CHIP coverage, financed by states and the federal government, is for families that make too much to qualify for Medicaid but too little to afford private insurance. The ACA ended a 13-year provision that made children of state employees ineligible to enroll in the plan because at the time CHIP was passed in 1997, federal lawmakers feared that states would try to use CHIP to shift some employee health-care costs to the federal government.
The problem states recognized with the ban was one of inequality. If all other low-income state residents are allowed to apply for CHIP coverage for their children, why should state employees, specifically those who were struggling to afford health insurance for their children, be kept from low-cost coverage? "This had been a topic we had been supporting and advocating for years because we felt the exclusion of state employees was certainly challenging for state employees who would fall in our [CHIP] guidelines," says Katherine Buckley-Patton, director of the Healthy Montana Kids program. "Anyone else would be able to apply and have coverage, but because of this one exclusion, state employees were not eligible for coverage."
With the passage of ACA, states can now apply to open up CHIP to cover the children of low-income state employees and receive federal funds. A successful application requires either proof that the state hasn't cut back health insurance coverage for dependent children below the level offered in 1997 (adjustments allowed for inflation), or proof that the combination of premiums and cost-sharing under a state employee health insurance plan exceeds five percent of a family's income. With approval, states are able to use their current CHIP guidelines to determine qualifying income levels and medical coverage.
So far, Alabama, Georgia, Kentucky, Montana, Pennsylvania and Texas have been approved to extend CHIP to some state employees. "We haven't heard a lot of interest beyond these states," says Catherine Hess, managing director for coverage and access at the National Academy for State Health Policy. A number of factors might explain why only a few states have applied: Some states may not need to cost shift coverage of children, others already offer generous dependent coverage and with state budgets as tight as they are, it could be that some states simply cannot come up with its portion to fund the CHIP expansion.
The six states that have applied to extend CHIP have varying back stories. In Georgia, the state estimated that 20 percent of those they expected to cover under an expanded CHIP were without health insurance. Texas has the highest percentage of uninsured children according to Census data. Alabama had a program similar to CHIP for teachers' and state employees' children that was completely state-funded. In Kentucky, CHIP has always been open to the children of state employees, but the state had to fund employees' children at 100 percent because the feds wouldn't pick up the cost.
There are benefits to both the state and employees when CHIP is expanded. In Kentucky, where approximately 1,500 children of state employees are enrolled in any given month, the state is saving $2 million in general fund dollars every year. Georgia currently has over 14,000 children of State Health Benefit Plan (SHBP) members in its CHIP and anticipates saving $16 million in the 2012 fiscal year, double that in fiscal 2013. And in Alabama, where there are about 7,000 kids enrolled, "there is the assumption there will be some level of savings," says Cathy Caldwell, director of CHIP in Alabama.
As for employees, they benefit from better coverage for their children and lower costs. "The premiums and co-pays for PeachCare for Kids members are less than those for children covered by the SHBP," says Pamela A. Keene, spokeswoman for the Georgia Department of Community Health. In Alabama, state employees have been under a pay-raise freeze for a number of years, so opening up CHIP to those who qualify means lower costs if the employee can drop family coverage and move to cheaper individual coverage. In Montana and Pennsylvania, the program is especially beneficial to part-time and seasonal employees who are eligible for some health insurance but not full-time benefits.
The expansions are new enough that data is not yet available on whether opening up CHIP has any larger public workforce benefits like a reduction in absenteeism or more productive employees. But it wouldn't be a stretch to guess that by offering kids the coverage they need at a cost families can afford, that could reduce employee stress and contribute toward a healthier community. "For the families that have taken advantage, it's certainly been a huge benefit to them," says Montana's Buckley-Patton.
What the CHIP expansion does ensure is greater equality in public employee health care, bringing public-sector state workers in line with their private-sector counterparts. "We always thought the prohibition was completely unfair," says Alabama's Caldwell. "Not only is it really the fair thing, it's probably a good thing for the state as well."
