[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]





         THE FUTURE OF THE CHILDREN'S HEALTH INSURANCE PROGRAM

=======================================================================

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON HEALTH

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                            DECEMBER 3, 2014

                               __________

                           Serial No. 113-184

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman
RALPH M. HALL, Texas                 HENRY A. WAXMAN, California
JOE BARTON, Texas                      Ranking Member
  Chairman Emeritus                  JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky                 Chairman Emeritus
JOHN SHIMKUS, Illinois               FRANK PALLONE, Jr., New Jersey
JOSEPH R. PITTS, Pennsylvania        BOBBY L. RUSH, Illinois
GREG WALDEN, Oregon                  ANNA G. ESHOO, California
LEE TERRY, Nebraska                  ELIOT L. ENGEL, New York
MIKE ROGERS, Michigan                GENE GREEN, Texas
TIM MURPHY, Pennsylvania             DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas            LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee          MICHAEL F. DOYLE, Pennsylvania
  Vice Chairman                      JANICE D. SCHAKOWSKY, Illinois
PHIL GINGREY, Georgia                JIM MATHESON, Utah
STEVE SCALISE, Louisiana             G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio                JOHN BARROW, Georgia
CATHY McMORRIS RODGERS, Washington   DORIS O. MATSUI, California
GREGG HARPER, Mississippi            DONNA M. CHRISTENSEN, Virgin 
LEONARD LANCE, New Jersey                Islands
BILL CASSIDY, Louisiana              KATHY CASTOR, Florida
BRETT GUTHRIE, Kentucky              JOHN P. SARBANES, Maryland
PETE OLSON, Texas                    JERRY McNERNEY, California
DAVID B. McKINLEY, West Virginia     BRUCE L. BRALEY, Iowa
CORY GARDNER, Colorado               PETER WELCH, Vermont
MIKE POMPEO, Kansas                  BEN RAY LUJAN, New Mexico
ADAM KINZINGER, Illinois             PAUL TONKO, New York
H. MORGAN GRIFFITH, Virginia         JOHN A. YARMUTH, Kentucky
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Missouri
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina

                         Subcommittee on Health

                     JOSEPH R. PITTS, Pennsylvania
                                 Chairman
MICHAEL C. BURGESS, Texas            FRANK PALLONE, Jr., New Jersey
  Vice Chairman                        Ranking Member
ED WHITFIELD, Kentucky               JOHN D. DINGELL, Michigan
JOHN SHIMKUS, Illinois               ELIOT L. ENGEL, New York
MIKE ROGERS, Michigan                LOIS CAPPS, California
TIM MURPHY, Pennsylvania             JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee          JIM MATHESON, Utah
PHIL GINGREY, Georgia                GENE GREEN, Texas
CATHY McMORRIS RODGERS, Washington   G.K. BUTTERFIELD, North Carolina
LEONARD LANCE, New Jersey            JOHN BARROW, Georgia
BILL CASSIDY, Louisiana              DONNA M. CHRISTENSEN, Virgin 
BRETT GUTHRIE, Kentucky                  Islands
H. MORGAN GRIFFITH, Virginia         KATHY CASTOR, Florida
GUS M. BILIRAKIS, Florida            JOHN P. SARBANES, Maryland
RENEE L. ELLMERS, North Carolina     HENRY A. WAXMAN, California (ex 
JOE BARTON, Texas                        officio)
FRED UPTON, Michigan (ex officio)










  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Joseph R. Pitts, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................     1
    Prepared statement...........................................     2
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     4
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................     5
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, prepared statement...................................    75

                               Witnesses

Evelyne Baumrucker, Health Financing Analyst, Congressional 
  Research Service...............................................     6
    Prepared statement...........................................     9
    Answers to submitted questions...............................    90
Alison Mitchell, Health Care Financing Analyst, Congressional 
  Research Service...............................................    11
    Prepared statement...........................................    13
    Answers to submitted questions...............................    91
Carolyn Yocom, Director, Health Care, Government Accountability 
  Office.........................................................    16
    Prepared statement...........................................    18
    Answers to submitted questions...............................   123
Anne Schwartz, Ph.D., Executive Director, Medicaid and Chip 
  Payment and Access Commission..................................    32
    Prepared statement...........................................    34
    Answers to submitted questions...............................   131

                           Submitted Material

Letter of December 1, 2014, from U.S. Conference of Catholic 
  Bishops to U.S. House of Representatives, submitted by Mr. 
  Pitts..........................................................    77
Statement of U.S. Senator John D. Rockefeller, IV, submitted by 
  Mr. Waxman.....................................................    79
Statement of the March of Dimes, submitted by Mr. Lance..........    83
Statement of the National Association of Pediatric Nurse 
  Practitioners..................................................    86

 
         THE FUTURE OF THE CHILDREN'S HEALTH INSURANCE PROGRAM

                              ----------                              


                      WEDNESDAY, DECEMBER 3, 2014

                  House of Representatives,
                            Subcommittee on Health,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:16 a.m., in 
room 2322 of the Rayburn House Office Building, Hon. Joe Pitts 
(chairman of the subcommittee) presiding.
    Members present: Representatives Pitts, Burgess, Shimkus, 
Murphy, Gingrey, McMorris Rodgers, Lance, Guthrie, Griffith, 
Bilirakis, Ellmers, Barton (ex officio), Pallone, Engel, Capps, 
Matheson, Green, Barrow, Castor, and Waxman (ex officio).
    Staff present: Sydne Harwick, Chief Counsel, Energy and 
Commerce; Chris Sarley, Policy Coordinator, Environment and 
Economy; Heidi Stirrup, Health Policy Coordinator; Josh Trent, 
Professional Staff Member, Health; Michelle Rasenberg, GAO 
Detailee; Ziky Ababiya, Democratic Staff Assistant; Kaycee 
Glavich, Democratic GAO Detailee; Amy Hall, Democratic Senior 
Professional Staff Member; Debbie Letter, Democratic Staff 
Assistant; and Karen Nelson, Democratic Deputy Committee Staff 
Director for Health.

OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN 
         CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

    Mr. Pitts. The subcommittee will come to order. Chair will 
recognize himself for an opening statement.
    In 1992, as a member of the state House of Representatives, 
I was proud to vote to create Pennsylvania's Children's Health 
Insurance Program, known as PA CHIP.
    In 1997, Congress created the federal CHIP program, which 
was partially based on Pennsylvania's successful model. CHIP is 
a means-tested program designed to cover children and pregnant 
women who make too much to qualify for Medicaid, but may not 
have access to purchase affordable private health insurance.
    Most recently, the Affordable Care Act reauthorized CHIP 
through fiscal year 2019, but the law only provided funding for 
the program through September 30, 2015.
    CHIP has historically enjoyed bipartisan congressional 
support, and it is widely seen as providing better care than 
many state Medicaid programs.
    Moving forward, Congress should be thoughtful and data-
driven in our approach. The last time Congress methodically 
reviewed the CHIP program was in 2009 with the Children's 
Health Insurance Program Reauthorization Act, or CHIPRA. 
Clearly, since that time, the Affordable Care Act has changed 
the insurance landscape significantly. Provisions of the 
program which may have made sense prior to the ACA might no 
longer be necessary. Other changes may need to be made as well.
    Like many of my colleagues, I believe we need to extend 
funding for this program in some fashion. If we do not, current 
enrollees will lose their CHIP coverage and many will end up in 
Medicaid and on the exchanges--programs which may offer poorer 
access to care or higher cost-sharing for lower-income 
families. Some will lose access to insurance altogether. At the 
same time, we should ensure the program complements, rather 
than crowds out, private health insurance. We should also 
ensure CHIP is a benefit that is targeted to those who are most 
vulnerable, rather than one that effectively subsidizes 
coverage for upper-middle-class families.
    It is important that we think carefully about this 
important program. While program funding does not run out until 
September 2015, governors and state legislatures across the 
country will start to assemble their budgets as soon as 
January. Accordingly, the committee is very aware that states 
need certainty sooner rather than later in their budgetary 
planning process, and that is why Chairman Upton and Ranking 
Member Waxman, along with their Senate counterparts, engaged 
governors earlier this year to request their perspective on the 
program. And that is why we are hearing from witnesses in our 
hearing today.
    So I look forward to hearing from our witnesses on the 
current state of CHIP as we consider the data they will 
provide, and evaluate proposals that will keep the program 
strong into the future.
    [The prepared statement of Mr. Pitts follows:]

               Prepared statement of Hon. Joseph R. Pitts

    The subcommittee will come to order.
    The chair will recognize himself for an opening statement.
    In 1992, as a member of the state House of Representatives, 
I was proud to vote to create Pennsylvania's Children's Health 
Insurance Program, known as PA CHIP.
    In 1997, Congress created the federal CHIP program, which 
was partially based on Pennsylvania's successful model. CHIP is 
a means-tested program designed to cover children and pregnant 
women who make too much to qualify for Medicaid, but may not 
have access to purchase affordable private health insurance.
    Most recently, the Affordable Care Act reauthorized CHIP 
through FY2019, but the law only provided funding for the 
program through September 30, 2015.
    CHIP has historically enjoyed bipartisan congressional 
support, and it is widely seen as providing better care than 
many state Medicaid programs.
    Moving forward, Congress should be thoughtful and data-
driven in our approach. The last time Congress methodically 
reviewed the CHIP program was in 2009 with the Children's 
Health Insurance Program Reauthorization Act, or CHIPRA.
    Clearly, since that time, the Affordable Care Act has 
changed the insurance landscape significantly. Provisions of 
the program which may have made sense prior to the ACA might no 
longer be necessary. Other changes may need to be made as well.
    Like many of my colleagues, I believe we need to extend 
funding for this program in some fashion. If we don't, current 
enrollees will lose their CHIP coverage and many will end up in 
Medicaid and on the exchanges--programs which may offer poorer 
access to care or higher cost-sharing for lower-income 
families. Some will lose access to insurance altogether.
    At the same time, we should ensure the program 
complements--rather than crowds out--private health coverage. 
We should also ensure CHIP is a benefit that is targeted to 
those who are most vulnerable--rather than one that effectively 
subsidizes coverage for upper-middle-class families.
    It's important that we think carefully about this important 
program. While program funding does not run out until September 
2015, governors and state legislatures across the country will 
start to assemble their budgets as soon as January.
    Accordingly, the committee is very aware that states need 
certainty sooner rather than later in their budgetary planning 
process. That's why Chairman Upton and Ranking Member Waxman, 
along with their Senate counterparts, engaged governors earlier 
this year to request their perspective on the program.
    And that's why we're hearing from witnesses in our hearing 
today. So, I look forward to hearing from our witnesses on the 
current state of CHIP as we consider the data they will provide 
and evaluate proposals that will keep the program strong into 
the future.
    I yield the remainder of my time to Rep. ------------------
----------.

    Mr. Pitts. And I yield the remaining time to Dr. Burgess.
    Mr. Burgess. Thank you, Mr. Chairman. I appreciate you 
yielding the time. Just before I deliver my opening statement, 
I want to say this may be my last time to serve as your vice 
chair of the subcommittee, and I have certainly enjoyed our 
time together the last two terms, and it has been a great honor 
of mine to have been of service to this subcommittee. I won't 
be leaving the subcommittee altogether, but I just won't be 
vice chairman in the upcoming term.
    And I am happy to be here this morning to talk about the 
Children's Health Insurance Program. It is an important issue 
in our Nation's healthcare. It is probably one of the most 
important that we will take up over the next year, both 
nationally and in the individual states. I thank you for 
recognizing that states do have an obligation to generate their 
budgets early in the next calendar year, and Texas, in fact, 
will do a budget for the next 2 years, so they do one for the 
biennium, so it is important that they have the availability of 
the information about this program going forward as they 
grapple with those budgetary issues.
    One of the program's greatest strengths is it does provide 
needed flexibility to states, including program and benefit 
design and different levels of cost sharing. It has allowed for 
creativity and efficiency in the program, but it also means 
that each state will be affected differently if the program 
loses funding at the end of the fiscal year.
    I think we can all agree that the health of our country's 
children requires our continuous attention, and in particular, 
kids with special needs. I am anxious to learn more about how 
this impacts Texas and my constituents. It is vital that we 
learn what the landscape for this program looks like in a post-
ACA world. We need an accurate picture about the path forward 
for what CHIP might look like going forward, and ways that 
Congress can be helpful.
    Mr. Burgess. And I will yield back to the chairman.
    Mr. Pitts. And the chair thanks the gentleman, and again 
thanks him for his service to the subcommittee. We still have 
two more subcommittee hearings next week so I will keep you 
busy.
    And with that, I would like to congratulate our ranking 
member, Mr. Pallone, for moving up to ranking member of the 
full committee. Looking forward to working with you in that 
regard, and appreciate having to have been work closely with 
you the last 4 years as ranking member.
    So with that, Mr. Pallone, you are recognized for 5 
minutes.

