Kids Coverage at Risk in Arizona

Kids coverage is again at risk in Arizona, as lawmakers there fight over whether to freeze enrollment in the state’s CHIP program (“KidsCare”), which currently covers 34,316 children. An unusual Arizona law requires the KidsCare program to freeze enrollment if the federal matching rate drops below 100%. Because a temporary increase in the CHIP matching rate begins phasing down starting in October, this means that the CHIP program could close to new enrollment if lawmakers can’t agree to increase state funding for the program by just $1.6 million.

Arizona’s Republican Gov. Doug Ducey has publicly stated his support for funding the KidsCare program, but a bill to remove the trigger failed to advance this legislative session, and the funding is now stuck in an ongoing intraparty budget struggle.

Because incomes fluctuate, particularly among low- and moderate-income families, year-to-year and within a year, some currently enrolled children will become ineligible and leave the program and other children will become newly eligible. Freezing enrollment means children who are otherwise newly eligible can’t enroll or re-enroll. This will cause overall enrollment to fall dramatically and more children who would be eligible for CHIP will end up uninsured.

That’s exactly what happened when Arizona previously froze enrollment in KidsCare earlier this decade. Between January 2010 and May 2012, Arizona froze KidsCare enrollment and the uninsured rate increased from 12% to 13.2%, even as the national uninsured rate for children declined over the same period. The state amassed a waiting list of more than 100,000 children in just 18 months of closed enrollment.

Going down this road again will cause serious harm. In the short term, uninsured children are less likely to receive preventive care and more likely to have an unmet medical or dental need than children with Medicaid or CHIP coverage. In the long run, those unmet needs can turn into complicated, expensive conditions, putting families at significant risk of medical debt and bankruptcy. A growing body of research underscores the long-term benefits of childhood Medicaid and CHIP coverage that last through adulthood, including better health outcomes, lower rates of mortality, stronger educational and economic achievements, and a significant return on public investment.

An enrollment freeze, if allowed to take effect, would mean even more uninsured children in the state. Arizona already saw an overall 12,355 decline in Medicaid/CHIP enrollment for kids between 2017 and 2018 and there is significant risk that many ended up without health coverage. And a recent Urban Institute report found that Medicaid and CHIP participation among eligible children in Arizona fell by 2 percentage points between 2016 and 2017, a statistically significant difference. Arizona should sustain health coverage for low-income families in the state and prevent the CHIP enrollment freeze from taking effect. CHIP is a great financial deal for the state, as the federal government will provide about $98 million in matching funds in state fiscal year 2020, covering nearly all of the program’s costs.