Researchers: Medicaid Should Be Expanded to Cover All U.S. Children

The Medicaid program, together with the Children’s Health Insurance Program (CHIP), remains a core source of health insurance coverage for the care of children in the United States, insuring about 35 percent of all U.S. children. But it has important limitations, as a team of healthcare policy researchers notes in an article published in The New England Journal of Medicine online on Dec. 31, 2020.

“Medicaid and Child Health Equity” is authored by James M. Perrin, M.D, Genevieve M. Kenney, Ph.D., and Sara Rosenbaum, J.D. Perrin is a physician at the MassGeneral Hospital for Children and Harvard Medical School. Kenney is at the Urban Institute. And Rosenbaum is with the Milken Institute School of Public Health at George Washington University.

The authors write that, “For children, no other insurer has equaled Medicaid’s comprehensive coverage and cost-sharing protections. But Medicaid, even as enhanced by CHIP, also has important limitations. Means testing restricts eligibility, and low provider payments create access problems for enrollees. Furthermore, federal Medicaid funding is tied to state spending. Even in normal times, this funding scheme places a substantial burden on states. But these are not normal times, and the Covid-19 pandemic has exposed many deep fissures in the U.S. health system.”

In that regard, they write that, “Making government health programs work better will be a priority for a new president. The fact that so many children depend on Medicaid makes this transition an especially valuable time to look closely at the ways in which reform could improve the program’s effects on child health. We believe that the imperative to achieve racial and socioeconomic health equity in the United States demands structural changes to Medicaid to make access universal for children, ensure stable and adequate funding, and address Medicaid’s historically low payment rates.”

What’s more, the researchers state, “In approaching reform of Medicaid coverage for children, it’s instructive to consider the program’s original purpose and its evolution. Established as a companion to Medicare, Medicaid was part of a landmark national health reform effort. Medicare was conceived as a universal social insurance program, whereas Medicaid was designed to help the poor and medically indigent. Medicaid for children was thus primarily tied to cash welfare assistance; restrictive rules and low welfare payments excluded millions of poor children. Some states opted to extend coverage to additional needy children, as the law establishing the program permitted, but the real push to extend Medicaid to all poor children began only in the early 1980s and wasn’t completed until the turn of the 21st century.”

The authors cite three areas that they believe that federal and state healthcare policymakers should examine: Medicaid’s financial-eligibility rules related to income and disability; the requirement that state governments fund a portion of Medicaid; and the chronically low payment rates to providers.

As they write, because of “Medicaid’s financial-eligibility rules for children remain tied to low income or disability, children enrolled in the program are therefore overwhelmingly poor or near poor, and the conditional nature of Medicaid coverage leaves millions of children without health insurance. The landscape of poverty in the United States also means that Medicaid disproportionately covers Black, Native American, and Latinx children. As long as Medicaid nearly exclusively targets the poorest children,” they argue, “it’s too easy for enrollment in the program to be stigmatized. Such stigmatization disadvantages children who also experience the effects of structural racism and systemic economic inequities and who are at risk for the physical, mental, and developmental health problems to which inequity contributes.”

What’s more, they write, “[T]he requirement that states fund a portion of their Medicaid programs creates additional challenges for a program targeted to the poorest children, with the gravest economic and health needs. In contrast, Medicare is fully federally financed. To keep Medicaid spending under control, states have routinely used strategies for limiting enrollment or keeping per capita spending low. The pandemic-induced economic disaster that so many states now face has placed increased budgetary pressure on Medicaid programs.”

And there is the perpetual issue of reimbursement. As the authors note, “Medicaid’s low physician payment rates, which average about two thirds of rates paid by Medicare for the same services, depress physician participation. Although as a group, pediatricians are more likely than other primary care providers to accept Medicaid, participation levels are still well below those for commercial insurance. Furthermore, participating clinicians often place limits on the number of Medicaid-covered children that they will accept into care.3 Both the federal government and state governments haven’t consistently enforced the federal requirement that Medicaid provide payments that are high enough to ensure that people with Medicaid coverage have as much access to care as people with commercial insurance, and the U.S. Supreme Court, in Armstrong v. Exceptional Child Center, Inc., denied providers the right to directly challenge states’ failure to enforce this requirement. Many areas lack community health centers and public hospital clinics, and families without access to these facilities report difficulty finding private physicians who are willing to see additional Medicaid-covered patients. Lack of access to specialists poses additional problems in many communities. Hospitals that are more affluent may limit the number of Medicaid beneficiaries they treat, which concentrates the care of these patients in community ‘safety-net’ institutions.”

The authors write that “We believe that Medicaid should be expanded to cover all children from birth through 21 years of age. Among children with employer-sponsored coverage, Medicaid would serve as a secondary payer for those whose special health care needs exceed limits on care imposed by plans. We also believe that the federal government should assume full financial responsibility for Medicaid for children, which would ease the fiscal pressures that cause states to reduce enrollment or impose burdensome renewal requirements. Finally, to lessen stigma and increase provider participation, Medicaid payments should parallel national Medicare standards.”

In terms of the practical details, they write that “These changes could be phased in over time, as has been the case with previous Medicaid reforms focused on child health. Children are a low-cost population to insure, and investments during childhood shape health and economic trajectories in adulthood. Making Medicaid universal and federally funded would enable states to focus on initiatives that improve health care quality as well as those that enhance integration of health care, education, and social services for all children. Such changes would especially benefit children with heightened health and social needs, such as those with severe mental illness and those in the child welfare system. Even more important, universalizing Medicaid represents a key strategy for achieving greater fairness for Black, Latinx, and Native American children, who have historically experienced grave health inequities.”