Increasing Denali Kidcare Eligibility: the Lifeboats Are Here

• Publication year: 2010

§ 27 Alaska L. Rev. 103. INCREASING DENALI KIDCARE ELIGIBILITY: THE LIFEBOATS ARE HERE

Alaska Law Review
Volume 27, No. 1, June 2010
Cited: 27 Alaska L. Rev. 103

INCREASING DENALI KIDCARE ELIGIBILITY: THE LIFEBOATS ARE HERE

ALEXANDER SADIGHI ^[*]

ABSTRACT

In this Note, the Author analyzes the current state of Denali KidCare. The Author summarizes the history of state-provided health insurance for children and the particular difficulties associated with providing health care in Alaska. In light of the recent passage of the Children's Health Insurance Program Reauthorization Act in 2009, the Author then investigates the increased incentives for states to expand health care coverage to more children and describes Alaska's failure to take advantage of these opportunities. The Article concludes with an argument in favor of specific steps that would allow Alaska to provide health care to as many children as possible at the lowest cost.

TABLE OF CONTENTS

INTRODUCTION................................................................................................104

I. HISTORY OF THE STATE CHILDREN'S HEALTH INSURANCE PROGRAM.............................................................................................105

II. CHILDREN'S HEALTH INSURANCE PROGRAM REAUTHORIZATION ACT.....................................................................107

A. Financing.....................................................................................108

B. Outreach and Enrollment.........................................................112

III. HEALTH CARE IN ALASKA: BACKGROUND........................................113

IV. DENALI KIDCARE................................................................................115

A. Background.................................................................................115

B. Qualifying Income Eligibility Standard..................................117

C. Raising the Eligibility Level.....................................................118

V. TAKING FULL ADVANTAGE OF CHIPRA.................................................................................................120

A. Performance Bonus Payments.................................................120

B. Outreach Grants.........................................................................121

C. Providing Insurance Can Save Money...................................122

D. Costs Are Low............................................................................123

CONCLUSION...................................................................................................124

INTRODUCTION

Alaska-The Last Frontier-has been a place where people go to hide, to escape, to live in seclusion and free of intrusion. Such desires are made possible by a land that is one-fifth the size of the United States, and larger than Texas, California, and Montana combined. ^[1] A land of such tremendous proportions allows for a population density of 1.07 persons per square mile. ^[2] Such a vast and unsettled land, however, leads to many costs.

Alaska depends on world demand for its products, including oil, fish, minerals, and timber. ^[3] Dependence on such commodities results in booms and busts, seasonal employment, and general instability. ^[4] These factors, together with the state's geography, make providing health care in Alaska particularly difficult and problematic-both in terms of quality and cost.

For example, as of 2007, Alaska's unique situation has resulted in an insurance market where two companies control ninety-five percent of the market. ^[5] Such a market leads to a state of affairs where certain low-income residents -too wealthy for Medicaid-could have to pay up to twenty percent of their incomes for health insurance. ^[6] It is simple enough to understand that when families have to choose between buying insurance costing twenty percent of their income and having no insurance at all, the result will be many uninsured families and children. In Alaska, around 18,000 children are uninsured. ^[7]

The federal government has been aware of this problem, which has arisen in many states. In response, it enacted the State Children's Health Insurance Program (S-CHIP) -now called "CHIP"-which the Obama administration reauthorized in the Children's Health Insurance Program Reauthorization Act (CHIPRA). ^[8] But Alaska is failing its families and children by not taking full advantage of the benefits provided under CHIPRA to help families too wealthy for Medicaid but too poor to afford private coverage. ^[9] The federal government is sending Alaska lifeboats to help insure its children, but Alaska has chosen to reject them.

This Note will argue that Alaska needs to change its CHIP laws and policies to better suit low-income children and families. Part I provides the background and origins of S-CHIP. Part II addresses CHIPRA and the changes it established in the system -specifically in terms of finance and outreach. Parts III and IV address Alaska's background and health care situation. Part V describes Denali KidCare-Alaska's CHIP. Finally, Part VI provides analysis for what Alaska needs to do to exploit CHIPRA fully and efficiently to provide low-income Alaskan families with maximum benefits.

I. HISTORY OF THE STATE CHILDREN'S HEALTH INSURANCE PROGRAM

In 1977, President Jimmy Carter introduced the Child Health Assessment Program to Congress-a major piece of legislation designed to improve health services for children of low-income families. ^[10] In the late 1980s, budget legislation phased in Medicaid coverage for children in poverty. ^[11] Additionally, states extended coverage to children and parents at higher income levels through Medicaid options and demonstration waivers. ^[12] By 1997, around twenty-one million children were enrolled in Medicaid. ^[13]

In 1997, President Clinton focused his efforts on a disproportionately uninsured group: families too wealthy for Medicaid but too poor to afford private insurance. ^[14] This group fell between 100% and 200% of the poverty line. ^[15] What resulted were proposals of different types. For example, Senators Orrin Hatch (R-Utah) and Ted Kennedy (D-Mass.) proposed comprehensive coverage, while other senators proposed expanding Medicaid. ^[16] The final product was the State Children's Health Insurance Program (S-CHIP), established by the Balanced Budget Act of 1997 and enacted under Title XXI of the Social Security Act. ^[17] Professor Lambrew ^[18] described S-CHIP as "a fine balance-hard wrought but designed to maintain equilibrium between states and the federal government as well as political conservatives and liberals." ^[19]

States were charged with administering S-CHIP within broad federal guidelines, and states and the federal government jointly financed it. ^[20] States were given great flexibility in designing their programs. ^[21] For example, in 2006, twenty-six states had eligibility thresholds at 200% of the poverty level and nine had thresholds at less than 200%; states went as low as 140% and as high as 350%. ^[22] The poverty guidelines are issued each year by the Department of Health and Human Services. ^[23] In 2009, the poverty guideline for a family of four in the forty-eight contiguous states and Washington, D.C. was $22,050. ^[24] For a family of four in Alaska, the poverty guideline for 2009 was $27,570. ^[25]

States were able to administer S-CHIP in three different ways: (1) by expanding Medicaid to cover ineligible children; (2) by creating a separate program under S-CHIP; or (3) through some combination of the first two methods. ^[26] If a state chose to expand Medicaid, it had to provide the same benefits as were already provided under the Medicaid program and had to apply the same rules and regulations. ^[27] If a state chose to create a separate program under S-CHIP, it was subject to minimum standards set by the federal government. ^[28]

Federal funding for S-CHIP was allocated based on a formula taking into account the number of children in low-income families, the number of uninsured children, and the wages in health services. ^[29] This method gave the most funding to states with the greatest number of uninsured children, but it caused major distribution imbalances. ^[30] Some states with a high number of uninsured low-income children received too much money -more than they were spending-and some states received too little. ^[31]

States were required to provide matching funds and were given three years to spend their federal allotment; if a state did not spend its federal allotment, the leftover money would be redistributed to a state that had exhausted its allotment. ^[32] To incentivize state participation, the federal government paid a higher share of the spending on S-CHIP than it did in Medicaid. ^[33] The federal government's matching rate varied between states from sixty-five percent to eighty-three percent, compared to fifty percent to seventy-six percent for Medicaid spending. ^[34] S-CHIP also differed from Medicaid in that it was not an entitlement program without limits on spending; S-CHIP was a grant program with federal spending capped in advance. ^[35]

S-CHIP was successful in reducing the number of low-income uninsured children. In the last decade, as a result of Medicaid and S-CHIP -combined with states expanding eligibility and adopting streamlined enrollment procedures -the...