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Journal Issue: Children and Poverty Volume 7 Number 2 Summer/Fall 1997

Programs That Mitigate the Effects of Poverty on Children
Barbara L. Devaney Marilyn R. Ellwood John M. Love

The Medicaid Program

Enacted in 1965, Medicaid, an entitlement program that provides health insurance coverage for low-income children, represented a major shift in federal health policy for poor families—moving from direct service delivery to a financing model. Its passage, however, received little notice, and it was generally regarded as an afterthought to Medicare, the health insurance program for the elderly and disabled.26 Perhaps this explains why the basic Medicaid legislation does not include any clear statement of the program's goals or expected outcomes beyond that of providing access to medical care for the poor.

From the start, states have administered Medicaid with joint financing by the state and federal governments. Medicaid requires that children receive what is called "early and periodic screening, diagnosis, and treatment (EPSDT)," and therefore, the Medicaid benefit package for children is generally comparable to most private health insurance plans. All state Medicaid programs must provide children with a comprehensive array of preventive or well-child care, as well as necessary diagnosis and treatment services for both acute and chronic illnesses, even if such services are not available to other Medicaid enrollees.

Not all low-income children are eligible for Medicaid. Medicaid eligibility standards for children vary substantially among states, although there is now more uniformity and greater coverage of children living in poverty than in the past. Medicaid eligibility for children was originally tied to eligibility for AFDC. However, congressional mandates during the 1980s severed this welfare link and imposed national income eligibility thresholds, based on the federal poverty level (FPL). These mandates vastly expanded the number of children potentially eligible for Medicaid, but the phase-in implementation of these mandates to include children through 19 years of age will not be complete until 2002.

Increasing numbers of uninsured children, high rates of infant mortality and low birth weight infants, declining immunization coverage, and continued reports of poor health status among low-income children, particularly uninsured children, led to the expansions of Medicaid eligibility in the 1980s. Implicit in the program is the assumption that the enrollment of low-income children in Medicaid will enable them to achieve access to health care services comparable to that of privately insured children. In turn, this access to health care services is expected to lead to improvements in health status for low-income children. However, as the following discussion indicates, most research has focused on process measures, not health outcomes, as evidence of Medicaid's success.

Program Coverage

Measurement problems have plagued attempts to obtain a reliable estimate of Medicaid's participation rate.27 Nevertheless, an Urban Institute study, which used data from the Current Population Survey and attempted to control for many of the known measurement problems, estimated that the Medicaid participation rate among AFDC participants was 90% in 1993 and 69% for children who qualified for Medicaid on the basis of family income alone.28

Although Medicaid child enrollment has increased as a result of the expansions in the 1980s, the number of uninsured children in 1994 reached 10 million, higher than at any time since 1987. Because the majority of uninsured children have family incomes somewhat above the poverty level, Medicaid in its current form cannot be expected to reduce the size of the uninsured child population to zero. The General Accounting Office estimates, however, that about one-third of uninsured children in 1994 would have qualified for Medicaid but were not participating.29

Medicaid participation may not occur for several reasons. There is a general lack of awareness that children can now qualify for Medicaid even if both parents are present in the home or one parent is working full time. The time-consuming, sometimes difficult application process is an obstacle to many people.30 Families may not apply for Medicaid because of its stigma as a welfare program. Finally, because most children are healthy, their parents may not feel there is a compelling reason for them to apply for Medicaid.

There is also concern that the new welfare reform legislation (the PRWORA of 1996) may further reduce participation. Currently the majority of children on Medicaid are automatically eligible because they qualify for AFDC. The welfare reform legislation ends this tie. Although states are generally required to continue using their old AFDC rules to determine eligibility for Medicaid, they are given the option of requiring a separate Medicaid application, apart from the application for welfare. Previous experience has shown that participation rates are lower for persons having to apply for Medicaid separately and that enrollment tends to occur at a point when there is a medical need, thus reducing the likelihood that Medicaid's preventive services will be used effectively.31 The legislation also restricts welfare eligibility for children who are legal immigrants and eliminates welfare eligibility for certain disabled children, and these actions may make these children ineligible for Medicaid.

Achievement of Program Goals

Program outcomes for the Medicaid program include both process outcomes such as access to and utilization of health care and health outcomes such as mortality, morbidity, and health status. Although there is strong evidence that Medicaid children have greater access to services than poor children who are uninsured, recent studies indicate utilization parity has not been achieved relative to children with private insurance. Data from the 1991 National Health Interview Survey (NHIS) showed that, although Medicaid children are as likely as privately insured children to have at least one physician contact during the year, they average fewer physician contacts overall (5.4 visits compared with 6.2 for privately insured children).32 Medicaid children's lower average rate of utilization compared with privately insured children suggests that Medicaid children may be less likely to obtain needed care than privately insured children. Medicaid children are also less likely than privately insured children to receive their care in physicians' offices, and they are more likely to use clinics, hospital outpatient departments, and emergency rooms. Further, Medicaid children are more likely to see different providers for routine and for sick care visits, which can have a negative effect on continuity of care.32,33

