11: State Health Insurance (HHS)

Broadened Health Insurance Coverage Through State Initiatives, Department of Health and Human Services (HHS)

Other Information:

On August 4, 2001, President Bush announced the Health Insurance Flexibility and Account-ability Demonstration Initiative. This initiative is designed to improve health insurance cover-age for low-income Americans through comprehensive state-based approaches under Medicaid and the State Children’s Health Insurance Program. THE PROBLEM • The federal government will spend an estimated $143 billion in 2002 on the Medicaid program. Recent annual growth in the Medicaid program is the highest it has been since the mid-1990s. Between 1999 and 2002, Medicaid expenditures are projected to grow almost 10 percent per year in comparison to the less than six percent average annual growth between 1994 and 1999. Overall national health expenditures are projected to follow a similar pattern. • In recent years, the number of people receiving health insurance under the Medicaid program has remained constant and the rate of insurance coverage among low-income Americans has not improved. Medicaid program enrollee growth is projected to increase only 1.2 percent per year between 2002 and 2006. Census Bureau estimates indicate that although the number of low-income individuals has decreased since the mid-1990s, those who remain low-income were no more likely to have insurance in 1999 than they were in 1995. • The Administration believes that the complex framework of federal Medicaid requirements restricts states from tailoring their Medicaid programs to effectively provide low-income individuals with affordable health insurance options. • The Administration believes that Medicaid and the State Children’s Health Insurance Program (SCHIP) should support, rather than undermine, the private health insurance market, where two-thirds of nonelderly Americans purchase health insurance coverage. The Medicaid program currently does not provide states with the flexibility or incentive to develop programs that are supportive of the private health insurance market, such as premium assistance programs. As a result, few states have successfully implemented such programs. • The Administration believes that Medicaid funding is not always being used to provide health insurance to low-income individuals. Recent studies by the Department of Health and Human Services (HHS) Inspector General have identified provider payment policies that have allowed billions of dollars in federal Medicaid funding to be used for purposes other than purchasing health insurance. • In the past, little federal guidance existed for states on how to develop comprehensive demonstrations seeking to improve health insurance coverage. Additionally, substantial federal effort is expended reviewing demonstration proposals that do not seek to improve health insurance coverage. Through guidance to states, the Administration will clarify the goals and the application process for federal Medicaid demonstrations. THE EXPECTED RESULTS • Increase the number of individuals with access to affordable health insurance without increasing Medicaid costs. We are already making progress on the number of Americans with access to health insurance. In the first six months of the Bush Administration, HHS estimates that an additional 800,000 people have obtained health insurance through the approval of state requests for Medicaid and SCHIP waivers and state plan amendments. • Increase the number of comprehensive state-based Medicaid and SCHIP initiatives addressing the problem of the uninsured. • Increase the number of Medicaid and SCHIP approaches that support coverage in the private health insurance market. • Improve the federal review process of state demonstration requests by streamlining the paperwork required and reducing the time period required for federal review.

Objective(s):

11.1: State Flexibility

11.2: Data Availability

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