Summary

Despite larger numbers of parents who work full-time, private health insurance coverage for children is declining. The number of children without health insurance coverage reached 10 million in 1994--the largest number since 1987. In comparison, the number of adults who have lost their health insurance coverage appears to have stabilized during the past two years. Meanwhile, although Medicaid provided health coverage for 16 million children in 1994, more than 60 percent of those children had a working parent. This trend is straining public resources: Taxpayers end up paying either for Medicaid coverage or for hospital subsidies to provide acute care for the uninsured. In response to rising Medicaid costs, state and local governments are considering various program changes, some of which have profound implications for health care coverage for children, such as proposals to remove guaranteed eligibility. Other changes that strengthen the private insurance market may also significantly affect children's future coverage.

GAO found that: (1) the percentage of children without health insurance was 14.2 percent in 1994; (2) the percentage of children with private health insurance has steadily decreased since 1987; (3) while there has been a decline in coverage for poor children, coverage for nonpoor children has remained stable; (4) Medicaid coverage for children was lower in 1994 due to methodological changes in the Current Population Survey; (5) there were 2.9 million Medicaid-eligible children that were not enrolled in Medicaid in 1994; (6) these children represented 30 percent of all uninsured children from birth to 5 years old, and had family incomes that fell below the federal poverty level; (7) the number of children eligible for Medicaid will increase in the next 6 years to include poor teens aged 13 to 19 years old; and (8) Medicaid will cover even more uninsured children as soon as the families of eligible uninsured children learn that they qualify for Medicaid.