Before the Affordable Care Act (ACA) became law, Arizona began the process of dismantling its CHIP program when it froze enrollment in KidsCare in January 2010. Enrollment was temporarily reinstated in May 2012, extending coverage to 47,000 children at the peak of KidsCare II. Thanks to the ACA’s alignment of children’s Medicaid eligibility across all age groups at 138% FPL, 60 percent of the children enrolled in KidsCare II on January 1, 2014, were transitioned to Medicaid. The remaining 14,000 were disenrolled on January 31, 2014.
These families may apply for coverage through Arizona’s federally-run marketplace, but many will be locked out of financial assistance due to the “family glitch.” Families are not eligible for premium tax credits if they could enroll in employer-based coverage in which the cost of coverage for just one parent is less than 9.5% of family income (without regard to the cost of full family coverage). A recent analysis for MACPAC suggests that as many as 56% of CHIP-income eligible families nationwide would not qualify for financial assistance in the marketplace.
While it will be some time before the impact on children’s coverage or utilization of health care services can be fully assessed in Arizona, it is possible to anticipate the financial implications for low-income families. In this new study, we examine three real-life children and their actual use of health care services to compare what their costs would have been in KidsCare versus three of the lowest cost silver plans in the Arizona marketplace. Here’s what we discovered:
- In all but one of 18 scenarios studied, families would face higher out-of-pocket cost-sharing for their children’s health care; while in the one scenario where spending was lower, the family would pay an additional premium for a non-benchmark plan. Notably, families with lower incomes and those with more than one child are even more likely to incur QHP costs that are many times higher than their KidsCare premiums.
- Children with special health needs will face substantially higher costs as well as exhaust certain benefits, such as physical and occupation therapy. Families will then face the difficult choice of paying the full cost of these important services or foregoing care that is essential to their child’s health and wellbeing.
- In marketplace plans that do not provide dental benefits, families would pay more for oral health coverage or potentially decide that the additional cost is just not worth it. This would be a significant missed opportunity to improve children’s oral health, as dental caries are the most common childhood chronic disease, and one that is easily prevented with routine dental care.
- Out-of-pocket costs differ considerably based on plan selection, but finding essential plan information is difficult and comparing costs can be very complex. Families will need and want assistance in choosing the health plan that’s best for them – for while premium costs are often at the top of the priority list, there are many other considerations, including additional out-of-pocket costs, the network of providers and drug formulary.
It’s important not to overlook that families, in general, are much better off under the Affordable Care Act. The ACA not only expands access to affordable coverage options to millions of uninsured people, mostly adults, but it also improves private insurance. Prior to the health reform law, plans could discriminate against people with pre-existing conditions like kids with asthma, or impose annual or lifetime benefit caps that fell short of meeting the needs of children with cancer or other high-cost conditions.
But it will be some time before we can fully assess how well marketplace plans are performing for children. Meanwhile, unintended shortcomings in marketplace coverage that impact children, including the family glitch and lack of inclusive dental benefits, must be fixed.
Recognizing that Medicaid and CHIP are cornerstones in the foundation of coverage for children, the ACA preserves and strengthens these programs. However, a key decision point looms ahead as Congress considers financing CHIP beyond 2015 when current funding expires. As Arizona is the only state to phase out its CHIP program, it provides important lessons for the upcoming discussion on the future of CHIP. Until we are certain that marketplace coverage can provide the comprehensive, affordable coverage that all low-income children need, messing with the success of Medicaid and CHIP, which have driven our country to achieve historic rates of coverage for children, puts kids’ health on the line and their low-income families’ financial security at risk.