Congress Leaves all the CHIPs on the Table

By: B. Cameron Webb, MD, JD

LAST WEEK IN REVIEW: Monday, Oct. 16th – Friday, Oct. 20th

Expectedly, last week’s biggest story remained the outpouring of responses to the Trump Administration’s Health Care Executive Order (EO) and decision to discontinue cost-sharing reduction (CSR) payments. Eighteen states and the District of Columbia filed a multi-state lawsuit in an effort to stop the President from discontinuing the CSR subsidies. The Administration’s actions also reverberated through Wall Street, with several health insurance stocks taking a hit after the decision was announced. Finally, the Senate Health, Education, Labor and Pensions (HELP) Committee also responded by striking a bipartisan deal to stabilize individual health insurance marketplace and extend CSR subsidies for two more years.

While the end of the CSR subsidies made the most noise, there was still plenty of action in other aspects of health policy. In the wake of Hurricane Maria, the health of Puerto Rico’s 3.4 million residents remains a concern, with increased rates of diarrhea, pink eye, skin rashes and mental trauma being reported. Two bills are being considered by Congress to add $1 billion to Puerto Rico’s Medicaid program and provide millions of dollars in disaster relief.

Finally, In the midst of the nation’s ongoing opioid epidemic, the White House announced that their candidate to lead the Office of National Drug Control Policy (ONDCP) withdrew his name amidst scandal. But while there has been a flurry of executive branch activity in the health insurance space over the past few weeks, we turn our attention in this week’s Spotlight to the legislative branch and the discussions in the House and Senate around ensuring healthcare access for children.

SPOTLIGHT: Congress Continues to Leave all the CHIPs on the Table

A doctor checking a childs throatFor weeks, Republicans and Democrats have both pledged their commitment to funding the popular Children’s Health Insurance Program (CHIP). Still, with federal CHIP funding expired as of September 30, the discussions—and even preliminary actions—in both houses of Congress have yet to result in an outcome that protects coverage for some of America’s most vulnerable children. As October comes to a close, states across the nation nervously watch both the Hill and their budgets, with several states just weeks away from running out of CHIP funding.

What is CHIP?

CHIP was enacted in 1997 as a partnership between federal and state governments to cover uninsured, low-income children with incomes above Medicaid income eligibility thresholds. Through the program, states have the option of using their federal CHIP funds to expand their Medicaid program beyond the federal minimum for children under 18 (i.e., cover children with incomes greater than 138 percent of the federal poverty line), to create a CHIP program that is separate and distinct from the state Medicaid program, or to use a combined approach.

In 2016, CHIP programs across the 50 states and in the District of Columbia covered 8.9 million children. Since CHIP’s enactment, the number of uninsured children in the United States has decreased from nearly 14 percent in 1997 to less than 5 percent in 2015. CHIP was last reauthorized at a cost of $39.7 billion as part of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).

When is it due for the next reauthorization?

When was it due, you ask? The deadline came and went on September 30, 2017—the end of the federal government’s 2017 fiscal year (FY 2017).

If the federal funding is already expired, what does that mean for CHIP as of now?

Again, the CHIP program is a partnership between federal and state governments. To encourage state participation—and investment—the federal government offers a rather generous matching rate for CHIP. While already considered an “enhanced” matching rate for CHIP relative to Medicaid, the Affordable Care Act (ACA) further increased the match by 23 percentage points, resulting in an 88 to 100 percent federal match across the states. This means that, for every dollar a state puts toward its CHIP program, the federal government will put up between $0.88 and the full dollar as a matched contribution.

kids protesting with signsWhile the funding technically expired on September 30, states can still use any remaining FY 2017 CHIP funds to continue operating their programs. Anticipating the issue with extending CHIP, the Medicaid and CHIP Payment and Access Commission (MACPAC) estimated how long each state would last before exhausting their CHIP funds. Four states (Arizona, the District of Columbia, Minnesota and North Carolina) are projected to exhaust funds by December 2017. An additional 27 states (including Virginia) are expected to run out of federal CHIP funds by March 2018.

