How Do Medicaid/CHIP Children with Special Health Care Needs Differ from Those with Private Insurance?

Medicaid and CHIP covered about half (48%) of all children with special health care needs in 2016.  Medicaid/CHIP is the sole source of coverage for 41% of these children, and another 7% have Medicaid/CHIP to supplement their private coverage. Medicaid plays a key role for children with special health care needs by making coverage affordable and covering services that private insurance typically does not. This issue brief compares key characteristics of Medicaid/CHIP children with special health care needs to those with private insurance only and those who are uninsured.  For example: Medicaid/CHIP children with special health care needs are significantly more likely to live in low income families compared to those with private insurance only. Nearly eight in 10 (78%) Medicaid/CHIP-only children with special health care needs, and nearly six in 10 (57%) of those with both Medicaid/CHIP and private insurance, live in families with incomes below 200% of the federal poverty level (less than $41,560/year for a family of three in 2018), compared to less than two in 10 (17%) of those with private insurance only. Medicaid/CHIP children with special health care needs are significantly more likely to have multiple health conditions and to be in poorer health compared to those with private insurance alone, with children with both Medicaid/CHIP and private insurance having the greatest needs. For example, children with special health care needs with both Medicaid/CHIP and private insurance are more than twice as likely (55%), and those with Medicaid/CHIP only are nearly twice as likely (43%), to have four or more functional difficulties compared to those with private insurance alone (24%). Medicaid/CHIP children with special health care needs are more likely to report that their coverage is affordable compared to those with private insurance alone.  For example, those with Medicaid/CHIP only are more than four times as likely (82%), and those with both Medicaid/CHIP and private insurance are more than twice as likely (43%), to report that their out-of-pocket health care costs are always reasonable compared to those with private insurance alone (19%).  Over half (53%) families of Medicaid/CHIP-only children with special health care needs, and over a third (36%) of those with both Medicaid/CHIP and private insurance, find it somewhat or very often hard to cover basic needs like housing or food since their child’s birth compared to a fifth (20%) of those with private insurance only.

Introduction

Medicaid and CHIP cover about half (48%, or about 6.8 million) of children with special health care needs in the U.S. as of 2016 (Figure 1). Box 1 below describes children with special health care needs.  Medicaid or CHIP is the sole source of coverage for 41 percent of these children.  Another seven percent have Medicaid/CHIP to supplement private insurance.  Medicaid provides a wide range of medical and long-term care services, many of which are not covered at all or only available in limited amounts through private insurance, and makes coverage affordable for many children with special health care needs and their families.

This issue brief compares the demographics, health status, access to care, and coverage affordability of Medicaid/CHIP children with special health care needs to those with private insurance and those who are uninsured.  Medicaid plays a key role for children with special health care needs by making coverage affordable and covering services that private coverage typically does not. Consequently, legislative proposals that would cap and reduce federal Medicaid funding may pose a particular risk to children with special health care needs and their providers.  While Congress did not pass such legislation in 2017, these proposals may resurface in 2018, and the Trump Administration’s FY 2019 proposed budget continues to advance these proposals.  A companion brief describes Medicaid’s role for children with special health care needs.

As defined by the U.S. Department of Health and Social Services, children with special health care needs “have or are at increased risk for chronic physical, developmental, behavioral or emotional conditions and also require health and related services of a type or amount beyond that required by children generally.”  Their needs arise from a range of conditions such as autism, Down syndrome, and other intellectual and developmental disabilities; physical disabilities such as cerebral palsy, spina bifida, and muscular dystrophy; mental health needs such as depression and anxiety; and complications arising from premature birth. They may need nursing care to live safely at home with a tracheotomy or feeding tube; attendant care to develop community living skills; medical equipment and supplies; mental health counseling; and/or regular physical, occupational, speech or other therapies to address developmental delays.  They may have difficulty with bodily functions, such as breathing, swallowing, or chronic pain; difficulty with daily activities such as self-care, mobility, learning, or communicating; and/or emotional or behavioral difficulties, such as anxiety, depression, or difficulty making friend.

Socio-Demographics

Children with special health care needs who have Medicaid/CHIP are significantly more likely to live in low income families, below 200% of the federal poverty level, compared to those with private insurance only.  Nearly eight in 10 (78%) Medicaid/CHIP-only children with special health care needs live in families with incomes below 200% of the federal poverty level (FPL, less than $41,560/year for a family of three in 2018), compared to 17% of those with private insurance only. Nearly six in 10 (57%) of  children with special health care needs who have both Medicaid/CHIP and private insurance live in a family with income below 200% FPL.  Medicaid/CHIP children with special health care needs are about 10 times less likely, and those with both Medicaid/CHIP and private insurance are about three times less likely, than those with private insurance only to live in a family with income of 400% FPL or higher ($83,120/year for a family of three in 2018, 5% vs. 16% vs. 49%) (Figure 2).

