Expansion of Medicaid Eligibility

One way to increase funding for community-based alternatives to institutional care is to ensure that all groups of children and adults who can be covered under Medicaid are included in the state Medicaid plan. Under federal law, states have the option of expanding significantly the number of people eligible for Medicaid. States should review all their Medicaid-eligibility policies to ensure that they are enrolling the populations most in need of community mental health services so as to avoid unnecessary institutionalization.

The Medically Needy Option

For example, both children and adults can benefit from the optional Medicaid category for covering the medically needy. Under this option, individuals who would be eligible for Medicaid in their state except for their income and/or resources can "spend down" by incurring medical expenses that are then offset against their income until they meet a state-defined income level.

According to HCFA, in 1997 14 states did not cover the medically needy in their Medicaid programs. While some of these states may by now have added this group to their coverage, the rest could greatly expand the reach of Medicaid in meeting the needs of individuals diverted from unnecessary institutionalization. States without the medically needy Medicaid eligibility option in 1997 were:

Several other options are available for establishing different income and resource limits for certain groups, and in some states special rules exist for individuals who receive supplemental security income (SSI) to access Medicaid.

Options to Cover Children

For children, there a number of very significant eligibility options (some also include pregnant women). States can elect to cover:

• infants up to age 1 and pregnant women with family incomes no more than 185% of poverty;
• children between 1 and 6 in families with incomes up to 133% of poverty;
• children born after September 30, 1983 with family incomes up to 100% of poverty;
• under Section 1902(e)(3), children who would be eligible for Medicaid if they were institutionalized but who could live in the community with their families if they received home- and community-based services;
• children under the medically needy option; and
• children with family incomes up to 200% of poverty (slightly higher in some states) if the state elects to use Medicaid as its approach to providing services under the Child Health Insurance Program (CHIP).

The Child Health Insurance Program (CHIP)

CHIP offers states a very significant resource for providing health and mental health care coverage for children in low-income families who were not, at the time of enactment of CHIP, eligible for Medicaid under their state's rules. States have two choices of how to accomplish this goal: they can include CHIP children as an eligible group under Medicaid or they can create a separate health insurance program for them.⁽¹²⁾ These are not exclusive options; states may choose to cover some CHIP children under Medicaid and offer others a health plan.

Providing CHIP coverage through Medicaid, contrasted with the limited mental health benefits available under the typical private insurance plan, can ensure children with serious mental or emotional disorders of access to a broad array of services while giving the state access to federal matching funds for these services even after the state's CHIP allotment has been fully spent. This is because all CHIP-eligible children who are covered under Medicaid have the same entitlements as any other Medicaid child. Yet only 34 states have provided Medicaid coverage for any CHIP-eligible children, and only 21 have covered all of their CHIP-eligible children under Medicaid. As of June 1999, 23 states and territories have Medicaid expansion programs, 15 have separate state-designed CHIP programs and 13 have a combination of Medicaid expansion and a state-designed program.

• States covering all CHIP-eligible children under Medicaid are:

• States that cover some CHIP-eligible children under Medicaid are:

• States that have failed to provide Medicaid coverage to CHIP-eligible children are:

States also have the authority to allow certain health care providers to "presumptively" enroll children in Medicaid who appear to be eligible based on their age and family income. This can be done based on the family's declaration that its income is below the state's Medicaid income-eligibility guidelines. The child can then be provisionally enrolled in Medicaid and begin receive services, while a full Medicaid application with the necessary information is prepared and submitted (this must be done by the end of the following month).

States that fail to cover all eligible children under Medicaid are losing the opportunity to secure federal matching funds for the home- and community-based services these children need.

Next: Redirecting State Hospital Spending