Alaska Health Policy Review

Nothing is as important as the health of our children. For that reason, we present this special two-part report. In previous issues of the Alaska Health Policy Review, we reported on changes in legislation for the State Children's Health Insurance Program (SCHIP) and the impact on medical assistance for children in Alaska. After March 31, 2009, federal funding for SCHIP will end, due to two presidential vetoes last year that denied reauthorization of the program.

We continue the discussion on this leading issue with a two-part article. Part one features an overview of Denali KidCare, Alaska's program responsible for administering medical assistance to eligible children and pregnant women through Medicaid and SCHIP. A history of previous legislation influencing SCHIP and Medicaid eligibility requirements is included. This legislation subsequently reduced coverage for low-income children and pregnant women in Alaska.

Paralleling actions in Congress, Alaska's legislators recently released bills proposing changes in the eligibility requirements for medical assistance. These bills, if passed, have the potential to increase the number of children and pregnant women eligible for health care services through Denali KidCare. In this issue, we present the state bills affecting medical assistance in Alaska. Federal legislative action updates on SCHIP will follow next week in part two.

Part One: The Ups and Downs of SCHIP and Medical Assistance in Alaska

Denali KidCare

Initiated in 1999, Denali KidCare is a government-funded health coverage program for children under age 18 in low-income families and for eligible pregnant women. Through joint funds from state and federal resources, Denali KidCare administers medical assistance for children eligible for SCHIP. The U.S. Congress determines federal guidelines for SCHIP, and states have the flexibility to choose their eligibility requirements, benefit packages and operating procedures.

The percentage of federal funding is determined by the federal medical assistance percentage (FMAP), also known as the federal matching percentage. Changes in this rate affect the amount of state funding required to maintain enrollment in Denali KidCare. Another factor influencing the number of children covered through SCHIP is the Federal Poverty Level (FPL). Income eligibility requirements for medical assistance are subject to changes in the FPL, and recent state legislative action includes changes that could give coverage to more children and pregnant women in Alaska.

Impact of the Federal Medical Assistance Percentage

The federal medical assistance percentage is among the current changes in legislation for the Children's Health Insurance Program Reauthorization Act (CHIPRA) of 2009, which we will discuss in the second part of this article. Although at times hard to comprehend, we give a brief history of how the federal matching rate affects coverage in Alaska.

Ideally, Denali KidCare will not experience changes in access to care and enrollment when federal funds for SCHIP end on March 31, 2009. Denali KidCare is a Medicaid expansion program, meaning it can fall back on Title XIX Medicaid funding after the end of March. However, reverting to Medicaid funding means that the amount of federal matching funds for each enrollee will be determined by a separate set of guidelines. Differences in the FMAP rates between Medicaid and SCHIP funding guidelines require Alaska's general fund (GF) to contribute more dollars per enrollee under Title XIX Medicaid funding. The following example from Denali KidCare highlights the impact of the federal matching rate on proportion of state and federal funding.

Contributions per Enrollee         Fed. Fiscal Year 2008   Fed. Fiscal Year 2009
(Federal Funds- General Fund)

SCHIP FMAP- GF                           67% - 33%                            65% - 35%

Medicaid FMAP- GF                        53%- 47%                         50% - 50%

The above table shows that the change from the SCHIP to Medicaid federal matching percentage will require general funds of 50 percent of the cost per enrollee, as opposed to only 35 percent per enrollee at the SCHIP federal matching rate. That is, when SCHIP funding ends, the Alaska general fund will have to contribute 15 percent more per enrollee in Denali KidCare.

At this time, the effects of this increased general fund-matching rate on access to care, enrollment, and any other concerns are unknown. Although funding for Alaska's children and pregnant women will most likely remain, Denali KidCare is still subject to legislation regarding the federal poverty level.

The Big Freeze and its Impact on Eligibility in Alaska

Throughout the last ten years, eligibility requirements for health insurance through Denali KidCare have varied. Eligibility rules are proposed and passed by state legislators and the governor, and are influenced by the state budget. In Alaska, variation in income eligibility requirements for medical assistance has affected the number of enrolled recipients of health care services through Medicaid and SCHIP.

In September of 2003, the Alaska State Legislature froze Medicaid income eligibility standards for children whose eligibility is managed through Denali KidCare. Other states were forced to make similar changes to their medical assistance programs around this time as well. In Alaska, the original (1999) eligibility requirements for SCHIP were set at or below 200 percent of the federal poverty level. In 2003, this number was reduced to at or below 175 percent of the FPL, with no adjustment for inflation (due to the federal poverty guidelines being written into statute).

The net effect of this was a ceiling at 151 percent of the FPL for eligibility, which left children and pregnant women above that threshold without coverage. Although children and women in families with incomes at or below 150 percent of the FPL were not affected by the eligibility freeze, enrollment in Alaska's Denali KidCare and SCHIP declined. Following this change in the FPL requirements, the number of children enrolled in the effective income category dropped by 2,553, and the number of enrolled pregnant women decreased by 436 between 2003 and 2006.

In late 2007, a bill proposed by Senator Bettye Davis and later signed by Governor Palin restored the income eligibility standards for children and pregnant women. The result was an increase for Denali KidCare income eligibility standards from 151 percent to 175 percent of the prevailing FPL, effective July 1, 2007, and a positive shift in enrollment of children and pregnant women in the affected income category.

As mentioned previously, federal guidelines set the rate of SCHIP federal funding for each state. However, states have some flexibility to raise or lower the eligibility requirements for medical assistance. A recent report highlighting a state-by-state comparison of eligibility requirements as they relate to the FPL yields important information about Alaska's standing in providing medical assistance.

