Administrative Hurdles In Public Health Insurance Programs Are Costing States Millions Of Dollars And Reducing Funding Needed For Care

NEW YORK CITY, Jan. 8-- At a time when states across the country are cutting their Medicaid budgets and setting up hurdles to keep children from enrolling in Medicaid and the State Children???s Health Insurance Program (SCHIP), a new study shows that these administrative hurdles are costing states millions of dollars that could otherwise be used to provide care to children in need.

A study conducted by The New York Academy of Medicine (the Academy), the Children???s Defense Fund-New York and Manatt, Phelps & Phillips, LLP and released today in the journal Health Affairs shows that New York state could reduce enrollment costs for its Medicaid and SCHIP programs by as much as 40 percent by simplifying the program???s application process. The researchers estimate that simplifying procedures could drop the average Medicaid or SCHIP enrollment cost of $280 per child to $168, a savings of $112 per child.

???Instead of being used to serve children, these Medicaid and SCHIP dollars are being spent on unnecessary red tape,??? said Gerry Fairbrother, Ph.D., a senior scientist at the Academy, and the lead study author. ???We are talking about millions of dollars that could be used to improve the health of children. There has to be a better answer.???

As a way to save Medicaid and SCHIP dollars, many states are introducing administrative hurdles in an effort to reduce the number of children who will successfully enroll. These hurdles include increasing how often enrollees have to prove their eligibility or increasing the amount of paperwork that must be completed. But those administrative hurdles are costly and time consuming and are taking away funds that could be spent on care for children, while reducing the number of children enrolling in these programs, according to the study.

In addition to increasing administrative requirements, since last year, 49 states have either cut or proposed cuts in their Medicaid spending, and 32 have planned a second round of cuts.

The study authors examined enrollment costs from three health plans that enroll both Medicaid and SCHIP children in the greater New York City area. The study compared current enrollment costs with those associated with a streamlined process that was used immediately following September 11, 2001. Following the terrorist attacks on that day, the state???s Medicaid central computer system was damaged and the state had to implement a dramatically streamlined process, which included several simplification features already being used in 10 other states.

The research team concluded that as much as 80 percent of the enrollment cost is associated with the rules, proofs and calculations needed to document eligibility for health insurance. By contrast, activities that help the family such as outreach and health insurance education together account for only 21 percent of the costs of enrollment.

???Health plans and state and local governments devote enormous resources to enrolling and renewing eligible families in the Medicaid and SCHIP programs,??? said Patricia Boozang, M.P.H., a co-author of the study and a senior health policy analyst at Manatt, Phelps & Phillips, LLP. ???If the administrative processes were simplified, we could redirect these resources to helping families access the health care services they need.???

In addition to creating additional costs, complex enrollment procedures are resulting in more and more families losing coverage. In fact complicated procedures cause programs to drop coverage for 50-60 percent of eligible youngsters whose families fail to re-establish eligibility each year.

???States that are contemplating making their enrollment process more complicated need to realize that those added steps are going to cost additional dollars,??? said Melinda Dutton, a co-author of the study and Director of Policy and Research at the Children???s Defense Fund. ???Using scarce health care dollars to chase children away from public health insurance is the worst kind of health policy. It harms children while wasting precious resources that would be better spent on giving our children a healthy start in life.???

The New York Academy of Medicine is a non-profit institution founded in 1847 that is dedicated to enhancing the health of the public through research education and advocacy with a particular focus on urban populations, especially the disadvantaged. The Children???s Defense Fund is a non-profit children???s advocacy organization that for thirty years has provided a strong and effective voice for all of the children of America who cannot vote, lobby, or speak for themselves. Address inquiries to Carolyn Kresky at 212-697-2323 or via email, ckresky@cdfny.org.

Manatt, Phelps & Phillips, LLP is a law and consulting firm, representing the New York State Coalition of Pre-paid Health Service Plans. The Firm???s healthcare policy group, based in New York, specializes in government sponsored health insurance programs. Address inquiries to Rachel Rosten Lohman at 212-445-8269 or via e mail, rlohman@webershandwick.com. Health Affairs, published by Project HOPE, is a bimonthly multidisciplinary journal devoted to publishing the leading edge in health policy thought and research. Articles in the January/February issue of the journal are available free to members of the press. Address inquiries to Jon Gardner at 301-656-7401, ext. 230 or via email, press@healthaffairs.org.

Posted on January 8, 2004

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