have relied primarily on private initiatives and have provided some financial support through special taxes on tobacco or alcohol (see Table 6.1). Some programs have focused on children, whereas others include families.

The most frequently mentioned advantages of separate state programs are that they avoid the stigma of the traditional welfare system and allow the states to experiment according to local economic and social needs, preferences, and resources (Lipson and Schrodel, 1996). State-based programs also are not subject to federal requirements about eligibility, the benefit package, provider payment rates, copayments, and other regulations that accompany the use of federal funds for Medicaid.

Designing Children's Insurance Programs

For more than a decade, states have been funding programs that provide insurance for children who are not eligible for Medicaid and who do not have private insurance. State-designed, non-Medicaid insurance programs typically develop contracts with private-sector health plans and providers at market rates, so that the subsidized children and families receive the same coverage as the privately insured groups in their communities (GAO, 1996).

State-sponsored programs may be administered by the state or by a nonprofit agency or corporation that agrees to administer the benefits, determine eligibility, and oversee the contracts with health plans that contract to deliver the care to the enrolled population. By acting as the purchaser on behalf of a pool of subsidized children and families, states can negotiate better rates than small employers or parents are likely to be able to receive on their own (Nichols et al., 1997).

For low-income working parents, these subsidized programs offer an attractive alternative to being uninsured or paying a substantial portion of their earnings to buy their own insurance. Coverage offered through public programs may of course differ from the coverage offered to individuals with employer-sponsored or private individual coverage. In fact, private health benefit policies purchased by employers or individuals do not always cover the scope of benefits covered through the Medicaid program. However, some parents prefer a private program because it is not associated with welfare, even if it offers a reduced benefit package (McDonough, 1997).

The design and implementation of programs for children's health insurance involve a complex set of questions. As described in the following sections, these include decisions about the eligibility for the program, the scope of benefits to be provided, sources and extent of financing, impact on the insurance market, and procedures for outreach and enrollment once the program is implemented.

The traditional public health model is to throw money at certain institutions and let them take whoever comes through their doors. We have used that model in Massachusetts, where we have a very sophisticated and deep network of community health centers. But we have found that people are more likely to avail themselves of preventive and other services when they have a sense that they are covered under an insurance plan. Holding an insurance card is an essential piece of people's dignity that gets them to appropriate services.

John McDonough

Massachusetts Legislature, Boston, MA

Public Workshop, June 2, 1997

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