WASHINGTON, DC – Across every category but one, the Children’s Health Insurance Program (CHIP) is far better for children and their families than the “health insurance exchanges” proposed in health reform legislation, according to a new white paper released today.

Entitled “Children in Health Reform: Comparing CHIP to the Exchange Plans,” the report analyzes the differences between CHIP and the exchanges. It finds that CHIP is far superior to exchange plans in terms of benefits provided, affordability, adequacy of pediatric provider networks, guarantees to coverage, pediatric quality of care, coordination with other child services, and the ability to prevent unintended consequences. However, if all other categories are equal, exchange plans would possibly do a better job of unifying family coverage than CHIP, a program that largely insures children only.

“President Obama is clear on health reform: we must fix what’s broken and build on what works,” said Bruce Lesley, President of the children’s advocacy organization First Focus and author of the report. “Unfortunately, the legislation passed by House of Representatives does not adhere to this principle, as it eliminates CHIP and leaves children worse off. Our research shows not only that CHIP is incredibly popular and effective but is also far better than exchange plans across virtually every category that is important to children and families.”

The report cites the following areas where maintaining CHIP health coverage is better than exchange plans:

  • Coverage for children from 2009 through 2013: If health reform were to repeal CHIP in 2013, states would not invest in improving coverage for children when those very efforts will be dismantled just a few years later. Thus, the increased coverage of 4 million children that is expected from passing CHIP earlier this year would largely be lost.
  • Covered benefits: Children in most state CHIP plans receive coverage for all approved vaccinations, dental care, and well-baby and well-child visits. This level of benefits stands in contrast to private plans, like those in the exchanges, which often impose limits that are particularly harmful to children with special health care needs.
  • Out of pocket costs: An actuarial study by Watson Wyatt Worldwide finds that children moved from CHIP to exchange plans would see dramatic increases in out-of-pocket costs. For example, out-of-pocket costs for a child living in a family earning 225 percent of the federal poverty level would increase by 1,100 percent, if the Senate were to join the House in repealing CHIP.
  • Premiums: Because CHIP keeps premiums and other out-of-pocket costs for children at very low levels, the cost of health insurance exchange plans will be many times higher, even for just covering children. Further, an increase in premiums will lead to a number of children currently enrolled in CHIP to lose coverage, according to the Congressional Budget Office.
  • Access to pediatric providers: CHIP plans specifically focus on the unique health care needs of children, which is not the case in proposed exchanges. And the recent CHIP reauthorization included improvements to pediatric-specific quality measures that may get lost in the conversion of children from CHIP to exchange plans.
  • Guarantee to care: In exchange plans, some children currently eligible for CHIP may be barred from receiving subsidies for coverage due to the costs of employer-sponsored plans. Moreover, the families that are eligible for subsidies and coverage through exchange plans may find coverage so unaffordable that they are left without insurance entirely.

Reform legislation recently passed by the House of Representatives repeals CHIP entirely, rolling millions of children and pregnant women from CHIP into the untested health insurance exchange. Senators Jay Rockefeller and Robert Casey have been champions of preserving CHIP in the Senate. In the Senate Finance Committee, Rockefeller successfully offered an amendment to restore the CHIP program. And although the Rockefeller amendment protects CHIP coverage for millions of children, funding is inadequate to sustain CHIP after 2013. This shortfall leaves children as the sole population whose coverage would be uncertain in 2014. Both Casey and Rockefeller are working to correct that flaw in the Senate bill. Recently, on the floor of the Senate, Casey announced his intention to offer an amendment that fully funds CHIP through 2019.

The report concludes, “In both policy and political terms, it makes little sense for children currently eligible for CHIP to be moved to exchange plans. Unless coverage through insurance exchange plans are dramatically improved in terms of benefits, premiums, out-of-pocket costs, access to care, and in other ways, children will likely be left worse off as a result of health reform.”

Lesley added, “[D]espite being a highly effective, extraordinarily popular program that was just renewed by Congress this year with great fanfare, the House of Representatives is repealing CHIP. This will lead to a slew of coverage and cost issues for children and their families, both foreseen and unforeseen.”