Why Go After Children’s Health Insurance?

By Richard Kirsch, contributor

With Republican presidential candidates trumpeting their concern about the struggles of working and middle-class families, why would congressional leadership undermine the wildly popular Children’s Health Insurance Program (CHIP)?

CHIP is that rare social program where success is celebrated by both Republicans and Democrats. Governors across the political spectrum support the program, which gives states flexibility in design while the federal Treasury pays an average of 88 percent of costs. By covering 5.8 million children, whose parents don’t get children’s health coverage at work but earn too much for Medicaid, CHIP has dramatically cut the proportion of uninsured children, providing them with good coverage and their parents with affordable premiums and low out-of-pocket costs.

When the Affordable Care Act was passed, CHIP supporters in Congress made sure that the new healthcare law did not interfere with CHIP’s success. The ACA kept CHIP in place, with a provision that Congress would review CHIP in 2015. With its history of bipartisan support, supporters hoped that renewing CHIP would not become controversial. It turns out that was too much too hope for.

In late February, Senate Finance Committee Chair Orrin Hatch (R-Utah) and House Energy and Commerce Committee Chair Fred Upton (R-Mich.) published a discussion draft that would endanger the health of at least 1 million children enrolled in CHIP while raising costs to states.

One reason that CHIP is so successful is that it has very low, income-based premiums and small co-payments. Today, high out-of-pocket health plans are squeezing family incomes. One out of three Americans says those costs resulted in delayed medical care for a family member last year. But under CHIP, parents can afford to both get their children enrolled and pay for a doctor’s visit.

The Republican proposals would force many families to pay more to get covered and to get healthcare for their children. One provision would reduce or eliminate funding for families in 29 states that provide sliding-scale premiums to many middle-class families. Another proposal would end the requirement that states keep Medicaid and CHIP eligibility for children at current levels through 2019.

The combination of lower funding for middle-class families and eliminating the requirement to maintain income eligibility would force states to cut children from the program, raise premiums and co-payments, or draw more on hard-pressed state budgets. We would certainly see various combinations of all three bad outcomes.

Children could also have to wait a full year to get health coverage under the Hatch-Upton plan. Under the law today, the maximum waiting period a state can impose is 90 days. While waiting periods are supposed to discourage families from dropping employee coverage to qualify for CHIP, 33 states have decided to have no waiting period. The reason is that early in the CHIP program, states discovered that the waiting periods didn’t save money but did interfere with children getting health coverage. There is no justification for forcing children to wait one year to get healthcare that is essential to their development.

Two other proposals from the Republicans would directly shift cost to states, in addition to the cut in federal support for many middle-income families. Upton and Hatch would block an increased federal match, which will be put in place in fiscal year 2016, costing cash-strapped states $10 billion over four years, according to the Congressional Budget Office.

Finally, in a measure that would punish children whose first language is not English — CHIP does not cover children who do not have legal permission to be in the U.S. — the Republican proposal would reduce federal funding for translation and interpretation services. Why would anyone want to make it harder for a sick child to talk with a healthcare provider?

The continued squeeze on working and middle-class families, as incomes remain stagnant even as unemployment drops, is finally becoming front and center to the political debate. Republicans are eager to show their concern. To be convincing, they will need more than rhetoric and their traditional recipe of cutting taxes and regulations. For that reason alone, I cannot figure out why Republicans would want to raise healthcare costs for middle-income families with children.

Hatch and Upton have labeled their proposals a “discussion draft.” This should be a short discussion, with the draft busting like any ill-advised trial balloon.

Fight about other things, but agree to keep the very successful, very popular, bipartisan CHIP program working well to make good health coverage available to millions of children in America’s working families.

Kirsch is a senior fellow at The Roosevelt Institute and a senior adviser to USAction. Follow him@_RichardKirsch.

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