Congress Extends Children’s Health Insurance for 2 Years

Democratic senators wanted a four-year extension but ultimately joined most Republicans in voting for a wider package that also reforms Medicare.
by | April 15, 2015

The U.S. Senate overwhelmingly approved a Medicare payment overhaul late Tuesday night that includes a two-year extension of the Children’s Health Insurance Program (CHIP), sending the bill to President Obama, who is expected to sign it.

Funding for CHIP, which serves children from low-to-moderate-income families, would have expired after September without congressional action, leaving billions in budget holes for states and around two million children uninsured. But the $214 billion Medicare package negotiated between House leaders includes $5.7 billion to keep CHIP going through 2017.

The package includes a 23-percent increase in funding rates from the federal government, which varies by state but covers an average of 57 percent of medical claims. States pay for the rest. The news will come as a relief for governors, most of whom called for an extension of at least four years in letters to Congress last year.

A majority of CHIP directors reported in a survey earlier this year that their governors were assuming in their budgets that Congress would extend the program, but only 18 assumed Congress would include the 23-percent increase. Another 17 were unsure, and another 10 weren’t counting on the additional funding. For some, then, the budgetary impact could be even greater.  

CHIP, which serves about 8 million kids, passed along bipartisan lines in 1997 and has continued to garner support from both parties as it has cut the rate of uninsured children in half. States have broad flexibility to set eligibility and design their programs. Some include children from families earning up to 300 percent of the federal poverty line, or about $73,000 for a family of four. And because the program is a block grant, unlike a traditional entitlement program, states can easily limit the number of patients in the program.

Senate Democrats have been the most vocal group of lawmakers in support of a four-year extension. But while they insisted on extending the program for four years to give greater stability to states, they were hesitant to attach their support on the wider Medicare package to a longer CHIP extension. The Medicare changes replaced deep and frequent cuts to doctors in the program, though federal actuaries warn even the new formula will require action from Congress to avert cuts after about a decade. Preventing regular cuts had become a much-loathed ritual among both parties.

U.S. Sen. Michael Bennet, a Democrat from Colorado, pushed an amendment Tuesday to extend the program for four years, but Senate leadership rejected his attempt.

Debate over what happens to CHIP after 2017 is likely to pick up in health policy circles immediately. Some have questioned the need for it in the era of the Affordable Care Act, but CHIP coverage remains far cheaper than private insurance plans sold on health exchanges and offers more specialized benefits in pediatrics.

Currently, people can’t get subsidized insurance coverage through an ACA health exchange if they already have affordable employer coverage, and the income threshold for affordable doesn't take into account the cost of providing coverage for an entire family.