Potential Impacts of Alternative Health Care Reform Proposals for Children with Medicaid and CHIP Coverage (Updated 1/8)

Abstract

For children currently enrolled in Medicaid and CHIP, the health reform bills in the House and Senate present both potential benefits and risks in terms of the type of coverage these children would have and their access to needed care. This brief estimates the number of children enrolled in Medicaid and CHIP who would have been affected if provisions in pending health reform bills were implemented in 2007. Potential tradeoffs associated with shifting children from CHIP into Medicaid or new exchange plans are discussed.

Update 1/08/10: On December 24, 2009, the Senate passed H.R. 3590 (Patient Protection and Affordable Care Act). The provisions of this bill with regard to Medicaid and CHIP are similar to the provisions in the Democratic leadership bill which are described in this brief. One difference is that H.R. 3590 reauthorizes CHIP through 2019 and fully funds the program through 2015. For a full description of the final Senate bill go to http://dpc.senate.gov/dpcdoc-sen_health_care_bill.cfm.

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Introduction

Federal health care reform is taking place against a backdrop of more than a decade of progress reducing uninsurance among children. Indeed, according to new coverage estimates, the number of children lacking insurance coverage declined by 800,000 between 2007 and 2008, despite the economic downturn. In 2008, uninsurance among children reportedly reached its lowest level in over twenty years. In contrast, uninsurance rates have been on the rise for adults. While employer-sponsored insurance (ESI) has been declining for both children and adults, children have gained public coverage at much higher rates than adults. The gains in public coverage for children are due to a combination of factors including the eligibility expansions that have occurred following the creation of the Children’s Health Insurance Program (CHIP (Title XXI)) in 1997, investments in outreach and enrollment simplification in Medicaid (Title XIX) and CHIP that raised participation in those programs, and more expansive Medicaid eligibility for children than for adults. Numerous studies have found that these policy changes have led to reductions in uninsurance among children and improvements in their access to care. In addition, gaps in insurance coverage and access to health care by race/ethnicity and income have narrowed for children.

CHIP reauthorization legislation enacted in February 2009 provides new funding and policy options intended to increase coverage among children who are eligible for Medicaid and CHIP but not enrolled. Such eligible but unenrolled children constitute the majority of uninsured children. CHIP reauthorization increased federal allotments through 2014 to support enrollment growth in CHIP and strengthened Medicaid and CHIP coverage for children in other ways, but it did not address all concerns about CHIP such as the lack of an entitlement for coverage.

The health care reform proposals under consideration have the potential to contribute to additional coverage gains for children, while also increasing coverage for parents and other family members. Given that so many children covered under Medicaid and CHIP have uninsured parents, increases in parental coverage resulting from health reform would likely improve the health and functioning of many of these children and their parents. However, these proposals also contain changes to Medicaid and CHIP which makes it important to consider their potential impact on the children who are served by these programs. Accordingly, this brief uses information from 2007 to estimate the number of children enrolled in Medicaid and CHIP who would be affected if provisions in the pending House and Senate health care reform bills were implemented. This brief only considers possible coverage changes for these children and does not address other possible effects of the alternative health care reform proposals under consideration. Since these bills differ in a number of important respects in the way that they treat Medicaid and CHIP, the estimates developed in this brief reflect the potential impact of alternatives currently under consideration and do not attempt to anticipate provisions that may end up in a final bill.

The following section describes changes in public programs for children over the last decade to provide a context for considering changes to Medicaid and CHIP under health care reform. Subsequent sections describe the proposed changes in both the recently passed House health care reform bill (H.R. 3962) and the recently introduced Senate leadership bill (Patient Protection and Affordable Care Act), the data and methods used to produce the estimates, and the key findings. The final section concludes with a discussion of the implications of the findings.

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