Newly eligible will join health plan risk pools

May 1, 2010

The reform law provides for and expansion of Medicaid recipients and dependent children as well as an expansion of the Children's Health Insurance Program.

NATIONAL REPORTS-Managed care organizations are sizing up a new pool of potential enrollees. The reform law provides for an expansion of Medicaid recipients and dependent children as well as an expansion of the Children's Health Insurance Program (CHIP).

Between 2010 and 2019, the Congressional Budget Office (CBO) estimates that there will be $434 billion in additional funding for Medicaid and CHIP programs.

"This is very significant for managed care companies that are either in the business of serving CHIP and Medicaid enrollees, or are considering getting into the business," says Joan Alker, co-executive director of the Georgetown University Center for Children and Families. "Much of the [law's] funding is to provide coverage through Medicaid and CHIP. Medicaid managed care is the predominant mode of service delivery. We expect that to continue."

The law expands Medicaid nationally to 133% of poverty level ($14,404 for an individual or $26,326 for a family of four in 2009) beginning Jan. 1, 2014, which will eliminate state variations in eligibility, and also include childless adults not yet eligible for Medicare who typically have been excluded from Medicaid coverage in the past.

CHIP, which was reauthorized in February 2009, will continue until at least 2019, and funding is secure through fiscal year 2015. Another provision in the law will allow states to use CHIP funding to cover children of state employees under certain circumstances.

Young adults, age 19 to 29, have the highest uninsured rate of any age group in the country, according to the Kaiser Family Foundation. They are often called "young invincibles" because many are uninsured and don't perceive a need for health insurance.

Currently, 14 states and the District of Columbia have no definition for how long parents can keep dependent children on their coverage. States that currently allow coverage beyond age 26-such as New York (age 29) and New Jersey (age 30)-are generally unaffected by the change.

DEFINITIONS WILL BE CRITICAL

There are still several questions to be resolved surrounding the dependent provision in the law, says Bianca DiJulio, principal policy analyst for Kaiser Family Foundation, such as further guidance from the Department of Health and Human Services about who is considered to be a dependent. For example, it may be possible for children to be married and still on their parent's plan. The children of a dependent-grandchildren-will not be eligible, however. On the other hand, there is nothing that prevents a dependent's spouse from joining an in-law's health plan, DiJulio notes.

"These issues will affect how many young adults can benefit from this provision," she says.

She also says employers will need to determine whether to share the cost of this premium or absorb it.

In the long run, DiJulio notes, the dependent provision of the healthcare reform law could be significantly beneficial to health insurance companies.

"This makes insurance more available to individuals in this age group," she says. "More people will be in health plans and be able to take advantage of those plans."

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