State Health Insurance Programs for the Uninsured

CRS Report for Congress
State Health Insurance Programs
for the Uninsured
Jean Hearne
Specialist in Social Legislation
Domestic Social Policy Division
Summary
In 2002, six states (Arizona, Massachusetts, Minnesota, New York, Pennsylvania,
and Washington) and the District of Columbia offered state-only health insurance
programs covering about 238,000 people. About one-half of those individuals,
however, were in one state’s program – Washington’s Basic Health Plan. All but one
of those programs directly provides for health insurance coverage of its enrollees
through arrangements with providers, insurers, or managed care organizations. Three
of those programs also offer subsidies to help pay for employer-provided insurance
when enrollees’ have such coverage available. New York’s “Healthy NY” is a re-
insurance program in which the state contracts with certain insurance companies to
provide coverage for the program’s participants. Then the state shares in the cost of
enrollees’ health care services by paying for the costs of claims falling within an agreed-
upon specified range, in this case between $30,000 and $100,000. This report,
summarizing those state programs, is one in a series of short reports describing recent
state activities to improve access to health insurance for the uninsured. It will updated
as new information becomes available.
Under a contract with the Georgetown University Institute for Health Care Research
and Policy, the Congressional Research Service (CRS) has developed a database
summarizing state activities related to improving access to health insurance. The database
provides characteristics of state-operated high-risk pools, health insurance purchasing
cooperatives, and programs for low-income uninsured individuals, as well as small- and
individual-market reforms in place in 2002. This data, developed through a combination
of literature review and state surveys, includes information on state programs, separate
from Medicaid and the State Child Health Insurance Program (SCHIP), for the uninsured
that are funded without federal contribution.
In the past, such state-only funded programs were referred to as “general medical
assistance.” General medical assistance, which usually consisted of Medicaid-like
benefits, were offered as a component of some states’ “general assistance” programs,
programs that extended cash welfare payments to individuals who did not qualify under

Congressional Research Service ˜ The Library of Congress

the federal rules of the Aid for Families with Dependent Children program. Most general
assistance programs were dismantled during the early 1990s. General medical assistance
gave way, as well, when (a) the cost of health insurance, generally, and Medicaid costs,
in particular, began escalating quickly, and (b) statutory changes began extending
Medicaid to many of the individuals who would otherwise receive their health insurance
or health care through general assistance programs. Several other general assistance
programs were subsumed into Medicaid under the demonstration authority allowed by
Section 1115 of the Social Security Act.¹
In 2002, six states (Arizona, Massachusetts, Minnesota, New York, Pennsylvania,
and Washington) and the District of Columbia offered state-only health insurance
programs covering about 238,000 people. The individuals covered under the state-only
programs are generally not eligible for Medicaid or SCHIP although some of the state-
only programs coordinate with Medicaid and SCHIP. For example, one program offers
eligibles a choice of Medicaid or the state program. Another program will combine funds
for SCHIP-eligible children with state-only funds for the parents who are not SCHIP-
eligible.
About one-half of the individuals enrolled in the programs, however, were in one
state’s program – Washington’s Basic Health Plan, which is, by far, the largest of all
state-only programs. The state-sponsored insurance plan had over 122,000 individual
enrollees in 2002. None of the seven programs are older than10 years and four were
implemented since 1997. All but one of those programs directly provides for health
insurance coverage of its enrollees through arrangements with providers, insurers or
managed care organizations. Three of those programs also offer subsidies to help pay for
employer-provided insurance when enrollees’ have such coverage available. New York’s
“Healthy NY” is a re-insurance program in which the state contracts with certain
insurance companies to provide coverage for the program’s participants. Then the state
shares in the cost of enrollees’ health care services by paying for the costs of claims
falling within an agreed-upon specified range, in this case between $30,000 and $100,000.
The information recorded in the state initiatives data base reflects the features and
enrollment in state programs at the point at which surveys were administered (fall of

