Better Managing New York State's Health Insurance Subsidy Programs
Most New Yorkers believe all fellow New Yorkers should have access to medical care. In order to promote this goal, the state’s elected officials have authorized and funded multiple programs to make subsidized health insurance available to those with limited incomes. These include a large Medicaid program for the indigent, the Child Health Plus (CHP) program for children in low-income families, a new Family Health Plus (FHP) program for parents in lowincome households, the Healthy New York program that makes reduced cost insurance available to low-wage workers at small firms, and the Elderly Pharmaceutical Insurance Coverage Program to assist seniors with drug costs. These programs already enroll nearly 4 million New Yorkers who otherwise would not have health insurance, and recent expansions in CHP and the new FHP are intended to increase significantly that number.
The Problem: Failure to Reach Many Who Qualify
But the well-intentioned efforts face serious obstacles to realizing their potential. Despite growing numbers of newly uninsured, the Medicaid program saw its enrollment shrink dramatically—by more than one-quarter million in New York City in the last half of the 1990s. The CHP program quickly did reach many children, but it soon became apparent that they often were the wrong children. In 2000 it was estimated that more than one-third of the more than 500,000 CHP enrollees were eligible for Medicaid rather than CHP, and federal officials threatened to impose fiscal sanctions on the State if these children were not placed in the appropriate program. Implementation of the FHP program, originally scheduled to begin in January 2001, was delayed until October 2001 because the State and federal governments differed over the financing and administration arrangements for the program.
The programs suffer from a lack of coordination in eligibility rules and administrative practices. Adults seeking Medicaid are subject to relatively stringent limits on their assets, while the children in these same households might qualify for Medicaid or CHP despite their parents’ assets. Medicaid and FHP exclude most immigrants, while CHP does not. The offices and agencies processing applications for the programs differ, with some community agencies and health plans able to accept children for CHP while local government social service departments must accept adults for Medicaid and FHP. The programs also vary in the interval at which individuals must be recertified as eligible, and whether or not recertification must include a "face-to-face" interview or can be accomplished via the mail.
As a consequence of these administrative complexities, many people do not receive health insurance benefits for which they could qualify. Individuals denied public assistance may be inappropriately denied Medicaid benefits because local social service agencies are relied upon to make the two decisions simultaneously. The growing number of people seeking Medicaid benefits outside the public assistance program have not been well served by the local social service offices; in New York City, the "Medicaid-only" offices that serve these applicants suffered personnel reductions of one-third between 1995 and 2000, despite growing workloads.
The fragmented administrative structure generates high administrative costs. In New York City, the cost of "Medicaid-only" eligibility offices was $68 million in fiscal year 2000 or about $117 per recipient. For CHP, total administrative costs borne by the State and the health plans enrolling children likely approach 10 percent of the program’s cost.
A Solution: Integrated Eligibility Determination
New measures are needed to make New York State’s health insurance subsidy programs work more effectively and efficiently. Several steps should be taken including better outreach and communication with uninsured families, but the analysis presented in this report highlights the need for better coordinated administration of the eligibility procedures for the programs. Moreover, the same changes that would enhance management of health insurance subsidy programs can be applied to yield similar benefits for a variety of other means-tested programs providing cash, food, daycare and other services. The eligibility processes for numerous public programs administered under State auspices should be linked to lower administrative costs and reach the target population more effectively.
Because responsibility is now divided between the State and local governments, and among agencies within State government, high level leadership is necessary to design and implement effective reforms. The Governor should take the lead in this effort. Since the State Department of Health (DOH) is the lead agency for insurance subsidy programs, the Health Commissioner should be given primary responsibility, and commensurate authority, by the Governor for redesigning the system and its supporting information systems. The Governor and Health Commissioner should pursue a two-stage strategy. First, eligibility determination for the major health insurance programs should be integrated in a new system created independent of the current public assistance eligibility bureaucracy. This requires four steps:
- defining common information requirements;
- standardizing procedures relating to documentation requirements and recertification;
- maintaining a statewide master eligibility file for all programs; and
- establishing multiple, common access points for eligibility and recertification with staff at these offices following uniform procedures across the state.
Determining eligibility for health insurance programs should no longer be viewed as a byproduct of public assistance program management. In the past, most beneficiaries got their health coverage this way. As recently as 1995, more than four of every five people with Medicaid coverage had qualified through public assistance or the federal Supplemental Security Income program; currently, the figure is barely one of two. Statewide about one million people are enrolled in a health insurance subsidy program without receiving cash benefits. This figure will grow as the new FHP program is implemented. This large, often working, population should be served by an eligibility determination system that is separate from local welfare offices.
The administration of this new system should be supported with a DOH-operated information system that includes a master eligibility file, but the line services of interviewing clients and reviewing the necessary documentation should rely on community-based organizations following the recently developed model of "facilitated enrollment." Local voluntary agencies should be reaching out to their constituents to promote enrollment; the county and New York City social service agencies should not be primarily responsible for determining eligibility for health insurance. The DOH should audit the decisions of the voluntary agencies and include performance criteria and financial incentives for accuracy in their contracts. In this way, the new system would promote efficiency of administration while improving outreach.
Second, the State should begin a longer-term process of integrating eligibility determination for all major means-tested programs including non-health programs. The families receiving health insurance subsidies often are eligible for other benefits, but must apply at separate offices and undergo eligibility checks requiring duplicative documentation and interviews. To illustrate, consider a family of three consisting of a preschool-age child, a schoolage child, and a mother working at wages that bring the family an income just above the federal poverty threshold. With respect to heath care benefits, each member could qualify for a different program—the mother for FHP, the older child for CHP, and the younger child for Medicaid. They would not qualify for public assistance, but could receive Food Stamps through a social service department office, school lunch and breakfast through the public school, an Earned Income Tax Credit through the State Department of Taxation and Finance, and housing aid from the local Housing Authority. Each form of assistance would require the working mother to submit applications and documentation of income and other household characteristics to separate government offices, probably taking time from work to meet the necessary eligibility determination steps.
The key to achieving an integrated eligibility system is an information system that creates a master eligibility file and supports diverse program applications. This information support system can start with health insurance subsidy programs, but should be planned as a backbone for broader applications. While this is a large task, the process can begin with three sensible and high-impact initial measures:
- Integrate Food Stamp eligibility determination with health insurance program eligibility determination;
- Test using school lunch program administrators as facilitated enrollers for health insurance programs; and
- Coordinate Earned Income Tax Credit benefit determination with health insurance subsidy eligibility determination.