How Does Alaska Compare With Other States?

A recent report by the Kaiser Commission on Medicaid and the Uninsured (see Sources for link) highlights the differences in medical assistance eligibility and guidelines among the 50 states. This report, issued this month, indicates that Alaska is one of seven states with medical assistance eligibility requirements at or below 200 percent of the federal poverty level. The remaining states have much higher levels, and subsequently provide medical assistance eligibility for more children.

Additionally, Alaska is one of eleven states that offer the least amount of coverage to pregnant women, at up to 184 percent of the federal poverty level. As with children's eligibility requirements, the remaining states offer broader eligibility requirements and thus assist more pregnant women. Comparatively, Alaska fares optimistically in ease of enrollment for Medicaid, and in eligibility requirements for medical assistance among working parents.

Presently, Alaska children in families whose income is at or below 175 percent of the FPL are eligible for services through Denali KidCare. In a state where the cost of living is one of the nation's highest, adequate federal poverty guidelines and flexibility for inflation can ensure coverage and avoid any freezes in eligibility requirements. Restoring the income eligibility requirement to at or below 200 percent of the FPL would provide medical assistance to 1300 children and 225 pregnant women. Fortunately, these changes have already begun and are reflected in the recent actions of state legislators.

Current Bills in the State Legislature: Supporting Greater Coverage for Children

Recent bill proposals in the Alaska legislature focus on increasing the percentage of the FPL eligibility requirements for medical assistance through Medicaid. We highlight two bills with the greatest potential impact on medical assistance for children and pregnant women in Alaska.

On January 9, Representative Hawker released HB 62, also known as the "Denali KidCare Accountability Act." This bill adds sections to a previous act, expanding eligibility requirements for children to include those in families with incomes up to 250 percent of the federal poverty level. However, recipients of medical assistance in families whose income is between 175 percent and 250 percent of the federal poverty level will be required to pay premiums, on a sliding scale, for medical assistance. The Department of Health and Human Services is required to set the premium at no less than 2 percent of the recipient's income, and establish a system of collecting premiums from recipients. Additionally, the families in the affected income brackets will be required to pass an asset test, which currently is not required for assistance, and impacts ease of enrollment.

According to Rep. Hawker, "HB 62 is a prudent way to provide health care to children in lower income families that are unable to obtain coverage through their employer or afford private health insurance. Requiring a financial contribution from this expanded group is a fair way to improve access to care while promoting individual responsibility. The premium will also help to ensure that the state is not unfairly competing with private enterprise health care programs." Competition with private insurance companies as a result of increasing eligibility requirements for government-funded assistance has been a topic of debate among legislators and others. Thus, this bill aims to reduce these fears, while increasing coverage.

Representative Cissna released HB 61 in the early January during the prefile submission period. This bill requests many changes to current statutes on medical assistance eligibility for Alaskans. Amendments are specific to the eligibility requirements for Medicaid and request raising the percentage of the FPL required for medical assistance for many groups of Alaskans. Included in these groups are individuals under the age of 19 and pregnant women. Specifically, this bill proposes increasing the family income eligibility from 175 percent to 200 percent of the federal poverty level for Alaska. As noted above, such an increase could offer medical assistance for an additional 1300 children and 225 pregnant women. Both HB 61 and HB 62 were read and sent to the Health and Social Services committee last week during the legislative session. We will continue to update readers on the progress of these bills, as well as on the potential impacts to health care coverage in the event that they do or do not pass.

The Road Ahead: Preview of Next Week's Part Two

Last year, Congress passed bills for the reauthorization of SCHIP twice, but faced vetoes both times by President Bush. SCHIP is currently operating on temporary federal funding, which ends March 31 of this year, unless reauthorization passes Congress and is approved by President Obama. With the hope of support from the new administration, reauthorization of SCHIP became an even greater priority this year, and Congress released SCHIP bills in both the House and Senate as one of their first actions of the legislative session.

The 2009 bills are referred to as the Children's Health Insurance Reauthorization Act (CHIPRA) of 2009, and the new bills contain significant changes from previous SCHIP legislation. For example, an increase in the federal tobacco tax will provide additional funding for SCHIP, and health coverage options are expanded to include dental and mental health services. Additionally, increased federal matching rates are proposed, and states have the option to waive the five-year waiting period for medical assistance among legal immigrants. The House passed CHIPRA 2009 in mid-January, and following some amendments, CHIPRA is now being considered in the Senate. Understandably, the SCHIP legislative activity is receiving heightened attention among legislators and the media.

Next week, we will discuss the specific changes to the CHIPRA 2009 in detail. We will report any legislative progress on the CHIPRA 2009, for as we submit this week's issue of AHPR, it is being heard and debated among Congressional senators. Finally, we will include a brief discussion on what these changes mean for Alaska and how the status of the Alaska economy impacts access to health care for our residents.

Sources:

Kaiser Commission on Medicaid and the Uninsured (January 2009). Challenges of Providing Health Coverage for Children and Parents in a Recession; A 50 State Update of Eligibility Rules, Enrollment and Renewal Procedures, and Cost-Sharing Practices in Medicaid and SCHIP in 2009.
Personal communication with staff at the Department of Health and Social Services, September 16, 2008.
Congressional Research Services Report for Congress (July 2008). What Happens to SCHIP after March 31, 2009.
Georgetown University Health Policy Institute, Center for Children and Families (March 2008). SCHIP Funding in the Year Ahead: Implications of the Medicare, Medicaid, and SCHIP Extension Act.
Senate Bill 27, Fiscal Notes (2008). Relating to Eligibility for Medical Assistance. Sponsored by Alaska Senator Bettye Davis.