Introduction

Improving the health of low-income children has numerous long-term benefits, including increased educational attainment and productivity [1–5]. As one mechanism to promote improved health, states have made substantial investments in Medicaid, the primary public health insurance program for low-income children. In 2009 more than two-thirds of U.S. children in households below the federal poverty line (FPL) were enrolled in Medicaid [6].

Although combined federal and state Medicaid expenditures exceeded $360 billion in fiscal year (FY) 2009 [7], and program expenditures amounted to between 22 and 33 % of total state spending in 2010 [8], little is known about the relationship between states’ spending for low-income children and their access to services and quality of care. While higher provider payment fees are assumed to improve access [9], previous research has not indicated a strong and consistent relationship [10–12]. Moreover, while physician visits are an important component of children’s health care use, fee-for-service physician payments represent a shrinking proportion of total Medicaid spending on children, dropping from 7.2 % in 1998 to 5.4 % in 2007 due to rising enrollment in managed care plans that receive capitated payments for a broad set of benefits [13].Footnote 1 Indeed, state Medicaid agencies may view managed care as a strategy for improving access because it commits health plans to contractual access requirements and gives state agencies the ability to monitor compliance with the rules [14, 15].

Exploring the link between spending and outcomes will help federal and state policymakers understand how to obtain the best value when allocating scarce public funds that are further limited during economic downturns [16]. Congress endorsed this course of study in the 2009 Children’s Health Insurance Program Reauthorization Act (CHIPRA), which established the Medicaid and CHIP Payment and Access Commission (MACPAC) and charged it with assessing the relationship between Medicaid and CHIP payment policies and access and quality outcomes for beneficiaries [17].

Given heightened interest in assessing the value of Medicaid spending, this paper explores whether those states that spend more per child also have better access outcomes. We compare data on insurance adequacy and access to care for publicly insured children (Medicaid and CHIP) from the 2007 National Survey of Children’s Health (NSCH) with 2006 state-level Medicaid expenditure data. While there have been numerous efforts to compare geographic variation in costs and quality within the Medicare program [18–20] and new efforts to compare state spending for cash-assistance Medicaid beneficiaries with disabilities [21], we are not aware of prior work addressing this relationship for Medicaid-enrolled children.

Our approach represents two advances from previous studies that have compared public expenditures or health care access for Medicaid-enrolled children across states or regions [10, 22, 23]. First, we use data from the NSCH, which permits calculation of state-level insurance adequacy and access to care estimates for children in all 51 state programs, whether enrolled in managed care or fee-for-service models. By using individual-level NSCH data, these measures can be adjusted for demographic factors to improve comparability across states. Second, recognizing the large and growing role of managed care for publicly insured children—in 23 states more than 70 % of Medicaid children were enrolled in comprehensive managed care plans in 2006 [24]—we use a global spending measure that includes all capitated, fee-for-service, and administrative expenditures.Footnote 2 Doing so more accurately captures total state spending on behalf of enrollees.

Methods

To develop measures of insurance adequacy and access to care for publicly insured children, we identified 2007 NSCH children whose parents reported they were insured by Medicaid or CHIP. We are unable to differentiate between Medicaid and CHIP because respondents were asked about both coverage types in a single question. Excluding respondents with missing data on gender, health status, and/or primary household language (0.2 % of the initial sample) resulted in a final sample size of 19,715. By state, sample sizes ranged from 180 (Utah) to 634 (Louisiana).

State-level Medicaid expenditures were computed for two categories—services and administrative expenses—from the Centers for Medicare & Medicaid Services (CMS) data. For service expenditures, we used 2006 Medicaid Analytic eXtract (MAX) data, which are research-quality data sets containing Medicaid enrollment and claims information from the Medicaid Statistical Information System (MSIS). MAX files contain claims information by service date for each enrollee for the entire calendar year and reflect retroactive claims adjustments, eligibility, and other corrections [24]. For this study, 2006 MAX files were the most current available.Footnote 3 For each enrollee age 0-17, we summed all capitation and fee-for-service expenditures during the year and divided the sum by the total number of months the child was enrolled in Medicaid. For example, a child enrolled in Medicaid for 7 months in 2006 would contribute 7 months to the denominator of the measure.

