Families USA: CHIPing Away at the Myths

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Health Action 2014
January 23-25

Hyatt Regency Washington on Capitol Hill

1. The myth of a government takeover of the health care industry:

The vetoed bill simply continues a program that has worked well for the past 10 years and extends coverage to uninsured children in low-income families who are currently eligible for it. Children enrolled in CHIP receive their care through private plans, mostly managed care, and are treated by private doctors and hospitals.
The bill is supported by organizations such as America's Health Insurance Plans (which represents the health insurance industry), PhRMA (which represents the pharmaceutical industry), and the American Medical Association—organizations with long histories of opposing government-controlled health care.
The key Republicans who crafted this compromise bill with leading Democrats, Senators such as Orrin Hatch (UT), Chuck Grassley (IO), and Pat Roberts (KS), are strong opponents of a government takeover of the health industry.
CHIP has always been, and will continue to be, a block grant that is administered by each of the states. This means its funding is capped at a specific amount each year that may not be exceeded. It is not an entitlement program, and it is carefully confined to cover a portion of uninsured children whose families can't otherwise obtain health coverage.

2. The myth of an expansion of eligibility:

This bill does NOT change which children are eligible for CHIP. States have always had the flexibility to set CHIP eligibility at whatever level they deem appropriate for their state. CHIP is not a one-size-fits-all program, and eligibility levels vary widely from state to state. The bill preserves that flexibility.
Claims by the President that this bill raises the CHIP eligibility level to $83,000 (400 percent of the federal of the poverty level) in annual income are unambiguously false. There isn’t a single state in the country with such a high eligibility level. One state, New York, wanted to set the eligibility standard at that level, but its request to do so was denied by the Administration.
The CHIP bill will make it more difficult for states to set eligibility levels above 300 percent of poverty (approximately $62,000 in annual income for a family of four). States wishing to establish higher levels would receive less money for children with incomes above 300 percent of poverty than for lower-income children.
The vast majority of the 3.8 million children who will gain coverage under this bill—more than 75 percent—have incomes below twice the poverty level. That’s $41,300 for a family of four.

3. The myth that this bill will spend too much money and is therefore irresponsible budgeting:

This bill will not increase the federal deficit. It is fully financed by a 61 cent per pack increase in the tobacco tax.
Using a tobacco tax to pay for expanded children’s health coverage is doubly beneficial: It will pay for the health care of low-income children in need, and it will prevent approximately 2 million children from smoking.
The President’s budget—which would add only $5 billion to CHIP over the next five years—is truly irresponsible budgeting. It fails to account for the increasing cost of health care over the next five years, and it would cause nearly half a million children who are currently enrolled in the CHIP program to lose coverage. Astoundingly, it would do nothing to cover any of the millions of children who lack health insurance today.

4. The myth that this legislation extends coverage to undocumented immigrants:

This bill does not cover undocumented immigrants. Indeed, it perpetuates the denial of coverage to legal immigrants who haven’t been in the country for five years.
It explicitly prohibits the use of any federal funding to cover undocumented immigrants. Section 605 of the bill states: “NO FEDERAL FUNDING FOR ILLEGAL ALIENS. Nothing in this Act allows Federal payment for individuals who are not legal residents.”
The bill retains the requirement that citizenship be verified for all individuals applying for Medicaid, and it extends this requirement to CHIP. It allows states to use Social Security databases to verify this information.