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. Thank you, Chairman Pitts, and I certainly 
have appreciated working with you. It has been very easy to 
work with you on a bipartisan basis on so many initiatives that 
actually have been passed and been signed into law, and I 
actually asked Dr. Burgess yesterday if he was still going to 
be on the subcommittee, because I heard that he was going to be 
chairman of one of the other subcommittees, and he said, yes, 
he still expected to be on the subcommittee. So I was glad to 
hear that as well.
    I wanted to thank you, Chairman, for having this hearing 
today, and I very much look forward to making progress toward 
ensuring the continued success of CHIP. It is a vital program 
that provides coverage to 8.1 million low-to-moderate-income 
children throughout the Nation who are unable to afford or not 
eligible for other forms of coverage. And without congressional 
action, funding for the program will expire next year. This 
would inevitably lead to gaps in coverage for some, and lack of 
coverage for many others, so we must have a conversation now 
about providing funding as soon as possible.
    In fact, I would urge my colleagues to consider an 
extension during the lame duck to ensure predictability to the 
many states that have come to rely and appreciate the CHIP 
program. I don't think any would argue that CHIP should not be 
extended, so let's just get it done.
    Now, you said CHIP was created, it is true, in a 
Republican-controlled Congress in 1997 as a joint federal-state 
undertaking so that states could help determine how best to 
design and administer their own programs, and ever since, it 
has traditionally enjoyed bipartisan support. And this historic 
support from both sides of the aisle was reflected in the 
responses to Chairman Upton and Ranking Member Waxman's recent 
letter to the Nations' governors, across red and blue states, 
including some that did and some that did not proactively 
implement the ACA, governors overwhelmingly support the 
extension of CHIP funding.
    I have a bill, H.R. 5364, the CHIP Extension and 
Improvement Act of 2014, that would achieve this purpose while 
also instituting reforms that would enable states to eliminate 
administrative burdens and increase the quality of care. By 
funding the program through 2019, we would provide states with 
more time to plan for the future, putting them in a better 
position to ensure that there are no disruptions, and 
affordance and comprehensive coverage for those families who 
depend on the program. Furthermore, the consequences of this 
coverage are far-flung. Not only do state governments depend on 
this funding, it would also support economic activities 
stemming from providers who provide care to children, as well 
as mothers who are able to keep themselves and their children 
health, and thus, won't need to take time off from work in 
order to care for their sick children.
    In New Jersey, over 800,000 children are served by New 
Jersey Family Care, which is funded by CHIP, and for these 
families, getting coverage on the private market is still out 
of reach, a sentiment that is supported by both the GAO and 
MACPAC, who have shown that even with cost-sharing, CHIP is the 
most affordable and comprehensive form of coverage for these 
children, especially those with complex health needs. And this 
is true for the millions of American families who rely on the 
program, so I hope that my colleagues will join me in 
supporting action this lame duck to fund CHIP for the next 4 
years.
    Mr. Pallone. Did anyone else want any time on our side, do 
we know? I guess not.
    I yield back, Mr. Chairman. Thanks again.
    Mr. Pitts. The chair thanks the gentleman.
    Mr. Pallone. Mr. Chairman, can I ask unanimous consent to 
enter into the record written statements which I believe you 
have from Families USA and the American Academy of Pediatrics?
    Mr. Pitts. All right, and we have given this to you as 
well, a joint letter from the U.S. Conference of Catholic 
Bishops, Catholic Health Association of U.S.--Catholic 
Charities USA, to add to that UC request.
    Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Pitts. On our panel--and all Members' written opening 
statements are being made part of the record. On our panel 
today we have Ms. Evelyne Baumrucker, Analyst in Healthcare 
Financing, for the Congressional Research Service; Ms. Alison 
Mitchell, Analyst in Healthcare Financing, Congressional 
Research Service; Ms. Carolyn Yocom, Director, Health Care, 
U.S. Government Accountability Office; and Dr. Anne Schwartz, 
Executive Director, Medicaid and CHIP Payment and Access 
Commission, MACPAC.
    Thank you for coming. You will each be given 5 minutes to 
summarize your testimony. Your written testimony will be placed 
in the record.
    And, Ms. Baumrucker, we will start with you. You are 
recognized for 5 minutes for your opening statement.
    Mr. Waxman. Mr. Chairman----
    Mr. Pitts. I am sorry----
    Mr. Waxman. Yes.
    Mr. Pitts [continuing]. I didn't notice you come in. We 
have the ranking member, before you begin.
    Chair recognizes the ranking Member, Mr. Waxman, 5 minutes 
for his opening statement.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Waxman. Thank you very much, Mr. Chairman.
    There is another subcommittee having a hearing at the same 
time as ours here, and so I am sorry I am late, but thank you 
for this courtesy to me.
    Today's hearing is about the Children's Health Insurance 
Program. This is a rare program in Washington that has enjoyed 
bipartisan support since its inception in 1997, and I am 
pleased that the committee is again proceeding in a bipartisan 
fashion; first with our letter to the governors, and now with 
this hearing.
    I strongly support an additional 4 years of funding for the 
CHIP program. The evidence both from the state letters and 
independent research shows that CHIP provides both benefit and 
cost-sharing protections that are critical for children, but 
are not guaranteed in the new health marketplaces or employer-
sponsored coverage. For the peace of mind of families, and ease 
of administration and certainty for states, I believe that a 
longer period allows for needed stability. That is why I 
cosponsored Ranking Member Pallone's Bill, H.R. 5364, that 
would provide 4 years of funding, and also give states 
flexibilities to make important program improvements, like 
making express lane eligibility a permanent option for states 
looking to reduce bureaucracy and improve the enrollment 
process. I hope that our colleagues on both sides of the 
committee--the aisle in this committee will give the bill a 
serious look. It is balanced and fair, and there is a lot to 
look for both states and beneficiaries.
    CHIP is only one piece of the healthcare system for 
children. Medicaid covers more than four times the number of 
children that CHIP does; 38 million in all, and with the new 
marketplaces and delivery system reform initiatives, such as 
medical homes, there are many positive developments to improve 
care for children.
    We have reduced uninsurance to a record low among children, 
but there is more work to be done. No matter where a child 
receives coverage, we need to ensure that it is comprehensive, 
child-focused, and affordable for all families.
    I want to also take a moment to honor one of the original 
authors of the CHIP program, Senator Jay Rockefeller, who is 
retiring this year. Senator Rockefeller fought tirelessly to 
get the CHIP program established, he fought tirelessly again to 
defend the program, and strengthen it during its 
reauthorization. Millions of children have better lives because 
of his work, and I know that he hoped to see the program put on 
a stable funding path prior to his retirement at the end of 
this Congress, and I would like to have his statement on the 
CHIP program inserted into the record for this hearing.
    Mr. Pitts. And without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Waxman. Thank you, Mr. Chairman. Yield back the balance 
of my time.
    Mr. Pitts. Chair thanks the gentleman.
    Now we will go to our witnesses, and we will start with Ms. 
Baumrucker, 5 minutes for an opening statement.

  STATEMENTS OF EVELYNE BAUMRUCKER, HEALTH FINANCING ANALYST, 
 CONGRESSIONAL RESEARCH SERVICE; ALISON MITCHELL, HEALTH CARE 
  FINANCING ANALYST, CONGRESSIONAL RESEARCH SERVICE; CAROLYN 
YOCOM, DIRECTOR, HEALTH CARE, GOVERNMENT ACCOUNTABILITY OFFICE; 
AND ANNE SCHWARTZ, PH.D., EXECUTIVE DIRECTOR, MEDICAID AND CHIP 
                 PAYMENT AND ACCESS COMMISSION

                STATEMENT OF EVELYNE BAUMRUCKER

    Ms. Baumrucker. Chairman Pitts, Ranking Member Pallone, and 
members of the subcommittee, thank you for this opportunity to 
appear before you on behalf of the Congressional Research 
Service. My name is Evelyne Baumrucker, and I am here to 
provide an overview of the State Children's Health Insurance 
Program. My colleague, Alison Mitchell, will address CHIP 
financing and the Patient Protection and Affordable Care Act 
Maintenance of Effort for Children.
    CHIP is a means-tested program that provides health 
coverage to targeted low-income children and pregnant women, in 
families that have annual income above Medicaid eligibility 
levels, but have no health insurance. CHIP is jointly financed 
by the Federal Government and the states, and is administered 
by the states. In fiscal year 2013, CHIP enrollment totaled 8.4 
million, and federal and state expenditures totaled $13.2 
billion. CHIP was established as a part of the Balanced Budget 
Act of 1997 under a new Title XXI of the Social Security Act. 
Since that time, other federal laws have provided additional 
funding and made significant changes to CHIP. Most notably, the 
Children's Health Insurance Program Reauthorization Act of 2009 
increased appropriation levels, and changed the federal 
allotment formula, eligibility and benefit requirements.
    The ACA largely maintains the current CHIP structure 
through fiscal year 2019, and requires states to maintain their 
Medicaid and CHIP child eligibility levels through this period 
as a condition of receiving Medicaid federal matching funds. 
However, the ACA does not provide federal CHIP appropriations 
beyond fiscal year 2015.
    State participation in CHIP is voluntary, however, all 
states, the District of Columbia, and the territories, 
participate. The Federal Government sets basic requirements for 
CHIP, but states have the flexibility to design their own 
version within the Federal Government's basic framework. As a 
result, there is significant variation across CHIP programs. 
Currently, state upper income eligibility limits for children 
range from a low of 175 percent of the federal poverty level, 
to a high of 405 percent of FPL. In fiscal year 2013, the 
federal poverty level for a family of four was equal to 
$23,550. Despite the fact that 27 states extend CHIP coverage 
to children in families with income greater than 250 percent of 
the federal poverty level, fiscal year 2013 administrative data 
show that CHIP enrollment is concentrated among families with 
annual incomes at lower levels. Almost 90 percent of child 
enrollees were in families with annual income at or below 200 
percent of FPL.
    States may design their CHIP programs in three ways: a CHIP 
Medicaid expansion, a separate CHIP program, or a combination 
approach where the state operates a CHIP Medicaid expansion and 
one or more separate CHIP programs concurrently. As of May 
2014, the territories, the District of Columbia, and seven 
states were using CHIP Medicaid expansions; 14 states operated 
separate CHIP programs; and 29 states used a combination 
approach. In fiscal year 2013, approximately 70 percent of CHIP 
program enrollees received coverage through separate CHIP 
programs, and the remainder received their coverage through a 
CHIP Medicaid expansion.
    CHIP benefit coverage and cost-sharing rules depend on 
program design. CHIP Medicaid expansions must follow the 
federal Medicaid rules for benefits and cost sharing, which 
entitles CHIP enrollees to Early Periodic Screening, Diagnostic 
and Treatment (EPSDT) coverage, effectively eliminating any 
state-defined limits on the amount, duration, and scope of any 
benefit listed in Medicaid statute, and exempts the majority of 
children from any cost sharing. For separate CHIP programs, the 
benefits are permitted to look more like private health 
insurance, and states may impose cost sharing, such as premiums 
or enrollment fees, with a maximum allowable amount that is 
tied to family income. Aggregate cost sharing under CHIP may 
not exceed 5 percent of annual family income. Regardless of the 
choice of program design, all states must cover emergency 
services, well baby, and well childcare, including age-
appropriate immunizations and dental services. If offered, 
mental health services must meet the federal mental health 
parity requirements.
    As we begin the final year of federal CHIP funding under 
the CHIP statute, Congress has begun considering the future of 
the CHIP program, and exploring alternative policy options. The 
health insurance market is far different today than when CHIP 
was established. CHIP was designed to work in coordination with 
Medicaid to provide health insurance to low-income children. 
Before CHIP was established, no federal program provided health 
coverage to children with family annual incomes above Medicaid 
eligibility levels. The ACA further expanded options for some 
children in low-income families with incomes at or above CHIP-
eligibility levels by offering subsidized coverage for 
insurance purchased through the health insurance exchanges. 
Congress' action or inaction on the CHIP program may affect 
health insurance options and resulting in coverage for targeted 
low-income children that are eligible for the current CHIP 
program.
    This concludes my statement. CRS is happy to answer your 
questions at the appropriate time.
    [The prepared statement of Ms. Baumrucker follows:]
 
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Pitts. Chair thanks the gentlelady.
    Now recognize Ms. Mitchell 5 minutes for an opening 
statement.

