Medicaid Managed Care - U.S. Senate Special Committee on Aging

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were not enrolled in <strong>Medicaid</strong> or covered by private insurance. These <strong>Medicaid</strong>-eligible uninsured
children accounted for 30 percent of all uninsured children in 1994 (GAO 1996a).
GAO indicates several reasons why a gap exists between eligibility and enrollment. First, some low1
income families may not be aware that children can be eligible for <strong>Medicaid</strong> when a parent works full
time or when two parents are present. Second, the enrollment process is difficult for low-income
families. Some applicants never complete the process, and others are denied eligibility for procedural
reasons that are correctable. In other cases, families may regard <strong>Medicaid</strong> as a welfare program and
avoid enrollment unless faced with a medical crisis.
Some states operate outreach programs to get more children enrolled. States, however, face conflicting
incentives. Although states seek to improve the health of their residents, expanded enrollment adds to
the cost pressures that <strong>Medicaid</strong> places on state budgets. This is likely to be true even though new
<strong>Medicaid</strong> spending may offset other state expenditures that directly or indirectly finance care for the
medically indigent.
The Effect of Welfare Reform. Under federal welfare reform legislation (P.L. 104-193), states have
the ability to unlink <strong>Medicaid</strong> eligibility from their new public assistance programs-while keeping a
link to old AFDC eligibility standards. About 1.3 million children and more than 4 million parents
receive <strong>Medicaid</strong> based solely on their eligibility for AFDC. Although the law eliminates the AFDC
program and replaces it with a new block grant program called Temporary Assistance for Needy
Families (TANF), those who were previously eligible for AFDC are supposed to retain <strong>Medicaid</strong>
eligibility automatically. The new law permanently carries old AFDC rules and standards into the
<strong>Medicaid</strong> program, rather than just grandfathering current beneficiaries' eligibility status. States are
permitted to modify or simplify <strong>Medicaid</strong> eligibility standards as long as the 1996 <strong>Medicaid</strong> rules are
treated as minimum standards. As a result of these changes, some individuals will now be eligible for
<strong>Medicaid</strong> even though they are not eligible for TANF (HCFA 1996c; Center on Budget and Policy
Priorities 1996; NHPF 1997).
By contrast, two other provisions of the new law may cause some people to lose <strong>Medicaid</strong> eligibility.
First, tightened eligibility criteria for coverage of disabled children under SSI could lead some to lose
<strong>Medicaid</strong> coverage. Some of these children, however, might qualify for <strong>Medicaid</strong> through other criteria
(HCFA 1996b). Second, states will not receive federal matching funds for coverage provided to legal
immigrants within five years of their entering the country. Legal immigrants already on <strong>Medicaid</strong>,
however, will not lose their eligibility (HCFA 1996d).
Although the law makes only minor explicit changes in the <strong>Medicaid</strong> program, some analysts believe
there may be greater indirect effects, ultimately reducing the numbers of people receiving <strong>Medicaid</strong>
benefits. Even more than at present, some who qualify may not be enrolled because they do not
understand that they are eligible or how to enroll. In addition, states will be faced with decisions on
how simple to make <strong>Medicaid</strong> applications for those eligible for TANF and how aggressive to be in
identifying people eligible for <strong>Medicaid</strong> but not for TANF (NHPF 1997).
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