Addressing Barriers to Health Insurance Coverage Among Children: New Estimates for the Nation, California, New York, and Texas

© 2012, The Urban Institute Health Policy Center • www.healthpolicycenter.org page 1 Addressing Barriers to Health Insurance Coverage Among Children: New Estimates for the Nation, California, New York, and Texas May 2012 Stacey McMorrow, Genevieve M. Kenney, and Christine Coyer Executive Summary In recent years, children have generally fared better than adults in obtaining health insurance coverage. This is largely due to higher income eligibility thresholds and efforts to simplify and improve enrollment and retention procedures under Medicaid and the Children’s Health Insurance Program (CHIP). However, some children continue to face challenges in obtaining and retaining coverage which may be addressed in part by a number of provisions included in the Affordable Care Act (ACA). For certain children, however, the ACA may not fully address existing barriers to coverage, and for others it may generate a new set of challenges. We explore several scenarios in which children may face particular challenges in accessing health insurance coverage under the ACA and provide estimates of the number of children in these complex coverage scenarios. These scenarios include situations where children are eligible for Medicaid or CHIP but their parents are not, as well as those where children are living without at least one of their parents. Given that states will be leading the implementation of many of the ACA provisions, we also present state-level estimates of children facing these scenarios in California, New York, and Texas. We find:  Just over 40 million children may face at least one complex coverage scenario under the ACA, and 6.3 million children may face two complex scenarios.  There are an estimated 4.8, 2.9, and 3.6 million children in these complex coverage scenarios in California, New York, and Texas, respectively.  Children facing at least one complex coverage scenario are currently more likely to be uninsured than other children.  Among all uninsured children in the United States, 62 percent are in at least one complex coverage scenario.  More than three-quarters of Medicaid/CHIP eligible uninsured children are in at least one complex coverage scenario. Maximizing coverage for children will therefore require addressing the complex coverage scenarios that prevent some children from obtaining or retaining coverage. Given that many children face these or similar scenarios today, policymakers at both the national and state levels can begin to address these issues even before the major ACA coverage provisions are implemented. In an effort to maximize the benefits of the ACA for children, it will also be important to consider children in these scenarios and how regulations and implementation strategies can address some of the potential barriers to coverage. Given the critical role that states will play in implementation, it may also be important for individual states to use data and stakeholder input to assess these issues in their own state in order to determine the best ways to address them. © 2012, The Urban Institute Health Policy Center • www.healthpolicycenter.org page 2 Introduction The Patient Protection and Affordable Care Act (ACA) introduces many changes to the health insurance landscape in the United States. In 2014, Medicaid eligibility will be expanded to a mandatory minimum of 138 percent of the federal poverty level (FPL) for all individuals who meet the immigration requirements. This will dramatically increase eligibility for both parents and childless adults.1 The law also calls for the establishment of state-based health insurance exchanges. The exchanges will be organized markets where individuals and small businesses can purchase health insurance coverage that is subject to new regulations intended to spread risk more broadly and promote competition in the market for health insurance. Individuals and families with incomes up to 400 percent of the FPL will also be eligible for federal subsidies to purchase coverage in the exchanges if they do not have affordable access to employer-sponsored insurance (ESI). With these new options in place, most individuals will be required to obtain a minimum level of coverage or pay a penalty.2 In recent years, children have generally fared better than adults in obtaining health insurance coverage. This is largely due to higher income eligibility thresholds and efforts to simplify and improve enrollment and retention procedures under Medicaid and the Children’s Health Insurance Program (CHIP). However, some children continue to face challenges in obtaining and retaining coverage which may be addressed in part by a number of provisions included in the ACA. For certain children, however, the ACA may not fully address existing barriers to coverage, and for others it may generate a new set of challenges. Many children who are eligible for Medicaid or CHIP, for instance, will have parents who are not eligible for Medicaid due to the lower inc