Could Ending CHIP Be Good for Health Reform?

Medicare and Medicaid aren't the only public insurance programs that could undergo a major overhaul under the current health-care reform bill. Over at The Washington Independent, Mike Lillis explains how the House bill proposes to eliminate CHIP -- the state children's health-insurance program that has enjoyed broad-based support from Democrats -- and move the low-income children covered by the government program into the health-insurance exchanges by 2013. The goal in doing so, Lillis says, is "to get family members under the same plan, to centralize control of the state-run CHIP program, and to shift more folks into private coverage to win the support of both the insurance lobby and moderate Democrats."

Opponents of the move point to independent findings that the cost of insurance for children covered by CHIP could rise if they entered the exchange and that they could lose many of the protections they currently have under the public program, which covers children from low-income families that are above the cutoff for Medicaid. Sen. Jay Rockefeller invoked many of these arguments during the Finance Committee's markup of the bill, maintaining that young children shouldn't be subject to the whims of the private market, and successfully prevented the program from being eliminated in the Senate bill.

I agree that it's important to pass additional protective measures to ensure that the benefits for these children remain comprehensive and affordable. Certainly, it would be a political disaster if Democratic reform disadvantaged low-income kids. That being said, if CHIP's dismantling ended up moving more folks into the health-insurance exchange, it wouldn't simply be a boon for "the insurance lobby and moderate Democrats." It could strengthen one of the most fundamental parts of the Democratic reform package -- a robust insurance exchange with a pool of participants that's large enough to drive down costs precisely because insurance companies have an incentive to jump in and compete for customers. Moreover, folding CHIP into the exchange would add a younger, healthier pool of participants to the exchange, offsetting its potential of becoming a dumping ground for the sick and elderly. Finally, CHIP has always suffered from under enrollment -- about 6 million children aren't insured in the program who should be -- and by bringing whole families in under the same plan, more children will be covered.

Given CHIP's popularity among Democrats and the success it's enjoyed, the proposal to eliminate the program could still be a legislative sticking point when it comes to putting the House and Senate bills together. But it's also important to remember that the program was created in the wake of Clintoncare's failure in 1994 -- a stop-gap measure, let's say, to insure that some of the country's most vulnerable citizens were covered. This time, Democrats have the chance to pass a truly comprehensive reform package and to implement changes that could help a much broader swath of the population -- kids included.

--Suzy Khimm

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