Policy Analysis

I was lucky enough to be able to take a stab at a Political Science senior research seminar in the fall of my Sophomore year.  The class was incredibly important for me, as it created a framework for me to begin understanding how policy could and must be bridged with understanding how to solve social problems.  I’d always been very analytical in trying to understand social policy – and was reading policy wonk blogs since high school – but until taking this class never made the link between the activism work I was interested in and my geeky fascination with policy.  As someone who has developed an interest in HIV in Southeast Asia, I think that the relationship between economic policy and health justice is stark.  As Elizabeth Pisani explains in the above video, people get infected with HIV because drug, sodomy, prostitution, etc. policy forces high risk populations into situations where it is more rational to make stupid decisions, with bad consequences for their health.  Over the course of the semester, my classmates undertook policy analyses ranging from gun control, to charter school legislation, to the DREAM Act, all following traditional policy analysis steps http://www2.maxwell.syr.edu/plegal/TIPS/select.html, looking at both ideal policy solutions and political feasibility.  Over the course of the semester, I researched the Affordable Care Act, which was being simultaneously being debated and shaped in the House and Senate, with a focus on the health of children living in poverty.  With this example, as well, the intersection between policy and social justice is stark.  Below is an outline of some of my research and conclusions:

Background: Healthcare for Low-Income Children

The passage of Medicaid – a program designed to give healthcare coverage to the poor – in 1965 was a huge change in public commitment to health insurance.  After it became clear that regular insurance benefits and packages did not meet the needs of children, Congress added the Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) program, Medicaid’s child health component, two years later.  Since 1967, EPSDT’s stated purpose has been “to discover, as early as possible, the ills that handicap our children” and to provide “continuing follow up and treatment so that handicaps do not go neglected.” EPSDT uniquely emphasizes preventative care and early intervention, in addition to providing pediatric primary care and treatment services.

Unlike Medicare, which is entirely federal, Medicaid is a joint federal-state program that is run by the states with federal matching grants and funds.  Medicaid, including EPSDT, is an entitlement program:  when individuals meet the requirements for program eligibility, the state must enroll them, and cannot put a cap on expenditures.  To qualify for Medicaid, individuals must meet financial criteria, with income eligibility thresholds for children much higher than for other groups.  States must cover all children under age 6 with family incomes below 133% of the federal poverty level (FPL), and children ages 6 to 18 with family incomes below 100% FPL. Children account for almost half of all Medicaid enrollees, but represent only 17 percent of total Medicaid expenditures.  In fact, per capita spending on children is the lowest among all beneficiary groups, despite being covered under a much more comprehensive program.

In an effort to extend coverage to more low-income children, congress established the State Children’s Health Insurance Program (CHIP) in 1997.  CHIP provides coverage to uninsured children whose families have incomes too high to qualify for Medicaid, but too low to buy private or employer-sponsored health insurance (generally about 200% of the FPL).  While EPSDT requires states to cover certain benefits, the CHIP program gives states more flexibility over the benefits package, and they usually provide more limited benefits.  Unlike EPSDT, CHIP does not create an entitlement for eligible children because it is a block grant program with caps on federal funding.  When funding is inadequate, states can start waiting lists, limit enrollment, or charge families for services. CHIP was renewed in February 2009 after contentious debate.

Health-Care Reform

            H.R. 3962, The Affordable Healthcare for America Act, passed by the House of Representatives on November 7th, is in many ways much stronger for low-income children.  Starting in 2014, children whose families have incomes at or below 150% percent of the FPL ($27,465 for a family of three in 2009) will be eligible for an expanded EPSDT program, which would make approximately 2.2 million more children eligible.  Adults living at or below 150% percent of the FPL will also be eligible for Medicaid, which will also benefit children – studies have shown that when children are eligible for coverage but their parents are not, the children are less likely to be enrolled. This expansion would initially be fully federally financed, then transition in 2015 to include a 9% state contribution. To increase provider participation, reimbursement rates for primary care services would be increased with new funding.

            However, H.R. 3962 would end CHIP in 2013. A new national health insurance exchange would be created, where individuals without other coverage could shop for insurance provided by private insurers or a public plan.  Subsidies would be provided for people with income under 400% of the FPL to purchase coverage through the exchange. Children currently receiving coverage through CHIP with family income below 150 percent of the FPL would be switched to EPSDT; other CHIP-enrolled children would be insured through the new health insurance exchange. The benefit packages available in the exchange would likely be less generous than those that CHIP provides, and the premiums and cost-sharing charges would be higher.

