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2003-12-26 -- State Budget Cuts making 1.6 million more uninsured

State budget cuts are making 1.6 million more uninsured, including
500,000 children, according to two new reports from the Center on
Budget and Policy Priorities.  As stated earlier, tax cuts for
corporations and the rich and combined with recession have caused the
worst state budget deficits since World War II.  As the article hints,
major restructuring is planned for Medicaid (Medi-Cal in California).

Center on Budget and Policy Priorities, December 22, 2003
http://www.cbpp.org/12-22-03health-pr.htm

UP TO 1.6 MILLION LOW-INCOME PEOPLE
- INCLUDING ABOUT HALF A MILLION CHILDREN -
ARE LOSING HEALTH COVERAGE DUE TO STATE BUDGET CUTS

Driven by flagging revenues and deep budget deficits, 34 states have
made cuts over the past two years in public health insurance programs
such as Medicaid and the State Children's Health Insurance Programs
(SCHIP), a new Center report finds.  Some 1.2 million to 1.6 million
low-income people - including 490,000 to 650,000 children and large
numbers of parents, seniors, and people with disabilities - have lost
publicly funded health coverage as a result. This past year, state
legislatures adopted changes to close state budget gaps totaling $78
billion for state fiscal year 2004.

A second Center report, also released today, examines one reason for
the loss of coverage: six states - Alabama, Colorado, Florida,
Maryland, Montana, and Utah - have stopped enrolling eligible children
in their SCHIP programs, denying coverage to tens of thousands of
eligible low-income children. (For summary of the report on children,
see below)

"Cuts of this magnitude in health coverage for low-income families are
unprecedented," stated Leighton Ku, a senior fellow at the Center.
"The ripple effects of these cuts will be felt across the states.
Most of the people who lose public coverage will become uninsured.
Burdens also will increase on public and private hospitals and clinics
that provide some care to the uninsured (often after untreated health
problems have developed into more serious health conditions)."

"The cuts also will mean fewer federal matching dollars going into the
states," Ku added.  A state loses up to $4 in federal matching funds
for every dollar that it cuts state Medicaid funding and up to $7 in
federal matching funds for every dollar it cuts state SCHIP
expenditures.

Cuts Will Drive Up the Number of the Uninsured

Some 43.6 million Americans were uninsured in 2002 (the most recent
year available), a 2 million increase since 2001.  The weak job market
and losses in private health coverage were the main reasons for the
increase.

The number of uninsured Americans would have grown by several million
more if Medicaid and SCHIP enrollment had not increased during the
economic downturn to help compensate for the loss of private coverage.
These programs are designed to play this "counter-cyclical" role by
expanding during periods of labor market weakness, when many workers
lose their jobs - and with it, their employer-sponsored health
coverage - and become eligible for publicly funded coverage instead.

The Medicaid and SCHIP cuts now taking place will weaken the programs'
ability to compensate for the loss of private coverage and cause the
number of uninsured Americans to go still higher.

States Cutting Enrollment in a Variety of Ways

  *  Some states have cut enrollment by restricting Medicaid or SCHIP
eligibility.  For example, Missouri lowered the Medicaid eligibility
limit for parents from 100 percent of the poverty line to 77 percent
(from $15,260 for a family of three to $11,750).

  *  Other states have adopted policies that do not directly limit
eligibility but result in lower enrollment by making it more difficult
to enroll in the program or retain coverage.

  *  Several states have instituted or raised monthly premiums.

  *  Several other states have adopted policies that impose added red
tape on program participants, such as requiring families to reapply
for the program every 6 months rather than annually.  Such changes can
cause many eligible people to lose coverage, including poor families
who cannot afford to pay higher premiums or working families who
cannot take time off from work for frequent trips to government
offices to renew their eligibility.  After Oregon increased its
Medicaid premiums, for example, enrollment fell by 40,000 people or
more than one-third.


Temporary Fiscal Relief Helped, But Additional Cuts Are Likely in 2005

A number of states have averted even deeper cuts in Medicaid and SCHIP
because of the enactment earlier this year of $20 billion in federal
fiscal relief for states.  Half of these funds are in the form of a
temporary hike in the federal Medicaid matching rate so states pay a
smaller share of total Medicaid costs.  Ohio and New Jersey, for
example, each used fiscal relief funds to prevent planned cutbacks of
Medicaid eligibility for low-income adults that would have reduced
caseloads by about 60,000 in each state.  The number of states
instituting Medicaid cuts dropped substantially after the fiscal
relief funds became available.

However, the temporary increase in federal Medicaid matching rates is
scheduled to expire on July 1, 2004.  This will intensify pressures on
state budgets for state fiscal year 2005, which begins on July 1 in
most states.  States face projected deficits of $40 billion to $50
billion in the upcoming fiscal year, despite the recent uptick in the
economy.  As a result, further Medicaid and/or SCHIP cuts are likely
in many states in the coming year.

In addition, about nine states will run out of federal SCHIP funds in
federal fiscal year 2005 (which starts October 1, 2004) because of
problems with both the level of federal SCHIP funds and the formula
for distributing them.  These states will be under pressure to reduce
their SCHIP caseloads.  Even more states will exhaust their federal
SCHIP funds in 2006 and 2007.  Finally, proposals to cap federal
funding for Medicaid (such as the Administration's block grant
proposal) could increase states' budget difficulties and ultimately
lead to further Medicaid cuts.

