CCF Research Helps Inform Debate over Reinstating Arizona KidsCare

Last week, I was in Phoenix, Arizona to testify at a hearing in the House of Representatives Health Committee on KidsCare.

As Say Ahhh! readers know, the changes to KidsCare in the last several years created a unique research opportunity because Arizona is the only state without a functioning Children’s Health Insurance Program. My colleagues here at CCF have written four reports on the topic.

Unfortunately, the findings from our research indicate that children in Arizona in the KidsCare income range are more likely to be uninsured and more likely to be stuck paying more for less comprehensive coverage than similarly situated children in other states.

In 2014, we looked at how losing KidsCare impacts a child’s health care costs. We found that families would face higher out of pocket costs for their children’s health care when enrolled in a Qualified Health Plan in the marketplace compared to KidsCare. Lower income children, families with more than one child, and children with significant health care needs are even more likely to incur QHP costs that are many times higher – 2 to 8 times higher in the scenarios examined – than their KidsCare costs.

In 2015, we conducted focus groups and interviews with families who had children enrolled in KidsCare within the past year or so. We found that all parents in the study were highly satisfied with KidsCare prior to its end. Parents who were able to enroll their children in Medicaid after kids care ended were most satisfied, while those parents with children who did not qualify for Medicaid were under financial stress. Families with children that remained uninsured were putting off healthcare services because they were unaffordable, and families who found coverage through their employer also delayed care because of high deductibles. All of the families wanted KidsCare to be reinstated.

We also did two reports on Children’s Health Coverage in Arizona – one in 2015 and one in 2016 – showing that Arizona has ranked 49th in the US for its rate of uninsured children for the past five years. Looking at 2014 data, 10% of Arizona children remained uninsured compared to just 6% nationally. Arizona saw some progress between 2013 and 2014 thanks to the transition of some children from KidsCare to Medicaid, the expansion of Medicaid to parents and other adults, and the availability of new marketplace plans. However, the lack of KidsCare prevented more dramatic coverage gains for children.

Nevada offers a helpful point of comparison. Nevada was previously ranked last nationally for its rate of uninsured children, but it outperformed Arizona in 2014 with a 5.3 percentage point decline in the rate of uninsured children in just one year. The main difference between Arizona and Nevada is that CHIP in Arizona is no longer available while the program has stayed intact in other states.

In fact, when you look at the data more closely, you can see that Arizona’s child uninsurance rate is the highest in the country for children in the KidsCare income eligibility range. That is, children with family incomes between 138 and 199 percent of the federal poverty level were uninsured at a significantly higher rate – 16.5% – than their lower- and higher-income peers.

On a more positive note, Arizona is currently eligible for 100% federal financing if it were to lift the temporary freeze on KidsCare.

CHIP funding can be confusing at best – so let’s review how this would work.

How much CHIP funding a state receives is comprised of two components – the state’s allotment and its match rate.

The state’s allotment is based on prior year expenditures, which has raised some questions about whether Arizona could get the full funding necessary if KidsCare were to be reinstated – since the state is spending very little now. Fortunately, federal CHIP law creates multiple pathways to ensure states have sufficient funding to cover coverage expansions, higher-than-anticipated enrollment, or simply projected expenditures that exceed the allotment amount.[1] Some combination of these pathways would ensure that Arizona has sufficient federal funds available to cover currently enrolled children and new children if the state were to reinstate KidsCare.

Arizona’s CHIP match has historically been about 77%, meaning the federal government paid three of every four dollars spent. The Medicare Access and CHIP Reauthorization Act which passed Congress last year with strong bipartisan support extended CHIP funding through September 2017 and made the necessary adjustments to the allotment formula to ensure that adequate funds were available for a 23-percentage point increase in federal matching funds – an increase that was originally contemplated by the Affordable Care Act. Therefore, if Arizona were to reinstate KidsCare, the federal government would pay for 100% of the costs through at least September 2017.

Sometime before September 2017, the Congress will have to decide whether and how to continue CHIP funding for additional time. The President’s FY2017 Budget, calls for a two-year CHIP extension through September 30, 2019. The 23-percentage point increase is already baked into the allotment formula, so a “clean” or straightforward 2-year extension of CHIP would allow Arizona to continue to benefit from 100% federal funding through September 2019. It’s always hard to predict how an election will impact specific programs – but if the past is prologue, CHIP’s strong bipartisan support means smart money is on a CHIP extension. Arizona is one of the only states in the country not bound by maintenance-of-effort requirements, so if KidsCare were to be reinstated, the state would always have the option to withdraw this coverage if the match rate declined in the future.

During the hearing in Arizona, one of the committee members asked what national researchers would do with their time if Arizona were no longer an outlier. I speak for my fellow researchers at CCF when I say that quite frankly, that is a problem we would love to have.

Editor’s Note: Prior to joining CCF, Kelly Whitener served as the Director of State Coverage Programs at the Centers for Medicare and Medicaid Services (CMS).

 

[1] All of these options include costs for children covered in Medicaid-expansion CHIP programs and separate CHIP programs, or in Arizona’s case, children ages 6-18 with family incomes from 100 to 138 percent of the FPL (sometimes called M-CHIP kids) and children in KidsCare.

Kelly Whitener is an Associate Professor of the Practice at the Georgetown University McCourt School of Public Policy’s Center for Children and Families.

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