Arizona is the only state without an active CHIP program, forcing families that had been covered to move onto Medicaid, enroll in the federal health-care marketplace or go uninsured, experts said.
And with the federal CHIP program up for reauthorization in 2015, all eyes are on Arizona.
"In the coming year, there's going to be a big conversation nationally about the role of CHIP moving forward in 2015 when it's supposed to be up for reauthorization," said Joe Fu, health policy director for the Children's Action Alliance, an advocacy group in Arizona.
"Arizona's in a unique circumstance because we have essentially cut our CHIP program even before that national conversation has taken place," he said.
But while there are lessons to be learned from Arizona, Fu and others say there is one big question that has yet to be answered: Have children been able to get affordable coverage without CHIP?
"I think a lot of people don't know what's going to happen to these kids," Fu said.
When Arizona lawmakers froze KidsCare in 2010, citing budget concerns, many did not expect it would come back. The program then covered more than 45,000 children whose families earned up to twice the federal poverty level.
Since then, the number of covered kids has fallen steadily, as children have aged out of the program or dropped off because they forgot to renew or because the family's income increased. By May 1, the latest data available from the state, only about 2,000 children remained on KidsCare - a 95 percent drop.
"For all intents and purposes, the state is eliminating its CHIP program, which no other state is doing," said Daniel Derksen, director of the Center for Rural Health at the University of Arizona.
The state had kept a waiting list of people wanting to get on KidsCare when it was first frozen, a list that topped 100,000 people in mid-2011, according to a Kaiser Family Foundation report. But a spokeswoman for the Arizona Health Care Cost Containment System, which oversees KidsCare, said the waiting list is no longer kept.
A temporary replacement, KidsCare II, was expected to insure 20,000 kids after the Maricopa Medical Center, Phoenix Children's Hospital and University Medical Center coordinated to draw federal funds for such a program. By December 2013, more than 40,000 kids were covered.
When KidsCare II ended in January, families were either picked up by an expanded state Medicaid program or dropped from coverage. The 14,000 children who were dropped got a letter telling them they would no longer have coverage at the end of the month.
"No one really jumped up and down and raised a fuss, really, when that happened," Derksen said. "My guess is a lot of parents won't realize that they're not covered until they go to access care."
There is third option to AHCCCS - the state Medicaid program - or to going uninsured: Families can turn to the federal insurance marketplace.
State officials have been referring would-be KidsCare applicants to the marketplace. Once there, however, they have run up against the "family glitch," a wrinkle of the Affordable Care Act that can keep families out of the federal marketplace.
The glitch stems from a provision in the law that was meant to keep people from ditching their employer-provided health care for a marketplace plan. Workers who try to do so could be denied access to federal insurance subsidies.
But for some workers, adding the family to their existing plan can be simply too expensive, and trying to get coverage on the marketplace without a subsidy is similarly prohibitive.
"The family glitch has to be fixed before we can even consider the future of CHIP," said Joan Alker, executive director of the Georgetown University Center for Children and Families.
She has little confidence that Congress will act on a fix, however, leaving affected families "to fall in the cracks of dysfunctional politics."
"That's why Arizona is so important from a national perspective because it's showing us what would happen to families under the current construct," Alker said.
Like Alker, many experts see Arizona as a test bed for the upcoming national debate on state children's health insurance programs. Federal funding for CHIP is currently set to run out on Oct. 1, 2015.
"In all the other 49 states in the country, CHIP is there as a very important program for kids," said Bruce Lesley, president of First Focus, a child advocacy group based in Washington, D.C. "Arizona is the exception for having frozen KidsCare and then basically not ever restoring it."
A March report by the Medicaid and CHIP Payment and Access Commission said the family glitch would affect about 1.9 million children if CHIP were eliminated across the U.S. - as it has nearly been eliminated in Arizona.
Fu said the glitch is just one of the challenges facing former KidsCare recipients.
"Based on what we've heard and our internal analysis, it's going to be extremely difficult for these kids to regain coverage because the plans on the marketplace are more expensive and costly in terms of both premiums … and cost sharing," Fu said.
Fu and the Georgetown University Center for Children and Families released a report Thursday examining the difference in cost of health care for children in Arizona who went from KidsCare to Obamacare. In almost every scenario, families will face higher costs for their children's coverage as a result of the change, the report said.
Arizona has routinely done poorly when it comes to uninsured children. There were more than 200,000 uninsured in 2009, and the problem has gotten worse, according to an analysis by the Georgetown center.
While the national percentage of children who are uninsured dropped from 8.6 percent in 2009 to 7.2 percent in 2012, Arizona's rate jumped from 12 percent to 13.2 percent, the analysis said.
Not all are going without coverage. The latest numbers from the Department of Health and Human Services showed about 25,000 Arizona children enrolled in a health insurance plan through the federal marketplace. Thousands more have gotten coverage through the state's 2013 Medicaid expansion, experts said.
"That's really the positive upside of this," said Tara McCollum Plese, senior director for external affairs of the Arizona Alliance for Community Health Centers.
"But we still have to reach those families and explain to them what this is about," she said. "And we need to get through that white noise. There's so much opposition, sometimes it confuses and discourages people, and it's really hard to get out the positive message."
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