The use of preventive care is a measure of access to health care not dependent on illness. Recent studies suggest that Medicaid's success with preventive care is mixed. On the positive side, data from the 1987 National Medical Expenditure Survey adjusted for child age show that Medicaid children are only slightly less likely than privately insured children to have well-child visits during the year and to have received the number of preventive care visits recommended by the American Academy of Pediatrics (AAP).34 However, both groups lag far behind the AAP's recommended visit schedule. Among other measures of preventive care, Medicaid children fare worse. Using 1991 NHIS data, preschool-age Medicaid children have lower completed immunization rates than privately insured children, a statistically significant difference of 40% versus 53%, and Medicaid children are much less likely to see a dentist during the year (39% versus 56%).32

Part of the reason Medicaid children have not achieved access equal to that of privately insured children is low Medicaid participation rates by office-based physicians, primarily because of Medicaid's historically low reimbursement levels.35 Because beneficiaries who receive a greater portion of their care in physicians' offices are less likely to be hospitalized, the Omnibus Budget Reconciliation Act of 1989 attempted to increase Medicaid payment levels to pediatricians and obstetricians.36,37 However, while higher reimbursement levels may improve access for some children, they may have little effect on the availability of care for children residing in some inner cities and rural areas where the supply of providers is extremely limited to begin with.38

Although the assumption is that Medicaid coverage has improved the health status of low-income children, there is little hard evidence for this proposition using traditional measures of health status such as morbidity and mortality statistics. Low-income children lag behind other children on many conventional measures of health status.39

Difficulties in finding good indicators of children's health status and in designing studies have made determining the effects of changes in medical care financing, organization, and delivery on children's health outcomes problematic.40,41 Further, many other factors affect the health status of low-income children such as poor housing and nutrition, making it difficult to isolate the impact of the access to health services.

Not surprisingly then, a 1991 literature review of health outcome studies for poor children noted that few studies analyzed health outcomes data and included information about insurance status. The review concluded that, directly following the enactment of Medicaid, there was some evidence that this program had improved the health status of children but that more recent evidence was indirect or inconclusive.42 However, there is strong direct or inferential evidence that medical care is efficacious with a wide variety of conditions for children.43

Recently, a few studies have analyzed infant mortality and low birth weight outcomes associated with Medicaid expansions for pregnant women; however, the results are not consistent. A study using data from the Current Population Survey, Vital Statistics, and the National Longitudinal Survey of Youth showed a positive association between Medicaid expansions to pregnant women during the 1980s and a reduced incidence of low birth weight and infant mortality.44 The effect was much greater for very poor women than for women with incomes between 100% and 185% of poverty, in part because this latter group of women were less likely to participate in Medicaid.45 However, separate studies using data concerning pregnant women in Tennessee and in Massachusetts did not find improvements for pregnant women on Medicaid in the use of prenatal care, birth weight, or neonatal mortality.46,47 The preponderance of research on this topic seems to suggest that improved Medicaid coverage alone will not be able to improve birth outcomes, given the continuing problems of provider participation in Medicaid and the broader problems facing high-risk pregnant women such as poverty, poor nutrition, unhealthful lifestyles, and drug and alcohol problems.

Indirect Program Outcomes

Two secondary outcomes with regard to Medicaid eligibility and low-income families have received attention lately. First is the possible work deterrent effect. Many low-wage jobs do not include health insurance benefits, and several studies have confirmed that the loss of Medicaid coverage can be a deterrent to a family's leaving welfare for work.48,49 To prevent this disincentive, beginning in 1990, all families no longer qualifying for cash assistance benefits as a result of earnings became eligible for up to 12 months of transitional Medicaid coverage. After this period of transitional coverage, younger children in a family may continue to qualify for Medicaid depending on family income, but teenage children and parents face the potential loss of Medicaid. This loss will occur even if the family does not obtain insurance coverage through work.

A second and related issue is whether or not the transitional work coverage provisions and the child Medicaid expansions of the 1980s had the effect of substituting Medicaid coverage for private insurance coverage for some pregnant women and infants. Studies suggest that some of the recent decline in employment-based insurance coverage for pregnant women and children is attributable to expanded Medicaid coverage, although there are differing conclusions about the size of this "crowd-out" effect.28,50 Caution must be taken in interpreting any crowd-out results because the relationship between Medicaid eligibility and employment-related insurance coverage for children is particularly complicated. Theoretically crowd-out could occur either because employers reduced coverage options in response to expanded Medicaid eligibility or because families chose Medicaid as preferred to private insurance—for cost or other reasons. In any event, changes to Medicaid policy in this area could make even worse the continuing problem of uninsured children.51