Stability of Children’s Coverage Threatened if Congress Doesn’t Act by Saturday

As readers of SayAhhh! already know, the maintenance of effort (MOE) provision in the Affordable Care Act has been one of the key policies to help bring the uninsured rate for kids down to historic lows – 95.5% of children had health insurance in 2016. This decline is largely attributable to Medicaid, CHIP, and the ACA – giving children more coverage options and creating a welcome mat effect that led to increases in children’s coverage as their parents became eligible for coverage for the first time. But the MOE played a critical role too.

The MOE protected children’s coverage in Medicaid and CHIP even as the rest of the U.S. healthcare system went through significant change by limiting the ability of states to scale back eligibility levels. The MOE is not set to expire until September 30, 2019, but with no new CHIP funding past September 30, 2017, what does the MOE really mean?

Like most things in Medicaid and CHIP, the answer varies by state. For states that use Medicaid to cover CHIP-financed children, states will have to continue covering children but will get significantly less federal funding to do so after their allotment runs out (15 states). But for states that created a separate CHIP program, they could freeze enrollment because the MOE allows states to do so in order to limit expenditures to those for which federal funding is available (36 states). This exception to the MOE hasn’t been tested – so we don’t know how far in advance of a funding shortfall states could freeze enrollment – but it will be tested very soon.

To be sure, states would have to go through a process to freeze enrollment, including public notice and submission of a state plan amendment to CMS, so it can’t happen overnight. But without Congressional action on CHIP funding, states are in a bind – states want to keep children in CHIP but some feel they can’t continue enrolling new children in good faith when the funding is not there to support their coverage beyond the next month or two.

The Medicaid and CHIP Payment and Access Commission (MACPAC) included an extension of the MOE through fiscal year 2022 as part of their CHIP funding recommendations released earlier this year. We were relieved to see that the Hatch-Wyden proposal on CHIP also included an extension of the MOE, though limited to children in families whose income does not exceed 300 percent of the federal poverty level beginning in 2020.

A recent report from the Kaiser Family Foundation shows when states project when they will run out of CHIP funding and also explains the implications of funding uncertainty and shortages. For example, past CHIP enrollment freezes led to coverage losses and had negative effects on health and family finances.

If Congress doesn’t act very soon to extend CHIP funding, states will start implementing enrollment freezes. And even temporary enrollment freezes can have a lasting, negative effect on children and their families as we know from the experience with Arizona’s on again off again coverage. The time to act is now.

Kelly Whitener
Kelly Whitener is an Associate Professor of the Practice at the Center for Children and Families