Congress Lets CHIP Expire, and States Scramble

Some states are already preparing to freeze enrollment or cut off children's health insurance as they face the near possibility of running out of money for the program.
by | September 29, 2017
doctor looking into a baby's ear
(TNS/Los Angeles Times/Noam N. Levey)

*This story has been updated since it was first published to reflect the fact that Congress missed the Sept. 30 deadline.

Congress missed the Sept. 30 deadline to reauthorize funding for the Children’s Health Insurance Program (CHIP), sending states that rely on that money scrambling to figure out how to pay for it.

U.S. Sens. Orrin Hatch and Ron Wyden introduced a bipartisan bill last month that would have extended funding for five years, but it never even got a vote. Health policy experts, however, are cautiously optimistic that Congress will pass the bill in the next few weeks, after the initial deadline has passed.

In the meantime, some states are already preparing to freeze enrollment or cut off insurance coverage as they face the possibility of running out of CHIP funding in the near future.

The federal Medicaid and CHIP Payment and Access Commission (MACPAC) estimates that three states -- Arizona, Minnesota, North Carolina plus the District of Columbia -- will run out of CHIP funding by the end of the year. But the Kaiser Family Foundation found that number to be conservative, releasing a report last month stating that 10 states would actually run out of money by the end of the year. Earlier this month, Minnesota's human services commissioner told Congress the state would exhaust its funding by the end of September.

“Most states have already passed their budgets, and the vast majority of them expected it to be reauthorized. Congress is really putting states in a bind right now,” says Joan Alker, executive director of the Georgetown Center for Children and Families.

The uncertainty is forcing states to make tough decisions: Do they fund the program themselves, at the expense of other programs, or do they cut or cap the program?

Utah submitted a request to the federal government to freeze enrollment in their program. Some states, including Nevada, have laws that force officials to freeze enrollment if federal funds decrease at all, according to Healthline.

CHIP provides health insurance to 9 million low-income children and pregnant mothers who don’t qualify for Medicaid. It's jointly funded by the federal government and states, but the feds foot almost 80 percent of the bill.

If states are forced to unenroll some children, it’ll be “a very complicated” process of deciding who gets cut off, says Alker. Children in states that don't fully fund CHIP with Medicaid dollars are most at risk of losing insurance, she says. Thirty-six states fall into that category.

“You can’t wait until the last minute to tell families that they’re kids are losing health insurance. We want to give them 60 days. It’s also expensive to shut down a program. CHIP is embedded into our I.T, auditing, prior authorization systems. That’s work,” says Linda Nablo, chief deputy director for Virginia’s Department of Medical Assistance Services.

There are far-reaching impacts of reducing the number of kids who have health insurance.

“Medical practices in more low-income places will suddenly have uninsured children. We have kids in the middle of a course of treatment. We have 1,100 pregnant women in Virginia receiving CHIP benefits right now," says Nablo. "Are we just going to tell them that labor and delivery is on them now?"

The number of uninsured kids is at a record low, with 95.5 percent of children under the age of 18 now covered by some form of health insurance, according to the Georgetown Center for Children and Families.

“This is a historic bipartisan accomplishment, and it’s something we should be proud of," says Akler. "Inaction by Congress is going to reverse our progress."

 

When States Are Expected to Run Out of CHIP Funding

 
First Quarter FY 2018
 
Second Quarter FY 2018
 
Third Quarter FY 2018
 
Fourth Quarter FY 2018

 
SOURCE: Medicaid and CHIP Payment and Access Commission