CHIPping Away at a Long-Term Extension
By Jennifer Perkins

More than 100 days have elapsed since the Children’s Health Insurance Program (CHIP) expired, and as yet there’s no deal to renew the program permanently, despite proclamations of its importance and feigned dismay at its lack of funding.

Lawmakers passed a continuing resolution, or stopgap spending bill, in late December before leaving Washington for the holidays. That continuing resolution expires Jan. 19, which coincidentally is when some states will get close to running out of funds, even though the short-term appropriation of $2.8 billion was intended to last through March.

The continuing resolution funds Texas’ CHIP program through March, with some contingency funding available after that should talks break down and progress screech to a halt. But 450,000 Texas children and pregnant women are counting on leadership in Congress to ensure contingencies do not need to be activated.

The recently passed Tax Cuts and Jobs Act, which in part eliminated the individual insurance coverage mandate, could drastically reduce the amount of funds needed for CHIP: A five-year extension will add about $800 million to the deficit, a significant reduction from the original $80 billion price tag. A 10-year extension would save roughly $6 billion, based on a new score from the Congressional Budget Office.

The complicated reasoning for the reduction follows several tracks:

• States’ federal match rate would return to the level in place before the Affordable Care Act became law, from 93 percent to 69 percent, thus reducing expenditures.
• Without individual mandates, premiums could go up, which would mean larger subsidy payments. Covering children and pregnant women in CHIP yields a larger reduction in spending related to marketplace coverage.
• No CHIP funding, or even a reduction, could cause parents to cover their children through the marketplace, increasing federal spending.
• Regulatory changes have made marketplace coverage for children more expensive, increasing federal spending.

All of this is to say that, essentially, the tax bill and regulatory changes have made marketplace coverage more expensive. Therefore, the federal government would spend less covering children and pregnant women through CHIP because of reduced expenditures on Medicaid and subsidies.

There is consensus among federal legislators to renew CHIP and optimism that full funding, instead of month-to-month piecemeal nickels and dimes, will happen in the very near term. 

The unknown is the vehicle:  

• It could be a primary component of a continuing resolution due by Jan. 19, 
• It could be a component of a full government budget if that budget is prepared by Jan. 19, or 
• It could materialize as a stand-alone CHIP bill. 

TMA will continue to monitor the situation and let you know how you can help break any log jam.