Medicaid/CHIP-only children with special health care needs are significantly more likely to be a member of a racial or ethnic minority group compared to those with private insurance only, while over half (53%) of those with both Medicaid/CHIP and private insurance are non-Hispanic white.  Nearly seven in 10 (68%) children with special health care needs with private insurance alone are non-Hispanic white compared to less than four in 10 (38%) Medicaid/CHIP children with special health care needs (Figure 3).

Health Status

Medicaid/CHIP children with special health care needs are significantly more likely to have multiple chronic conditions and to be in fair or poor health compared to those with private insurance only. Close to four in 10 (37%) Medicaid/CHIP-only children with special health care needs have four or more chronic conditions, compared to less than a quarter (23%) of those with private insurance only.  Over half (51%) of those with both Medicaid/CHIP and private insurance have four or more chronic conditions. Some of the chronic conditions reported by children with special health care needs include autism, intellectual disability, asthma, depression, anxiety, attention deficient hyperactivity disorder, cerebral palsy, cystic fibrosis, diabetes, muscular dystrophy, brain injury, heart conditions, and epilepsy.  Medicaid/CHIP-only children with special health care needs are three times as likely (9%), and those with both Medicaid/CHIP and private insurance are four times as likely (12%), to be in fair or poor health compared to those with private insurance alone (3%) (Figure 4).

As a result of their poorer health, Medicaid/CHIP children are significantly more likely to have multiple health care service needs during the course of a year and to have their daily activities affected by their health compared to those with private insurance only.  Medicaid/CHIP-only children with special health care needs are significantly more likely (25%) to require three or more health care services, such as specialist care; prescription medication; speech, occupational, or behavioral therapy; or mental health treatment or counseling, compared to those with private insurance alone (17%).  Medicaid/CHIP-only children with special health care needs are nearly twice as likely (43%) to have four or more functional difficulties compared to those with private insurance alone (24%).  Over half (55%) of those with both Medicaid/CHIP and private insurance have four or more functional difficulties. Functional difficulties experienced by children with special health care needs include problems with bodily functions, such as breathing, swallowing, or chronic physical pain; activities or participation, such as self-care, mobility, learning, or communicating; and emotional or behavioral factors, such as anxiety, depression, or making friends.  Medicaid/CHIP-only children with special health care needs are significantly more likely (31%) to have health conditions that usually or always affect their daily activities somewhat or a great deal compared to those private insurance only (18%) (Figure 5).

As a result of their greater health needs and functional limitations, Medicaid/CHIP children with special health care needs are significantly more likely to have their education impacted by their health status.  Those with Medicaid/CHIP only (30%) are significantly more likely to have a current special education plan compared to those with private insurance alone (24%). Medicaid/CHIP-only children with special health care needs also are significantly more likely (13%) to miss more than two weeks (11 or more days) of school due to illness or injury compared to those with private insurance alone (7%) (Figure 6).

Access to Care

Despite their greater needs, Medicaid/CHIP-only children with special health care needs are significantly more likely than those with private insurance alone to report that their coverage meets their needs.  For example, Medicaid/CHIP-only children with special health care needs (87%) are significantly more likely than those with private insurance only (56%) to report that their coverage is adequate. Two-thirds (66%) of children with both Medicaid/CHIP and private insurance report that their coverage is adequate, perhaps due to this group’s greater health needs. Medicaid/CHIP-only children with special health care needs also are significantly more likely to report that their insurance always allows them to see all needed health care providers, compare to those with private insurance alone (77% vs. 71%).  While access to mental health services can be challenging across payers due to provider shortages, Medicaid/CHIP-only children with special health care needs (64%) are significantly more likely to report that their insurance always meets their mental or behavioral needs compared to those with private insurance alone (41%) (Figure 7).

Medicaid/CHIP children with special health care needs have high rates of access to care; their access is not as high as those with private insurance alone but significantly better than those who are uninsured.  Nearly four in five (78%) Medicaid/CHIP-only children with special health care needs report a usual source of care when sick compared to 89% of those with private insurance alone.  The rates for access to a usual source of preventive care (92% for Medicaid/CHIP-only vs. 97% for private insurance only) and for at least one preventive visit in the last year (86% for Medicaid/CHIP-only vs. 91% for private insurance only) are high for both groups. Medicaid/CHIP children with special health care needs also experience significantly better access to care on these measures compared with those who are uninsured (Figure 8).

