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Without New Federal CHIP Funds, States Will Soon Cut Health Coverage for Children

October 31, 2017 at 12:15 PM

With the President and Congress missing the September 30 deadline to extend funding for the Children’s Health Insurance Program (CHIP), states will soon begin to close or scale back their programs, a new report from Georgetown University’s Center for Children and Families shows. That puts the coverage of the 8.9 million children enrolled in CHIP, and the historic highs in kids’ health coverage that the nation has achieved, at serious risk. The House and Senate should approve legislation to renew CHIP funding, but without the harmful funding provisions that House Republicans are pushing to offset the costs.

With no new federal CHIP funding, states are using leftover federal funds to keep their programs running. Ten states will completely run out of federal funds by the end of the year, according to a recent report from the Kaiser Family Foundation, and most will run out by the end of the first quarter of calendar year 2018.

States with separate CHIP programs (which enroll about 44 percent of kids with CHIP coverage nationwide) have begun preparing for when they exhaust their federal CHIP funding. These states are contemplating freezing enrollment, scaling back eligibility, or ending their programs altogether, the Center for Children and Families reports. States with CHIP-funded Medicaid expansions must continue coverage for their CHIP-eligible children but only at the state’s regular matching rate for federal Medicaid funding, which averages 57 percent across the states, well below the current average CHIP matching rate of 93 percent.) Arizona, Colorado, Texas, Utah, and Virginia are among states with laws requiring them to close their CHIP programs if no federal funding is available. And while these states won’t reach that point until December or January, they will soon have to send notices to families about the coming end of their CHIP program.

Even if the President and Congress eventually fund CHIP and these state actions are temporary, they can cause lasting damage to children. Arizona froze enrollment in its CHIP program in 2009 and enrollment dropped by more than 60 percent in less than two years. And North Carolina experienced a 30 percent enrollment drop when it implemented a freeze in 2001.

Congress can quickly end the uncertainty around CHIP, since House and Senate committees have approved legislation with near-identical CHIP provisions. Both bills would provide sufficient funding for states to sustain (and expand) their current CHIP programs for five years, through fiscal year 2022. The bills would also retain the Affordable Care Act’s temporary, 23-percentage-point increase in the federal CHIP matching rate through fiscal year 2019, provide a transitional increase in 2020, and extend for five years the Express Lane Eligibility option that makes it easier for eligible children to enroll in (and renew) Medicaid and CHIP coverage.

The House is expected to vote this week on legislation that would extend funding for CHIP and Community Health Centers. While these provisions are sound, the bill has significant shortcomings, including insufficient funding for Puerto Rico and the U.S. Virgin Islands to respond to the devastation from Hurricanes Irma and Maria, and funding provisions that would harm people with marketplace or Medicaid coverage.

States and children have not yet felt the adverse impact of the federal delay in new CHIP funding, but that day is coming soon. The House and Senate should work out a bipartisan agreement on CHIP that does not include the harmful funding provisions that House Republicans are pushing.