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Tuesday, October 11, 2011

Putting the family back in FamilyCare

This blog was written by Raymond Castro and was originally posted on the New Jersey Policy Perspective blog.

The Comprehensive Medicaid Waiver recently submitted to the federal government by the Department of Human Services will not include a major reduction in the eligibility level for parents in NJ FamilyCare.

This is very welcome news to the 23,000 poor, uninsured parents who would have been denied health coverage because their income exceeded 25 percent of the Federal Poverty Level, or roughly $439 a month for a parent raising two children.

Opposition to this Draconian policy was a major priority for NJPP. Our research showed the devastating impact such a policy would have on families, which helped to inform the debate on this important policy issue. The public outcry was integral to the administration’s decision. In announcing the final waiver application, Commissioner Jennifer Velez said, “We responded to the valuable input provided by the Medicaid stakeholder community.”

The proposal to reduce eligibility was originally raised by the DHS in a concept paper, along with many other changes in Medicaid. Although the stated goal in the concept paper was to improve and make more efficient all Medicaid services, the paper also included a reduction in FamilyCare eligibility levels for parents from 133 percent of the federal poverty level to the welfare income guidelines, which are at about 25 percent of the poverty level.

Incredibly, that meant a parent raising two children earning as little as $439 a month would not be eligible for FamilyCare even though their children would. The cutback would have been in addition to a cutback adopted by the state last year which reduced the FamilyCare eligibility level for parents to 133% of the FPL, or about $2,000 a month for a single parent with two children. That cut in service resulted in the denial of health coverage for 70,000 parents this year.

The administration should be applauded for backing away from the FamilyCare reductions, but it’s important to point out that tremendous pressure was applied in the process of making that decision. Some of the key factors include:

• Overwhelming public opposition
The department received more comments against this proposal than any other in the concept paper. Legislators on the budget and health committees were very critical, as was coverage in the media. According to the department, in the waiver application summary of the public comments received, “Most respondents across all industry groups oppose the proposal to freeze enrollment of adult parents.”

• Not an effective strategy to reduce state funding
The state’s goal was to save $300 million through the waiver. This proposal would have saved $9 million but caused the state to lose about $17 million in federal matching funds. That is one of the reasons why most states do not cut these programs.  Last year, New Jersey and Arizona were the only two states to reduce eligibility. In addition, the department will ask for a higher matching rate, consistent with what some other states will receive for expanding eligibility earlier than required under federal health reform. The department estimates this approach will save about $32 million in state funds without cutting eligibility.

• Fewer children would have enrolled
Soon after the reduction in parent eligibility was proposed, NJPP research  showed that enrollment abruptly stopped increasing for children of parents who were denied eligibility last year due to FamilyCare cutbacks, even though the eligibility of the children was not changed.  Further, enrollment of children who had parents who were not denied eligibility continued to increase at the same time. This research was consistent with earlier research conducted by NJPP showing child enrollment suffered in 2002 when the state previously reduced parent enrollment. It became clear that child enrollment in New Jersey would be further reduced if parent enrollment was cut again, which was inconsistent with the state’s laudable to enroll as many uninsured children as possible in FamilyCare.

• Federal approval was unlikely
To reduce parent eligibility to such low levels, the state would need approval from the federal government to waive a requirement in the Affordable Care Act that all states must maintain eligibility until the Act was fully implemented in January 2014. On that date, nearly all low income individuals will be entitled to Medicaid and moderate income individuals will be eligible for tax credits to reduce the cost of their health insurance premiums. Such a “maintenance-of-effort” requirement was needed because allowing states to cut existing coverage now would make it more difficult to achieve universal coverage.

• More families would be forced onto welfare
New Jersey in the late 1990’s found a successful approach to moving low-income working families away from welfare by creating support services that enabled parents to continue working. These services included health coverage, the state Earned Income Tax Credit, transportation and child care. The policy was so effective the welfare caseload fell by more than half. Cutting eligibility in FamilyCare for the poorest working families would have undermined this policy. Under the proposal, the only way a parent could continue to receive health coverage would be to quit his or her job.

The final FamilyCare waiver request is now much more consistent with the many other waivers that are requested in the state’s application to the federal government to protect or improve Medicaid services.

Commissioner Velez was right when she testified at the Assembly Budget Committee that it is better to maximize federal funds and create efficiencies than eliminate critical Medicaid services to generate needed state savings. While the state is still requesting some waivers that are concerning,  the department has gone a long way to show that reform of Medicaid does not necessarily mean less care for vulnerable people and, in some cases, it can mean even better care.

This blog was written by Raymond Castro and was originally posted on the New Jersey Policy Perspective blog.

Putting the family back in FamilyCare | Families USA


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