SCHIP Freezes Will Increase the Number of Uninsured Children

The decision by six states to stop accepting eligible children into
their SCHIP programs generally affect children in families with
incomes between 100 percent or 133 percent of the poverty line and 200
percent of poverty.  (Families with incomes below these levels are
generally covered by Medicaid, which is not affected by the freeze.)

Three of the six states are putting SCHIP-eligible children on a
waiting list.  In the other three states, families are told to
re-apply if and when enrollment re-opens in the future.

The freeze generally applies to eligible newborns as well as other
children.  This means newborn infants in low-income families are being
denied coverage despite their vulnerability -  and the critical
importance of health care - in their first days and months of life.

Exactly how many children are affected by the six states' decision to
stop accepting eligible new SCHIP applicants is unknown, since three
of the states do not maintain waiting lists.  Florida's waiting list
contained more than 44,000 eligible children as of November 14.

"These SCHIP freezes threaten the nation's recent progress in
providing health coverage to low-income children," said Donna Cohen
Ross, lead author of the report on the SCHIP freezes. "Since SCHIP was
created in 1997, the number of low-income children who are uninsured
has declined.  Yet 6.8 million low-income children still lack
insurance, and the ban on new SCHIP enrollment in these states is
going to worsen the problem."

Changing Course

The Center reports note that further cuts that cause more low-income
people to lose insurance could largely be averted, and many of the
recent cuts reversed, if federal and state policymakers would make
changes in budget priorities.  A continuation of federal fiscal relief
to states for another year in light of continuing state budget crises,
and state decisions to put off limits further cuts that cause
low-income people to become uninsured, would help significantly, the
Center said.

Center executive director Robert Greenstein noted that the Bush
Administration has given indications it will propose a health
insurance initiative in coming months.  "Any such initiative should
start with an extension of temporary financial assistance to states
for another year to avoid casting more of the nation's poorest and
most vulnerable citizens into the ranks of the uninsured," he said.

"A 'health insurance initiative' that consists primarily of further
tax cuts packaged with a 'health insurance' label and fails to do
anything about cutbacks in health insurance at the state level that
are affecting the neediest Americans will be disappointing," he added.

The Center's two reports - Losing Out: States Are Cutting 1.2 to 1.6
Million Low-Income People from Medicaid, SCHIP and Other State Health
Insurance Programs and a summary version of Out in the Cold:
Enrollment Freezes in Six State Children's Health Insurance Programs
Withhold Coverage from Eligible Children - are available on the Center
's website http://www.cbpp.org.  The full version of the latter report
has been published by the Kaiser Commission on Medicaid and the
Uninsured and is available at http://www.kff.org.)

States That Cut Enrollment in Medicaid, SCHIP or Other State Health
Insurance Programs: Summary of State Policies and Impacts in State
Fiscal Years 2003 and 2004

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Brief Description of Cuts


United States

1.2 million to 1.6 million    (490,000 to 650,000 children)

Cuts adopted in 34 states in state fiscal years 2003 and 2004.  Almost
half of the cuts are targeted at children, but there also are cuts
that end coverage for  low-income parents, pregnant women, senior
citizens, people with disabilities, childless adults, and immigrants.



California

250,000 to 500,000

Created barriers that make it harder for low-income parents to stay
enrolled in Medicaid.  Reduced eligibility for transitional Medicaid,
so that parents have coverage for up to 12 months after leaving
welfare for work, instead of 24 months.  (In addition, Gov.
Schwarzenegger has just proposed to stop enrolling additional eligible
low-income children in SCHIP and to stop admitting immigrants in other
health coverage programs, affecting an additional 114,000 children and
78,000 immigrants.  These proposals are not included in the estimates
of the cuts enacted in California.)

In addition,  California added a mid-year reporting requirement in
Medicaid, so that enrolled parents must report changes in their
incomes or other family information twice a year.  This will cause
some families to lose coverage if they are unable to submit the
paperwork in time or if their family circumstances have changed
slightly.  Another measure imposed standards on local agencies
concerning the timely redetermination of Medicaid eligibility;
agencies that do not meet the standards will lose administrative
funding.  This is intended to expedite Medicaid disenrollment of
parents whose certification periods have lapsed.  When this
legislation was passed, the state assumed that mid-year reporting
would reduce caseloads by about 100,000 and the new performance
standards would result in caseloads being reduced by about 400,000,
suggesting a caseload reduction of about 500,000.

However, the final impact of these changes is not clear because of
uncertainties in how the legislation will be implemented by state and
local agencies.  To be conservative, we provide a lower-bound estimate
that assumes the actual cuts are half as large as those budgeted; this
indicates a Medicaid caseload reduction of 250,000 to 500,000.  .

Finally, California reduced eligibility for transitional Medicaid
coverage, so that those leaving welfare for work only get 12 months of
Medicaid coverage, not 24 months, as they did before.  (California
also has continued to delay implementing a federally-approved SCHIP
expansion that would extend coverage to parents with incomes between
100 and 200 percent of the poverty line; this delays coverage for
about 275,000 uninsured parents.

In addition, Gov. Schwarzenegger has proposed freezing enrollment for
children in SCHIP beginning on   January 1, 2004; this would reduce
enrollment by an estimated 113,800 children next year.  The new
governor has also proposed freezing enrollment in state-funded health
care provided to immigrants, which would affect an estimated 77,900
people.  None of the three items mentioned in parentheses are included
in our estimates of approved cuts.)


Cuts in other states:

Alabama

3,000 to 4,000

Stopped admitting eligible low-income children in SCHIP.  Increased
monthly premiums for children in SCHIP.


