States Consider Covering Parents Under CHIP Program

In the budget  he unveiled Last month, President Clinton proposed spending $76 billion over 10 years to provide health care benefits to approximately 4 million of the nation's estimated 44 million uninsured citizens. He wants to allow matching grants to cover uninsured parents of children eligible for states' Children's Health Insurance Programs, or CHIP. CHIP is a federal-state program to insure poor children not covered by Medicaid -- generally, children of the working poor.

The proposal has caught the attention of the nation's governors.

Wisconsin already covers parents of CHIP-eligible kids using matching Medicaid funds under their BadgerCare program. As of last month, its total percentage of uninsured stood at 4 percent. In 1998, the national average stood at 16 percent.

"I suggest that governors take a look at adding parents. It's so popular--parents are coming in droves," Wisconsin Gov. Tommy Thompson said at a meeting of the National Governors' Association last month.

But the road to expanding family coverage is a rocky one for the states. Clinton's plan, named FamilyCare, calls for higher federal matching payments to states for covering parents as well as their kids. In order to cover parents with CHIP funds, states currently must submit a waiver for approval by the Health Care Financing Administration (HCFA), the federal agency that administers CHIP. Most have failed to get one approved.

According to the National Conference of State Legislatures, Massachusetts, Mississippi and Wisconsin are currently the only states approved by HCFA to use CHIP dollars for parents, and they can do so only by subsidizing employer-sponsored insurance and only if it is cost-effective. Cost-effectiveness is defined as family coverage that costs the state dollars equal to or less than what the state would pay to cover the family's eligible children under CHIP. Oregon has an amendment to its CHIP plan pending to provide a similar subsidy. Florida was turned down by HCFA after submitting an amendment similar to Oregon's.

Other states have tried to get approval to use CHIP money for parents without using it as a subsidy for employer-sponsored insurance. Vermont and Rhode Island put forward proposals to cover parents with CHIP funds; both were turned down by HCFA.

While Wisconsin is using CHIP funds to cover parents with employer-sponsored insurance to the extent it can, the state is also in the process of getting a waiver to use CHIP money for parents who don't qualify for employer-sponsored insurance. The state has tried this before unsuccessfully, but is trying again with a new waiver application, according to Joe Leean, secretary for the Wisconsin Department of Health and Family Services.

"In HCFA's defense, I think their fear is that some states might use [CHIP funds] for adults. We're convinced that we'll get more kids in when adults enroll. We've shown this," he said.

Although the process of getting at CHIP funds for parents is complicated, the states that have been able to secure them have had success. For example, under Massachusetts' combination Medicaid and CHIP program, MassHealth, a family of four with an income below 200 percent of the federal poverty level, or $34,100, is automatically eligible. If parents have access to an employer-sponsored plan but don't participate because the monthly premiums or payroll deductions are too high, the parents may join the employer-sponsored plan. The state picks up the tab using CHIP funds. This is the case no matter what level of poverty the family is at, up to the 200 percent limit of $34,100 for a family of four, as long as the parents have access to an employer-sponsored plan that they're not using.

If, however, a family of four is below 133 percent of the poverty level (approximately $22,600), parents and children are covered by MassHealth, even if the parents have no access to an employer-sponsored plan. (Parents below 133 percent without employer-sponsored insurance are covered with matching Medicaid funds, not CHIP funds.) If a family is between 133 and 200 percent of the poverty level, parents without access to an employer-sponsored plan won't be covered by MassHealth--only their children will be.

Uninsured adults in Massachusetts dropped from 11 percent in 1995 to 8 percent in late 1998, while the number of uninsured kids in the state dropped from 11 percent to 5 percent over the same time period, according to Rich Copp, spokesperson for the Massachusetts Office of Health and Human Services. MassHealth was expanded to cover parents by Governor A. Paul Cellucci in November 1997.

"The numbers really speak for themselves. It's been quite a turn around," Copp said.

Ron Pollack, executive director of Families USA, an advocacy group for healthcare consumers, says that research supports the idea that covering parents helps cover greater numbers of children.

"The problem of uninsured parents has an adverse impact on kids. Kids don't enroll when their parents don't. We think expanding coverage to parents will serve kids," he said.

Although expanding programs that already exist was a feasible way to expand coverage, Pollack said spending CHIP money, meant for children, on adults isn't the right way to go about solving the problem of uninsured adults.

"Parents are the next frontier. But there's still a lot more to do for kids," Pollack said.

Nevertheless, states are still interested in covering parents with the enhanced CHIP match. At the NGA conference, Governors Mike Leavitt of Utah and Mel Carnahan of Missouri expressed interest in expanding their programs to cover parents. "[We] need to add the parents, which I'm very interested in doing," Carnahan said.

"There will be a number of states that will go ahead and file waiver applications this spring. They are interested in [seeing] that whatever happens with the [President's] proposal is well-coordinated with their efforts," said Joan Henneberry program director for the Health Policy Studies Division of the NGA's Center for Best Practices.

If the president's proposal is enacted, states would not have to apply for waivers to use CHIP funds to cover parents, according to HHS. Even if it isn't, some speculate that the proposal will make it easier for states to access CHIP funds to use for parents.

"It's difficult to deny states waivers when the president says it's what states should be asking for," Wisconsin's Leean said.

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