                  STATEMENT OF ALISON MITCHELL

    Ms. Mitchell. Thank you for the opportunity to appear 
before you today on behalf of CRS to provide an overview of 
CHIP financing, and the ACA Maintenance of Effort for Children.
    First, CHIP financing. The Federal Government and states 
jointly finance CHIP, with the Federal Government paying about 
70 percent of CHIP expenditures. The Federal Government 
reimburses states for a portion of every dollar they spend on 
their CHIP program, up to state-specific limits called 
allotments. The federal matching rate for CHIP is determined 
according to the Enhanced Federal Medical Assistance 
Percentage, which is also the E-FMAP rate, and this is 
calculated annually and varies according to each state's per 
capita income.
    In fiscal year 2015, the E-FMAP rates range from 65 percent 
in 13 states, to 82 percent in Mississippi. The ACA included a 
provision to increase the E-FMAP rate by 23 percentage points, 
not to exceed 100 percent for most CHIP expenditures from 
fiscal year 2016 through fiscal year 2019, and with this 23 
percentage point increase, states are expected to spend through 
their CHIP allotments faster.
    And these CHIP allotments are the federal funds allocated 
to each state for the federal share of their CHIP expenditures, 
and states receive a CHIP allotment annually, but the allotment 
funds are available to states for 2 years. This means that even 
though fiscal year 2015 is the last year states are to receive 
a CHIP allotment, states could receive federal CHIP funding in 
fiscal year 2016.
    Moving on to the Maintenance of Effort, or MOE, the ACA MOE 
for children requires states to maintain eligibility standards, 
methodologies, and procedures for Medicaid and CHIP children 
from the date of enactment, which was March 23, 2010, through 
September 30, 2019, and the penalty for not complying with the 
ACA MOE is the loss of all federal Medicaid matching funds. And 
the MOE impacts CHIP Medicaid expansion and separate CHIP 
programs differently. For CHIP Medicaid expansion programs, the 
Medicaid and CHIP MOE provisions apply concurrently. As a 
result, when a state's federal CHIP funding is exhausted, the 
financing for these children switches from CHIP to Medicaid, 
and this would mean that the state's share of covering these 
children would increase because the federal matching rate for 
Medicaid is less than the E-FMAP rate. For separate CHIP 
programs, only the CHIP-specific MOE provisions apply, and 
these provisions include a couple of exceptions to the MOE. 
First, states may impose waiting lists and enrollment caps, and 
second, after September 1, 2015, states may enroll CHIP-
eligible children in qualified health plans in the health 
insurance exchanges that have been certified by the Secretary 
to be at least comparable to CHIP in terms of benefits and cost 
sharing.
    In addition to these two exceptions, under the MOE, in the 
event that a state's CHIP allotment is insufficient, a state 
must establish procedures to screen children for Medicaid 
eligibility, and for children not Medicaid eligible, the state 
must establish procedures to enroll these children in 
Secretary-certified qualified health plans. If there are no 
certified plans, the MOE does not obligate states to provide 
coverage to these children.
    In conclusion, fiscal year 2015 is the last year federal 
CHIP funding is provided under current law. If no additional 
federal CHIP funding is provided, once the funding is 
exhausted, children in CHIP Medicaid expansion programs would 
continue to receive coverage under Medicaid through at least 
fiscal year 2019, due to the ACA MOE, however, coverage for 
children in separate CHIP programs depends on the availability 
of Secretary-certified qualified health plans.
    This concludes my statement, and I will take questions at 
the appropriate time.
    [The prepared statement of Ms. Mitchell follows:]

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    Mr. Pitts. Chair thanks the gentlelady.
    Now recognize Ms. Yocom 5 minutes for an opening statement.

                   STATEMENT OF CAROLYN YOCOM

    Ms. Yocom. Chairman Pitts, Ranking Member Pallone, and 
members of the subcommittee, I am pleased to be here today to 
discuss the extension of federal funding for the Children's 
Health Insurance Program, better known as CHIP. Congress faces 
important decisions about the future of CHIP. Absent the 
extension of federal funding, once a state's CHIP funding is 
insufficient to cover all eligible children, the state must 
establish procedures to ensure that those who are not covered 
are screened for Medicaid eligibility. In states that have used 
CHIP funds to expand Medicaid, children will be eligible to 
remain in Medicaid. Thus, approximately 2.5 million children 
will continue to receive coverage. However, for the over 5 
million children who are in separate child health programs, 
their coverage options are different and less certain. These 
children may be eligible, but are not assured eligibility, for 
the premium tax credit and for cost-sharing subsidies 
established through the Affordable Care Act to subsidize 
coverage offered through health insurance exchanges.
    My statement today draws on past GAO work which suggests 
that there are important considerations related to cost, 
coverage and access when determining the ongoing need for the 
CHIP program. Cost: GAO compared separate health CHIP plans in 
five states with state benchmark plans, and these were intended 
as models of coverage offered by the qualified health plans 
through exchanges. Our studies suggest that CHIP consumers 
could face higher costs if shifted to qualified health plans. 
For example, the CHIP plans we reviewed typically did not 
include deductibles, while all five states' benchmark plans 
did. When cost sharing was applied, the amount was almost 
always less for CHIP plans, with the cost differences being 
particularly pronounced for physician visits, prescription 
drugs, and outpatient therapies. And lastly, CHIP premiums were 
almost always less than benchmark plans.
    The cost gap GAO identified could be narrowed, as the 
Affordable Care Act has provisions that seek to standardize the 
costs of qualified health plans, and reduce cost sharing for 
some individuals. However, this will vary based on consumers' 
income level and plan selection. Absent CHIP, we estimated that 
1.9 million children may not be eligible for a premium tax 
credit, as they have a parent with employer-sponsored health 
coverage, defined as affordable under IRS regulations. The 
definition of affordability considers the cost of self-only 
coverage offered by the employer, rather than the cost of 
family coverage.
    With regard to coverage, we found that most benefit 
categories were covered in separate CHIP and benchmark plans 
that we reviewed, with similarities in terms of the services in 
which they impose day visit or dollar limits. For example, the 
plans typically did not impose any such limits on ambulatory 
services, emergency care, preventive care, or prescription 
drugs, but did impose limits on outpatient therapies, and 
pediatric dental, vision and hearing services. We also 
identified differences in how dental services were covered 
under CHIP and benchmark plans; differences that raised the 
potential for confusion and higher costs for consumers.
    With regard to access, national survey data found that CHIP 
enrollees reported positive responses regarding their ability 
to obtain care, and that this proportion of positive responses 
was generally comparable with those in Medicaid or those who 
were covered by private insurance. However, access to specialty 
care in CHIP may be more limited than in private insurance. In 
2010, our survey of physicians reported experiencing greater 
difficulty referring children in Medicaid and CHIP to specialty 
care, compared with privately insured children. We also found 
that the percentage of specialty care physicians who accepted 
all new patients with private insurance was about 30 percent 
higher than the percentage of those who accepted all children 
in Medicaid and CHIP.
    Over the last 17 years, CHIP has played an important role 
in providing health insurance coverage for low-income children 
who might otherwise be uninsured. In the short term, Congress 
will be deciding whether to extend federal funding for CHIP 
beyond 2015. In the longer term, states and the Congress will 
face decisions about the role of CHIP in covering children once 
states are no longer required to maintain eligibility standards 
in the year 2020.
    Chairman Pitts, Ranking Member Pallone, and members of the 
subcommittee, this concludes my prepared statement. I would be 
pleased to respond to any questions you might have.
    [The prepared statement of Ms. Yocom follows:]
   
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    Mr. Pitts. Chair thanks the gentlelady.
    Now recognizes Dr. Schwartz 5 minutes for an opening 
statement.

               STATEMENT OF ANNE SCHWARTZ, PH.D.

    Ms. Schwartz. Good morning, Chairman Pitts, Ranking Member 
Pallone, and members of the Subcommittee on Health. I am Anne 
Schwartz, Executive Director of MACPAC, the Medicaid and CHIP 
Payment and Access Commission.
    As you know, MACPAC is a congressional advisory body 
charged with analyzing and reviewing Medicaid and CHIP 
policies, and making recommendations to the Congress, the 
Secretary of the U.S. Department of Health and Human Services, 
and the states on issues affecting these programs. Its 17 
members, led by Chair Diane Rowland and Vice Chair David 
Sundwall, are appointed by the U.S. Government Accountability 
Office.
    While the insights and expertise I will share this morning 
build on the analysis conducted by MACPAC staff, they are, in 
fact, the consensus views of the Commission itself. We 
appreciate the opportunity to share MACPAC's recommendations 
and work as this committee considers the future of CHIP.
    Since its enactment, with strong bipartisan support in 
1997, CHIP has played an important role in providing insurance 
coverage and access to health services for tens of millions of 
low and moderate-income children with incomes just above 
Medicaid eligibility levels. Over this period, the share of 
uninsured children in the typical CHIP income range--those with 
family income above 100 percent but below 200 percent of the 
federal poverty level--has fallen by more than half from 22.8 
percent in 1997, to 10 percent in 2013. Given that the last 
federal CHIP allotments under current law are now being 
distributed to states, the Commission has focused considerable 
attention on CHIP over the past year in order to provide the 
Congress with expert advice about the program's future. This 
inquiry, which is ongoing, has considered the program in its 
new context, given the significant change in insurance options 
available to these families, including the exchanges and 
employer-sponsored coverage.
    In its June 2014 report to the Congress, MACPAC recommended 
that the Congress extend federal CHIP funding for a transition 
period of 2 additional years, during which time key issues 
regarding the affordability and adequacy of children's coverage 
can be addressed. In coming to this consensus recommendation, 
the Commission considered what would happen if no CHIP 
allotments were made to the states after fiscal year 2015. It 
found that many children now served by the program would not 
have a smooth transition to another source of coverage. The 
number of uninsured children would likely rise, cost sharing 
would often be significantly higher, and exchange plans 
appeared unready to serve as an adequate alternative in terms 
of benefits and provider networks. My written testimony and the 
Commission's June report provide additional information about 
the nature and extent of these concerns. We are currently 
updating and extending our analyses of benefits, cost sharing, 
network adequacy, and coverage gaps for inclusion in our 2015 
reports.
    When the Commission made its recommendation to extend 
funding, it noted that there was insufficient time between then 
and the end of the current fiscal year to address all the 
issues it identified, either in law or regulation. In addition 
to examining CHIP from the perspective of children and 
families, MACPAC has also considered how different policy 
scenarios affect the states. Under current law, states will run 
out of CHIP funding at various points during fiscal year 2016, 
with more than half of the states exhausting funds in the first 
two quarters. In the absence of federal CHIP funding, states 
with Medicaid expansion CHIP programs, which cover about 2.5 
million children, must maintain their 2010 eligibility levels 
for children through fiscal year 2019 at the regular Medicaid 
matching rate, meaning at increased state cost. By contrast, 
states operating separate CHIP programs, now serving over 5 
million children, are not obligated to continue funding their 
programs if federal CHIP funding is exhausted, and will most 
likely terminate such coverage.
    MACPAC's commissioners feel strongly about the need to 
extend funding for CHIP. A time-limited extension of CHIP 
funding is needed to minimize coverage disruptions, and provide 
for a thorough examination of options addressing affordability, 
adequacy, and transitions to other sources of coverage. An 
abrupt end to CHIP would be a step backward from the progress 
that has been made over the past 15 years. In addition, 
congressional action is required so that states do not respond 
to uncertainty about CHIP's future by implementing policies 
that reduces children's access to services that support their 
healthy growth and development.
    Finally, while MACPAC has recommended a 2-year extension, 
it has also stated that this transition period could be 
extended if the problems it has identified have not been 
addressed within the 2-year period.
    Again, thank you for this opportunity to share the 
Commission's work, and I am happy to answer any questions.
    [The prepared statement of Ms. Schwartz follows:]
    