Alaska

1,600

Reduced income limit for children in SCHIP from 200 percent of the
poverty line ($38,000 for a family of three in Alaska) to 175 percent
($33,000).  Eliminated inflation adjustments on income limits for
children in SCHIP and for pregnant women and aged and disabled people
in Medicaid, so that income limits decline as a percentage of the
poverty line.



Arizona

no estimate

Created enrollment barriers by requiring children, adults and certain
aged and disabled people to submit paperwork every 6 months, rather
than permitting 12-month continuous eligibility.  Have announced plans
to increase premiums for SCHIP children with incomes between 150
percent of the poverty line and 200 percent.



Arkansas

no estimate

Increased monthly premiums for disabled children in a special Medicaid
waiver program who receive health services at home and would otherwise
be institutionalized.



Colorado

16,300

Stopped admitting eligible low-income children and pregnant women in
SCHIP.  (Also passed legislation to end Medicaid coverage for 3,500
legal immigrants. This is currently subject to an injunction because
of a legal challenge and is not counted in our estimate.)



Connecticut

20,500

Reduced Medicaid income eligibility limit for low-parents from 150
percent to 100 percent of the poverty line (from ($22,890 to $15,260
for a family of three).  Because of an injunction, implementation has
been delayed and many of these parents are receiving transitional
Medicaid benefits.  They will eventually lose coverage, however, when
their transitional benefits expire.  Created enrollment barriers for
children that make it harder to apply for Medicaid from clinics and
make it harder for children to remain enrolled by requiring their
families to submit paperwork every 6 months, rather than permitting
12-month coverage.  Stopped admitting recent legal immigrants to
state-funded Medicaid.



Florida

74,000

Stopped admitting low-income eligible children in SCHIP and places
them on a waiting list instead.  About 44,000 have been placed on this
list since July 2003.  This is in addition to a waiting list of about
27,000 that already existed for immigrant and other children.  Cut
Medicaid income eligibility limits for seniors and people with
disabilities from 90 percent of the poverty line to 88 percent (from
$8,082 for a single senior to $7,902)



Indiana

32,000 to 40,000

Created enrollment barriers by requiring Medicaid children to submit
paperwork every 6 months, rather than permitting 12-month coverage.
Reduced Medicaid income limits for seniors and people with
disabilities by narrowing methods of computing disposable income
(currently blocked by lawsuit, so this cut is not counted).



Iowa

no estimate

Increased premiums for working disabled people's Medicaid coverage.



Kansas

no estimate

Increased enrollment barriers so that fewer people who have left
welfare for work retain their Medicaid coverage.



Kentucky

3,000

Instituted monthly premiums for children in SCHIP and for certain
families who receive Medicaid benefits after leaving welfare for work.
Terminated Medicaid coverage of parents who do not meet work
requirements in welfare program.  Reduced amounts that an
institutionalized person's spouse can keep.



Louisiana

no estimate

Reduced Medicaid income limit for seniors and people with disabilities
by narrowing methods of counting disposable income.



Maryland

5,000

Stopped admitting eligible children in SCHIP who have incomes between
200 percent and 300 percent of the poverty line (between $30,520 and
$45,060 for a family of three).  Imposed monthly premiums for children
with incomes between 185 percent of the poverty line and 200 percent
($28,230 to $30,520 for a family of three) in SCHIP, which has
resulted in a decline in enrollment of children in that income range
by about half.



Massachusetts

13,900

Temporarily ended insurance coverage for certain long-term unemployed
people.  Eliminated health insurance eligibility for certain
immigrants.  Increased premiums for some low-income children in
Medicaid.  Reduced Medicaid eligibility for certain adults by adding
an asset limit.



Minnesota

35,000

Cut eligibility and benefits for certain low-income adults who do not
have children.  Reduced Medicaid eligibility for newborn infants whose
mothers were on Medicaid from 24 months to 12 months.  Other
miscellaneous cuts.



Missouri

32,00 to 42,700

Lowered Medicaid income eligibility limit for parents from 100 percent
of the poverty line to 77 percent (from $15,260 for a family of three
to $11,750).  Because of a court injunction some of these parents are
retaining transitional Medicaid benefits, but they will lose Medicaid
coverage when their transitional benefits expire.  Eliminated Medicaid
coverage of non-custodial parents.  Reduced duration of transitional
Medicaid benefits for parents leaving welfare for employment.



Montana

no estimate

Stopped admitting eligible low-income children in SCHIP and place them
on a waiting list.



Nebraska

28,700

Cut income eligibility limits for children and parents by changing
methods of counting income and household composition rules.  This is
delayed by a court injunction, but the people will lose coverage when
their transitional Medicaid benefits expire.  Created enrollment
barriers by making it more difficult for children to apply for
Medicaid from health clinics.  Ended Medicaid coverage for poor 19 and
20 year olds.



Nevada

2,900

Cut Medicaid income limits for unemployed workers by changing methods
of accounting for unemployment benefits.



New Jersey

1,900

Stopped admitting new low-income parents applying for NJ Family Care.
Terminated coverage for certain immigrants and adults.



North Carolina

no estimate

Reduced Medicaid eligibility limits for certain seniors and people
with disabilities by changing methods computing assets in determining
eligibility.  Reduced Medicaid coverage for low-income parents and
children who left welfare for work from two years to one.
(Preliminary data indicate that under the latter change about 51,000
parents and children will no longer be eligible.  But some of them
will retain Medicaid coverage under a different eligibility category,
however, so the net reduction in enrollment is not yet clear.)



