Tomorrow, approximately 14,000 children in Arizona will lose their CHIP coverage as the state becomes the first in the nation to substantially roll back most of its CHIP program – Arizona KidsCare II.  To understand what’s going on in Arizona, we first need to review the state’s checkered history with the Children’s Health Insurance Program (CHIP).

And, astute readers of SayAhh! might ask, what about the maintenance of effort provisions in the Affordable Care Act which preserve children’s eligibility levels till 2019? The MOE doesn’t apply to Arizona because the state put its enrollment restrictions in place shortly before the Affordable Care Act came into play.

Arizona froze enrollment in its original CHIP program (KidsCare) in January 2010. Of the nearly 47,000 enrolled at the time of the freeze, only a few thousand remain enrolled today due to attrition. Governor Brewer blamed her actions on the recession, but Arizona was the only state that took such a draconian step while all others honored their commitments to kids’ health.  In 2011, a group of hospitals offered a temporary solution by funding KidsCare II to help some of the kids on the waiting list get coverage until December 31, 2013 – a bridge to new coverage options available through the Affordable Care Act on January 1, 2014. Given the technical difficulties in the federal marketplace, the expiration date was extended until January 31, 2014 – hence tomorrow is the date these kids are losing coverage.

In December, there were about 37,000 Arizona children covered through KidsCare II. Thanks to the “stairstep” provision in the Affordable Care Act aligning Medicaid coverage for children with their parents at 138% of the federal poverty level (FPL), about 23,000 of the kids were able to transition to Medicaid coverage.  Unfortunately for 14,000 Arizona kids with incomes between 138-200% of the FPL, they must take their chances.

Many of their families are expected to seek coverage through the health insurance exchange, but as Say Ahhh! readers know, the family glitch may prevent some of them from getting premium tax credits.  And of course we all know, a fair number of glitches remain in the enrollment process through the federal marketplace. That is why we think Governor Brewer should have continued to cover these kids through CHIP – if not permanently then at least until the end of 2014 after the second open enrollment period is available — presumably with many of the problems resolved. It’s too soon to tell how well the 14,000 Arizona children losing KidsCare II will fare going forward, but we are monitoring the situation closely.

While, it may be too late to avoid a gap in coverage for some of these children, CHIP will continue to be a viable and cost-effective option for Arizona to provide coverage if policymakers choose to take action and reinstate the program. After all, families pay a share of the costs, and the federal government picks up over 75% of the remainder.

In our latest report on uninsured children, Arizona ranked 49th in the nation with 13.2% of children uninsured – far higher than the US rate of 7.2%.  If Arizona’s leaders don’t get to work quickly to figure out how to cover these 14,000 children soon, the state may slip even further.