The Medicaid Unwind’s Impact on Children: Are They Moving to CHIP?

As of July 1st all states in the country (except for Oregon) have started the process of renewing and disenrolling children and adults from Medicaid according to CMS’s latest chart. As readers of SayAhhh! are well aware, states are checking eligibility for everyone enrolled in Medicaid after the continuous coverage protections associated with the COVID-19 public health emergency lifted at the end of March.

According to the Kaiser Family Foundation, over 3 million people have lost Medicaid already. CCF and KFF are both trying to track how many children are losing Medicaid but the data is very inadequate since many large states are not reporting this metric.

Some, like the Deputy Secretary of Health in Arkansas, say not to worry (!) about large numbers of people losing Medicaid claiming that folks have new coverage because they are working more and their income went up so they are getting coverage either through their employers or subsidized coverage through the Marketplace.

Hopefully, as all of the models projected, eventually millions of people will have transferred to ESI or the Marketplace – we just won’t know how many for a while – but unfortunately state data so far suggest that in most places the vast majority of those losing coverage are not being determined ineligible because their incomes were too high and sent over to the Marketplace or CHIP. Most are losing coverage for “red tape” or procedural losses where families are not getting through the process for a variety of reasons. According to KFF, 75% of terminations have fallen into the “procedural’ box so far.

So, suffice it to say that we’re very worried – especially for children for whom income eligibility levels for public coverage are much higher in all states than for adults and are much more likely to lose Medicaid will remaining eligible. Federal researchers projected that 3 out of 4 children losing Medicaid would remain eligible – a very troubling statistic as procedural terminations or “red tape” losses pile up – rather than eligibility determinations that actually ascertain whether a child is eligible for Medicaid or not.

Today we’re going to look at an important question for children which is how many will move to the Children’s Health Insurance Program (CHIP)? What is the data showing so far?

Researchers from the Urban Institute, who modeled what would happen to Medicaid enrollees once the pandemic lifted, projected that 3.2 million children would move from Medicaid to CHIP. That would be a huge influx and an administrative challenge for CHIP given that enrollment nationwide in March 2020 before unwinding kicked off was 7.1 million.

First, a quick review of how CHIP is structured – when CHIP was enacted in 1997 states were given a choice – either expand Medicaid coverage or establish a new separate state program that can offer a different benefits package from Medicaid’s pediatric benefit,  known as “EPSDT”,  and charge premiums and cost-sharing that are not permitted by and large for children covered by Medicaid. Regardless of the choice, states receive a higher match for children financed by Title XXI (CHIP) as compared to Medicaid (Title XIX). Many states now have a combination of both approaches.

Thirty-three states have separate CHIP programs. CHIP financed Medicaid for children has all of the same rules – with one exception – children must be uninsured to be CHIP eligible.1 So these children were protected by the continuous coverage protection during the COVID-19 pandemic and now will be renewed alongside children in Title XIX Medicaid. Children in separate CHIP programs were not.2 (A number of states did enact protective measures for their separate CHIP programs – such as lifting temporarily or permanently lifting CHIP premiums and/or not kicking children out when they turned 18.) Some states charge premiums in their CHIP programs, which potentially creates a barrier for children to move over.

There is another complicating factor in trying to track the trends. Every state except one (Washington) that operates a separate CHIP program also uses CHIP funds to cover some children in Medicaid – so their program is a “combination” program.3 In these states, unless the state disaggregates its CHIP data to sort out which children are in CHIP funded Medicaid versus its separate CHIP program it will be hard to tell what is going on.

What do we know so far about CHIP enrollment from state data? So far, unfortunately, like pretty much else going on with Medicaid unwinding it is still early days but it’s not looking great in terms of children moving to CHIP because their families’ income went up. Connecticut, Indiana, and Iowa have seen small increases in CHIP enrollment; the other five states we have data for so far have shown declines.

Arizona: The state got an early start on unwinding so we have four months of data and enrollment in the state’s separate CHIP program, known as KidCare, has declined by more than 11,000 children or a hefty 15 percent of enrollment. Child enrollment in Medicaid has also declined over the period by 35,623 – 5 percent.

Florida: The state’s official forecasters projected that Florida’s Healthy Kids program (its primary separate CHIP program) would see enrollment rise by approximately 100,000 over the course of the unwinding. So far, despite a hefty number of Medicaid terminations (c. 250,000) in their first month, the data from April to May (the first month of Medicaid terminations in Florida) shows Healthy Kids enrollment going down by 1,440 children — almost 2 percent of enrollment. Meanwhile, net Medicaid enrollment for children in the same month according to our calculations from the state’s data declined by 83,532 kids. A large number of those likely remain eligible for Medicaid but since Healthy Kids enrollment went down it is not a good sign that children are making their way over without a coverage interruption – or at all.

Idaho: The situation in Idaho is incredibly troubling with CHIP enrollment declining from 39,307 in February to 26,006 in April – fully one-third of children! Idaho does operate a combination program with children aged 6-18 from 100 percent of the poverty line to 138% covered in CHIP financed Medicaid – and the data is not broken out – so perhaps a good chunk of these kids were in CHIP financed Medicaid and lost coverage (appropriately or not) during redetermination. Still, this is extremely concerning – with 34,763 children losing Medicaid since April in Idaho and 13,301 losing CHIP more than 48 thousand children have lost public coverage in the last few months.

Pennsylvania: The state saw a small decline in its CHIP enrollment from April to May; its first month of Medicaid terminations which included a small number of children losing Medicaid as well in the reported data.

Arkansas: It is hard to discern what is happening in Arkansas which operates its child health programs under a Section 1115 waiver with “ArKids B” functioning as the state’s equivalent of CHIP for children from families with slightly higher incomes. Cumulatively, Arkansas has reported terminations of 81,586 children in total of which just under 5,000 losing coverage are in ArKids B.

We’re doing our best to track all of this enrollment data here.

As we have repeatedly pointed out, children have a great deal at stake during this process with over half the children (54%) in the country enrolled in Medicaid as the unwinding began. Given that Medicaid is the single largest source of coverage for children – especially children of color – the implications for children, families and the providers who serve them are substantial. Governors are ultimately responsible for both Medicaid and CHIP and are expected to promote seamless transitions, where income appropriate, for children between the two programs.

Editor’s note: To view our Medicaid & CHIP enrollment data sources, click here.

An additional note: Our analysis of Florida’s separate CHIP program includes children enrolled in the state’s full-pay Healthy Kids and MediKids plans, which means these families are paying the full cost of coverage which is not subsidized by federal or state CHIP funding.

1 Medicaid can act as a secondary payer for children with ESI for example but CHIP cannot.

2 Utah briefly did retain CHIP children in their separate CHIP for a few months. LINK TO OUR BLOG ON THIS

3 The Affordable Care Act required all states to cover children ages 6 to 18 with incomes from 100 to 138 percent of the poverty line to be covered in Medicaid if a state was not already doing so to align families. These children, known as the “stairstep children” receive CHIP match.

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.