Seesawing Family Income Threatens Kids’ Medicaid Coverage In Texas

Because of Texas’ particularly frequent income checks, Dawn Poole and her husband regularly document their family finances to make sure their nine children, who all have complex health conditions, continue to qualify for Medicaid. (Courtesy of the Poole family)

Dawn Poole often worries about whether her children qualify for Medicaid and have access to the care they need.

Much of her anxiety is a direct result of living in Texas. Here, children’s eligibility for Medicaid varies by age, but to qualify most children must come from families with incomes at or below 138 percent of the federal poverty level — in 2017, $33,948 for a family of four. Texas also has one of the country’s strictest Medicaid verification systems: It runs regular checks on family finances after kids are enrolled to make sure they continue to qualify.

Those checks are the cause of Poole’s angst.

Because she and her husband work in seasonal industries — she’s an hourly employee in agriculture and he’s in oil — their hours and incomes have changed on a monthly, even weekly basis. That means their nine children — five of whom are adopted, and all with complex health conditions — could lose health insurance one month but then qualify the next, even though the family’s total income for the year does not exceed the eligibility threshold.

“You have to show all the pay stubs and your information and where you’re working and what you’re doing,” Poole said, outlining the paper trail she must maintain for these eligibility checks. If not, she said, she receives notices from the state with a clear message: “You need to have this done now, or we will drop coverage.” It’s not an empty threat — state figures suggest the number of kids who have temporarily lost Medicaid has shot up since Texas started this testing.

Stories like Poole’s take on heightened significance as the GOP emphasizes state flexibility in its plans to overhaul Medicaid. The idea is rooted in a belief that less federal oversight will cut bureaucratic runaround and trim wasteful spending. But detractors point to such policies—in which states already have significant leeway — as a prime example of how a state’s well-intentioned efforts can lead to more red tape and limit access to care.

“I just find it amazing that a state that says that it needs to have … new flexibility to innovate is engaged in something this harmful and burdensome,” said Sara Rosenbaum, a health policy and law professor at George Washington University.

How It Works

Texas starts income tests five months into a child’s coverage, when an automated system runs through several databases to ensure the family’s income hasn’t climbed above the eligibility cap. The test repeats for the sixth, seventh and eighth month of the year. If, at any point, the family’s income crosses the line, they have 10 days to prove otherwise. Failure to do so means loss of coverage.

If families have multiple children who enrolled in Medicaid at different times, say, because the enrollment happened as a result of a specific brush with the health care system, the income checks are pegged to each child’s specific start date, not done simultaneously — which means more paperwork for parents.

Systems with such frequent checks aren’t common, said Tricia Brooks, a senior fellow at Georgetown University’s Center for Children and Families.

State officials maintain that the practice, in place since 2014, is “a program integrity initiative.” Its financial impact — which Texas has not tracked — is irrelevant, they add. “The goal is to make sure, if people are getting the benefit, it’s because they’re eligible,” said Christine Mann, a spokeswoman for Texas’ Health and Human Services Commission.

This concept of program integrity is one way that states control enrollment. Its appeal, of course, is the potential to curb costs.

Critics say this argument doesn’t hold up. Nationally, children account for more than two-fifths of Medicaid’s enrollment but are responsible for less than one-fifth of program spending, while seniors and people with disabilities — who generally require more health services, and pricier ones — drive about half of Medicaid costs. So kicking out those kids whose families’ incomes exceed the demarcation line doesn’t necessarily hold costs down. This especially holds true when their eligibility is reinstated within three months and — in some cases where disqualification resulted from paperwork glitches rather than an income change — retroactive.

Instead, the skeptics add, the verification checks pose logistical hassles, require greater resources and save little money upfront.

Still, some say there is value to the approach, at least on paper.

“Texas is not wrong to check eligibility,” said Robert Moffitt, a senior fellow at the right-leaning Heritage Foundation. “It just seems that going through this every month is an administrative burden that is probably not necessary.”

 Efficiency, Or Minimizing Enrollment?

At Conroe’s Lone Star Community Health, a community health center in Poole’s hometown, near Houston, most Medicaid patients are children, said CEO Karen Harwell. Almost all come from families with hourly jobs. A family like Poole’s could make $2,000 one month and $100 the next, losing coverage for August but requalifying three weeks later.

Texas has not broken down how many children lose coverage because of income testing. But in September 2014 — a month before this practice began — just under 10,000 kids on Medicaid faced a gap in coverage of three months or less, according to state data. By June 2016 — the most recent month for which Texas could provide statistics — almost 23,000 children experienced such a gap. Another comparison: In September 2015, about .55 percent children on Medicaid experienced a three month or shorter gap in coverage before re-enrolling, compared to about .33 percent a year before.

Meanwhile, internal data kept by the Texas Association of Community Health Centers suggests that in a single month about 5.6 percent of Medicaid-covered children will lose insurance because of income testing, and a third of that group will regain coverage within three months.

“Over the course of the year, the percentage of children put through the ringer is huge,” Rosenbaum said.

Critics say the number of children coming back to Medicaid relatively quickly puts more limits on savings. Meanwhile, maintaining the infrastructure to test family incomes — and follow up with those who may no longer qualify — requires time and money on Texas’ part. But the state hasn’t measured the practice’s fiscal impact.

“This is obviously not a huge money saver. It’s a culture thing, an attitude thing,” said Anne Dunkelberg, associate director of Texas’ left-leaning Center for Public Policy Priorities.

Losing insurance even briefly can have far-reaching consequences for children’s health. Three months without coverage means three months when kids skip wellness visits or don’t fill prescriptions.

Chronic conditions such as asthma can spiral out of control, noted Leighton Ku, who directs George Washington University’s Center for Health Policy Research and has researched the consequences of interrupting children’s coverage. That means sicker kids who need specialty and emergency room care — which both cost more. Poole’s family has had that experience: When her children have lost coverage, she said, they have had to skimp on regular health care, ultimately requiring ER treatment.

Of course, saving money isn’t everything, said Matt Salo, executive director of the National Association of Medicaid Directors. Some states, like Texas, want to ensure a publicly funded program provides services only to the most eligible, even if it costs the state more money to do so.

To be fair, Ku said, judiciously used income checks can help control costs for a program that can break many states’ budgets — including Texas’, where Medicaid is the largest single expense.

“There are some states we think would run very good Medicaid programs with more flexibility. And there are other cases where, if you have a little more flexibility, they do not-good things,” he said.

That variability is the real issue, he and others suggested.

“States should be held accountable for being wiser as well as being dumber. You can’t control for the fact that different people in different parts of the country have different beliefs and attitudes,” said Tom Miller, a resident fellow at the conservative American Enterprise Institute, in Washington, D.C.

Even though this Texas system may be problematic, Moffitt said, it shouldn’t detract from the value of giving states more freedom. “Medicaid is not a fountain of innovation, but it should be and it can be,” he said.

Still, the calls for Medicaid flexibility have been accompanied by proposed federal funding cuts — the argument being that state-based ideas will yield enough savings to make up for the loss. Critics counter that notion is hardly a sure thing.

“To think they’re going to find enough savings in their programs or could raise taxes to offset the loss of federal funding is highly suspect,” Brooks said. “Instead, then, states have to make tough choices. And those choices are not going to be good for kids and families.”

Categories: Health Care Costs, Medicaid, States

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