January 1998

MIChild Plan Submitted for Federal OK

by Lisa Baragar

The State of Michigan is one step closer to implementing MIChild—the new health insurance program for children (1) aged under 19, (2) living in a family having income at or below 200 percent of the federal poverty level (the 1997 FPL was $13,330 for a family of three; 1998 guidelines have not yet been issued), and (3) ineligible for any other health insurance program, including Medicaid.

In August, Congress appropriated as part of the 1997 federal budget agreement $24 billion to help states expand health insurance coverage to uninsured kids. Michigan Department of Community Health (MDCH) officials then began work on a plan to spend Michigan’s share of the windfall—$467 million over five years. (Michigan must match 32.49 percent of the federal funds it receives.) State officials announced in October that instead of expanding Medicaid—as some states plan to do—they would base a program on the State of Michigan employees’ health benefit plan. Officials expect MIChild to cover about two-thirds—156,000—of Michigan’s 228,000 uninsured children.

The plan offers comprehensive coverage, including (but not limited to) that for well-child services, doctor and hospital visits, dental care, and prescription drugs. In developing MIChild, MDCH officials maintained their commitment to managed care, specifying that only insurers offering a preferred-provider arrangement and health maintenance organizations (HMOs) will be eligible to extend MIChild benefits. Health plans will not have to compete with one another to receive a MIChild contract; they simply must meet the state’s eligibility requirements and adhere to contract conditions. Participating health plans, in return, will receive from the state a yet-to-be-specified capitated (per child) monthly payment and from participating children’s families a monthly premium. The state will contract with nonprofit dental corporations for dental services, and community mental health service boards—public agencies accountable to the MDCH and local government—will provide mental health and substance abuse services.

In December, Michigan officials submitted to the federal Department of Health and Human Services the MIChild plan that, if approved, they hope will be available in April 1998. The plan includes an estimated fiscal year (FY) 1998 budget (including state and federal funds) of $36 million—far less than the $130 million the 1997 federal budget agreement permits, because the state anticipates a first-year MIChild enrollment of only 25,000. Officials say the first year’s enrollment figure is a conservative estimate, and the remaining funds will be rolled over for next year’s use. The budgets for FY 1999 and 2000 are $94.4 million (based on 110,000 enrollees) and $127.5 million (based on 120,000 enrollees), respectively.

Outreach

From the beginning, government and community leaders have agreed that the success of MIChild depends on outreach. The federal budget agreement specifies that combined spending on direct services, administration, and outreach is limited to 10 percent, and many fear that not enough money will be allocated for outreach. State officials, however, indicate that they plan to launch a broad-based media campaign.

In addition, the state will seek help from local government and community agencies. For example, local public health departments receive state funds for Medicaid outreach, and school-based and school-linked health centers and WIC (Women, Infants, and Children) continually educate the public about their services. When parents come into contact with these programs, they will be advised if their child potentially is eligible for MIChild.

Mark Bertler, executive director of the Michigan Association for Local Public Health, says the MDCH outreach plan still needs work. He thinks the state should build partnerships with community businesses and organizations that traditionally have not been tapped for outreach purposes. For example, if a person uses food stamps, his/her children may be candidates for MIChild, and when the store accepts the food stamps it could give the stamp user information about MIChild.

State officials point out that its plan ensures that multipurpose collaborative bodies (groups of business, government, and community representatives charged with planning and providing community services) will receive grants with which they may devise their own outreach initiatives. Sharon Claytor Peters, president and chief executive officer of Michigan’s Children, believes that even with grants, asking community organizations to conduct outreach to yet another vulnerable population may not work. She hopes that the outreach budget will be generous, pointing out that "You get what you pay for."

Cost Sharing

Another issue is cost sharing for families having an income of 151–200 percent of the FPL:  They must pay both an $8 per child monthly premium (capped at $16 per family) and a $5 copay for (1) prescriptions filled without prior authorization, (2) glasses or contact lenses, (3) dental extractions and crowns, and (4) physical-therapy visits. Families with incomes at or below 150 percent of the FPL are exempt from cost sharing.

The department believes that parents will feel less that MIChild is "welfare" program—which could cause many to avoid it—if they help to pay for it. Ms. Peters supports the MDCH position but advises that extra care be taken when parents fail to pay the monthly premium (coverage can be revoked if a parent fails to pay a premium within a month after it is due). She takes the position on that a child should not lose his/her health insurance over $8. Mr. Bertler believes that any cost sharing is unnecessary and harmful. "To say ‘Gosh, this is not a lot of money’ is to look at things from the perspective of a government employee—not of those we’re trying to serve."

Access

Access to MIChild’s services also concerns many. For example, if a child is eligible for any other health insurance program—even if only an employer-sponsored catastrophic-care plan—s/he is not eligible for MIChild. Ms. Peters says children covered by plans less comprehensive than MIChild should have access to the program. State officials indicate that once the program is underway, they will explore ways to expand MIChild coverage to these children.

Another access concern is that MIChild services will be delivered only by managed-care plans. State officials argue this will ensure health care quality and reduce costs. Mr. Bertler believes, however, that providing preventive and other health care to children already is cost effective; there is no need to limit who may provide it. Susan Garcia, deputy director of the Michigan Association of Health Plans supports the managed-care delivery plan; she points out that parents of MIChild eligibles, if they have coverage themselves generally have it from some type of managed-care system (e.g., Medicaid managed care or an employer’s HMO), and their familiarity with how to access and work with such a system will help ensure continuity and consistency of care for their children enrolled in MIChild.

Ms. Garcia is concerned about another access issue: MIChild’s prohibition on covering children who drop out of school. "I do not like tying sanctions to health care," she says.

Conclusion

Ms. Peters, Mr. Bertler, and Ms. Garcia all believe that the state’s intention to implement MIChild in April is overly ambitious—especially since implementation of the out-state Medicaid managed-care initiative is slated to begin at about the same time. They also believe that it will take some time for the feds to approve MIChild and for the MDCH to work out its administrative details. Still, the three agree that when MIChild finally is up and running, its benefits will outweigh any drawbacks.