living in low-income families. Four states had developed subsidy programs for families. In addition, private programs were operating in 25 states (Gauthier and Schrodel, 1997) (see Table 6.1).
As of May 1997, only six states (Alaska, Illinois, Indiana, Nebraska, Nevada, and South Carolina) had no public or private subsidized insurance programs and had not expanded Medicaid eligibility to children over age 1. Eight states (Alabama, Idaho, Louisiana, Mississippi, Ohio, Oklahoma, Texas, and Wyoming) had only private Blue Cross and Blue Shield Caring Programs for Children and provided no state assistance (Gauthier and Schrodel, 1997; Gehshan, 1997).
Many of the states choosing Medicaid expansions have considered the relative administrative and fiscal advantages of altering an existing program when compared with designing and implementing new state programs (Mann, 1997). Medicaid already has an administrative structure in place in every state, and its administrative costs are low. Medicaid's contracts and rates have already been negotiated and provider networks, payment systems, and benefit packages have been established. In addition, the federal matching payments provide an incentive to expand Medicaid by reducing the amount of money that states need to provide from their own budgets (Dorn et al., 1998; Mann, 1997).
However, some states have preferred to sponsor separate, independent programs that are distinct from Medicaid. Several states have funded programs that subsidize coverage for children through selected commercial insurance or managed care plans. The level of the subsidy typically varies on a sliding scale, with full subsidies for children from families with the lowest income levels and higher premium levels and copayments for children from families with higher levels of income. Some states