Nine in Ten: Using the Tax System to Enroll Eligible, Uninsured Children into Medicaid and SCHIP

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Abstract

In 2004, 89.4 percent of uninsured children who qualified for Medicaid or the State Children's Health Insurance Program lived in families who filed federal income tax forms. This substantially exceeds the proportion of uninsured but eligible children who can be reached through many other outreach strategies. Federal lawmakers could cover uninsured children in these families by: (a) changing federal income tax forms so parents can identify their uninsured children and request coverage; (b) investing in information technology allowing data exchange between states and the Internal Revenue Service; and (c) letting states cover uninsured children if tax information shows they qualify.

Introduction

As reauthorization of the State Children’s Health Insurance Program (SCHIP) returns to the federal policy agenda, the country’s leaders are confronted with one key fact suggesting a need for policy change: more than 6 in 10 uninsured children qualify for Medicaid or SCHIP but are not enrolled. Most of these children are eligible for Medicaid.

Reaching these children may not be easy. States have made great progress simplifying application procedures and conducting extensive outreach. As a result, 79 percent of eligible children already receive coverage. Clearly, many of the “lowest-hanging fruit” have already been picked. Reaching the remaining 21 percent of eligible children is likely to require bold action.

Passed by Congress but vetoed by President Bush, the Children’s Health Insurance Program Reauthorization Act of 2007 (CHIPRA) contained important proposals to address this problem. It provided states with new resources and incentives to maximize the enrollment of eligible children, with a particular focus on the lowest-income children. It gave states important new tools to reach the eligible uninsured, including a new option for Express Lane Eligibility (ELE), through which children could qualify for health coverage based on eligibility determinations already made by other government programs.

This Issue Brief examines the potential offered by the income tax system as another vehicle for finding and enrolling eligible children. We conclude that revising SCHIP reauthorization legislation to connect Medicaid and SCHIP eligibility with the federal income tax system could yield dramatic gains in enrolling uninsured children who qualify for health coverage.

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