You asked (1) whether any state's State Children's Health Insurance Program (SCHIP) requires families whose kids have exorbitant medical expenses to pay higher premiums and (2) for a breakdown of expenditures in Connecticut's Katie Beckett waiver program.

None of the SCHIP experts we contacted were able to identify any states with SCHIP programs that require families with children who need expensive medical treatment to pay higher premiums. But the Centers for Medicare and Medicaid Services, the federal agency that oversees the SCHIP program, is still checking to see if any states are doing this. We will advise you if it identifies any.

SUMMARY

We are unaware of any states that have tiered premiums in their SCHIP programs that require families who have children with very high medical costs to pay higher premiums than other families. States could face at least two obstacles in implementing such a system. First, federal law limits what states may charge families for cost sharing to 5% of income. And state wishing to use a tiered premium could need a federal waiver, since the regulations seem to contemplate cost sharing based on income alone and in a way that does not favor higher income families over poorer ones.

Arizona has asked the federal Centers for Medicare and Medicaid Services (CMS) to amend the state's existing Medicaid 1115 waiver to allow it to charge premiums to parents of severely disabled children enrolled in the state's Arizona Long Term Care Services program premiums once their income exceeds 400% of the federal poverty level (FPL). The state will continue to disregard the parents' income for eligibility purposes (similar to Connecticut's Katie Beckett waiver), but it wants the ability to charge the higher income families for some of their children's care costs.

Connecticut could alternatively use an SCHIP waiver to help families whose private insurance lacks coverage for their medically involved children and who cannot access the Katie Beckett program because of its long waiting list. Another option would be for the state to create a new Medicaid coverage group that Congress established in the new federal Deficit Reduction Act.

DSS reports that in 2004, the average monthly cost per case in the Katie Beckett program was $ 1,517. 85. This amount covers home health, hospital care, doctors, prescriptions, and other costs. If you would like a more detailed breakdown of the costs, we would need to make a special request to DSS.

SCHIP PREMIUMS FOR CHILDREN WITH HIGH MEDICAL COSTS

The federal SCHIP law limits states' cost sharing charges to 5% of their income. States can vary premiums and other cost sharing based on income, but only if it does not favor higher income children over lower income children (42 CFR § 457. 530).

In Connecticut, families with children in HUSKY B (our SCHIP program) whose income is between 235% and 300% of FPL pay a flat monthly premium, regardless of their children's care costs. The highest eligible income for HUSKY B families of four is $ 60,000; 5% of this is $ 3,000. Currently, a family with income between 235% and 300% of the FPL pays $ 25 per month per child (maximum of $ 50 per family) and $ 760 per year in co-payments, for a yearly maximum cost sharing of $ 1,360. (HUSKY B families with incomes between 185% and 235% of the FPL pay no premiums. ) Connecticut would still be within the 5% cap if it were to raise the premium for these families with high-cost children, but it is unclear whether federal rules would allow this without some type of a waiver.

Alternatives for Families with Limited Insurance Coverage

Some families may not qualify for SCHIP because of income and cannot get into the Katie Beckett program because that program has 110 people on its waiting list. Some of these individuals may have private insurance that does not cover catastrophic care.

An alternative could be for the Department of Social Services (DSS) to seek an SCHIP waiver to provide coverage for the services that these families' private plans do not cover (“wrap around”), provided their income is no more than 300% of the FPL. (In this instance, the waiver would be necessary because SCHIP coverage is typically for people who have no insurance). For higher income families, the state could allow people to buy into this coverage, which higher income families may already do for regular HUSKY B coverage. Such a plan would enable the state to spend down more of its SCHIP block grant (the state gets $ . 65 back in federal block grant funds for every $ 1 it spends), which currently has a $ 9 million surplus, according to DSS. And parents could be asked to pay a portion of the wrap around coverage in a monthly premium.

Deficit Reduction Act

As an alternative to the SCHIP waiver, states could create a Medicaid coverage group for children who meet the federal Social Security definition of disability. This alternative was just authorized under the Family Opportunity Act provisions (Section 6062) of the recently-passed federal Deficit Reduction Act of 2005. Family income can be as high as 300% of the FPL, but states can go higher with no federal funding.

The program will be phased in, with children up to age six covered first, beginning on January 1, 2007. As an optional program, states could amend their Medicaid state plans to include this new group, without a federal waiver. Families must participate in employer-sponsored coverage in certain circumstances, as well as pay monthly premiums. The premium caps are higher than SCHIP's for families with incomes between 200% and 300% of the FPL (7. 5% instead of 5%). States receive the regular 50% Medicaid match for their program expenditures.

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