The Arizona Senate passed SB1447 today, which will provide health insurance to over 30,000 children of working-class families through KidsCare in Arizona.
The KidsCare provision was attached through an amendment offered by Rep. Regina Cobb on Thursday to the bill which expanded the Empowerment Scholarship Account (ESA) program.
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The Legislative overview reads:
S.B. 1457 empowerment scholarships; persons with disabilities
Establishes a process for students with a disability in the Empowerment Scholarship Account (ESA) program to continue to receive ESA monies after their 12th grade cohort year and requires the Arizona Health Care Cost Containment System (AHCCCS) to submit a state plan amendment to the Centers for Medicare and Medicaid Services (CMS) to resume enrollment in the Children’s Health Insurance Program (CHIP).
ESA Program
The ESA program was established in 2011 to provide educational options for special needs students outside of the public school system. The program has since expanded to include: 1) students attending D and F schools or school districts; 2) foster care children; 3) children in military families; 4) siblings of current or previous ESA recipients; 5) School Tuition Organization (STO) recipients who are eligible for Arizona Scholarships for Pupils with Disabilities Program (ASPDP); and 6) students residing on an Indian Reservation. In order to be eligible for the ESA program, a child must meet any of the above requirements and must have either: 1) attended a public school as a full-time student for at least the first 100 days of the prior fiscal year; 2) previously participated in the ESA program; 3) received an STO scholarship due to being displaced or disabled and continues to attend a qualified school; 4) been eligible for an ASPDP scholarship under certain circumstances; or 5) not previously attended a governmental primary or secondary school and is currently eligible to enroll in a school district or charter school kindergarten program.
In order to participate in the ESA program, the parent of a qualified child must annually sign an agreement to follow the requirements outlined in statute. Parents must agree to use a portion of the ESA monies each quarter to provide an education to the student in at least reading, grammar, mathematics, social studies and science.
Permitted expenses for ESA monies include tuition or fees, required textbooks, tutoring and curricula. Parents are required to submit a quarterly expense report to the Arizona Department of Education (ADE) detailing the expenditures (A.R.S. § 15-2402).
On entrance to the ESA program, students are moved in a cohort. Each school year, students are advanced with their cohort one grade until the 12th grade, at which point students are exited from the ESA program regardless of their age or achievement level.
KidsCare
CHIP is a federal program administered by the states to provide health insurance coverage to children whose families are low-income but earn too much to qualify for Medicaid. Arizona’s CHIP program was established in 1998 and is commonly referred to as KidsCare (Laws 1998, 4th S.S., Chapter 4). KidsCare provides health care coverage for children up to the age of 19 years with family income at or below 200 percent of the Federal Poverty Level (FPL) who are not eligible for other AHCCCS coverage.
Beginning on January 1, 2014, the Affordable Care Act (ACA) required the expansion for children under age 19 to 133% of the FPL ($32,300 for a family of 4). In addition, the ACA allowed children with incomes 133% to 200% FPL to become eligible for a subsidy to purchase health insurance through the new federal health insurance exchange. Infants continue to be covered up to 140% FPL.
Prior to the ACA, AHCCCS provided coverage for children with incomes up to 200% FPL through 2 programs: KidsCare and KidsCare II. Both programs received an approximate 3 to 1 federal match rate for its recipients. On January 1, 2014, 26,300 KidsCare recipients with incomes up to 133% FPL were transferred to the Traditional population. The transferred KidsCare and child expansion populations receive a 77.71% federal match rate in FY 2015. Due to these programmatic changes, the KidsCare II program officially ended on January 31, 2014. Pre-January 2014 KidsCare I recipients with income from 133% to 200% FPL continue to receive coverage in KidsCare. As of April 1, 2015, the KidsCare program had approximately 1,600 remaining members.
Beginning October 1, 2015, KidsCare will receive a 100% federal match rate through September 30, 2019. The federal monies are deposited into the CHIP Fund, and the CHIP Fund is then appropriated, along with the General Fund match, to fund the KidsCare program. The KidsCare program has had an enrollment freeze since January 1, 2010. The KidsCare program will receive a 3 to 1 federal match rate for the first quarter of the state FY 2016 (July 1, 2015 through September 30, 2015) and a 100% federal match rate beginning on October 1, 2015 thereafter, for a weighted blended FY 2016 rate of 94.48% (FY 2016 Appropriations Report).
Concerning ESAs, there is a potential fiscal impact to the state General Fund (GF) as students with a disability who would otherwise be exited from the ESA program would continue to receive funding. The exact number of students who will qualify to continue in the Program under S.B. 1457 will be determined by the Annual Education Plan and ADE. Concerning KidsCare, there is a potential upfront fiscal impact to the GF as the state may be required to appropriate monies for the program until CMS provides the increased allotment, at which time the GF will be repaid.