December Is the Most Critical Month Yet for States’ CHIP Funding

Congressional inaction in funding the Children’s Health Insurance Program (CHIP) has put states – and the children and families CHIP covers– in a cliffhanger scenario. While there have been encouraging legislative steps taken to extend the program, the bill currently appears to be stalled. With the help of temporary, reallocated CHIP funding, states are continuing to support their programs, but these funds are running out. As a result, a growing number of state officials expect they will have to notify families that their children’s coverage is in jeopardy by as early as this month.

To date, 17 states, including Washington, DC, (AZ, CA, CO, DC, DE, FL, HI, ID, MA, MN, MT, NV, OH, OR, PA, UT, and WA) have received redistribution grants from the Centers for Medicare & Medicaid Services (CMS) to continue their programs. Another nine states (AL, AK, CT, GA, KS, KY, NY, VA, and VT) are also expected to receive redistribution grants in the coming days and weeks.

As detailed in a previous NASHP blog, states are eligible to receive redistribution dollars only after spending their available federal fiscal year (FFY) 2017 carryover CHIP funds. The redistribution funds are available as a last resort and nearly $1.2 billion of the total available $2.9 billion has been reallocated to enable states to continue their CHIP programs. In December, Minnesota will be the first state to exhaust all of its federal CHIP funds, including its redistribution grant , and it’s possible that Oregon and Arizona could.do the same.

Ultimately, timing for notifying families that their children’s coverage could end depends on how long a state can continue its CHIP program while also giving families adequate time to prepare.
Unfortunately, right now some states don’t have much time.

Many states using redistribution grants to fund their separate CHIP programs are watching Congressional activity closely, hoping federal CHIP funding will be extended as part of the continuing resolution (CR) that must pass by Friday, Dec. 8, 2017, to keep the federal government operating. However, reports suggest there will be two CRs – the first by Dec. 8th to ensure the federal government is operational in the short term and another in the coming weeks that will fund the government for a longer term. Congress is most likely to consider adding CHIP funding to the later one. With continued CHIP funding uncertainty, it remains unclear if states can and will put their plans to notify families that their children’s coverage could end on hold until after Congress acts on the second CR. For example, both Colorado and Oklahoma have already sent informational notices to families; Virginia and Connecticut plan to send notices in early to mid-December. Ultimately, timing for notifying families depends on how long a state can continue its CHIP program while also giving families adequate time to prepare — and unfortunately some states don’t have much time.

On Dec. 1, 2017, U. S. Reps. Ryan Costello (R-PA) and Tom Emmer (R-MN) introduced a bill to be included in the Dec. 8 CR that gives CMS greater flexibility to allocate redistribution funding to states that will experience a CHIP shortfall this month. The bill would waive a proration rule in the current statutory formula that dictates the portion of redistribution funds CMS allocates to ensure all states receive some of these funds. If it passes, states that exhaust all of their federal CHIP dollars in December 2017, including those that have already received and used the entirety of their redistribution portion, could receive an additional payment.

It is expected that only Minnesota (and perhaps Oregon and Arizona) will run out of all of their funds in December and would be eligible to receive this additional payment. While the additional redistribution payment will be limited and relatively small, there will be less funds available for other states that are also running out of federal funds in future months. As a result, the urgency for Congress to appropriate new federal CHIP funds for all states remains critical, even with this short-term solution. Even if this short-term fix passes, with a growing number of states expected to exhaust their CHIP funds by the end of January, it does not guarantee there will be no notices going out to families this month.

Alabama’s notification contingency timeline for its separate CHIP program:
Late December 2017: Send informational notice to families to alert them that coverage may end in February, 2018
January 2018: Freeze enrollment
February 2018: Disenroll children from CHIP
* Alabama expects to exhaust all federal CHIP funds in February, 2017, but needs to initiate notification in December 2017.

Throughout its 20 years, CHIP has enjoyed strong bipartisan support and states, Congress and CMS have enjoyed a productive partnership, sharing the common goal of serving the nation’s children. The House has passed a bill to continue the program for five years and while funding remains a stumbling block, states hope Congress will again find a bipartisan path forward to continue health coverage uninterrupted to the 9 million children who rely on their action.