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'Family Glitch' Puts 1.9 Million CHIP Kids at Risk

By Marissa Evans, CQ Roll Call 

April 29, 2015 -- When Congress reauthorized federal funding for the state-managed Children's Health Insurance Program (CHIP) for two years in April, it did not address a so-called family glitch that could jeopardize coverage for nearly 2 million children, according to state CHIP directors and children's health advocates.

As funding for the program expires in 2017, families of children now getting health insurance through CHIP will have find policies on the state and federal marketplaces established by the Affordable Care Act.

That's where the family glitch comes into play. The glitch is a faulty benchmark under the federal health law that bases the affordability of health plans for families on the cost of coverage for individuals. The cost of a family plan is typically more expensive than individual coverage—but the law didn't set parameters for the affordability of family plans. That means many families can't afford the coverage or qualify for subsidies to help them pay for it, which could cause up to 1.9 million CHIP children to lose coverage altogether, according to the Government Accountability Office.

"The family glitch would have to be fixed soon, and that has been challenging to try to do," said Elisabeth Wright Burak, senior program director for Georgetown University's Center for Children and Families. "It's hard to imagine with the politics of the [Affordable Care Act] and the presidential elections that that's going to be fixed."

Iowa Republican Sen. Charles E. Grassley said in an emailed statement that Congress needs to examine the insurance plans offered on the exchange and by employers to see "what should be provided to near-Medicaid income kids and what role CHIP or its successor will play in providing care."

"While the family glitch is important, it speaks to the larger review of the role of CHIP that must be discussed in the next two years," Grassley said in the statement.

CHIP was implemented in 1997 to provide health coverage to children in families earning between 200 percent and 300 percent of the federal poverty level—too much money to qualify for Medicaid but typically not enough to afford private insurance plans. Before the 2010 federal health law, Medicaid in most states covered families making up to 100 percent of the federal poverty line. In 2013, 8.1 million kids were covered under CHIP at a cost of $13 billion.

In the two years before CHIP's funding authorization expires, the programs' directors and child health advocates will try to find ways to integrate the program's beneficiaries into the state and federal insurance exchanges, according to Trish Riley, executive director for the National Academy for State Health Policy. She said one of the issues to be addressed is that private insurer plans today aren't as extensive as CHIP and Medicaid plans. 

"Private insurers have kids' plans, but low-income kids have typically been under the jurisdictions of Medicaid and CHIP," Riley said. "When you take kids that have more needs or complex needs you might have to think of other strategies." 

Riley said that since insurers have shown themselves to be flexible with plans offered on the exchanges, she hopes they would be open to changes to their children's plans. 

A February GAO report cited a survey that found CHIP enrollees have comparable coverage and access to services as privately insured children. The survey also found that parents of children enrolled in CHIP experienced less financial burden in paying their children's medical bills. 

But in the same report the agency wrote that "several states raised concerns about negative implications for children's coverage if CHIP funding is not reauthorized, including concerns that their states would lose gains made in covering children, who would also lose access to providers and dental care." 

In Louisiana, for example, Jeff Reynolds, undersecretary for the Department of Health and Hospitals, said the state's CHIP program is receiving an additional $36.7 million to help it "maintain the level of service we're at right now." He said the program is taking a wait-and-see approach over what the federal government will recommend if CHIP isn't reauthorized beyond 2017. 

In West Virginia, with 28,700 children in the state's CHIP and Medicaid programs, a survey found that more than two-thirds of participating families say that they didn't think they could afford more than $50 per month for premiums if they were moved to the federal marketplace, according to Sharon Carte, executive director for West Virginia CHIP.

And, she said, two years won't be enough time to figure out a solution for those families.

Insurance commissioners typically set rates six months prior to enrollment periods, she said, which would require Congress to find a fix for the family glitch by next year in order to help CHIP beneficiaries transition to the exchanges. She said that that's unlikely.

Congress "did a straight extension without addressing any issues," Carte said. "I could see two years going by and we could be in the same position if no changes are made."  

Further complicating a congressional response to the glitch is that lawmakers can't do much until after the King v. Burwell Supreme Court decision in June, according to Doug Holtz-Eakin, president of the American Action Forum. 

The case examines whether the federal health law can give subsidies to residents of the 34 states that didn't set up health insurance marketplaces, opting instead to use the federal marketplace. An estimated 13.4 million people could lose the subsidies if the court strikes them down, according to a Kaiser Family Foundation analysis. 

Holtz-Eakin said if the court strikes down the subsidies it could clarify how Republicans move forward with making changes to the federal health care law and how to address the family glitch in CHIP. 

"It's hard to have a strategy for CHIP in isolation because you don't know yet what problems you're fixing," Holtz-Eakin said. "The CHIP program was an extremely bipartisan effort, and to have the program missing some of the target population is not something I think Republicans would sit idly by and watch." 

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