October 06, 2017

Congress Formulates CHIP Reauthorization Plans

Congressional efforts to fund the State Children's Health Insurance Program (CHIP) are moving forward after the program expired Sept. 30, the final day of a failed last-ditch effort to repeal and replace the Patient Protection and Affordable Care (PPACA).

Jointly funded by the states and federal government, CHIP provides low-cost health insurance coverage to children of families that earn too much to qualify for Medicaid. The federal share of CHIP spending involves a set amount of funding covering a two-year period. Although most states still have a few more months before their resources for CHIP are exhausted, the need for Congressional action is becoming increasingly pressing.

The House Energy and Commerce Committee unveiled legislation on Oct. 3, entitled the “Helping Ensure Access for Little Ones, Toddlers, and Hopeful Youth by Keeping Insurance Delivery Stable (HEALTHY KIDS) Act of 2017.” If enacted, it would extend the CHIP program for five years. The committee addressed details of the bill in a markup session on Oct. 4.

The Senate Finance Committee held a separate legislative markup Oct. 4 for its unique bill, S. 1287, “the Keep Kids’ Insurance Dependable and Secure (KIDS) Act of 2017,” to also extend CHIP for five years.

Historically, the federal government has provided an average of 71 percent of the CHIP funding, but a provision in the PPACA boosted federal funding to the states by 23 percentage points over the past two years. Both House and Senate bills would continue the extra funding through Fiscal Year (FY) 2019 and gradually phase out the payment bump until resuming the more traditional matching rates in FY 2021 and 2022.

While both the House and Senate have coalesced around a preferred time frame for the program’s extension, only the Energy and Commerce legislation outlines policy changes to cover the associated costs of continuing CHIP. The House plan would make the following changes:

Charging higher Medicare premiums to seniors earning more than $500,000 annually (Raises $6 billion)
Allowing states to disenroll lottery winners from Medicaid (Raises $400 million)

Shortening the grace period for PPACA enrollees who don’t pay their marketplace premiums from 90 days to 30 days (Raises $5 billion)

Redirecting money from the PPACA’s prevention and public health fund to community health centers (Raises $5.5 billion)

Strengthening Medicaid’s third-party liability policy by making it easier for state programs to avoid some medical costs if they’re already covered by private plans or other government programs (Raises approximately $4 billion)

To date, no Democrats have agreed to the House proposal. Progressives are expected to staunchly oppose many of the proposed policy offsets, especially the repeal of the PPACA’s prevention and public health fund. Negotiations on bipartisan pay-fors continue in the Senate and, thus far, nothing has been publicly released.