In a time of partisan inertia, heightened concern about income inequality and the welfare of children, and disagreement about the ability of government programs to address serious problems, the Children's Health Insurance Program (CHIP), enacted in 1997 by a Republican Congress and Democratic President, stands as an example of a government program which has proven to work and improve the lives of millions of low to moderate income children. In fact, a recent large-scale evaluation of CHIP found "CHIP to be successful in nearly every area examined. CHIP succeeded in expanding health insurance coverage to the population it is intended to serve, particularly children who would otherwise be uninsured, increasing their access to needed health care, and reducing the financial burdens and stress on families associated with meeting children's health care needs." It is not surprising therefore that public opinion polls consistently show broad support for CHIP.
Yet CHIP programs in many states could end beginning late in 2015, if Congress does not act to continue funding for the program. A just-released issue brief I wrote for First Focus describes how ending federal funding for CHIP in 2015 could lead to a reversal of the gains for children and families documented in the evaluation.
If CHIP funding is not renewed, the Affordable Care Act allows states to end their separate CHIP programs, which currently cover four to five million children. Some of those children might be eligible for state Medicaid programs and some states might expand their Medicaid programs to include children currently eligible for CHIP. But with less federal funding support for Medicaid than is currently provided for CHIP, few states may exercise that option. Children not eligible for Medicaid would have to get more expensive coverage through their parents' employers, the insurance Marketplaces established by the ACA, the private insurance market, or become uninsured.
As detailed in the brief, despite large subsidies available to low and moderate income families for Marketplace coverage, that coverage as well as employer sponsored coverage and unsubsidized private insurance will typically be more expensive than CHIP coverage and may be unaffordable for many families. For example, for a family of four with an annual income of $38,000-$50,000 the cost (including premiums and cost-sharing) of subsidized Marketplace coverage will be 2.5 times as expensive as the median cost of CHIP coverage. In some states, the differences in cost will be even greater as will be the case for children with special health care needs and those that do not have access to subsidized family coverage. While current estimates of the impact on children's coverage of the increase in the cost of coverage are not available, based on available research, it appears that more than a million children may become uninsured, reversing a trend of declines in uninsurance among children that dates to the enactment of CHIP in 1997.
A second success of CHIP, increasing children's access to needed health care, will also be adversely affected by the loss of federal CHIP funding. Because having health insurance increases access to and utilization of health services, children who become uninsured when federal CHIP funding ends will likely experience reduced access to and utilization of needed health services as will children who find coverage through Marketplace and employer sponsored plans but face higher levels of cost sharing than in CHIP. For these children access to needed health care will be further reduced since most Marketplace and employer sponsored plans do not offer the scope of child-specific benefits offered by CHIP. Children with special health care needs will be particularly affected since they need more services and use more special child-specific services than most.
The third success of CHIP, reducing the financial burden and stress on families associated with meeting children's health care needs, may also be undermined by the loss of CHIP funding. As discussed above, because of the increased cost of children's coverage some families may choose to leave their children uninsured while those that purchase coverage may need to reduce their expenditures on other necessities such as food, housing, child care, etc. Moreover, that replacement coverage, with a more limited scope of benefits and higher caps on out-of-pocket costs, will not provide the same level of protection from high health care costs that CHIP does.
Extending CHIP funding until 2019 could go a long way to sustain and expand CHIP-related gains for children as CHIP enrollment grows in conjunction with further implementation of the ACA. Extending CHIP funding, however, is only an interim measure. In the long run, it will require additional actions such as ensuring adequate, affordable coverage for children in the absence of CHIP or making funding for CHIP permanent to sustain the progress made on children's coverage and access to needed health care, and families' economic security.