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If Children’s Health Insurance Program Is Not Renewed this Year, Can Obamacare Fill In The Gaps?

baby dental checkup
Dave Buchwald

After the elderly, children are the most highly-insured age group in the United States. Credit for that goes to a 13-year old program called the Child Healthcare Insurance Program (CHIP), which will end in September if Congress does not extend its funding.

Since the passage of CHIP in 1997, the percentage of children with health insurance in the United States has gone up from about 86 percent to about 93 percent, according to the CDC. CHIP “really made a monstrous difference in how many kids were uninsured,” says Aaron Carroll, M.D., a pediatrician and policy researcher at the Indiana University School of Medicine. He was recently interviewed on Sound Medicine's radio hour on the topic. (see full interview below)

CHIP provides low-cost health coverage to children in families that earn too much money to qualify for Medicaid but less than 200 percent of the federal poverty level ($47,700 per year for a family of four). The program now covers over 8 million children. Some conservatives argue that with federal government subsidizing care through the Affordable Care Act’s healthcare exchanges and Medicaid available to more families, CHIP no longer makes financial sense.

But healthcare policy experts worry that if the program comes to an end, some children will fall through the cracks.

Switching from CHIP to coverage under an exchange plan would mean a big jump in out-of-pocket expenses for families. CHIP coverage is “very generous,” explains Carroll. “The vast majority of the healthcare expenses—about 90 percent—are paid for by the government.” Whereas for an average midrange plan bought on the healthcare exchange, the family is responsible for about 30 percent of the cost, Carroll says. Higher deductibles and copays can make it cost-prohibitive for poor families to make doctor’s visits or fill prescriptions.

And if CHIP ends, more kids could be left uninsured because of the “family glitch” in the Affordable Care Act, says Carroll. Under the ACA, employers with over 50 workers are required to offer health insurance to their employees, but not to employees’ families. Employees can opt to sign up for a plan on the health care exchanges if they’re looking for family coverage. However, generally speaking, individuals eligible for employer-provided healthcare who opt to seek private insurance through the exchanges, are not eligible to receive a subsidy, and must pay full-price.  

It’s not yet clear whether CHIP funding will be renewed this year.

Carroll says that as health care spending goes, CHIP is “shockingly cheap,” compared to the cost of Medicaid, partially because children’s health care just costs less than adults’. “It's nowhere near what we usually talk about when we talk about healthcare spending,” he says.

“But there's a reasonable argument to be made that we put the Affordable Care Act in place so that states wouldn't have to be responsible for state health insurance plans like this,” says Carroll.  “The ACA was supposed to save states money by transitioning a lot of these kids onto exchange plans, or onto plans through peoples' jobs.”

However, he says, to make a credible case that children at this income level will be covered without CHIP, the “family glitch” will have to be fixed. Last year, Senator Al Franken (D-MN) introduced the Family Coverage Act, a bill which would extend the employer mandate to cover families. “If insurers are only offering plans to individuals, it will be hard to make the argument that the ACA is really covering kids as well as it should, ” says Carroll. Sound Medicine will be following developments around CHIP and will provide updates.

Listen to Sound Medicine's interview with Dr. Aaron Carroll about CHIP.