For administrative expenses, we used the Quarterly Medicaid Statement of Expenditures for the Medical Assistance Program, also known as Form CMS-64, used by state Medicaid agencies to report actual program administrative expenses. Many expenses, such as the costs to maintain data management systems, are not attributable to individual beneficiaries. Accordingly, states report administrative expenses in aggregate across all eligibility and age groups. We divided administrative expenses by total member months reported in MAX for all enrollees (no age restrictions). For each state, we then added administrative (per member month) and service (per child member month) expenditures. We compared the result—per member per month (PMPM) total Medicaid expenditures for children—with access measures from the NSCH.

We computed seven regression-adjusted state-level measures of insurance adequacy and access to care: (1) insurance always allows access to needed providers (n = 19,604); (2) insurance always covers needed benefits (n = 19,532); (3) had personal health care provider (n = 19,635); (4) received preventive medical visit in the prior year (n = 19,376); (5) received preventive dental visit in the prior year (n = 19,594); (6) received mental health care when needed (ages 2 and above, n = 2,673); and (7) no problems obtaining referrals when needed (n = 4,019).

Measures were computed using logistic regression to adjust for demographic, health status, and household differences that might affect experiences with accessing the health care system and perceptions of insurance adequacy [25–32]. These factors included age, sex, race/ethnicity, health status (child has special needs), mother’s education, household income, language (non-English speakers), and number of children in household (only child). Table 1 indicates the categorical levels and reference groups implemented in regression models. There were three control variables with missing data: poverty status, mother’s education, and race/ethnicity. For all three variables we addressed missingness by creating a separate category of “unknown value” for the characteristic. For example, household income below 100 % FPL was our reference level, and the regressions included dummy variables for FPL 100–149 %, FPL 150–199 %, FPL 200–299 %, FPL ≥ 300 %, and FPL unknown.

Table 1 Unweighted sample characteristics for publicly insured children, NSCH 2007 (n = 19,715)
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We examined evidence of associations between spending and each measure using descriptive and multivariate approaches. First, we compared adjusted state measures of adequacy and access to total child Medicaid PMPM spending in scatter plots. Then, to assess the statistical significance of potential relationships, we constructed multilevel logistic regression models, including state-level PMPM expenditures as a regressor predicting individual measures.

We also looked for “high-value” states that achieved above-median performance on adequacy and access measures at below-median spending. Median, rather than mean, reference values were used to limit the sensitivity of the analysis to outliers. We examined managed care enrollment levels from MAX 2006 validation tables [24] in identified high-value states to test the hypothesis that higher managed care enrollment may facilitate achieving better insurance adequacy and access to care with lower spending. For each state, the number of children enrolled in health management organizations (HMOs) or health insurance organizations (HIO) at any point in the year was divided by the total number of children. Both the numerator and denominator excluded children receiving less than full Medicaid benefits.

Results

Of the sample of publicly insured children in the NSCH, approximately 45 % were white, nearly two-thirds were age 0–10, one-third lived in households with income below the FPL, and nearly half were born to mothers without a high school diploma (Table 1). About one-quarter had special health care needs, and 38 % were the only child in their household. Sample characteristics varied widely by state, highlighting the need to adjust for demographic, health status, and household characteristics that affect the need for and use of health services when comparing measures across states. For example, in one state 17 % of publicly insured children in the NSCH sample had special health care needs, compared to 36 % in another state.

Median total Medicaid PMPM spending for children age 0–17 was $278; most states had spending between $200 and $350 PMPM (Table 2). Overall, the highest-spending state (Alaska, $556 PMPM) had expenditures nearly four times those of the lowest-spending state (Louisiana, $141 PMPM).

