CHIP’s Future: There Are Hopeful Signs from Congress, But States Still Face Uncertainty
With less than two weeks to go before current federal funding for the Children’s Health Insurance Program (CHIP) ends, Sens. Orrin Hatch and Ron Wyden have introduced a bipartisan bill to extend the program for five years. However, state officials face the unsettling possibility that if Congress is unable to pass this legislation and appropriate funds soon, some states may have to make tough decisions about their programs’ future as soon as mid-October.
The introduction of the Keeping Kids’ Insurance Dependable and Secure (KIDS) Act (S. 1827) follows a hearing on CHIP held by the Senate Finance Committee where Medicaid and CHIP Payment and Access Commission (MACPAC) staff, a parent of a child covered by CHIP, and a state official who administers a CHIP program testified about its value. Speakers stressed the urgent need for longer-term funding certainty for the program that helped reduce the rate of uninsured children nationwide to historically low levels. By proposing five years of funding at the current federal matching rate, which includes the Affordable Care Act’s (ACA) 23 percent bump for two years before it is phased out, this bill offers states the predictability they need to encourage innovation and investment in children’s coverage.
As promising as the developments from the Senate are, the clock is ticking and with the many demands facing Congress there is no guarantee that there will be timely action taken on the bill. State officials’ anxiety about how far their remaining CHIP funds will stretch and how much time they have to complete complicated policy, systems, and practice changes if Congress doesn’t successfully extend CHIP funding is intensifying. A recent NASHP blog highlighted some of the steps states are considering or currently taking and notes that states will have to use their remaining federal CHIP funds to implement these contingency plans, which means states will exhaust their CHIP funds sooner than is projected.
States are applying a new level of scrutiny to their remaining federal CHIP funds to determine how long they can expect to provide coverage to enrollees. Washington State estimates its CHIP funds will be exhausted in November 2017 because the state is anticipating an increase in claims, which differs from federal projections of January 2018. As a result of the devastation from Hurricane Harvey, Texas’s CHIP program is temporarily waiving cost-sharing payments required from families to ensure children have access to care, which will result in a more rapid spend-down of the state’s CHIP funds. These two states’ concrete examples prove the current spend-down projections are estimates that are subject to change.
During a recent conference call with representatives from state CHIP and Medicaid programs, several officials expressed serious concerns that CHIP funding had not yet been extended. Given the ongoing uncertainty, they are beginning to coordinate with health insurance Exchange officials to develop transition plans. They are seriously considering the policy and systems changes required to seamlessly transition children currently covered by CHIP that may be eligible for the ACA tax credits into qualified health plans (QHPs).
The systems are currently designed to ensure that children eligible for CHIP are enrolled in that program and not in a QHP. If CHIP ends and children need to be transitioned to other potential sources of coverage, there are layers of decision points embedded in state and federal eligibility systems that support enrollment in CHIP that would need to be redirected to ensure a child does not get stuck pinging between the Exchange and a CHIP program that is in in the process of being shut down. Identifying and implementing the necessary changes and testing the updated systems will require time and substantial funding that states, which are expected to exhaust their CHIP funding by early 2018, do not have.
There are other, broader concerns–QHPs are not currently prepared to enroll thousands of new children. In addition to eligibility issues, officials expressed concerns about insurance rates that are currently being finalized that don’t account for a potential infusion of current CHIP enrollees. Adding children, who are generally cheaper to cover, could help reduce rates, but insurers have not actuarially calculated for this influx. Their impact on the private insurance market is still unknown, which can be complicated in this environment of potential market instability. Also, QHPs cannot guarantee there are appropriate numbers of pediatric providers in their networks to cover thousands of new children. Some officials also cited timing as a major issue because if CHIP isn’t extended soon, a number of states will need to transition children who may be eligible for Exchange subsidies (though not all are) during the shortened annual open enrollment period, which they fear would be chaotic.
Concerns about the future of CHIP funding and the steps states must take to possibly end the program have taken precedence over the fact that the legislative authority to use Express Lane Eligibility (ELE) is also due to expire on Sept. 30, 2017, if Congress does not act to extend it. ELE, originally introduced through the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA), is an option available to states to streamline either initial enrollment or renewal (or both) for children into either Medicaid or CHIP by using an eligibility decision from another trusted means-tested program, such as the Supplemental Nutrition Assistance Program (SNAP). There are currently nine states that are using ELE according to the HHS Office of Inspector General. Several of these states have literally built their eligibility systems, processes, practices and staffing around it and are depending on ELE to continue.
The Senate’s KIDS bill also extends ELE through 2022. While the promise of this proposal is cause for celebration, prompt action is required because there could be significant costs to states that adopted ELE and without it would have to change how they determine eligibility. According to state officials, there simply isn’t enough time to make the changes necessary by Oct. 1 without disrupting coverage for Medicaid and CHIP children in these states. State officials will need to work with the Centers for Medicare & Medicaid to create temporary solutions for states to maintain coverage for children whose eligibility is now seamlessly determined through ELE.
While states welcome the introduction of a bill that could deliver longer-term funding certainty that they need to continue to meet children’s health needs, the timing for legislative action remains critical.