About 835 New Hampshire children are set to be dropped from a state-funded program that significantly reduces their health insurance costs if the current 2012-2013 budget proposal is passed.

The program is known as the “buy-in” tier of New Hampshire Healthy Kids, a nonprofit with which Gov. John Lynch has proposed severing a state contract in order to save an estimated $6.6 million. Healthy Kids provides affordable health and dental coverage to uninsured children and teens through pooled contracts.

The state already runs the Healthy Kids Gold program – which is the largest of the three tiers and serves children at up to 185 percent of the federal poverty level – through its Medicaid program.

Lynch’s proposal would move about 8,600 children in the silver program, which serves between 186 and 300 percent of the federal poverty level, onto the state’s Medicaid rolls. Right now, silver premiums are partially subsidized and rates are reduced by physicians and hospitals through contracts with Healthy Kids, which disputes the savings projections from moving the program into Medicaid calculated by state health officials.

That leaves the buy-in program, serving children at 300 to 400 percent of the federal poverty level. Unlike the other two tiers, coverage for buy-in children is not subsidized. But by pooling the buy-in children with the silver recipients, their insurance costs are significantly reduced. And because the buy-in children are not eligible for Medicaid, the state doesn’t have a mechanism to take them in.

“There are no concrete solutions on the table,” said Lisabritt Solsky, the state’s deputy Medicaid director.

The children in the buy-in program tend to be sicker than the other Healthy Kids populations, said Roland Lamy, chairman of the Healthy Kids board of directors. Since the coverage is not subsidized, parents are presumably still paying to stay in the program because their children need regular medical attention, he said.

“My understanding is the buy-in program tends to have high utilizers and the benefit package available to them has been of great value,” Solsky said.

Since the buy-in tier is relatively small, running it without pooling the larger, healthier silver program doesn’t seem feasible, Lamy said.

“As a standalone program it performs very poorly and it’s unlikely that we would find an insuring partner to deal with these kids on their own merit,” he said.

The buy-in families aren’t as poor as those on the other two tiers, but a higher rate of pre-existing conditions could cause them to see prohibitive rate increases on the open market.

A child in the buy-in program can receive both health and dental coverage for a $205 monthly premium with no deductible, said Healthy Kids spokeswoman Renee Robertie. Under the New Hampshire Health Plan, a state-mandated high-risk pool, coverage for recipients 18 and younger ranges from a $147-per-month premium with a $5,950 deductible to a $286-per-month premium with a $2,000 deductible, she said.

“I think there will be families that are going to have to decide whether to put food on the table or pay to insure their kids,” Lamy said.

And for those who choose to go without health insurance, the costs of their unfunded emergency room visits will be passed on to others, Robertie added.

Come January 2014, the buy-in children will be eligible for health insurance exchanges under the federal health care reform law and qualify for a subsidy to reduce their rates, Solsky said.

“That’s the soft landing point,” she said. “Right now we need to identify how to provide some option to get from here until then.” (next page »)

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