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Home > Advocacy > CWLA 2007 Children's Legislative Agenda/2007 Hot Topics > 2007 Legislative Hot Topics


2007 Legislative Hot Topics

Health Care: Defending Medicaid and Expanding SCHIP

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  • Oppose the President's cuts to Medicaid, including Administrative efforts to restrict Medicaid funding that serves the health care needs of children in foster care.

  • Expand the State Children's Health Insurance Program (SCHIP) to cover more uninsured children.


Child welfare agencies are responsible for meeting the health and mental health needs of all children in state custody, and virtually all children in foster care are eligible for and obtain health care services through Medicaid. Other federal programs that support the child welfare system do not provide coverage for acute or long-term health services. 1 The need for comprehensive Medicaid coverage for this population is particularly significant, as research has extensively documented that children in foster care have more health problems, especially mental health problems, than the general population of children from low-income families. 2

In addition to relying on Medicaid for a broad range of acute and long-term health services, children in foster care differ from other children because of their greater need for mental health and disability-related services. 3 Beyond funding the direct provision of basic physical health care services, Medicaid currently allows states to provide critical rehabilitative, therapeutic, psychiatric, and targeted case management (TCM) services to children in foster care. Such funding is essential to ensure children in foster care receive the necessary physical and mental health supports while in protective custody.

Child welfare advocates must defend against continued federal efforts to limit the use of the TCM and rehabilitative services Medicaid options that serve children in protective state custody. These heightened regulatory restrictions pose a significant threat to the child welfare system's capacity to meet the health care needs of children in foster care. The Administration has proposed to statutorily exclude payment for rehabilitation and case management services that are "intrinsic to programs other than Medicaid," including child welfare. This provision means that Medicaid could not be billed for services if it is possible for other federal, state, or local funding to cover these costs. Many of the services the Administration highlighted as being "intrinsic" to child welfare, such as therapeutic foster care, provide valuable mental health benefits to children in the child welfare system. These mental health services allow children in foster care to receive necessary therapeutic services in the least restrictive setting possible, and should be paid for by Medicaid. In addition, the Administration's proposal would cut federal funding for TCM to 50%, which is the rate for administrative services rather than the current Medicaid services rate.


Health insurance coverage for all children and their families, through Medicaid, SCHIP, or private insurance, can prevent children from ever needing the child welfare system in the first place. The availability of such health services can also help families remain intact or aid family reunification efforts. Although Medicaid coverage is available to almost all children while in foster care, broadening health coverage for low-income children and families that fall outside of that bracket-namely at-risk families and children transitioning out of foster care-is critical. At-risk children who are given access to appropriate physical and mental health care as they develop have a much greater likelihood of reaching their fullest potential. 4

Enacted as part of the Balanced Budget Act of 1997, SCHIP broadens coverage for low-income children. The program helps states provide health insurance to children in working families who do not have employer provided coverage, or who earn too much to qualify for Medicaid. Over the past decade, SCHIP has played a valuable role ensuring access to health care for low-income children. Amid a backdrop of rising health care costs, significant declines in employer-based coverage, and an increase in the number of uninsured Americans, SCHIP has served as Medicaid's essential companion, covering millions of children who otherwise would not have access to affordable health care. Together, SCHIP and Medicaid have effectively reduced the uninsured rate of low-income children by one-third. 5

SCHIP is a matched block grant program that has allocated $40 billion in federal funds over 10 years. The program is due to expire September 30, 2007, necessitating reauthorization this year by Congress. Recent estimates by the Congressional Research Service predict that if the current allotment level and formula continue into the future, in just a few years, most states will face chronic shortfalls of federal SCHIP funds, potentially imperiling the health coverage of 1.9 million children. 6 It is vital that legislation reauthorizing the program include federal funding to ensure not only that current SCHIP coverage can continue, but also that future efforts can expand, allowing states to move forward and cover more children.

As SCHIP reauthorization efforts go forward, Congress must also act to protect and strengthen Medicaid, which continues to play a vital role in the health coverage system for children, particularly for those in foster care. Any cuts to Medicaid or other programs serving low-income populations in order to finance SCHIP would just further harm children. Reauthorization of federal SCHIP legislation is a major opportunity for Congress to advance the widely shared goal of ensuring that every American child has access to high-quality health care, thereby strengthening many of the nation's most vulnerable families.


  1. Crowley, J. S., & O'Malley, M. (2006, December). Profiles of Medicaid's high cost populations. Washington, DC: The Kaiser Commission on Medicaid and the Uninsured. back
  2. Geen, R., Sommers, A., & Cohen, M. (2005). Medicaid spending on foster children. Available online. Washington, DC: Urban Institute. back
  3. Crowley & O'Malley. back
  4. Too close to turn back: Covering America's children. (2006, December). Washington, DC: Georgetown University Health Policy Institute Center for Children and Families. back
  5. Ibid. back
  6. The Kaiser Commission on Medicaid and the Uninsured, based on the 2007 budget documents from the Office of the Actuary at the Centers for Medicare & Medicaid Services. back

CWLA Contact

Tim Briceland-Betts

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