Table 2 State Medicaid PMPM cost (2006) and NSCH insurance adequacy and access to care outcomes (2007) for publicly insured children
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Considering unadjusted insurance adequacy and access to care measures, at the national median, 91 % of publicly insured children had a personal health care provider and a preventive medical visit in the prior year (Table 2). More than three-fourths had a preventive dental visit and had no problems obtaining referrals when needed. Roughly 80 % responded that their insurance always covered needed services and allowed access to needed providers. Just over 60 % of children received mental health care when needed.

Adjusted measures are useful for examining the remaining variation across states after accounting for differences in demographics, health status, and household characteristics. Generally, the range in adjusted measures was similar to that observed for the unadjusted measures (Table 2). Variation across states in the adjusted measures ranged from 12 percentage points (has a personal health care provider, 85–97 %) to 57 percentage points (receipt of mental health services when needed, 17–74 %).

Scatter plots arraying state-level adjusted measures with PMPM spending suggested a positive relationship between spending and insurance adequacy measures, as well as with receipt of mental health care and with obtaining referrals (Fig. 1). There does not appear to be a relationship between spending and access to medical or dental care or to having a personal health care provider.

Fig. 1
figure 1

Adjusted state-level quality measures (NSCH 2007) and PMPM expenditures (2006)

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Results from multi-level regression models were consistent with results from the scatter plot analysis. PMPM was a significant predictor of both measures of insurance adequacy as well as receipt of mental health services (Table 3). An increase of $50 PMPM (or roughly, moving from the median to the 75th percentile) was associated with a 6 % increase in the likelihood that insurance would always cover needed services (p = 0.04), a 7 % increase that insurance would always allow access to needed providers (p = 0.04), and a 19 % increase in receiving mental health care services when needed (p < 0.01). For the remaining four access measures, PMPM was a consistent positive predictor and achieved marginal statistical significance (0.05 < p < 0.10) in two cases: having a personal health care provider and having no problems obtaining needed referrals.

Table 3 Estimated odds of positive access outcome in states with PMPM spending $50 higher than median
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Few states consistently achieved “high value,” defined as a level of insurance adequacy or access above the adjusted national median with lower-than-median PMPM spending. One state—Hawaii—had lower-than-median spending and higher-than-median outcomes for six of the seven measures. An additional five states—Alabama, Georgia, Indiana, South Carolina, and Tennessee—had lower-than-median spending and higher-than-median outcomes for five of the seven measures.

Across all states, the share of Medicaid-enrolled children receiving care through capitated managed care plans in 2006 varied enormously, from 0 to 98 %, with a national median of 55 %. Considering the six potential “high-value” states identified above, there are no clear patterns regarding managed care enrollment. Children’s enrollment in comprehensive managed care was especially high in Hawaii and Indiana in 2006—98 and 91 % respectively—and enrollment was above the national median in Georgia (76 %). However, Alabama had no comprehensive managed care enrollment and South Carolina had 20 % enrollment in 2006. While MAX data indicate that Tennessee had no comprehensive managed care enrollment in 2006, this represents an atypical period. The state long operated capitated managed care arrangements, but briefly relied on administrative-service-only relationships with managed care organizations from 2003 to 2006 [33]. It began returning to risk-based contracts in 2007, and by 2009, more than 94 % of Tennessee’s Medicaid enrollees were in comprehensive managed care plans [34].

Discussion

States with higher total Medicaid expenditures per child per month appear to perform better on measures of insurance adequacy and access to care for publicly insured children. PMPM spending was a positive predictor of adequacy and access for all seven measures examined and a significant or marginally significant predictor for five measures. Expenditures had the greatest effect on access to mental health; an increase of $50 PMPM increased the likelihood of receiving needed services by 19 %. Though our expenditure measure reflects all fee-for-service, managed care capitation payments, and administrative fees, these results are consistent with previously reported work linking higher provider reimbursement rates to improved access to care [10–12].

