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From Health Law Daily, March 30, 2015

Coverage and costs to consumers in CHIP and private qualified health plans compared

By Harold M. Bishop, J.D.

A Government Accountability Office (GAO) report to Congressional requestors found that coverage in selected Children’s Health Insurance Program (CHIP) plans and private qualified health plans (QHPs) were generally comparable, but that the CHIP plans more commonly covered pediatric dental and certain enabling services, such as translation and transportation services, and had fewer coverage limits. In addition, the report found that costs to consumers were almost always less in selected CHIP plans than in QHPs, despite the provisions contained in Sections 1401 and 1402 of the Patient Protection and Affordable Care Act (P.L. 111-148) (ACA), which limit QHP costs to consumers, through refundable premium tax credits and reduced cost-sharing (GAO Report, GAO-15-323, February 25, 2015).

Background. CHIP finances health insurance for over 8 million children whose household incomes are too high for Medicaid eligibility, but may be too low to afford private insurance. Federal funding appropriated to states to support CHIP will end after September 2015 unless Congress acts to appropriate new funds. Since January 2014, federal subsidies have been available to qualifying individuals to offset the cost of private health insurance purchased through the ACA-established health insurance Exchanges—where eligible individuals can select from QHPs and stand-alone dental plans (SADP) offered by participating private issuers.

The ACA also requires that, beginning in October 2015, if a state’s CHIP funding is insufficient to cover all CHIP-eligible children, the state must establish procedures to ensure that the children who are not covered by CHIP are screened for Medicaid eligibility. If found Medicaid ineligible, the children may be enrolled into a QHP that has been certified as comparable to CHIP by HHS, if such a QHP is available.

2013 report. In November 2013, the GAO issued a report to Congress that compared coverage of services and costs to consumers in separate CHIP plans and plans intended as models for the benefits that would be offered through QHPs in five states—Colorado Kansas, Illinois, New York, and Utah—and described how coverage and costs might change in 2014 (see Study compares CHIP plans with insurance under the Affordable are Act, December 23, 2013).

In the 2013 report, the GAO found that coverage in selected separate CHIP plans was generally comparable to benchmark plans and consumers’ costs for these services were almost always less in CHIP than in benchmark plans. The GAO also concluded that uncertainty remained regarding issuer decisions regarding how to define certain covered services and the implementation of other ACA provisions, such as pediatric dental services, and that further study would be beneficial. At the time of the 2013 report, QHPs were not available for study.

Current congressional request. Now that QHPs are available on the exchanges, Congress asked the GAO to examine the comparability of benefits and costs to consumers between CHIP plans and QHPs in the same selected states. In its report, the GAO describes (1) how coverage of services in separate CHIP plans compares to QHPs, and (2) how costs to consumers in separate CHIP plans compare to QHPs.

Coverage results. In five selected states, the GAO determined that coverage of services in the selected CHIP plans were generally comparable to that of the selected private QHP. Most plans covered the services GAO reviewed with the exceptions of pediatric dental and certain enabling services such as translation and transportation services, which were covered more frequently by the CHIP plans. Only the selected QHP in New York covered pediatric dental services. In Illinois, Kansas, Colorado, and Utah, SADPs could be purchased separately.

The GAO also found that the CHIP plans and QHPs were similar in terms of the services on which they imposed day, visit, or dollar limits, although the CHIP plans generally imposed fewer limits than the selected QHPs. For services where coverage limits were sometimes imposed on QHPs and CHIP plans, the GAO’s review found that the limits on CHIP plans were at times less restrictive. In addition, for pediatric dental services, coverage limits in the selected SADPs were generally similar to those in the selected CHIP plan. When there were differences, however, CHIP was generally more generous.

Cost results. The GAO found that consumer costs (deductibles, copayments, coinsurance, and premiums) were almost always less in the five states’ selected CHIP plans when compared to their respective QHPs, despite the application of ACA-authorized subsidies that reduce these costs in the QHPs. When cost-sharing applied, the amount was typically less for CHIP plans, even considering ACA provisions aimed at reducing cost-sharing for low income consumers who purchased QHPs.

The GAO’s review of premium data also suggested that selected CHIP premiums were always lower than selected QHP premiums, even when considering the application of ACA subsidies that help to defray the cost. Finally, all selected CHIP plans and QHPs the GAO reviewed limited out-of-pocket maximum costs, and these maximum costs were typically less in the CHIP plans.

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