Executive Summary
Sixty-two percent of uninsured children qualify for but are not enrolled in Medicaid or the State Children's Health Insurance Program (SCHIP). Similarly, two-thirds of uninsured, poor parents qualify for Medicaid but are not enrolled. Auto enrollment could reach many of these uninsured families. Under this strategy, eligible parents and children receive health coverage based on information already in the hands of state officials, rather than through full, formal applications for Medicaid or SCHIP.
Similar auto-enrollment strategies have achieved remarkable success with other public and private benefit programs. For example:
- With retirement savings programs, 10 percent of eligible workers enroll if they must establish Individual Retirement Accounts on their own, and about one-third participate when their employers offer the option to enroll into 401(k) retirement accounts. By comparison, 90 percent of eligible workers participate in 401(k) accounts when they are automatically enrolled by their employers unless the workers actively decline participation.
- Medicare Part B, into which seniors are enrolled automatically unless they decline participation, covers 96 percent of eligible seniors. By contrast, the Medicare Savings Programs, for which low-income seniors must apply to receive assistance with cost-sharing and premiums, reach no more than 33 percent of the eligible population.
- The drug discount card that was the first benefit to be implemented under the Medicare Modernization Act of 2003 (MMA) included a $600 subsidy for low-income seniors. In states where seniors automatically received this benefit if they had participated in previous subsidy programs, 80 to 90 percent of eligible seniors enrolled. In states where seniors were required to apply for the new benefit, only 4 to 20 percent of eligible seniors enrolled.
- Since 1991, school districts participating in the National School Lunch Program (NSLP) have had the option to provide free meals based on direct certification, through which children receive NSLP based solely on the findings of Food Stamp and cash assistance programs. In the 61 percent of districts that used this option in 2001–02, 43 percent of all children approved for free meals were enrolled either through direct certification, without any application for NSLP by their parents, or through other mechanisms that grant free meals based on income determinations of other programs. Direct certification lowered administrative costs, reduced the proportion of ineligible children receiving free meals, and increased the number of eligible children receiving free meals. Based on this success, Congress passed legislation in 2004 requiring all NSLP-participating districts to use direct certification by 2008–09.
Similar strategies may also be effective in enrolling poor parents—that is, parents with incomes at or below the FPL. Among poor parents who are uninsured, 83 percent either live in a family participating in a means-tested nutrition program or have a child who receives Medicaid. Strikingly, 53 percent of poor, uninsured parents fall into the latter category, with children already enrolled in Medicaid. This suggests that one straightforward and promising way for states to identify and enroll potentially eligible
but uninsured parents is through their children's Medicaid records.
A number of states have pursued auto-enrollment strategies to provide children with Medicaid or SCHIP based on the findings of other means-tested programs, such as NSLP or the Food Stamp Program. Such strategies have generally failed for two main reasons, each of which could be addressed through modest changes in federal law.
First, the computer systems that states use to administer health and non-health programs often cannot communicate with one another. Accordingly, information frequently must be obtained, conveyed, or evaluated by hand in order for a child receiving non-health benefits to be enrolled into Medicaid or SCHIP. This makes ongoing program administration cumbersome, costly, and ultimately unsustainable. This problem could be solved with federal funding for states to develop the information technology (IT) needed to implement auto-enrollment through electronic exchange and analysis of eligibility information.
Second, federal law forbids child health programs from relying on the final income determinations of other means-tested programs. This is because Medicaid, SCHIP, and non-health programs have slightly different methodologies for determining household income. For example, these programs may have varying definitions of the household members whose resources and needs are taken into account in determining eligibility, or different "disregards" that are subtracted from a household's gross income to arrive at a net income figure. As a result, even after non-health programs have found children to have family incomes low enough to qualify for Medicaid or SCHIP, parents are nevertheless required to complete a second and generally redundant application before their children can receive health coverage. In several states pursuing auto-enrollment, such applications have been completed for less than a third (25%–31%) of potentially eligible children, leaving the remaining children uninsured.
To solve this problem, policymakers could change federal law to give states the flexibility to disregard technical differences between program methodologies and grant health coverage when other means-tested programs have found that families have incomes low enough to qualify for Medicaid or SCHIP. A similar approach already applies to low-income subsidies under the MMA. Through the Medicare Savings Program (MSP), state Medicaid programs have, for many years, covered Medicare cost-sharing for low-income seniors. Under the MMA, subsidies go to certain low-income Medicare beneficiaries, with automatic coverage for seniors who participate in MSP. Although eligibility rules for MMA subsidies and MSP differ in some states, auto-enrollment still takes place, because the programs' eligibility requirements are substantially the same, though not identical.
These two changes to federal law could be accomplished through legislation. They also could be tested within a single state through a federal waiver under Section 1115 of the Social Security Act. Such a waiver could provide enhanced federal funding to develop IT infrastructure and permit the state to rely on the determinations of other means-tested programs in establishing that families meet eligibility requirements for Medicaid or SCHIP. Of course, consent to enrollment in health coverage would be needed, but states could have the flexibility to provide eligible children with health coverage unless their parents object.
In this time of partisan division, one health policy goal that unites leaders in both parties is providing health coverage to the millions of uninsured children who qualify for Medicaid and SCHIP but are not enrolled. In pursuing this goal, policymakers may wish to consider giving states the resources and flexibility needed for effective implementation of auto-enrollment, which has proven successful when used with many other public and private programs.