CHIP Funding Delays Risk Enrollment Freezes that would Reverse Success on Kid’s Health Coverage

Last week we released a new report on the consequences of delayed Congressional action on CHIP. Federal funding for CHIP expired 32 days ago, an unprecedented lapse in CHIP’s 20-year history. States are quickly running out of federal funding, with Arizona, Minnesota, and Oregon slated to exhaust federal funds before the end of December. If Congress doesn’t act quickly, these states will have to make difficult choices: come up with additional state funding or shut down their CHIP programs. And shutting down is exactly what Arizona’s state law requires if the current level of federal matching funds is not available.

Past experience has clearly demonstrated that when states have temporarily closed their programs, children will fall through the cracks due to rapid disenrollment and significant confusion as families scramble to find alternatives.

A total of 12 states have frozen CHIP at some point, generally because of state budget shortfalls – not a lack of federal funding. When North Carolina froze its CHIP program between January and October 2001, enrollment fell by nearly 30% from about 72,000 to 51,300 when it froze enrollment between January and October 2001. During the 2003-2004 recession when six states capped enrollment, enrollment dropped by an aggregate of 15% with attrition rates ranging from 6 percent in Florida and Maryland to 29% in North Carolina. At the height of Florida’s enrollment freeze, the waitlist grew to 91,000, further adding to the ranks of the uninsured. After Arizona froze its CHIP program in December 2009, enrollment fell by more than 60% from about 46,900 to 17,600 by July 2011. A few things are clear:

  • Freezes are detrimental to the health of children enrolled in CHIP and puts financial stress on families who lack access to affordable private insurance.
  • Freezes put additional stress on the health care safety net and perpetuate cost-shifting as families have no alternative but to seek care in emergency rooms and may be unable to pay those bills.
  • Even without freezes yet in effect, press coverage on the lack of Congressional action on CHIP may already be having a chilling effect on CHIP by discouraging families from applying or renewing coverage.

History is clear; enrollment freezes in CHIP do harm. Congress, which has continually expressed its bipartisan support for CHIP, doesn’t seem to understand how close we are to seeing children in Arizona left out in the cold once again. If the lapse in federal funding forces states to close their CHIP programs, even temporarily, it could unravel years of success in covering more than 95 percent of the nation’s children.

Tricia Brooks is a Research Professor at the Georgetown University McCourt School of Public Policy’s Center for Children and Families.