Evolution of a Children's Health Insurance Program: Lessons From New York State's Child Health Plus
The State Children's Health Insurance Program (SCHIP) was passed by Congress in 1997. It provides almost $40 billion in federal block grant funding through the year 2007 for states to expand health insurance for children. States have the option of expanding their Medicaid programs, creating separate insurance programs, or developing combination plans using both Medicaid and the private insurance option. New York State's child health insurance plan, known by its marketing name Child Health Plus, was created by the New York Legislature in 1990. New York's program, along with similar ones from several other states, served as models for the federal legislation, especially for state health insurance plans offered through private insurers. New York's program provides useful data for successful implementation of SCHIP.
When Congress passed the State Children's Health Insurance Program (SCHIP), Title XXI of the Social Security Act,1 in August 1997, it effectively shifted more responsibility for health care reform and resolution of the issue of children's access to health insurance to the states. The SCHIP legislation allows states some flexibility in the design of their programs. Thus, the states have become the primary breeding ground for new approaches to insuring children. Established SCHIP-like programs provide the opportunity to examine the effectiveness of a variety of approaches to improving access to high-quality health care for children.
New York State's Child Health Plus program (CHPlus) was created in 1990.2,,3 This article describes the history and design of CHPlus, offering insight into one option available to states as they implement SCHIP—that is, developing a new program to complement a state Medicaid plan.
SCHIP provides states with $24 billion over 5 years and almost $40 billion through the year 2007 to expand health insurance for children. Title XXI allows states 3 options in implementing SCHIP: 1) expanding Medicaid, 2) creating a separate program that provides coverage through private insurers, or 3) a combination of the Medicaid and private insurer approaches.4,,5
Each option poses dilemmas for the states. Title XXI effectively established SCHIP as an entitlement for the states, but not for individuals. Medicaid, on the other hand, creates an entitlement for those children who meet eligibility requirements, and states choosing Medicaid expansion to implement SCHIP must meet Medicaid benefit and cost-sharing requirements. Although states building on Medicaid may find efficiencies in administration, the implementation of SCHIP based on Medicaid runs the risk that additional state funding may be necessary to match federal Medicaid funds once the federal SCHIP allotment is exhausted. Although, in theory, states can seek a Section 1115 Medicaid waiver from the Health Care Financing Administration (HCFA) to minimize this risk, HCFA has requested that states delay such requests pending greater experience with Title XXI.6 A further potential drawback to implementing SCHIP by expanding Medicaid is the stigma associated with Medicaid as a welfare program. Many of SCHIP's beneficiaries will be from working families and such a stigma may discourage enrollment. Additionally, the Medicaid expansion option for SCHIP offers enrollees a single choice, while the private insurers model may offer enrollees a choice of plans.
States choosing to implement SCHIP by creating a new program that uses plans offered by private insurers have greater flexibility. A state can fashion its own SCHIP eligibility requirements and benefit package as long as Title XXI requirements for targeting low-income children and limiting cost-sharing are met. A new program, however, may require a new infrastructure to support its implementation. If the costs for the new program exceed the federal SCHIP funds allotted to the state, the state may have an obligation to eligible children even after all Title XXI funds allotted to the state have been exhausted, necessitating either long waiting lists or additional state appropriations to meet demand.4
SCHIP requires that states agree to maintain their Medicaid programs at June 1997 levels. States also must maintain other state spending on children's health insurance at 1996 levels.1 These provisions are included in SCHIP to prevent states from shifting state expenses onto programs for which federal funds are available. At the same time, states as well as HCFA are concerned that SCHIP may encourage families of children covered by private health insurance to switch to publicly funded programs, a phenomenon typically called crowd out. SCHIP is likely to be watched closely for its effects on sources of coverage for eligible children.
New York State's CHPlus
New York State's child health insurance program, known by its marketing name CHPlus, was created by state legislation in 1990,2 one of a series of state initiatives addressing lack of health insurance.7 The overall goal for CHPlus was to provide comprehensive outpatient health care services to low-income children. Legislative objectives for the program are to: 1) provide primary and preventive health insurance coverage to low-income children by removing financial barriers to purchasing such coverage through an individual subsidy program; 2) increase eligible children's access to primary and preventive health care services; 3) improve the health status of children participating in the program, and 4) reduce and target outpatient bad debt and charity care expenditures more efficiently in New York State.8
Funding for CHPlus
Like programs before it, CHPlus funds come from New York's Statewide Bad Debt and Charity Care Pool. An initial annual appropriation of $20 million from the pool covered subsidized insurance for eligible children, as well as marketing and outreach activities.2 Enrollment fees and premiums paid on behalf of children not eligible for full subsidy (initially $25 per child per year, with $100 maximum per family per year) provide additional funding. Subsequent legislation has authorized additional funds from the Statewide Bad Debt and Charity Care Pool to cover the administrative costs incurred by the New York State Department of Health (NYSDOH) related to the program as well as age eligibility and benefit expansions (see Table 1).
