CHIP Reauthorization: Right Around the Corner

Reauthorization for the Children’s Health Insurance Program (CHIP) lurks behind Washington’s focus on the Affordable Care Act (ACA) repeal and replace efforts. But the battle may be as contentious, and the added factor of a September 30th deadline makes stakeholders worry.

“We’re at real risk of moving backward,” says Joan Alker, Executive Director of the Center for Children and Families at Georgetown University. That’s because children’s healthcare in the U.S. is heavily dependent on three public programs: Medicaid, the ACA, and CHIP. “All three legs of that stool,” Alker says, “are uncertain or threatened.”

Senate Finance Committee Chair Hatch (R-Utah) and Ranking Member Wyden (D-Oregon) want a “clean bill” according to staffers. The reauthorization measure will probably be part of the 22 “extenders” minibus measure to appear before Congress. The “minibus” refers to a handful of policy provisions tied together in one piece of legislation. The healthcare minibus includes all the healthcare extenders left behind from the Medicare Access and CHIP Reauthorization Act (MACRA), including, but not limited to, CHIP, the Maternal, Infant, and Early Childhood Home Visiting (MIECHV) program, community health centers funding, and therapy caps.

But the future of CHIP may depend on Republicans’ reaction to their ACA repeal and replace efforts. If BCRA – the Better Care Reconciliation Act – falls apart, will they be angry? Or if it passes, will they become emboldened? Advocates worry the recent cancelled CHIP hearings might be a set-up for a short-term extension.

Even including the cost of the funding extension, the Trump budget would cut CHIP by a net $3.4 billion from fiscal year 2017 to fiscal year 2018—a 20 percent reduction.

First, the budget would eliminate the ACA’s 23 percent increase to the federal matching rate for CHIP. This would significantly shift costs from the federal government to states, making it harder for states to afford to maintain current levels of CHIP coverage.

Second, the budget would eliminate the ACA’s maintenance of effort requirement for CHIP. With these protections gone, states could take actions such as reducing CHIP eligibility, freezing enrollment, or making it more difficult to enroll.

Third, the budget would cap eligibility for federal CHIP funding at 250 percent of the federal poverty level (FPL). The upper income limit for CHIP eligibility in 24 states, including the District of Columbia, is above 250 percent. As a result, under the Trump budget, these 24 states would lose federal matching funds for some of the children they currently cover, likely forcing states to make cuts to their CHIP.

The Medicaid and CHIP Payment and Access Commission (MACPAC), a nonpartisan congressional advisory body, recommended in January CHIP be extended by five years to 2022. The idea was to inoculate the program, at least temporarily, from “heightened… uncertainty about the stability of the Exchange market” and proposals to “change the structure and financing of the Medicaid program.” Recently, the bipartisan National Governors Association strongly recommended Congress extend CHIP funding for five years, explaining that “access to health insurance is critical to ensuring a healthy start for our nation’s children.” MACPAC also recommended extending the 23-point funding bump to 2022 and eliminating a six-month waiting period imposed on children who lose employer-sponsored insurance. They also recommended extending the “maintenance of effort” requirement on states that operate Medicaid-expansion CHIP programs.

The CHIP debate is also starting much later than in years past. That’s a problem, because states need months of advance notice to keep CHIP functioning. “There’s intense concern about the deadline,” says Bruce Lesley, President of First Focus, a nonprofit advocacy group for children and families. “We’ve learned from the past that states have to plan ahead — if they’re not certain a program is going to continue, they have to start thinking about winding it down.” In some states, budgets for the coming fiscal year must be enacted as early as the end of March; in others, the deadline comes between April and June.

According to MACPAC, Arizona, California, DC, Minnesota, and North Carolina will run out of CHIP funding by December 2017 if Congress does not reauthorize the money for the program. More than half of states are projected to exhaust federal CHIP funds by March 2018 without reauthorization.

 

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