SPECIAL REPORT | June 21, 2007

Millions of Children are Counting on CHIP Reauthorization to Get the Care and Coverage They Need

Improving health coverage for children through reauthorization of the State Children’s Health Insurance Program (CHIP) is the top health priority for Congress. CHIP has played a crucial role in helping to reduce the rate of uninsured lower-income children over the past ten years. The program requires reauthorization by Congress by September 30 of this year.While the Bush Administration would have Congress ratchet back our commitment to CHIP, in effect cutting off coverage for 1.6 million children and low-income adults, a bipartisan majority of the Senate is committed to investing more resources to cover uninsured children who are eligible for, but not enrolled in, CHIP or Medicaid.

In recent weeks, the Bush Administration and some Congressional Republicans have used misleading rhetoric to support their efforts to limit CHIP. Most recently, on June 18, the Bush Administration issued a skewed report that denies the existence of millions of uninsured children who are eligible for public coverage. Specifically, the Administration now claims that only 1.1 million uninsured children are eligible for public coverage. The reality is that there are approximately six million uninsured children in the United States who are eligible for CHIP or Medicaid. In reauthorizing CHIP, Congress must provide sufficient resources to combat the very real crisis millions of American families face in securing health care and coverage for their children. 

Researchers who have studied the uninsured have consistently found that approximately six million children are eligible for public coverage but not enrolled. The June 18 report, prepared on behalf of the Department of Health and Human Services (HHS) by the Urban Institute’s Income Benefits Policy Center, is inconsistent with previous, widely-accepted estimates finding that approximately six million uninsured children are eligible for coverage under CHIP or Medicaid. The flawed Bush report claims that in the calendar year 2003-2004, there were only 4.9 million uninsured children nationwide. According to the study, of those children, 689,000 children in families with incomes that fall below 200 percent of the federal poverty level (about $41,300 for a family of four) were eligible for CHIP, and only 257,000 were eligible for Medicaid. If children in states that currently provide for coverage above 200 percent of the poverty level are included, the report concludes that the number of uninsured children eligible for CHIP then increases to 794,000. These numbers are completely inconsistent with the facts and the reality for states grappling to provide coverage to uninsured children. 

·Much of the widely-regarded literature on the number of uninsured children eligible for public coverage was conducted by the Health Policy Center of the Urban Institute. These researchers have estimated that six million uninsured children are eligible for public coverage, with approximately two million eligible for CHIP and four million eligible for Medicaid. (Kenney and Cook, Coverage Patterns Among SCHIP-Eligible Children and Their Parents, Urban Institute, February 2007) A leading paper published in the peer-reviewed journal, Health Affairs, in March 2007 by Dubay, Guyer, Mann and Odeh cited Urban Institute analysis in support of its assertion that some 4.4 million uninsured children are eligible for Medicaid and an additional 1.7 million are eligible for CHIP. 

·A recent report issued by the Georgetown University Health Policy Institute Center for Children and Families (CCF) also determined that 6.1 million children qualify for CHIP or Medicaid under existing state eligibility rules. Of these children, the report estimated that 4.4 million are eligible for Medicaid and 1.7 million are eligible for CHIP. (CCF, June 2007) 

·Even the conservative Heritage Foundation, a staunch supporter of the President’s efforts to roll back CHIP coverage, agrees that, “The large number of uninsured children is univer­sally acknowledged as a serious problem.” (Heritage Foundation, May 2007) 

·According to the well-respected California Health Interview Survey, in 2005 there were 247,000 uninsured children in eligible for Medicaid in California alone – a number close to the number the Bush Administration claims for the entire country. The survey also found that there were approximately 200,000 uninsured children eligible for CHIP in the state. 

The Bush Administration’s estimates use misleading and incomplete data.One reason the estimates in the Bush Administration’s report are so low is that they apparently include only children eligible for CHIP or Medicaid who are uninsured for an entire year. Such children, however, are only a fraction of the total number of children who need help securing coverage. Children often move in and out of public and/or private coverage, and it is not at all unusual for a child to be uninsured for part of a year. If the Administration were seeking to provide an accurate portrayal of the number of uninsured children, its analysis would have considered all children who lack coverage at some point during the year. According to Genevieve Kenney, a principal research associate and health economist with the Urban Institute’s Health Policy Center, “From the point of view of projecting costs associated with expanding Medicaid and [CHIP] to cover more eligible but uninsured children, you need to use the point-in-time estimate, because any estimates that were made based on a full-year uninsured number would not include the costs that kids would incur who had been uninsured for a few weeks or months during the year.” (CQ HealthBeat News, June 18, 2007) 

The Bush Administration’s estimates represent a drastic departure from its earlier rhetoric about the importance of enrolling eligible children in public coverage.As recently as two years ago, the Bush Administration maintained that millions of uninsured children were eligible for Medicaid and CHIP. A stated goal of the President’s Fiscal Year 2006 budget was “providing health care coverage to a total of approximately 5.8 million low-income, uninsured children through the State Children’s Health Insurance Program.” The President’s 2006 budget further called for providing $1 billion in outreach grants over two years, “to enroll as many Medicaid- and [CHIP]-eligible children as possible.” Just as the Senate Finance Committee is poised to markup legislation to reauthorize CHIP, the Administration has decided to understate the number of uninsured children. Its new report is a transparent effort to revive the President’s discredited proposal to limit sharply new funding for CHIP. By releasing flawed data at this critical juncture, the Bush Administration is playing politics with children’s health coverage and is, again, deliberately distorting the scientific data to fit its agenda. 

