North Carolina State Children’s Health Insurance Program

Briefing Paper

Problem Statement:

Not all children in North Carolina have equal access to health care.

  • 305,690 children or 13% of all children of North Carolina (<19 years old) do not have health insurance.

•The number of uninsured North Carolina children is increasing and is up from 11% in 2001.

•Uninsured residents result in $30.6 billion dollars of uncompensated costs to our state’s budget.

•This large number of children without health insurance exists after the implementation of the SCHIP program, which has significantly expanded access to care for children in N.C.

Looking more closely at the 305,690 children in North Carolina, 95,502 fall above the upper limit of the eligibility qualifications for both Medicaid and SCHIP (>200% federal poverty level).The remaining 210,188 children who currently qualify for SCHIP or Medicaid coverage remain uninsured, likely due to confusing eligibility requirements and cumbersome enrollment processes.

Background:

The Federal State Children’s Health Insurance Program (SCHIP) was enacted with bi-partisan support in 1997 as part of the Balanced Budget Act ( The goal of SCHIP was to significantly reduce the number of low-income uninsured children, especially those who live in families with incomes exceeding Medicaid eligibility requirements. Unlike Medicaid, SCHIP is not an entitlement to services for beneficiaries but a capped allotment to states. Congress provided a fixed amount—approximately $40 billion from fiscal years 1998 through 2007—to states with approved SCHIP plans. Funds are allocated to states annually. Subject to certain exceptions, states have 3 years to use each year’s allocation, after which unspent funds may be redistributed to states that have already spent all of that year’s allocation (

Options:

We researched this issue extensively and present the following policy alternatives to address the problem of children without health insurance in North Carolina.

Policy Alternatives

Type / Statement / Pros / Cons
Cost-benefit / Reduce redundancy by eliminating the separate SCHIP program and expanding the Medicaid entitlement program. Utilize existing administrative and record keeping infrastructure of the public school system to simplify enrollment process. /
  • Simplifies a complex system
  • Reduces redundancy
  • Potential for significant cost reduction
/
  • Major upheaval of existing system
  • Potential for significant burden on already taxed schools
  • Possible initial cost increase due to restructuring
  • Possible loss of jobs or changes in pay scale for Medicaid and SCHIP case workers

Analogous Circumstance / Adapt the policy background for the VA Hospital System by establishing children’s care centers strategically around the state. /
  • Establishment of consistent care centers for children which could help keep costs down
  • Potential for reduction in attrition due to centralized record keeping (easier to follow up with lost kids)
/
  • Major up-front costs to set up care centers
  • Potential temporary increase in enrollment caps due to up front costs
  • Potential temporary rise in uninsured kids

Analogous Circumstance / Adapt one of the state plan’s that extends access to coverage to all children under 19 years old and includes cost-sharing. /
  • Quality affordable coverage available to ALL children
  • Adaptation of current system, no major upheaval
  • Money to cover costs generated by minimal premiums charged to enrollees
/
  • Potential increase in cost sharing by enrollees

No action / Keep SCHIP and Medicaid the same and instead help those who do not qualify but cannot afford private insurance find cheaper options. /
  • No changes to current system
  • Potential for new job creation to bring people in to help those who do not qualify for SCHIP find other affordable coverage
/
  • Putting more on an already taxed system
  • Potential for cost increase to cover the extra work and new jobs

Goals:

  1. To make good, affordable health coverage available to all children in North Carolina through changes to the current SCHIP program that will simplify eligibility and enrollment procedures
  2. To reduce the number of uninsured children in North Carolina by 90% in the next five years
  3. To improve the health of North Carolina’s children by increasing adherence to recommended preventive care and health screenings by 75% in the next five years

Recommendations:

The Muckrakers Policy Consulting Group recommends an adaptation of the All Kids program in Illinois for implementation in North Carolina. The basis for the recommendation is a fourfold reasoning structure.

