CHIP Funding Likely, But Timing Issues, Other Pitfalls Loom

Feb. 9, 2015

Topics: Children's Health Insurance Program, Health Care Spending, Politics and Policy, Health Care Legislation

by Joshua Zeitlin, staff writer

Funding for CHIP, the Children's Health Insurance Program, expires Sept. 30, 2015. With new coverage options available via the Affordable Care Act, and the typically contentious politics of today, some stakeholders are wondering whether CHIP funding will be reauthorized.

Does the ACA mean the end of CHIP? If not, what does the future hold for CHIP? American Health Line spoke with several experts to get their take.

Little Question on Reauthorization

The experts are nearly unequivocal: There is little doubt that funding for CHIP will continue.

"I'm very optimistic," Families USA Executive Director Ron Pollack said, adding, "Everything we hear both on Capitol Hill and from the governors is that the bipartisanship that the program enjoyed from day one continues today. The CHIP funding extension should continue to enjoy the support it has had and appears to still have throughout the country."

Chris HoltAmerican Action Forum Health Policy Director Chris Holt agreed. "In one form or another, in one way or another, there will be a CHIP [funding] reauthorization." Holt noted that the program will continue to exist in part because of the ACA's "family glitch," which could leave many children uninsured if CHIP funding is not reauthorized.

Senate Finance Committee Chair Orrin Hatch (R-Utah) struck a similar tone in comments he made last month, calling CHIP a "must-pass" measure and adding that he is "optimistic that we can work on a bipartisan, bicameral basis to extend CHIP in a responsible way."

Timing in Question

It seems most observers are certain CHIP will be reauthorized. However, stakeholders were less confident about how long it would take for Congress to act.

The nation's governors have been clear on the issue of timing. As they plan their budgets for fiscal year 2016, nearly all of the 39 governors who sent letters last year to the Senate Finance and House Ways and Means committees said they wanted the program reauthorized -- and soon.

Utah Gov. Gary Herbert's (R) administration wrote, "At a minimum, states must know whether or not the CHIP will continue, and whether or not changes will be made to the program or funding for the program at least six months in advance of any change."

"If you look at the governors' responses," Pollack said, "they are terribly worried. They have to make plans in terms of their budgets and their programs, and they're doing so now, and the longer this gets delayed, the more difficult CHIP implementation will be for the next fiscal year. It really is critically important to get this done as soon as possible."

A recent survey from the National Academy for State Health Policy found that CHIP directors in general have indicated that "a timeline of March to May is," for many states that operate separate CHIP programs -- CHIP can be operated by a state as part of its Medicaid program or separate from it -- "pretty important for [states'] planning purposes," according to NASHP Program Manager Maureen Hensley-Quinn.

Pollack thinks states might get their timing wish. He predicted that lawmakers "are not going to want to complicate this by getting the CHIP issue mixed together with other things that are far more contentious and partisan." He added that "the context is absolutely right to get this to happen early," possibly at the same time as Congress addresses Medicare's sustainable growth rate formula. That's expected by the end of March.

"It makes a great deal of sense to pair up something that is of real important to seniors -- the SGR fix -- with something that's critically important to children and their families," he said. He added, "It may be a tad too early to say it's going to happen with confidence. I do think it will, but I think we'll have a better sense of this in the next few weeks."

However, not everyone is so optimistic about the timing. Billy Wynne, former health policy counsel to the Senate Finance Committee and current CEO of Healthcare Lighthouse, said that while it's not impossible to address CHIP issues around the "doc fix" deadline, it would be difficult.

Similarly, Holt said that the new GOP Congress has "other priorities that are stacked up in front of it." His "gut," he said, "is that this something that comes up before the August recess ... and governors are just sort of left not quite sure what's going to happen."

Another reason Wynne mentioned there could be a later vote on CHIP funding, besides "the general deadline orientation of the Congress," is King v. Burwell. He said, "There are many who will want to defer action on other health care items until after" the Supreme Court case, to determine whether subsidies will still be available to help U.S. residents purchase coverage -- for children and adults alike -- through the federal exchange.

Will CHIP Funding Get Complicated?

It doesn't have to be that way, Pollack said. "Whether it's King v. Burwell or other extraneous matters that are not really applicable to CHIP, there's no reason to complicate what is really a simple process of extending CHIP funding to issues that clearly are contentious."

Ron PollackPollack said the CHIP issue is "the test as to whether Congress can function in a bipartisan fashion," adding, "It would make sense to get come accomplishment under Congress' belt before they tackle what will inevitably be contentious issues." Pollack argued that CHIP "remains an oasis of bipartisanship" and is optimistic it will remain that way.

However, other stakeholders said they expect at least some debate, particularly over the length of a CHIP funding extension. The Medicaid and CHIP Payment and Access Commission has called for a two-year extension to provide time for Congress to consider new coverage options under the ACA. Meanwhile, President Obama in his fiscal year 2016 budget proposed funding the program through FY 2019, an idea for which several governors also have called.

Holt said it's too early to tell how long CHIP funding will be reauthorized for and whether lawmakers will make major changes to the program, such as limiting coverage to children who would be affected by the family glitch. He added that the longer it takes to reach an agreement, "the more likely that you end up with a sort of temporary patch" and "the less time there is to move something sort of complicated through the process," although he noted lawmakers could make program changes that would not go into effect until a later date.

Meanwhile, Wynne warned that the funding debate could encounter some issues that stir up the "stronger voices on kind of the extreme arms," particularly those of GOP members, "who may want to make CHIP more political." For example, he noted that the 2009 CHIP reauthorization waived the standard five-year ban for some legal immigrants arriving in the U.S. to participate in the program, which has "the capacity to become a pretty hot-burner issue."

Billy WynneIn the end, Wynne sees the likeliest changes to the program being an end to the 23% increased federal matching rate for CHIP and alterations to the maintenance of effort provision, both of which were included in the ACA.

Still, he said, "I don't think ... either side really wants [CHIP funding] to be a controversial issue," adding that the parties do not want "to get accused of undermining care for kids."