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October 1997 Policymakers, Others Examine MDCH’s MIChild Program by Lisa D. Baragar, Consultant for Public Policy The Michigan Department of Community Health (MDCH) wasted no time in developing its plan for using Michigan’s share—$91.6 million—of the $24 billion that Congress appropriated in August for the federal children’s health initiative. On October 7, Carol Isaacs, director of health legislation and policy development for the MDCH, explained to the House Appropriations Subcommittee on Community Health that state officials already have concrete ideas on how they will obtain the $40 million in matching funds that Michigan must contribute to receive its first year’s federal allotment. In addition, she presented the initial framework for MIChild (pronounced "my child")—the new health insurance program for uninsured children. Although the full details of the new program are not yet available, officials are poised to put it in place early next year. Still, Isaacs describes the plan as "a work in progress" and acknowledges that the state has much fine-tuning to do before launching the new initiative. At the hearing, she explained a few specifics about the program. MIChild The program will target a very specific population: children aged under 19 who are ineligible for Medicaid but whose family income is at or below 200 percent of the federal poverty level (FPL); the FPL is $13,330 for a family of three. Unlike Medicaid, no asset test will be used to determine a child’s eligibility for the new program. The MDCH expects MIChild to cover 156,000 of the state’s 228,000 uninsured children (this figure is based on U.S. Census Bureau data), which means that approximately 70,000 Michigan children will remain without any coverage despite implementation of the new plan. Isaacs pointed out that the objectives of MIChild are to
Isaacs added that the plan will cover the following services: well-child visits and immunizations, hearing and vision screening, primary care and specialty physician visits, emergency care and transportation, mental health care, diagnostic treatment, inpatient and outpatient hospital visits, dental care, and prescription drugs. So far, MDCH officials intend to offer MIChild through the health plans and networks already established as Michigan’s qualified health plans (plans that have been awarded state contracts to provide capitated Medicaid managed care). Implementation will begin soon after the first of the year in Wayne, Oakland, Macomb, Washtenaw, and Genesee counties, with the remainder of the state scheduled for spring 1998. Premium Sharing Although MDCH officials contend that the plan is in relatively good shape, policymakers and some organizations have concerns about key aspects of the plan. Representative Robert Emerson (D-Flint) is one legislator, for example, who sees room for improvement. At the subcommittee meeting, he explained that he does not believe that premium sharing or copayments should be a part of the program, especially because it is unclear whether they will decrease the federal government’s share of the cost or offset state funding. Isaacs pointed out, however, that federal law allows states to impose premium sharing, which can be no more than five percent of a family’s income; Michigan’s proposed coinsurance of $8 a child is, on average, less than one percent. Emerson argued that just because the federal government allows Michigan and other states to impose premium sharing does not mean they must, especially if it hurts those eligible for the program: "State workers do not pay anything for their health insurance; what makes them think that families that earn up to 200 percent of the FPL can afford to do so?" Isaacs justified premium sharing by comparing MIChild to Michigan’s Healthy Kids—a recent expansion of Medicaid to cover more children. She explained that Healthy Kids failed because parents (1) did not like the stigma of being a part of a Medicaid program, (2) thought the program was too bureaucratic, and (3) thought they would find insurance soon, but if, in the meantime, their children really needed health care, they would take them to an emergency room. "By incorporating premium sharing in the MIChild program," Isaacs suggested, "parents will feel less as though it is an entitlement; instead, they will have ownership in the program and their children’s health." She added that this is why the state opted to create a new health insurance program for children instead of expanding Medicaid. Crowd Out Isaacs explained that another major problem facing MIChild is "crowd out"—the deliberate exclusion of a child from any private or public health insurance plan with the expectation that MIChild will pick him/her up—which is prohibited by the federal children’s health initiative. According to Isaacs, the Michigan program seeks to comply with the crowd-out prohibition stipulating that if an employer ceases to offer dependent health insurance coverage, parents must wait six months before their children are eligible for MIChild; if a family moves to Michigan, they too must wait six months. Still, federal law and Michigan’s policy may not adequately address the issue. In separate discussions, both Blue Cross and Blue Shield of Michigan (BCBSM) and the federal Health Care Financing Administration (HCFA)—the Medicaid and Medicare regulatory agency—explained that crowd out will remain a major problem. For example, BCBSM administers the Caring Program for Children, which covers outpatient services for 4,200 children aged up to 19 whose family income is equal to or less than 185 percent of the FPL. "Because MIChild covers children up to 200 percent of the FPL, [children in the Caring program] will be disqualified from the Caring Program," explained Tracy Baker, manager of state relations for BCBSM. The likelihood, she added, is that the Caring Program will be discontinued. The loss of such programs, however, is what federal legislators sought to avoid when they drafted the children’s health initiative. According to Debbie Chang, director of the Office of Legislation for HCFA, state initiatives such as MIChild are supposed to be in addition to, not instead of, states’ existing programs; the purpose is to expand the number of children eligible for health care, not make children who already have coverage eligible for a new program. Conclusion Despite their differences on premium sharing and crowd out, MDCH officials, legislators, and others agree that outreach and enrollment simplicity and flexibility will be the key to the new program’s success. Isaacs stated that the state plans to work with community organizations to help enroll children in MIChild or Medicaid, whichever is appropriate. In addition, families will be able to enroll using a single, mail-in form that they can pick up at schools and doctors’ offices. Still, there are many other issues surrounding the initiative, such as defining the relationship between MIChild and the health plans that will administer Michigan’s Medicaid managed-care initiative: Will qualified health plans’ contracts be modified to require participation in MIChild? Will capitation rates differ for the Medicaid and MIChild populations? Although the MDCH has come a long way in creating a framework for MIChild, many are quick to remind the department that it still has a long way to go.
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