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CHIP Offers Lower Costs, Comparable Benefits to Marketplace Benchmark Plans, GAO Says

By Rebecca Adams, CQ HealthBeat Associate Editor

December 20, 2013 -- Consumer's costs in five state Children's Health Insurance Programs (CHIP) were lower than in the benchmark health plans that were a model for benefits in plans to be available in those states' new insurance marketplaces, according to a recent Government Accountability Office (GAO) report.

CHIP is a better deal because the benefits were roughly equivalent to those in the plans that marketplace plans were based upon, but CHIP plans had lower premiums and out-of-pocket costs.

One example cited in the 58-page report was a hypothetical office visit if a child to a specialist in Colorado. The cost in CHIP was between $2 to $10 per visit, depending on the family income, compared to $50 per visit for kids who were enrolled in the standard plan available in the marketplace.

Costs for CHIP coverage are expected to stay about the same in the next year, according to state officials. But the cost of the marketplace insurance "is less certain," according to the report.

"The CHIP plans in four of the five selected states did not include any deductibles, which means that enrollees in those states did not need to pay a specified amount before the plan began paying for service," the report stated. Utah did have a deductible, but only for certain higher-income families.

But the private plans that were the model for marketplace plans had deductibles which ranged from $500 in Illinois and Kansas to $3,000 in Utah for a single person, and $1,000 in Kansas to $6,000 in Utah for a family.

Comparing CHIP coverage with private insurance is relevant because CHIP insurance may be phased out. The health care law (PL 111-148, PL 111-152) provided funding for the more than 8 million kids enrolled in the children's insurance program only through fiscal year 2015.

The GAO report noted that starting in October 2015, any state that does not have enough funding to cover all the children who are eligible for CHIP will have to screen low-income children to see if they qualify for Medicaid. If they don't, the children should be enrolled into a marketplace health plan that the Department of Health and Human Services says is comparable to CHIP.

The report compared CHIP plans with a private plan that was selected as a benchmark for the marketplaces in Colorado, Illinois, Kansas, New York and Utah.

"We determined that the CHIP and benchmark plans in our five selected states were comparable in that they included some level of coverage for nearly all the services we reviewed," the report stated. There were a few exceptions: Hearing tests and hearing aids were not covered by the private benchmark plan in Kansas. Outpatient therapy was not covered by CHIP plans in Kansas and Utah or by the benchmark marketplace plans in Colorado, Kansas, or New York.

The use of medical care was roughly the same for families, regardless of whether they had CHIP, Medicaid or the private insurance that existed before the marketplaces were created.

However, there is some evidence that in some cases CHIP and Medicaid patients may have had some trouble finding a physician to take care of them. When compared to children enrolled in private insurance, more CHIP patients used emergency room services, and a lower proportion of CHIP children reported visiting dentists and orthodontists.

The report was requested by Sen. Jay Rockefeller, D-W.Va., who chairs the Senate Finance Subcommittee on Health Care.

The advocacy group First Focus said that the health care law contained legislative authority, if not funding, for the CHIP program through 2019, and that lawmakers should pass legislation to provide more money because the program offers much-needed affordable care.

"With CHIP funding scheduled to drop dramatically in 2015, Congress must act early next year to ensure that CHIP will always be there to keep our children healthy," said First Focus President Bruce Lesley.

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