Adela Flores-Brennan, Executive Director

In all of the activity surrounding the close of the legislative session here in Colorado, the steady stream of regulatory activity, and a packed November ballot, one issue that has received little public attention is protecting the Children’s Health Insurance Program (CHIP). Congress extended funding for CHIP when it passed the Medicare Access and Children’s Health Insurance Program Reauthorization Act (MACRA) in 2015. However, the funding is only extended through September of 2017, thus again creating uncertainty as to the future of the program. While next September sounds like a long time from now, 15 months is not a great deal of time for Congress to take needed action to protect CHIP. Colorado needs to have a long-term, sustainable plan to ensure that children and pregnant women covered by the program today are protected and have affordable access to coverage and care.

What does CHIP look like in Colorado?

CHIP is a federally created program that provides allotments to states for covering low-income children and pregnant women whose incomes are too high for Medicaid but too low to purchase health insurance. It is a popular program with bipartisan support and has been a critical piece of the continuum of health insurance affordability options. CHIP provides families with the peace of mind and added security that comes having an affordable source of coverage and care for their kids.  In Colorado, it has been a critical component to reducing the rate of uninsured children to 2.5 percent.

Colorado’s Child Health Plan Plus (CHP+) currently covers about 50,000 children and pregnant women up to 260 percent of the federal poverty level, or $52,236 per year for a family of three. Participants are enrolled into a managed care plan and are expected to pay an annual enrollment fee that varies based on income and number of enrolled children. Colorado currently receives 88 percent of the funding for CHP+ from the federal government—that means that the state is only paying 22 cents on the dollar to provide comprehensive health care to CHP+ enrollees. Elimination of that federal financing would mean significant disruption for CHP+ enrollees and Colorado advocates should be strategizing alternatives now so we don’t jeopardize Colorado’s amazing gains in covering the uninsured. We cannot move backward on children’s health. Congress must re-fund and extend CHIP. Unfortunately, we cannot solely rely on Congress taking action and we should be creating our own path forward for long-term protection of these women and children.

What are the options?

Policy options for covering children and pregnant women enrolled in CHIP programs are emerging and being analyzed by policy makers and researchers at the state and national level. Options range from Medicaid expansion to sending all current enrollees through the health insurance exchanges. CCHI has been working with its partners in the All Kids Covered coalition to think about various strategies that we will discuss further below.

While the health insurance exchanges, like Connect for Health Colorado provide a possible alternative to CHP+ through access to subsidized private coverage, there are some significant drawbacks that should be considered. First, the coverage in the exchanges is not as affordable as CHIP. For example, a white paper from the Centers for Medicare and Medicaid Services shows that an average premium plus out of pocket expenses for a child in private coverage would equal $1,178 compared to $68 in CHP+. Second, the benefits are not as comprehensive. A recent paper and blog from the Georgetown Center for Children and Families (CCF) discusses the significant difference in adequacy and affordability of coverage in private coverage available on exchanges as compared to CHIP benefits and affordability. Third, the so-called “family glitch” would prevent some families from being able to access the premium subsidies available in the exchanges because they may have access to employer-based health insurance that is technically deemed affordable.

Moving children and pregnant women into private coverage through the state marketplace is not the right option at this time because it would leave them with less affordable, less robust coverage. With this in mind, CCHI commissioned some research on policy options for the Colorado CHP+ program that we plan to release in coming months. Of course, it is always an option to maintain the status quo; however, if financing or other factors require us to think about other opportunities, we wanted to start the process of analyzing what options would ensure the best affordability and most robust coverage for pregnant women and children. We considered:

  • No change. Under this option, we assumed that Congress will act to extend funding at the current level and that there would be no structural changes to the CHP+ program either at the state or federal level. This is the simplest future of the CHP+ program as it requires no major changes. However, it will require advocacy to ensure lawmakers are aware of the benefits of CHP+ to Colorado kids and take timely action to re-finance and reauthorize in the coming years.
  • Medicaid expansion. We looked at folding CHP+ into the Medicaid program and expanding Medicaid for children and pregnant women to 260 percent of poverty (the income threshold for CHP+). If CHP+ funding were not to be extended, this would be the most affordable option for children and pregnant women. It will also allow for children to receive the more comprehensive Medicaid benefits. However, the fiscal impact to the state would need to be carefully analyzed. While the per capita cost of Medicaid for children is cheaper than the per capita cost of CHP+, the state currently pays about 50 percent of the costs for kids in Medicaid, but only about 12 percent of costs for kids in CHP+.
  • Medicaid buy-in. We analyzed the possibility of creating a Medicaid buy-in for the CHP+ population modeled after the two current Medicaid buy-in programs for children with disabilities and for working adults with disabilities. Since Colorado already has the systems in place to administer a buy-in, this might be a relatively easy transition. However, it would be extremely important to set the premiums at a level that is affordable to families or the program would be ineffective.
  • New state subsidy. Existing research on the affordability of subsidized private coverage in the exchange shows that it is much more expensive to enrollees than CHP+. Thus, if moving children into the exchange were to be a consideration, it would be important to find ways to improve the affordability of the coverage. We looked at whether an additional state-based subsidy to offset premiums for private insurance would be a viable option using what the state currently appropriates for its portion of the CHP+ program, which is about $22.4 million. No systems are in place to implement a state subsidy like this, so this option represents the highest level of effort from an administrative and technology implementation perspective.

It’s too early to make a recommendation on how Colorado should proceed without additional research into issues like benefit alignment, feasibility and financing. Further, the state may have other policy options to consider. However, it is not too early for stakeholders to be establishing our priorities for the future of Colorado’s CHP+ program and thinking about a two-pronged strategy to ensure Colorado kids have affordable and comprehensive coverage moving forward.

So how could Colorado protect kids?

First, we must push Congress for the continuation of CHIP funding past 2017-at least through 2019 when the program is up for reauthorization. Second, irrespective of the possible 2017 federal financing threat to the future of the CHIP program, we should work to improve private coverage for children. Research and analysis emerging from national thought leaders provides us a number of ideas for improving private coverage for children. For example, ensuring that dental care is embedded and subsidized, offering CHIP plans on the exchange, using CHIP as the benchmark for exchange coverage, or fixing the family glitch.  To this end, CCHI and other advocates will continue to investigate the best policy solutions for the health of Colorado children and be prepared to offer thoughtful proposals to ensure comprehensive and affordable coverage for the future. We look forward to engaging with our state partners and policymakers in the weeks and months ahead.

The Colorado Department of Health Care Policy and Financing is hosting a meeting on July 21 at 10am to discuss options and get feedback from interested stakeholders. More information is available here.

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