Last week, Joan Alker and Jade Little blogged about the troubling trend of children losing Medicaid as enrollment declines near 2 million. Leading up to the unwinding, researchers estimated that 57% of children losing Medicaid would be eligible for CHIP based on income. There are many reasons why children don’t successfully transition seamlessly from Medicaid to CHIP. States have many choices about how they structure their CHIP programs starting from whether or not they cover all children through Medicaid (i.e., M-CHIP) and how integrated their eligibility and enrollment processes are. But a primary barrier to CHIP enrollment is the requirement for prepayment of the first month’s premium or enrollment fee before coverage is effective.
So, here’s something important that states can do immediately – eliminate CHIP premiums, or at least waive them for the duration of the unwinding. Based on the 2020 KFF/CCF 50-state survey on Medicaid and CHIP policies, 26 states charged monthly or quarterly premiums and 4 states charged an annual enrollment fee.1</sup During the 2023 survey, six states (CA, CO, IL, ME, NC, and NJ) reported they were eliminating premiums or enrollment fees altogether. That leaves 22 states charging monthly or quarterly premiums and 2 states charging an annual enrollment fee. Based on our review of state unwinding-related premium policies, 8 states (AZ, DE, GA, IA, MD, VT, WV, and WI) have waived premiums through the end of the year or the end of the unwinding.
Forgoing CHIP premiums is not a hard choice. Premium revenue is deducted before calculating the state and federal share of CHIP costs. If premiums are eliminated, total costs will be slightly higher. But that cost to the state would be offset with the enhanced federal CHIP match, which ranges from 65% to 85%. For every dollar states do not collect from a family for CHIP premiums, federal funding would compensate the state 65 cents to 85 cents. Moreover, the state benefits from cost savings associated with administering and collecting premiums. Unfortunately, we don’t have much insight into these costs or the extent to which premiums inhibit enrollment, contribute to churn, and interfere with the ability to fully measure the quality of care that children receive. For example, we don’t know how many states require prepayment prior to enrollment, what share of children are disenrolled for nonpayment, and how many re-enroll after being locked out of coverage for up to 90 days.
Short of eliminating premiums, there are other steps states can take to reduce the negative impact on continuity of coverage for children. States can start by minimally eliminating premiums charged to families earning less than 200% FPL, as New York did recently in when it removed the premium tier for families with income below 222% FPL. Still, 16 states charge premiums or enrollment fees to families with income below 200% FPL and 7 of those (AL, AZ, FL, GA, ID, NV, and UT) charge premiums or enrollment fees to families earning less than 150% FPL, which is prohibited in Medicaid but allowed in CHIP due to a misalignment of federal regulations. Georgia is the only state with premiums charged to families under 200% FPL that has temporarily paused premiums.
Both states and the federal government can do more to simplify premiums. At the federal level, CMS should align premium policies across Medicaid and CHIP by prohibiting premiums below 150% FPL, requiring a minimum 60-day grace period for payment (including at initial enrollment) and eliminating lockout periods. And even though CMS has proposed changes to CHIP grace periods and lockouts, such regulatory changes take time to implement after a new rule is adopted.
In the meantime, states have a lot of flexibility to adopt more family-friendly policies, including:
- Charging family-based premiums, rather than per-child premiums, as 10 states do (DE, FL, KS, LA, MD, MI, NV, TX, UT, and VT).
- Adopting generous grace periods; 5 states (AL, CT, ID, VT, and WV) don’t disenroll children for nonpayment until renewal while 4 states (FL, LA, MO, and NY) have grace periods of 1 month or the minimum 30 days.
- Eliminating lockout periods following nonpayment; 12 states lock children out of CHIP coverage with 10 of those (IN, KS, LA, MA, MO, NV, PA, UT, WA, and WI) applying the maximum 90-day lockout period. Lockouts immediately leave children without access to health care. Every state, except Florida, suspended its premium lockout policy during the COVID-19 public health emergency.
- Setting fixed premiums and avoiding frequent increases; Missouri sets premiums at the maximum of 5 percent of family income so premiums vary by family size and by income level and are increased annually.
How we set and administer premiums is critically important to promoting continuity of coverage. As we watch the number of children losing Medicaid grow, with the likelihood that many will experience a gap or lose coverage altogether, it is abundantly clear that states must do more to ensure that children who are eligible for CHIP are successfully enrolled.
Editor’s note: To view our Medicaid & CHIP enrollment data sources, click here.
1Premium information is based on the 2020 KFF and Georgetown CCF 50-state survey on Medicaid and CHIP Eligibility, Enrollment, and Cost-Sharing Policies. Changes to state policies have been noted based on available public information. States may have made other changes that have not been captured since the annual survey did not gather premium-related information during the Medicaid continuous enrollment requirement.