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    Mr. Pitts. Chair thanks the gentlelady. Thanks to all the 
witnesses for your testimony.
    We will now begin questioning, and I will recognize myself 
5 minutes for that purpose.
    Start with CRS and MACPAC. What is the impact on the 
federal budget if federal CHIP funding is or is not extended, 
and how does that differ based on whether the current match 
rate is increased or not, and whether or not it is a 2- or 4-
year extension? Ms. Mitchell?
    Ms. Mitchell. I can't tell you for sure, that is definitely 
a question for the Congressional Budget Office, but I can tell 
you that we, as we have said, the children in CHIP Medicaid 
expansion programs would continue to receive coverage at a 
lower federal matching rate through at least fiscal year 2019 
due to the MOE. If CHIP funding ends, we know that at least 
some children will be covered under the qualified health plans 
in the health insurance exchanges with some--with subsidized 
coverage, and some children would be uninsured. And you are 
talking about the 23 percentage point increase, if that is 
taken away, then funding for the CHIP program would be less 
than under current law because we would maintain the current E-
FMAP rates, rather than the 23 percentage point increase.
    Mr. Pitts. Dr. Schwartz?
    Ms. Schwartz. Yes, we received a cost estimate from the 
Congressional Budget Office for MACPAC's recommendation, and 
for the 2-year extension CBO estimated that it would increase 
net federal spending by somewhere between $0 and $5 billion 
above the current law baseline. That's a very big bucket. If 
CHIP were fully funded, to speak to the 23 percentage point 
bump, if CHIP were fully funded in fiscal year 2016, with the 
23 percentage point bump, spending would be about $15 billion. 
Without it spending would be $11.3 billion.
    Mr. Pitts. All right, let us stay with you, Dr. Schwartz. 
What is the impact on states if CHIP funding is not extended?
    Ms. Schwartz. The impact on states differs as to whether 
they operate their program as a Medicaid expansion CHIP 
program, in which case they have a continued obligation to 
provide services for those children under the Medicaid program 
at their regular Medicaid match, which is lower, in the 
aggregate, about a 43 percent increase for states because of 
the difference between the two matching rates. It is different 
across different states because of the design decisions that 
they have made, and the extent of their enrollment that is 
enrolled in Medicaid expansion CHIP versus separate CHIP.
    Mr. Pitts. OK. Ms. Baumrucker, there are nearly 270,000 
children in Pennsylvania in CHIP. The Affordable Care Act 
required states to transition CHIP children aged 6 through 18, 
in families with annual incomes of less than 133 percent 
federal poverty level, to Medicaid beginning January 1 of this 
year. This was a big issue for people in my district in 
Pennsylvania. Nationally, do you know how many hundreds of 
thousands of children lost their CHIP coverage this year, and 
were instead enrolled into Medicaid as a result of the 
Affordable Care Act?
    Ms. Baumrucker. There was an estimate--there we go. There 
was an estimate that was done by the Georgetown Center for 
Children and Families in August of 2013 that suggested that 21 
states were transitioning--were required to transition their 
separate CHIP program children into CHIP Medicaid expansion 
programs as a result of the ACA eligibility changes, and 
according to Georgetown and Kaiser, this represented about 28 
percent of CHIP enrollees, or approximately 562,000 children.
    Mr. Pitts. OK. Let's go back to MACPAC. In 2007, CBO wrote 
a paper saying the literature on crowd-out for CHIP children 
ranged from 25 to 50 percent. A 2012 report from the National 
Bureau of Economic Research found the upper bound of the rate 
of crowd-out to be 46 percent. What concerns does MACPAC have 
regarding to what extent this CHIP coverage crowds out private 
coverage?
    Ms. Schwartz. Clearly, crowding out private coverage is not 
desirable, particularly in terms of federal spending. MACPAC 
has not done its own analyses of crowd-out, and we have cited 
the CBO report that you have cited. The Secretary's recent 
evaluation of the CHIP report--CHIP program has a much lower 
number. An article that came out in Health Affairs a couple of 
months ago reported a much higher number. And I think that the 
experts are somewhat at a loss as to a point estimate.
    We observe private coverage declining, we observe CHIP 
coverage increasing, but it is very difficult to design a study 
that properly teases out the role of CHIP in that dynamic.
    Mr. Pitts. Ms. Yocom, you want to comment on that question? 
What concerns does GAO have that might duplicate private--that 
this might duplicate private coverage and unnecessarily 
increase federal expenditures?
    Ms. Yocom. Well, similar to what Dr. Schwartz said, there 
is always a concern if you are substituting federal dollars for 
private dollars. One issue with crowd-out is, it is extremely 
difficult to measure, and then even if measured, it is 
extremely difficult to think about causality and what happens 
with it.
    One of the issues that we ran into in looking at this many 
years ago now, which I think is still relevant, is the fact 
that the insurance coverage available was not necessarily 
comparable to what was being offered. So while there was a 
substitution effect, you weren't substituting a similar type of 
coverage. Under the Affordable Care Act, there will be more 
standardization of what is a qualified health plan, and it may 
be a little bit easier to take an analysis and look and see 
what types of substitution might be happening.
    Mr. Pitts. Thank you.
    Chair recognizes the ranking member, Mr. Pallone, 5 minutes 
for questions.
    Mr. Pallone. Thank you. I wanted to ask Dr. Schwartz, in 
the CHIP reauthorization legislation in 2009, Congress gave 
states the new option to reduce bureaucracy and help make the 
Medicaid and CHIP enrollment process easier, called express 
lane eligibility. And this state option was only authorized on 
a temporary basis, but recently Congress acted to extend it 
through September of next year. This provision allows states to 
use family data from other programs like SNAP to determine 
Medicaid and/or CHIP eligibility, and it is a win for families 
that don't have to keep providing the same info twice, and it 
is a win for states who have demonstrated this approach saves 
administrative dollars.
    It seems to make little sense that Congress would have to 
keep authorizing this commonsense provision. So, Ms. Schwartz, 
I believe that MACPAC has examined this issue, and could you 
tell us what you have found, and also what the Commission 
recommends with respect to express lane eligibility?
    Ms. Schwartz. Yes----
    Mr. Pallone. You put the mic on, yes.
    Ms. Schwartz. One of our statutory requirements is to 
comment on reports of the Secretary to the Congress, and in 
April, MACPAC sent official comments to this committee and to 
others on the mandated evaluation of express lane eligibility 
by the department. In that letter, MACPAC noted its support for 
making express lane eligibility a permanent option, presuming 
that it does not result in incorrect eligibility 
determinations.
    The Commission also recommended that express lane be 
extended to adults, which would be consistent with other 
actions that have been taken to simplify and streamline 
enrollment processes, and also would allow processing of the 
family as a unit, rather than processing parents and children 
separately.
    The Commission also noted that it would allow states--the 
13 states that have used express lane, that have invested in 
this approach to continue to maintain the gains that they have 
seen, noting, for example, that the state of Louisiana told the 
Commission that they had reduced 200 eligibility worker 
positions as a result of adopting express lane.
    And finally, in that letter the Commission noted the need 
for guidance from CMS to the states on how to measure the 
accuracy of eligibility determinations.
    Mr. Pallone. Thank you. Let me ask, as you know, just 
having health insurance isn't enough; the coverage needs to be 
affordable, both when you go to the doctor, and also in the 
amount of money you have to pay to keep insured. And as you 
know, Medicaid includes important out-of-pocket cost 
protections for children with respect to premiums and 
copayments. And sometimes we hear that beneficiaries need to 
have more skin in the game, or states should be allowed to 
charge beneficiaries more in the name of personal 
responsibility. I believe MACPAC has looked into the issue of 
how out-of-pocket costs like premiums affect access, and would 
have you found, and again, what did you recommend?
    Ms. Schwartz. Yes, in the Commission's March 2014 report to 
the Congress, the Commission made a recommendation to align 
premium policies in separate CHIP programs with those in 
Medicaid so that families with incomes below 150 percent of the 
federal poverty level should not be subject to CHIP premiums. 
The research shows that children and families at this low level 
of poverty are much more price-sensitive than higher income 
enrollees, and below 150 percent of the federal poverty level, 
premium requirements increased uninsurance substantially.
    This recommendation would affect only eight states that 
continue to charge CHIP premiums below 150 percent of the 
federal poverty level.
    Mr. Pallone. Well, thank you, Doctor. I hope we can see 
Congress implement this commonsense MACPAC recommendation and 
protect low-income children from losing coverage as a result of 
unaffordable premiums.
    And again, I just wanted to ask you, I have heard some 
people argue that Medicaid is somehow harmful for patients, I 
am getting into Medicaid now, and that is because there is 
inconsistent quality or lack of information about quality, and 
somehow the program is bad for patients, but I wanted to ask 
you, do you think inconsistent quality or lack of quality info 
is a problem unique to Medicaid, or is that something our 
health system as a whole struggles with? I was particularly 
interested in this recent study on the Oregon Medicaid program 
that shows that Medicaid really does make a difference. And if 
you could comment on that or any other states.
    Ms. Schwartz. Yes. The Commission recently submitted a 
comment letter on the department's report on use of quality 
measures, the science of quality measurement, and the 
infrastructure for both measuring and holding health systems 
accountable for quality is growing. There is more work to be 
done. A very important factor to keep in mind when looking at 
differences in quality is an adjustment for health status 
because, clearly, individuals who are sicker to begin with tend 
to have poorer health outcomes. When the proper adjustments are 
done for health status, Medicaid beneficiaries tend to do as 
well as others. Of course, there is room for improvement across 
the health system.
    Mr. Pallone. All right, thank you very much.
    Mr. Pitts. Chair now recognizes the vice chairman, Dr. 
Burgess, 5 minutes for questions.
    Mr. Burgess. Thank you, Mr. Chairman. And I apologize for 
my absence. I am toggling between two subcommittee hearings 
this morning. It is always a challenge.
    Let me ask Ms. Yocom, you were talking to the subcommittee 
chairman about the crowd-out issues. I am actually also 
interested in the provider update rates. We oftentimes hear 
SCHIP and Medicaid lumped in together, that a patient with a 
private insurance policy has about a 75 percent chance of a 
physician taking a new patient, whereas with Medicaid and SCHIP 
lumped together, it is under 50 percent. Do you have a sense as 
to where the actual CHIP program falls in that?
    Ms. Yocom. The survey data that we looked at that surveyed 
physicians, I believe we combined both Medicaid and CHIP 
together. In looking at the MEPS data and the issues about 
referring to specialist care, which seems to be where the 
biggest access issue is, CHIP fared slightly better than 
Medicaid, and both programs fared significantly better than 
someone who was uninsured. There was a statistical difference 
between those who were privately insured, however. There was 
better access for someone with private insurance in specialty 
care.
    Mr. Burgess. I will just--I practiced for a number of years 
in north Texas and my own experience was that it was hard to 
find specialty physicians, particularly in Medicaid because a 
larger proportion of my patients--I was an OB/GYN--and a larger 
proportion of my patients were covered by Medicaid rather than 
SCHIP but it was difficult. And one of the obstacles always 
seemed to be the administrative barriers that were placed in 
front of the physician for either being enrolled in the 
program, difficulty getting paid, reimbursement rates are 
always an issue, but over and above that, there was a hassle 
factor associated with, particularly Medicaid, but I suspect in 
both Medicaid and SCHIP.
    Has GAO looked into that?
    Ms. Yocom. Some of the studies we have done would confirm 
that from the perspective of physicians, that it is not just 
about the payment, it certainly is also about the paperwork and 
the requirements that are involved.
    The thing that is always difficult in looking at the 
program is balancing those requirements for documentation 
against some of the bad actors who are capitalizing on the 
services, and I think that is a constant struggle.
    Mr. Burgess. And, of course, it is just anecdotal, but I 
did hear from physicians who would tell me, OK, I will see this 
patient because I like you and you are a friend. I am not going 
to submit anything for payment because it is just not worth 
my--I will pay more in having my office submit this for payment 
than I would ever be reimbursed. Is that just unique to north 
Texas, or have you heard that in other areas as well?
    Ms. Yocom. In the times that we have interviewed physician 
groups and things like that, that has come up. There is no way 
to quantify how big that is. I think many physicians do--they 
do want to help people who need care, and they can't. They also 
have to run a business.
    Mr. Burgess. Right.
    Ms. Yocom. So sometimes that is where some of those limits 
come in.
    Mr. Burgess. Let me just ask a question generally, and 
really for anyone on the panel, but, Dr. Schwartz, it is 
particularly to you. We kind of heard during this subcommittee, 
during the passage of the Affordable Care Act, that once we 
were able to be in the elision fields of the ACA, programs like 
SCHIP wouldn't be necessary any longer. So is SCHIP still 
necessary with the full implementation of the Affordable Care 
Act?
    Ms. Schwartz. I think when the Commission took a deep look 
last year at the coverage and the benefits and cost sharing 
that is available in the exchanges, these concerns surfaced, 
and our analyses primarily relied on GAO's work comparing 
benefits and cost sharing between separate CHIP programs and 
benchmarks for the design of exchange benefits.
    We are now looking, now that there are real data on 
premiums, and real data on the benefits being offered by plans, 
we are trying to get a better sense of where those differences 
are and the magnitude of those differences. We have shared some 
of that information with the Commission, and I would anticipate 
some recommendations coming from the Commission by our June 
report this year to address those issues around adequacy and 
affordability. But right now, the Commission's concern is that 
the changes are not ready for the CHIP kids, and that a 
significant number of kids with CHIP would not be able to 
afford the exchange coverage.
    Mr. Burgess. Well, I appreciate that answer. And my time 
has expired, so I will leave it there, but I do just want to 
point out that June is great, but we will be talking 
reauthorization prior to June, so all of the, you know, 
expediting you can do with that report will be helpful to 
members of the subcommittee.
    So thank you, Mr. Chairman. I will yield back.
    Mr. Pitts. Chair thanks the gentleman.
    The ranking member has a UC request.
    Mr. Pallone. Mr. Chairman, I wanted to ask unanimous 
consent to submit for the record, on behalf of Congressman 
Lance, a statement submitted for the hearing by the March of 
Dimes.
    Mr. Pitts. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Pitts. And the chair recognizes the gentleman from New 
York, Mr. Engel, 5 minutes for questions.
    Mr. Engel. Thank you very much, Mr. Chairman. Thank you for 
holding today's hearing. Thank you, Mr. Pallone.
    And let me first say, I have always been a strong supporter 
of CHIP. With funding for the program set to end in less than a 
year, I believe it is really imperative that Congress acts 
quickly to provide assurances to the states and the children 
served by this program, that their access to healthcare 
services will continue. It is absolutely imperative. It has 
been a tremendous success in my home state of New York. When 
CHIP was enacted, there were over 800,000 uninsured children 
living in New York. Now we are down to about 100,000 uninsured 
children, which represents a nearly 90 percent decline. Our 
program, titled Child Health Plus, is currently providing 
quality affordable healthcare to approximately 496,000 New York 
children. And after 2 decades of great success, I would like to 
see funding continue for this very important program, which is 
why I am pleased to be a cosponsor of Mr. Pallone's 
legislation, the CHIP Extension and Improvement Act, and it is 
my hope that the committee will act quickly on this 
legislation.
    Let me start with Dr. Schwartz. MACPAC unanimously 
represented that CHIP funding be extended for 2 years. Can you 
elaborate on what issues MACPAC recommends Congress, HHS, and 
the states focus on in the intervening years to ensure that 
children maintain access to vital healthcare services?
    Ms. Schwartz. Yes. The Commission's key concerns are the 
extent to which children will have an alternate source of 
coverage, the affordability of that coverage, the adequacy of 
the coverage in terms of the benefits that are covered, and the 
adequacy of the networks, and the differential impact on 
states. Those are the areas in which we are looking, and that 
is the reason for the 2-year recommendation for funding because 
those questions can't be solved quickly, but we believe that a 
2-year time frame would provide the impetus to make those 
changes to a smooth transition to other sources of coverage.
    Mr. Engel. Well, thank you. Let me also say, Dr. Schwartz, 
I couldn't agree more with the statement in your written 
testimony, and I am going to quote you when you said, ``an 
abrupt end to CHIP would be a step backward from the progress 
that has been made under CHIP.'' And that is so true because 
the cost of living in my area of New York is quite high, and 
there is a significant difference in healthcare costs for those 
on CHIP, and the child-only policies available through our 