1.4 million children stand to lose their existing coverage under the President’s approach. President Bush and a number of Congressional Republicans have called on Congress to ratchet back CHIP coverage to limit coverage to children in families earning no more than twice the federal poverty level. The President has also called for a reduction in the federal matching rate for children in families with incomes above 200 percent of the federal poverty line, and for CHIP-covered adults, the large majority of whom are working-poor parents of children enrolled in Medicaid or CHIP. Accordingly, President Bush’s budget provided for only $4.8 billion in funding for CHIP over the next five years. 

Now relying on the June 18 HHS report to affirm its position, the Bush Administration asserts that additional funding for the program is “unnecessary” – implying that there aren’t enough children in need of coverage to merit additional money. If adopted, not only would President Bush’s proposals fail to make any headway towards covering the nation’s nine million uninsured children, but his approach would also effectively cut off health coverage for more than a million people. According to data released by the Congressional Budget Office (CBO) on March 9: 

·CHIP enrollment of children and pregnant women over the course of a year would decline from 7.6 million in 2007 to 6.2 million by 2012, a reduction of 1.4 million. Total CHIP enrollment would fall by 1.6 million. 

·States would face a total federal funding shortfall of as much as $7.6 billion over the next five years (assuming current CHIP matching rates are retained). If adopted, the Bush Administration’s proposal to reduce the federal CHIP matching rate for certain beneficiaries would reduce the shortfall to $4.6 billion, but would shift up to $4 billion in costs to the states, requiring them either to increase their own contribution to the costs of CHIP or substantially cut their programs. 
 

In reauthorizing CHIP, a bipartisan majority of the Senate seeks to cover those uninsured children who are already eligible, but not enrolled, in Medicaid and CHIP. Providing for our children’s medical care is one of our nation’s most important priorities. Since the enactment of CHIP ten years ago, we have seen employer-sponsored coverage decline and the cost of premiums skyrocket, resulting in an increased need for CHIP which policymakers could not have anticipated when they set funding levels for the program a decade ago. That is why a majority of the Senate – from both sides of the aisle – rejected the inadequate funding for CHIP proposed by the President. The Budget Resolution approved by Congress provides for up to $50 billion for CHIP over five years. This $50 billion is an investment that will fill a $13.4 billion gap in federal funding that would occur by merely reauthorizing the program at baseline rates. This funding would also allow the states to move forward with their efforts to cover the millions of children eligible but not enrolled in existing state CHIP or Medicaid programs, and to maintain coverage for all currently-enrolled individuals. 

CHIP has significantly reduced the number of uninsured children in America’s lower-income families.The CHIP program, which is targeted to lower-income families who do not qualify for Medicaid, but are unable to afford private insurance, has made great strides in covering uninsured children. 

• While the number of uninsured adults has increased, the percentage of children without health insurance dropped by about one-third from 1997 (the inception of the CHIP program) to 2004. (Kaiser Commission on Medicaid and the Uninsured, January 2007)
   
• A May 2007 CBO study found that CHIP has reduced by 25 percent the number of uninsured children in lower-income families (i.e., those with family income between 100 and 200 percent of the federal poverty level). CBO determined that before CHIP’s creation in 1997, lower-income families were uninsured at a rate of 22.7 percent, but that figure had dropped to 16.9 percent by 2005. Other studies have suggested that CHIP’s effect may be even greater. The percent of uninsured children below 200 percent of poverty has dropped by one-third over the past decade and most experts attribute this drop to CHIP. It is clear that without CHIP, the number of uninsured children would be far greater. 

The great majority of children covered by CHIP would otherwise have been uninsured.CHIP was created in 1997 to provide health insurance coverage to children who would otherwise be uninsured. According to the May 2007 CBO study referenced above, a majority – two to three out of every four children – covered by CHIP in the past decade would otherwise have been uninsured. Several other studies have yielded similar findings. For example:

• The Congressionally-mandated study of CHIP concluded that most newly-enrolled children were previously uninsured or recently lost their Medicaid or private health coverage. Specifically, 72 percent of children enrolling in the program had either been uninsured or enrolled in other public coverage in the six months prior to enrollment. The remaining 28 percent had private coverage prior to enrollment but half involuntarily lost it due to changes in family status or employment. In addition, one-quarter of recent enrollees who were previously enrolled in private plans had coverage that their families found unaffordable. (Wooldridge and Kenney et al. Congressionally Mandated Evaluation of the State Children’s Health Insurance Program, Final Report To Congress, October 2005)
• Another recent study examined the extent to which CHIP might be substituting for private health insurance coverage at the time of enrollment. The study found that among children who were newly enrolled in CHIP in ten states, only about 14 percent had private coverage that they could have retained as an alternative to CHIP. Moreover, of this 14 percent, about half of the parents reported that the private coverage was unaffordable compared with CHIP. The results of this study suggest that relatively few CHIP enrollees could have retained private coverage and that even fewer had parents who felt that the option of private coverage was affordable. (Sommers and Zuckerman, et al. Health Affairs, March/April 2007) 

