Background

North Carolina’s Medicaid program provides coverage to children ages 0 to 5 up to 200 percent of the federal poverty level (FPL) and children ages 6 to 18 up to 100 percent of the FPL. In 1998, North Carolina developed its State Children’s Health Insurance Program (SCHIP), North Carolina Health Choice. North Carolina Health Choice was established as a separate SCHIP program and provides health coverage to children, ages 6 to 18, who are not eligible for Medicaid and in families with incomes up to 200 percent of the FPL. The state does not provide health coverage to immigrants who are not eligible for coverage under Medicaid/SCHIP. Data from the North Carolina Division of Medical Assistance show that in 2006 Medicaid and Health Choice covered more than 850,000 children.

Data from the Census Bureau’s Current Population Survey indicate that enrollment gains in Medicaid and Health Choice have helped to drive a notable decline in the percentage of uninsured children in North Carolina—from 16 percent in 1998 to 10 percent in 2000. After 2000, however, the enrollment successes in Medicaid and Health Choice were not enough to offset a significant decline in children receiving coverage through their parent’s employer and the consequent rise in the rate of uninsured children (which in 2005 rose to 13 percent).

During the summer of 2006, Action for Children North Carolina convened a broad workgroup of organizations—including children’s advocates, the state chapter of the American Academy of Pediatrics, the North Carolina Hospital Association and insurers—to develop a solution to the growing rate of uninsured children in the state. Since they believed the state was generally doing a good job at reaching children eligible but not enrolled in Medicaid and Health Choice, they focused on uninsured children with family income above 200 percent of the FPL, where there was the greatest percentage of newly uninsured children.

Working with an actuarial consultant, Mercer Government Human Services Consulting, the group developed Carolina Cares for Children which called for a new health insurance program that would be subsidized by either Medicaid or SCHIP dollars, available for children up to age 18 in families with incomes between 200 and 300 percent of the FPL. Additionally, the proposal recommended that families above 300 percent of the FPL be able to buy into the program.