exchange, New York State of Health.
    CHIP has been tremendously successful in providing lower-
middle-income children with affordable health insurance, and 
for them to possibly lose that coverage would be very 
unfortunate.
    So, Dr. Schwartz, we touched on it a little bit before in 
one of the questions, but can you or any of the other witnesses 
elaborate on the cost differences between CHIP and plans 
available in the various state health insurance exchanges that 
have been examined? Ms. Yocom?
    Ms. Yocom. Sorry. Yes. We did find that cost was one of the 
areas where we could pretty consistently see that there was a 
difference between CHIP and the benchmark plans. There is a 
higher use of deductibles and larger deductibles. Premiums were 
more likely to be lower in CHIP. And the other thing, of 
course, is that CHIP is limited to 5 percent of a family's 
income. On the benchmark and qualified health plan side, there 
is a limit on premiums, but other costs are not necessarily 
counted in that limit. So it is a little more difficult to be 
sure that things remain affordable.
    Mr. Engel. Thank you. Let me also ask anyone on the panel, 
if CHIP funding does not continue past this fiscal year, what 
will happen to the children in states that run separate CHIP 
programs, but do not have plans in place through their 
exchanges that are comparable to CHIP in benefits and cost 
sharing? And coupled with that is, do states have any 
obligation to help transition beneficiaries to affordable 
exchanges plans?
    Ms. Yocom. The states' obligation is to take those children 
and screen them first for Medicaid eligibility, and then to 
consider them for coverage under the exchange. Our work 
identified about 1.9 million children who are likely not to 
qualify for the exchange because of having a parent that has 
employer-sponsored coverage. And affordability has been defined 
as a single, self-only coverage amount, and not a family 
coverage amount. That difference, in looking at what the costs 
are, could place some people out of the market in terms of 
being able to afford----
    Mr. Engel. And that just shows how imperative it is that 
CHIP funding continues past this fiscal year.
    Thank you, Mr. Chairman.
    Mr. Pitts. Chair thanks the gentleman.
    We still have two more hearings next week in the Health 
Subcommittee, but let me just say in case I don't get to say it 
next week, we are going to be losing Dr. Gingrey, a very valued 
member of our Health Subcommittee, and I am pleased to 
recognize him for 5 minutes for questions at this time.
    Mr. Gingrey. Chairman Pitts, thank you very much. I 
certainly appreciate that. I am going to miss you guys and gals 
on this great committee.
    My question and comment will pertain to fiscal 
responsibility and, indeed, sanity. So before I get into that, 
I want to make sure everybody understands, my colleagues 
especially, that I think the Medicaid program is a great 
program, going back to 1965. And I think the CHIP program, in 
Georgia we call it Peach Care, I think it is a great program, 
going back to 1997 and 2009, and all that has been discussed, 
but naturally, I am a fiscal conservative, and--as we all 
should be, and worried about the increased spending and 
responsibility, particularly to our states.
    Obamacare included a provision which requires, as you know, 
the states to maintain income eligibility levels for CHIP and 
Medicaid through September 2019 as a condition of receiving 
payments under Medicaid and SCHIP, notwithstanding the lack of 
corresponding provision federal appropriations for fiscal year 
2016 through 2019. This provision is often referred to, as has 
been mentioned, the Maintenance of Effort, or MOE, requirement.
    While Medicaid and CHIP costs are increasing, is this 
effectively an unfunded mandate on states? And the last 
question, and more importantly, while a lot of states, a lot of 
states, have suggested extending the CHIP funding for these--
that 4-year gap, is it fair to say that they are assuming that 
the MOE, Maintenance of Effort, remains, but they might feel 
differently if MOE was scraped. And I, indeed, have called many 
times since March of 2010 for eliminating that Maintenance of 
Effort requirement. I think if--you might have more states 
accepting Medicaid expansion up to 133 percent of the federal 
poverty level if they could make sure that the people that were 
enrolled were indeed eligible, and doing that periodically, if 
it is every 1 or 2 or 3 years or whatever, because we want the 
money to go to those that really need it.
    So any member really of the panel, and we can start with 
Ms. Baumgartner if you like. I know I mispronounced your name, 
but why don't you go ahead and respond to that for me, if you 
will?
    Ms. Baumrucker. So I hear--there are a lot of issues that 
you discussed in the--in your question and in your comment 
about whether or not CHIP funding--what is the responsibility 
of states after the MOE--with the MOE in place. And so as we 
have discussed on the panel today, Medicaid expansion children 
continue to be enrolled in the Medicaid program, and are 
matched at the federal matching rate for the Medicaid program. 
The separate CHIP children, if there are qualified health 
coverage through--if there are Secretary-certified plans 
available in the exchanges, separate state children would first 
be screened for Medicaid, and if they are eligible, they would 
be enrolled there. Otherwise, the CHIP program requires them, 
under current law, to be--if there are certified coverage 
that--enrolled in that coverage. So if you remove the MOE 
requirements, then it would be up to states as to whether or 
not they would continue their child coverage going forward, but 
at this point, that 2019 requirement requires states to 
maintain Medicaid, and the CHIP question----
    Mr. Gingrey. Well, Dr. Schwartz, would you like to respond 
to that as well?
    Ms. Schwartz. I would just say that in talking with the 
folks who run CHIP programs in the states, that they are very 
concerned about needing to know what the future is for their 
state budgeting purposes, and concerned about what will happen 
to the kids that they are currently responsible for. And I 
believe that is well reflected in the letters from the 
governors----
    Mr. Gingrey. Well, I am going to interrupt you just for a 
second. I apologize for that, because my time is running out 
and I wanted just to make a comment.
    The question was brought up about the express lane process, 
and expanding that into the future. I am very concerned about 
the express lane if people that are eligible, let's say, for 
the SNAP program are automatically eligible for Medicaid 
expansion or SCHIP, when there are some states, and we know 
this, who make people eligible for the SNAP program by virtue 
of the LIHEAP program, where they are giving them $1 a month to 
make them eligible, and then they are automatically eligible 
for SNAP. And now this express lane would make some of those 
people automatically eligible for the SCHIP program and 
Medicaid expansion. So it goes on and on and on. And we have a 
responsibility on this committee to make sure that we look at 
that problem and solve that before we go expanding coverage and 
appropriations for an additional 4 years.
    So, Mr. Chairman, thanks for your indulgence, and I yield 
back.
    Mr. Pitts. Again, the chair thanks the gentleman.
    And now recognize the gentlelady from California, Ms. 
Capps, 5 minutes for questions.
    Mrs. Capps. Thank you, Mr. Chairman, Ranking Member 
Pallone, for holding such an important hearing.
    Since its inception, CHIP, or C-H-I-P, has been a critical 
healthcare program for children. I think we all agree upon 
that. It has let parents rest easier and has shown the Nation 
what bipartisan support can do to make a real impact on each of 
our communities. And my background as a long-time school nurse, 
I can't impress upon my colleagues, and I know I have run this 
into the ground, but the importance of our children having a 
formal connection early on to the healthcare system, not just 
for when they get sick, but to keep them healthy, to keep them 
thriving and ready to learn.
    The CHIP program is key to the health and economic security 
of all of our families, linking over 8 million of our Nation's 
children to care, and together with Medi-Cal, my state's 
Medicaid program, which we call CHGP in California, these 
programs have cut the rate of children's uninsurance by half. 
This is something that must be supported and continued.
    And one thing I want to touch on briefly in response to a 
question earlier from our chairman, MACPAC does offer 
impressive coverage statistics for children over the history of 
CHIP. The share of near-poor children without health insurance 
has dropped 22.8 percent in 1997, to 10 percent in 2013, which 
is remarkable. Even while private coverage rates declined from 
55 to 27.1 percent. Simply put, at a time when employer-
sponsored coverage was declining, we still managed to bolster 
coverage for children.
    Private coverage rate--rates also declined precipitously 
for near-poor adults, from 52.6 percent to 35.8 percent. So 
clearly, CHIP wasn't the reason why private rates declined, but 
it and Medicaid were the reason why children's coverage 
improved, despite an overall decline in private coverage.
    Similarly, all of you--each of you has highlighted 
significant issues that could arise if the CHIP program is not 
funded for additional years. Children could become uninsured, 
eroding the progress we have made since the beginning of the 
program, and cost to taxpayers would go up, since keeping kids 
in CHIP costs the Federal Government so much less than moving 
them to an exchange marketplace coverage.
    So my first question, just to get on the record, and I 
don't care who answers this, if CHIP funding is not extended, 
what would happen to the overall rate of uninsured children? 
Anyone want to put that out?
    Ms. Schwartz. I don't think we have calculated an overall 
rate of uninsured children, but the estimate that we have 
relied on to date is that about 2 million children would lose 
coverage. We are now doing additional analyses to get a better 
sense and more clarity around that number.
    Mrs. Capps. Thank you. And I think that gives us the big 
picture of how important this program is.
    And for those CHIP children who would become insured 
through the exchanges, how would this affect their level of 
appropriate age-specific benefits and the affordability of 
coverage? Again, sort of a generalized question for anyone. 
Thank you, Ms. Yocom.
    Ms. Yocom. Sure. Affordability certainly would change, and 
costs would likely be higher for families who move from CHIP to 
the exchange. In terms of benefits, we identified a few 
benefits that were generally better under CHIP than under 
Medicaid----
    Mrs. Capps. Yes.
    Ms. Yocom [continuing]. Sorry, under the exchanges, and 
those were vision and dental----
    Mrs. Capps. Yes.
    Ms. Yocom [continuing]. And some on rehabilitative 
services, but that was a bit more mixed. There were also CHIP 
plans that did not have rehabilitative services as well.
    Mrs. Capps. I see. So, Dr. Schwartz, specifically for you, 
in terms of logistics, if CHIP funding is not extended, what 
are the implications for state legislatures?
    Ms. Schwartz. State legislatures will begin meeting soon. 
Those that meet for less than the full year, in January, are 
very concerned about this issue, and need to have some kind of 
contingency plan if the federal funding runs out. The National 
Conference of State Legislatures have said that this is 
problematic for all state legislatures, whether they have a 
full-time legislature or one that meets every 2 years, or one 
that meets annually.
    Mrs. Capps. Is there an estimate on when states would run 
out of CHIP money, and when families would have to be notified 
that they will no longer have coverage?
    Ms. Schwartz. With regard to when the funding would run 
out, it is different in different states, as I mentioned in my 
testimony. But every state will run out by the end of 2016.
    On the question of notice requirements, there are notice 
requirements under current law. This is a somewhat unique 
situation, and so that would be an area where, certainly, we 
would like to get some clarity from CMS about what states would 
be required to do.
    Mrs. Capps. I know I am over my time, but for our part, I 
don't believe we as a committee would allow that to happen, and 
that is why H.R. 5364, the CHIP Extension Improvement Act, is a 
good bill to sign on to. Happy to have done that.
    Thank you very much again for being here.
    Mr. Pallone [presiding]. Gentlelady's time has expired.
    The chair now recognizes the gentleman from Virginia, Mr. 
Griffith, 5 minutes for questions please.
    Mr. Griffith. Thank you, Mr. Chairman.
    And if anyone could respond to this, or all of you, in 
response to Chairman Upton and Ranking Member Waxman's letter 
and questions, Virginia Governor, Terry McAuliffe, raised the 
issue of allowing coverage of medically necessary institution 
for mental disease, and the placements for CHIP-eligible 
children, which is currently available to children on Medicaid. 
Given the work that this committee has done on mental health 
under Chairman Murphy, or in the Oversight and Investigations 
Committee that Chairman Murphy chairs during this past year, 
and hearing that testimony, and, of course, being aware of the 
tragedies that took place, while it may not have been helped, 
at Virginia Tech and elsewhere in Virginia, I think this is 
something that ought to be considered.
    Do any of you all have thoughts on whether or not CHIP 
should include providing this type of mental health coverage?
    Ms. Schwartz. I would just say that MACPAC began this fall 
a focused inquiry on behavioral health services in Medicaid and 
CHIP. We are still learning and identifying the problems and 
the concerns. Coverage in institutions of mental diseases in 
Medicaid has certainly been a concern, and that will be an area 
where you will see more from us in the future.
    Mr. Griffith. Because one of the areas--just to underline 
this for you all--one of the areas that we have identified, and 
Chairman Murphy's hard work on this issue and those of us on 
that committee, is that so many young people, particularly 
young males between the ages of 14 and it goes over to like 28, 
which would not apply to CHIP, but particularly these 14-year-
olds I am concerned about and up to the 18 age, they are not 
getting treatment. They know there is something wrong, the 
families know there is something wrong, but they are not even 
going in to get treatment for over a year before they begin, 
and that creates a lot of--or starts the process, and in a lot 
of cases it ends up in very tragic situations without getting 
that treatment.
    All right, let us move on to other subjects while I still 
have some time.
    The American Action Forum, run by former CBO Director, Doug 
Holtz-Eakin, estimated in September that 1.6 million children 
currently in CHIP would fall into the family glitch.
    Ms. Baumrucker, can you explain for those who might be 
watching this hearing later or now, what is the family glitch 
and why is that of concern particularly related to CHIP?
    Ms. Baumrucker. So under the regulation from CMS, or IRS, 
affordability or whether or not you have access to insurance 
coverage that is affordable, so whether you would have access 
to subsidized coverage through the exchanges, is defined 
against an individual, not a full family. And so the idea 
behind families that would fall into that family coverage 
glitch is that they may have access to employer-sponsored 
insurance, but that that insurance coverage would be under the 
9.5 percent of their annual family income, and so would be 
considered affordable, but may or may not be based on their 
income against poverty level.
    Mr. Griffith. OK, so if I can clarify, and I understand it 
but I want to make sure the public understands it as well. What 
you are talking about is, is that in order to be affordable, it 
has to be 9.5 percent of the individual's income or the family 
income, but that is determined against the individual 
employee's wages, and if they happen to have, particularly in a 
single-parent household and they have three or four children at 
home, when you add the cost of covering the children, it is no 
longer 9.5 percent or less of their income, it goes up above 
that, but for purposes--the Affordable Care Act did not take 
that into calculation, or at least the regulations based upon 
the Affordable Care Act, did not take that into consideration, 
and so we have families out there who, notwithstanding the fact 
it is deemed affordable by the Internal Revenue Service, it may 
not be affordable. Is that a correct restatement of what you 
said?
    Ms. Baumrucker. I would agree with that.
    Mr. Griffith. I appreciate that. Thank you so much.
    That being said, and I am going to have to truncate this a 
lot because I talk too much, which often happens. Dental 
insurance, there is a real concern there with the dental 
insurance aspects related to the Affordable Care Act, and of 
course, we know there was the double counting issue. Related to 
CHIP, what can you all tell me about how many children are 
currently getting dental services under CHIP, and how this may 
be impacted as well by the Affordable Care Act? And I saw Ms. 
Yocom nodding. I would be happy for you to give me an answer. 
And I have 20 seconds left.
    Ms. Yocom. OK. No pressure. We did do some work on dental, 
and it is sort of a good-news, bad-news. The good news is 
dental coverage and use of dental services in Medicaid and CHIP 
has actually shown some improvement over the last few years. 
The bad news is it is still not on par with private insurance. 
OK?
    Mr. Griffith. I appreciate that.
    And my time being up, I yield back. Thank you, Mr. 
Chairman.
    Mr. Pitts. Chair thanks the gentleman. And----
    Mrs. Capps. Mr. Chairman.
    Ms. Pitts [continuing]. Mrs. Capps, you are recognized for 
a UC request.
    Mrs. Capps. Yes. I apologize for not doing this on my time 
but I wanted to ask unanimous consent to insert into the record 
the statement from the National Association of Pediatric Nurse 
Practitioners in support of the Child Health and Disability 
Prevention Program, and swift passage of funding for this 
program. And I yield back.
    Mr. Pitts. And without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Pitts. Ms. Castor, you are recognized for 5 minutes for 
questions.
    Ms. Castor. Thank you, Mr. Chairman. And I want to thank 
you and Ranking Member Pallone for your leadership on SCHIP. 
And I would like to thank our witnesses who are here today for 
lending your expertise on the financing of SCHIP, and the 
impact of various policy decisions at the federal and state 
level.
    I come from the state of Florida, and we take great pride 
that an early precursor to SCHIP was developed in the state of 
Florida, in the late '80s and early '90s. I think it was very 
smart, they created insurance that is specific to children's 