CHIP is helping the lower-income families it is meant to serve. Ninety-one percent of children enrolled in CHIP in Fiscal Year 2006 were in families living at or below 200 percent of the poverty level. (Congressional Research Service, March 2007) Recent evidence also suggests that most CHIP enrollees with incomes above 200 percent of the federal poverty level have parents without employer-sponsored insurance coverage. (Urban Institute, April 2007) 

CHIP has been effective at providing children with better access to quality medical care and improved outcomes. Children enrolled in CHIP experience better access to care, quality of care, and health outcomes than uninsured children. (Kaiser Commission on Medicaid and the Uninsured, April 2007)With increased access to medical care, children covered by Medicaid or CHIP also generally experience improved health. Analysis of data from the Centers for Disease Control and Prevention shows that approximately one-quarter of children covered by Medicaid or CHIP are in better health now than they were one year ago, according to their parents or caretakers. This improvement exceeds the gains reported for both uninsured and privately-insured children. (Centers for Disease Control and Prevention, National Center for Health Statistics, 2006) 

Children without health insurance suffer serious consequences.Research has shown that uninsured children not only miss regular checkups and visits to the doctor for less-serious conditions, but also receive less and lower-quality care even in instances where hospital services are required. 

·A study commissioned by the Kaiser Family Foundation and featured in the Journal of the American Medical Association on March 14, 2007 found that patients without health insurance are less likely to receive treatment after injuries or diagnoses of chronic diseases. In addition, the study found that patients without health insurance are less likely to receive necessary follow-up care than those with health insurance coverage. 

·A report issued by Families USA on February 27, 2007 indicated that children without health insurance receive less and inferior care. For those uninsured children with severe illnesses or injuries, this can lead to serious – even tragic – consequences. For example: 

·Among children admitted to a hospital with appendicitis, uninsured children were 19 percent less likely to receive a laparoscopic appendectomy, a less invasive and less painful way to remove the appendix than traditional open surgery.

·Among children admitted to a hospital with middle ear infections, uninsured children were less than half as likely to get ear tubes inserted than insured children. 

·Uninsured children admitted to a hospital due to injuries were twice as likely to die while in the hospital as their uninsured counterparts. 

·Uninsured children are twice as likely as insured children to miss out on needed medical care, including doctor visits and checkups. 25.6 percent of children who are uninsured do not receive any medical care, compared to 12.3 percent of children who are insured. (Robert Wood Johnson Foundation , August 2006) 

With the increasing decline in employer-based health care coverage, the number of uninsured children is increasing. Despite the success of CHIP, the gains in coverage achieved under the program have been offset in recent years by a decline in employer-sponsored health insurance. A March 14 study prepared for the Robert Wood Johnson Foundation (RWJF) by the State Health Access Data Assistance Center (SHADAC) at the University of Minnesota found that fewer than half of parents in families earning less than $40,000 a year are offered health insurance through their employer – a nine percent drop since 1997. The study further found that employer offers of health insurance to parents with lower incomes have fallen three times as fast as offers to parents who earn more money. As employer-sponsored health insurance coverage has eroded, the number of uninsured children has increased since 2004. (Kaiser Commission on Medicaid and the uninsured, January 2007) In reauthorizing CHIP, Congress should provide sufficient funding for the program to ensure that children whose parents work hard retain the coverage and care some have through CHIP. 

Americans strongly support investing more funds in CHIP.In a November 2006 poll conducted by Lake Research Partners for CCF, 82 percent of American voters expressed support for adding new funds to the CHIP program. Of this 83 percent, one-third want Congress to maintain coverage for children already in the program, and two-thirds want to see Congress provide a level of funding that allows states to cover even more children. 

Republican and Democratic leaders in the states recognize the large number of uninsured children and are spearheading efforts to cover them. Between January 2006 and mid-April, 2007, 29 states and the District of Columbia adopted legislation or were considering proposals aimed at covering more children through Medicaid and CHIP. The great majority of these state initiatives included plans to make it easier for uninsured children already eligible for CHIP or Medicaid to enroll in and maintain coverage. Fifteen of these 29 states and the District of Columbia planned or proposed to increase their CHIP eligibility levels – the majority above 200 percent of the federal poverty level. A strong reauthorization of CHIP will support and strengthen state efforts to cover uninsured children. Conversely, without adequate funding, state momentum could be halted or even reversed. (CCF, May 2007) Attached to this special report is a chart indicating which states have adopted or are considering improvements in children’s health coverage. 

The reauthorization of CHIP should not cause more Americans to become uninsured, as would result from the President’s approach. At a time when the number of uninsured has reached approximately 45 million people, Congress should be working to expand health coverage, not causing individuals to lose the coverage they now have. We should support CHIP without undermining the promise of coverage it provides today. Our nation’s most vulnerable children and their families are counting on us. 

DPC