Under federal statute children receiving Title IV-E adoption assistance or foster care are categorically eligible for Medicaid. States have the option to extend Medicaid benefits to non-IV-E eligible children in foster care, which all states do. Therefore the general notion is that most children in the child welfare system are Medicaid recipients. Federal law and regulations also require states to provide Early and Periodic Screening, Diagnosis and Treatment (EPSDT) services to Medicaid eligible children under the age of 21. The EPSDT program screens children to uncover physical challenges, mental health problems, developmental delays, and dental needs. In addition to covering basic health care needs, Medicaid also serves as the major source of coverage for special services for children and families in the child welfare system, including rehabilitative, case management, and in-patient psychiatric services at no cost to low-income children and families. Although children constitute about 50 percent of Medicaid beneficiaries, they account for only 20 percent of the costs. Together with Medicaid, CHIP has helped to reduce the rate of low-income uninsured children by expanding eligibility levels and simplifying enrollment procedures.

Final FY 2011 Continuing Appropriations

In order to avert a government shutdown, lawmakers agreed upon a spending package that cut $3.5 billion from the Children’s Health Insurance Program (CHIP), or just below 10 percent of the total cuts in the appropriations agreement. The Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA) provided states with additional financing as well as fiscal incentives to enroll lower income children, and the cuts to this program will jeopardize the capacity to reward states that are seeking to become eligible for the bonus payments.

Chairman Ryan’s FY 2012 Budget Proposal

The budget plan approved by the House Budget Committee would have a devastating impact on Medicaid and other programs that serve vulnerable children and families. The proposal cuts Medicaid by $771 billion over the next decade, converts it into a block grant, and eliminates the expansions authorized under the Affordable Care Act (ACA).

Under this proposed budget resolution, beginning in 2013 states would receive a fixed amount of funding from the federal government to operate Medicaid, indexed for inflation and population growth. States would be allowed to adopt their own program standards and rules for coverage, benefits, and enrollment. Block granting Medicaid would not only jeopardize coverage for millions of children, it would also result in cost-shifting that would place an even greater burden on state and local governments, providers, and families, leaving states with limited resources to provide necessary health care and other services. At this point, it is not clear what would happen to EPSDT or other medically necessary services under a block grant structure.

With respect to the repeal of the ACA, the proposal would in effect eliminate the extension of CHIP through 2019 (which was authorized under the ACA). This translates into a loss of billions of dollars, and millions of children remaining uninsured. It also eliminates the expansion of Medicaid eligibility to former foster youth up to age 26.

A Better Way Forward

Over the last decade, CHIP and Medicaid have driven the uninsured rate of children down to the lowest level on record. Any cuts, rescissions, or waivers could drastically alter the landscape of children’s coverage. Repealing the ACA not only jeopardizes the health care of the 30 million of children currently covered, but also the 8 million who remain uninsured. Furthermore, cutting bonus payments to states only adds to the barriers that low-income families face when trying to enroll in the program and further inhibits states’ outreach efforts for families that may not know that their children are eligible for Medicaid.

While so much focus has been placed on cuts and caps to valuable entitlement programs like Medicaid, the need to invest in and protect these programs has been grossly neglected. The transition in and out of the child welfare system makes it particularly difficult to ensure continuous coverage for these children, most of whom have disproportionate health needs. Congress recently reintroduced the Ensuring Continuous Medicaid Coverage for Children Act of 2011 (HR 669) which would change from discretionary to mandatory the authority of state Medicaid plans to provide for 12-month continuous coverage of children, similar to what is the requirement in private insurance plans. This is just one step of many needed to ensure that the health of our nation’s most vulnerable children remains a national priority.