needs, and they started with public school enrollment to create 
a large group that gave the state negotiation power to go out 
and get the best rates to cover children, and they used the 
data that they gathered there to demonstrate to other states 
that it is very cost-effective, that--compared to adults a lot 
of time, children are pretty inexpensive when it comes to 
taking care of their healthcare needs. So that allowed other 
states and the Federal Government to say, hey, this is a smart 
policy to invest in children, negotiate lower rates for 
healthcare coverage.
    So now, years later, it is widely embraced, and in response 
to the committee's July correspondence to states asking for 
their input, the overwhelming number of states have said, yes, 
Congress, please extend funding for State Children's Health 
Insurance Program. So we should do this as soon as possible, 
the Congress should act. First, it would give families the 
peace of mind that they need that their children are going to 
be able to get to the doctor's office, get the vaccination 
thingy, get the dental care that they need, but as Dr. Schwartz 
has pointed out, early in the new year, states are going to be 
putting their budgets together and they really need this 
information from the Congress and on the federal side of what 
the funding is going to be. So I would urge us to try to get 
this done in the lame duck to give that certainty, or at least 
in the early part of the new year tackle it and move it through 
as quickly as we can.
    I would like to ask a couple of questions about who remains 
uninsured, and what the barriers are, because even with all of 
this progress over the past years, we still have--I don't know, 
Dr. Schwartz, did you say 10 percent uninsured? It varies state 
to state. In my State of Florida, we are still not doing all 
that we should.
    What are the barriers today to getting children enrolled? 
Does it involve the waiting lists, and then I will have a 
couple of other questions to ask you.
    Ms. Schwartz. Well, I think there are many different 
factors, and I am not going to be able to quantify how much 
each contributes to that amount. There are many children who 
are eligible for Medicaid and CHIP who are not enrolled because 
of lack of awareness or lack of understanding. Certainly, 
waiting periods for CHIP coverage do mean that those children 
remain uninsured in the period in which they have applied, but 
are not eligible for coverage. There are children as well whose 
immigration status does not permit them to be covered under 
Medicaid and CHIP.
    Ms. Castor. So on the waiting list issue, the MACPAC has 
advised the Congress that one way to ensure that children get 
covered is to eliminate those waiting lists. And hasn't this 
been the trend in states over the past couple of years? I think 
I read that at least 20 states have eliminated that waiting 
list. Unlike the State of Florida, unfortunately, I think they 
still say, OK, families and kids, you have to wait 2 months, 
which really doesn't seem to make a lot of sense when you 
acknowledge it is important for children to be healthy and 
ready to learn in the classroom. What is going on with the 
waiting list?
    Ms. Schwartz. Yes, you are correct that states have been 
eliminating their waiting lists. The 37 states that began 2013 
with CHIP waiting periods, by 2014, 16 had eliminated those. 
The Affordable Care Act also required states to limit waiting 
periods to 90 days. And as well, there are a number of 
exemptions to the waiting period. Some states have told u s 
that it takes a lot of work to go through and tick off all 
those exemptions, and it is just better to have no waiting 
period at all, and that was one of MACPAC's recommendations.
    Ms. Castor. Great. Great. And then what role do you think 
the transition to Medicaid Managed Care has played in erecting 
barriers to children being covered, and the fact that a number 
of states have not expanded Medicaid? Does that also play a 
role in creating a barrier to enrollment?
    Ms. Schwartz. The expansion of Medicaid that states have 
the option of taking, of course, applies to adults. It does not 
apply to children. Children are covered in every state. I am 
not aware of any research that shows that Managed Care is a 
barrier to insurance, and in fact, there are many who would 
argue that Managed Care provides a system of care for a child 
with someone--and an organization responsible for that care. So 
I am not able to provide an answer on that.
    Ms. Castor. MACPAC has not examined that?
    Ms. Schwartz. Not from that perspective.
    Ms. Castor. OK, thank you very much.
    Mr. Pitts. Chair thanks the gentlelady.
    And recognizes the gentleman from Florida, Mr. Bilirakis, 5 
minutes for questions.
    Mr. Bilirakis. Thank you, Mr. Chairman. Appreciate it. 
Thanks for holding this hearing.
    Ms. Mitchell, CHIP is a capped allotment and not mandatory 
spending like some other federal programs. Can you talk about 
how CHIP has provided more robust federal budget discipline 
compared to Medicaid and Medicare? Does the flexible benefit 
design help to control costs and increase outcomes in the 
program?
    Ms. Mitchell. Medicaid and CHIP are very different from a 
financial standpoint. They are both mandatory funding. CHIP has 
the capped allotments that states receive every year. Medicaid 
is open-ended. So for every dollar a state spends on their 
Medicaid program, they receive a portion of that back, 
according to their FMAP rate. And the FMAP rate for Medicaid is 
less than the E-FMAP rate that states receive for CHIP. In 
fact, it is--the E-FMAP rate is--for the states are 30 percent 
reduction in what states receive under the FMAP rate. So that 
is the difference between the financing on those two.
    Mr. Bilirakis. OK, thank you. Another question, under the 
President's healthcare law, about half the states have expanded 
Medicaid to cover childless adults, and again, this is for Ms. 
Mitchell. Yet, CHIP is facing a funding cliff. I am concerned 
that we could be subsidizing the care of able-bodied adults, 
and may have lost our focus on the poor and underserved 
children. That is what it was intended to do, in my opinion.
    When CHIP was initially passed, who was the target 
population, I want to hear, and under the broad eligibility 
provisions today, how has that eligibility income level 
shifted? This is for Ms. Mitchell.
    Ms. Mitchell. When CHIP was passed in 1997, the target 
population was targeted low-income children that did not have 
access to insurance. So that was the point of CHIP. Did you 
have anything to add to that?
    Ms. Baumrucker. Sure. As part of the CHIP program, or CHIP 
Reauthorization Act, as well, there was attention that the 
Congress put on finding and enrolling uninsured children in the 
Medicaid program eligibility limits, and to try and bolster 
that lower income--those lower-income families over the CHIP 
children at higher income thresholds. So there is that target 
group. Without CHIP funding, there is a potential, as we have 
noted on the panel, that some could become uninsured going 
forward.
    Mr. Bilirakis. Thank you. Thank you.
    Ms. Yocom, OMB has labeled CHIP as a high-error program, an 
estimated 7 percent improper payment rate. I know that GAO has 
looked at program integrity within Medicaid, but have they 
looked at the CHIP program?
    Ms. Yocom. We have not.
    Mr. Bilirakis. OK. Can you talk about some of GAO's 
Medicaid integrity recommendations, since some states run CHIP 
inside the Medicaid program?
    Ms. Yocom. Sure. Many of GAO's recommendations on program 
integrity and Medicaid relate to making sure that CMS and the 
states work together and collaborate on both information 
systems and oversight. We most recently have recommended that 
there be a more intensive look at Medicaid managed care, in our 
most recent study, we really found that CMS and the states, and 
even the Inspector Generals, were not spending time looking at 
whether payments made by managed care organizations and 
payments made to managed care organizations were done in a 
fiscally responsible way. So that is an area of significant 
need right now.
    Mr. Bilirakis. Thank you very much.
    Dr. Schwartz, has MACPAC looked at the feedback the 
governors provided about the current design of the CHIP 
program, and if so, can you talk about how this will factor 
into what recommendations MACPAC may be making?
    Ms. Schwartz. Yes. At the staff level we have seen some but 
not all of the letters that I believe have been sent to the 
committee. I understand the committee is releasing them and--in 
which case we will brief our commissioners at our meeting next 
week, and that will provide the strongest voice for the state 
perspective in MACPAC's deliberations, because our analyses and 
our recommendations focus on children, families, the Federal 
Government and the states. So we are very grateful to the 
committee for asking for those letters from the states because 
I think we will find them very useful.
    Mr. Bilirakis. Very good. Thank you.
    I yield back, Mr. Chairman.
    Mr. Pitts. Chair thanks the gentleman.
    Now recognize the gentleman from Pennsylvania, Dr. Murphy, 
5 minutes for questions.
    Mr. Murphy. Thank you, Mr. Chairman.
    Ms. Yocom, one of the concerns of Medicaid is that the 
program doesn't always provide good access to care, in part due 
to the low reimbursement rates. And I believe in your report 
from GAO, the GAO report also says that the ways to improve 
access to providers is to change their reluctance to be part by 
changing what is basically low and delayed reimbursement and 
provider enrollment requirements. That is from the GAO report. 
So I understand that GAO did some work comparing Medicaid and 
CHIP kids' access to care in that 2011 report. Can you talk a 
little bit about the findings of that report, what may be the 
difference in care for children in CHIP versus Medicaid?
    Ms. Yocom. OK. Yes. The report that you are referring to 
did not get to the point of what was the quality of care 
received. We did get to the point of looking at how much 
utilization occurred in each type of program, and whether or 
not there were perceptions of access with each of these 
programs. We did find that perceptions of access at the primary 
care level were equally strong across Medicaid, private 
insurance, and CHIP. And in terms of utilization of primary 
care services, we didn't find a statistically significant 
difference in utilization across the private insurance, across 
Medicaid, and across CHIP.
    Where we did find a significant difference was with 
specialty care, both in terms of physicians reporting 
difficulty referring individuals for specialty care, and then--
in Medicaid and in CHIP, and then also with utilization rates 
of specialty care. Also perceptions of access for specialty 
services were also lower for Medicaid and for CHIP.
    Mr. Murphy. Well, let me--they are lower for Medicaid and 
CHIP. One of the questions I have about access, and you heard 
Mr. Griffith make reference to the hearings we have had on 
mental health and mental illness, one of the barriers we find 
that the Federal Government has created under the Medicaid 
program is what is called the same-day billing rule. You can't 
see two doctors in the same day.
    Ms. Yocom. Yes.
    Mr. Murphy. Now, to me, that is an absurd barrier we have. 
Knowing that early symptoms of severe mental illness begin to 
appear, in 50 percent of cases, by age 14. Some may even appear 
earlier. And to have access to a pediatrician or a family 
physician might, say, Ms. Jones or Ms. Smith, your child is 
showing some problems here, we need to get them to see a 
psychiatrist/psychologist right away.
    Ms. Yocom. Yes.
    Mr. Murphy. Medicaid says, nope, you have to come back. 
When we know that they can be referred in the same day, 
compliance is very high when they have to come back, it is a 
problem. And there is an average of 112 weeks between the first 
symptoms and first professional involvement.
    Does CHIP have the same barrier that Medicaid has, do you 
know----
    Ms. Yocom. I----
    Mr. Murphy [continuing]. Or would anybody in the panel know 
about that?
    Ms. Yocom. I don't believe so, but I don't know of any now.
    Mr. Murphy. But that--because that is one of the critical 
barriers in terms of----
    Ms. Yocom. Right.
    Mr. Murphy [continuing]. Access and quality if Medicaid--
and I think one of the reasons there is stigma with mental 
illness is you can't get help.
    Ms. Yocom. Right. And I----
    Mr. Murphy. And so----
    Ms. Yocom. I do know there are states and options that can 
allow you to bill two providers on the same day, and--by 
identifying the providers. So hopefully, not too similar to 
MACPAC, but we also are doing a look right now at behavioral 
health services and some of the issues related to obtaining 
access.
    Mr. Murphy. I hope some of you can give me an answer to 
that question----
    Ms. Yocom. Yes.
    Mr. Murphy [continuing]. Because the committee--if funding 
for the CHIP program is not extended, I am concerned that many 
kids are going to lose their coverage and be enrolled in the 
exchange under the Affordable Care Act, but what we have also 
heard from a number of employers and a number of families is 
what appears to be a lower cost is a very high deductible. And 
so basically now they are given catastrophic insurance where 
they are paying thousands of dollars as a deductible.
    Now, in your testimony, you indicated that approximately 
1.9 million children would not qualify for a subsidy in the 
marketplace due to the employer-based coverage being available. 
Without CHIP, isn't it likely that many of these children are 
just going to go uninsured then, Ms. Yocom?
    Ms. Yocom. I believe it is likely, yes, absent----
    Mr. Murphy. And anybody else have a comment on that, would 
some of these kids just then go without care?
    Ms. Schwartz. That is MACPAC's concern as well, and what we 
are trying to get better data on--at the moment are what the 
offers are for dependent coverage for the parents that have 
employer-sponsored coverage, and what the costs for that 
coverage look like.
    Mr. Murphy. Well, I just want to say, and Mr. Pallone may 
be surprised to hear me say this, but there are some government 
programs that are doing pretty well, and I think in this one, 
CHIP has got some value, I know in Pennsylvania has a strong 
demonstrated value, and rather than cut something that is 
working, we should find a way of learning lessons of value from 
this and not making families go without insurance. So I thank 
you very much.
    I yield back, Mr. Chairman.
    Mr. Pitts. Chair thanks the gentleman.
    Now recognize the chair emeritus of the full committee, Mr. 
Barton, 5 minutes for questions.
    Mr. Barton. Thank you, Mr. Chairman. I just got here. I am 
going to pass on questions. I guess I will ask one question 
just for the record.
    In your opinion, if the next Congress significantly changes 
the Affordable Care Act, which I think we will, would you 
recommend that we maintain SCHIP as a separate program, or 
would it--would you recommend we fold it in with whatever we 
end up doing with the Affordable Care Act? And I will let 
anybody who wants to answer that.
    Ms. Schwartz. It was MACPAC's--the Commission's intention 
in making its recommendation for a 2-year extension of CHIP 
funding to use that 2 years to find a way to make sure that 
there is integration of children into other forms of coverage, 
to ensure that that coverage works well for children, and that 
there is not loss of coverage for people.
    Depending upon what the Congress does, the strategies for 
that integration might have to change, but that clearly is part 
of the intention behind the rationale behind the Commission's 
recommendation.
    Mr. Barton. Anybody else? OK, well, Mr. Chairman, I am 
going to--Ms. Yocom, did you want to say something?
    Ms. Yocom. I was going to point to one study that GAO did 
that looked at the association between parents and caretaker 
coverage with children's coverage, and we did find that there 
is a stronger--there is a strong association with parents who 
have coverage--they're far--their children are far more likely 
to be covered if they have coverage that is similar to their 
parents. When the coverage gets mixed, the likelihood of a 
child obtaining insurance is slightly lower. We did not find 
anything about utilization or access, however.
    Mr. Barton. OK. Mr. Chairman, I am going to yield back. I 
was one of the authors of the last reauthorization of the SCHIP 
program, so I am a supporter of it. I haven't studied the issue 
well enough to know where we are going to go in the next 
Congress, but I will definitely work with you and other members 
of this subcommittee to do that.
    Mr. Pitts. The chair thanks the gentleman.
    Now recognize the gentlelady from North Carolina, Ms. 
Ellmers, 5 minutes for questions.
    Mrs. Ellmers. Thank you, Mr. Chairman, and thank you to our 
panel for being here today.
    One of the issues that I have been working on that is very 
important to me is access to healthcare services for children 
with life-threatening illnesses. Congressman Moran and I have 
sponsored bipartisan legislation, the Children's Program of 
All-Inclusive Coordinated Care, or ChiPACC--Act of 2014, which 
is H.R. 4605. A little promotion there.
    Basically, this is based on a collaborative model of care 
developed by Children's Hospice International. This model 
provides comprehensive and coordinated care for Medicaid-
eligible children who suffer from life-threatening diseases. 
Currently, the ChiPACC program is operating in five waiver 
states. This legislation would allow states the flexibility to 
implement ChiPACC as a Medicaid state plan option. The program 
provides improved access to critical care services for this 
population of children, while resulting in cost savings through 
their state Medicaid program.
    I would just ask that you look into that piece of 
legislation because, again, we will be putting it forward into 
the new Congress.
    My questions, starting off with Dr. Schwartz. When our 
committee asked our state about CHIP funding, the state 
emphasized that the CHIP funding expires qualified plans. A 
federal facilitated marketplace could experience an increase in 
cost sharing by thousands of dollars per year. Of course, that 
depends on the number of children, health status and state of 
the children at the time. Therefore, would a compromise be made 
to continue the CHIP program with a greater financial 
contribution higher than the current 5 percent threshold, but 
lower than the cost sharing that would be incurred on the 
federally facilitated marketplace? In other words, how do we--
from the beneficiary's perspective, increase their portion?
    Ms. Schwartz. MACPAC is currently undertaking analyses to 
look at the impact of cost sharing, particularly in the 
exchanges on families----
    Mrs. Ellmers. Yes. Yes.
    Ms. Schwartz [continuing]. And that impact varies quite a 
bit based on the healthcare use of the children. So the 
