‘State Flexibility’ Proposals in Hatch-Upton-Pitts CHIP Discussion Draft Puts Kids Coverage at Very Serious Risk

The discussion draft on how to extend the Children’s Health Insurance Program (CHIP) recently released by Republican leaders includes a number of provisions that will put children at significant risk of losing their CHIP coverage and becoming uninsured if these proposals were to become law. I blogged about the discussion draft in some detail last week.

One need look no further than Arizona to see why the Hatch-Upton-Pitts (I am going to call it “HUP” for short) proposal puts children at risk. Arizona is the only state that has dismantled its CHIP program by taking action before the maintenance-of-effort requirements included in the Affordable Care Act was enacted, ensuring that states maintain the eligibility levels in place as of March 23, 2010. The HUP proposal seeks to repeal these protections.

My colleagues at CCF and I have spent a lot of time looking at what has happened in Arizona as readers of SayAhh! know. The situation for children there is not pretty. In the absence of the MOE, the state has virtually eliminated its CHIP program by freezing enrollment. About 14,000 children lost their CHIP coverage and attrition has reduced current enrollment to less than 1,800 children, down from more than 45,000. As a result, the state’s uninsured rate for children has gone up.

An even more troubling aspect of the HUP proposal is that not only would it allow states to scale back CHIP, it could jeopardize one important route to affordable coverage for children faced with the loss of CHIP coverage. The situation on the ground in Arizona could have been even worse for children if not for another provision of the Affordable Care Act that HUP wants to repeal – the requirement that states align eligibility for kids in the Medicaid program up to 138% of FPL. These kids, the so-called “stairstep” kids aged 6-18, who were previously covered in separate CHIP programs, have moved to Medicaid – a program that cannot be capped. In Arizona, 23,000 kids fell into this category and maintained their health insurance as a result. HUP goes back to the old days when states could choose to cover these kids under separate CHIP programs – even though their younger siblings would be covered in Medicaid.

Moreover, as a research paper we will release soon documents, when states have the option to limit eligibility for kids, history shows some of them will take it. Tough state budget climates, often brought on by recession, have resulted in numerous such examples over the past decade. Limits on federal CHIP allotments in the past have also led to state reductions in children’s coverage.

Speaking of limits to federal CHIP funds, the HUP proposal limits federal CHIP matching funds in numerous ways (most notably eliminating the upcoming 23% increase in the federal CHIP matching rate, and eliminating or reducing federal CHIP match rates for children above 250% of FPL which would affect the majority of states) raising the likelihood that states would respond to these new opportunities to limit coverage for children.

Read in its entirety, the HUP proposal raises very serious red flags for the future of CHIP and children’s coverage. Let’s hope that the authors, who say they are seeking comment, are flexible enough to do what is right for kids

Joan Alker
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

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