North Dakota

2,600

Reduced Medicaid eligibility for two-parent families with a parent who
works more than 100 hours per month .  Narrowed eligibility for
certain seniors.



Oklahoma

8,300

Ended Medicaid coverage for low-income parents, children and seniors
whose gross incomes are above the Medicaid limits but who incur high
medical expenses that reduce their disposable incomes to a level below
the Medicaid limit.



Oregon

40,000

Increased monthly premiums for low-income people in Medicaid (now
called Oregon Health Plan Standard).  Also restricted other
eligibility criteria. As a result, more than one-third of those
previously enrolled have lost coverage.  Ended Medicaid coverage for
those whose gross incomes are above the Medicaid limits but who incur
high medical expenses that reduce their disposable incomes to a level
below the Medicaid limit.  Cancelled earlier plans to expand coverage
for adults with incomes over the poverty line.



Rhode Island

1,200

Increased monthly premiums for families with children in Rite Care.



South Carolina

7,000

Reduced Medicaid income limit for parents by adding a limit on gross
income.  Created enrollment barrier by increasing paperwork
requirements to renew children's Medicaid coverage.



Tennessee

150,000

Broad reductions in eligibility for TennCare.  About 200,000 lost
coverage in July 2002 when the state required that large numbers of
beneficiaries reapply.  While the state has permitted a grace period
during which those who lost coverage may reapply, only a limited
number are expected to successfully re-enroll.  Reduced eligibility
for "uninsurable" people with chronic health problems who cannot get
private health insurance.  Stopped admitting  eligible low-income
children into TennCare unless they have incomes below 100 percent of
the poverty line (for children six and older), below 133 percent of
the poverty line (for children one to six) or below 185 percent of the
poverty line (for infants under one).



Texas

344,000 to 494,000

Imposed an asset test for children in SCHIP, increased monthly
premiums for some children in SCHIP and imposed premiums for the first
time for others, and instituted changes to make it harder for children
to stay enrolled in SCHIP.  This will reduce enrollment in SCHIP by
about one-third.  In addition, those children who are admitted in
SCHIP will not be not be covered for medical care in their first three
months in the program.  Delayed plans to reduce  enrollment barriers
for children in Medicaid by postponing implementation of plans to
streamline eligibility by enrolling children for 12- month periods and
requiring more burdensome enrollment procedures for some children.
Cut Medicaid income eligibility limit for pregnant women from 185
percent of the poverty line to 158 percent (from $22,420 for family of
two to $19,150).  Eliminated Medicaid coverage for low-income adults
whose gross incomes are above the Medicaid income limit but who incur
high medical expenses that reduce their disposable incomes to a level
below the Medicaid income limit.  Terminated Medicaid coverage for
parents who do not meet work requirements for welfare.



Utah

no estimate

Stopped admitting eligible, low-income children in SCHIP.



Vermont

10,000

Instituted or increased monthly premiums for certain low-income
adults, children and seniors in health coverage programs.



Virginia

no estimate

Made eligibility rules more restrictive for transitional Medicaid
coverage, under which low-income adults retain Medicaid when they
leave welfare for work.  Eliminated inflation adjustments in Medicaid
income limits for certain seniors and people with disabilities, so
that eligibility, as a percentage of the poverty line, will erode over
time.



Washington

116,000

Ended Medicaid eligibility for recent legal immigrants.  Increased
enrollment barriers for children and parents that make it more
difficult for them to stay enrolled in Medicaid.  Announced plans to
increase premiums for low-income children in Medicaid and SCHIP.  (On
December 18, Gov. Locke proposed eliminating the premiums for some of
the children and reducing premiums for others.  If this is approved by
the legislature, then fewer children would lose coverage.)  Reduced
cap on the number of people who can be served by the Basic Health
program by 36,000.



Wisconsin

1,600

Created enrollment barriers for working families applying for
BadgerCare by requiring further paperwork to verify income.  Increased
premiums for families with incomes above 150 percent of the poverty
line.  Reduced eligibility for seniors by modifying methods of
counting assets and changing rules related to amounts that spouses may
retain.

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Descriptions of Families Affected by Cuts in Health Programs in the
States

St. Louis, MO

"R" and her two-year-old daughter live below the poverty line in St.
Louis, where she works as a sales representative for a company that
sells dental equipment.  Her company offers a limited insurance
package to employees at substantial cost:  "R" would need to pay $120
month for coverage for herself, and the insurance would only cover 50
percent of her medical costs and no prescription drugs.  She has not
been able to afford this coverage.  "R's" daughter is enrolled in
Medicaid.  Because of the recent eligibility cuts to Medicaid in
Missouri, which reduced the Medicaid income limit for parents from 100
percent to 77 percent of the poverty line, "R" cannot qualify for
herself.  (She would qualify if last year's eligibility guidelines
were still in effect.)

In August, "R" had severe pain and went to an emergency department in
Florida, where she was traveling.  She was diagnosed with an acute
intestinal infection, had surgery, and was discharged after four days
in the hospital - with a bill of $46,000.  She was instructed to
follow up with a primary care doctor in Missouri, which she was unable
to do without insurance.  The pain returned, and so she went to an
emergency department in Missouri, where she was treated and released -
with another $1,000 bill.  She was given a prescription, and borrowed
$100 from a friend to obtain it, and has not been able to repay the
friend.

"R" has occasional abdominal pain but is not getting any treatment.
She intends to declare bankruptcy because she cannot pay the $47,000
she owes in medical bills, but so far has been unable to save the
funds needed to pay for a bankruptcy filing.


