Report warns of higher costs if CHIP expires

Children enrolled in the Children's Health Insurance Program (CHIP) would be forced to pay higher out-of-pocket expenses if they shifted into subsidized exchange plans, according to an independent analysis obtained by The Hill.

Comparing 17 CHIP programs to private plans operating on state-based exchanges, the analysts found that children in families living at 175 percent of poverty — most of whom currently pay nothing for their healthcare through CHIP — would have to pay roughly 12 percent of those costs under exchange plans. 

That translates into almost $300 per child in new out-of-pocket expenses, according to analysts at Towers Watson, a global consulting firm, who crunched the actuarial values of CHIP plans versus exchange plans.

(The actuarial value indicates the percentage of medical expenses covered by an insurance plan. A plan that pays nothing has an actuarial value of 0.00, while a plan covering everything has an actuarial value of 1.00.)

Twelve of the 17 examined states cover children living at 225 percent of poverty — roughly $50,000 for a family of four. In those 12 states, the actuarial value of the CHIP programs ranges from 1.00 (in five states) to 0.92 (in one state) — meaning those families pay out-of-pocket costs between 0 and 8 percent. 

By contrast, those same children shifted into exchange plans would pay more than 25 percent of their medical costs — or almost $600 per child, Towers Watson found.

The analysis arrives as some lawmakers are already reminding colleagues that CHIP funding runs dry in 2015, leaving Congress to decide whether to renew the program yet again or scrap it in favor of other options defined by the new healthcare reform law. 

Although the 13-year-old program has been extremely successful — it currently covers more than 9 million children and pregnant women — some lawmakers have pushed to eliminate CHIP, arguing the advantages of enrolling kids and parents in the same plan.

Some child welfare advocates, though, have warned that the private exchange plans, as defined by the reform law, simply won't offer the same cost benefits that CHIP plans do. Those voices tend not to care how children get healthcare services, but simply want assurances that CHIP children won't lose coverage or benefits if they're moved elsewhere.

The Towers Watson report quantifies some of those concerns.