2002) and spending figures are for the most recent fiscal year available. In most cases,

therefore, the enrollment and spending information provided is for state fiscal year 2002.
Many states, however, make changes to their programs annually, so the information about
program features should be considered to reflect the programs in place in that year. Next
year the programs may look quite different from the descriptions below, especially in light
of the current budget challenges many states are facing. For example, there are press
reports that Washington’s Basic Health Plan’s enrollment will be cut by half in the
coming fiscal year.²

¹ Section 1115 of the Social Security Act provides the Secretary of Health and Human Services
with broad authority to authorize experimental, pilot, or demonstration projects which, in the
judgement of the Secretary, are likely to assist in promoting the objectives of the Medicaid
statute. [http://www.cms.hhs.gov/medicaid/1115/default.asp]
² Pear, Robert. “Most States Cutting Back on Medicaid, Survey Finds”, New York Times, January

13, 2003.

Table 1. Summary of State-Only Programs Providing Health
Insurance to Individuals Not Eligible for Medicaid^a
Number of Spending for
Type of^bcoveredhealth care
StateName of programprogramindividualsservices
ArizonaPremium Sharing
ProgramDirect coverage3,623$20.2 million
District ofHealthcare
ColumbiaAllianceDirect coverage28,360Not available
Children’s Medical
MassachusettsSecurity PlanDirect coverage25,680 $11.5 million
Direct coverage
MinnesotaMinnesotaCareor subsidy32,915$373.0 million
New YorkHealthy NYRe-insurance13.430$106.0 million
PennsylvaniaAdultBasicDirect coverage11,937$97.0 million ^c
Direct coverage
WashingtonBasic Health Planor subsidy122,250$219.0 million
^So^urce^{: Geo}^r^g^e^to^wⁿ^Un^iv^er^sity^{, I}ⁿ^stitu^{te f}^o^r^Health^Car^e^Resear^ch^an^d^P^o^licy^.^{State in}^itiativ^{es d}^a^tab^a^se
^{created u}ⁿ^d^{er con}^t^{ract to th}^{e C}^R^S^.
^a^{State s}^u^rv^ey^res^pon^den^t^s^w^e^{re as}^k^e^{d to prov}^{ide data pres}^en^{ted f}^o^r^th^e^m^o^s^t^recen^t^fⁱ^s^cal^y^ear.^In^{all cas}^es
^t^h^{e dat}^a^provⁱ^d^{ed are f}^o^{r 2002. N}^o^t^al^l^dat^a^{, h}^o^w^e^v^e^{r, ref}^e^rs^t^o^t^h^{e s}^a^m^e^12-^m^oⁿ^t^h^fⁱ^s^cal^peri^od.
^b^{Direct cov}^e^rag^e^den^o^tes^{a prog}^ram^th^{at directly}^prov^ides^f^o^{r h}^ealth^s^e^rv^ices^f^o^{r en}^rollees^th^r^o^u^g^h
^a^r^r^a^nge^m^e^nt^{s w}ⁱ^t^h^p^r^o^vⁱ^d^e^r^s,ⁱⁿ^sur^e^r^s^o^r^m^a^na^ge^d^c^a^r^e^o^r^gaⁿⁱ^z^a^tⁱ^o^ns.^Sub^sⁱ^d^y^d^e^no^t^e^{s a}^pr^o^g^r^a^m^t^h^a^t
^con^t^ribu^tes^tow^a^{rd th}^{e cos}^t^of^em^ploy^er-^s^pon^s^o^{red ins}^u^r^aⁿ^{ce cov}^e^rag^e^{. R}^e^-ⁱⁿ^s^u^r^an^{ce den}^o^tes^a
^prog^ramⁱⁿ^w^h^ich^th^{e s}^t^{ate s}^u^bs^idizes^h^ealthⁱⁿ^s^u^ran^{ce cov}^e^rag^e^f^o^{r en}^{rolled in}^divⁱ^du^als^an^{d s}^m^all
^b^u^si^ne^s^s^e^s^w^h^en^cl^ai^m^s^f^a^l^l^wⁱ^t^hⁱⁿ^{a cert}^aⁱⁿ^s^p^eci^fⁱ^{ed ran}^g^e^{, i}ⁿ^t^hⁱ^s^cas^{e bet}^w^een^$30,000^aⁿ^d
^$100,000.^c
^In^clu^d^es^admⁱⁿⁱ^s^t^rativ^{e cos}^t^s^.^P^eⁿⁿ^s^y^l^v^aⁿⁱ^{a w}^a^sⁿ^o^t^ab^{le to}^p^r^o^v^id^{e sp}^en^dⁱⁿ^g^f^o^r^h^ealth^ser^v^ices^sep^a^r^a^te
^f^r^om^prog^ram^admⁱⁿⁱ^s^t^ratⁱ^oⁿ^.
Table 2. Eligibility Groups Targeted by State-Only Programs
StateTarget group
Arizona – Arizona residents with family income below 250% of the^a
federal poverty level (FPL).
– Chronically ill (with at least one of 19 specified conditions)
with family income below 400% of FPL.
District of Columbia – Uninsured D.C. residents with family income below 200% of
FPL.
Massachusetts – Uninsured residents not eligible for Medicaid with family
income below 400% of FPL.

