Compound interest has been called a “miracle” because it can turn a small early investment into significant value over time. The Children’s Health Insurance Program is a compound interest generator.
CHIP creates access to care — well-child visits, immunizations, primary care and prevention generally — for kids from low-income families. The program is designed to set children on a path to better health in the long term. In fact, the benefits of CHIP are so clear that the program has garnered bipartisan support since it was established two decades ago.
Last weekend, the deadline for Congress to extend CHIP funding passed. This week, committees in the U.S. Senate and House approved bills to extend CHIP. Nearly everyone agrees the program should continue. The question is how to pay for it.
There’s no question CHIP is a good value for Missouri. The state’s federal CHIP grant is $175 million, and the match rate for these funds has historically been more favorable than the traditional Medicaid rate. In addition, the Affordable Care Act encouraged CHIP enrollment, temporarily raising the federal share to 97 percent. Whether at the traditional match of 74 percent or the ACA rate of 97 percent, the state gets a lot of coverage for a low-cost population for reduced state investment.
Missouri’s CHIP program maximizes the federal dollars through flexibility. Missouri covers some children who would otherwise be in traditional Medicaid through CHIP — this saves the state money and allows a part of the population to benefit from the program without the jeopardy of change in federal policy. Although the ACA added some constraints within the eligibility categories, the state continues to realize a significant benefit.
If CHIP is not reauthorized, and the federal funds are not available, the program would disappear. The state could opt to cover more children — which are generally very low cost by comparison to other Medicaid populations. However, Missouri would receive only the traditional Medicaid match, which is much less generous. Given the state’s financial outlook, keeping kids within the Medicaid system without the favorable rate, is unlikely.
The real question is about the federal spending, not the health value. Since new federal spending must be balanced by reductions elsewhere under the congressional rules, reauthorization hangs on the ability to find budget offsets. Moreover, with tax reform and tax cuts on the agenda, spending of any kind — even on a children’s’ health program — is subject to a new calculus.
The compounding health value of CHIP is clear. However, the funding debate draws another economic principle into sharper relief — opportunity-cost.
What is the cost to the health care system if children from low-income families don’t receive the services that are the central components of CHIP? It’s pretty clear. We’ll lose the compounding benefit of health and prevention when it is inexpensive, and pay at the other end of the system — where chronic disease, poor health and high costs are the norm.
There’s no “miracle” in compound interest. It’s math — the time value of money. And, there’s no real debate about whether CHIP is an opportunity or a cost.
Let me know what you’re thinking.
Herb B. Kuhn
MHA President and CEO
In This Issue
2018 ICD-10 Updates For MO HealthNet Billings Effective Oct. 1
August MUR Available On HIDI Analytic Advantage®
HIDI Releases Third Quarter FFY 2017 Inpatient, Outpatient, Missouri Databases
CMS Releases Addendum to IQR Manual Version 5.2a
TJC Releases Addendum To Specifications Manual For National Quality Measures