Affordability

Medicaid/CHIP children with special health care needs are significantly more likely to report that their coverage is affordable compared to those with private insurance alone.  Medicaid/CHIP-only children with special health care needs (82%) are more than four times as likely to report that their out-of-pocket health care costs are always reasonable compared to those with private insurance alone (19%).  Over four in 10 (43%) of those with both Medicaid/CHIP and private insurance report that their out-of-pocket costs are always reasonable. Medicaid/CHIP-only children are more than 12 times less likely (3%) to incur annual out-of-pocket costs of $1,000 or more, compared to those with private insurance alone (36%) (Figure 9).

Insurance affordability may be a particular concern for families of Medicaid/CHIP children with special health care needs because they are significantly more likely to have difficulty covering basic household needs compared to those with private insurance only.  Families of Medicaid/CHIP-only children with special health care needs are more than two and a half times as likely (53%) to find it somewhat or very often hard to cover basic needs like housing or food since their child’s birth compared to those with private insurance alone (20%) (Figure 9). For an example of how Medicaid helps make private coverage affordable for children with special health care needs, see Gabriel’s story in Box 2 below.

Gabriel was born prematurely at 27 weeks and spent a little over his first year of life in the hospital. When he was ready for discharge, his parents were told that he would have to go to a nursing home because the services that he needed to be safely cared for at home were not offered by his private insurance through his father’s job as a tugboat pilot. Medicaid covers these services, and because Gabriel qualified based on the extent of his health care needs, he was able to come home. Although Gabriel has significant developmental delays and chronic lung diseases, his mother, Jessica, says he is “thriving at home.”  Jessica attributes Gabriel’s progress to the Medicaid services he receives to care for his tracheotomy and gastrostomy tube and monitor his oxygen supply and ventilator.  Gabriel requires close attention because he can decompensate quickly, and Jessica credits his Medicaid home nursing services with helping him stay as healthy as possible – he has only been hospitalized for illness once since his discharge.  He plays outside with the support of his direct care workers, and Medicaid provided a generator that enabled him to remain at home during recent flooding and power outages instead of going to a shelter or hospital. Jessica says the private insurance copayments for all of Gabriel’s care would be “outrageous” without Medicaid.  Medicaid helps with medical supplies, prescriptions, visits with seven specialists and a pediatrician, and eight outpatient occupational and speech therapy sessions per month.  Medicaid also supplements Gabriel’s special education services, which, for example, do not address feeding issues. Jessica studied social work in college and says she was used to helping connect others with resources but never thought that she would be “on the other end of needing support” herself.  She believes that Medicaid helps Gabriel to “reach his maximum potential” and maintain his quality of life.

Insurance affordability also is important because the demands of caring for children with special health care needs can impede their families’ ability to work, an outcome that is significantly more likely among Medicaid/CHIP children with special health care needs compared to those with private insurance only. Medicaid/CHIP-only children with special health care needs are nearly twice as likely (18%) to live in families who had to reduce their work hours or stop working due to their child’s health needs, compared to those with private insurance alone (10%). Over one-quarter (27%) of those with both Medicaid/CHIP and private insurance live in families who had to reduce their work hours or stop working due to their child’s health needs (Figure 10).

Families of Medicaid/CHIP children with special health care needs may be less able to work because they are significantly more likely to devote time to meeting their child’s health needs compared to those with private insurance only.  They are three times as likely (12%) to have family members who spend five or more hours per week providing their health care at home, and those with both Medicaid/CHIP and private insurance are over four times as likely, compared to those with private insurance alone (4%).  Medicaid/CHIP-only children with special health care needs are three times as likely (3%) to have family members devoting five or more hours per week coordinating their health care, and those with both Medicaid/CHIP and private insurance are five times as likely, compared to those with private insurance alone (1%) (Figure 10).

Conclusion

Medicaid/CHIP children with special health care needs experience greater health needs, comparable access to care, and greater affordability compared to those with private insurance alone.  Their families are more likely to have to limit their work hours or stop working as a result of their health and more likely to devote time providing or coordinating their health care.  In addition to filling gaps in private insurance and making coverage affordable, Medicaid is the sole source of coverage for many children with special health care needs in low and middle income families. Medicaid also fills in the gaps in private insurance and makes coverage affordable for children with some of the greatest health care needs.  Medicaid/CHIP children with special health care needs experience significantly better access to care on these measures compared with those who are uninsured.

Proposals to cap and reduce federal Medicaid funding may pose a particular risk to children with special health care needs because these children use services more intensively, and often incur greater costs, compared to other children.  While Congress did not pass such legislation in 2017, these proposals may resurface in 2018, and the Trump Administration’s FY 2019 proposed budget continues to advance these proposals. Families of children with special health care needs, their providers, states, and other stakeholders may want to consider the implications of these proposals, given the important role that Medicaid plays for children with special health care needs.

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