States Face Dwindling Children’s Health Insurance Resources

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By Victoria Pelham

States need to consider what measures to take to keep insuring low-income children now that a federal funding law has lapsed and quick congressional action is unlikely.

A federal agency’s recent bulletin on what steps to take is “another sign of how perilously close we are to seeing children’s coverage disrupted,” a health policy analyst said in a Nov. 13 blog post. Tricia Brooks, a senior fellow at the Georgetown University Center for Children and Families, told Bloomberg Law Nov. 13, “Congress can’t guarantee they’re going to get this done until it’s done.”

The $13 billion Children’s Health Insurance Program covers 9 million kids in the gap between traditional Medicaid coverage eligibility and the ability of their families to afford private insurance. It expired Sept. 30, plunging states, providers, and beneficiaries into uncertainty. And while an infusion of Centers for Medicare & Medicaid Services funds to five states bought the program some more time, two states are set to run out of money for children’s health insurance in December, according to a congressional advisory group’s updated estimates. Arizona and Minnesota will be the first to run dry, the Medicaid and CHIP Payment and Access Commission projects, with six more to run out in January.

The House passed its five-year extension of CHIP (H.R. 3922) at the start of November, after a bitter debate over how to pay for the bill and a vote along party lines. The Senate hasn’t taken its plan to the chamber floor for a vote and is tied up in a tax overhaul proposal.

Now states’ long-held concerns are becoming more real. And the CMS is advising them on how to cope during a shortfall.

Tentative Plans

Some states operate CHIP as part of Medicaid, while others operate it as a standalone program. In the absence of federal money, states that operate CHIP through a separate standalone program are exempt from Obamacare’s maintenance of coverage provisions and can act to shut down their programs (or move the enrollees over to Medicaid), according to a recent informational bulletin. These states also are able to use a mixture of solutions, but moving people to Medicaid means the states will get a lower federal match (about 15 percentage points lower).

The states running CHIP through Medicaid expansions are required to maintain certain eligibility standards for the kids but also at the lower federal match, the bulletin warned.

That’s true in Virginia and Minnesota, for example.

“In that case it’s a financial hit to the state, and they’re going to have to come up with the extra money,” Brooks said.

Officials also suggested states come up with specific timelines for using their existing resources: projected exhaustion, any legislative budgetary changes or coverage redeterminations, plans to cap or freeze enrollment, and the process for notifying enrollees. That also would likely include expected changes to enrollment and claims systems and managed care contracts, as well as state plans.

Situation in Minnesota

The Minnesota Department of Human Services told Bloomberg Law in a Nov. 14 statement that the state had received $3.6 million in redistributed CHIP funds for October and $1 million for November.

But under current law and funding levels, the program will be required after that to continue covering kids above 133 percent of poverty and babies in families making from 275 to 283 percent of poverty. They would just receive the smaller 50 percent Medicaid match for both.

Pregnant women in Minnesota’s CHIP program don’t qualify for Medicaid in the state, so “there is no fallback to Medicaid coverage other than emergency care once the redistributed CHIP funds run out,” the agency said. There is one caveat: if the state chooses to carry forward 2017 funds not yet claimed for the newly Medicaid insured children. But even that is subject to a statutory penalty slashing the money by one-third.

The state has estimated the shortfall would amount to a $10 million in its general fund.

“We continue to urge Congress to appropriate CHIP funding,” the statement said.

Optimism and Doubt

Arizona, however, is expecting nothing to change for either policy or coverage “for the foreseeable future,” a spokeswoman for the Arizona Health Care Cost Containment System told Bloomberg Law Nov. 14. The program is known as KidsCare in Arizona and is managed by the AHCCCS.

Heidi Capriotti said the state’s CMS redistribution ($21.8 million) will last to December. Changes in enrollment make it hard to predict the exact date because 800 more children enrolled between September and October. But if Arizona does exhaust those funds, the state’s governor has made plans to reallocate money from another Medicaid program to the KidsCare program “until Congress can take action.”

That would likely last through the first quarter of 2018, she said. “And we fully expect Congress to take action sometime in that time frame.”

“There continues to be high optimism that Congress can get this done,” Brooks said, noting the policy agreements on CHIP extension in the House and Senate and the Trump administration advising states not to worry.

“We’ve got to believe that something positive is going to happen, but then in the back of your mind there’s this small chance that it doesn’t happen and are you going to put your state budget at risk?” she added. “Are you going to ignore a state law that says if there is no federal funding the CHIP program ends?”

Some states have those laws on the books.

“We definitely have seen that this Congress hasn’t been able to come to agreement on much of anything, so there’s got to be that lingering doubt in the back of your mind,” she said.

States such as Colorado and West Virginia are starting to plan to send notices warning coverage will be lost by end of January or February, Brooks said.

Virginia’s governor has also warned that the state would be forced to tell families Dec. 1 that they will lose coverage and to freeze enrollment Jan. 1.

Families Unsure

Families could also be scared away by the confusion over CHIP, especially once notices start going out, advocates warn.

“It has a chilling effect on enrollment where people get discouraged and go, ‘Well that’s it—my coverage isn’t going to continue for my child,’” Brooks said.

That means they may ignore renewal notices or skip scheduled appointments with dentists or annual exams because they believe their insurance won’t cover them.

“It’s a multiplier in that kids could lose coverage and could be delaying services, which is really common for people who are uninsured and that could have a lasting effect,” she said.

Arizona hasn’t seen that impact yet, Capriotti said. But it does want enrollees to know it’s not planning any steps to scale back coverage.

“We certainly want people to not panic and be afraid the program’s changing and not make their premium on time,” she 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 CMS informational document is at

The Georgetown University CCF blog post is at

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

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