Deadline Looms for Children’s Health Insurance Funding

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By Victoria Pelham

The clock to renew funding for the Children’s Health Insurance Program, which covers around 8 million kids, is ticking.

“The urgency of moving and moving quickly takes on greater intensity with each passing day because states need to be able to start planning by late summer whether they’re going to have a program or whether they’re going to be in shut-down mode,” Sara Rosenbaum, health policy professor with the George Washington University, told Bloomberg BNA April 4.

If not renewed by September, federal funding for the bipartisan-supported program is expected to run dry for the first batch of states just a few months later, and all states within a year, according to the Medicaid and CHIP Payment and Access Commission, which has recommended a five-year extension.

But with the funding in question and the American Health Care Act stalled, CHIP could become a vehicle for pushing forward more polarized, conservative health-care overhauls that have been at play in recent months. The situation is precarious, analysts warned.

A Pressing Timeline

CHIP, operated either through Medicaid or through separate state programs, cost $13.7 billion in fiscal 2015, $9.7 billion of which came from the federal government, according to MACPAC. It serves low-income kids with families who make too much to be eligible for safety-net Medicaid but not enough to afford other forms of coverage.

Its current funding, which has been continually restored since it was launched in 1997, is authorized through September.

With so much focus on Affordable Care Act repeal-and-replace bills in recent months, analysts are worried there hasn’t been enough momentum to swiftly protect CHIP.

Because state budgets are often finalized in the spring and begin by July, states need to know how many dollars will be available to them to use, Edwin Park, vice president for health policy at the Center on Budget and Policy Priorities, said. That’s especially true because, if services or enrollment needs to be cut, there are mandatory notice periods for families.

Further, the uncertainty complicates the situation for states because of expected budget deficits in upcoming years. To mitigate the risk, they may start to scale back on provider and plan payments or benefits.

“Congress is still wrapped up with the ACA [and] its focus on taxes, so when is it going to set aside time for CHIP?” Park told Bloomberg BNA April 4.

“We wouldn’t want them to make any of those decisions just because Congress hasn’t acted on a timely basis,” he said.

And when state programs face down the end of federal funds, the earliest of which would fall to Arizona, California, Minnesota and North Carolina, they could clip beneficiaries from the rolls, he warned.

Park believes lawmakers won’t act on the program until later this year, maybe the summer.

Kelly Whitener, associate professor at Georgetown University’s Center for Children and Families, on the other hand remains “cautiously optimistic” representatives will handle the health insurance reauthorization quickly.

Still, given the surprising politics this year, she stressed that stable funding is critical to stable coverage for kids.

“CHIP is sometimes seen on the Hill as a health extender—something that needs to be extended periodically,” she said. Others in that category, though, can be extended last-minute or retroactively without affecting program participants. “CHIP is not like that.”

Vehicle

GOP proposals floated this year have suggested completely overhauling the health-care system, especially in regard to safety-net coverage. Lawmakers have called for Medicaid financing restructures and cutting costs, in a bid to making the program more sustainable and flexible, as well as ideas such as work requirements.

Some of those ongoing conversations could find their way into the CHIP program.

For example, the libertarian think tank Cato Institute could have a chance to state its case. The group said April 3 in a newly released Handbook for Policymakers that it would like states to be able to randomly measure the impact of Medicaid and CHIP programs on beneficiaries and also wants to see current-level funding freezes for the insurance.

Conservatives see the latest bill as a likely source for moving forward GOP ideas.

Ed Haislmaier, with the Heritage Foundation, said the more urgent priority should be FDA user fee reauthorization.

“[CHIP reauthorization] is not happening in a vacuum,” he said.

“You can always play around with money,” he said, but “if you don’t get [user fee reauthorization], you start losing staff that is very tough to recruit. If I were sitting in Congress, I’d be more worried about getting [user fee] reauthorization done.”

Further, what gets attached to the CHIP bill depends on what kinds of overhauls make it through Congress first. There are still many unknowns, he said. But if there are changes tacked on, the conversation should really be moving more toward the larger picture, he said, of how to apply premium support to low-income populations and braid different programs together.

He said different family members are often insured under separate programs.

“That’s where you would more likely go if you were looking at long-term reform,” he told Bloomberg BNA.

“Do you simply reauthorize or do you look at doing reform as part of the process—and what reforms have you already done?”

The concern, Park said, is that reauthorizing the popular CHIP program could turn into something like “robbing Peter to pay Paul” where CHIP is extended but other programs could be cut to offset it.

“I would not be surprised if there’s a great deal of interest at least in some quarters in using very noncontroversial provisions and provisions that are widely supported to move a broader and more controversial agenda,” Rosenbaum said.

Rosenbaum also serves as chairwoman of MACPAC, the Medicaid and CHIP congressional advisory group, but was not speaking on behalf of the group April 4.

At Stake

“We would look at something like that from the perspective of, ‘What does it do for kids’ coverage? Does it help us move coverage forward and help us cover more kids or does it take us back?’” Whitener said. The signs point to any changes likely doing the latter, she said.

That would likely include block grants or per-enrollee federal funding ceilings. More helpful improvements would focus on streamlining or improving quality, she said.

Analysts also noted, this time around there could be some scrutiny and controversy around maintenance of eligibility provisions (which protect current levels of coverage for kids until 2019 under Obamacare) and also around higher match rates afforded to CHIP under the ACA.

Many warned that the big picture in this debate is the larger progress the U.S. has made toward reducing the uninsured rate among children, currently at a “historic low,” just 6.7 percent in CHIP-eligible children, according to MACPAC. The group estimates that 1.1 million kids could be left without insurance without CHIP.

“This would be a big step backwards,” Park said.

To contact the reporter on this story: Victoria Pelham in Washington at vpelham@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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