Matthew Martin makes a very cogent point about CHIP reauthorization yesterday:
Underdiscussed: if the CHIP reauth was scored as deficit reducing over 10 years, that means there are lots of medicaid expansions we could do without needing payfors
— Matthew Very Stable Reinsurance Martin, LLC (@hyperplanes) January 23, 2018
The Congressional Budget Office (CBO) scored CHIP as a deficit reducer over ten years because the CBO figured that if there was no CHIP, some parents and kids would access Affordable Care Act (ACA) subsidies. Those subsidies would cost the government as much or more than CHIP to cover fewer people.
ACA plans tend to pay their networks somewhere between Medicare and Commercial rates. CHIP tends to pay somewhere between Medicaid and Medicare rates for their doctors. This matters a lot. I am touching back on a recent Health Affairs article on what a standard office visit costs by type of insurance.
Medicaid pays significantly less per unit of service than an Exchange plan. That means the total premium for an identical risk pool is substantially less for a CHIP/Medicaid program than for an Exchange based program. And since states and individuals often kick in a higher percentage of premium for CHIP the Federal costs are significantly lower.
Covering more people through Medicaid or CHIP buy-in is a net expense reducer for the federal government. States may scream unless there is an adjustment to the matching funds rate as right now people who are covered on the Exchange cost the state budget nothing and moving people to CHIP or Medicaid would shift significant costs to the states.