unspent funds forward, and NOT on the need for a bigger block grant overall, we will win a small battle but suffer a major overall loss--we will be forced once again to cut CHIP back. As recent exciting new state-level initiatives to cover all children show, Americans are ready today to take steps to cover more uninsured kids. CHIP stands on Medicaid’s broad shoulders: NO cuts to Medicaid to offset SCHIP.