MedCity Influencers, Payers, Policy

Pennsylvania Governor Corbett’s fight on CHIP: Politics or good policy?

Sometimes there is more to political posturing than meets the eye. Last week, Governor Tom […]

Sometimes there is more to political posturing than meets the eye. Last week, Governor Tom Corbett of Pennsylvania requested a waiver from the Centers for Medicaid and Medicare Services to permanently ensure that children in families between 100% and 133% of the poverty line remain in the state’s children’s health insurance plan (CHIP) rather than transition to the state’s Medicaid program as was mandated in the Affordable Care Act (ACA). This was not the first time that Governor Corbett had requested a waiver from the feds, and it is clear that he is mounting a “Custer’s last stand” around his state’s CHIP program.

Political brinksmanship?
Many would say that this fight on CHIP is just the latest salvo in political brinksmanship between the Republican and Democratic parties. Like other conservative administrations, the Corbett administration has begrudgingly agreed to some degree of Medicaid expansion, but only through a waiver by which the state would use subsidies to allow uninsured adults to purchase commercial insurance plans rather than traditional Medicaid. [Details of that waiver request here.] In fact, in Harrisburg, they avoid the words “Medicaid expansion” as if those words are radioactive. What is happening with CHIP might be viewed in a similar vein, in that families covered by CHIP obtain commercial insurance, subject to co-pays, premiums, and out-of-pocket costs like other families with employer-based insurance. Children in Medicaid receive a generous set of benefits without the out-of-pocket costs that their CHIP peers incur.

Fighting to preserve CHIP is a popular position for the Pennsylvania governor within his party; to many, this is ultimately a fight about expanding entitlements vs. allowing market-based approaches to win the day.

First state to develop CHIP
But is this really all about political optics? Maybe not. When the CHIP program was authorized in 1992, Pennsylvania was the first state to develop its program, and over the years, it has been an extremely popular program throughout the state. Although children in Medicaid have a more generous benefits package, particularly for children with serious medical and behavioral health conditions, the poor reimbursement to healthcare providers has effectively reduced the provider networks for families in Medicaid. Conversely, children in the CHIP program, even as they have limits on some benefits, have a much wider primary care and subspecialty provider network, often indistinguishable from other children with employer-based insurance. Such equal footing is highly relevant in the advocacy to reduce disparities in healthcare for low-income families. Furthermore, the Pennsylvania CHIP plan is actually quite generous and includes a variety of key benefits (e.g., dental) that are also available in the Medicaid program.

Uncertainty beyond 2015
Right now, the future of the CHIP program nationally is uncertain beyond 2015, when its funding lapses. Although CHIP has been hugely successful in increasing insurance coverage for children to nearly 95% nationwide (by comparison, adults have been in the 70’s), many would argue that the health insurance exchange plans obviate the need to continue the program. To reduce administrative burden and challenges for families navigating too many programs, states could simply partition children in CHIP, depending on income level, to their Medicaid programs or toward subsidized commercial insurance on the exchanges. Because of the ACA mandate to cover all children in Medicaid up to 133% of poverty level, many states have already moved all their CHIP children into Medicaid plans, believing that the more generous benefits in Medicaid would be a “win” for these families. However, we lack the data on whether such an assumption holds true if Medicaid reimbursement continues to fall and as expected, Medicaid provider networks shrink. Lacking robust provider networks, such a “win” may be more imagined than real.

So in the end, I think we should not make snap judgments and label the Governor’s fight as all smoke and mirrors. Pennsylvanians have been wildly enthusiastic about their CHIP program, and many families have benefited directly from it. Thus far, the feds have allowed states to cultivate local solutions to increase insurance coverage for uninsured adults. Lacking real data on which pathway would be best, I hope they would allow the same flexibility with respect to CHIP programs for children.


David Rubin

David Rubin, MD MSCE, is Co-Director of PolicyLab at the Children’s Hospital of Philadelphia, a Senior Fellow at Penn's Leonard Davis Institute of Health Economics, and Associate Professor of Pediatrics at Penn's Perelman School of Medicine.

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