January 8, 2018

CMS says states could run out of CHIP funds by Jan. 20

Daily Briefing

    CMS officials on Friday said some states could run out of CHIP funding as soon as this month without further action from Congress—and a recent Congressional Budget Office (CBO) report estimated that it would cost the federal government less to reauthorize funding for CHIP than previously thought.

    Background

    Federal funding for CHIP—which covered about 9.2 million low-income U.S. children and pregnant women in fiscal year (FY) 2016—expired at the end of FY 2017 after lawmakers could not reach an agreement on ways to offset the cost of funding the program.

    HHS has allocated emergency funds to several states to prevent disruptions in coverage, and President Trump last month signed a short-term spending bill that included $2.85 billion in funding for CHIP to be allocated for the first two quarters of FY 2018, which began on Oct. 1, 2017, and will run through March 31. However, some experts and stakeholders estimated that the short-term CHIP funding might not last states through March.

    CMS says some states could run out of CHIP funds after Jan. 19

    CMS said some states will begin to run out of CHIP funds after Jan. 19—when the current short-term federal spending bill is set to expire, Axios' "Vitals" reports. According to "Vitals," Congress must pass and Trump must sign a new spending bill before Jan. 20 to avoid a government shutdown.

    CMS spokesperson Johnathan Monroe said CHIP funding included in the short-term spending bill "should carry all the states through Jan. 19 based upon best estimates of state expenditures to date." He continued, "However, due to a number of variables relating to state expenditure rates and reporting, we are unable to say with certainty whether there is enough funding for every state to continue its CHIP program through March 31." A CMS official said, "Some states will begin exhausting all available funding earlier than others … but the exact timing of when states will exhaust their funding is a moving target."

    CMS did not specify which states are expected to run out of CHIP funds first, Kaiser Health News reports. However, Modern Healthcare reports Alabama, which was set to freeze enrollment Jan. 1 without additional funding, will only be able to stay open for an additional month under the short-term funding bill. According to KHN, states that run out of CHIP funds might have to suspend enrollment in or completely close their programs. CMS said it is working with states to help them handle the potential funding shortfall.

    CBO says it would cost $800M to reauthorize CHIP for 5 years

    In related news, CBO on Friday said a bill (SB 1827) that would reauthorize federal funding for CHIP for five years would cost the federal government $800 million over a decade—which is $7.5 billion less than CBO previously estimated, Modern Healthcare reports.

    CBO estimated that under the bill, called the Keep Kids' Insurance Dependable and Secure (KIDS) Act of 2017, the total cost of reauthorizing federal funding for CHIP would be $48.4 billion over 10 years. CBO attributed the lower cost estimate in part to a provision in a tax reform bill (HR 1) recently signed into law, which eliminated the Affordable Care Act's individual mandate penalty.

    CBO predicted that because of that provision, premiums for exchange plans will rise, which could result in fewer adults and children enrolling in such coverage—ultimately reducing federal spending on exchange coverage. Further, CBO said the provision could drive more children who were previously enrolled in exchange plans to be enrolled in CHIP plans, which cost the government less. As a result, CBO said the federal government will need less revenue to offset the cost of funding CHIP than previously estimated (Baker, "Vitals," Axios, 1/8; Galewitz, Kaiser Health News, 1/5; Luthi [1], Modern Healthcare, 1/5; Raman, CQ News, 1/5 [subscription required]; Luthi [2], Modern Healthcare, 1/5)). 

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