At least six states have opened their Children’s Health Insurance Programs to the kids of low-income state employees, an option that was prohibited until the passage of the 2010 health law.

This relatively small step has as its backdrop years of debate related to CHIP, and to concerns that it encourages states — and consumers — to replace private insurance with taxpayer-subsidized coverage.

Now, as a result of the policy change, families of lower-income state employees who have struggled to pay for family coverage can qualify for the program. CHIP, which is jointly financed by the states and the federal government, provides coverage to uninsured children of families that make too much to qualify for Medicaid but cannot afford private insurance.

The federal government had closed that option to most states when CHIP was originally established in 1997 because of concerns that it might be an easy way to shift the costs of some public employee health benefits from financially strapped states to the federal government. Federal employees were allowed to enroll their children.

“State employees shouldn’t be the only people in the country who cannot access the program,” said Steven Kreisberg, the director of collective bargaining and health care policy at the American Federation of State, County and Municipal Employees. And, in an era of frozen wages, pay cuts and furloughs for state employees, the ability to participate in CHIP is critical for families, he added.

But critics have long worried that CHIP does not do enough to guard against the market phenomenon known as crowd-out, when public insurance replaces private. This concern was part of the motivation for including the state prohibition when the program was created. Without it, some said, states could push their lower-income employees’ dependents into the CHIP program, thereby saving on health benefit costs because the federal government would be picking up part of the tab.

The health law requires states to show that they have not cut their share of employee health insurance costs in an effort to push their workers’ children to CHIP or that the cost of the coverage available to employees is a financial hardship for families.

Despite this dictate, Nina Owcharenko, the director of the Heritage Foundation’s center for health policy studies, said there still is a real risk of this scenario playing out particularly among higher-income CHIP participants. Ultimately, Owcharenko expects states to weigh how they can get the best deal—a consideration that she says could mean finding ways to draw down more federal dollars.

But Tricia Brooks, senior fellow at the Georgetown University Center for Children and Families, said that the federal matching funds that will flow to the states are a plus but are not the primary reason states are pursuing the policy change.

“I think the intent was much more motivated by the fact that there were children who were being discriminated against,” she said.

Georgia, which is waiting for final federal approval, is the latest state to offer its lower-income employees the CHIP option-known as PeachCare for Kids. The Centers for Medicare and Medicaid Services has already given the nod to plans by Alabama, Kentucky, Montana, Pennsylvania and Texas.

Georgia’s open enrollment period began in October, and officials expect 42,000 children to switch to PeachCare for state savings of $32 million in fiscal year 2012. If those expectations are met, Georgia — out of the six states — would have the highest number of state employees’ children enrolled in CHIP.

Leigha Basini, a program manager at the National Academy for State Health Policy who works with state CHIP directors, said more states are enthusiastic about the option because of the potential savings and the chance to expand coverage to more kids. “It potentially is a win-win for the states and the employees,” she said.

In each state, the number of employees who will be able to get this coverage will be affected by what ceiling that state sets for CHIP eligibility — in Georgia, it’s $52,500 for a family of four — and how much workers are paid. In addition, state employees’ opinions about the quality of their state-based coverage and CHIP will factor into their decision about whether to switch programs.

A spokeswoman for Georgia’s Department of Community Health said the state expects the new option will benefit state employees through lower out-of-pocket costs, although the exact savings will depend on factors such as the private plan in which the child was enrolled, family income and the child’s age.

Meanwhile, for some states, new cost-sharing requirements for the qualifying state employees sometimes go along with the CHIP change.

Diane Joiner, a single mother who works for Alabama’s health department, enrolled her teenage daughter in All Kids, Alabama’s version of CHIP, when a state-subsidized CHIP look-alike program was canceled because the state prohibition was lifted. (A number of states had such plans in place to aid low-income state employees when their participation in CHIP wasn’t allowed.)

She says she is pleased with the coverage, but points out that she now pays a $100 annual premium. Although this amount is more than she paid in the state-subsidized program, it is much less than if she would have to pay regular coverage premiums.

Otherwise, her benefits and copays are the same. “My daughter’s got to be covered, and I can’t afford [the state plan],” she said.

And some state officials say the change is making a real difference for children and families.

Katherine Buckley-Patton, who directs the Healthy Montana Kids program, said some low-income state employees have been struggling to keep their family insured or may not be able to afford coverage for their children. Allowing them to move to CHIP has relieved this pressure and helped to keep some at-risk kids covered.

Here’s how the policy change is playing out in the other states:

— Montana has enrolled 513 children of state employees since October 2010 in its CHIP program. State officials expect this number to increase as the state does aggressive outreach efforts. Buckley-Patton noted that some employees had questioned why they were excluded when federal workers were not. “The door has been closed on them a number of times in the past,” she said.

— Texas expects to save $16 million over two years, according to a spokeswoman. The state’s CHIP spending is $340 million this year.

— In Kentucky, which had used state dollars to cover state employees’ CHIP-eligible children, the change has saved the state $2 million.

— Pennsylvania officials expect part-time or seasonal workers to be among the beneficiaries of their state’s policy change. They estimate less than 1 percent of state employees qualify for the program.