BEFORE THERE was an Affordable Care Act (ACA), the Children’s Health Insurance Program (CHIP) helped plug one of the many coverage holes in the nation’s health insurance system. At an annual cost of $13 billion, most of which comes from Congress and the rest from state governments, CHIP covers some 8 million children in families too well-off to qualify for Medicaid but too poor to afford private insurance. The uninsured rate for minors has fallen from 14 percent before the law’s enactment in 1997 to 7 percent today.
In theory, there is no more need for a program like CHIP now that the new health-care law is in effect, with its interlocking system of guaranteed issue and subsidized policies available to the entire under-65 population via Medicaid, employer-paid insurance or reformed individual health insurance exchanges. In practice, while most CHIP beneficiaries may indeed obtain new sources of coverage, CHIP must keep going for a time, lest children lose coverage during the transition. For that reason, the ACA kept federal CHIP matching funds flowing to states through fiscal 2015. It also required states to maintain their eligibility rules through fiscal 2019.
Obviously, this time line created a potential unfunded mandate for the states for those four years. That wouldn’t be a problem if all, or nearly all, former CHIP beneficiaries could find the same coverage elsewhere. Alas, implementation quirks in the health-care law make that doubtful. The Internal Revenue Service defined eligibility for subsidies on the exchanges in such a way as to exclude families with many children who are currently served by CHIP or are still uninsured. The American Action Forum, a conservative think tank, estimates that this “family glitch” could affect more than 2.2 million children if funding for CHIP isn’t extended past 2015. Even families that get subsidized coverage through the exchange may find that benefits for their children will be narrower and cost more out-of-pocket than does CHIP, according to an analysis by the Wakely Consulting Group.
One of CHIP’s authors, Sen. John D. Rockefeller IV (D-W.Va.), has proposed extending the program’s federal funding through 2019, while beefing up the benefits package. This would address the risk of an unfunded mandate as well as that of costlier, skimpier benefits confronting CHIP beneficiaries. There are just two problems: finding billions of dollars to pay for the plan, and guaranteeing that Congress uses the time that money buys to fix CHIP-related glitches. Otherwise, Congress will be back in the same predicament come 2020 — when both the new cash and the requirement that states maintain CHIP expire.
Plainly, funds have to be found to avoid short-term harm to children who depend on CHIP. Equally clearly, the funding must come with a plan to right-size CHIP for a world in which comprehensive reform largely supersedes it.