children you are most concerned about stand to have the highest 
cost sharing----
    Mrs. Ellmers. Yes.
    Ms. Schwartz [continuing]. Because of the service level 
cost sharing.
    Mrs. Ellmers. Yes.
    Ms. Schwartz. But that could be--what you suggest could be 
certainly one approach that we could look at.
    Mrs. Ellmers. OK. Also, as a follow-up to that, under 
current law for 2016, or will be implemented in 2016, the CHIP 
enhanced federal medical assistance percentage is scheduled to 
increase by 23 percent. Now, according to MACPAC or CBO 
estimates, will the additional billions of dollars that will be 
generated from that in federal funding result in more children 
receiving health coverage? Will there be an increase in the 
number? And I apologize if any of these questions have already 
been posed to you because I did come in late.
    Ms. Schwartz. OK, the increased funding results from when 
you have a higher matching rate, the states use the money more 
rapidly, and so to get through the same period of time with the 
same enrollment----
    Mrs. Ellmers. Yes
    Ms. Schwartz [continuing]. It requires more dollars. It is 
not based on a change in enrollment.
    Mrs. Ellmers. So it won't increase the number of children 
receiving services?
    Ms. Schwartz. That is affected by the eligibility level, 
not by the match rate.
    Mrs. Ellmers. OK. Ms. Yocom, I have a question for you. How 
much money could Congress save in federal taxpayer dollars if 
the 23 percent increase were set aside or scraped?
    Ms. Yocom. I am sorry, I don't think I can answer that. One 
of the things that happens with increasing that matching rate 
is the funds will disappear more quickly----
    Mrs. Ellmers. Yes.
    Ms. Yocom [continuing]. And that could lead to states 
struggling to continue to cover their----
    Mrs. Ellmers. Yes. But that hasn't necessarily been 
something that the GAO has already looked into?
    Ms. Yocom. It is not something we have looked at now.
    Mrs. Ellmers. OK. OK, well, thank you very much.
    And, Mr. Chairman, I yield back the remainder of my time. 
Thank you.
    Mr. Pitts. Chair thanks the gentlelady.
    Now recognize the gentleman from New Jersey, Mr. Lance, 5 
minutes for questions.
    Mr. Lance. Thank you very much, and good morning to you 
all. I have been involved in another hearing. This is an 
incredibly important topic.
    A number of members on the subcommittee, including me, are 
from states that extend CHIP coverage to pregnant women. As I 
understand it, it is estimated that about 370,000 pregnant 
women are covered each year in the 18 states that offer the 
coverage. Is there data to suggest that pregnant mothers have 
better health outcomes with CHIP as opposed to Medicaid? 
Whoever on the panel would be interested in responding to that.
    Ms. Yocom. I am not aware of data that shows that, so no.
    Mr. Lance. Anybody else? Regarding another aspect of this 
issue, Ms. Tavenner said to a senate committee that existing 
CHIP regulations require assessment for all other insurance 
affordability programs, including Medicaid and the premium tax 
credit when CHIP eligibility for a child is ending. Can any of 
the distinguished members of the panel elaborate on what this 
assessment entails, or qualified health plans, for example, 
currently available that would be considered adequate for 
children leaving CHIP?
    Ms. Yocom. Yes. One of our more recent studies did take a 
look in five states. We looked at benchmark plans which were 
the basis for coverage under qualified health plans, and we 
have some ongoing work as well right now. But essentially, we 
did find that costs would be higher, in some cases, 
particularly with vision and hearing services, that the 
coverage under the benchmark plans was not as robust as what is 
offered under CHIP.
    Mr. Lance. Thank you. Others on the panel? Let me urge the 
distinguished members of the panel to consider the situation 
that was suggested by Chairman Emeritus Barton. The new 
Congress may very well try to amend the Affordable Care Act in 
significant ways. The President could sign that or veto that, 
but regardless of our action or his action, it is my legal 
judgment that the Supreme Court may rule as not consistent with 
statutory law, current subsidies to the Federal Exchange. I 
think it is an extremely important case, and I think the Court 
could quite easily conclude that black letter law does not 
permit subsidies to the Federal Exchange.
    If that were to occur then the Affordable Care Act might 
collapse under its own weight, and if that were to occur, then 
Congress will certainly have to address the CHIP issue 
separately and distinctly from the Affordable Care Act. And so 
I would encourage the panel to consider what actions we should 
take moving forward if that were to occur, and it is my legal 
judgment that it might very well occur.
    Do any of the members of the panel have initial thoughts on 
what I am suggesting? Dr. Schwartz?
    Ms. Schwartz. Only to say that to the extent that premium 
subsides are not available, that obviously----
    Mr. Lance. Yes.
    Ms. Schwartz [continuing]. Changes the options for children 
significantly.
    Mr. Lance. Yes.
    Ms. Schwartz. And so it is always a question of CHIP 
relative to what, and so I think your point is well taken and 
it is one that the Commission will be considering.
    Mr. Lance. Thank you. There are pros and cons in having 
CHIP folded into the ACA, I understand that, but CHIP predates 
the ACA, there are many of us who support CHIP who certainly 
are vigorously in opposition to the ACA, and I hope that we 
cannot confuse the two or conflate the two. And the Supreme 
Court has granted certiorari in this case, well, there will be 
oral arguments in March, I suppose, and a decision by June, but 
I would encourage all on the panel to consider what might occur 
if what I suggest eventuates.
    Thank you very much, Mr. Chairman.
    Mr. Pitts. The chair thanks the gentleman.
    That concludes this round of questioning. We will go to one 
follow-up per side.
    I will recognize myself 5 minutes for that purpose.
    And let me continue on Mrs. Ellmers' question. She asked it 
of GAO. Let me ask it of MACPAC. What many of the advocates and 
public health groups are saying is that CHIP is a success today 
under today's match rate. Can you confirm that if Congress were 
to scrap the 23 percent increased FMAP in current law, and only 
extend CHIP for 2 years, the CBO's current projections are that 
extending CHIP for that time could save federal money, reduce 
the deficit. Dr. Schwartz?
    Ms. Schwartz. The savings do come from comparison to the 
alternative. That is, as long as states are putting in more 
money, the Federal Government is putting in less, and so yes, 
that would potentially result in savings.
    Mr. Pitts. All right, let me continue with you. States have 
told us that under the MAGI, the Modified Adjusted Gross 
Income, calculations, there are lottery winners currently 
enrolled in Medicaid. In fact, in 2014, one state reported to 
us that roughly one in four of their lottery winners were 
enrolled in Medicaid, or had a family member in Medicaid. And 
this includes at least one individual who won more than $25 
million, but still was receiving Medicaid services. Since CHIP 
uses MAGI calculations as well, is it possible that CHIP is 
providing coverage for lottery winners?
    Ms. Schwartz. I am not familiar with the specific cases 
that you cite, but it would be my understanding that, to the 
extent that lottery winnings are considered taxable income, 
that they would be taken into account in a MAGI calculation.
    Mr. Pitts. Ms. Yocom, would you respond to that question?
    Ms. Yocom. Yes. I can't do much more than echo what Dr. 
Schwartz just said. Yes.
    Mr. Pitts. Anyone else? All right, that concludes my 
questioning.
    I will recognize the ranking member 5 minutes for a follow-
up.
    Mr. Pallone. Dr. Schwartz, let me ask you, I want to follow 
up on the earlier question relating to the transfer of children 
from CHIP to Medicaid. As you know, the Early Periodic 
Screening, Detection and Treatment benefit is available for all 
children in Medicaid, but not necessarily in CHIP. Do you have 
any estimate of the number of children of those 500,000 
children who saw an improvement in coverage as a result, and do 
you have any estimate of the number of children who now benefit 
from reduced cost sharing as a result of the--that transfer?
    Ms. Schwartz. That is a great question, but I don't think 
we have the data to answer that question.
    Mr. Pallone. So you think you could get back to us, or you 
don't have sufficient data?
    Ms. Schwartz. We would have to look at the states which 
were transitioning kids, and we would have to look at the 
difference between the benefit package in their CHIP program 
versus the Medicaid program. I would be hesitant to say that we 
could then say anything about their specific healthcare use, 
and so we will look into what we can provide the committee.
    Mr. Pallone. All right, I appreciate that. I just wanted to 
mention, it is not a question, but I just wanted to mention 
that in formal responses to the Energy and Commerce Committee 
and the Senate Finance Committee, governors from 39 states 
expressed support for CHIP, and urged Congress to extend the 
program, and noted the role the program plays in providing 
affordable and comprehensive coverage to children. On July 29, 
the chairman and ranking members of both Energy and Commerce 
and Senate Finance sent letters to all 50 governors asking for 
their input to inform Congress' action on CHIP, and, yes, taken 
together, the letters that we received from the governors 
indicated support for extension of CHIP, and outlined a number 
of suggestions for program improvements that could accompany 
any funding reauthorization. And we do have that information on 
the committee's Web site. So I did want to mention that, Mr. 
Chairman.
    And I yield back.
    Mr. Pitts. Chair thanks the gentleman.
    That concludes the questioning from the members. I am sure 
we will have more we will submit to you in writing. We ask that 
you please respond promptly. I remind Members that they have--I 
am sorry? Did you have a follow-up? I am sorry.
    Mr. Griffith. I had some clean-up questions, Mr. Chairman, 
but it is up to you. I can submit them in writing or----
    Mr. Pitts. Well----
    Mr. Griffith [continuing]. However you want to do it.
    Mr. Pitts. Yes. Do you object or--go ahead. Mr. Pallone 
says it is all right.
    Mr. Griffith. CBO's projections, Ms. Mitchell, reflect what 
is effectively a grandfathered scoring provision, which assumes 
a $5.7 billion expenditure on CHIP in the baseline each year, 
however, since that is merely a budgetary assumption, is it 
fair to say that in reality, any additional funding is new 
funding which, if not offset, we probably ought to offset it, 
but if not offset, would increase the deficit?
    Ms. Mitchell. I am not sure that I can answer that 
question.
    Mr. Griffith. OK.
    Ms. Mitchell. That gets into sort of CBO's score----
    Mr. Griffith. But in basics, if you don't----
    Ms. Mitchell [continuing]. Scoring----
    Mr. Griffith. If you don't do an offset of something that 
has been built into the base, if you don't do the offset then 
you probably have an increase, wouldn't that be correct?
    Ms. Mitchell. I think the $5.7 billion assumption in CBO 
sort of complicates this a little bit, so I would defer to 
them----
    Mr. Griffith. OK.
    Ms. Mitchell [continuing]. For sure.
    Mr. Griffith. I appreciate that.
    CHIP was designed for lower-income children, yet today, 
some middle and even upper-middle-income families have members 
with CHIP coverage. For example, I note that one state, some 
enrollees are covered--the children are covered up to 350 
percent of the federal poverty level. For a family of four, 350 
percent is an income of $83,475, yet the median income in that 
particular state is $71,637.
    So the question becomes, in some states, is CHIP 
subsidizing the upper-middle-class families in those particular 
states? Yes, ma'am?
    Ms. Baumrucker. I am happy to take that question. So again, 
as a part of the CHIP Reauthorization Act of 2009, there were 
provisions that were put into place, into current law, to 
target the CHIP coverage to the Medicaid-eligible children 
first, and then also to limit coverage above 300 percent of 
federal poverty level by reducing the CHIP enhanced match rate 
to the Medicaid federal matching rate for new states expanding 
above that 300 percent level. So there was an attempt to ensure 
that the CHIP dollars were being spent on the lower income--or 
under 300 percent of FPL.
    Mr. Griffith. And I guess where it gets confusing is the 
different states have different levels because that number is 
twice as much as the median income in my district, and so that 
makes it--that 350 percent of federal poverty level is about 
twice what the median household income is in my district.
    MACPAC, if we find that we are subsidizing the middle-
class, do you all think that is appropriate?
    Ms. Schwartz. The Commission hasn't taken up the question 
of eligibility levels within Medicaid--I mean within CHIP. I 
just would remind the committee that almost 90 percent of the 
kids now covered by CHIP are below 200 percent of poverty.
    Mr. Griffith. And obviously, that is a good thing and we 
appreciate that.
    Mr. Chairman, I appreciate your patience, and I yield back.
    Mr. Pitts. Chair thanks the gentleman.
    We have been joined by a gentleman from Texas, Mr. Green. 
You are recognized 5 minutes for questions.
    Mr. Green. Thank you, Mr. Chairman, and ranking member 
for--and to our witnesses for testifying today.
    CHIP has been a critical source of health insurance 
coverage for millions of low- and moderate-income families who 
cannot access affordable care for their children in the private 
insurance market. Recent evaluations of CHIP reiterated what we 
have long known; even when employer-sponsored insurance is 
offered for children, the affordability of such plans is a 
major barrier to many families. And I have a district that is 
an example of that.
    There are a number of ways Congress can help to include and 
strengthen and improve CHIP and children's coverage. For 
example, my colleague and I, Joe Barton, have legislation that 
would provide for a 12-month continuous coverage under Medicaid 
and SCHIP, because that would have that continuity. Most health 
insurance policies are a yearlong. Hopefully, that would be 
something we consider in the reauthorization.
    People rarely lose their Medicaid and CHIP coverage because 
they become long-term ineligible for the program. Instead, 
people are often disenrolled due to bureaucratic problems or 
short term changes in income that have no impact on their long-
term eligibility for Medicaid and SCHIP. This disrupts that 
continuity of care, and creates a bureaucratic chaos for 
hospitals and providers, and ends up costing the healthcare 
system much more.
    While that legislation focuses on people who are removed--
or lost their CHIP, the issue of churn exists between Medicaid, 
SCHIP and the marketplaces. Due to the small changes in income, 
an individual could switch from being eligible for Medicaid, to 
being eligible for subsidized coverage in the exchanges. 
Switching back and forth between insurance coverage can be 
changing benefits, changing in participating providers, 
pharmacies, changing out-of-pocket, not to mention 
administrative paperwork for the state or the insurance 
companies, and the doctor's office.
    One program to help reduce that churn is the Transitional 
Medical Assistance, or TMA. Dr. Schwartz, I understand that 
MACPAC has recommended that Congress make TMA permanent, in 
part because of the churn factor. Can you elaborate?
    Ms. Schwartz. Yes. MACPAC has recommended making TMA 
permanent, rather than having to consider it on an annual 
basis. The Commission has also recommended and strongly 
supports policies of 12-month continuous eligibility for both 
children and adults as a way of minimizing disruptions in care, 
and also minimizing the bureaucratic aspects of churn.
    Mr. Green. OK. Some might say that we have exchanges, we do 
not need the TMA. I don't believe that because, simply, in 
Texas we don't have Medicaid expansion, which is, I think, a 
majority of the states. Why would we still need TMA even with 
the Affordable Care Act?
    Ms. Schwartz. MACPAC has looked at that issue, and its 
recommendation was to make TMA optional in those states that 
have taken up the expansion for childless adults because that 
serves to cover that population without having a TMA program. 
Nonetheless, it stays relevant for those below the exchange 
eligibility level.
    Mr. Green. You know, the goal of the SCHIP program is to 
get the most vulnerable population, and you are right, if a 
state did expand it, they don't need Medicaid expansion plus 
SCHIP, and they are not going to have two programs, but they 
need to be in one or the other. That is important.
    Ms. Yocom, in terms of physician access, I understand that 
you and other researchers have reported that CHIP and Medicaid 
enrollees experience similar challenges as individuals covered 
by private insurance. Would you agree that issues with access 
experienced by families with children in CHIP reflect broader 
system-wide challenges, rather than problems with CHIP itself?
    Ms. Yocom. There are certainly issues with access, 
particularly with mental health, with dental care, and with 
specialty services. I would agree that those issues that arise 
in CHIP appear to be similar for the private sector, but more 
intense for CHIP and for Medicaid.
    Mr. Green. Ms. Schwartz, I only have a few seconds, but can 
you discuss the issues that still need to be resolved with 
regard to network adequacy and access to pediatric services and 
qualified health plans?
    Ms. Schwartz. Yes. This is an area which we are looking 
into. There is an assumption that CHIP networks work best for 
children because it is predominantly a child program. We 
convened a roundtable earlier this week, bringing together 
plans, providers, state officials, federal officials, and 
beneficiaries, to kind of explore what some of the solutions 
might be, and you will be hearing more about that from us in 
the future.
    Mr. Green. All right.
    Mr. Chairman, thank you, and thank you again for having the 
hearing.
    Mr. Pitts. Certainly. Thank you.
    That concludes the questions from the Members. As I said, 
Members will have follow-up questions. We ask that you please 
respond promptly. And I will remind Members that they have 10 
business days to submit questions for the record, and Members 
should submit their questions by the close of business on 
Wednesday, December 17.
    Thank you very much for being here, for your patience, for 
all the good information. Look forward to working with you.
    Without objection, the subcommittee is adjourned.
    [Whereupon, at 12:13 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                 Prepared statement of Hon. Fred Upton

