A 'Glitch' Keeps Medicaid From Former Foster Kids

But proposed legislation in Congress would fix the wording in the federal health-care law that's leaving some foster youth uninsured.

U.S. Sen. Bob Casey on the steps of the U.S. Capitol speaking to a constituent.
(Pete Marovich/MCT)
One of the most popular provisions in the Affordable Care Act (ACA) gives young adults the option of staying on their parents' health insurance plan until they turn 26. It's been so popular, in fact, that less than half of all eligible employees under 26 enrolled in an employer-provided health plan in 2015. Many instead opted to stay insured under mom and dad.

In late July, Pennsylvania Sen. Bob Casey introduced a similar bill in Congress extending government-subsidized health insurance to foster youth until they turn 26. The funny thing is that Congress already passed just such a provision in 2010 so that young adults weren't penalized for not having a permanent home. So why the duplication?

It turns out, Casey's legislation is an attempt to fix what he calls a "glitch" in the law's language that has led to spotty and limited Medicaid coverage for former foster care youth. The glitch -- perhaps more accurately described as a troublesome ambiguity -- has come about thanks to two little words: "the State." As it's written, the health-care law says former foster youth only qualify for Medicaid if they "were in foster care under the responsibility of the State." Two years ago, the Centers for Medicare and Medicaid Services (CMS) concluded that "the State" means "the state in which they currently live." In other words, a state is only required to provide Medicaid to a former foster youth if that individual aged out of that specific state's foster care system. Put another way, that means that if a young adult was in foster care in Maryland, but moved to nearby Virginia or the District of Columbia for work, his option to receive Medicaid would only be valid in Maryland.

Advocacy groups like the Young Invincibles, the Children's Defense Fund and First Focus have challenged the fairness of the provision, given that 20-somethings who didn't end up in the foster care system do not face a similar residency requirement. If they did, it would mean that a young person would have to move back to their parents' home state to access their health insurance. The foster care provision, as CMS has interpreted it, discourages former foster care youth from pursuing out-of-state college and career opportunities in a way it does not with nonfoster youth. What's more, they argue, children in foster care move around a lot. Research suggests they remain more transient than their peers in adulthood.

Access to health care is especially important for alumni of state foster care systems because evidence suggests they suffer disproportionate rates of physical ailments, such as asthma, dental decay and malnutrition. They also develop a dependency on drugs at higher rates than their peers. Within the Medicaid program, claims data show that as much as 57 percent of youth in foster care meet criteria for a mental disorder. Supporters of the foster care provision argue that extending health care to these young adults actually helps the community at large by keeping these individuals out of crises that might lead to hospitalizations and emergency room visits.

After CMS released its conclusion, Casey and then-Sen. Mary Landrieu, of Louisiana, sent a letter explaining the provision was meant to be interpreted more broadly. "The State," they argued, is shorthand for "wards of the state," as in the government. The CMS interpretation "is not only counter to the intent of Congress," they wrote, "but has also created an extra, unnecessary barrier to the Affordable Care Act's goal of expanding access to affordable health coverage for all Americans."

Technically, CMS never finalized its interpretation of the provision, but in lieu of final action, the draft regulation has created a de facto policy where most states have not made former foster youth eligible for Medicaid if they aged out of the system somewhere else. What states could do, the CMS suggested, is voluntarily expand Medicaid coverage to former foster youth from other states. Indeed, 13 states have done this: California, Georgia, Kentucky, Louisiana, Massachusetts, Michigan, Minnesota, Montana, New Mexico, New York, Pennsylvania, South Dakota and Wisconsin.

Casey's legislation, however, would make the regulatory dispute moot. His bill mostly changes the wording in the law from "the State" to "a state" in two places. "You have a basic problem with intent in the statute that was not carried forward in the regulations, which is frustrating," Casey said. "Rather than trying to continue to debate that, it may be best to clarify it so there's no question."

Before the health-care law, more than a quarter of Americans aged 18 to 26 did not have health insurance. Now, under the foster care provision, the number of people in that age group eligible for Medicaid is projected to grow from 55,000 last year to 74,000 in 2017, according to CMS actuarial estimates. That's a small number of people relative to other newly eligible groups that stand to receive public health insurance under the 2010 law.

It's too early to know what chance Casey's legislation has of passing. So far, it doesn't have co-sponsors or a companion bill in the U.S. House of Representatives. But both the senator and advocacy groups think the bill's chances are good because child welfare is a subject that typically draws bipartisan support. Still, Casey said he doesn't want to understate the challenge. "Any clarification that might seem easy," he said, "isn't because of the contention in the Senate around the ACA."

J.B. Wogan is a Governing staff writer.