In brief: Most children and women brought into Medicaid coverage in recent years would otherwise have been uninsured. However, recent research also indicates that, for those above poverty, a significant number would otherwise have employer-sponsored coverage. Under what has proved to be an unsuccessful measure enacted in 1990, states are required to make use of employer-sponsored coverage when it is cost-effective to do so. This requirement has not been easy for states to implement, nor have its benefits been well understood. While many modest-income working families need assistance to afford coverage, better approaches to coordinating low-income subsidies with employer-financed private coverage will allow available public dollars to cover more children in need. They could also improve continuity of care and coverage for children, pregnant women, and their families.

This report presents pertinent research findings, analyzes a range of related issues, discusses problems faced by current efforts to coordinate Medicaid and employer financing, and discusses possible policy options for improvement. The analysis draws on a roundtable discussion by experts with a range of applicable expertise regarding the interface between public and employer-financed health insurance. For the foreseeable future, both are potentially significant sources of health care coverage for children in modest-income working families. The paper is intended to assist policy officials in designing cost-effective strategies to cover uninsured children and pregnant women.