Listening to the sponsors of Graham-Cassidy suggests that coverage for low-income individuals will be based on CHIP benefit standards and, of course, everyone loves CHIP, right? In fact, the proposed legislation does NOT ensure that Marketplace and Medicaid expansion enrollees will get benefits that are equivalent to CHIP in a given state. Nor does it tag benefit requirements specifically to one of the three CHIP benchmark options.

What Graham-Cassidy does is set a low value on plans that do not meet one of the CHIP benchmarks standards, which affects the amount of money states get. Then starting in 2023, if the state does not provide benefits with an actuarial value equivalent to the LOWEST valued CHIP benchmark plan, then the state will lose a percentage of its funding. The penalty declines each year as states get closer to 2026 when all funding ends.

So how do we know the value of the least generous CHIP benchmark plan? Let’s start with the basics. The three CHIP benchmark options are:

• The standard Blue Cross/Blue Shield preferred provider option federal employee health benefit plan (FEHBP).
• The health insurance plan offered by the HMO that has the largest non-Medicaid enrollment in the state.
• Any state employee health plan, regardless of enrollment.

The FEHBP or HMO benchmark would provide a relatively comprehensive scope of coverage. In some states, the state employee benefit plan or plans may offer equally comprehensive benefits. However, the state employee benefit plan benchmark essentially undoes any “bottom line.” It leaves the benefit package entirely to the state’s discretion with no federal minimum standards. For example, some states offer a catastrophic plan as a state employee option. And while states must provide CMS with an actuarial certification of the value of the CHIP benchmark plan in effect, there is no source for assessing the value of the lowest-valued benchmark that would qualify as a CHIP benchmark. Without this information, it’s not possible to assess the value of benefits under Graham-Cassidy or how severe its penalties would be if states offer less generous benefits.

But there’s more. Another benefit option in CHIP is “Secretary-approved” coverage, which is fundamentally wide open for possibilities. This means the Secretary of HHS has the discretion to approve any plan regardless of value or comparability to three benchmark packages. CHIP benchmarks must also include basic services, including inpatient and outpatient hospital services, physicians surgical and medical services, laboratory and x-ray services, and well-baby and well-child care, including age-appropriate immunizations. This requirement does not apply to Secretary-approved coverage.

Notably, the Graham-Cassidy proposal provides less funding overall to states than is needed to cover Marketplace and Medicaid expansion enrollees in 2020 and beyond – particularly in the 31 states and D.C. that expanded Medicaid. Without strong federal standards, fiscal pressures will weaken coverage and lead to variation in access to care and affordability across states.

Just because Graham-Cassidy references the CHIP benchmarks, lawmakers should not be lulled into believing that it requires or encourages states to provide CHIP-level benefits. If states offer bare bones benefits, they get less money. But then again, they don’t need as much money. There is no guarantee of minimum benefits in Graham-Cassidy and when all is said and done, consumers lose the guarantee of essential health benefits that is a cornerstone of the Affordable Care Act.