Merritt Island, FL

"A" lives with her two-year-old daughter, "B".  "A" does not have
access to employer-based insurance for either herself or "B", as she
is unable to work.  "A" faces multiple disabilities, having only one a
rm, chronic fatigue syndrome and a form of anemia that requires
monthly administration of gamma globulin. "A" receives Supplemental
Security Income (SSI) and is enrolled in Medicaid.  "B" is uninsured.

"B" has asthma, allergies, and hydronephrosis, a kidney disorder that
should be regularly monitored by ultrasound. Since June, "B" has been
on the waiting list for Medi-kids, one of Florida's SCHIP programs.
"A" reports that "B" is overdue for an ultrasound, having not had one
since January of 2003.


Orlando, Florida

"J" lives in Orlando with her three-year-old son, "Z".  Until
recently, "Z" was covered by Medicaid.  When "J" began working
full-time in the corporate offices of a resort, her income increased
to approximately $1,200 a month (about $14,400 on an annual basis).
While her income continues to be low, it is not low enough for "Z" to
continue to qualify for Medicaid.  He does qualify for Medi-Kids, the
state's SCHIP-funded program for low-income children under five.  "J"
applied and submitted a check for the enrollment fee with her
application.  She received a letter saying that "Z" qualified for the
program, but that he would be placed on a waiting list until the
program reopened.  "Z" has now been on the waiting list two months.

While on the waiting list, "Z" broke his nose at daycare.  "J" took
him to an emergency department, where he was treated and
released -with a $600 bill and instructions to follow up with a
pediatrician.  "J" has not been able to take "Z" to a pediatrician.  A
broken nose can be associated with a deviated septum, which may
require surgical intervention.  Additionally, depending on the damage
to the nasal mucous membranes, nosebleeds with substantial blood loss
can occur.  "Z" has not been assessed since his visit to the emergency
department.

"J" is also worried about getting immunizations for "Z".  In January,
he is due for a series of shots and if he does not receive them, he
will not be permitted to return to daycare and his mother will not be
able to work.


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The Second Report on Children loosing health coverage:


Center on Budget and Policy Priorities, December 22, 2003

OUT IN THE COLD:

Enrollment Freezes in Six State Children's Health Insurance Programs
Withhold Coverage from Eligible Children

By Donna Cohen Ross and Laura Cox

Summary

http://www.kff.org/medicaid/loader.cfm?url=/commonspot/security/getfil
e.cfm&PageID=28333


Facing budget pressures, six states - Alabama, Colorado, Florida,
Maryland, Montana, and Utah - have stopped enrolling eligible children
in their State Children's Health Insurance Programs (SCHIP).  As a
result, tens of thousands of eligible low-income children are going
without health insurance.

The SCHIP freezes mark a threat to the nation's recent progress in
providing health coverage to low-income children.  Between 1997 (when
SCHIP was created) and 2002, increased enrollment of low-income
children in SCHIP and Medicaid caused the share of low-income children
who are uninsured to fall by one third.  Close to 4 million children
receive coverage through SCHIP.  However, roughly 6.8 million
low-income children remain uninsured.

The families affected by the SCHIP freeze generally have incomes
between 100 percent and 200 percent of the poverty line, or between
$15,260 and $30,520 for a family of three in 2003.  (Families with
incomes below these levels are generally covered by Medicaid, which is
not affected by the freeze.)

Three of the six states that have frozen SCHIP enrollment are putting
SCHIP-eligible children on a waiting list.  The other three states
have not established waiting lists; in these states, families are told
that to obtain coverage for their children, they will have to re-apply
if and when enrollment re-opens at some point in the future.  Children
already enrolled in SCHIP can retain their coverage if they recertify
their eligibility and pay any required premiums on time, but in at
least some of these states, those who fall behind on their premiums
and subsequently pay the back amounts owed can be terminated and
placed on the waiting list if they reapply.

Because three of the six states with freezes do not maintain waiting
lists, it is impossible to know exactly how many children nationally
are affected by the freezes.  Florida's waiting list contained more
than 44,000 eligible children as of November 14.

The freezes are producing dramatic inequities in the treatment of
children.  For example:

    * Many of the eligible children who are being denied SCHIP
coverage have lower incomes than children who already are covered by
SCHIP and retain coverage.

    * Normally, children enrolled in Medicaid are transferred to SCHIP
if their family income rises above the Medicaid income limit but
remains below the SCHIP income limit.  In states with enrollment
freezes, however, such children are generally considered "new
applicants" to SCHIP and are subject to the freeze.  For some
families, therefore, even a small increase in income will cause the
loss of their children's health coverage, a development that can
discourage families from accepting promotions or working more hours.

    * In most of the states with freezes, children with incomes
between 100 percent and 133 percent of the poverty line become
ineligible for Medicaid at their sixth birthday.  (This is because
these states have higher Medicaid income limits for children up to age
six than for children ages six to 19.)  Normally, these children are
transferred from Medicaid to SCHIP and remain insured.  In states with
freezes, however, they are considered new SCHIP applicants and are
subject to the freeze.  Thus, they lose coverage.

    * In states with freezes, the freeze generally applies to eligible
newborns as well as other children.  This means these newborns will be
denied coverage despite their vulnerability (and the critical
importance of health care) in their first days and months of life.

This report is based on a survey of state SCHIP officials and child
health advocates in six states that were implementing enrollment
freezes in November 2003.  It is part of a series of surveys conducted
over the last three years by the Center on Budget and Policy
Priorities for the Kaiser Commission on Medicaid and the Uninsured.