Eligibility for CHPlus Subsidy
Eligibility for CHPlus is based on 4 criteria: 1) the child's age, 2) residence, 3) household income, and 4) health insurance or Medicaid status. In the original legislation, CHPlus was available only to children <13 years old2; the maximum age of eligibility increased over several years until 1997 when it was increased to children under 19 years old. Additionally, children must be residents of New York State, must reside in a household having a net income at or below 222% of the nonfarm federal poverty level, must be ineligible for Medicaid, and must not have equivalent health care coverage.
Eligible children receive state subsidy of part or all of the cost of the health insurance premium. Children from families whose income is below 160% of the gross federal poverty level and who meet the other eligibility criteria, receive full subsidy. Children who are otherwise eligible whose family incomes are between 160% and 222% of the gross federal poverty level are eligible for partial subsidy of premiums. Children who are not Medicaid-eligible, have no equivalent health coverage, but whose household income exceeds income eligibility level, can purchase CHPlus for a premium cost set by the Commissioner of Health.
New York State designed CHPlus with several ways to deter crowd out. Most important was requiring that children be uninsured or without equivalent coverage by other health insurance. Equivalent coverage for CHPlus purposes is defined as coverage for primary health care services provided in a physician's office or other outpatient sites, which is consistent with the CHPlus benefit package.2 Even if such insurance plans do not include prescription drug or preventive care services, they are considered equivalent coverage for purposes of this definition.
Statutory criteria stipulate that any child eligible for Medicaid is not eligible for CHPlus. Early in CHPlus, insurers interpreted this to mean that children not actually enrolled in Medicaid could be enrolled in CHPlus if they met income eligibility requirements. Over time, however, insurer scrutiny of Medicaid eligibility has tightened. Because concurrent enrollment of a child in both Medicaid and CHPlus is not allowed, insurers must assess CHPlus applicants for Medicaid eligibility based on household income. Insurers refer children apparently eligible for Medicaid to the appropriate local County Department of Social Services. Households with a CHPlus-enrolled child may qualify for Medicaid via spending down (ie, paying for medical expenses, including CHPlus-related costs, to reduce their income) to Medicaid eligibility.
Children who are eligible for CHPlus receive a standard health insurance benefit package. Until December 31, 1996, benefits covered were outpatient visits, including routine well-child visits, laboratory tests, diagnostic radiographs, prescription drugs, emergency department services, and outpatient alcohol and substance abuse services (Table 2). Beginning in 1997, CHPlus added coverage for inpatient care.
Insurer Selection Process
In September 1990, organizations meeting the statutory criteria for CHPlus sponsors were invited by the NYSDOH to submit proposals to implement CHPlus; 1600 qualifying organizations received the request for proposals (RFP) for this noncompetitive submission.8 The NYSDOH received only 9 proposals representing 15 insurers in response to the RFP. Only not-for-profit insurers (ie, Blue Cross/Blue Shield), health maintenance organizations, and comprehensive health services plan providers submitted proposals. None was received from commercial insurers despite attempts by the NYSDOH and the New York State Insurance Department to encourage them.8
There was wide variation in the premiums requested in insurers' proposals for CHPlus. During the review process, the NYSDOH and the New York State Insurance Department worked with insurers to modify premiums, while at the same time, maintain the fiscal viability of the program. NYSDOH established a risk-sharing arrangement to protect insurers from major financial risk while ensuring the appropriate use of state funds. The risk-sharing between the state and insurers covers medical expenses only. Finally, proposed marketing plans were examined for cost, effectiveness, and interaction with community-based networks to ensure strong grassroots outreach and sensitivity to different communities.8
An important element of CHPlus was a requirement in the original legislation for a comprehensive evaluation of the implementation and effectiveness of CHPlus by an outside person or party (ie, not a state employee, official, or agency).2,,3 Questions to be addressed in the evaluation included the effects of CHPlus on access to, utilization of, and quality of care, health status, emergency department use, and community-based and statewide outreach and education efforts related to program enrollment.2
A RFP from the NYSDOH in May 1993 resulted in a contract with the University of Rochester's Child Health Studies Group for the evaluation, and results of the statewide evaluation are published elsewhere.3,,9 This supplement to Pediatricssummarizes a separate study, performed in the 6-county region in upstate New York, and funded by The David and Lucile Packard Foundation and the Monroe Plan for Medical Care. The statewide CHPlus evaluation used methods similar to those used in this study.10
Enrollment in CHPlus
Enrollment in CHPlus started slowly. In 1989, the rate of New York State children without health insurance was estimated to be 8.7%; 19.2% more received Medicaid; the rate of those without insurance increased to 10.7% by 1992.3,,9 The CHPlus legislation projected 37 000 enrolled children in the first year; in fact, by the end of 1991, 16 319 children had been enrolled.3,,9 Slow enrollment was in large part attributable to enrollment caps maintained by insurers as they projected the number of enrollees available funds would support.3 With more funds and expanded age eligibility, enrollment growth increased somewhat, reaching 71 031 children by 1993.3 By August 30, 1997, enrollment statewide exceeded 140 000 children,11 and after the major expansion in 1997, enrollment has doubled.
