Where Are We with CHIP Now?

Congress’ short-term patch for the currently unfunded Children’s Health Insurance Program (CHIP) program may not be enough to avoid disenrolling families as some state officials predict they will exhaust these funds as soon as January and February. Uncertainty about the program’s future persists as states work with the Centers for Medicare & Medicaid (CMS) to try to understand how much each state can expect — if any — in redistribution funds once their extra allotment money is spent. States and families need Congress to act quickly to provide stable, long-term funding to ensure continuity of coverage for children.

Update on CHIP Financing
Both of the continuing resolutions (CRs) that Congress passed in December 2017 have had an impact on CHIP financing, but neither included long-term, predictable funding that states need to sustain the program into the future.

Congress used the Dec. 8, 2017, CR to temporarily eliminate the redistribution fund’s proration rule to allow states that were experiencing a shortfall of federal CHIP funding in or by December 2017 to receive additional redistribution dollars. The “fix,” as it is called, was extremely helpful to a few states (MN, OR, AZ, and WA) that had exhausted or soon would all of their federal CHIP funds.   Another 16 states (CA, CO, CT, DE, DC, FL, HI, ID, LA, MA, MT, NV, NY, OH, PA, UT) benefited from the fix to some degree, receiving funds that could support their CHIP programs an extra week or two. However, providing states that ran out of federal CHIP funds first with additional redistribution dollars has diminished the pool for all other states.

The CR passed on Dec. 21, 2017, included $2.85 billion in federal CHIP allotments that is said to give states enough funding to operate their CHIP programs through March. Unfortunately, according to CMS and individual state analyses, these funds are not be enough for all states to meet that March goal. Recently, the National Academy for State Health Policy (NASHP) has been polling state officials, asking when they expect to exhaust their new allotments. To date, of 29 states that responded, 10 report they will exhaust their funding by or during February 2018 and seven states predict their funds will run out in March 2018. The latest CR also extended the temporary fix that will allow CMS to reallocate remaining, limited redistribution dollars to those states that spend their allotment first.

The additional funds provide a short-term solution, especially for states that were making plans to disenroll children from separate CHIP programs as soon as January. These states may have federal funds that allow them to extend coverage to February. It is unknown how far the remaining redistribution money will go, but it is clear that there will not be enough for all states. As a result, there are states currently planning enrollment freezes and disenrollments as early as late January and early February.

The Impact of Continued Uncertainty
It has been more than 100 days since CHIP funding lapsed on Sept. 30, 2017. State officials had hoped for swift bipartisan action to extend this popular program and ensure continuity of coverage for millions of children. To the frustration of many, that has not happened. States have kept the program going with help from reallocated federal funds and in some instances, state funds. Officials had hoped to avoid alarming families unnecessarily. However, to help families prepare, in November and December several states did send written and electronic alerts to families that their children’s coverage was in jeopardy. Before sending the alerts, many states worked with community-based organizations and conducted trainings with call center staff so families could turn to informed, trusted sources for help. As expected, there has been an increase in calls and unfortunately, some panic. Some states are also experiencing an increase in spending as families rush to access needed services for their children while the program is available.

State Medicaid and CHIP officials report that families and state partners are confused about the status of the program, which requires significant staff time to provide up-to-date and accurate information, which is challenging because the federal funding continues to change. State’s limited resources have been devoted to contingency planning and budgeting since s, when concerns about CHIP funding first surfaced. Rather than making further investments in their programs, states have needed to focus on simply keeping them operational.

Looking Ahead
The Congressional Budget Office (CBO) released a new score for the Senate bill that reauthorizes CHIP and provides five years of funding for the program. Rather than the original anticipated cost of $8.3 billion (above the assumed CHIP baseline), CBO now estimates CHIP will only cost an additional $800 million. This is due to the elimination of the Affordable Care Act’s individual mandate because it is assumed providing coverage for children through CHIP will cost the federal government less than if these children transitioned to the Exchange.

Continued short-term fixes and funding have a limited effect on states ability to assure the CHIP program’s sustained viability. Although states are committed to providing children with coverage, they depend on the federal government’s funding assistance to do so. Armed with a new, lower CBO score, state officials hope Congress can again reach a bipartisan agreement to continue this essential program.