Medicaid and CHIP:

Opportunities Exist to Improve U.S. Insular Area Demographic Data That Could Be Used to Help Determine Federal Funding

GAO-09-558R: Published: Jun 30, 2009. Publicly Released: Jul 21, 2009.

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The five largest insular areas of the United States--American Samoa, the Commonwealth of the Northern Mariana Islands (CNMI), Guam, Puerto Rico, and the U.S. Virgin Islands--receive federal funding through Medicaid and the State Children's Health Insurance Program (CHIP), joint federal-state programs that finance health care for certain low-income individuals. These programs are administered and funded differently in the insular areas when compared to the states. For example, while states must extend Medicaid eligibility to certain individuals whose incomes are at or below a percentage of the federal poverty level (FPL), the insular areas are not required to cover this population. In addition, under both Medicaid and CHIP, the federal government matches state or local government spending. However, federal law establishes the federal matching rate for expenditures by the insular areas at the lowest rate available to states, while matching rates for the states are determined each year based on a formula that takes into account variations in per capita income in each state. Furthermore, federal Medicaid spending in the insular areas is subject to an annual limit that does not apply to the states. Finally, while CHIP funding is subject to annual limits for both states and insular areas, the formula for determining each state's CHIP allotment differs from the formula used for allotments for the insular areas. Taken together, these differences in funding formulas have contributed to per capita federal Medicaid and CHIP spending that has been lower in the insular areas than in the states. Some insular area governors and other insular area officials contend that federal Medicaid and CHIP spending in the insular areas is not sufficient to meet the needs of the areas and have recommended that the Medicaid spending limits be removed and the federal matching rates for Medicaid and CHIP be increased. However, Congress and others have raised concerns that limitations in Medicaid and CHIP program data and in available demographic data for the insular areas make it difficult to accurately assess the needs of the areas. For example, states are required to report all of their Medicaid and CHIP spending to the Centers for Medicare & Medicaid Services (CMS)--the agency that oversees these programs. In contrast, insular areas must report only spending up to their annual limits. Furthermore, while the Bureau of the Census (Census) collects household demographic data from the states annually, it generally only collects household demographic data for the insular areas once every 10 years as part of the decennial census.

Insular areas' Medicaid and CHIP income eligibility criteria vary, and contribute to wide variation in the estimated percent of the population covered by Medicaid in each of the insular areas. For example, two of the areas base their income eligibility criteria on the FPL, while two other areas base their income eligibility criteria on locally established income limits. In 2008, the estimated percentage of the populations covered by Medicaid in the insular areas ranged from 6 percent in the U.S. Virgin Islands to 88 percent in American Samoa, according to the Congressional Research Service (CRS). In addition, CMS provides the insular areas with flexibility in how they report Medicaid and CHIP enrollment data and requires the areas to report spending data quarterly using a standard form. Based on their review of reported spending data, CMS officials have determined that spending reports from the insular areas are sufficient to justify the federal matching payments made to them. For a number of reasons, CPS and ACS data are not available for the five insular areas in our review. However, Census updates certain data annually for Puerto Rico, including demographic, socioeconomic, and housing data collected through a tailored version of the ACS. According to Census officials, such data could be used in a CHIP allotment formula that used ACS data. Similar demographic, socioeconomic, and housing data for the other four insular areas are collected once every 10 years through the decennial census. Census officials identified two options to update demographic information for the other four insular areas between decennial censuses--the agency could implement survey programs to collect demographic, socioeconomic, and housing data or it could update certain demographic data through its Population Estimates Program. However, according to agency officials, the agency would need additional resources or would need to take additional steps to develop either of these updates, depending on the method used.

Recommendation for Executive Action

  1. Status: Closed - Not Implemented

    Comments: August 2010: The Census Bureau had not implemented the recommendation, but maintained interest in developing demographic data collection for the insular areas. September 2012: Census was in the process of reviewing a proposal regarding methods for collecting demographic, social, economic, and housing data from the insular areas between decennial censuses, but noted that funding was not available to implement the proposal. Update October 2013: Census had reviewed methods for collecting demographic data between decennial censuses and concluded that collection of data similar to that used in the CHIP allotment formula for the States and Puerto Rico was not feasible. Census noted that a mid-decade census could be feasible, but funding was not available to develop or support such data collection.

    Recommendation: To improve the availability of the data that could be used in a CHIP allotment formula, the Secretary of Commerce should direct Census to update, between decennial censuses, the demographic data for American Samoa, CNMI, Guam, and the U.S. Virgin Islands.

    Agency Affected: Department of Commerce


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