Families are often torn between Obamacare exchanges and the Children’s Health Insurance Program, which fit together poorly.
Senate leaders recently reached agreement on a five-year extension of funding for the Children’s Health Insurance Program (CHIP), which was due to expire on September 30. CHIP, which helps states provide health-care coverage to low-income kids, is better structured than Medicaid to ensure that funds are targeted to those who need assistance most. Now, after the Affordable Care Act has created an entitlement to subsidized coverage through the exchange, CHIP-eligible families are often torn between two programs that fit together poorly. If a few minor flaws in its design are fixed, however, CHIP can fill a gap and enhance the rest of America’s health-care safety net.
Between 1982 and 1990, Congress expanded eligibility for Medicaid seven times through bipartisan federal budget agreements, increasing spending on the program from $32 billion to $72 billion per year. Republicans grew weary of the structure of the program, which rewarded states with the loosest cost controls and distributed the largest portion of funds to the wealthiest states rather than to those with the greatest unmet health-care needs. In 1997, when Senator Ted Kennedy (D., Mass.) sought a further expansion of federal assistance to provide health insurance to low-income children, Senator Orrin Hatch (R., Utah) insisted that it be distributed though a newly designed program.
The product of their agreement was CHIP, which provides funds for states to extend health-care benefits to children in families whose income is just above the levels required for Medicaid eligibility (at least 138 percent of the poverty level for those under age six, and at least 100 percent of the poverty level for those ages 6–18). The federal government bears more of the cost of CHIP (92 percent in 2016) than of Medicaid (63 percent), but the allotment that each state can receive is capped over a two-year period, after which any remaining funds are redistributed to the other states. A supplemental contingency fund is available for states that show high enrollment growth and exceed their caps.
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Chris Pope is a senior fellow at the Manhattan Institute. Follow him on Twitter here.
This piece originally appeared in National Review Online