First, this option makes possible to achieve our major goals; the most important of our goals is to extend affordable coverage to all children in the state of North Carolina, which the All Kids plan does. Additionally, it makes the eligibility process absolutely clear—everyone is eligible—thus simplifying enrollment.

Secondly, preventive care is highly emphasized—no co-pay is required for preventive care—which will save money for the state in preventing future chronic illness.

Thirdly, because cost sharing is utilized, the structure of the program simultaneously helps fund itself and quells debate. It also utilizes existing infrastructure from the Medicaid program, which the Office of the State Auditor showed recently could save nearly $16 million (Bonner, Raleigh News & Observer, 7/25).

Finally, the plan addresses concerns regarding crowd out. The sliding-scale monthly premiums are capped, but for higher-income families they are sufficiently costly enough to make private plans competitive for those who can afford them. Additionally, a 12 month mandatory waiting period after dropping employer-based insurance is part of the plan (with exceptions for job loss). These features coupled together significantly reduce concerns about crowd out.

Contact:

Team Muckrackers

Resources for Additional Background Information

Websites

Kaiser Family Foundation’s History of SCHIP

Fact Sheets on SCHIP policy by state

North Carolina Health Choice For Children (NCHC)—North Carolina’s SCHIP Policy

National SCHIP Policy Site

Current Status of SCHIP:

The Lewin Group’s Report on NCHC

Kaiser Family Foundation’s Health Facts by State:

Federal Restrictions on States’ Health Insurance Restrictions is Illegal:

United States Government Accountability Office

SCHIP Veto Override Failure on CNN

Bev Perdue on Health Care:

Hillary Clinton on Health Care:

Barack Obama on Health Care:

Commonwealth Foundation Report on SCHIP expansion (pre-veto)

NCHC Information Site:

Monthly SCHIP Enrollment Data in North Carolina, DHHS:

Fact checking on President Bush’s SCHIP veto speech:

Short NCHC Information Page, DHHS:

Local report showing increase in uninsuredness in North Carolina

Appendix A

Key Stakeholders & Interests:

  • Business and industry such as; Private health insurance industry, NC BCBS, HMO’S employers who want to buy into SCHIP, Hospitals, Private medical (pediatric and family practice) offices, Pharmaceutical industries, State/county health depts., Cigarette industry (NC Gold leaf foundation)
  • Health Care providers, Members of AMA, AAP, ADA, AAPD nursing associations and all other allied health care associations.
  • Public Interest groups County and community health ctr. Directors advocating for their patients who are most often in marginalized groups.
  • Media, community based organizations, advocates of children’s’ health, parents of enrolled children
  • Government officials and lobbyists such as; State congressional delegates, state legislature, congress, state governors, state medical directors, county health officers, The private health insurance industry, employers who want to buy into the SCHIP program.

Demographic comparison: North Carolina and three states with universal coverage for children.

North Carolina / Massachusetts / Illinois / Tennessee
Population / 8,856,505 / 6,437,193 / 12,831,970 / 6,038,803
% 18 & under / 24.30% / 22.50% / 25.10% / 23.90%
Number uninsured kids / 305,690 / 83,009 / 306,805 / 118,143
% uninsured kids (of all kids) / 14.20% / 5.73% / 9.53% / 8.19%
Average family size / 2.98 / 3.11 / 3.23 / 2.48
Median Family Income / $40,863.00 / $53,657.00 / $47,711.00 / $38,945.00
% below FPI / 13.80% / 9.90% / 11.90% / 15.00%
% white (non Hispanic) / 67.90% / 80.00% / 65.30% / 77.50%
% black / 21.70% / 6.90% / 15.00% / 16.90%
% Hispanic / 6.70% / 7.90% / 14.70% / 3.20%
% other / 3.70% / 5.20% / 5.00% / 2.40%
Persons per sq mile / 165.20 / 809.8 / 223.40 / 138.00

Appendix C

Cost Estimates for Proposed Policy

Estimated costs of proposed changes in North Carolina.

