Lewis & Ellis, LLC

Could CHIP be on the chopping block?

Health Care and Health Insurance
by Rita Tansen
How are children getting their health insurance?
How are children getting their health insurance?

Medicaid and Children's Health Insurance Program (CHIP) cover more than one in three children and play a significant role in health coverage of low-income children.

Across the country, millions of Americans have been able to get affordable health insurance as a result of the various provisions of the Patient Protection and Affordable Care Act.  However, Congress's action or inaction on CHIP funding may affect health insurance coverage options for low-income children that are eligible for the current CHIP program.

The health insurance market is vastly different today than when CHIP was first established in 1997.  While Medicaid provided the foundation of health insurance coverage for children from low-income families, CHIP was created as a complement to Medicaid to provide health coverage to uninsured children who were not eligible for Medicaid coverage. Before CHIP was established, no federal program provided health coverage to children with family annual incomes above Medicaid eligibility levels. States are permitted to use CHIP funds to expand their Medicaid program, to create a separate CHIP program or adopt a combination approach. On average, the federal government's share of CHIP spending is 70% compared to Medicaid spending of 57%.

The ACA further expanded the options for children in low-income families with incomes at or above CHIP eligibility levels by offering premium/cost sharing subsidies for insurance purchased through the Health Insurance Exchange Marketplace. CHIP is only funded by the federal government through the end of the 2015 fiscal year. If CHIP is not reauthorized by Congress, it could lead to a large number of children nationwide suddenly finding themselves without health coverage. That could be extremely problematic for not only those kids and their families, but also health insurers and care providers as well.

Why is this the case?
The most recent data suggests that plans acquired through CHIP have an actuarial value of more than 90 percent, meaning that they cover more than 90 cents of every dollar a family would otherwise have to spend on health care costs. In general, plans through CHIP carry lower deductibles, co-pays, and premiums than traditional coverage, as a means of making sure kids are getting the kind of medical treatment they often need more so than their adult counterparts. By comparison, "silver" plans through the ACA exchanges only average about 70 percent. That means that many families may go without providing care to their kids because it's becoming too costly to visit the doctor.

There are many other obstacles that may crop up if CHIP is allowed to expire as well. Perhaps the biggest of these is that many states don't allow for some types of pediatric treatment to be covered by standard health insurance plans, meaning that children with learning disabilities or developmental issues might have a harder time getting the treatment they need.

If CHIP is allowed to expire, the more insurance companies can do to help parents meet their costs as effectively as possible, the better off both they and their clients are likely to be.



Consultants to Contact