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Journal Issue: Special Education for Students with Disabilities Volume 6 Number 1 Spring 1996

REVISITING THE ISSUES: The Effects of Medicaid Expansions on Insurance Coverage of Children
Lisa C. Dubay Genevieve M. Kenney


Overall, the take-up rates among children eligible for Medicaid are fairly high, and there is evidence that the Medicaid expansions for children resulted in only a small rate of substitution of Medicaid for private employer-sponsored insurance coverage. The participation rates among children eligible under the expansions who lack employer-sponsored coverage were around 70%. This is significantly lower than participation rates for children eligible for AFDC, however, indicating that more intensive outreach may be needed to further reduce the number of young children lacking insurance coverage.

Only 17% of the increase in the Medicaid coverage of children between 1988 and 1993 is attributable to crowding out.27 Crowding out is more of an issue for near-poor children than for poor children. This suggests that raising eligibility thresholds beyond the federal poverty level could significantly reduce the number of children who lack insurance coverage but only at the price of also reducing the number with employer-sponsored coverage.

Together these findings have mixed implications for the impacts of the Medicaid eligibility expansions on children's health. First, while the expansions led to substantial increases in Medicaid enrollment for children, the program is still not reaching a significant portion of the target population. Second, the apparent shift from employer-sponsored to Medicaid coverage, resulting from both secular declines in and crowding out of employer-sponsored coverage for the near poor, means that Medicaid is substituting to some extent for what would have been private insurance coverage in prior years. Because other research has demonstrated access problems under the Medicaid program,28 this could mean less access to care for some children. At the same time, low-income children who switch from private to Medicaid coverage may experience greater access to preventive health care under Medicaid. Despite these issues, the expansions likely protected large numbers of low-income children who would have lost their employer-sponsored insurance coverage and become uninsured during this period, and may have staved off the resultant declines in child health.

Finally, and most disturbingly, despite the dramatic Medicaid expansions for children, the number of uninsured children grew by almost one million between 1988 and 1993. This suggests that many more children would have lacked insurance coverage without the expansions, reflecting a transformation of the health insurance market that leaves more and more children with state Medicaid programs as their primary potential source of health care coverage.