Background

Children applying for health coverage under the State Children's
Health Insurance Program (SCHIP) in six states now confront a barrier
they have not faced in the past: Enrollment is frozen, and uninsured
children found to qualify for SCHIP are not being admitted to the
program.  Instead, states are either placing these children on waiting
lists or notifying them that they must reapply if and when enrollment
opens in the future.

Enacted as part of the Balanced Budget Act of 1997, SCHIP has played
an important role in reducing the number of uninsured children.  As of
June 2003, some 3.9 million children were enrolled in SCHIP
nationwide.[1] In addition, a large number of children who have
applied for coverage through SCHIP have been found eligible for
Medicaid and have been enrolled in that program.  Data released by the
Centers for Disease Control and Prevention (CDC) show that enrollment
of low-income children in SCHIP and Medicaid led between 1997 and 2002
to a one-third reduction in the percentage of low-income children who
are uninsured.[2]

Even with this progress, roughly 6.8 million children in families with
incomes below 200 percent of the poverty line remain uninsured.[3]
The emergence of SCHIP enrollment freezes could undermine further
progress toward reducing this number.

This report presents the findings of a survey of state SCHIP officials
and child health advocates in six states that were implementing
enrollment freezes in November 2003.  It is part of a series of
surveys conducted over the last three years by the Center on Budget
and Policy Priorities for the Kaiser Commission on Medicaid and the
Uninsured to track strategies that states are using to facilitate
enrollment in health coverage for children and families.  The survey
found that the enrollment freezes in these states are causing tens of
thousands of eligible children to go without health insurance and are
creating inequities among children.  The enrollment freezes also have
amplified the need for effective outreach efforts aimed at helping
families protect the eligibility of children currently enrolled in
SCHIP in these states; these children stand to join uninsured,
eligible children awaiting admittance into SCHIP if they do not comply
promptly with renewal procedures and keep current on their premium
payments.

Over the past few years, many states have faced their most difficult
budget squeezes in several decades.  These state budget pressures, not
a lack of federal SCHIP funds, have driven the decision to freeze
SCHIP enrollment. Federal funding shortfalls are expected to be a
concern in future years in some states, but none of the states in
question is experiencing a federal SCHIP funding problem at this time.

Various states have faced choices about the extent to which they will
preserve health coverage for children and families. Some states in
which policymakers made a decision to save money by scaling back SCHIP
have judged an enrollment freeze to be less egregious than ratcheting
back the SCHIP eligibility criteria or eliminating health benefits.
Yet enrollment freezes impose significant hardship, as this report
indicates.

States can dedicate new resources to ease or lift an enrollment
freeze, specifically the federal fiscal relief funds allocated to
states last May under the Jobs and Growth Tax Relief Reconciliation
Act of 2003.  This Act provided $20 billion in fiscal relief funds to
the states.  One state with an enrollment freeze - Montana - used a
share of its fiscal relief funds in November 2003 to enroll 1,300
children who had been on the SCHIP waiting list.  The other five
states with enrollment freezes have not availed themselves of this
opportunity.



States With SCHIP Enrollment Freezes and How They Work

The states that had enrollment freezes in effect in November 2003 -
Alabama, Colorado, Florida, Maryland, Montana and Utah - are six of
the 35 states that have used federal SCHIP funds to create children's
health coverage programs separate from Medicaid.  (States that used
their SCHIP funds to expand Medicaid cannot cap or freeze enrollment
of children eligible under the expansion.)  An additional state -
North Carolina - had a SCHIP freeze in place between January and
October 2001, but has since found the funds to keep the path to its
SCHIP program open.  Another state, Tennessee, has frozen enrollment
for some children under TennCare, its Medicaid waiver program.

When a state imposes a freeze, it stops enrolling eligible children in
its separate SCHIP program.  When a family submits an application on
behalf of a child, the process initially proceeds as it would under
normal circumstances.  Under a part of federal law known as the
"screen and enroll" provision, the application is first screened to
assess whether the child qualifies for Medicaid; children found
eligible are enrolled in Medicaid.  Children not eligible for Medicaid
are then assessed to determine whether they qualify for SCHIP.  While
an enrollment freeze is in effect, states deal with these eligible
children in one of two ways:

    * The SCHIP-eligible children are put on a waiting list, as is the
case in Alabama, Florida and Montana, or

    * Families of the SCHIP-eligible children are notified that SCHIP
enrollment is closed and they will have to re-apply on behalf of the
child when enrollment re-opens in the future.  Colorado, Maryland and
Utah proceed in this manner.

At the time that children are told to reapply in the future, families
generally are not given specific information about when the enrollment
freeze will be lifted; families are told to watch for public
announcements of an open enrollment period.  In states with waiting
lists, families are told they will receive notification.

In all six states, children who are already enrolled in SCHIP can
retain their coverage as long as they recertify their eligibility and
pay any required premiums on time.  If their families do not complete
the renewal process on time or if their premium payments are not
received on time, however, the child loses SCHIP coverage and becomes
uninsured.  If the family subsequently re-applies, the child will be
placed on the waiting list or informed that enrollment is closed,
depending on the state.