    CHIP is an important program that provides health coverage 
to children who might otherwise go uninsured and it has 
historically enjoyed bipartisan support. I am especially proud 
that because of this program, Michigan has one of the lowest 
rates of uninsured children in the nation. But funding for CHIP 
is set to end next year, and while I support extending that 
funding, it is important that we address several questions 
about the future of the program to ensure we continue to 
provide care for the nation's most vulnerable kids.
    Much has changed in health care since CHIP was created back 
in 1997. While the rate of children without insurance has 
declined, health care costs have continued to grow.
    In its repeated reauthorizations, the CHIP program has 
usually been extended in a bipartisan manner. Most recently, 
however, the Children's Health Insurance Program 
Reauthorization Act (CHIPRA) in 2009 and the Patient Protection 
and Affordable Care Act in 2010 made significant changes to the 
program. The president's health care law reauthorized CHIP 
through FY2019, but only provided funding for the program 
through September 30, 2015. This has effectively created a 
funding cliff raising questions about the future of CHIP.
    First, we must consider cost. It's important to understand 
the cost of extending CHIP coverage and ensure that any 
additional federal spending is fully offset. CHIP is a good 
model of a program that provides coverage and flexibility while 
also providing budget discipline. We need to ensure that this 
remains the case.
    Second, crowd-out must be considered. CHIP was designed to 
provide coverage for lower-income Americans. There is a 
legitimate policy concern that, if not properly focused, CHIP 
coverage may unduly crowd-out private health coverage. It is 
imperative that CHIP remain a program targeted to those who 
need it most.
    A third area of concern is coverage. My colleagues and I 
who support extending CHIP funding do so because we believe in 
high quality, affordable coverage. As Congress considers the 
interactions between CHIP, employer-provided coverage, 
Medicaid, and exchange coverage, we need to carefully examine 
the benefits of different types of coverage. We need to examine 
what we know about cost, quality, outcomes, access to care, and 
other critical metrics.
    Finally, we must consider the construction of the program. 
One of the great benefits of the way the CHIP program is 
designed is that it empowers states. We have heard recently 
from governors all across the country about the successes of 
the CHIP program. Michigan currently covers nearly 45,000 
children and has provided services to over 300,000 since the 
program's inception. The Director of Michigan's Department of 
Community Health recently wrote, ``We believe the flexibilities 
afforded by CHIP have contributed to our success.'' While 
states need to be accountable for the federal dollars they 
spend, we should maintain the CHIP program in a manner that 
provides states like Michigan with appropriate tools to oversee 
and operate their programs, enabling them to build upon past 
success. This means policies that enhance program integrity, 
state flexibility, and other factors should be a priority.
    I want to thank the Congressional Research Service, 
Government Accountability Office, and Medicaid and CHIP Payment 
and Access Commission (MACPAC) for their testimony. I look 
forward to working across the aisle to adopt common-sense 
policies that keep the CHIP program strong for the future and 
provide needed coverage to millions of kids.
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