Over the past several decades, uninsurance among children has declined, falling below 5 percent in 2015. Declines in uninsurance were driven by increases in public health insurance of children through the Children’s Health Insurance Program (CHIP) and Medicaid. Expansions in eligibility and coverage through these programs have led to increased receipt of health care among children and lower family financial burdens related to children’s health care.
Despite what seemed to be a road map for how to extend funding for CHIP in mid-September, federal funding for CHIP ended on September 30. Absent reauthorization of funding by Congress for fiscal year 2018 and beyond, up to 9 million children are at risk of losing coverage under CHIP.
Children can be eligible for two types of CHIP programs: separate and Medicaid expansions. Children eligible for separate CHIP programs are especially at risk. Ten states are projected to run out of carry-over CHIP funds by December 2017, and 32 states will run out by March 2018.
States with separate CHIP programs have three immediate choices after their funds run out:
- Move children eligible for separate CHIP programs into the Medicaid program and receive the lower Medicaid match
- Substitute state-only funds to cover these children
- End their coverage
Children eligible for CHIP through Medicaid expansions will be protected until 2019 by the Affordable Care Act’s (ACA) maintenance of effort requirement. States will only receive the Medicaid match for these children until then. It is not clear what states will do in 2019 when they are no longer required to cover children with incomes over 138 percent of the federal poverty level.
Fifty-six percent of children are ineligible for Marketplace tax credits
Using our American Community Survey Health Insurance Policy Simulation Model, we estimated what would occur if CHIP were not extended and states fail to otherwise cover separate CHIP-eligible children. Under this scenario, only 44 percent of children enrolled in separate CHIP are eligible for Marketplace tax credits, and 56 percent are not eligible because of the firewall and the so-called family glitch. The firewall limits eligibility for premium tax credits to people with an offer of single coverage that is more than 9.56 percent of family income, even though the cost of covering the whole family may be higher.
Although families will turn to the Marketplace and employer-sponsored plans to cover their children, both options will generally be more expensive than CHIP and provide fewer benefits. Families eligible for Marketplace tax credits face options with lower actuarial value and higher average cost sharing and premiums that were $1,000 higher in 2015, on average, than CHIP coverage. For the 25 percent of families with children enrolled in S-CHIP (Separate Children’s Health Insurance Program) who have special health care needs, their increased costs could be higher.
Families ineligible for tax credits who turn to employer plans to cover their children face premiums that represent large shares of their incomes. For those losing eligibility for separate CHIP, enrolling a child in a parent’s employer-sponsored plan will typically cost 8 percent of family income and bring the total cost of covering the family to 11 percent, on average.
The share of income that families must contribute varies, and families with lower incomes face the highest burdens (see table below). Premiums are not the only cost dimension along which employer coverage will differ from CHIP coverage. Employer coverage plans typically have higher out-of-pocket cost-sharing requirements, including deductibles, coinsurance, and copayments, than those required by CHIP.
Without federal funding for CHIP, coverage for children enrolled in separate CHIP programs is immediately threatened. We estimate that 1.2 million of separate CHIP-enrolled children nationally could become uninsured depending on how Congress and states act.
Those enrolled in Medicaid-expansion CHIP programs face the same risks when the ACA’s maintenance of effort requirements expire. Our estimates indicate that an additional 2 million children could become uninsured in 2019 if CHIP is not reauthorized.