What Would Happen if CHIP Went Away? Our Research Suggests Kids (for now) Would be Significantly Worse Off

While the eyes of the world have been intently focused on the success or failure of the Affordable Care Act, an important question has recently surfaced in the policy debate by the Medicaid and CHIP Payment Access Commission (MACPAC, — the group legislatively tasked with making recommendations on Medicaid and CHIP to policymakers): Should the Children’s Health Insurance Program (CHIP) continue to exist in light of new coverage options under the ACA?

As regular readers of Say Ahhh! know, CHIP’s funding expires on September 30, 2015 so Congress must act to renew CHIP’s funding next year. MACPAC recommended that CHIP be extended for two years, during which time problems such as the family glitch, affordability, and comparable benefits – especially dental coverage gaps— would need to be fixed. Only then could we feel more confident about kids moving to marketplace coverage.

Here at CCF we have been doing our homework for some time now about what the impact of such a move would be. And this week we released two new reports that suggest kids would be significantly worse off if CHIP were to go away any time soon.

First and foremost, while we don’t have great numbers on how many kids would not be eligible for subsidies in the marketplace because of the “family glitch,” we know it is likely in the millions. GAO has estimated that it would be 1.9 million and MACPAC recently estimated that more than half of kids in separate CHIP programs would fall into the glitch. So without new funding or a fix to the family glitch, we would experience a completely unacceptable result: millions of children losing their health insurance at a time when the nation is moving, finally, down the path to universal coverage.

But let’s assume for the moment that the family glitch is fixed. What kind of coverage would kids get in the exchange? Here is where our new research comes in. Yesterday we released a report looking at what costs families could expect to pay in the marketplace as compared to CHIP in Arizona with our partners at the Arizona Children’s Action Alliance. We decided to look at Arizona because they have the dubious honor of being the only state to effectively dismantle their CHIP program earlier this year. (As the report explains, the maintenance of effort provisions of the ACA do not apply there.)

This is a complicated question because costs are so variable depending on the plan families choose and their utilization of services. So my hat is off to Tricia Brooks, Martha Heberlein and Joseph Fu who did the hard work of figuring this out. But as the report shows, in all but one of 18 scenarios studied, families face higher out-of-pocket costs for their children’s health care in the marketplace. Families with lower incomes and those with more than one child are even more likely to incur costs in the marketplace that are many times higher than their previous KidsCare premiums. Check out the blog by Tricia and Martha for more information.

And on Wednesday, with our partners at the National Academy of State Health Policy (NASHP), we released a report that catalogues the benefits children receive in separate state CHIP programs. The report’s authors, CCF’s Joe Touschner and Martha Heberlein and NASHP’s Anita Cardwell and Joanne Jee, did meticulous work for many months cataloguing CHIP-covered benefits. You can read Joe’s blog for more on their findings, but I was most struck by the fact that but I was most struck by the fact that 3 out of 4 states use CHIP funds to provide benefits based on those Medicaid offers for kids – the EPSDT benefits, which we know from our friends at the Academy of Pediatrics are the standard for pediatric care. Even though the benchmark choices that states have for defining their Essential Health Benefits (EHB) package in the marketplace look quite similar in many ways to the choices that states have for CHIP, it is clear that states have made better choices for kids because their decisions are focused explicitly on what children need from health coverage. In contrast, states chose EHBs primarily with adults in mind.

So while there may be advantages to moving kids into the marketplace, and further research is needed (e.g. issues like provider adequacy), we remain convinced that for the foreseeable future we need to affirm our nation’s success in covering children by keeping CHIP strong and stable for kids.

Joan Alker is the Executive Director of the Center for Children and Families and a Research Professor at the Georgetown McCourt School of Public Policy.