Changes in children’s coverage in the coming years under the Affordable Care Act.
Additional take up and retention in existing Medicaid and CHIP programs, as they are currently structured, are key to driving further increases in children’s health insurance coverage. Implementation of the major coverage provisions of the Affordable Care Act in 2014 holds promise for further reducing the number of uninsured children in the coming years due to a combination of policy changes, including “no wrong door” provisions for applications, new data-driven enrollment and retention processes, the expansion of coverage to parents and other adults, and the requirement on individuals to have health insurance coverage, which will lead to penalties beginning in 2015 for uninsured children and adults who are not exempt from the mandate. Under current Medicaid and CHIP programs for children, almost 7 in 10 (68 percent) uninsured children are eligible for Medicaid and CHIP and very few are eligible for employer-sponsored insurance.
The Affordable Care Act has changed the context for CHIP and children’s coverage, introducing a number of new issues for states.
Flexibility has been a hallmark of the CHIP program, key to state ownership and commitment to the program and reflected in the considerable variation across state CHIP programs in their eligibility levels, cost sharing, and other program features. Under the Affordable Care Act, states must now cover all children with family incomes below 133 percent of FPL in Medicaid rather than separate CHIP programs and, unless they run out of federal CHIP funding, states cannot roll back eligibility levels before 2019. States are also precluded from instituting enrollment freezes, increasing premiums beyond the cost of living, or imposing waiting periods of more than three months in length; they also have less latitude in use of income disregards and defining household composition when computing CHIP eligibility. These policy changes are designed to reduce coverage gaps and increase Medicaid and CHIP coverage among children.
The changing policy environment under the Affordable Care Act presents new options for families with children who are enrolled in CHIP.
Many parents will be newly eligible for Medicaid or will qualify for subsidized coverage through the Marketplace, which is expected to lower their uninsured rates. In addition, the Marketplace subsidies, which target those with incomes below 400 percent of the FPL, have the potential to offer new affordable coverage options to uninsured children who are not eligible for Medicaid or CHIP. The reforms introduced as part of the coverage available through the new Marketplaces include guaranteed issue and bans on lifetime and annual limits that should improve the coverage options available to children, particularly to those who have preexisting health conditions. Moreover, CHIP offers an affordable way for many families to insure their children and satisfy the Affordable Care Act’s coverage requirement.
While the new coverage options under the Affordable Care Act have the potential to reduce uninsured rates among children, some families may still experience financial burdens, and risks of coverage gaps and discontinuities in care exist for children who experience transitions between Medicaid, CHIP, and the new Marketplace plans.
As currently structured, some families with CHIP-eligible children face both Marketplace and CHIP premiums, and Marketplace subsidies are not adjusted for CHIP premiums (a situation sometimes referred to as “premium stacking”). Families could also face challenges maintaining coverage for their children in states that have waiting periods and lock out periods for premium non-payment in their CHIP programs due to administrative challenges associated with implementing these policies. In addition, some uninsured children with access to employer-sponsored coverage will not be able to receive the new Marketplace subsidies due to the so-called “firewall,” which is designed to prevent crowd-out of employer coverage. Access to affordable ESI coverage is currently defined by the cost of employee-only coverage. Other members of the family are precluded from receiving Marketplace subsidies for their coverage if employee-only coverage is affordable, even when their ESI coverage for dependents is very costly.
The coming years offer the potential to build upon the coverage and access gains and financial protections for children and their families that resulted from CHIP, but uncertainties remain about how children’s coverage will be affected.
Since 1997, CHIP has focused federal and state policy attention on improving health insurance coverage and health care for low- and moderate-income children, with resulting gains in coverage and access to care for children and lowered financial burdens and stress for their families. But it is unclear at this time how implementation of the Affordable Care Act will affect CHIP’s target population of low-income children and their families.
The prospects of positive changes for children result primarily from the expected gains in health insurance coverage for their parents. The Affordable Care Act coverage expansions are expected to improve the health and wellbeing of parents and other low-income adults, particularly in states that choose to expand Medicaid under the Affordable Care Act. Further reductions in uninsurance among children are also possible given the availability of Marketplace subsidies and health insurance reforms, the individual mandate, and the new outreach, enrollment, and renewal processes that are being implemented.
The Affordable Care Act extended federal CHIP funding through September 2015, and funding for CHIP beyond that date will require legislative action. This study, like the prior Congressionally-mandated evaluation in ten states, has demonstrated the successful role that CHIP has played in meeting children’s health care needs in very different contexts and with very different program structures, adapted to states’ unique circumstances. The central question for policy makers is how to build upon CHIP’s accomplishments to achieve additional coverage, access, and quality gains for children.