In 1997, the federal government created SCHIP to ensure healthcare coverage for America's children living in poverty. Ten years later, over 34 million children are enrolled under Medicaid and SCHIP. Yet nine million children still lack health insurance, three-quarters of whom are eligible for but not enrolled in SCHIP.
Access and awareness are the most common barriers to SCHIP enrollment cited by parents of uninsured children. In many states, SCHIP enrollment is a complicated process which is separate from other social services and which may require taking time off from work for face-to-face interviews. Moreover, many parents are not aware that their children qualify for the program. Recent state-led outreach efforts have made some progress in addressing these issues, but more decisive action is needed to close the gap between eligibility and enrollment.
Automatically enrolling eligible children in SCHIP is the simplest and most practical way to close this gap. Several studies suggest that switching to an opt-out system instead of an opt-in one can dramatically improve enrollment. Using tax returns to facilitate automatic enrollment makes sense because the relevant information for determining eligibility is already included in the tax return. A patient's medical conditions or medical expenses would not be required, and thus HIPAA Protected Health Information would not be violated. Tax-based enrollment would also have the added benefit of encouraging families to file their taxes on time and to take advantage of other tax-based government programs, such as Child Care Credits and the Earned Income Tax Credit (EITC). This proposal could be piloted at the state or federal level as a supplement to existing outreach efforts, and it has the potential to be integrated with other plans to reform the tax code and to reduce unnecessary bureaucracy in our nation's vital social programs.
HISTORY
In the past ten years, SCHIP has significantly reduced the number of uninsured children. Enrolling eligible children in the program, however, has always been difficult. Several states are trying novel means of outreach, such as offering enrollment at community centers and streamlining eligibility with Food Stamps, WIC, and other programs. Nevertheless, many of these policies are relatively resource-intensive and still rely on opt-in strategies rather than more effective opt-out ones.
ANALYSIS
The tax system has already become an important vehicle for ensuring health care coverage. Tax-exempt Health Savings Accounts and state-based efforts to provide credits for health care coverage are notable examples. This proposal builds on previous efforts by not only providing a financial incentive for insurance but by actually enrolling individuals in programs they qualify for.
This policy would significantly streamline the enrollment and renewal process for applicants and administrators, and thus it has the potential to save money on administrative costs in the long run. Also, aligning SCHIP renewal with the tax calendar should not be a significant change since 44 states have already adopted a 12-month renewal period for Medicaid/SCHIP.
Some may be concerned that eligible families may not file their taxes, but closer analysis reveals that this fear is unfounded. Experience with the EITC, for example, has shown that despite some challenges in receiving filings from households without children, over 90 percent of eligible households with one or two children take advantage of the credit. To be truly effective, however, additional efforts will be needed to inform families about changes, and traditional forms of enrollment should not be cut before reform is fully implemented.
NEXT STEPS
Because SCHIP is funded by states and the federal government, reform can happen at either level. Current proposals for SCHIP reauthorization and tax simplification offer opportunities to include this policy in federal reform efforts, but history suggests that a state-based approach may be more feasible.
SOURCES
Burban, Leonard and Deborah Kobes. 'Analysis of GAO Study of EITC Eligibility and Participation.' Urban Institute. 1 Jan 2002. Available at <www.urban.org/publications/410435.html>.
Kaiser Commission on Medicaid and the Uninsured. 'Enrolling Uninsured Low-Income Children in Medicaid and SCHIP.' Kaiser Family Foundation. January 2007. Available at <http://www.kff.org/medicaid/upload/2177-05.pdf>.
*A full list of sources is available upon request.
Robert Nelb, Yale University
RELATED ARTICLE: KEY FACTS
* Nine million children in the United States are uninsured.
* 74 percent of these children are eligible but not enrolled in Medicaid/SCHIP.
* The majority of Americans (over 90 percent) believes that providing health insurance to children is the right thing to do.
RELATED ARTICLE: TALKING POINTS
* This plan will reduce unnecessary bureaucracy and significantly improve access to care for millions of children.
* The only significant cost of this proposal is paying for the health care coverage that has already been promised to children and their families.
* Protected health information will not be shared with the IRS and privacy will be maintained.
