More than two million children may soon have no affordable health insurance — perhaps no health insurance at all. They’re at risk because federal funding for the Children’s Health Insurance Program will expire next year, unless Congress extends it — or fixes the so-called family glitch in the Affordable Care Act.
The number rises to 2.7 million if one also counts children who are eligible for CHIP, but not enrolled and others in Medicaid because some states and the District of Columbia used CHIP funding to expand eligibility, rather than create an altogether separate program.
More than 400 organizations that advocate and provide services for children have urged Congress to keep CHIP fully funded until at least 2019 — even if, as seems unlikely, Republicans agree to fix the glitch.
But say they did. First Focus, which has been pushing hard for renewed CHIP funding, argues that the program would still be needed. First some background, then the reasons why and finally the reasons the issue is more urgent than it may seem.
What is CHIP?
Congress created CHIP in 1997 to close a gap not unlike the one that could soon open. While very poor children qualified for Medicaid, families with somewhat higher incomes couldn’t afford health insurance, especially because relatively few could get it through their employers.
At the time, 23% of children in families below twice the federal poverty line were uninsured. Last year, all but 7.3% of children had health insurance — well over half through CHIP or Medicaid, according to Families USA.
Insurance coverage is far from the whole story. CHIP is designed specifically for children’s healthcare needs. States that operate CHIP through their Medicaid plans must provide a prescribed battery of early and periodic screening, diagnostic and treatment services.
States that have standalone CHIP programs must also provide a wide range of preventive services, as well as outpatient treatment and in-hospital care.
How is CHIP funded?
CHIP is sort of like Medicaid in that the federal government pays a share of the costs states incur in providing health care for those enrolled in their programs. The so-called match varies according to a formula, just as it does with Medicaid. It’s generally higher — on average, 71%.
But unlike Medicaid, CHIP is a block grant. In other words, the federal government gives states just so much, rather than a percent of their annual costs.
If that’s not enough, states can put children on a waiting list. Or they can require families to share more of the costs, though the law puts strict limits on premiums, copays and the like — the strictest for the lowest-income families. Or they can cut reimbursement rates — a cost-saver that tends to limit access to care.
How did the ACA deal with CHIP?
The ACA requires states to shift children whose incomes are at or below 133% of the federal poverty line into Medicaid. For technical reasons, the threshold is effectively 138% of the FPL — currently $27,310 for a parent with two children. The Supreme Court’s ruling that states can’t be compelled to expand their Medicaid programs has no affect on this child coverage mandate.
At the same time, the ACA prohibited states from lowering their CHIP eligibility standards — or changing their applications procedures to reduce enrollment — until the end of Fiscal Year 2019.
More than half the states and the District cover children in families with incomes at or above 250% of the FPL — and 19 states and the District, with incomes of at least 300% of the FPL.
So it might seem that most states and the District would have to pick up the full cost of health care for a great many children enrolled in their programs unless Congress renews CHIP funding. We thus see the Washington Post editorial board warning of a “potential unfunded mandate.”
Not so, the Vice President for Health Policy at First Focus advised me. States will have no obligation to maintain their CHIP enrollment standards and procedures if Congress doesn’t come through with federal funding.
Why do we still need CHIP?
As I’ve already noted, there’s the family glitch in the ACA. The term refers to an ambiguous provision that the Internal Revenue Service has decided bars families from getting subsidies for health insurance purchased on an exchange if a working member’s employer offers health insurance that’s affordable for him/her alone.
Family coverage, as I’m sure many of you know, is considerably more expensive than coverage for only a worker. So some children — other dependents too — will probably be priced out of the market.
It’s not just premiums we need to be concerned about. A healthcare consulting firm crunched the cost-sharing numbers in 35 states, i.e., the premiums, deductibles and copays, that families are responsible for.
The experts found that families at 160% of the FPL would face out-of-pocket costs averaging seven times what they currently pay if their children were insured through a health plan purchased on an exchange rather than CHIP.
Bigger shocks to the pocketbook for families whose children have special healthcare needs like asthma and diabetes — as much as $5,200 a year per child.
At the same time, the experts found that certain services most CHIP programs provide at no cost to the family would either not be covered at all or require cost-sharing. Only 37% of the health plans reviewed covered hearing exams, while all the CHIP plans did.
And in most cases, families would have to pay an additional premium, plus some further costs for their children’s dental care — a benefit required in CHIP.
What’s so urgent?
The federal fiscal year began only weeks ago. So it might seem that Congress has a lot of time before it has to come to grips with further funding for CHIP.
Most states, however, begin their fiscal years on July 1. Only two and the District begin theirs as late as the fed. So budget drafting is already underway. A big problem when there’s a big question mark about funding for CHIP.
Googling around, one finds many warnings of potential disruption. States unwilling, for obvious reasons, to renew their contracts with health plans. The plans, therefore, not renewing their contracts with pediatricians and other providers. Providers reluctant to accept CHIP-insured patients because they don’t know whether they’ll get paid.
And as Say Ahh! blogger Elisabeth Wright Burak adds, parents in acute anxiety because they don’t know whether their children will have affordable health insurance come fall.
Healthcare lobbyist Billy Wynne foresees troubles ahead in our fractitious Congress — worse as the months go by. We just might help create a proper sense of urgency if enough of us weigh in. A MoveOn.org petition makes this quick and easy to do.
UPDATE: Shortly after I published this, First Focus posted a new letter to Congressional leaders, signed by some 1,200 organizations. It urges them to include a four-year extension of CHIP funding in the next “legislative vehicle” that moves during the lame duck session that will begin soon after the November elections. It says that an estimate 10.2 million children could otherwise have” their health coverage disrupted.”