CHIP operates under the Medicaid umbrella and covers children whose family incomes are too high to qualify them for traditional Medicaid. CHIP—unlike the traditional program—is funded through block grants; states receive a fixed amount of money from the federal government, which they match with state dollars.The problem in the ACA is that the subsidy provision was written to consider only whether employer-provided insurance is affordable for the individual enrolled—it doesn't take into account the premium costs for covering an entire family, which can be extremely expensive. Here's the Devor family in Illinois as an example. The husband/father gets coverage through his employer for just $71 a month out of his paycheck. To cover his entire family, he'd have to spend $587 a month, which he just can't afford. His affordable plan means he doesn't qualify for a subsidy on the exchange—and neither does his family. His wife isn't insured, his kids are covered through CHIP. For as long as it lasts.
The situation for children isn't so dire now as it was in 2009. Now that the state health insurance exchanges exist, many families with children enrolled in CHIP would have access to affordable forms of coverage on the exchange. Not all of them, though.
Due to a mistake in the way the Affordable Care Act was written, an estimated two million children will be without affordable coverage if Congress fails to continue CHIP's funding. The mistake, known in health policy circles as the "family glitch," prohibits families with incomes below 400 percent of the federal poverty line from receiving subsidies if one of the parents has health insurance through their employer—even when that coverage won't cover dependent spouses or children.
Sen. Jay Rockefeller (D-WV), a key architect of the CHIP program, has introduced legislation to fund the program through 2019. It doesn't seem likely that a Republican Congress would do anything about fixing a glitch in Obamacare—they haven't been too willing to do so yet—but not kicking millions of kids out of health coverage? That they might be willing to consider.