This would be less complicated if we were writing about snacks. Most of us know CHIP (The Children’s Health Insurance Program) as Healthy Families, now a part of Medi-Cal. What you may not know is that the program is set to run out of funding in less than a year, unless Congress acts.
What is CHIP?
CHIP is health insurance available to children in low- and moderate-income families who are above the income threshold for Medicaid. Created in 1997, CHIP now covers 8 million children nationally. Some states (including California beginning in 2013) operate CHIP programs as extensions of Medicaid rather than independent stand-alone programs.
How is it funded?
CHIP programs are typically more generously funded by the federal government than Medicaid is. That means states have to come up with fewer dollars to support the program – for example, in California 65% of the cost of coverage for CHIP kids comes from the federal government, compared to the traditional 50-50 split for Medicaid. The ACA increases the federal matching rate by 23 percentage points beginning in 2015, however this is contingent upon Congress authorizing funding for the program.
Where is the money going?!?!
CHIP funding currently is scheduled to expire in September 2015. Apparently Congress thought it would be a good idea to schedule a payment increase from the Feds, but not put any money into the bank account. This means Congress has to formally reauthorize the program and allocate funds to it. Senator Jay Rockefeller of West Virginia introduced a bill in June that would fund CHIP for four additional years and expand the program from 250% to 300% FPL.
What will happen if CHIP is not reauthorized?
The impact would vary significantly from state to state. In states with stand-alone CHIP programs, the kids above Medicaid income thresholds would be shifted to the Exchange. Where CHIP is operated within Medicaid, the states are required to continue Medicaid coverage (a maintenance of eligibility provision or MOE) through October 2019, but with significantly reduced federal funding.
But California is a little tricky, because it moved CHIP into Medi-Cal after the ACA was signed and the MOE went into effect. This leaves our state’s future a bit up in the air – as either scenario could play out depending on the federal and state governments’ interpretation of the rules. If California keeps CHIP kids in Medi-Cal, the State will have to come up with a lot more funding for their coverage.
What are the pros and cons to reauthorizing CHIP?
There are several reasons why CHIP reauthorization may be a good idea, including:
- Exchange plans have higher cost-sharing
- Some children would be ineligible for subsides due to employer offers that meet affordability requirements for the employee, but not family plans (the kid glitch)
- CHIP plans can offer more specialized benefits tailored to children
However, opponents argue that children have coverage options through the Exchanges and don’t need an additional program. Unfortunately many families with kids in CHIP would face higher costs in the Exchange and some (up to 2 million) would forgo coverage altogether.
What can we do?
You may want to share your feelings on CHIP with your elected representatives in Congress and offer your opinion on whether or not it should be extended, and for how long. First Focus, the California Children’s Health Coverage Coalition, and other advocates have prepared a letter advocating for reauthorization of CHIP for four additional years. If interested, you may sign onto the letter here.
For more details on CHIP, see MACPAC’s Report to Congress for more information on CHIP and reauthorization.