CHPlus and SCHIP
CHPlus is the basis for New York State's SCHIP submission to the HCFA. Under Title XXI requirements, New York State's CHPlus as well as similar programs in Florida and Pennsylvania are eligible to be those states' SCHIP plans. Technically the Title XXI requirements are for these states to maintain their state-only programs.1CHPlus meets many of the minimum SCHIP requirements, including age and income eligibility. Additionally, New York State has chosen to use its allotment of federal SCHIP funds, an estimated $256 million annually, to expand CHPlus beyond the SCHIP's family income requirement of 200% of the federal poverty level, to include children in families whose income is up to 250% of the federal poverty level by July 1, 2000.12 On April 1, 1998, CHPlus was approved by the HCFA as New York State's SCHIP submission.13
There is much to learn from New York State's experience with CHPlus. Although the evaluation described here examined the early years of CHPlus, it appears that New York State's partnership with private insurers has been a successful means of insuring uninsured children. Using private insurers to handle much of the program's implementation removes the burden of instituting a new program from public resources.
In New York State, advocacy from physicians played an important role in shaping CHPlus. Through the involvement of the American Academy of Pediatrics—Division II (New York)—in the Campaign for Healthy Children, physicians were instrumental in the passage of the initial CHPlus legislation in 1990, and in the major expansion and revision in 1997. In 1998, pediatricians and other physicians have been instrumental in convincing Governor Pataki and the New York State legislature to agree to expand CHPlus beyond the scope of the program as submitted to HCFA for SCHIP approval.14 The original CHPlus benefit package did not include routine hearing, vision, and dental care, which parents reported were among the most problematic gaps in CHPlus coverage for families and children.3Extensive advocacy efforts by pediatricians and child advocacy groups successfully encouraged the state legislature and Governor Pataki to expand the benefit package to include emergency, preventive, and routine dental care; speech and hearing services; emergency, preventive and routine vision care; inpatient mental health alcohol and substance abuse services; and durable medical equipment, hearing devices, wheelchairs and leg braces. These benefits as well as a raise in family income levels for CHPlus eligibility became effective on January 1, 1999.15
Physicians, especially pediatricians, have had an important role with respect to the evaluation of CHPlus, and can have a critical role in the evaluation of SCHIP programs. Under the provisions of Title XXI, Section 2108, federal law requires states to evaluate various aspects of their SCHIP plans. Requirements include assessing the numbers of covered children; the effectiveness of the state's plan in such areas as demographics of children served, and quality, amount, and level of assistance; and coordination with other public and private programs for children.1 States could meet these evaluation requirements although a number of approaches. Physicians would add credibility to those asking states to evaluate their SCHIP plans with rigorous, scientific methodology, conducted by an independent, third party.16
- SCHIP =
- State Children's Health Insurance Program •
- CHPlus =
- Child Health Plus •
- HCFA =
- Health Care Financing Administration •
- NYSDOH =
- New York State Department of Health •
- RFP =
- request for proposals
- ↵Balanced Budget Act of 1997, Public Law 105-33, Subtitle J—State Children's Health Insurance Program
- ↵New York State Public Health Law, Article 25, Title I-A, Child Health Insurance Plan (Chapters 922 and 923 of the Laws of 1990), as amended
- ↵Szilagyi PG, Zwanziger J, Rodewald LE, et al. Evaluation of Child Health Plus in New York State. Albany, NY: Department of Pediatrics, University of Rochester; 1996
- Rosenbaum S,
- Johnson K,
- Sonosky C,
- Markus A,
- DeGraw C
- ↵Robert Wood Johnson Foundation. Expanding health insurance for children: Congress passes bucks to the states. Advances. 1997;4:1–2. http://www.rwjf.org./library/97_4_2.htm
- Center for Health Policy Research
- Holl JL,
- Dick AW,
- Shone LP,
- et al.
- ↵New York State Department of Health. Child Health Plus Health Plan for Kids: Annual Report 1991. New York, NY: New York State Department of Health; 1991:5
- Szilagyi PG,
- Zwanziger J,
- Rodewald LE,
- et al.
- Szilagyi PG,
- Shone LP,
- Holl JL,
- et al.
- ↵New York State Department of Health. State Child Health Plan under Title XXI of the Social Security Act, State Children's Health Insurance Program. New York submission to the Health Care Financing Administration. http://www.health.state.ny.us/nysdoh/child/chcont.htm
- ↵George Pataki, Governor. Child Health Plus Program reaches milestone. Press release, July 22, 1998. http://www.state.ny.us/governor/press/july232_98.htm
- ↵Health Care Financing Administration, HCFA Press Office. HHS approves New York plan to insure more children. Press release, April 1, 1998. http://www.hhs/gov/news/press/1998pres/980401b.html
- ↵George Pataki, Governor. Child Health Plus expansion means healthier kids. Press release, June 18, 1998. http://www.state.ny.us/governor/press/june18_2_98.htm
- ↵George Pataki, Governor. Governor Pataki signs expanded Child Health Plus legislation: nation's largest best health insurance program for children gets even better. Press release, September 24, 1998. http://www.state.ny.us/governor/press/sept24_1_98.htm
- Szilagyi PG,
- Holl JL,
- Rodewald LE,
- et al.
- Copyright © 2000 American Academy of Pediatrics