Problems with Eliminating CHIP

Many children’s advocacy groups are very concerned about completely eliminating CHIP coverage, even though it is not as comprehensive as EPSDT and often has inadequate funding.  They worry that coverage through the exchange will not be as extensive as CHIP, there will be fewer screening and prevention visits, children will receive fewer legal protections, and additional administrative barriers might prevent eligible children from getting the coverage to which they are entitled. Administrative hurdles already keep 2/3 of the over 8 million uninsured children who are eligible for EPSDT and CHIP from being covered.  The Children’s Defense Fund, the American Academy of Pediatrics and the Children’s Health Group have argued that the benchmark coverage provided by the health insurance exchange is new, untested, and more expensive than CHIP, and does not ensure that children getting coverage through the exchange will have the same benefits that children in Medicaid have.  Experimenting on the vulnerable populations receiving care through CHIP is not fair. Currently, CHIP enrollees, depending on income, pay at most 2% for their health services. In the exchange, those same families would pay between 5-35% of health costs.  The increased financial burden on families could end up leaving low-income children worse off.

Possible Modifications to the Affordable Healthcare for America Act

1. Keep the bill as it stands, with only minor changes – The bill could be revised to make sure that the transition from CHIP to the exchange is better planned and tested, and that sufficient time is allotted to make the transition go smoothly.  An amendment offered by Rep. Diana DeGette (D-Col.), not included in the final bill, would have prevented the shift from CHIP to the exchange unless the White House certified that the plans offered comparable benefits.
2. 2.                  Require that all exchange plans offer EPSDT services – The unique prevention-oriented EPSDT requirements, which include comprehensive physical health, mental health, and developmental assessments, and vision, dental, and hearing services, have been proven to identify conditions that can impede children’s growth and development early, so as to avoid the costs of long-term disability.  EPSDT also covers all diagnostic and treatment services necessary for both acute and chronic health conditions – more than most private insurance plans. Access to the physical, occupational and speech therapy, respiratory care, personal care services, mental health and substance abuse services, and durable medical equipment provided by EPSDT has been shown to improve the quality of life in children with disabilities.  Having all exchange plans include this coverage, as some legislators have proposed, might ensure that low-income children not experience a decrease in care, but it is much more difficult to hold commercial plans accountable than state plans. Another option, which has also never been tested, however, is to keep the “benchmark” benefits provided by the private plans, but give families “wrap-around” supplemental coverage to fill the gaps in EPSDT services the plans don’t cover.
3. 3.                  Continue CHIP – Maintaining the CHIP program would help ensure that all currently covered children don’t experience a decrease in coverage. The Senate Finance Committee’s reform bill would keep the CHIP program in place until September, 2019, when it would be up for reauthorization. The Congressional Budget Office (CBO) assumes, however, that CHIP would be funded at only $5.7 billion a year, a fraction of what it would need just to maintain its current caseload.  This option also does not address CHIP’s weaknesses, such as less comprehensive coverage than EPSDT, nor the fact that maintaining CHIP as a separate program would likely make the health care system more complex and difficult for families to navigate.
4. 4.                  Allow more low-income children to enroll in EPSDT – Medicaid costs less per child on average than private insurance, even including all the services covered by EPSDT that are not typically covered by private insurance, and after adjusting for  lower provider payment rates.  Additionally, its prevention-based requirements have been proven beneficial.  This option would be both more cost effective and medically effective than the current proposal.

Policy Suggestions

Both public and private coverage fall short in meeting children’s needs, but EPSDT has been more effective than private coverage in providing preventive care to low-income children. The expanded EPSDT should provide more coverage– all children up to 300 percent of the FPL (about $66,000 for a family of four) should be eligible for EPSDT.  Medicaid is the most effective way to provide comprehensive and affordable coverage to people, and EPSDT is also significantly less costly per child than private insurance, largely due to its lower administrative costs. One study found that if EPSDT children were to be covered by private coverage, average medical costs would rise by 3 to 11 percent. Looking at how health care reform affects children is vitally important – improving the developmental and health trajectories of children could lead to better health and functioning and lower chronic disease burdens in the adult population.

Political Feasibility and Unintended Consequences

Cost would be a major concern for fiscally conservative legislators worried about the deficit.  However, H.R. 3962 is already fully offset – the bill would reduce budget deficits by $129 billion over ten years, and the CBO estimates it would continue to reduce deficits after 2019.  If  adding additional children to EPSDT did raise costs (by having the government pay for both subsidies for the parents, and the children’s coverage) it would be by an inconsequential amount. Some conservatives will likely claim adding more children to EPSDT is increasing “socialized medicine,” as they did during the CHIP reauthorization debates.  Unlike a newly developed public option, however, Medicaid is a program that has existed for over 40 years that is generally respected.  This policy would merely provide coverage for more children.

One unintended consequence is that some children would not be combined with their parents under a single health policy, which could both be complicated for families, and make it slightly less likely for children to utilize all available benefits.