How to Expand Access to Coverage for Former Foster Children

The Affordable Care Act’s protections for former foster children has increased access to coverage for foster youths, a particularly vulnerable population, according to a study published by Health Affairs.

Around 18,000 children in the foster care system age out of the system each year. While in the foster care system, these children receive Medicaid coverage. After aging out of the system, however, former foster children can receive healthcare coverage in two ways through the Affordable Care Act.

First, the Affordable Care Act mandates that any children who age out of the foster care system should receive access to full Medicaid benefits until they are 26 years old in the state in which they age out of foster care.

Second, Medicaid expansion provides additional coverage for this vulnerable population, since children who age out of foster care often meet the low income eligibility requirements in Medicaid expansion states.

Before the Affordable Care Act went into effect, states could opt to use the Chafee option.

“In the thirty states that exercised the so-called Chafee option through the Foster Care Independence Act of 1999, youth in care at age eighteen could preserve Medicaid eligibility and other services up to ages twenty, twenty-one, or twenty-two, depending on their income, resources, and other requirements established by state law,” the study explained.

The researchers leveraged the National Youth in Transition Database to assess whether the Affordable Care Act’s Medicaid expansion efforts have enabled former foster children to find reliable healthcare coverage. They observed two cohorts of young adults between fiscal year 2011—before the Affordable Care Act went into effect—and fiscal year 2018.

The two cohorts had significant distinguishing characteristics. 

The second cohort—which the researchers began to observe in fiscal year 2014 with two follow-up analyses in fiscal years 2016 and 2018—were more likely to have Medicaid coverage as an adult and more likely to be employed. They were also less likely to have a child and less likely to be incarcerated. They enjoyed a better economic environment than the first cohort.

Overall, Medicaid expansion improved coverage rates among former foster youths by 10.1 percentage points.

In Medicaid expansion states, more individuals in both cohorts kept their Medicaid coverage through age 21, whereas in nonexpansion states, more young adults dropped their coverage at a younger age. 

Of the first cohort, 78 percent maintained Medicaid coverage when they were 19 in fiscal year 2013 and 72 percent kept Medicaid until they were at least 21. In contrast, the second cohort saw 84 percent of their young adults retain Medicaid coverage until fiscal year 2016 when they were 19 and 77 percent kept Medicaid until fiscal year 2018 when they were 21.

In contrast, Medicaid eligibility age expansion increased former foster youths’ access to Medicaid coverage by 3.4 percentage points.

The researchers outlined three potential reasons for the differences in outcomes between the two policies. 

The distinction may be tied to their different eligibility and verification requirements. Additionally, outreach and awareness may have improved with Medicaid expansion so that former foster youths and foster systems are more aware of their coverage options. 

It is also possible that limited data has obscured the full impact of the age extension pathway. This policy extends the age of eligibility to 26 years old, but the National Youth in Transition Database does not track former foster youths for that amount of time. If the Chafee option had a greater effect when foster youths were closer to 26 years of age, the data would not show it.

Other forms of health insurance saw a 3.0 percentage point decline under Medicaid expansion. However, under the Chafee option, there was no significant shift in enrollment in other health insurance.

“These findings may indicate the value in broad eligibility over targeted eligibility and have important implications for future policy and practice guidance,” the researchers explained. “States should consider a streamlined, automated approach for enrolling foster youth in Medicaid and for keeping them enrolled through age twenty-six.”

Recent data confirmed that young adults between the ages of 19 to 25 have seen the greatest benefits from Medicaid expansion.

Previous studies have identified that Medicaid coverage can improve health outcomes including mortality among young adults.

Still, young adults were hit hard by the pandemic, according to a separate study. If all fourteen states that had not yet expanded Medicaid at the time of this study decided to expand their Medicaid programs before 2020, 4.4 million uninsured individuals would have had an insurance option. Most of those uninsured individuals were young adults.