Generally, all new SCHIP applicants in these states are subject to the
enrollment freeze, with few or no exceptions.  Some states exempt one
or a few specific categories of applicants from the freeze, such as
children of military personnel no longer on active duty who were
previously enrolled in SCHIP.[4]



Ramifications of SCHIP Enrollment Freezes

Enrollment Freezes are Leaving Eligible Children Uninsured

Many families have lost employment as a result of the weak job market,
and with it, their private health coverage.  Other low-income families
whose wages or hours have been cut back may encounter difficulty
keeping up with the premium and other out-of-pocket health care costs
they must pay to retain their private health care coverage.  In short,
the increase in unemployment and poverty of the past few years has
increased the need for publicly funded health insurance programs.  The
SCHIP enrollment freezes, however, are leaving tens of thousands of
SCHIP-eligible children without coverage.


These children live in low-income families, with many of them living
just above the federal poverty line of $15,260 per year for a family
of three in 2003.  Table I presents the income levels of eligible
children who are unable to enroll in SCHIP programs in the six states
as a result of enrollment freezes in effect as of November 2003.

In Florida, where the freeze went into effect on July 1, 2003, more
than 44,000 uninsured children who have been determined eligible for
one of the state's three SCHIP-funded programs were on the waiting
list as of November 14, 2003.

Nationwide, exactly how many children are affected by the freezes is
impossible to quantify since three of the states with freezes -
Colorado, Maryland and Utah - do not maintain waiting lists.  Some
related information is available, however, from Utah:  that state has
lifted its enrollment freeze three times in the two years since its
freeze was first established, and Utah reports that 25,302
applications, representing an estimated 55,043 potentially eligible
children, were submitted during the periods when enrollment was
open.[5]

In addition to the number of children whose families apply but are
turned away because enrollment is closed, there are an unknown number
of children whose families are confused or discouraged by news stories
about the freeze and do not apply.  A particular concern is that a
significant proportion of families discouraged from submitting
applications are likely to have children eligible for Medicaid.  If
such families were to submit an application, the child would have an
opportunity to be determined eligible for Medicaid and would receive
health coverage.  Information that families receive about the freeze
may not highlight this reason to submit an application, even though
SCHIP enrollment is closed.

Not much information is available about the conditions and health
status of the children affected by an SCHIP enrollment freeze, but the
data that are available indicate that while children are on a waiting
list, their health may be compromised and their families may suffer
significant anxiety and financial hardship.

Enrollment Freezes Create Inequities and Hardship Among Children

State policies and procedures being used to implement enrollment
freezes are resulting in sharp inequities and significant hardship
among children eligible for health coverage programs.

    * Higher income children retain health insurance, while some lower
income children become uninsured.  New applicants to SCHIP who are
found eligible may not enter the program until the enrollment freeze
is lifted.  Since current enrollees may have family income up to the
state's SCHIP income limit - approximately 200 percent of the poverty
line in most cases - and a new applicant may have a much lower income,
higher income children are covered during the freeze while some
lower-income children remain uninsured.

      Suppose, for example, a child with family income of 170 percent
of the federal poverty line ($25,942 per year for a family of three)
applies for SCHIP in January when no freeze is in effect and is
enrolled in the program for the next 12 months.  In July, the state
imposes an enrollment freeze.  Shortly thereafter, a seven-year-old
child with family income of 110 percent of the federal poverty line
($16,786 per year for a family of three) applies.  Although the
seven-year-old is eligible for SCHIP, the freeze prevents her from
obtaining coverage, and she is placed on the waiting list.

      The likelihood that such scenarios will occur is increased by
the fact that in five of the six states with SCHIP freezes, children
in families with incomes between 100 percent and 133 percent of the
poverty line (or between $15,260 and $20,206 per year for a family of
three in 2003) become ineligible for Medicaid on their sixth birthday.
(The reason why this happens is explained on pages 7 and 8.)  Children
in this income range have lower incomes than many children already
enrolled in SCHIP in these states.

    * Newborns may be barred from the program and remain uninsured.
Four states that have frozen SCHIP enrollment - Alabama, Florida,
Maryland, and Utah - do not allow any eligible newborns to enroll in
SCHIP.  Colorado and Montana also have generally frozen enrollment for
newborns but make an exception for newborns who have an older sibling
enrolled in SCHIP.  Barring eligible newborns from health coverage is
especially problematic, considering the vulnerability of newborns in
their first days and months of life.  Guidelines established by the
American Academy of Pediatrics call for more frequent well-baby visits
in the first year of life.[6]  Infants born at low-birth weight, or
whose health is otherwise at risk, can require intensive medical care.

    * Children who lose Medicaid coverage because their family income
increases become uninsured.  Under normal circumstances, children
enrolled in Medicaid may "roll over" or transfer into their state's
separate SCHIP program if their family income increases above the
Medicaid income limit but remains below the SCHIP income limit.[7]  In
many states, this transfer occurs without the family having to submit
a new application.

      In states with enrollment freezes, however, such children would
generally be considered "new applicants" to SCHIP and would be subject
to the enrollment freeze.  Thus, a child who has been covered under
Medicaid whose parent secures a better job, gets even a small boost in
pay or has a temporary increase in working hours can find herself
uninsured and placed on a waiting list for health coverage.  As a
result, it can be to a parent's disadvantage to accept a raise or
promotion or to work more hours.

    * Six-year-olds and one-year-olds who previously were enrolled in
Medicaid can become uninsured. Under federal law, states are required,
at a minimum, to cover in Medicaid children under age six whose
families have income below 133 percent of the poverty line and
children ages six to 19 in families with incomes below 100 percent of
the poverty line.  (States with separate SCHIP programs are free to
establish a single Medicaid income limit of at least 133 percent of
the poverty line for children of all ages.  However, as of April 2003,
only seven of the 35 states with separate SCHIP programs - and only
one of the six states with SCHIP freezes - had done so.)  Separate
state SCHIP programs serve children with incomes that are above the
state's Medicaid income limit but below the state's SCHIP income
limit, which often is around 200 percent of the poverty line.

