Sixteen states will run out of federal funding for CHIP — the Children’s Health Insurance Program — by the end of January, according to the Kaiser Family Foundation. Three-quarters of all states expect to exhaust funds by the end of March unless Congress can agree to fund it.
CHIP provides health insurance coverage for just shy of nine million children whose families have too much income to qualify for Medicaid but not enough to afford the cost of insurance. It is increasingly used by families whose employer-provided insurance is too expensive. CHIP is provided for free or the program’s premiums are pegged to an amount based on a family’s annual income.
CHIP has come into the news lately because Congress has not yet reauthorized its funding mechanism and, as a result, states are running out of money. Once the money runs out, potentially hundreds of thousands — if not millions — of low-income kids could lose their health insurance. That could be a dire situation for some families.
Versions of CHIP reauthorization have passed both the House and a key Senate committee, but there have been disagreements on how to pay for the program. Lawmakers on both sides of the aisle agree that it will ultimately be reauthorized, but for families who rely on the coverage, the stopgap temporary solutions have caused heartburn and Democrats have complained that Republicans want to focus on tax reform first.
The loss of federal funds could cause state budget shortfalls because nearly all states assumed continued federal funding in their 2018 budgets. States have already made plans for what to do in the event that federal funds are exhausted.
Depending on how they have setup their CHIP programs, states plan to terminate or reduce coverage, cap enrollment or transition children to Medicaid, according to the Kaiser Family Foundation. States that have a CHIP-funded Medicaid expansion are making plans to address the budgetary shortfall that will occur when they still need to provide children coverage but receive a lower federal Medicaid match rate.
CHIP has also become a topic of conversation in popular culture. ABC late-night host Jimmy Kimmel gave an emotional monologue about his son, Billy, who recently had a successful surgery. Kimmel thanked the doctors who took care of his son while making a plea that CHIP funding be extended so that other children can get health services.
“Now CHIP has become a bargaining chip,” he said. “It’s on the back burner while they work out the new tax plans.”
CHIP costs just over $16 billion per year. Even after accounting for economic growth, the tax bill passed by the Senate, which is now being reviewed for final passage by both chambers, is projected to cost $1 trillion by the Joint Committee on Taxation.
The steps Congress has taken to fill the funding gaps while it debates a more permanent solution have been small and drawn the ire of states and medical groups.
President Donald Trump signed a short-term government funding bill which called on the Department of Health and Human Services to allocate any remaining funds to the states most at risk of running out of CHIP funding.
“The short-term funding agreement to fund the government until Dec. 22 only includes a patchwork measure,” said the American Academy of Pediatrics in a statement.
A bipartisan group of 12 governors led by Ohio Gov. John Kasich and Colorado Gov. John Hickenlooper wrote a letter to House and Senate leadership Tuesday asking them to reauthorize CHIP. “We believe covering children and pregnant women without disruption is one thing we can all agree on,” the letter read.
Congress has fought over how to pay for CHIP but has yet to reach a compromise. Democrats and Republicans skirmished over authorizing the funding this fall in the House, where Republicans wanted to extend funding in exchange for funding cuts to Obamacare. Then in December, Republican Utah Sen. Orrin Hatch and Democratic Ohio Sen. Sherrod Brown clashed over whether the government could afford such programs. Hatch, who was one of the initial authors of the legislation, said the government had spent beyond its means and he wants to find a way to extend the program.
Already, some states are sending our mailers to families saying their coverage may be affected. There is concern among health experts that added insecurity about programs or just a brief hiccup in coverage can have lasting damage.
Research into programs that have suspended or modified coverage found that once programs like CHIP experience temporary program suspension, it can take years to bring coverage levels back to previous levels.