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CBO Looks At CHIP Effects On Private Child Coverage

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Researchers at the Congressional Budget Office say information about the effects of the Children’s Health Insurance Program on the total number of low-income children with health coverage is limited.

The few analyses available suggest that CHIP may lead to a reduction in use of private health coverage for 25 to 50 children for every 100 children enrolled in CHIP, the researchers estimate in a study prepared at the request of the leaders of the Senate Finance Committee.

The researchers found one study that implied that employers were much more likely to respond to CHIP by increasing the cost of family coverage than they were to drop family coverage options altogether.

The average increase was about $120 per year, the researchers estimate.

But the researchers also note that about 5% of the parents of children eligible for CHIP coverage drop all employer-sponsored coverage, including coverage for their own health, when children can enroll in CHIP.

If that pattern holds true, that hints that CHIP may sometimes reduce private primary coverage of adults as well as of children, the CBO researchers write.

Members of Congress are looking closely at CHIP because of a dispute about whether the program should tighten its focus on expanding access to health coverage for children in homes with incomes under 200% of the federal poverty level, or whether the program should expand and permit states to use CHIP funds to cover parents and some childless adults with very low incomes.

Senate Finance Committee Chairman Max Baucus, D-Mont., responded to the release of the CBO report with a statement indicating that his committee may consider CHIP funding reauthorization in early June.

The CBO report itself shows that CHIP has succeeded at reducing the number of uninsured U.S. children in households with income between 100% and 200% of the federal poverty level by 25%.

The fact that uninsurance for children in higher-income families has stayed about the same while the uninsurance rate for lower-income children is falling implies that CHIP is helping the lower-income families it’s meant to serve, Baucus says.

In addition, the CBO researchers have found little evidence that CHIP causes significant “crowd-out,” Baucus says.

In some cases, children may have moved to CHIP from private plans simply because CHIP plans offered better benefits or were more affordable, Baucus says.

“Just because families are offered private coverage doesn’t mean they can always afford it,” Baucus says.

Sen. Charles Grassley, R-Iowa, the senior Republican on the Senate Finance Committee, responded to the report with a statement of his own questioning efforts to permit states to include low-income parents in CHIP, or to include children in households with incomes of 200% to 400% of the federal poverty level.

“The main goal of [CHIP] reauthorization ought to be increasing the number of low-income kids who are covered by health insurance,” Grassley says. “This report tells us that Congress needs to make sure that whatever it does, it should actually result in more kids having health insurance, rather than simply shifting children from private to public health insurance.”


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