StateTarget group
Minnesota – Children under age 21 with family income below 150% of
FPL.
– Pregnant women with family income below 275% FPL.
– Parents with family income below 275% FPL.
– Childless adults with family income below 175% FPL.
New York – Uninsured working individuals with family income below

250% FPL.

– Self-employed individuals with income below 250% FPL.
– Small employers with one-third of employees earning less
than $31,000 per year.
PennsylvaniaAdults under age 65 with family income below 200% FPL.
Washington – Uninsured workers with family income below 200% FPL.
– Unemployed people with family income below 200% FPL
needing transitional health insurance.
– Individuals with family income below 200% of FPL who do
not qualify for other federal health assistance.
^Source:^Geo^r^g^e^to^wⁿ^Un^iv^er^sity^Iⁿ^stitu^te^f^o^r^Health^Car^e^Resear^ch^an^d^P^o^licy^.^{State in}^itiativ^{es d}^a^tab^a^se
^{created u}ⁿ^d^{er con}^t^{ract to th}^{e C}^R^S^.
^a^T^h^{e f}^e^deral^pov^ert^y^l^e^v^e^l^w^a^s^s^e^t^at^{$18,100 f}^o^{r a f}^a^mⁱ^l^y^of^f^o^u^rⁱⁿ^2002.
Table 1 provides basic characteristics of each of the seven programs and Table 2
summarizes their eligibility criteria. The above information does not include programs³
established under Medicaid Section 1115 demonstration waivers. A total of 19 states
plus the District of Columbia have comprehensive demonstration waivers, many of which
extend coverage to certain groups of people who are not traditionally eligible for
Medicaid. Although the data are weak, we know that those programs together cover at
least five times the number of individuals covered through the seven above-described
programs.⁴ In fact, New York’s Medicaid demonstration program alone covers almost
twice the number of those covered in all of the above seven programs combined. While
most states have abandoned their state-only programs to establish demonstration waivers
under Medicaid, and more recently SCHIP, the above seven programs have held on to the
state-only approaches, and some of those have both a state-only program and a waiver
program in place. This is likely to be because those states not wish to change program
features in order to obtain federal approval under the demonstration waiver authority. It
remains to be seen if those programs can withstand a budget environment that may make
the matching payments available under Medicaid and SCHIP waivers relatively more
attractive than the state flexibility.

³ Arizona, Arkansas, California (LA County), Delaware, Hawaii, Kentucky, Maryland,
Massachusetts, Minnesota, Missouri, New York, Oklahoma, Oregon, Rhode Island, Tennessee,
Vermont, Wisconsin, New Jersey, and Utah.
⁴ In the past, states were not required to report enrollment or expenditures under waiver programs
separately from other enrollees and spending. Recently, CMS has begun collecting such
information. It is likely that as states become used to the new reporting format, data related to
these characteristics will improve.