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Child Watch® Column: "Six Reasons We Must Keep CHIP in Final National Health Reform Legislation"

Release Date: January 8, 2010

Marian Wright Edelman

Most Americans do not know that the politically popular and successful Children's Health Insurance Program (CHIP), signed by President Obama with much fanfare on February 4, 2009, will be repealed in the House bill in 2013. The Children's Defense Fund strongly supports the Senate bill's CHIP provisions. They would keep CHIP in place until 2019 with funding through 2015 to allow time to see whether the new proposed, costlier and untested exchange will be a safer and better place for children. As the exchange is presently constructed, millions of CHIP children will be worse rather than better off if CHIP is not protected. So the first reason to keep CHIP is to assure that no child—and certainly not millions of children—will be worse off after health reform than they are today.

Second: We know that, at least for now, CHIP is a safer, better and less expensive place for children than the exchange which lacks CHIP's current benefit and cost protections. The Director of the Congressional Budget Office, Douglas Elmendorf, noted that higher premiums and out of pocket costs in the exchange would contribute to CHIP children going uninsured. Given the complex process for establishing essential health benefits in the insurance company driven exchange, there is no assurance children will receive benefits comparable to what they are getting in CHIP. Why would we take away child protections in a program that works until we are sure something comparable or better is in place? Unlike the House bill which would turn children over immediately to the untested exchange in 2014, the Senate bill would delay such a transition until we see how the exchange works and after an assessment of whether it will provide comparable services to children.

Third: CHIP is less costly than the exchange for parents and taxpayers. A Wyatt WorldWide study released by First Focus found that families would pay between 7 and 35 percent of their health costs out of pocket compared to two percent or less under CHIP. The Congressional Budget Office estimates that the per capita cost to care for a CHIP child will be less than $1,000 in 2013 and that the exchange will cost more. A 2009 Center on Budget and Policy Priorities and Kaiser Commission on Medicaid and the Uninsured survey found only 12 states require co–pays (usually very small) for inpatient hospital visits for children in families with incomes under 200% of the federal poverty level ($44,100 for a family of four): only 15 states require co–pays for emergency room visits; and 20 states for non–preventive physician services. Without cost protections, many children are likely to end up uninsured if CHIP is eliminated—increasing costs to the children as well as to states. If parents cannot afford the exchange, children without insurance will end up in emergency rooms where care is much more costly. A new report by Children Now in California noted that the average cost of treating a child for a single preventable hospitalization in that state is $7,000 compared to the $1,200 cost of health coverage for a child. 

Fourth: A guarantee to nothing is of no benefit. Some argue that CHIP should be eliminated because it is a block grant subject to the political and funding whims of Congress and the cash–strapped states and that families in the exchange will be guaranteed subsidies and coverage. The fallacy here is that there is no certainty about what children in the exchange will be guaranteed and ignores the negative effect on child coverage if parents are only guaranteed the right to pay more for fewer benefits. We hope with time that exchange coverage will be better, or at least comparable, to what CHIP children get today, but we do not yet have that assurance. Children need a guarantee to coverage which assures them comprehensive benefits at a fair cost. In the interim, we have urged Congress to guarantee coverage to children in CHIP, especially during this terrible economic downturn, to protect them against the ravages of budget cuts and recession. Children need a national health safety net right now—wherever they live—just as seniors already have.

Fifth: Many states have made CHIP and children's health a priority. Georgetown's Center for Children and Families says almost half the states improved CHIP in 2009 although at least 19 of them were plagued by budget shortfalls. In 2008, the number of uninsured children dropped to its lowest point in 20 years, to 8.1 million children. CHIP is working. Don't break it—keep it and make it better at least until 2019.

Sixth: Children should not be treated unjustly compared to other groups. Why should the children be forced to move out of CHIP? No adults are being kicked out of Medicaid, Medicare, or their Veterans Health Benefits. While millions of children will benefit from the laudable expansions of Medicaid and long overdue insurance reforms and expanded coverage, millions of CHIP children should not have to pay the price. 

Some contend that ending CHIP will allow more parents and children to be enrolled in the same health plans. But isn't it more important that it be easy and affordable for a parent to be assured of health coverage for all of their children? The Senate bill does that with a "no wrong door" policy enabling a parent to enroll themselves and their children in the exchange or CHIP or Medicaid at the same time. There is research showing that children are more likely to enroll in health coverage when their parents are insured, but we are not aware of research that discusses the benefits of all family members being in the same plan.  

President Obama stated my belief clearly in signing the CHIP bill less than a year ago when he stated: "There are certain obligations that are not subject to tradeoffs and negotiations—health care for our children is one of those obligations."  The millions of flesh and bone children who rely on CHIP today should not be put at risk of losing their known care until we are assured that a new more costly and unknown exchange will be in their best interest and that of taxpayers.