United States: Late Push to Reauthorize CHIP Funding This Session

Approximately eight million children currently covered by the Children's Health Insurance Program (CHIP) may lose access to their pediatric-specific benefits and provider networks if legislation is not passed to extend federal funding for CHIP beyond its slated expiration at the end of FY 2015. CHIP is designed to provide coverage to children and pregnant women in families who do not qualify for Medicaid but are unable to afford private health insurance. While CHIP is administered by the states, it is predominately funded by the federal government.

Since CHIP's enactment in 1997, the percentage of uninsured children has been cut in half. However, in the wake of the new coverage options provided by the Affordable Care Act (ACA), there has been debate regarding the ongoing effectiveness and need for the program. The House Energy & Commerce and Senate Finance Committees sent a  letter to all 50 state governors on July 29, 2014, soliciting input and feedback from states on whether and how CHIP should be extended and what additional policy changes should be made to the program.

The Medicaid and CHIP Payment and Access Commission (MACPAC) recently provided its recommendations to Congress, advising Congress to "extend federal funding for CHIP for a transition period of two years beyond 2015, during which time the key issues regarding the affordability and adequacy of children's coverage must be addressed." MACPAC cautioned that if CHIP funding is allowed to expire, the number of uninsured children would increase significantly. MACPAC also warned that families would see significant increases in cost sharing for health services if CHIP is allowed to expire. Additionally, MACPAC, citing the need for evidence regarding adequacy of access to coverage and networks for children in exchange plans, expressed concerns that adult-focused plans currently available on the exchanges may not provide an appropriate alternative to the pediatric-focused CHIP.

In an effort to avoid this outcome, congressional lawmakers are pushing legislation to extend CHIP funding to 2019. On June 11, 2014, Senator Jay Rockefeller (D-W.Va.) introduced the CHIP Extension Act of 2014 (S. 2461) to extend federal CHIP funding through 2019. The bill also seeks to increase access and improve enrollment to the program. In particular, the bill would automatically enroll newborns, as is already done in Medicaid, and permanently extend state usage of Express Lane Eligibility, which can maximize enrollment by allowing states to rely on data from other programs such as TANF and WIC to reduce the administrative burdens of enrollment. The bill also would increase state flexibility to tailor CHIP programs to local needs and interests. For example, states could choose to expand coverage by raising eligibility to 300 percent of the federal poverty level or eliminating CHIP premiums. The bill has attracted the praise of advocacy groups, including the Children's Hospital Association, March of Dimes and the National Health Law Program.

Similarly seeking to extend federal funding for CHIP through 2019, Representatives Henry A. Waxman (D-Calif.) and Frank Pallone, Jr. (D-N.J.) introduced the CHIP Extension and Improvement Act of 2014 (H.R. 5364) on July 31, 2014. Notably, both bills maintain ACA's October 1, 2015, 23 percent increase to the federal matching rate for CHIP, already approximately 15 percent higher than the Medicaid matching rate, bringing the average federal matching rate for CHIP to 93 percent. If successful, the House and Senate bills will avoid potential disruptions in children's health insurance coverage and ensure states sufficient time to make budgetary decisions.

Setting the stage for a larger debate on CHIP reauthorization, the U.S. Senate Finance Committee's Subcommittee on Health Care held a hearing to discuss the future of CHIP on September 16, 2014. Although CHIP generally has been the recipient of bipartisan support, Senator Rockefeller and other stakeholders expressed concerns that the program may become a victim of political gridlock.

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