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Appendix B: Key Terms and Concepts
Health insurance coverage
In 2001, 67.1 percent of the U.S. population had private health insurance coverage, most often provided through an employer.4 For populations served by the safety net, however, the cost of premiums to purchase private coverage—either through an employer or individually—may be beyond their budget. Even for low-income families with private coverage, the deductibles and copayments required by their insurance may be beyond their means. This section describes three public programs that fund health care for segments of the U.S. population.
Title XIX of the Social Security Act is a Federal/State entitlement program that pays for medical assistance for certain individuals and families with low incomes and resources. This program, known as Medicaid,5 became law in 1965 as a cooperative venture jointly funded by the Federal and State governments (including the District of Columbia and the territories) to assist States in furnishing medical assistance to eligible needy persons. Medicaid is the largest source of funding for medical and health-related services for America's poorest people.
Within broad national guidelines established by Federal statutes, regulations, and policies, each State (1) establishes its own eligibility standards; (2) determines the type, amount, duration, and scope of services; (3) sets the rate of payment for services; and (4) administers its own program. Medicaid policies for eligibility, services, and payment are complex and vary considerably, even among States of similar size or geographic proximity. Thus, a person who is eligible for Medicaid in one State may not be eligible in another State, and the services provided by one State may differ considerably in amount, duration, or scope from services provided in a similar or neighboring State. In addition, State legislatures may change Medicaid eligibility and/or services during the year.
State Children's Health Insurance Program (SCHIP)
The Balanced Budget Act of 1997 created a new children's health insurance program under Title XXI of the Social Security Act called the State Children's Health Insurance Plan6 (SCHIP). This program enabled States to initiate and expand health insurance coverage for uninsured children. The funds cover the cost of insurance, as well as outreach services to get children enrolled and reasonable costs for administration. Funds must be used to cover previously uninsured children and not to replace existing public or private coverage.
The statute set broad outlines of the program's structure and established a partnership between Federal and State governments. States were given broad flexibility in tailoring the programs to meet their own circumstances. States could create or expand their own separate insurance programs, expand Medicaid, or combine both approaches.
States may choose among several benchmark benefit packages, develop a benefit package that is actuarially equivalent to or better than one of the benchmark plans, or use the Medicaid package. States also have the opportunity to set eligibility criteria regarding age, income, resources, residency, and duration of coverage within broad Federal guidelines. The Federal role is to provide technical assistance to the States and to ensure that programs meet statutory requirements that are designed to ensure meaningful coverage under the program.
The Centers for Medicare & Medicaid Services (CMS) administers Medicare,7,8 the nation's largest health insurance program, which covers nearly 40 million Americans. Medicare is a health insurance program for people 65 years of age and older, some disabled people under age 65, and people with End-Stage Renal Disease (permanent kidney failure treated with dialysis or a transplant).
Medicare has two parts. Part A primarily helps pay for inpatient hospital services. Coverage is automatic for most people when they turn 65. Part B helps pay for doctors' services, outpatient hospital care, and some other medical services that Part A does not cover, such as the services of physical and occupational therapists and some home health care, when they are medically necessary. Enrollment in Part B is voluntary, and enrollees pay a premium for this coverage.
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Other Ways Health Care for Low-Income Populations Is Financed and Provided
This section describes some additional programs through which health care for low-income and other vulnerable populations is provided or financed, as well as the organizations that sponsor or administer the programs.
Disproportionate Share Hospitals (DSH) (CMS)
The Medicare DSH adjustment is an additional Medicare payment to hospitals that treat a high percentage of low-income patients. Under Medicaid DSH, disproportionate share hospitals receive higher Medicaid reimbursement than do other hospitals because they treat a disproportionate share of Medicaid patients.
Uncompensated Care Pooling (State Programs)
An uncompensated care pool within a State helps finance hospital-based care for uninsured patients by providing financial support to hospitals and other providers to help defray the expenses of uncompensated care.
Health Centers Programs (Health Resources and Services Administration[HRSA])
Operating at the community level, Community Health Centers (CHCs) provide regular access to comprehensive primary and preventive care, regardless of individuals' ability to pay. CHCs are core safety net providers, although they are not present in all communities. In addition, this program encompasses several types of Health Centers that provide primary and preventive health services to meet the health care needs of specific populations, including migrant and seasonal farm workers, homeless people, at-risk school children, and residents of public housing.
