Q&A: Will Congress Save Health Insurance Program for Low-Income Kids?
By Anna Challet
Ed. Note: Unless Congress acts, federal funding for the Children’s Health Insurance Program (CHIP), which matches state dollars to provide health coverage for children under 19 in low-income families, will end next year. Ed Walz is vice president of First Focus, a DC-based advocacy organization for children and families that focuses on federal policymaking. He spoke with NAM Reporter Anna Challet about the future of CHIP and the likelihood of Congress stepping in to preserve the program.
Who does CHIP provide health coverage for?
CHIP provides coverage for 8 million children or so throughout the course of the year who would otherwise be uninsured because their parents work and make too much money to qualify for Medicaid, but not enough to afford the high cost of private insurance … Before CHIP, the uninsured rate among kids was about 15 percent. Today it’s about 7 percent. It’s essentially cut the uninsured rate among children in half.
With the Affordable Care Act now fully implemented, why is CHIP still necessary?
Kids who are covered by CHIP today would not all be able to get coverage through the ACA if CHIP were to go away … If it did go away, some of the kids would move into Medicaid, but it’s a relatively small number, in part because not every state has expanded Medicaid, but also because CHIP covers kids well in excess of the Medicaid expansion level. The ACA now requires that Medicaid expand to 138 percent of the federal poverty level in states that choose that option, but … CHIP covers kids much higher up the income scale. For example, in my home state of Wisconsin, it’s 250 percent of the federal poverty level.
If CHIP were to go away, the ACA wouldn’t pick [some] kids up because of what’s called the family glitch, or the children’s glitch. That has to do with a problem in the way the IRS implemented the tax subsidies for the exchanges [the state health insurance marketplaces created by the ACA]. Essentially it means that as many as 2 million kids who would otherwise qualify for exchange coverage won’t get the subsidies they need to make it affordable, so they won’t get insurance. Even in a post-ACA world, there’s not a coverage solution for all the kids who are currently in CHIP.
The other problem is that if kids do get exchange coverage, research shows that it won’t be as valuable or as good as the coverage they currently get through CHIP … At a national level, CHIP provides more than 80 percent of the child-specific care that kids need, while average exchange plans provide a little over half of that child-specific care. And at the same time, CHIP plans average less than $100 in out-of-pocket annual costs, whereas the average exchange plan would cost nearly $1000, so ten times the cost for less care.
What is the threat to CHIP right now?
Essentially there are two requirements for a government program to function. One, Congress has to authorize it, and give the agencies permission to run it. [Also] they have to fund it. There’s no requirement that they do those two things on the same schedule. So one of the weird things about where we are right now in the public policy around CHIP is that the federal government has the authority under law to run CHIP through 2019, but funding for CHIP runs out at the end of federal fiscal year 2015, which is the fiscal year we just started. So a year from now, in October 2015, funding for CHIP will end. That’s the real threat. The threat is that even though there might be authorization, there won’t be money, and that is the effective end of CHIP.
The challenge right now is when Congress will extend that funding. And it’s important that Congress act this year, because even though federal funding won’t technically end for another 11 months, the reality is that because CHIP is a federal-state partnership, the budget decisions that happen in the state capitals all over the country matter just as much as the budget debates in Washington. And those state budget debates are happening right now … So it’s important that Congress send a message this year that states can continue to count on federal CHIP funding.
At this point, does it look like Congress will do that?
CHIP is incredibly popular, and it has a strong track record of bipartisanship. So we’re hopeful and have reason to believe, based on our conversations with folks on Capitol Hill, that policymakers understand that CHIP still plays an important role … There’s momentum to get CHIP funding extended in the lame duck session this fall, so after the elections.
What will happen if they don’t?
The honest answer and the scary answer is that we don’t really know what will happen. It’ll vary from state to state, but what we can say is that when we’ve seen a similar problem in the past, the outcome has not been good for children.
California is unfortunately the poster child there. Back in 2009, when the CHIP agency in California ran into a state funding problem, they responded by establishing a waiting list. That meant that kids who were newly eligible for what was then called the Healthy Families program were not enrolled, and kids who were covered by Healthy Families but lost coverage for administrative reasons or for whatever reason then were not able to re-enroll … Even a year after the waiting list was lifted, the agency had only been able to return enrollment levels to 50,000 kids lower than when they put the waiting list in place … If you imagined similar reactions at the national level, it would literally put the health of millions of children at risk.