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The ACA has worked in concert with CHIP to move the U.S. toward universal coverage for children

Failure to reauthorize CHIP could jeopardize gains in coverage for U.S. children across racial/ethnic groups

As efforts to repeal and replace the Affordable Care Act (ACA) continue to consume Congress, the clock is ticking on federal funding for the Children’s Health Insurance Program, or CHIP. The joint federal–state program was enacted 20 years ago to provide coverage to uninsured children whose families earned too much to qualify for Medicaid but couldn’t afford private insurance. At the most recent count, nearly 9 million children up to age 19 had CHIP-funded coverage. But that coverage could be at risk if Congress fails to renew the program’s federal funding, which is set to expire on September 30. This week, Senate Finance Committee leaders Orrin Hatch (R–Utah) and Ron Wyden (D–Ore.) introduced a bipartisan bill to extend CHIP funding for five years, but there are many steps left before the reauthorization of CHIP funding is assured.

The program, which from the beginning has attracted bipartisan support, is widely seen as a policy success story. Between 1997, when CHIP was enacted, and 2015, the uninsured rate for children under age 18 fell by more than two-thirds, from 13.9 percent to 4.5 percent. Thanks largely to CHIP and states’ more generous Medicaid household income eligibility thresholds for children, children across racial and ethnic groups have been far less likely than their adult counterparts to lack health insurance. Disparities in uninsured rates between white and minority groups have been narrower among children, too. But, strikingly, the nation has made even more progress toward ensuring all children have health insurance since the ACA’s major coverage expansions rolled out in 2014.

Between 2013, the year before the coverage expansions took effect, and 2016, the uninsured rate for children under age 18 fell from 7 percent to 4 percent, according to new data from the U.S. Census Bureau’s American Community Survey. This decline meant an estimated 2 million more children had health insurance in 2016. Children’s uninsured rates fell among whites, blacks, and Hispanics, with the greatest decline coming among Hispanics, who had the highest rate in 2013. This improvement narrowed the Hispanic–white disparity in uninsured rates from seven percentage points to four.

These reductions reflect both the ACA’s expanded coverage options as well as its “welcome mat” effect, in which families of children who had all along been eligible for Medicaid or CHIP prior to the ACA signed up for the programs for the first time because of the law’s outreach and enrollment assistance efforts. CHIP also has served as an essential bulwark against the ACA’s “family glitch.” Under current law, a worker is deemed to have affordable job-based insurance — and the worker and their dependents are denied marketplace subsidies — if the cost of coverage for the worker is below a certain threshold, even when the typically much higher cost of family coverage is not. If it weren’t for CHIP, an estimated 1.4 million children in these families would go uninsured, according to the Government Accountability Office.

Nearly all states extended Medicaid or CHIP coverage to children under age 19 living in households with incomes up to 200 percent of the federal poverty level before the ACA’s coverage expansions. Yet we still found that in both 2013 and 2016, average uninsured rates across all three racial and ethnic groups were lower in states that had expanded Medicaid by January 2016 than in states that had not. The disparity between white and Hispanic children was substantially narrower in expansion states, too. This may be at least in part because of the higher CHIP eligibility thresholds that exist in many expansion states.

By 2016, states that had expanded Medicaid under the ACA made further progress in covering children, especially among Hispanics. Over the three-year period, the average uninsured rate for Hispanic children in expansion states dropped by four percentage points, and the Hispanic–white disparity narrowed by two percentage points. Average uninsured rates for black children and white children, already the same in 2013, kept pace, with two-percentage-point declines in both groups.

Yet we also found, as we did with adults, that states that did not expand Medicaid made progress in children’s coverage, too. These advances were at least in part the result of the ACA’s welcome mat effect and the premium subsidies and insurance marketplaces that were available in every state. In nonexpansion states, the uninsured rate among Hispanic children fell by more than a quarter, to 11 percent. This improvement narrowed the Hispanic–white disparity from 10 percentage points to seven. Meanwhile, the average uninsured rate for black children in nonexpansion states declined by three percentage points to reach 4 percent, the same as the uninsured rate among

These gains could be eroded if federal CHIP funds stop flowing to states. Three states (Arizona, Minnesota, and North Carolina), along with the District of Columbia, are projected to exhaust their currently available federal CHIP funding by the end of this year. In the absence of an extension of CHIP funding, all but one state (Wyoming) will run out of federal CHIP dollars by next summer. The estimated 3.7 million children enrolled in CHIP programs that exist outside of Medicaid are likely to feel the effects first, potentially losing coverage entirely or confronting skimpier coverage and much higher out-of-pocket costs.

The ACA’s coverage expansions have worked in concert with CHIP to help the nation make progress toward universal coverage for U.S. children, regardless of race or ethnicity. Failure to reauthorize CHIP now would likely jeopardize those gains.

Mission

The mission of The Commonwealth Fund is to promote a high-performing health care system that achieves better access, improved quality, and greater efficiency, particularly for society's most vulnerable, including low-income people, the uninsured, minority Americans, young children, and elderly adults.