Insuring More Texas Children Is the Right Thing to Do

Testimony of Sam Adkins, MD

Senate Finance Committee
April 2, 2009

Mr. Chair and members of the committee, it is a privilege for me to speak with you today on behalf of the Texas Medical Association, the Texas Academy of Family Physicians, and the Texas Pediatric Society, which collectively represent more than 46,000 physicians and medical students. My name is Sam Adkins. I am a practicing family physician and the director of the family practice residency program at Seton Hospital in Austin.

I am here to testify strongly in favor of establishing a Children's Health Insurance Program (CHIP) buy-in for families. The bottom line for our organizations is this: Insuring more Texas children is not only good medicine but also good business.

• Our organizations support implementing a CHIP "buy-in" for families who earn too much for CHIP under the existing eligibility rules, but still cannot afford to purchase coverage on their own and do not have access to coverage through their employer.
• While there are many variables that influence children's health and development, the medical literature is clear: Children with health insurance are more likely than uninsured children to be in better health and to have the medical care they need to stay healthy. 
• According to the Census Bureau, the fastest growing population of uninsured children are those living in families earning above 200 percent of poverty. This is not surprising. Employers, particularly small employers, are increasingly opting not to provide health insurance to their employees, much less the employees' dependents. As the economy shrinks, this trend is likely to accelerate. Yet, the average cost of purchasing family health coverage is more than $12,000. For a family earning 300 percent of poverty - about $63,000 a year - this would require that they spend about 20 percent of their income on health insurance.
• A CHIP buy-in would create an affordable option for working families to insure their children. Families would be expected to contribute to the costs of the insurance, with monthly premium payments increasing as their incomes rise. Families also would contribute to the costs by paying copayments for office visits, prescription drugs, and other services.
• Numerous states already have taken bold steps to reduce the number of uninsured children.   As of January 2009: Twenty-six states have enacted affordable coverage available to children at or above 250 percent of the federal poverty level (FPL), and 18 of these states cover children at or above 300 percent FPL. If Texas is to remain a competitive place to do business, it too must be a leader in increasing access to affordable health insurance for children.
• We appreciate the concerns that you may have about expanding government-financed health care. We believe an effective health care system blends the best of public and private systems to achieve universal access. In addition to the CHIP buy-in, we also actively support, including SB 6 by Sen. Robert Duncan to establish a "Healthy Texas" reinsurance program to help small employers obtain affordable health insurance.
• Yet, for children, CHIP provides the most cost-effective option, as the costs of covering children will be shared by state and federal governments as well as families. Moreover, even if legislation is passed to make insurance more broadly available to employers, there will still be thousands of families for which employer-sponsored insurance is not available.
• To prevent families or businesses from dropping existing health insurance coverage, we support including in any CHIP expansion legislation provisions that would deter "crowd out," such as, (1) requiring a sliding-scale cost-sharing arrangement, and (2) a six-month waiting period before a family with insurance could purchase CHIP coverage, allowing of course for good-cause exceptions such as the loss of insurance coverage due to job loss.
• Our organizations also continue to strongly support efforts to implement a CHIP premium assistance program. Under a premium assistance program, instead of enrolling a child directly in CHIP, the state uses CHIP funds to subsidize the purchase of employer-sponsored coverage when such coverage is available.

As you consider Senate Bill 841, we also believe that expanding CHIP for higher-income families should go hand-in-glove with implementing 12-months' continuous coverage for children on Medicaid.

• In 2007, Texas enacted 12-months' continuous coverage for most children in CHIP. Unfortunately, Texas' poorest children must still reenroll every six months. Some 850,000 children are eligible but not enrolled in Medicaid or CHIP. Most of these children are Medicaid-eligible. Twelve-months' continuous coverage is one of the most important initiatives Texas could enact to insure more children.
• Reenrolling frequently not only deters children obtaining timely cost-effective primary and preventive care, it also results in unnecessary hospitalizations and costs. A 2008 California study found that when Medicaid coverage is interrupted, "children suffer harm from less adequate ambulatory care and unnecessary hospitalizations." The study found that after that state implemented 12-months' continuous coverage, there were 3,600 fewer hospitalizations of children for preventable conditions with an associated savings of $17 million in hospital costs.
• Annual enrollment will simplify Texas' strained eligibility system by reducing by half the number of child Medicaid renewals that eligibility workers must manage. Additionally, enacting 12-months' continuous coverage would help Texas comply with the Frew vs. Hawkins agreement by improving timeliness of medical and dental check ups.  The basis of the lawsuit was that children in Medicaid were not receiving needed medical and dental care.
• Texas already has extended 12-months' coverage in other publicly financed health care programs, including most children in CHIP, the women's health program, and CHIP perinatal. This, of course, also is the standard for employer-sponsored coverage.
  

A Robust Physician Network and a Fully Functioning Eligibility System Are Essential to the Success of a CHIP Expansion.

• It is important that I note that while health insurance is absolutely critical to promoting appropriate, timely, and cost-effective health care for children, an insurance card alone will not improve the availability of care. There must be an eligibility system equipped to accurately and timely enroll children as well as a sufficient network of physicians who are able and willing to care for current and new CHIP enrollees.
• Regarding the eligibility system, we believe the single most important thing you could do is enact 12-months' continuous coverage, as articulated above.
• To expand the network of physicians participating in Medicaid and CHIP, physician payment rates must be further improved. The increases enacted in 2007 have helped. Most of the gains were among physicians who treat children. Yet, the gains were modest and somewhat tenuous.
• Despite the increases, Medicaid and CHIP payments still average only 73 percent of what Medicare would pay for the same service and cover only about half the costs of providing care. Physician practice costs increase about 3 percent a year. Without further rate increases this year, we fear that the gains we have made in participation will evaporate as physicians try to cope with rising practice costs and stagnant reimbursements.   We urge you, thus, to pair a CHIP expansion with a Medicaid and CHIP physician payment increase, with the goal of reaching Medicare parity.