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COD E R E D

Download - Code Red: The Critical Condition of Health in Texas

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Appendix BMedicaid and the State Children’s Health Insurance Programin Texas:History, Current Arrangements, and OptionsPrepared by David C. Warner, Lauren R. Jahnke, and Kristie KimbellCenter for Health and Social PolicyLBJ School of Public AffairsThe University of Texas at AustinApril 2005Executive SummaryMedicaid and the State Children’s Health Insurance Program (SCHIP) are key programs forproviding health insurance and health care to low-income people in the United States. Thisreport reviews the history and current state of Medicaid and SCHIP in the U.S. and Texas interms of mandatory and optional beneficiaries, mandatory and optional benefits, and options forprogram expansions or modifications. The report focuses on medical services and not longtermcare under Medicaid. Major changes may occur soon to Medicaid on the federal level, butdetails are not yet available.Medicaid was established in 1965 to pay the medical bills of low-income people and increaseaccess to health care. Medicaid is overseen by the Centers for Medicare and MedicaidServices (CMS), part of the U.S. Department of Health and Human Services, and is a federalstatepartnership, so the program varies from state to state depending on how the state haschosen to implement it, within certain basic guidelines. Federal law says that states must coverwhat are called mandatory populations and offer mandatory benefits, and coverage beyondthese levels are called optional populations and benefits. The federal government matcheseach state’s Medicaid spending by covering from 50 percent to 83 percent of Medicaidexpenses, depending on a formula that takes into account the average income in each stateeach year. A few services are matched at higher percentages, such as family planning at 90percent. The Disproportionate Share Hospital Program (DSH) is a Medicaid programestablished in 1981 that reimburses hospitals that serve a disproportionately large number ofMedicaid patients or other low-income people to help compensate them for lost revenues.The State Children’s Health Insurance Program (SCHIP) was created in 1997 to offer healthinsurance to uninsured children with family incomes or assets too high to qualify for Medicaid,but who cannot afford private insurance. It is also administered by CMS. It is not an entitlementprogram, unlike Medicaid, so it does not have to serve everyone who qualifies — it can turndown recipients if the state depletes its SCHIP budget. The federal government matches ahigher percentage of state spending in SCHIP than in Medicaid. The formula for SCHIP federalmatching funds is based on each state’s Medicaid matching rate; in 2004 the SCHIP matchingrates varied from 65 to 84 percent.States can get permission to waive certain Medicaid and SCHIP laws and regulations to givethe states more flexibility and to allow experimentation with new approaches to delivering

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