CHIP: The 3 looming questions about the soon-to-expire program

Topics: Politics and Policy, Federal Government, Health Care Reform, Insurance, Children's Health Insurance Program, Medicaid

By Ashley Fuoco Antonelli, associate editor

Republicans and Democrats might not agree about much in health policy, but for the past 20 years, they've agreed on this much: The federal government should help ensure, through CHIP, that children have access to health insurance.

Industry experts predict the bipartisan tradition will continue when funding for CHIPwhich covered an estimated 8.4 million U.S. children in 2015comes up for reauthorization later this year.

But that doesn't mean that the future is clear for children's health care. Key questions loom about how Republicans' other health reform efforts will affect CHIP—and even whether lawmakers might scrap the program entirely.

About CHIP

CHIP was created in 1997 under former President Bill Clinton's administration. The Affordable Care Act (ACA) reauthorized the program through 2019, but Congress has not yet acted to provide funding for CHIP past Sept. 30.

As the National Governors Association (NGA) wrote in a May 11 letter to lawmakers, Congress' inaction creates uncertainty for states, which need to "appropriately budget and plan for their upcoming fiscal years."

And those budget deadlines are quickly approaching. According to the Los Angeles Times' Michael Hiltzik, some states must set their next fiscal year's budget "as early as the end of March, (and) in others the deadline comes between April and June." Without a funding extension, NGA wrote, "[S]tates will have no choice but to begin notifying families, altering provider contracts, and taking other steps to terminate their programs."

The big unanswered questions in the CHIP debate

A complicating factor for CHIP's reauthorization is that the program is deeply tied both to Medicaid and to the ACA—meaning that Republican efforts to change those programs could have big consequences for CHIP. In particular, three key questions remain unanswered:

  1. How could the American Health Care Act's (AHCA) Medicaid reforms affect enrollment and funding for CHIP?
  2. Will Republicans nix the ACA's "funding bump" for CHIP?
  3. Will Republican lawmakers replace CHIP entirely?

Let's explore each of these in more depth.

How could the AHCA's Medicaid reforms affect enrollment and funding for CHIP?

While Medicaid and CHIP are separate programs, they are closely intertwined. According to Kaiser Family Foundation, some states have implemented CHIP as an expansion of their Medicaid programs, while other states commingle the programs to at least some degree.

As a result, some experts say the AHCA's provisions that would reduce Medicaid spending—which the Congressional Budget Office initially projected would amount to $880 billion, or 25 percent, in reductions over a decade—could bleed over into CHIP.

Sara Rosenbaum, a George Washington University law professor who previously served as chair of the Medicaid and CHIP Payment and Access Commission (MACPAC), told Modern Healthcare, "If you do mortal damage to Medicaid, which the AHCA does, it would spill over to CHIP, which is joined at the hip with Medicaid."

Repealing the ACA also could affect how families enroll in CHIP. Prior to the ACA, Medicaid eligibility thresholds for children varied by age—so a family might have one child enrolled in Medicaid and another enrolled in CHIP because of their respective ages. The ACA sought to make it easier for family members to enroll in the same program by setting a standard Medicaid eligibility threshold for all children at 133 percent of the federal poverty level. According to KFF, this led 21 states to transition children from CHIP to Medicaid. 

But as Joan Alker, a Medicaid expert at Georgetown University, told Vox's Dylan Matthews, the AHCA would give "states the option to put those kids back in CHIP," meaning children within the same family could once again wind up in two different coverage programs.

Will Republicans nix the ACA's "funding bump" for CHIP?

Although many industry experts expect that Congress ultimately will reauthorize CHIP, it's less clear whether they will keep a 23 percent "funding bump" in federal matching rates through fiscal year 2019 that was provided in the ACA for the program.  

Unsurprisingly, state governors want that match to continue in the next reauthorization bill. MEDPAC also endorsed the funding in its December 2016 recommendations to Congress. But House Republicans have proposed eliminating the funding bump to reduce spending.

Kelly Whitener, an associate professor of practice at the Center for Children and Families at the Georgetown University McCourt School of Public Policy, told American Health Line that a House committee last year approved a measure, called the Common Sense Savings Act of 2016 (HR 4725), that would have repealed the CHIP funding bump. The full House did not consider the measure, but Whitener said lawmakers could seek to include similar language in a bill to repeal the ACA.

Will Republican lawmakers replace CHIP entirely?

Some experts also have suggested that Republicans could decline to reauthorize CHIP funding and instead seek to replace the program as part of their larger health reform efforts.

While phasing out a largely bipartisan program with nearly 8 million enrollees might seem unlikely, the idea is far from new, and in fact, Democrats floated the idea of replacing CHIP in 2015 and gleaned initial backing from MACPAC. At that time, Democrats believed the ACA's coverage expansions could replace CHIP and recommended that CHIP be extended for only two years, which they said would provide enough time to resolve transition issues.

But shortly after the November 2016 elections, MACPAC changed course and voted 16-1 to recommend that Congress extend CHIP for an additional five years, through Sept. 30, 2022. The panel said Congress should act "as soon as possible" to reauthorize CHIP so the program remains in place in case the ACA is repealed.

Where CHIP reauthorization stands now

Several lobbyists have said Republican lawmakers hope to pass a "clean" CHIP bill, free of controversial and unrelated amendments, to reauthorize funding for two years.

Katherine Hempstead, a senior adviser at the Robert Wood Johnson Foundation, told American Health Line, "There has always been bipartisan support for CHIP," adding that HHS Secretary Tom Price "signaled his own support for reauthorizing CHIP" during hearings on his nomination for his new role.

Whitener also said "CHIP has enjoyed strong bipartisan support, which may continue even as other health-related issues have been more divisive." But she added that CHIP is not the only program relevant to children's access to coverage: "Extending CHIP funding while repealing the ACA and cutting Medicaid would not be a net win for children," she said.