A growing number of states are cutting back a popular health insurance program for children, just five years after it was unveiled with great fanfare as a life raft for working-poor families.
When budgets were flush, states from California to Rhode Island were stumbling over themselves to court youngsters into the government-sponsored children's health insurance programs, also known as CHIP. By last year, 4.6 million children were enrolled and the biggest challenge was finding more to take part.
But as the economy has soured, states have pared back or frozen enrollments, cut back on marketing and added restrictions and fees. In seeking to lower their own costs, some have forgone millions of dollars in contributions from the federal government, which pays for the bulk of the program. Parents like Cristina Clerico of Hyrum, Utah, have been left in the lurch. Her state went so far as to freeze enrollment in its CHIP program in December after officials determined that they couldn't afford their 20% share of the costs.
"It's been a lean year [in Utah], I recognize that, but there are certain programs that are important to the well-being of the state, and this is one of them," said Clerico, 32, who has tried to get insurance for her two children since her husband lost his job as a carpenter late last year.
Utah's experience is being repeated around the country. Montana and North Carolina also have capped or frozen enrollment, though North Carolina later reopened it. Oklahoma and New Mexico have come close to dropping children from the program. Idaho has stopped advertising its program, and Rhode Island has begun charging families monthly premiums for the first time.
"Unless we rein in this very generous program--the Cadillac of all programs--it's going to bust our budget and force a tax increase," said Diane Kinderwater, a spokeswoman for New Mexico's Republican Gov. Gary Johnson. So far, the state's Legislature has balked at paring back eligibility.
CHIP serves families who make too much money to qualify for the Medicaid program for the poor but not enough to buy private health insurance. Under CHIP, families pay little for a wide array of medical, dental, vision and prescription drug coverage.
The program encourages regular check-ups and timely treatment; without coverage, uninsured children can develop serious or chronic conditions that result in costly emergency room visits or hospital stays. Families can be bankrupted trying to pay for such care.
Gov. Gray Davis has been a strong proponent of California's CHIP program, called Healthy Families, which enrolls half a million children. Two years ago, times were so flush that he pushed to expand coverage beyond children--to 300,000 working-poor parents. But late last year, facing a $12.5-billion deficit, he put on the brakes, proposing to delay the expansion until July 2003.
Now, under pressure from fellow Democrats and some Republicans in an election year, he has vowed to proceed this summer--but has put the onus on state legislators to find the dollars. Once the expansion is fully in place, the state's share of the expenses will easily top $100 million a year.
Critics Say Time Is Wrong for Expansion
"It's the right thing to do regardless of the fiscal situation," said Glen Rosselli, undersecretary of California's Health and Human Services Agency.
Critics, however, say this is not the time to expand programs.
"This is complete insanity," said California state Sen. Ray Haynes (R-Riverside). "We're only making our budget deficit worse and we're doing it in the worst possible way."
Arizona, which had similar plans to expand coverage for parents, has decided to wait.
"We just can't afford it," said Francie Noyes, a spokeswoman for Republican Gov. Jane Dee Hull. "We're not going to expand a program when we're facing the deficit that we're facing."
Many states are in a conundrum, said Vickie Gates, director of the State Coverage Initiatives program, funded by the Robert Wood Johnson Foundation.
"Just when their revenues are going down because of their economic circumstances, they're faced with the greatest increase in need" for CHIP, she said.
When CHIP was approved in 1997, former President Bill Clinton touted it as the most significant expansion in public health insurance in more than three decades. Congress pledged up to $24 billion over five years.
What made the program so alluring, even to conservative lawmakers, was that it targeted working families, not those on welfare. And the federal government contributed up to 85% of the costs, depending on each state's per-capita income.
In some states, including California, recruitment began slowly as states tested the best way to find eligible children. But national enrollment spiked last year, up 38% from the year before.
States used television ads, billboards, school fliers and even home visits to recruit children. The CHIP initiative became a political darling--partly because it relied far more on federal than state dollars.
"States had been working so hard to make it easy for families to enroll," said Rachel Klein, a health policy analyst for the consumer group Families USA. "They practically competed against one another in how fast they were enrolling kids."
Federal Government Encourages Enrollment
Even in these tough times, the federal government has not pulled back on its financial support and is encouraging states to expand, not restrict, coverage. And it is giving governors flexibility to change benefits and co-payments if they agree to serve more people.
In some states, lawmakers have tried to insulate CHIP from the budget ax. Some are still actively recruiting new members, taking a "wait-and-see" approach in case the economy rebounds, said Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured.
But economic realities are making expansion of coverage more difficult, and in some states, such as Utah, next to impossible.
Meanwhile, parents like Clerico pray that their children stay healthy.
"We just have to hope for the best and get something when we can," said Clerico, who has multiple sclerosis and does not have coverage for herself or her children through her job at a nonprofit.
It's a risky existence. Clerico had to take her 7-year-old daughter to a hospital's after-hours clinic last month because she had an ear infection. Clerico will have to pay the bill over time.
Utah's problem is that CHIP, once up and running, became too popular to sustain. The state based its $5.5-million CHIP budget on enrollment of 21,000 children, said Stephen McDonald, a spokesman for the Utah Department of Health. But by December, 27,500 children had enrolled.
In addition to freezing enrollment, Utah eliminated coverage for most chronic dental problems, imposed monthly premiums and increased co-payments for drugs, lab tests, X-rays and hospital stays.
Utah lawmakers are trying to find the money to restore the cuts in dental services and reopen enrollment next year, said state Sen. Peter Knudson, a Republican from Brigham City who is leading the effort. No one on the program has been dropped, but no new children are being added.
"The program will go on," he said. "I hope we can at least restore it to the level we had before and then build upon that. That's my goal."
Other states are struggling to maintain CHIP programs as well. Oklahoma had planned to stop covering 50,000 children enrolled in its SoonerCare CHIP program on April 1. The cutbacks were suspended this month, though, because the Legislature cobbled together an emergency infusion.
States Finding Ways to Keep Costs Down
Some CHIP programs have developed subtler ways of keeping costs down. In Kentucky, for instance, the enrollment process has been made more difficult for parents, who now must demonstrate proof of income and show up for in-person interviews to keep their children covered.
Idaho eliminated its outreach program, including TV and radio announcements, and canceled contracts with Head Start and the Girl Scouts to promote the program.
Idaho state Sen. Stan Hawkins, a Republican, said outreach increases interest in CHIP, which in turn causes the state to hire more people to process applications.
"The next thing you know, you have a ratcheting up in costs overall," Hawkins said.
Children's advocates are furious at what they consider a betrayal. "We do agree that costs are rising, but they should not be turning to Idaho's low-income families to save costs," said Michele Casey of the Idaho Community Action Network.
Wherever the programs are scaled back or restricted, parents and children feel the pain--physically or financially.
North Carolina froze enrollment in Health Choice in January 2001 after 78,000 children joined the program, 6,000 more than state officials had estimated were eligible. By the time the freeze was lifted in late summer--because of public pressure--enrollment had plunged by 20,000.
Among those forced to wait for a spot was Connie Ledford's 8-year-old son, who needed surgery for chronic ear infections. His parents went ahead with the surgery and are now swamped with medical bills that they say they can't pay.
"We were just turned down for a home because our credit is just so terrible because of all the bills that piled up from it," said Ledford, 26, whose son is now enrolled. "We might wind up filing [for] bankruptcy."
Copyright 2002 Los Angeles Times