Congress renewed the Children’s Health Insurance Program (CHIP) for an additional six years in January. The program provides free or low-cost insurance for 8.9 million children in low- and moderate-income families. Those families earn too much to qualify for Medicaid, but have difficulty affording or accessing private insurance.
The Medicaid program covers 26.8 million more children. At the states’ option, CHIP also can provide coverage to pregnant women.
CHIP was enacted in 1997 during the Clinton presidency with strong bipartisan support. The program helped reduce the percentage of children in the United States without health insurance from 14 to 4.5 percent.
Although both Democrats and Republicans support CHIP, the program became a bargaining tool in 2017 and early 2018 as members of Congress fought over other issues including immigration, Obamacare and the federal budget. Long-term funding of CHIP was suspended for more than three months before the six-year deal was reached.
CHIP is primarily funded by the federal government with some contribution from the states. In fiscal year 2016, the federal government spent $14.8 billion on the program; $2.1 billion came from other sources.
States manage CHIP, including eligibility requirements. A state’s programs can be freestanding, folded into the Medicaid program, or a combination of both. In 46 states, CHIP is available to families with income up to 200 percent of the poverty level; 24 of those states provide coverage up to 250 percent of the poverty level or higher. The federal government will give a state matching funds for coverage up to 300 percent of the poverty level.
For a family of four, 200 percent of the federal poverty level in the contiguous 48 states and D.C. is $50,200. The poverty level dollar amounts are higher in Alaska and Hawaii.
In most states, there is no waiting period to enroll a child in CHIP. Federal regulations allow states to impose a waiting period of up to 90 days, and 15 states have exercised that option. An advisory commission to Congress has proposed eliminating waiting periods in all states.
The federal government established guidelines for what must be covered and then gives states leeway regarding additional details of coverage. Services that must be covered include: routine checkups, doctor visits, immunizations, prescriptions, dental care, vision care; inpatient and outpatient hospital care; laboratory, X-ray and emergency services.
Routine well-child visits and routine dental visits must be available at no additional charge to families, but states may require copayments or deductibles for other services, provided the total amount for those charges and premiums do not exceed 5 percent of a family’s income for a year.
To determine the details of coverage, states are directed to use what the federal government calls "benchmark coverage." The benchmarks are: the standard Blue Cross/Blue Shield preferred provider option service benefit plan offered to federal employees; state employee coverage plan; or the HMO plan that has the largest commercial, non-Medicaid enrollment within the state. In addition, a state can provide coverage that is "actuarially equivalent" to the benchmarks, or the state can ask the Secretary of the U.S. Department of Health and Human Services for a waiver to provide a different type of coverage.
A commission that advises Congress about CHIP, the Medicaid and CHIP Payment and Access Commission (MACPAC), notes that CHIP provides substantial savings for low- and moderate-income families. Using data from 2015, the commission said that the average premiums and cost-sharing per child under CHIP was only $158 per year, whereas the cost per child in an employer-sponsored plan was $891.
In addition, CHIP provides for more coverage for dental, vision and audiology services than most employer-sponsored plans.
Looking to the future, the commission advocates using CHIP funds to promote innovation, some of which may be similar to changes in health care for the adult population. Innovations might include focus on treatment of chronic conditions, obesity, managed care and alternative payment models. In addition, the commission urges more seamless coverage when children transition between different health insurance plans, including between CHIP and Medicaid.
The American Academy of Pediatrics and the American Medical Association supported extension of funding for CHIP, both calling it a "vital program." The Pediatric Academy’s policy statement would go a step further. The academy urged coverage not only for children through age 18, but added that all children, adolescents, and young adults to the age of 26 "should be covered by an affordable, quality health insurance plan that allows access to comprehensive essential care."
Jeff Atkinson is a professor for the Illinois Judicial Conference and has taught health care law at DePaul University College of Law in Chicago.