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Model Application Template for the State Children’s Health Insurance Program

Effective Date:

Approval Date: 16 children receiving coverage under the Nebraska Medicaid Program. This includes full coverage of Vaccine for Children benefits.

Potential for Substitution

Although Nebraska’s Title XXI proposal will expand Medicaid to cover all uninsured children age 18 and younger with family incomes at or below 185 percent of the federal poverty level, it is not anticipated that there will be a significant crowd-out effect - families substituting Kids Connection coverage for family coverage. Crowd-out is not anticipated because family coverage for persons in this income group is not affordable. The national rate of family health insurance premiums is estimated to be in excess of $3,500 annually. It is unlikely that employers provide family health insurance to workers earning wage rates that are consistent with an income of 185 percent of FPL (an income of $25,253 for a family of three or $30,433 for a family of four), especially given the relatively large number of small businesses in the State. Therefore, substitution is not likely despite the relatively high overall level of health insurance in Nebraska, broader benefit coverage for children under Medicaid and the adoption of Kids Connection name, which may be more palatable to some families than Medicaid.

While HHSS staff do not anticipate crowd-out to be a significant issue for Kids Connection, LB 1063 (mentioned previously) establishes a committee to study the implementation of Kids Connection as Nebraska’s Title XXI program and other alternatives for implementing Title XXI, including the use of private health insurance. The committee’s report is due to the Legislature by September 1, 2000 and must address the number of children moving from private insurance programs to Kids Connection; a comparison between the costs and coverages of Kids Connection and the private health insurance market in implementing Title XXI; and recommendations regarding the continued funding and future provision of health insurance for children eligible under LB 1063.

Should crowd out prove to be an issue that needs to be remedied, the Health and Human Services system will consider appropriate action, such as a three- month or six-month waiting period, premiums, copayments, or tax credits to families who maintain private coverage. These items would have to be authorized in statute.

Furthermore, HHSS staff believe that the substitution will be insignificant based on the experience in Minnesota and Florida. Like Nebraska, Minnesota has a relatively high rate of insurance coverage. Also, both states have programs that have more friendly sounding names, Minnesota’s MinnesotaCare and Florida’s Healthy Kids. While the benefits may be slightly