Maternal and Child Health Block Grant Program (HRSA)
This program seeks to (1) assure access to quality health care, especially among those with low incomes or limited availability of care; (2) reduce infant mortality; (3) provide and ensure access to comprehensive prenatal and postnatal care to women, especially low-income and at-risk pregnant women; and (4) increase the number of children receiving health assessments and follow-up diagnostic and treatment services.
National Health Service Corps (HRSA)
This program provides Health Service Corps clinicians, who supply primary care as well as oral and mental health services to areas experiencing clinician shortages. Many States also run similar programs that complement the National Health Service Corps.
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Medical debt can be a substantial issue for uninsured Americans. One recent survey found that 46 percent of uninsured patients who had received ambulatory care had unpaid bills or were in debt to the facility where they received care, and that three out of five uninsured patients who had received ambulatory care said they needed help paying their medical bills.9
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At the Federal level, the income level at which people are considered "poor" or "nonpoor" is set by the Office of Management and Budget.10 The level is determined by family size and composition, and counts money income before taxes. Capital gains and noncash benefits (such as Medicaid) are not included. The poverty thresholds, shown in Table B-1, do not vary geographically but are updated annually for inflation.11
Table B-1: Poverty Thresholds in 2001 by Size of Family and Number of Related Children Under Age 18
|Size of family unit Related
||Children Under Age 1820|
||Eight or more|
|One person (unrelated individual)
||Under age 65
||9,214|| || || || || || || || |
|5 years of age and older||8,494|| || || || || || || || |
||Householder under age 65||11,859 12,207|| || || || || || || || |
|Householder 65 years of age and older||10,705||12,161|| || || || || || || |
|Three persons||13,853||14,255||14,269|| || || || || || |
|Four persons||18,267||18,566||17,960||18,022|| || || || || |
|Five persons||22,029||22,349||21,665||21,135||20,812|| || || || |
|Six persons||25,337||25,438||24,914||24,411||23,664||23,221|| || || |
|Seven persons||29,154||29,336||28,708||28,271||27,456||26,505||25,462|| || |
|Eight persons||32,606||32,894||32,302||31,783||31,047||30,112||29,140||28,893|| |
|Nine persons or more||39,223||39,413||38,889||38,449||37,726||36,732||35,833||35,610||34,238|
4 Medical Expenditure Panel Survey. MEPS Household Compendia of Tables. Household Health Insurance Tables: 2001. Table 1. Available at: http://www.meps.ahrq.gov/mepsweb/data_stats/summ_tables/hc/hlth_insr/2001/alltables.pdf. Accessed February 20, 2009.
5 Centers for Medicare & Medicaid Services. Medicaid: A Brief Summary. Available at: http://www.cms.hhs.gov/MedicaidGenInfo/. Accessed February 20, 2009.
6 Centers for Medicare & Medicaid Services. What is the State Children's Health Insurance Plan (SCHIP)? Frequently Asked Questions page "What is SCHIP?").
7 What is Medicare? page. Medicare Web site. http://www.medicare.gov/MedicareEligibility/Home.asp?dest=NAV|Home|GeneralEnrollment#TabTop. Accessed February 20, 009.
8 Medicare Eligibility, Enrollment, & Premiums page. Medicare Web site. Available at: http://www.medicare.gov/MedicareEligibility/Home.asp?dest=NAV|Home|GeneralEnrollment|PremiumCostInfo#TabTop. Accessed February 20, 2009.
9 Andrulis D, Duchon L, Pryor C, Goodman N. Paying for health care when you're uninsured: How much support does the safety net offer? Boston, MA: The Access Project. 2003. Web site: http://www.accessproject.org/medical.html. Accessed February 20, 2009.
10 Statistical Policy Directive No. 14, Definition of Poverty for Statistical Purposes page, U.S. Census Web site. Available at: http://www.census.gov/hhes/www/poverty/definitions.html). Accessed February 20, 2009.
11 How the Census Bureau Measures Poverty page. U.S. Census Web site. Available at: http://www.census.gov/hhes/www/poverty/definitions.html. Accessed February 20, 2009.
20 Proctor BD, Dalaker J. Poverty in the United States: 2001. Current Population Reports P60-219. Washington, DC: U.S. Census Bureau; 2002. Available at: http://www.census.gov/prod/2002pubs/p60-219.pdf. Accessed February 20, 2009.
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Current as of August 2003
AHRQ Publication No. 03-0025