The House/Senate conference on the Balanced Budget Act approved a total of nearly $40 billion to be used over the next 10 years to fund an expansion in health care coverage of children. The conference report creates a new Title XXI of the Social Security Act, which guarantees a federal appropriation for this purpose for each year beginning in FFY 98 and continuing through FY 2007. States, including the District of Columbia, can use the new funds either to expand Medicaid eligibility for children, with an enhanced federal match for the expansion population, or to purchase other health coverage, or both. The details of the program are as follows:
Funding is set at $4.275 billion per year for each of the next four fiscal years, beginning in FY 98. The appropriation drops to $3.150 for FYs 2002, 2003, and 2004, then increases to $4.050 for FYs 2005 and 2006, and $5 billion for FY 2007. These appropriations are guaranteed to the states without separate congressional action each year.
The formula for allocation among the states changes over time. For FYs 98–2000, the secretary will calculate, for each state, a figure equal to the number of uninsured low-income children (below 200 percent FPL) in the state multiplied by a cost factor for that state. (The cost factor is a formula based on annual average wages in a state compared to national average.) These calculations are then summed up, to get the national total. The ratio of the state’s number, compared to the national number, expressed as a percentage, is the state’s share of the national appropriation.
In FY 2001 the formula changes, to be 75 percent uninsured low-income children and 25 percent low-income children (regardless of insurance status). The formula is modified a third time, beginning with FY 2002, to be weighted equally between the numbers of uninsured low-income children and low-income children.
There would be a minimum grant of $2 million for each state. Some of the appropriation is set aside for allotments to Puerto Rico, Guam, the U.S. Virgin Islands, American Samoa, and the Northern Marianas.
Unused portions of a state’s annual allotment can be carried forward, for up to three years, after which they are redistributed.
Federal share of all expenditures, whether enhanced Medicaid or other, is at a rate calculated for each state by:
A state with a regular FMAP of 60 percent, for example, would have a federal matching rate under the new Title XXI of 72 percent (30 percent of 40 percent, or 12 percent, added to 60 percent).
Expenditures charged to the allotment include the cost of the health insurance, the cost of medical assistance for children made eligible for Medicaid under the expansion authorized by Title XXI, direct reimbursement to providers for care of a child, outreach activities, and administrative costs. The amount claimed for costs other than health insurance or Medicaid, however, is limited to an amount equal to the sum of the health insurance and Medicaid expenditures. Health insurance coverage may include coverage of abortion only if necessary to save the life of the mother or if the pregnancy is the result of an act of rape or incest.
A state may purchase family coverage, rather than just child coverage, under a group health plan or other health insurance if the state demonstrates, to the satisfaction of the secretary, that it is cost effective to do so.
Eligible children are those not eligible under the state’s regular Medicaid program, and are not covered under a group health plan or has health insurance coverage (as defined in Section 2191 of the Public Health Service Act). The family incomes must be below 200 percent of the federal poverty level, or not more than 50 percentage points above the state’s Medicaid eligibility ceiling (as of June 1, 1997), whichever is higher. For example, if the state Medicaid program covers children up to 185 percent of the FPL, that state could use Title XXI funds to cover children up to 235 percent of the FPL. A child is not eligible if the child is an inmate of a public institution, a patient in an institution for mental diseases, or a child who is a member of a family eligible for health benefits coverage on the basis of a family member’s employment with a public agency in the state.
The benefit package for the child health insurance program must be equivalent to:
The child health insurance plans currently offered by Florida, New York, and Pennsylvania are deemed to meet this requirement.
A state Medicaid maintenance of effort (MOE) is required. The state may not adopt Medicaid eligibility income and resource standards, and methodologies that are more restrictive than those applied as of June 1, 1997.
Other relationships to the Medicaid program include application of a number of Title XIX provisions, including those relating to provider taxes and donations, and certain criminal and civil monetary penalties. Section 1115 waiver authority is also available.