PPACA defined eligibility criteria for the new premium tax credit,  which will apply in all states. PPACA’s Private Health Insurance Market Provisions

Although not the focus of this report, PPACA also contained provisions to  facilitate children’s access to private health insurance, apart from the  provision of the premium tax credit. IRS finalized its proposed rule in May 2012 with minimal  change to these methods. Under PPACA,  CHIP is not funded beyond 2015, and, even if federal funding is  extended, states may opt to reduce eligibility levels for CHIP or eliminate   Without CHIP- CHIP programs altogether beginning in fiscal year 2020.funded Medicaid expansion or separate CHIP programs, we estimate that  an additional 1.9 million children who would otherwise be eligible for CHIP  would be considered to have access to affordable insurance under this  proposed standard and would be ineligible for the premium tax credit. In commenting on IRS’s proposed rule on eligibility for the premium tax  credit, some states and other organizations noted that IRS’s proposed  interpretation of access to affordable employer-sponsored insurance— defining affordability on the basis of the cost of a self-only plan, and not  on the cost of a family plan—could result in some children remaining  uninsured. An Estimated 14 Percent of Children Eligible for Medicaid, CHIP, or the Premium Tax Credit under PPACA Would Experience a Change in Eligibility within 1 Year

Applying final CMS and proposed IRS 2014 PPACA eligibility rules to  children in 2009, we estimate that nationally, 9 percent of children eligible  for Medicaid, CHIP, or the premium tax credit experienced a change in  household income within 6 months that would affect their eligibility for a  specific form of assistance, and 14 percent of these children experienced   (See table 2.) CMS Has Provided States with Tools to Increase Enrollment, and States Express a Need for Further Guidance and Note Budget Constraints

CMS has provided states with incentives and guidance to implement  current initiatives to improve enrollment policies and has made progress  assisting states in implementing PPACA requirements aimed at further  simplifying Medicaid and CHIP enrollment. State officials reported  ongoing challenges with regard to enrolling eligible children, including the  need for timely guidance to implement PPACA provisions, concerns  about enrolling family members who are not eligible for the same  program, and state budget constraints. Recommendation for Executive Action

In the Department of the Treasury’s future rule making, we recommend  that the Secretary of the Treasury, in consultation with the Commissioner  of Internal Revenue, consider the impact of the proposed standard for  determining affordability of employer-sponsored insurance on children  and other family members who are eligible to enroll, and whether it would  be consistent with the goals of PPACA to adopt an alternative approach  that would consider the cost of insuring eligible family members, or as  necessary, seek clarification from Congress regarding its intent with  respect to this standard. Department of the Treasury officials provided technical  comments, which we incorporated as appropriate. Appendix I: Scope and Methodology of the Survey of Income and Program Participation Analysis

Our first two objectives were to assess the extent to which uninsured  children would be eligible for Medicaid, the State Children’s Health  Insurance Program (CHIP), or the premium tax credit available under the  Patient Protection and Affordable Care Act (PPACA) and the extent to  which they would experience a change in eligibility among these forms of  assistance because of changes in household income during a year.
Why GAO Did This Study

PPACA sought to increase access to affordable health insurance, and major provisions, such as a tax credit to offset the cost of private insurance premiums, will become effective in 2014. GAO estimated the extent to which (1) uninsured children would be eligible for Medicaid, CHIP, or the premium tax credit under PPACA, and (2) children would experience a change in eligibility among Medicaid, CHIP, and the premium tax credit under PPACA because of income changes. GAO also assessed CMS steps thus far to help states enroll children and related state challenges. GAO applied proposed and final 2014 PPACA eligibility rules to nationally representative 2009 data from the U.S. Census Bureau and interviewed officials from CMS and IRS, two federal agencies responsible for implementing relevant PPACA provisions, and six states that received federal funds for enrollment efforts.

What GAO Found

GAO estimates that under the 2010 Patient Protection and Affordable Care Act (PPACA), about three-quarters of approximately 7 million children who were uninsured in January 2009 would be eligible for Medicaid, the State Childrens Health Insurance Program (CHIP), or the new premium tax credit. The remaining children had family incomes too high to be eligible, were noncitizens, or would be ineligible for the premium tax credit because they would be considered to have access to affordable employer-sponsored insurance per the Internal Revenue Services (IRS) proposed affordability standard, in which IRS interpreted PPACA as defining affordability for an employees eligible family members based on the cost of an employee-only plan. Some commenters raised concerns that IRSs interpretation was inconsistent with PPACAs goal of increasing access to affordable health insurance as it does not consider the higher cost of family insurance and could result in some children remaining uninsured. Under PPACA, CHIP is not funded beyond 2015, and states may opt to reduce CHIP eligibility or eliminate programs in fiscal year 2020. Without CHIP, more children could become uninsured. In May 2012, IRS finalized its rule but deferred finalizing the proposed affordability standard.
GAO estimates that about 14 percent of children in January 2009 who met 2014 PPACA eligibility criteria for these programs experienced a change in household income that would affect eligibility within 1 year. Changes in eligibility among children in states without policies allowing them to remain eligible for Medicaid and CHIP for a full year were estimated to be higher than in states with such policies. Frequent eligibility changes could deter enrollment if the process for changing enrollment is burdensome.
The Centers for Medicare & Medicaid Services (CMS) has provided states with financial incentives and technical guidance to improve enrollment and to implement PPACA provisions. States reported challenges to enrolling eligible children, including the need for guidance to implement certain provisionswhich CMS indicated was forthcomingand state budget constraints.

What GAO Recommends

GAO recommends that in future rule making, the Secretary of the Treasury, in consultation with the Commissioner of Internal Revenue, consider the impact of the proposed standard for determining affordability of employer-sponsored insurance on eligible family members, and whether it would be consistent with PPACA to adopt an approach that would consider the cost of insuring eligible family members, or as necessary, seek clarification from Congress regarding its intent with respect to this standard. HHS and Treasury were given a draft of this report for review, but neither provided formal comments. Treasury provided technical comments, which GAO incorporated as appropriate.