Out-of-pocket healthcare costs for some New Jersey families with children will skyrocket if Congress doesn’t extend funding for the Children’s Health Insurance Program (CHIP), according to a new report.
The study by Wakely Consulting Group found that the impact would be the greatest on families with children who benefit from CHIP but would not be eligible for Medicaid.
For example, a New Jersey family with an annual income of $50,085 would see its average annual out-of-pocket costs for children’s healthcare rise from $103 through CHIP to $960 through a subsidized insurance plan purchased through the federal health insurance marketplace, according to the report.
Federal funding for CHIP, which was created in 1997, is set to expire on Sept. 30, 2015.
New Jersey U.S. Rep. Frank Pallone (D-6th) yesterday co-sponsored a bill that would fund CHIP through 2019.
CHIP serves families with incomes up to 350 percent of the poverty line, which amounts to $83,475 for a family of four, while Medicaid only serves families with incomes up to 138 percent of the poverty line, or $32,913 for a family of four.
Both types of insurance are offered through the state’s New Jersey FamilyCare program.
FamilyCare currently covers 793,000 New Jersey children out of 1.57 million total enrollees. More than 100,000 of those children would not qualify for Medicaid.
While there haven’t been specific threats to end CHIP funding, Pallone, the ranking member of the House Energy and Commerce Committee’s Health Subcommittee, is concerned about overall congressional inaction on major legislation. He wanted to introduce the bill more than a year ahead of time to allow time for it to pass, Pallone spokesman Sean Dugan said.
“The congressman has very little faith in the House majority’s ability to govern and we have seen that proved time and time again,” Dugan said.
The report, funded by the Robert Wood Johnson Foundation, found a wide disparity between CHIP benefits and those available in marketplace plans, in addition to the large potential difference in out-of-pocket costs.
For example, children who require speech therapy are covered for up to 60 days of therapy by CHIP, while marketplace plans only cover 30 days.
Beyond the increase in average out-of-pocket costs if CHIP were ended, there would be even larger increases for some families whose children have need special treatment for conditions like asthma. New Jersey FamilyCare limits out-of-pocket costs to $1,497, while marketplace plans allow out-of-pocket costs for a child to be as high as $5,200.
Raymond J. Castro, senior policy analyst for New Jersey Policy Perspective, said the differences in out-of-pocket costs are startling.
These costs “have been issue even for adults in the marketplace,” said Castro, adding that policy analysts need more time to determine how serious a problem these costs will be for families. “As to whether it’s too high or not, I suspect that it is, but we need more experience.”
Castro noted that under the 2010 Affordable Care Act, children aren’t eligible for subsidized marketplace coverage if their parents are offered insurance through their employers.
Researchers with the center-right policy organization the American Action Forum wrote in a report earlier this year that Congress shouldn’t “blindly” reauthorize CHIP without considering the overlapping coverage provided by the expansion of Medicaid and the introduction of subsidized coverage through the marketplace and state-based exchanges.
They suggested that CHIP be more narrowly tailored to meet the needs of children who aren’t eligible for either Medicaid or subsidized coverage.
While Castro said it would be ideal if there were seamless coverage between Medicaid and the marketplace plans, the differences in benefits identified in the report make this difficult. He added that there isn’t enough time to devise a narrower CHIP program and that many children benefit from the existing program.
Castro said Pallone’s bill is needed. While the ACA expanded Medicaid to include many low-income families (with the agreement of Gov. Chris Christie in New Jersey), many low- to middle-income families remain ineligible for Medicaid.
“I think the principal issue is, do we want children to be a priority,” Castro said. “Children are an investment in our future and the ACA did not change that. It’s fine that we have more protections for them – we’re just not ready to make the change yet.”
Castro described CHIP as “one of the most successful” health programs, helping to lower the rate of uninsured children during the 2007-2009 recession.
Pallone, along with bill co-sponsor U.S. Rep. Henry Waxman of California, was a sponsor of the original CHIP legislation.
Castro said he hopes Congress starts work on Pallone’s bill soon.
“We know about the logjams in Congress and this could be a huge issue,” Castro said. “Hopefully the tea party will not hold this hostage as they have other programs.”
Disclosure: The Robert Wood Johnson Foundation provides funding for NJ Spotlight’s health coverage.