January 28, 2003
HUSKY FOR UNINSURED ADULTS
By: Saul Spigel, Chief Analyst
You asked if there are any federal or state legal barriers to permitting uninsured adults to purchase insurance through the state's HUSKY program. You also wanted to know whether any other issues might affect implementing such a policy.
There appear to be no federal legal barriers to permitting uninsured adults to purchase HUSKY insurance benefits if they pay the full premium of approximately $170 per month and required co-payments. This would place them in “Band 3” of HUSKY B, which is currently available only to children in families with incomes at or above 300% of the federal poverty level (FPL).
Parents and adult relative caretakers with incomes up to 150% of FPL of children eligible for HUSKY A are already able under a federal waiver to obtain HUSKY A benefits. And several states have received a federal waiver to expand their Medicaid and State Children's Health Insurance Program (SCHIP, which funds HUSKY B) coverage to higher income parents and childless adults. The latter waiver's guidelines emphasize maximizing private insurance coverage and targeting populations with incomes below 200% of FPL.
State law would have to be changed to permit adults to purchase insurance through HUSKY B. Changes would need to be made in the HUSKY B authorizing statutes (CGS § 17b-289 to –303), which, among other things, state that HUSKY B is for children and defines “eligible beneficiary,” “family,” and “enrollee” in ways that accomplish this end.
Any changes should also make clear that adults could participate only by paying the full HUSKY B premium, that is, by participating in Band 3. Otherwise they might be subject to the federal rules that govern the State Children's Health Insurance Program (SCHIP), which partially funds HUSKY B, and the state plan that implements it. These rules and the plan set eligibility and co-payment requirements based on income, among other things.
There are two issues to consider in designing coverage for adults through the HUSKY program. One is that the Department of Social Services' contracts with the health plans that provide HUSKY B coverage do not cover adults. Consequently, the plans are not obligated to accept adults and they may not be willing to do so because it could entail higher administrative costs and increased risk. The other issue is assuring that providing benefits for adults does not lead employers to drop health insurance benefits. HUSKY B rules originally required families to have been without employer-sponsored coverage for six months before they could qualify. This “crowd-out” period has since been reduced to two months.
The HUSKY program is comprised of three components: HUSKY A, HUSKY B, and HUSKY Plus. HUSKY A is the state's Medicaid program for children and their families and is governed by Medicaid rules. HUSKY B is the state's version of the federal Children's Health Insurance Program and is governed by that program's rules. HUSKY Plus is a supplemental program for children enrolled in HUSKY B whose severe physical or mental health needs cannot be met by the regular HUSKY B benefit package.
HUSKY A is available to children in families with incomes up to 185% of FPL (currently $27,778 for a family of three). Medicaid prohibits charging beneficiaries for premiums or other coinsurance. HUSKY B is available to children in families with incomes between 185% and 300% of FPL ($45,060). It consists of three bands. Families with incomes between 185% and 235% of FPL (Band 1) pay no premium and no more than $650 in annual co-payments. Families with incomes between 235% and 300% of FPL (Band 2) pay a maximum of $1,250 in combined annual premium and co-payments. Uninsured families with incomes over 300% of FPL (Band 3) can obtain HUSKY B benefits for their children by paying the full premium cost of approximately $170 per month plus required co-payments.
HUSKY FOR ADULTS
Parents of HUSKY A Children
Some adults can already enroll in HUSKY. Parents who are receiving Temporary Family Assistance (TFA) automatically qualify, and can maintain coverage for a limited time as they transition off TFA. In 1999, the legislature took advantage of a federal welfare law provision (section 1931) to create a new Medicaid coverage group comprised of parents and caretaker relatives of children enrolled in HUSKY A (PA 99-279). Coverage was originally open to these adults with incomes up to 185% of FPL (the same limit that applied to children). But in 2000, the legislature reduced the limit to 150% of FPL and delayed coverage availability until January 1, 2001.
Nearly 84,300 adults were covered by HUSKY as of November 2002. This figure includes TFA recipients, TFA transitional recipients, and the higher income adults covered by section 1931.
The governor is proposing to reduce the income limit to 100% of FPL, thus eliminating coverage for parents with incomes between 100% and 150% of FPL. The Office of Fiscal Analysis estimates this would eliminate coverage for approximately 23,000 people while saving approximately $55 million per year.
Federal Medicaid and SCHIP Waivers for Adults
A new federal waiver process gives states an opportunity to use SCHIP and Medicaid funds to offer coverage for adults, including childless adults. The Health Insurance Flexibility and Accountability Initiative (HIFA) is a Medicaid and SCHIP demonstration waiver that the Centers for Medicare and Medicaid Services (CMS), the federal agency that administers these programs, introduced in August 2001. Its primary goal is to encourage new, comprehensive state approaches to increase the number of people with health insurance within existing Medicaid and SCHIP resources. HIFA emphasizes statewide approaches that maximize private insurance coverage and target populations with incomes below 200% of FPL.
HIFA does not include any new federal funds for these expansions. Rather, it allows states to reduce spending on existing Medicaid and SCHIP programs by limiting benefits; charging co-payments, deductibles and premiums; and capping the number of people who can enroll in such programs. Waiver proposals must be cost neutral as to Medicaid, that is they cannot increase federal funding over what would have been spent under current requirements. And they must not project spending more on SCHIP-eligible populations than they are allotted under the SCHIP funding formula.
CMS identified three groups of uninsured people who can be included in a waiver: mandatory, optional, and expansion. States cannot alter their benefit packages for people in the mandatory group, but HIFA allows them to be less generous with optional and expansion groups.
The expansion group encompasses people who states cannot cover in either Medicaid or SCHIP without a waiver, such as childless, non-disabled adults under age 65. Several states have already received waivers to cover some people in this expansion group. Arizona and Maine received waivers to cover childless adults with incomes up to 100% of FPL. New Mexico's waiver covers childless adults up to 200% of FPL. Oregon's waiver covers childless adults and parents of SCHIP and Medicaid-eligible children up to 185% of FPL. Utah's waiver extends limited medical coverage, with an enrollment fee and cost sharing, to previously uninsured low-income adults by increasing cost-sharing requirements and reducing optional benefits to certain current Medicaid recipients.
The Government Accounting Office (GAO) has criticized CMS' granting waivers to use SCHIP money to cover uninsured adults on both legal and policy grounds. It asserts that Arizona's use (GAO reviewed only Arizona, California, and Utah's waivers) of unspent SCHIP funds to cover childless adults is not consistent with, and consequently not authorized by, SCHIP's statutory objective of expanding health coverage to low-income children. SCHIP law also requires states to return unused funds for reallocation to states that have exhausted their allocations. Allowing states to use money they did not spend on children for childless adults prevents this reallocation, GAO asserts.