Governors Face Hard Choices Without Kids’ Health Insurance Funds

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By Victoria Pelham

Governors are urging Congress to renew the law funding children’s health insurance coverage, which expired more than two months ago.

The $13 billion Children’s Health Insurance Program has been walking a tightrope since federal funding ran out Sept. 30, and states are now up against the clock to pull together their own dollars or start trimming their programs. Bills from both chambers to renew the program for five years have moved forward, but a debate over cost offsets and other congressional hold-ups prevented the plans from going to the Senate floor.

A continuing resolution to fund the government will likely make it easier for states to access reserve funds for CHIP programs and buy them more time, but it’s not the long-term solution states had hoped for for the 9 million children covered.

In Colorado, the first state to notify families that they may have to look elsewhere for coverage, Gov. John Hickenlooper (D) is working with officials to determine which children and pregnant women are the most needy or sick, and how much they’d cost the state, in case money runs out. But picking and choosing who gets health care is a “terrible, terrible situation,” he told reporters on a Dec. 5 press call.

“We’ve got to a point where we don’t have good choices,” he said.

The National Governors Association also is pressing lawmakers to act, pointing out in a recent bipartisan letter that three states and four territories are set to run out of federal dollars for CHIP this month.

Options for States

States don’t want to boot children from the program, Maureen Hensley-Quinn, with the National Academy for State Health Policy, said. But they had banked on lawmakers acting in time to keep the CHIP funding intact.

So now they’re looking at options—that all take time and limited resources—with a small window to prepare, she told Bloomberg Law.

“They have to balance families’ health-care needs with the fiscal health of their state,” she said.

Officials have been working behind the scenes on strategies such as reshuffling state dollars to cover the kids until Congress reauthorizes federal funding, moving them onto state health insurance exchanges, or even possibly expanding Medicaid to them, as well as identifying children who are in need of long-term help. They’ve also made plans to be able to end contracts with managed care companies that run CHIP, in case they’re forced into that.

Hickenlooper said Colorado is beginning its CHIP priority list with an eye toward who the state can actually be able to fund without congressional action. That could get them by for two or three months.

But it’s a low-tax state, he said. “At any time anything getting new financing is a very difficult notion. ... To get the kind of money needed to continue CHIP is hard to imagine.

“We’re all scratching our heads saying, ‘How did we get to this point?’” Hickenlooper said.

Oregon will continue to cover CHIP beneficiaries through April by moving them onto Medicaid if the federal money isn’t made available, Gov. Kate Brown (D) told reporters. And she expects reimbursement.

“I am not willing to go backwards,” she said, pointing to her state’s 98 percent child insured rate.

Congressional bills made it seem likely there’d be a long-term CHIP solution, Hensley-Quinn said: Instead, states could now have to pull their own dollars around needlessly.

The governors’ association’s letter said that taking steps “to avoid those worst-case outcomes places a tremendous administrative and financial burden on states and sows confusion among vulnerable populations.”

Buying Time

Seventeen states have also sought redistribution money from the Centers for Medicare & Medicaid Services for CHIP, with a further nine expecting grants in the coming weeks, according to NASHP.

It’s getting tight for budgets, with Minnesota and Oregon likely to run out of all the federal money, including CMS grants, this month, and possibly Arizona as well, Hensley-Quinn said. There’s roughly $1.7 billion left in that CMS pot, she added.

For now, there’s a carrot for states in the continuing resolution: This will likely be a short-term patch, and states could hold out hope CHIP reauthorization will be included in a Dec. 22 funding measure, she said.

That leaves them in a tricky spot: With the holidays approaching and state office closures, every day matters. Some might not have time to wait and will send notices to families in mid-December that their coverage could end.

States are looking at potentially draconian decisions, Hickenlooper said.

“Congress has got to recognize that anxiety and fear have a real cost in people’s lives,” he said.

Republican Governor

Republican Gov. Scott Walker (Wis.) also joined the chorus of governors pressing for Congress to take up CHIP funding.

In a Dec. 5 letter he posted on Twitter, the governor asked House and Senate leaders to “uphold the federal state partnership.” The state has $115 million in annual federal CHIP match on the line—and 100,000 kids. It’s set to run out in the new year.

“Failure to act will force Wisconsin, and other states, to fulfill the federal government’s share of their commitment to provide access to this care,” he said.

The Democratic governors said lawmakers had been playing politics with the program’s future. “We’ve gotten into this habit of negotiating back and forth, ‘Is this going to be part of shutting down the government? Do I get a chit for your chat?’” Hickenlooper said.

“It’s absolutely imperative that Congress quit playing political games and get their act together and fund the CHIP program,” Brown said.

To contact the reporter on this story: Victoria Pelham in Washington at

To contact the editor responsible for this story: Brian Broderick at

For More Information

The National Governors Association letter is at

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