So, within the next six months, most states would not have the financial support from the federal government to continue providing their current levels of access to healthcare for low-income children. As you can imagine, that sentence–and its underlying reality—does not sit well with any American of conscience, nor does it serve the interests of any of the 469 members of Congress up for reelection in 2018.

Current CHIP Activity in the Senate

The Keeping Kids’ Insurance Dependable and Secure (KIDS) Act was introduced on September 18th by Sen. Orrin Hatch (R-Utah) and referred to the Senate Finance Committee. Sen. Hatch is no stranger to CHIP, having co-sponsored the original legislation in 1997 that led to its creation. The Senate Finance Committee, chaired by none other than Sen. Hatch, advanced the measure on October 4. In brief, the KIDS Act would extend CHIP funding through FY 2022, maintain the federal matching rate at current statutory levels (as they were “enhanced” under the ACA) through FY 2019 before decreasing it to a traditional CHIP matching rate by FY 2021 and FY 2022, and would create protections and flexibility under the ACA’s maintenance-of-effort provision.

Meanwhile, in the House of Representatives

The Helping Ensure Access for Little Ones, Toddlers, and Hopeful Youth by Keeping Insurance Delivery Stable Act of 2017 (“HEALTHY KIDS Act”) was introduced on October 3rd by Rep. Michael Burgess (R-Texas) and was referred to both the Energy and Commerce Committee as well as the Ways and Means Committee. While the Energy and Commerce Committee passed a bill extending funding for the program on October 4, they did so with no Democratic support within the Committee.

Similar to the KIDS Act in the Senate, the HEALTHY KIDS Act in the House would reauthorize CHIP for five years, extend state maintenance of effort for children below 300 percent of the federal poverty line, transition down from the enhanced match to a regular CHIP match by FY 2021, and would extend a number of demonstration and outreach programs. The HEALTHY KIDS Act went a step farther, delaying cuts in Medicaid Disproportionate Share Hospital payments by one year and providing $1 billion in Medicaid financing to Puerto Rico and additional relief to the U.S. Virgin Islands. Among the outlined offsets for these expenditures was an increase in Medicare premiums for beneficiaries making over $500,000 per year.

So what’s the holdup?

According to most reports, Democrats on the House Energy and Commerce Committee requested that the Committee delay sending the HEALTHY KIDS Act to the floor for a vote of the entire House of Representatives. At particular issue were the nature of the offsets in both the HEALTHY KIDS Act and a separate measure—the CHAMPION Act (H.R. 3922)—which was also introduced on October 3rd to reauthorize community health centers through FY 2019. While the HEALTHY KIDS Act would increase Medicare premiums for high-income beneficiaries, of greater concern to House Democrats was the CHAMPION Act’s cutting of $6.35 billion in future appropriation to the Prevention and Public Health Fund (PPHF), which was created by the ACA. With such a large and important source of public health funding on the line, it seems House Democrats are unwilling to move forward with either piece of legislation until, at the very least, the PPHF funds issue was resolved.

A look ahead on CHIP reauthorization

While House Democrats hoped to renew bipartisan negotiations, House Republicans on the Energy and Commerce Committee contend that no counteroffers were ever provided. As the House of Representatives reconvenes today after its district work period, the Energy and Commerce Committee plans to immediately move forward with presenting the HEALTHY KIDS Act for a full vote of the House.

Even if the House passes the HEALTHY KIDS Act, the KIDS Act will still need to be debated and voted on by the Senate, and the respective chambers would need to resolve any differences between the bills—either through a conference committee (which would require a second vote on the bill reached through compromise) or a back-and-forth that would yield consistent language on which both chambers could vote. Finally, that bill would need to go to President Trump for his signature or veto.

There remains a long road ahead to get CHIP reauthorized. In many states, there is a race against the clock, with statutory requirements in some states necessitating a freeze of the program as soon as federal funds from FY 2017 expire. With stakes this high, Congress will need to finally succeed in working together to make sure that America’s children don’t bear the brunt of their dysfunction.

Student Contributors on this Article:
Marissa Alvarez, Chad Fletcher, Shaina Haque