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Children’s Coverage and the Fate of CHIP

Attended a very interesting panel discussion today, where experts analyzed the state of children’s health insurance and discussed next steps in reform. While private insurance and public programs have steadily increased enrollment rates of children over the years, it is worth noting that over 8 million children are currently uninsured and over half of them are eligible for either Medicaid or SCHIP.

One of the panelists was Nate Checketts who oversees the CHIP program in Utah, and he discussed the state’s newly opened Health Insurance Exchange as well as the positive effects of the CHIP Reauthorization Act (CHIPRA) and stimulus funds on the state’s health coverage program for children.

Much of the discussion centered around the future of the highly successful CHIP program, which covers millions of children who do not qualify for Medicaid. Compared to private insurance, the subsidized program allows families to purchase low-cost insurance for their children (on average only 0.65% percent of family income) at a nearly 100% actuarial value. Many SCHIP programs also contract to private insurers to administrate the program.

As reform stands in the House, the CHIP program would be eliminated by 2014, with 40% of enrollees becoming Medicaid-eligible (up to 150% FPL) and the remaining becoming eligible for premium subsidies to purchase insurance through the Exchange. The Senate version will presumably preserve the program in addition to Medicaid expansion and insurance subsidies. The panel discussed the pros and cons of the prospect of preserving/eliminating the program, summarized below:

Why is it better to end CHIP as seen in the House?

-The program is ‘less certain’ to be reauthorized in the future and is subject to state cuts, while Medicaid and Exchange subsidies are guaranteed
-Parents and children can be covered as a single unit, which is administratively simpler and has even shown to be beneficial to families’ health
-Fewer subsidy programs means less complexity and lower costs
-Comparatively higher provider payments are found in the Exchange, thus improving access to provider networks
-A decreased burden on states and/or allows shifting of funds to other services

Why is it better to keep CHIP as seen in the Senate?

-The CBO finds that preserving the program lowers the costs of the Senate bill
-Allows states to continue to innovate using CHIPRA tools for outreach
-Out of pocket costs (currently 2% of income) would be much lower compared to Exchange plans (up to 8% of income)
-Fewer children would become uninsured because of problems with affordability in Exchange
-Children would receive comparatively better coverage than Exchange plans, with guaranteed oral, dental, and hearing services

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