Policy Brief #2 : State Benefit Design Choices under SCHIP - Implications for Pediatric Health Care

This policy brief is the second in a series of reports focusing on the design of state SCHIP programs as they near full implementation. It examines the extent to which state agencies adopt conventional insurance norms or adhere to special principles of Medicaid coverage design for children in designing separately administered (or freestanding) SCHIP programs. The issue of coverage design is particularly relevant for children with low prevalence conditions and special health care needs. Increasingly, conventional insurance uses standardized coverage norms to limit coverage and treatment. These standardized norms take the form of across-the-board treatments and exclusions, limited definitions of medical necessity, and the use of irrefutable, standardized treatment guidelines in determining when covered treatments will be available. All of these practices are impermissible under Medicaid, which uses exceptionally broad preventive standards to determine coverage of children; such standards favor coverage of children with low prevalence problems.

The issue of coverage design takes on particular significance in the context of the current health system, since the use of managed care (which dominates separately administered SCHIP programs, as it does Medicaid) effectively merges issues of coverage, treatment, and ultimately, the quality of health care.