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Treasury Rule Denies Children, Makes Action on CHIP Critical

Today, the Obama Administration announced a final decision on key health reform implementation issue that will leave hundreds of thousands of children without affordable health coverage. The Treasury Department's final rule, which will be published in the Federal Register on Thursday, says if an employee is offered an affordable health insurance option...

Targeted News Service

WASHINGTON, Jan. 30 -- First Focus issued the following news release:

Today, the Obama Administration announced a final decision on key health reform implementation issue that will leave hundreds of thousands of children without affordable health coverage. The Treasury Department's final rule, which will be published in the Federal Register on Thursday, says if an employee is offered an affordable health insurance option by her employer, any family coverage option offered by the employer is also considered to be affordable, no matter its actual cost. Specifically, the rule says that if the cost of self-only coverage for an employee does not exceed 9.5 percent of the taxpayer's household income then the coverage is considered affordable for the entire family. This is particularly problematic given that employee-only insurance premiums average about $5,400 per year, while family premiums are nearly triple the cost, at $15,000.

Under the Affordable Care Act (ACA), anyone who has an offer of affordable insurance is ineligible for subsidies and cannot access coverage in the new health insurance exchanges. The Government Accountability Office estimated that about 7 percent of uninsured children in 2009 -- about 460,000 -- would remain uninsured because parents would not be able to afford coverage for the whole family. The rule also means that there will be no relief for families who have been stretching to pay premiums for family coverage that is outside their means (e.g. more than 9.5 percent of household income).

Child advocates, who have long pressed the Administration to fix this so-called "family glitch" in the law, are deeply disappointed by today's announcement. In July, a coalition of 74 national and state advocates led by First Focus sent a letter to President Obama, urging the Administration to ensure that the final Treasury rule made health coverage affordable for families.

Responding to the final rule, Bruce Lesley, President of First Focus, issued the following statement:

"Today's final rule is a serious blow to children who will be left out of the coverage that was promised under the Affordable Care Act. The children's community is disappointed by the Administration's decision to deny access to coverage for children based on a bogus definition of affordability. According to key Members of Congress who wrote the legislation, the final rule is not consistent with the intent of Congress. Today the promise of health reform has been denied for hundreds of thousands of children."

"As we approach the 4th anniversary of the Children's Health Insurance Program's reauthorization next week, we are more grateful than ever that this essential backstop is in place for children. Without CHIP, many more children would have lost coverage as a result of today's rule. Due to the fact that CHIP blunts the negative impact of this decision for some low-income children, it is clear that CHIP must be reauthorized and made permanent in this Congress or kids will have been left worse off. We appreciate the President's leadership and frequent remarks about the how important it is for our nation to safeguard our children. Today, we urge the President to match his rhetoric about protecting children from harm with action to make sure that no child is left out in the cold when it comes to affordable health coverage."

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