While these findings should be heartening to state policymakers seeking to ensure that public funds are well spent, a few states do appear to obtain higher value than others. In six states (Alabama, Georgia, Hawaii, Indiana, South Carolina, and Tennessee), spending was lower than the national median but adjusted insurance adequacy and access to care performance was consistently higher than the median. It is unclear whether these states are anomalous exceptions or if their performance is the result of concerted efforts to assure low-income children access to services while minimizing Medicaid spending.

Nevertheless, the factors responsible for outcomes in these states warrant further study to determine if they offer lessons for other state Medicaid and CHIP programs on ways to improve the value of the money spent. One hypothesis that we explored was that high-value states enrolled greater proportions of children in comprehensive managed care plans, as these delivery models may give states greater ability to hold plans accountable for their performance [14, 15]. We found that two states with consistently high-value results—Hawaii and Indiana—had unusually high enrollment in capitated managed care. Interviews with program managers in these states conducted for another study [35] indicated that managed care was a key strategy for achieving value in the Medicaid program. In Indiana’s case, the state has long required plans to collect and, since 2005, publicly report quality measures. In 2006, Indiana incorporated pay-for-performance incentives in its contracts. In Hawaii, the state has enrolled children in capitated managed care since the mid 1990s; contracted plans also serve the privately insured and have earned some of the highest quality scores nationwide.

While these findings suggest the promise of Medicaid managed care, such a delivery approach does not appear to be required for achieving high value. South Carolina, another of the “high-value” states identified in this study, enrolled only about 20 % of all children in capitated managed care in 2006. The state has earned high marks for policies that increase access to dental care for low-income children, and may use similar strategies to assure access to other types of care [36].

There are several limitations that should be considered in interpreting these results. First, all data from the NSCH are parent-reported. Second, although state-level data presented in this study are the most complete available, measures for insurance adequacy and access to care (Medicaid and CHIP) and expenditures (Medicaid alone) reflect slightly different populations. Nevertheless, comparing these two measures to explore the relationship between spending and access for publicly insured children is still likely to yield meaningful results. While the NSCH sample includes both Medicaid and CHIP enrollees, sample members predominantly represent Medicaid enrollees, though the balance of Medicaid versus CHIP respondents likely varied across states. Nationwide, Medicaid enrollees accounted for approximately 83 % of publicly insured children in 2007; in no state were fewer than 70 % of publicly insured children enrolled in Medicaid at some time during the year (authors’ calculation based on data in [37, 38]). Considering expenditures, MAX data do not contain information on payments for CHIP enrollees, and no data sets of comparable quality on CHIP expenditures are available. However, our Medicaid-only PMPM cost measure is likely to be similar to a combined Medicaid and CHIP PMPM measure, because the greater proportion of enrollees are in Medicaid and in FY 2006, 32 states operated Medicaid-expansion or combination Medicaid/CHIP programs, which use the same administrative and service contracting approaches for both populations [39].

Though this study expands the body of evidence on the positive relationship between public spending and insurance adequacy and access to care outcomes for children, available data to address this question are limited. The NSCH provided many useful indicators of children’s health care access but lacks other measures that would be useful in assessing the value of Medicaid spending. For example, how are providers delivering care to chronically ill children? How often are acutely ill children treated appropriately for common conditions like ear infections? Are mental health care services—both screening and treatment—well coordinated with medical care?

Provisions in the CHIPRA will help to expand the number of available measures and improve comparability across states by developing a core set of quality and access measures for Medicaid and CHIP enrollees. Twenty-four measures covering areas such as prenatal care, immunizations, well child visits, emergency room use, and appropriate acute care treatment were included in the initial set for voluntary reporting. CMS is investing significant resources in helping states measure and report on quality in the CHIP and Medicaid programs, viewing this measurement effort as the first step in improving the quality of care for publicly insured children [40]. Future research comparing the value of spending to a broader set of quality indicators for children’s health care by source of insurance coverage will benefit from these efforts.