With federal funding for the Children's Health Insurance Program set to run out in 2017, HHS has determined children can't get comparable benefits and cost-sharing on the insurance exchanges set up under the Affordable Care Act.
As a result, HHS Secretary Sylvia Mathews Burwell suspended a provision of the healthcare reform law requiring states to develop procedures to automatically transition children who aren't eligible for Medicaid from CHIP to exchange coverage if CHIP funding ends.
The ACA requires that HHS certify that children would be able to find plans with comparable benefits and cost-sharing, and Burwell concluded they would not.
“At this time and in the foreseeable future, the requirement of the act that requires states to establish processes to enroll children in certified QHPs does not apply,” Burwell said in the analysis.
A CMS spokesman said CHIP is meeting children's needs in the near term and noted that President Barack Obama requested funding through 2019 in his 2016 budget blueprint.
Burwell's conclusion regarding transitioning CHIP enrollees to exchange plans was no surprise to policy insiders.
“This confirms what has been well-documented and underscores the need for ACA changes that strengthen pediatric coverage,” said Sara Rosenbaum, a healthcare policy expert at George Washington University. “Without those changes, continuing CHIP funding remains an imperative.”
Policy analysts have estimated as many as 2 million children could end up without coverage should CHIP end because they are not eligible for Medicaid, don't qualify for exchange subsidies or qualify for subsidies but their families still can't afford the higher premiums and cost-sharing.
For example, the average out-of-pocket costs for children in Alabama are $1,455 in an exchange plan versus $175 in CHIP.
Bruce Lesley, president of the bipartisan children's advocacy organization First Focus, said the HHS analysis “goes to show how great CHIP is for children and their families and is further validation that CHIP provides the most comprehensive benefits at the lowest cost for kids.”
CHIP was established in 1997 with bipartisan congressional support to cover low-income children who were not eligible for Medicaid. In 2014 CHIP covered about 8.1 million children.
The ACA extended the authorization for CHIP through 2019 but left it up to Congress to extend funding for the program beyond 2015. Lawmakers included a two-year extension in legislation last year that repealed Medicare's sustainable growth-rate formula for paying physicians.
It's likely that Congress will extend funding again before 2017 to avoid disrupting coverage for millions of children, according to Rachel Klein, director of organizational strategy for the consumer advocacy group Families USA. She added that the program enjoys strong bipartisan support.
In addition to offering more affordable coverage, CHIP plans are generally more comprehensive for “child-specific” services (such as dental, vision and habilitation) and for children with special healthcare needs, according to the new HHS analysis.
That contrast should also influence lawmakers, said Joan Alker, executive director of Georgetown University's Center for Children and Families. “We believe it is very important that children are not made worse off,” Alker said.