FACT SHEET | March 27, 2007

Fewer Working Parents are Able to Obtain Private Health Insurance

Working parents are experiencing a decline in employer-sponsored health insurance. A March 14 study prepared for the Robert Wood Johnson Foundation (RWJF) by the State Health Access Data Assistance Center (SHADAC) at the University of Minnesota found that fewer than half of parents in families earning less than $40,000 a year are offered health insurance through their employer – a nine percent drop since 1997. The study further found that employer offers of health insurance to parents with lower incomes have fallen three times as fast as offers to parents who earn more money. In reauthorizing SCHIP, Congress should provide sufficient funding for the program to ensure that children whose parents work hard retain the coverage and the care some have through SCHIP. 

Most uninsured children have parents who work, but can’t get or afford private health insurance for their children. Approximately nine million children in the United Statesare uninsured – about one in every eight kids. Of these uninsured children, the RWJF-SHADAC study found that nearly two out of three (64 percent) live with adults who earn modest incomes (defined in the study as roughly $40,000 or less for a family of four, which is about 200 percent of the federal poverty level). Appendix A to this report sets forth the number of uninsured children in each state who are living in working families with modest incomes. Many of these uninsured children are eligible for free or reduced-cost care through SCHIP. 

SCHIP has been a crucial health care safety net for lower-income working families. SCHIP was created in 1997 to provide health insurance coverage to children who would otherwise be uninsured. The program is targeted to children in lower-income families who do not qualify for Medicaid, but are unable to afford private insurance. Data published in January by the Center on Budget and Policy Priorities shows the benefits to children of having SCHIP coverage −increased access to quality medical care and improved health:

• Research has shown that children who have access to a “medical home,” a usual place to receive their care, increases the quality and continuity of children’s health care. Children covered by Medicaid or SCHIP are much more likely to have a medical home than children who are uninsured.
• A direct measure of access to medical care is whether a child has seen a physician or other health professional in the past year. Children enrolled in Medicaid and SCHIP are much more likely than uninsured children to have seen a physician within the past year.
• Children covered by Medicaid or SCHIP are much more likely than uninsured children to have preventive health care and to keep up with recommended schedules of well-child visits.
• With increased access to medical care, children covered by Medicaid or SCHIP have improved health. Approximately one-quarter of children covered by Medicaid or SCHIP are in better health now than they were one ear ago, according to their parents or caretakers. This improvement exceeds the gains reported for both uninsured and privately-insured children. 

With the increasing decline in employer-based health care coverage, the number of uninsured children has increased. SCHIP has made great strides in covering uninsured children. While the number of uninsured adults has increased, the number of children without health insurance dropped by about one-third from 1997 (the inception of the SCHIP program) to 2004 (Kaiser Commission on Medicaid and the Uninsured, January 2007). However, as employer-sponsored health insurance coverage has continued to erode, the number of uninsured children has increased since 2004. According to the Kaiser Commission on Medicaid and the Uninsured, nine million children are currently uninsured. 

Children without health insurance suffer serious consequences. 

• A study commissioned by the Kaiser Family Foundation and featured in the Journal of the American Medical Association on March 14, 2007 found that patients without health insurance are less likely to receive treatment after injuries or diagnoses of chronic diseases. In addition, the study found that patients without health insurance are less likely to receive necessary follow-up care than those with health insurance coverage.
• A report issued by Families USA on February 27, 2007 indicated that children without health insurance receive less and inferior care. For those uninsured children with severe illnesses or injuries, this can lead to serious – even tragic – consequences. For example:
  • Among children admitted to a hospital with appendicitis, uninsured children were 19 percent less likely to receive a laparoscopic appendectomy, a less invasive and less painful way to remove the appendix than traditional open surgery.
  • Among children admitted to a hospital with middle ear infections, uninsured children were less than half as likely to get ear tubes inserted than insured children.
  • Uninsured children admitted to a hospital due to injuries were twice as likely to die while in the hospital as their uninsured counterparts.
• Uninsured children are twice as likely as insured children to miss out on needed medical care, including doctor visits and checkups. 25.6 percent of children who are uninsured do not receive any medical care, compared to 12.3 percent of children who are insured (RJWF, August 2006). 

Over one million children stand to lose their existing coverage under the President’s Budget. The President’s Fiscal Year 2008 Budget proposes to provide a net increase of $2 billion in new federal funds for SCHIP over five years ($5.5 billion excluding Medicaid interactions). The President’s approach is to“refocus” SCHIP coverage, targeting children in families earning no more than twice the federal poverty level. The President’s budget would also reduce the federal matching rate for children in families with incomes above 200 percent of the federal poverty line, and for SCHIP-covered adults, the large majority of whom are working–poor parents of children enrolled in Medicaid or SCHIP. Not only would the President’s budget fail to make any headway towards covering the nation’s nine million uninsured children, but the President’s approach would also effectively cut off health coverage for at least a million children and low-income adults. According to the Center for Budget and Policy Priority’s analysis of data released by the Congressional Budget Office on March 9: 

• States would face a total federal funding shortfall of as much as $7.6 billion over the next five years (assuming current SCHIP matching rates are retained). If adopted, the Administration’s proposal to reduce the federal SCHIP matching rate for certain beneficiaries would reduce the shortfall to $4.6 billion, but would shift up to $4 billion in costs to the states.
• SCHIP enrollment of children and pregnant women over the course of a year would decline from 7.6 million in 2007 to 6.2 million by 2012, a reduction of 1.4 million. Total SCHIP enrollment would fall by 1.6 million. 

The reauthorization of SCHIP should not cause more Americans to become uninsured, as will result from the President’s budget. Research has shown that insuring parents is an effective way to increase children’s participation in public programs (Center on Budget and Policy Priorities, 2007). Children in states that have expanded Medicaid coverage to parents participate in Medicaid at a rate of 20 percentage points higher than those who live in states without such expansions. Ironically, the Bush Administration has previously encouraged states to cover parents and has often lauded such coverage flexibility as a good way to reduce the number of uninsured Americans: 

• At a Finance Subcommittee on Health Care hearing about SCHIP on July 25, 2006, former CMS Administrator Mark McClellan stated, “Extending coverage to parents and caretaker relatives not only serves to cover additional insured individuals, but it may also increase the likelihood that they will take the steps necessary to enroll their children. Extending coverage to parents and caretakers may also increase the likelihood that their children remain enrolled in SCHIP.”
• Commenting on HHS approval of California’s waiver of SCHIP rules to allow the state to expand coverage to 300,000 uninsured individuals, then-HHS Secretary Tommy Thompson said, “By giving parents of children in the SCHIP program health insurance, we are providing quality health care to the whole family… This will make it easier for moms and dads to care for their children, since they themselves will have access to the care they need to stay healthy. “ (HHS press release, January 24, 2002)
• We should support SCHIP without undermining the promise of coverage it provides today.
   

Democrats strive to protect more – not fewer – people. Providing for our children’s medical care is one of our nation’s most important priorities. That is why Senate Democrats have rejected the inadequate funding for SCHIP proposed by the President. The Budget Resolution approved by the Senate Budget Committee provides for up to $50 billion for SCHIP over five years to expand coverage to the estimated six million children eligible but not enrolled in either SCHIP or Medicaid, and to maintain coverage for all currently–enrolled individuals.
 

APPENDIX A:

DPC