Senate Deal Would Extend Children’s Health Insurance by 5 Years

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By Victoria Pelham

Key senators have reached a deal on a plan to extend funding for the Children’s Health Insurance Program for five years.

The Sept. 12 announcement by Senate Finance Committee Chairman Orrin Hatch (R-Utah) and ranking Democrat Ron Wyden of Oregon comes as CHIP is facing a Sept. 30 deadline for funding reauthorization.

The Finance Committee proposal also includes new protections for low-income kids and elements of state flexibility, Hatch and Wyden said. Calling the move a “good first start” and a “great deal for America’s kids,” they lauded the stability the plan’s continued coverage would offer kids.

Without congressional action, CHIP would expire and some states would start exhausting CHIP funds by December, with most running out by March 2018, according to the Medicaid and CHIP Payment and Access Commission. States and advocates have warned the deadline is dangerously close, with programs having to start preparing to shut down within weeks. Nearly 9 million children whose families fall between eligibility for Medicaid and the ability to afford private insurance are covered under the 20-year-old CHIP program.

There’s no text of the proposal yet.

Funding Plans

The Finance deal also would taper off Obamacare’s 23 percent increase in the federal match rate for the program after 2019, according to a Senate aide.

The Affordable Care Act extended CHIP with new provisions, including a higher contribution that brought the average federal share to about 93 percent, according to the Centers for Medicare & Medicaid Services. That boost was continued under the Medicare Access and CHIP Reauthorization Act, which renewed CHIP to fiscal 2017.

Under this proposal, senators have agreed to scale that back. A spokeswoman for the Senate Finance Committee told Bloomberg BNA the match would stay the same to fiscal 2019 but would go down to an 11.5 percent enhanced rate in fiscal 2020 and return to pre-ACA levels by fiscal 2021 and 2022.

The bill would “transition CHIP to its traditional federal-state partnership,” the Finance Committee said.

The health insurance program costs more than $13.5 billion annually, according to 2015 figures from the Georgetown University Center for Children and Families.

Wyden told reporters Sept. 13 the deal would cost $8 billion, and the Senate is working on the details of how it will be financed. He added he expects amendments on the bill.

Obamacare also tacked on a maintenance of effort provision, requiring CHIP to continue the same acceptance policies for kids until fiscal 2019. The Senate Finance Committee’s new plan would allow for extra protections and flexibility under that provision, press secretary Katie Niederee said.

Leeway around the maintenance of effort provision would likely extend to states that have expanded their children’s coverage to those with family incomes above 300 percent of poverty, Joan Alker, executive director of the Georgetown center, said.

She called that a “reasonable compromise.”

House Is Watching

Rep. Greg Walden (R-Ore.), the chairman of the House Energy and Commerce Committee, said Sept. 13 he’s waiting to see details of how the Senate Finance Committee will pay for the deal. That’s where a multi-year deal becomes complex, because it’s in the billions of dollars, he said.

In a statement, House Democratic Whip Steny Hoyer (Md.) called on Republicans to “work with Democrats on identifying reasonable offsets and extenders so that we can turn this deal into bipartisan legislation that can pass the House and Senate and be signed by the President.”

He said it was critical to assure families they won’t lose coverage because of “preventable Congressional inaction.”

Support for Five-Year Extension

MACPAC, the federal advisory group to Congress, has recommended the five-year extension, as well as continuing the enhanced match and maintenance of eligibility standards.

The National Governors Association has also called for a five-year CHIP extension.

Meanwhile, managed care plans are asking lawmakers to pass a permanent reauthorization of CHIP. “It makes no sense to continue a program [in a way that] every couple years we have to go through this fire drill, because Congress is not capable at this point of passing reauthorization in an early timeline,” Jeff Myers, president and CEO of the Medicaid Health Plans of America, said. “We always run up against the deadline.”

The continuous last-minute funding debates jeopardize the program, he told Bloomberg BNA Sept. 13.

Alker said urgent action is needed on CHIP to provide peace of mind, with clocks ticking for some states to lose funding by December.

The program has worked in tandem with Medicaid as the “backbone” of a movement that has seen the rate of uninsured kids plummet to less than 5 percent.

“We really need Congress after many months of discussing taking away coverage to quickly affirm the value of the CHIP program and assure provide that certainty for states and for families,” she said. They need a “very clear statement from Congress very, very soon.”

Alker and other advocates have stressed that states need enough time to plan far ahead to give families enough notice and make changes if their program funding expires.

She called the Senate Finance proposal imperfect but a “solid agreement.”

The tapering down of the enhanced federal match is done at a reasonable pace, Alker said, because it leaves the ACA’s match alone until 2019. States often plan for two-year budgets, she said.

Cohesiveness

But Myers warned that reducing the matches and making changes in a “piecemeal” way without addressing the safety net on the whole puts kids’ coverage at risk. He said that CHIP builds on top of Medicaid, so it’s critical for policies to take both into account.

While his organization believes in the need to address long-term sustainability in Medicaid spending, states are reliant on federal dollars to cover near-poor children. And that saves money down the road, he said.

The real issue is how to offer “better services to children who need them in a more cost-effective manner,” he said.

“By reauthorizing [CHIP] permanently and making it more like Medicaid, you can actually think about the way in which the federal government and state government should interact to provide care for children in a much more cohesive fashion...,” he said.

MACPAC also has argued for steps toward creating a more streamlined, comprehensive children’s coverage network.

—With assistance from Alex Ruoff

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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