One of the few states with published cost breakdowns is Washington State. In Washington State's Medicaid program, the average annual cost of care was $3,800 for children with selected chronic conditions, compared with an average of $955 for all enrolled children (Ireys et al., 1997). The proportions of payments for various categories of care (e.g., inpatient, outpatient, home care, drugs, durable medical equipment, and other providers) varied substantially by diagnosis. For example, inpatient costs ranged from 25 to 71 percent of the total. Durable medical equipment accounted for 24 percent of the costs of care for children with cerebral palsy, compared with 12 percent for children spina bifida and 5 percent or less for children with asthma, chronic respiratory disease, and diabetes (Ireys et al., 1997).

The Medicaid program is increasingly using managed care approaches in the delivery of services, most often through contracts with private health plans. An estimated 2.5 million children with chronic special health care needs are enrolled in the Medicaid program, but data are limited to evaluate the impact of Medicaid managed care on these children (Newacheck et al., 1994). Moreover, state Medicaid data tends to be aggregated, and without individual-level encounter data it is difficult to track or evaluate the types or quality of services used by any individual enrollee over time (GAO, 1997; Howell, 1996). The committee's general concerns about managed care are discussed in a later section of this chapter.

Supplemental Security Income

In 1996, approximately 955,000 children with disabilities received SSI payments that made them eligible for Medicaid (Alliance for Health Reform, 1997). SSI benefits are used to preserve the ability of families to take care of disabled children at home by providing cash assistance to help them meet some of their disability-related expenses, to help compensate for lost income, and to help meet basic expenses for food, clothing, and shelter (National Academy of Social Insurance, 1996).

As a result of the welfare reform legislation enacted in 1996, the definition of disability and the process for determining eligibility were tightened for children with behavioral problems (see Box 7.1), thus changing their Medicaid eligibility. The loss of SSI benefits could mean an increased financial burden for parents of disabled children, decrease their access to appropriate services, and ultimately have a significant impact on the children's level of functioning. However, there was controversy about the level of behavioral dysfunction that would merit a monthly federal cash payment and concern that the diagnostic criteria were too generous, as well as difficult to interpret (Koppelman, 1998).

In response to concerns expressed by the disability and children's health communities, the Balanced Budget Act of 1997 mandated Medicaid coverage for all disabled children who lost their eligibility due to changes in the welfare law or who were receiving SSI as of the date of the law's enactment (August 22, 1996). The Social Security Administration is reevaluating the determination criteria and reviewing appeals filed by families who have lost their benefits (see Box 7.1).

Maternal and Child Health Services Block Grant

Title V of the Social Security Act authorizes the Maternal and Child Health Services (MCH) Block Grant, a public health program that allows states to develop model, community-based health programs to improve the health of mothers and children. States are required to match $3 for every $4 that they receive from the federal government, and many states provide funds beyond the required match. More than $1.7 billion was generated in fiscal year 1997 for services at the state and local levels (MCHB, 1997).

The majority of MCH block grant funds are spent on preventive public health services to help meet the Healthy People 2000 national health objectives of the Public Health Service Act. The funds are used to pay for services for children and pregnant women not covered by Medicaid. These include programs offered by local health departments, community and migrant health centers, and HIV prevention and

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