State CHIP Officials Speak Out on Impact of Congressional Funding Delay

In early January, the National Academy for State Health Policy (NASHP) asked all state Children’s Health Insurance Program (CHIP) and Medicaid officials:

  • How state CHIP funding exhaustion dates and contingency planning had changed as a result of the Dec. 22, 2017, continuing resolution that provided states with a short-term allotment of $2.85 billion, and
  • What has been impact of the extended uncertainty about long-term, predictable funding on states and their CHIP programs.

The following is a summary of the information shared by 34 states whose officials responded to the poll.

Estimating the Exhaustion of Federal CHIP Funds
Given the temporary changes to the allocation of redistribution funds, states are uncertain how much future federal funding they can count on to keep their CHIP programs operational. The officials shared estimates of when their state may exhaust federal funds with NASHP on the condition of confidentiality.

  • Eleven states anticipate exhausting their funds sometime in February 2018
  • Ten states anticipate exhausting their funds sometime in March 2018

State contingency plans evolve with the emerging information from the Centers for Medicare & Medicaid Services (CMS) and with potential legislative action from Congress, which must pass a financial package by Jan. 19, 2018, to avoid a federal government shutdown. CMS officials have told states that future redistribution funds cannot be guaranteed and, as expected, state officials hope Congress will take action to provide long-term, predictable funding soon. Without Congressional action, there are states that may need to either freeze enrollment or initiate disenrollment by the end of January or early February.

The Impact of Prolonged Uncertainty
The impact of sustained uncertainty for the future of CHIP varies across states. Some officials report they face more significant and immediate implications than others, but all states are experiencing challenges operating a health coverage program without guaranteed funding. Here are some key budgetary and program concerns:

  • Continued uncertainty has a significant impact on budgeting and planning for state resources. Should a state assume that Congress will extend CHIP? How much money should states budget for children’s coverage – enough to ensure they match CHIP dollars? A higher level of funding to provide state matching dollars for more children in Medicaid? If so, where do those funds come from?
  • Should states with biennial legislative sessions convene special sessions? If so, when should they address the potential changes in states budget as a result of changes to federal funding for CHIP?

Limited Medicaid and CHIP resources are stretched thin:

  • Agency staff have focused on contingency planning, budgeting, and keeping the program operational rather than make additional improvements to CHIP or other state health initiatives, such as delivery system reforms and eligibility and other information technology systems improvements.
  • For months, a significant amount of staff resources has been devoted to communications and outreach to families, stakeholders and partners (including health plans, providers, contractors, vendors, and community-based organizations) to ensure they have accurate and current information.
  • Uncertainty has delayed implementation of new state laws – both laws related to the CHIP program and to other health programs because the responsibility for implementing the laws falls to the same agency officials who must focus on CHIP.

Loss of participating providers and increased utilization of the delivery system:

  • Although not wide-spread yet, there are reports of states losing participating providers from health plans that contract with CHIP due to the uncertainty of future funding for the program.
  • There is an increased demand from families seeking primary care and specialty health services for their children while the program is still operational. This has been taxing to the delivery system in some areas and also results in an increase in spending that more rapidly depletes the available funding.

System changes:

  • Given the time required to make significant eligibility and claims systems changes, some states have had to make the changes even though they have not had to implement them yet. This has resulted in expenditures for staff and contractor/vendor time, as well as the cost of systems changes, even though these actions may not be needed if Congress ultimately extends the program.

States’ responses to NASHP’s poll underscore the fact that Congressional delay in extending the CHIP program’s funding could soon result in children losing their health coverage and highlight the systemic implications for states. Budgetary, systems, provider network, and agency work delays will likely affect states and their coverage programs for months after the uncertainty is resolved.