Hurricanes to Drain Children’s Health Insurance Funds

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By Alex Ruoff

The hurricanes battering Gulf states will tax public insurance systems for children there, underscoring the need for Congress to extend funding for the programs soon, researchers and advocates told reporters Sept. 8.

Natural disasters run up hospital bills for people on public insurance programs and increase enrollment in programs like the Children’s Health Insurance Program (CHIP), Joan Alker, executive director of the Center for Children and Families at Georgetown University, said. This means Gulf states, Texas and Florida in particular, will see their CHIP funds drained in coming weeks.

Funding for CHIP is set to expire Sept. 30, but lawmakers had noted only a handful of states like Arizona and North Carolina were projected to run out of money by December. Now, additional state health officials are warning their coffers may be drained much sooner and some are preparing to respond to budget shortfalls with enrollment freezes as soon as Nov. 1.

“It’s a budgeting nightmare,” Cathy Caldwell, director of Alabama’s CHIP program, said. Even before Irma took aim at the region, Alabama had planned to freeze CHIP enrollment in November, meaning it will have to reject new enrollees, she said.

CHIP covers nearly 9 million children whose families fall in the gap between Medicaid eligibility and the ability to afford private health insurance. Lawmakers have said they plan to pass a CHIP funding bill in September, but haven’t agreed on how long to extend the program and whether any changes are needed for the program.

Texas and Florida, which are expected to be the hardest hit by hurricanes this year, have two of the largest CHIP programs in the county. Texas’s CHIP program has more than 1 million enrollees and was originally slated to run out of funds in April. Florida has 428,094 enrollees in its CHIP program, which was slated to run out of funds in January.

Health officials temporarily made it easier for children in Texas to access safety-net insurance like CHIP and Medicaid in the aftermath of Hurricane Harvey and its devastating flooding. Officials at Texas’s Health and Human Services Department told Bloomberg BNA it’s too early to know the storm’s impact on CHIP enrollment.

Officials are likely to do the same for Florida, if Hurricane Irma, set to hit the state Sept. 9, causes flooding and heavy damage as well.

Running Low

It’s unclear how much money any states have left, Caldwell said, because CHIP funds are largely administered by the federal government. Several states, including Alabama, are finding their CHIP funds are running out more quickly than originally anticipated, she said.

Ten states, not four as estimated by congressional advisers in June, will run out of CHIP funds by the end of 2017, according to a survey of states by the Kaiser Family Foundation released Sept. 6. Texas did not respond to the survey, and Florida reported it would run out of funds in January. The survey was taken before Hurricane Harvey made landfall in Texas.

Nevada, which congressional advisers believed had CHIP funds to last until January, now expects to run out of money for the program at the end of November, according to the Kaiser Family Foundation. If funds aren’t extended by Congress, the state will end the program on Nov. 30.

Several states are preparing contingency plans if federal funds expire, Caldwell said.

Roadblocks Ahead

Lawmakers are debating whether to extend funding for CHIP two years, to 2019 when the program’s authorization ends, or longer, according to a health lobbyist familiar with negotiations. At issue is whether to continue the 23 percent increase in the federal contribution for the program, set to expire in 2019.

This increase, created by the Affordable Care Act, means the federal government raised the percentage of total CHIP funds it pays relative to states by 23 percent and led to the federal government paying 100 percent of CHIP funding in a dozen states. As a result, the federal government pays a far larger share for CHIP than it does for Medicaid, which also extends public health insurance for millions of low-income Americans, including children.

A long-term extension means lawmakers must either end the 23 percent increase in 2019, continue it through the length of the extension, or taper it off after 2019, a Democratic staffer told Bloomberg BNA.

Republicans also want to offset CHIP funding, meaning they have to make cuts or changes elsewhere in the federal budget to pay for the extension, which could cost up to $5 billion for a 5-year extension. The net cost of extending CHIP two years would be $3.1 billion, according to a government estimate.

Lawmakers are still debating offsets, Rep. Greg Walden (R-Ore.), chairman of the House Energy and Commerce Committee, told reporters Sept. 6.

To contact the reporter on this story: Alex Ruoff in Washington at aruoff@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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