An Obamacare setback for poor children

Reuters

Uninsured patient Yulisa Mateo, 9, has an eye test at Venice Family Clinic in Venice, California, June 25, 2009.

Article Highlights

  • Kids enrolled in CHIP will be moved out of their health plans and into state-run Medicaid Plans b/c of Obamacare.

    Tweet This

  • The impact on the CHIP kids will take effect regardless of what the states choose to do with the rest of the program.

    Tweet This

  • The kids previously on CHIP will be on a long list of folks who have their current health coverage taken by Obamacare.

    Tweet This

  • Obamacare will hurt many folks. Was it necessary to burn down some people’s coverage to offer insurance to others?

    Tweet This

Come January, many children currently enrolled in the State Children’s Health Insurance Program (CHIP) will be compulsorily moved out of their current health plans and into state-run Medicaid plans – as a result of Obamacare.

In today’s New York Post Op Ed Page, I describe how this came to pass. To expand on the issue, here’s some additional detail of how it’s going to work:

CHIP gives matching funds to states for providing health insurance to children. The program was designed to cover uninsured kids in families with incomes that are modest but too high to qualify for Medicaid. It was expanded by President Obama in 2009 as part of its re-authorization and now covers more than 8 million kids.

CHIP has plenty of flaws. It has increased the cost of coverage by limiting competition in the insurance market. But it can give kids a choice of private health plan models that are a lot better than traditional Medicaid. Right now, many states benchmark the benefits that CHIP must offer to the same standard Blue Cross/Blue Shield plan that’s available to Members of Congress in the Federal Employees Health Benefits Plan (FEHBP), or to the benefits offered to state workers, or to the most popular private health plan that’s already operating in a particular state.

Under Obamacare, any kid whose parents earn between 100% and 133% of the Federal Poverty Level (FPL) will be forcibly moved off of CHIP and into Medicaid. That comes out to families of four earning $23,000 to $31,000 in annual income. It ropes in thousands of children. And it will unfold regardless of whether a particular state plans to expand its Medicaid program for adults to meet the 133% threshold.

It’s all part of the President’s vaunted Medicaid expansion and an obscure provision buried in Obamacare. When the feds coaxed states to expand their Medicaid programs up to 133% of FPL, they wanted to make sure that kids followed their parents into the program (presumably so that families would be covered under the same insurance schemes, making managed care easier). So section 2001(a)(5)(B) of Obamacare made the children whose parents earned between 100% and 133% of FPL (based on their parents’ modified adjusted gross income) a “mandatory” Medicaid population. (Of note: states will retain their ability to claim the enhanced CHIP matching rate out of their CHIP allotments for this population).

But this provision is separate from the language that offers states enhanced matching funds to expand their overall Medicaid programs up to 133% of FPL. That means that the impact on the CHIP kids will take effect regardless of what the states choose to do with the rest of their program. It’s also not affected by the Supreme Court decision that gave states some flexibility to refuse the Federal Medicaid expansion.

According to the SCOTUS decision, if a state declines to expand its Medicaid program to cover the new expansion group, the state forgoes only the federal funds that would have been used to offset medical costs of the “newly eligible” beneficiaries. But all other provisions of the Medicaid statute, including those in Obamacare, are “severed” from this remedy. They remain “fully operative,” and will “function in a way consistent with Congress’ basic objectives in enacting the statute.”

This means that provisions such as section 2001(a)(5)(B), which were not the focus of the SCOTUS decision because they are not part of the Medicaid expansion described in section 2001(a)(3), are not affected by the Supreme Court’s ruling.

So the kids previously on CHIP will find themselves among a growing list of folks who have their current health coverage degraded by Obamacare. I’ve detailed some of the other groups that will have their current health coverage hit in my NY Post Op Ed. In fact, it’s likely that for every one uninsured person who receives coverage as a result of Obamacare, they’ll be many more people who have their present health coverage degraded by the law’s other provisions.

And so a new part of the overarching vision of Obamacare is starting to take shape. It goes like this: The way to improve access to health insurance is by sanding down everyone’s coverage to the same lower standard. Think of Obamacare this way – it was designed to take the existing pie of health coverage dollars, and spread them more thinly, to extend coverage to some new folks. This is how the President proposes to make our healthcare system more “just”. This doesn’t mean the overall pie doesn’t grow – it does — largely because the new law does little to create the kinds of competitive pressures that would hold down costs.

Obamacare will hurt many folks, even as some are helped by the law’s coverage. Was it necessary to burn down some people’s coverage to offer insurance to others?

Ironically, these provisions will also wound the industry groups that cynically helped push Obamacare into law. This may be the measure’s only real “justice.”

When the health insurers and drug makers helped push Obamacare’s passage, they envisioned a bigger pool of newly insured patients. These new customers, they reasoned, would have more (federal) money to purchase their products.

That new pool of insured customers that industry gets? It could be largely offset by the skimpier coverage that their old customers will now be carrying. The healthcare industry may have to revisit their original estimates of Obamacare’s largesse.

 

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Scott
Gottlieb

What's new on AEI

Love people, not pleasure
image Oval Office lacks resolve on Ukraine
image Middle East Morass: A public opinion rundown of Iraq, Iran, and more
image Verizon's Inspire Her Mind ad and the facts they didn't tell you
AEI on Facebook
Events Calendar
  • 21
    MON
  • 22
    TUE
  • 23
    WED
  • 24
    THU
  • 25
    FRI
Monday, July 21, 2014 | 9:15 a.m. – 11:30 a.m.
Closing the gaps in health outcomes: Alternative paths forward

Please join us for a broader exploration of targeted interventions that provide real promise for reducing health disparities, limiting or delaying the onset of chronic health conditions, and improving the performance of the US health care system.

Monday, July 21, 2014 | 4:00 p.m. – 5:30 p.m.
Comprehending comprehensive universities

Join us for a panel discussion that seeks to comprehend the comprehensives and to determine the role these schools play in the nation’s college completion agenda.

Tuesday, July 22, 2014 | 8:50 a.m. – 12:00 p.m.
Who governs the Internet? A conversation on securing the multistakeholder process

Please join AEI’s Center for Internet, Communications, and Technology Policy for a conference to address key steps we can take, as members of the global community, to maintain a free Internet.

Event Registration is Closed
Thursday, July 24, 2014 | 9:00 a.m. – 10:00 a.m.
Expanding opportunity in America: A conversation with House Budget Committee Chairman Paul Ryan

Please join us as House Budget Committee Chairman Paul Ryan (R-WI) unveils a new set of policy reforms aimed at reducing poverty and increasing upward mobility throughout America.

Thursday, July 24, 2014 | 6:00 p.m. – 7:15 p.m.
Is it time to end the Export-Import Bank?

We welcome you to join us at AEI as POLITICO’s Ben White moderates a lively debate between Tim Carney, one of the bank’s fiercest critics, and Tony Fratto, one of the agency’s staunchest defenders.

No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.