Pursuant to a congressional request, GAO discussed the feasibility of allowing some families with children with disabilities to purchase Medicaid coverage, focusing on: (1) what role Medicaid plays in providing health care coverage for children with disabilities; (2) the extent to which private insurance offers coverage of needed services for children with disabilities; and (3) the benefits and services available to children under the Medicaid program.

GAO noted that: (1) Medicaid generally covers children with disabilities who receive Supplemental Security Income (SSI) program benefits; (2) in December of 1999, almost 850,000 children were receiving SSI payments; (3) these children represent 18 percent of the 4.7 million children with chronic physical or mental conditions of which children with severe disabilities are a subset; (4) several options exist for states to expand coverage for children with disabilities or special health care needs and special needs education.

(5) in particular, spend down options can result in children being sporadically eligible for Medicaid, and states’ expansions of eligibility for certain categories of children with disabilities may not be available to all children, even if they meet the eligibility and income requirements; (6) private health insurance is often not available and can be a more limited option for many children with disabilities; (7) in particular, families with children with special health care needs whose income rises above the maximum threshold allowed for SSI and Medicaid often have limited options for obtaining private health insurance that will cover the services the children need;

(8) many of those leaving SSI and Medicaid work in lower-wage jobs that often do not have access to group coverage or may find their share of premium costs unaffordable; (9) while the Health Insurance Portability and Accountability Act of 1996 guarantees that certain children have access to individually-purchased health insurance without exclusions for pre-existing conditions, this coverage is also likely to be unaffordable for many; (10) for those individuals who do obtain private health insurance coverage.