Total SCHIP Expenditures, FY2007
NC
State Share / $55,075,942
Federal Share / $166,646,858
Total Expenditure / $221,722,800
SCHIP per child estimate, 2007
state / $360.08
federal / $1,089.52
total / $1,449.60
additional amount necessary to cover all uninsured (305,690 individuals)
state / $110,073,386.18
federal / $333,056,200.05
total / $443,129,586.23
additional amount to cover all currently qualifying (>200%FPI) (210,188 individuals)
state / $75,684,860.14
federal / $229,004,601.31
total / $304,689,461.45

From KFF’s statehealthfacts.org. Remainder shows extrapolations from available data estimating amount spent per current SCHIP enrollee and additional amounts necessary to cover currently uninsured children in North Carolina. Stratified by state vs. federal dollars.

Appendix D

Policy Alternative Evaluation Criteria:

The following criteria were used to determine the potential viability of our policy alternatives:

  • Technical feasibility
  • Throughout the implementation of changes to the North Carolina healthcare system, measures must be taken to ensure the absence of both types I (implementation) and type II error (theory).
  • Congruence with values of community
  • We based some of our assessments on whether the changes proposed reflect the values of the citizens of North Carolina.
  • Anticipation of future constraint
  • Using a costs/benefits analysis, we determined whether the State budget for SCHIP, coupled with the matching Federal funds, will cover proposed changes.
  • Politicians’ receptivity
  • We have determined that an appropriate policy window is opening to make significant changes in healthcare in North Carolina, based on current proposed legislation and recent statements from state legislators and administrators.

Post-implementation Evaluation Criteria:

We recommend the following criteria to be analyzed after implementation of the proposed policy change:

  • Percentage of children without health insurance
  • This analysis should include determination of the number of children were previously ineligible for health insurance and obtain coverage under the new plan.
  • Percentage of children utilizing preventive services
  • This assessment should be based on number of children who have received well visits and who are current with immunizations.
  • Assessment of parental productivity
  • A sample should be taken to estimate number of missed parental workdays due to childhood illnesses such as asthma, which can be minimized with improved preventive care.
  • Determination of incidence of preventable childhood chronic illnesses.
  • Over time, measures should be taken to assess the incidence of chronic childhood illnesses that can be prevented with routine well-child care, such as obesity-related conditions.

It is recommended that these criteria be assessed at the beginning of the program evaluation and annually for the next five years.

Appendix E

Logic Model (Muckrakers Policy Consulting Group)

SCHIP expansion in North Carolina.

Community needs / Goals / Inputs / Activities / Outcomes
305,690 (13%) children in NC are uninsured. / The goal of the Muckrakers policy consulting group is to advise the Governor on how to implement changes to the current SCHIP program that will:
1.Simplify intake process and expand SCHIP eligibility to include all NC children
2.Decrease the number of uninsured children in North Carolina by 90% in the next 5 years.
3.Increase the general health of NC children by increasing utilization of preventive services by 75% within the next 5 years / 1.Six Muckrakers members
2.Program staff
3.Stakeholders (inside and outside government)
4.Key community volunteers
5.Advisory committee
6.Financial and material resources / 1.Stakeholder meeting with NC legislature to push for policy changes
2.Develop new staff SCHIP manual working with program staff at NC DHHS
3. Develop, coordinate and establish outreach into rural and suburban communities in NC
4. Training of key community volunteers by program staff
5.Develop and pilot data base specifications on the number of insured versus uninsured children in NC
6. Distribute applications for SCHIP sign up at the start of the school year in schools and other strategic community locations. / 1.NC legislature approve policy change to increase funding allocation to SCHIP to cover all children in NC
2. Increased financial resources to fund SCHIP program
3. Key community volunteers increase awareness of parent stakeholders on expanded eligibility guidelines
4. Staff effectively utilize insured/uninsured children data base for program evaluation
5. Increased number of uninsured children served across the state as shown by data base information
6. Increased number of healthy children with a medical home in NC
7.Increased economic productivity of NC parents