Expired Children’s Health Insurance Leaves States in a Bind

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By Victoria Pelham

Five states and the nation’s capital—and nearly 2.5 million children—could see money for kids’ health coverage run dry by the end of the year or January if Congress continues to delay reauthorization of the now-lapsed Children’s Health Insurance Program.

And while House lawmakers waffle on how to pay for the extension, they’re already feeling the strain in a situation changing by the day.

Arizona, California, the District of Columbia, Minnesota, Ohio, and Oregon will run out of CHIP money first, according to a Georgetown University Center for Children and Families report, with six others also planning or mulling measures to halt their programs by December if new funds don’t turn up. Some of the programs most at risk, like Texas’s, cover the largest share of kids.

Federal CHIP funding expired Sept. 30, leaving nearly 9 million children whose families make too much to qualify for Medicaid but not enough for private insurance in the lurch. States, too, have been left in limbo, with funding cliffs for the $13 billion program complicated by managed care arrangements that are paid in advance, as well as by laws in some places that restrict programs without the promise of continued federal funding. Further, severe hurricanes in recent months in Texas, Florida, and Puerto Rico could place an added strain on existing resources, causing dollars to dwindle even faster. Amid this uncertainty, federal Centers for Medicare & Medicaid Services redistribution funds would only last for a month or two, according to the Georgetown University center.

“Congress is really playing with fire by not acting, because states are really walking a tightrope right now,” Joan Alker, Center for Children and Families executive director, told Bloomberg BNA Oct. 25.

Sending a Warning

Congressional advisers, who have recommended a five-year extension of CHIP, decided in an Oct. 26 meeting to release updated figures on how states are shouldering the burden of insurance program not being renewed—and to use those figures to send a warning.

“We ought to reinforce the idea... that these kinds of disruptions or questions or uncertainties... cause lots of ripple effects to state budgets, to beneficiaries, and to programs,” Penny Thompson, chairwoman of the Medicaid and CHIP Payment and Access Commission, said.

House Republicans said the same day that they plan to bring the House CHIP reauthorization bill to the floor the week of Oct. 30 even if there is no agreement with Democrats. The plan made it out of the House Energy and Commerce Committee, but has been stuck in a battle over whether Obamacare programs and Medicare premium rates should be changed to cover the $10 billion CHIP cost.

In the other chamber, the Senate Finance Committee easily passed its bipartisan plan to renew CHIP but has yet to share details of how to pay for it or take it to vote. That bill would renew the children’s program for five years and maintain mandates to keep most eligibility standards (except for those above 300 percent of poverty) in place but ease away from Obamacare’s enhanced match rate.

Marsha Gold, MACPAC vice chair and an independent health-care consultant, called it “unfortunate from a beneficiary perspective and public policy perspective that these people are being held hostage to whether [Congress] has the right vehicle, what the legislative agenda is, or what are the offsets.”

Some advisers said further recommendations for the commission or data might not be helpful because they wouldn’t necessarily lead anywhere and because where things stand is already well known. One warned that it’s beyond MACPAC’s role to “intervene or think about commenting” on the budget process and discussions lawmakers are mired in.

Another commissioner, Darin Gordon, lamented that the cyclical nature of CHIP reauthorization and the short time periods of renewal create “organizational or operational chaos.” Gordon serves as president and chief executive of Gordon & Associates and formerly ran Tennessee’s Medicaid and CHIP programs.

The Medicaid Health Plans of America, which represents managed care plans, also has complained about the continual deadline-pushing of an important, bipartisan program and uniquely called for a permanent CHIP reauthorization.

Still, MACPAC commissioners agreed the lack of resolution on CHIP, nearly a month after its expiration, has left states in a tough position to run a federal-state partnership.

Freezing Up

States that run a standalone CHIP program, rather than through a Medicaid expansion, are in the most precarious situation, Alker said, because they won’t receive any federal match for CHIP-covered kids once CHIP funds run out.

And they cover 40 percent of all enrollees, according to the report.

“I do think this is sort of a breach of federal contract with states in administering this program,” Alan Weil, MACPAC commissioner and editor-in-chief of Health Affairs, said Oct. 26.

State officials have to take steps before they run out of money, not after.

Minnesota, Arizona, Washington state, California and Oregon have each asked the CMS for leftover allotment dollars to tide them over, according to MACPAC.

Utah has asked the federal government to change its state plan to allow the state to close down CHIP without federal funding, with families being notified in early November.

The following month, the next batch of states—Colorado, Virginia, Washington state and Texas (where state law would shut down CHIP without federal money and mandate 30 days’ notice)—expect to begin informing families they’re losing their children’s coverage, the report said.

“You don’t wait until your car runs out of gas to go to the gas station, and that’s what I fear is happening here,” Alker warned.

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

For More Information

The full Georgetown University report is at http://src.bna.com/tIv.

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

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