With Bill Bradley out of the presidential race, Vice President Gore's proposal to expand the Children's Health Insurance Program (CHIP) remains the one comprehensive proposal on the table in the presidential election to address the plight of the 44 million Americans who lack health insurance. But CHIP is far from an ideal foundation for expanding coverage. The program has gotten off to a slow start, and it suffers from some critical weaknesses that may haunt its future.
Under CHIP, the fed-eral government subsidizes health insurance for kids whose families cannot afford private insurance but earn too much to qualify for Medicaid. When lawmakers established the program in 1997, they were addressing a pressing problem. The number of children without health insurance has crept steadily upward in recent years. Employers of low-wage workers have increasingly balked at paying for comprehensive family coverage, and declining welfare rolls have left more families without insurance. According to a study by Families USA, approximately 675,000 former welfare recipients had lost Medicaid as of 1997, and 62 percent of them were children. Today, a little over 11 million kids lack health insurance, and 24 percent of them are eligible for CHIP in addition to the 38 percent who qualify for Medicaid, according to data from the Kaiser Commission on Medicaid and the Uninsured.
Vice President Gore would expand CHIP's reach by raising the program's income eligibility cap and allowing families who were still above that cap to buy into the program. To entice states to insure more children, Gore would use a carrot-and-stick approach, awarding bonuses to states that meet enrollment targets and punishing states that fall behind, by picking up a smaller proportion of their costs for the program. Gore would also allow parents to enroll in CHIP along with their children, although states could set a lower income eligibility cap for parents than for kids. According to estimates by Kenneth E. Thorpe, a health economist at Emory University and former Clinton administration official, Gore's proposals would extend health insurance to 12.1 million people, raising the proportion of Americans with coverage from 84 percent to 88 percent.
President Clinton's proposal resembles the vice president's blueprint. Under his plan, once states have insured children in families with incomes up to twice the federally measured poverty level, they could also enroll parents in CHIP. States that opt for this route would have to cover parents in families with incomes up to the poverty level within five years.
It's not hard to see why CHIP has a lot of cachet in the administration. The program's target population is not only working-class Americans who need a break, but kids. CHIP is popular also with governors because it's a block grant rather than an entitlement; that is, states receive a set amount of funds from the federal government and have the option of capping enrollment or paring back benefits as they see fit. Entitlements like Medicaid don't afford that flexibility: If citizens can demonstrate eligibility, states are required to enroll them and provide certain minimum benefits.
Despite its fans, however, CHIP may not be the most effective or secure means of reducing the numbers of the uninsured. It requires families without health coverage to master yet another mechanism for getting access to health care, and the complexities of enrollment are enough of a deterrent that many who are legally entitled to benefits simply won't get them. Precisely because it isn't an entitlement like Medicaid--much less a federally run entitlement like Medicare--states can cut back on CHIP or simply let it languish, as some of them have.
One alternative to CHIP would have been a straight expansion of Medicaid, a well-established and familiar program that, depending on the state, generally provides comprehensive benefits. Extending Medicaid, in fact, is what Democratic Senator Jay Rockefeller and the late Republican Senator John Chafee had proposed in 1997 before CHIP's passage. At that time, however, Republicans were pushing to turn Medicaid into a block grant, an effort that Democrats and moderate Republicans were just able to stave off. In that environment, there was little chance that Congress would approve an expansion of Medicaid. As an alternative to the Rockefeller-Chafee bill, senators Ted Kennedy and Orrin Hatch proposed new block grants to the states to create a separate children's health care program. The final compromise allowed states to expand Medicaid, create a separate program, or implement a combination of the two. In 1999 CHIP programs served nearly 1.3 million kids, while Medicaid expansions enrolled close to 700,000.
Some health care experts worry about the side effects of setting up separate CHIP programs. While Medicaid is identified with welfare, CHIP serves a working-class constituency, and in some states it has acquired a more professional patina than Medicaid. In Kansas, for example, CHIP pays health care providers more than Medicaid does. "CHIP gets shiny new cards and flashy outreach," says Cindy Mann of the Center on Budget and Policy Priorities. "That exacerbates the second-class stigma associated with Medicaid." The legislation establishing CHIP also had the perverse effect of punishing states that had previously expanded their Medicaid programs to include more children. That's because the federal government picks up a bigger chunk of the tab for children enrolled in CHIP or Medicaid programs that were expanded after 1997 than for kids who were enrolled in Medicaid before CHIP's passage.
Some states such as Nevada created a CHIP program entirely separate from Medicaid. That setup could lead to disruptions when families currently enrolled in CHIP suddenly qualify for Medicaid, or vice versa, depending on changes in family income. Other states have guarded against that problem by putting the same organization in charge of both Medicaid and CHIP and giving the children an insurance card that entitles them to identical benefits. Parents generally don't know which program they are enrolled in because both Medicaid and CHIP are publicly identified under the same moniker (such as KidCare in New Jersey). The only difference is that health expenses are paid from different pots of money, depending on whether patients qualify for CHIP or Medicaid. It might seem that this is the functional equivalent to expanding Medicaid, but there is an important difference: States can cap enrollment in the CHIP program, even one created "behind the scenes."
Of course, many governors relish the flexibility CHIP offers. And it's safe to say many states would not have conducted vigorous outreach programs if they had only been allowed to expand their Medicaid program. In the process of spreading the word about CHIP, furthermore, states have inadvertently recruited for their Medicaid programs because many CHIP applicants were impoverished enough to qualify for Medicaid.
With Medicaid already in existence, however, establishing a separate structure for CHIP probably never made much sense as policy in the first place. Moreover, if we are ever going to have universal coverage, it will have to be a firm commitment to all Americans--in other words, an entitlement under federal law. CHIP, however, tends to replace an existing federal entitlement (Medicaid) with a capped benefit at the mercy of budget fluctuations and 50 different governors and state legislatures. Gore says universal coverage is still his ultimate objective, but if he's serious, he's going to have to find a better vehicle than CHIP. ¤