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Trump Budget Would Roll Back Children’s Health Coverage

May 24, 2017 at 1:00 PM

Millions of children would face the risk of losing their health coverage or going without needed care under the harmful changes to the Children’s Health Insurance Program (CHIP) and Medicaid that President Trump proposes in his budget. While proposing just a two-year extension of federal CHIP funding, the budget would immediately shift significant costs to states, reduce benefits and raise out-of-pocket costs for near-poor older children, and eliminate tools that help states enroll more eligible children. That’s on top of the large and growing cuts to children’s coverage that states would undoubtedly make over time due to the federal Medicaid funding cuts under the House-passed bill to repeal the Affordable Care Act (ACA) — which the budget not only incorporates but significantly increases.

The President’s budget would:

  • Likely mean that some children on CHIP and Medicaid would become uninsured or face higher out-of-pocket costs. The budget would repeal the requirement that states maintain their existing Medicaid and CHIP children’s eligibility levels through 2019 and not make their enrollment procedures for children more restrictive. That change would let states cut children’s eligibility in Medicaid and CHIP, or make it harder for eligible children to enroll. To be sure, some children losing their coverage could become eligible for subsidies to buy coverage in the ACA’s health insurance marketplaces. But some families may not be able to afford the higher premiums and other out-of-pocket costs that they’d generally face in marketplace plans as compared to CHIP.

    Of particular concern, a substantial number of children now on CHIP wouldn’t be eligible for marketplace subsidies at all due to the “family glitch” — under which the children and spouse of an employee with access to employer-based coverage are ineligible for marketplace subsidies, even if the employee can only afford employer-offered coverage that’s limited to him or her and doesn’t include other family members.

  • Shift significant costs to states by cutting federal CHIP funding. The budget would eliminate a 23-percentage-point increase in each state’s federal CHIP matching rate that’s scheduled to remain in place through 2019. That translates to about a $3.5 billion cut in federal financial support for state CHIP programs. The budget would also reduce federal CHIP funding for children in families with incomes above 250 percent of the federal poverty line. (States would receive only the regular Medicaid matching rate — 57 percent, on average — rather than the regular CHIP matching rate of 70 percent for such children, assuming that the 23-percentage-point increase ends.) That would affect the 28 states and Washington, D.C. that now provide CHIP coverage to some children above that income threshold. States would have to bear a much greater share of the cost of their CHIP programs. Consequently, they’d either have to contribute more of their own funds or, likelier, scale back their CHIP programs.
  • Reduce benefits and raise out-of-pocket costs for near-poor older children. Before the ACA, some states covered younger near-poor children under age 6 in Medicaid, with older children in families above the poverty line covered through separate state CHIP programs. Thus, some families had children of different ages covered though two separate programs, and many families had to transition their child’s health care from one set of health care providers to another after the child’s sixth birthday. To simplify coverage for children, the ACA required states to provide Medicaid coverage to all children in families with incomes below 138 percent of the poverty line, with states continuing to receive the higher CHIP matching rate for children previously covered in separate state CHIP programs. As a result, the near-poor children who now receive CHIP-funded Medicaid coverage also get more comprehensive health benefits like Early and Periodic Screening, Diagnostic and Treatment (EPSDT), face no premiums, and likely pay lower out-of-pocket charges than they would in separate state CHIP programs. The budget would repeal this requirement and let states move these older near-poor children back to separate state CHIP programs.
  • Eliminate an effective tool that helps states enroll more eligible children. States now have an option, known as Express Lane Eligibility, to use the eligibility information they’ve collected and rigorously verified to establish eligibility in other programs (e.g., SNAP) to streamline the enrollment of eligible children in Medicaid and CHIP. This option, enacted in the 2009 CHIP reauthorization and adopted by nine states, can boost enrollment and reduce administrative costs, as both a federal evaluation and the Government Accountability Office have found. The budget would let this provision expire.

Congress should reject these proposals and instead enact a five-year CHIP funding extension that allows states to fully sustain their existing CHIP programs, as both the Medicaid and CHIP Payment and Access Commission (MACPAC) and the National Governors Association have recommended.