Actuarial Study Confirms Children Currently Enrolled in CHIP Will Face Higher Costs If Moved Into Exchange PlansHealth
WASHINGTON, D.C. – Today, a new actuarial study has revealed that the Children’s Health Insurance Program (CHIP) is significantly better for low-income families than any health reform proposal pending in Congress. The study, conducted by respected consulting firm Watson Wyatt Worldwide, finds that children currently enrolled in CHIP will face higher costs if they are moved into exchange plans.
The report compares the actuarial values of CHIP plans against health reform proposals in the House of Representatives and the Senate. For children living in families earning 175% of the federal poverty level (FPL), the study finds that the median CHIP plan covers 100% of medical expenses covered by CHIP, exposing children to no out-of-pocket costs. For children in families earning 225% of FPL, the median CHIP plan covers 98% of medical expenses, exposing children to only 2% of costs. Comparable exchange plans in the House and Senate bills would expose children and their families to anywhere from 5% – 35% of out-of pocket costs, greatly increasing their financial burden and leaving children worse off as a result of health reform.
The report was commissioned by a First Focus, a bipartisan children’s advocacy organization.
“For any who had doubts, this study confirms that children currently enrolled in the Children’s Health Insurance Program have the best, most affordable care,” said Bruce Lesley, President of First Focus. “CHIP provides comprehensive benefits to children that specifically address their unique health care needs. And it is far more affordable than any plan proposed in Congress. For health reform, Congress should be fixing what is broken and building on what works. CHIP works for kids and we should be expanding this program, not phasing it out.”
“Actuarial value” refers to the percentage of total allowed medical charges paid by a health plan. The actuarial value is expressed as a share of all medical expenses, i.e. an actuarial value of 75% would mean that the health plan would pay 75% of covered medical expenses for a standard population. Actuarial values only consider benefits payments and do not include premiums.
The study uses data from CHIP programs in 17 states, which accounts for 54% of the total CHIP population. The maximum family income for CHIP eligibility ranges from 200% to 400% in these states. Nine of the surveyed states have no premium contribution or enrollment fee at 175% of FPL and 4 of the states have no premium contribution or enrollment fee at 225% FPL. Watson Wyatt has found that children are only exposed, depending on their family’s income, to 0%-2% of their medical expenses, while health proposals in Congress expose families to anywhere from 5% – 35%.