The Clock is Ticking as We Enter a Critical Time for the Future of CHIP

twitterFederal funding for the Children’s Health Insurance Program (CHIP) is set to end this September, and without Congressional action, states will soon confront significant fiscal challenges. If states exhaust their federal CHIP funds, those with separate CHIP programs can cap enrollment and take steps to close their CHIP programs. States that operate Medicaid expansion CHIP programs will lose their enhanced CHIP federal match but because of the current maintenance of effort (MOE), will maintain coverage for children at the lower Medicaid match rate.

According to a recent analysis, by the Medicaid and CHIP Payment and Access Commission (MACPAC), based on current projections from states on their CHIP spending if federal funding is not extended, all states will exhaust federal CHIP funding sometime in FY2018. The estimates show that more than half of all states—33 states and the District of Columbia (D.C.)—will spend out their federal CHIP funds by March 2018, and of these states, four and D.C. will exhaust these funds as early as December 2017. As a result, in some states program officials have been working the governor’s office and legislature to consider different contingency plans if federal funding is not extended soon.

Last week, NASHP convened a call with a representative group of CHIP and Medicaid officials and they noted that if federal CHIP funding remains uncertain in the coming weeks and months, states may need to initiate efforts to close their CHIP programs, which would require multiple, varied steps. There are many programmatic and operational issues that would need to be addressed to prepare to transition enrollees from CHIP. These policy considerations and action steps are highlighted in this timeline NASHP developed in 2016 with state input. For example, states would need to develop communication plans to inform families, providers, and other stakeholders; evaluate and possibly modify existing or planned contracts with managed care organizations, vendors and other entities; assess current state policies and laws to identify needed changes if CHIP were to end; and plan for potential eligibility, claims and other systems changes. Creating and implementing these transition plans would be administratively burdensome and potentially costly for states, particularly if federal CHIP funding is eventually extended and these efforts result in being unnecessary.

Program officials cited many state legislative sessions are scheduled to end in May and June, which marks the deadline for any flexibility in possibly securing any state legislation that may be needed by some to make substantial changes to their programs. NASHP published a survey in early 2017 examining how states are budgeting and planning for CHIP given its uncertain future, and the overwhelming majority of states indicated that their budgets currently assume that federal CHIP funding will continue. Considering this, if Congress does not extend CHIP funding or postpones a funding decision until summer or fall of 2017, states will be in a very challenging position in the coming months. Also, states expressed that a multi-year extension of federal CHIP funding would be extremely helpful to allow for long-term programmatic planning and for providing budgetary stability.

State officials continue to comment on the value of CHIP as a program that provides affordable and comprehensive coverage to almost nine million children in low-income working families, and for pregnant women in some states. NASHP recently summarized state officials’ views on children’s coverage within the current context of uncertainty both in terms of federal CHIP funding as well as potential changes that may occur at the federal level to overall health care reform. State officials emphasized the importance of maintaining children’s coverage gains, coverage affordability, pediatric-specific benefits, and high-quality care for children. Similar to MACPAC’s recommendations, they expressed that maintaining a stable source of coverage for children is essential as significant changes in health insurance markets are being considered at the federal level. Consequently providing for a multi-year extension of CHIP funding as soon as possible is crucial for state planning and budgeting efforts as well as for ensuring coverage gains and a stable care delivery system for children.

NASHP will continue to work with state officials on ways to maintain robust children’s coverage and will share out their perspectives and insights. For further resources related to children’s coverage, please see NASHP’s Children’s Health Insurance Resources page.