      In states that have higher Medicaid income limits for children
under age six than for children ages six through 19, some children
cease to qualify for Medicaid upon reaching their sixth birthday and
become eligible for SCHIP.  Normally, these children "roll over" from
Medicaid to SCHIP and remain covered.  In states that have a SCHIP
enrollment freeze in effect, however, such children become uninsured
upon turning six, even if their families have complied with all
Medicaid renewal procedures.

      To illustrate the predicament that families are facing, suppose
a family with income at 125 percent of the poverty line - $19,075 for
a family of three in 2003 - has children aged five and eight.  The
five-year-old would be enrolled in Medicaid, while the eight-year-old
would be enrolled in the state's separate SCHIP program.  Upon
reaching the sixth birthday, coverage of the younger child ordinarily
would shift to the SCHIP program.  In most states that have frozen
SCHIP enrollment, however, the six-year-old will lose her health
coverage and be treated as a new SCHIP applicant.  She will be
relegated to a waiting list or told to reapply at a later, unspecified
time when enrollment is open.  The result is that the family has one
child with coverage and one child who is uninsured.  Montana is the
only state with age-based eligibility that has exempted children
"aging out" of Medicaid from its freeze.

      In addition, some states have established a higher Medicaid
income limit for infants (i.e., children under age one) than for
children aged one through five.  In these states, Medicaid-eligible
children can lose coverage upon reaching either their first birthday
or their sixth birthday.[8]



Conclusion

With the emergence of enrollment freezes in six states operating
SCHIP-funded separate programs, we are beginning to see an about-face
in the aggressive efforts to enroll eligible low-income children in
health coverage.  Over the past several years, these efforts have
played a major role in reducing the number of uninsured children and
offsetting much of the loss of private coverage.  The decisions of
some states facing state budget pressures to freeze SCHIP enrollment
and of other states to cut children's Medicaid eligibility or to
institute procedural changes that deter eligible children from
accessing needed coverage has placed this progress in jeopardy.   In
states with SCHIP freezes, children who have been found eligible for
coverage are being left uninsured.  Whether they are placed on SCHIP
waiting list or turned away to reapply at some future date, their
families are left to grapple with the hardships they confront when
they cannot obtain medical attention their children need.

The enactment in late May of $20 billion in federal fiscal relief to
states provided an avenue for states to avert having to take actions
such as imposing SCHIP enrollment freezes.  These six states have not
taken such action.  In addition, by curtailing SCHIP enrollment, these
states are forfeiting the enhanced federal matching funds they could
be claiming to help meet the health needs of these uninsured children.

The likelihood that additional states will impose enrollment freezes
will rise as states begin to face federal SCHIP funding shortfalls
over the next several years.  Unless more federal SCHIP funds are
provided or procedures for reallocating federal SCHIP funds among
states are modified, federal SCHIP funds are projected to be
inadequate to maintain current SCHIP caseloads through 2007 in
approximately nine states.

Waiting lists could also spread to Medicaid if the Administration's
proposal to allow major parts of Medicaid to be converted to a block
grant is adopted.  Under the proposed block grant, federal Medicaid
funding would be capped, and the provision of current law which
requires that all eligible people who apply for Medicaid be enrolled
would be repealed for the components of the Medicaid that the block
grant would replace.  This ultimately could lead to widespread use of
waiting lists for children and other eligible applicants for the first
time in Medicaid's history.

End Notes:

[1] Vern Smith and David Rousseau, "SCHIP Program Enrollment: June
2003 Update." Kaiser Commission on Medicaid and the Uninsured,
December 2003, Publication #4148.

[2] Centers for Disease Control and Prevention, National Center for
Health Statistics, "Early Release of Selected Estimates Based on Data
from the 2002 National Health Interview Survey," June 2003.

[3] Analysis of March 2003 CPS data, Kaiser Commission on Medicaid and
the Uninsured

[4] For specific information on exceptions to enrollment freezes in
these states, see the appendix to the full version of this paper,
which has been published by the Kaiser Commission on Medicaid and The
Uninsured and is available at
http://www.kff.org/medicaid/loader.cfm?url=/commonspot/security/getfil
e.cfm&PageID=28333.

[5] Utah Department of Health, Utah CHIP Open Enrollment Response for
July 28-August 1, 2003, November 7, 2003.

[6] Committee on Practice in Ambulatory Medicine, Recommendations for
Preventive Pediatric Health Care, American Academy of Pediatrics,
2000.

[7] Suppose, for example, a state's Medicaid income limit for a child
age six or older is 100 percent of the poverty line or $15,260 for a
family of three in 2003, and the state's SCHIP program covers children
who are not eligible for Medicaid whose family income is below twice
the poverty line, or $30,520 for a family of three.  A ten-year-old
whose parents earn $14,000 a year would be enrolled in Medicaid.  If
his the child's father gets a better-paying job and the family income
rises to $20,000, the child will no longer qualify for Medicaid but
will be eligible for coverage under the state's SCHIP program.  The
child "rolls over" or is transferred from Medicaid to SCHIP and
remains insured.

[8]  Florida covers infants up to 200 percent of the federal poverty
line in Medicaid while adhering to the federal Medicaid minimums for
older children.  In Florida, infants who reach their first birthday,
as well as children  who turn six, are subject to the freeze.