Nine in Ten: Using the Tax System to Enroll Eligible, Uninsured Children into Medicaid and SCHIP

Nine in Ten: Using the Tax System to Enroll Eligible, Uninsured Children into Medicaid and SCHIP Stan Dorn, Bowen Garrett, Cynthia Perry, Lisa Clemans-Cope, and Aaron Lucas Urban Institute 2100 M. St. NW Washington, DC 20037 Prepared for First Focus January 2009 Abstract In 2004, 89.4 percent of uninsured children who qualified for Medicaid or the State Children’s Health Insurance Program lived in families who filed federal income tax forms. This substantially exceeds the proportion of uninsured but eligible children who can be reached through other outreach strategies. Federal lawmakers could cover uninsured children in these families by: (a) changing federal income tax forms so parents can identify their uninsured children and request coverage; (b) investing in information technology allowing data exchange between states and the Internal Revenue Service; and (b) letting states cover uninsured children if tax information shows they qualify. Contents 9 in 10 eligible, uninsured children live in families who file federal income tax returns.............................1 SCHIP reauthorization could let states use federal income tax information to enroll eligible, uninsured children into health coverage, at their parents’ request..............................................................................5 Data‐driven eligibility‐determination and enrollment can lower administrative costs, reduce eligibility errors, and cut red tape for families................................................................................5 Medicare uses federal income tax information and other external data to qualify seniors for need‐based subsidies, without requiring traditional application forms.........................................6 Children could likewise receive health coverage based on federal income tax data ......................6 Conclusion.....................................................................................................................................................8 Appendix A. Methodology..........................................................................................................................10 Appendix B. A More Detailed Explanation of Options for Federal Policy Change......................................14 Modifying the federal income tax form.........................................................................................14 Investing in information technology (IT) infrastructure................................................................14 Enrollment alternative A: Giving states a menu of options for using federal income tax information to provide uninsured children with health coverage................................................15 Menu option 1: Basing Express Lane Eligibility on income tax data .................................15 Menu option 2: Facilitating enrollment without changing existing eligibility methodologies..................................................................................................................18 Menu option 3: Sending application forms......................................................................18 Enrollment alternative B: Enrolling all uninsured children into Medicaid and SCHIP when income tax data show they qualify.............................................................................................................18 Appendix C. Excerpt: The New Jersey State Income Tax Form for 2008, page 1 .......................................20 About the authors.......................................................................................................................................21 About the Urban Institute...........................................................................................................................21 About First Focus........................................................................................................................................21 Notes...........................................................................................................................................................22 i Nine in Ten: Using the Tax System to Enroll Eligible, Uninsured Children into Medicaid and SCHIP Introduction As reauthorization of the State Children’s Health Insurance Program (SCHIP) returns to the federal policy agenda, the country’s leaders are confronted with one key fact suggesting a need for policy change: more than 6 in 10 uninsured children qualify for Medicaid or SCHIP but are not enrolled.1 Most of these children are eligible for Medicaid. Reaching these children may not be easy. States have made great progress simplifying application procedures and conducting extensive outreach.2 As a result, 79 percent of eligible children already receive coverage.3 Clearly, many of the “lowest-hanging fruit” have already been picked. Reaching the remaining 21 percent of eligible children is likely to require bold action. Passed by Congress