The problem? The Kennedy HELP bill alluded to – but did not actually specify – how it would approach several key elements of health reform: A major expansion of Medicaid to 150 percent of the federal poverty level (FPL); a requirement that employers purchase coverage for their employees or pay a fine; and a public plan option. So, CBO didn’t include these elements in its analysis of the Kennedy HELP bill, which means there is a huge gap between these preliminary results and what we’d see if the “real” bill with all key elements in place were evaluated. It is a bit like reading a critic’s review of a theater production in which several of the main characters are left un-played.
To me, the most interesting part of the analysis from a kids’ health coverage perspective is a dry little paragraph on the expected impact on Medicaid and CHIP of the Kennedy HELP bill:
“Finally, although the proposal would not change federal laws regarding Medicaid and CHIP, it would affect outlays for those programs. CBO assumes that states that had expanded eligibility for Medicaid and CHIP to people with income above 150 percent of the federal poverty level would be inclined to reverse those policies, because those individuals could instead obtain subsidies through the insurance exchanges that would be financed entirely by the federal government. Reflecting those reductions in enrollment, federal outlays for Medicaid and CHIP would decline by $38 billion over 10 years.”
In other words, if we set up a major new, 100 percent federally-funded subsidy program, states will have every incentive in the world to drop any and all optional Medicaid and CHIP coverage that they can. Even if the Medicaid or CHIP coverage is better for people – for example, providing the full range of services that a child with a disability requires – it is too much to expect states to voluntarily continue to provide it when they, instead, could drop it and allow these people to enroll in federally-subsidized coverage. And, the vast majority of “optional” state expansions above 150 percent of the FPL are for children, either through Medicaid expansions or CHIP. As I needn’t remind the people of California who are facing a Governor who has threatened to eliminate the state’s CHIP program, CHIP, for now, is an entirely optional endeavor and can be dropped by a state at any point.
So, without some kind of maintenance-of-effort requirement on optional Medicaid and CHIP coverage (or a guarantee that any coverage children receive through an Exchange will be as affordable and strong as they receive through Medicaid or CHIP), we are at risk of seeing some children being made worse off by health reform.